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85–439 2015

OUR NATION OF BUILDERS: HOME ECONOMICS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, 

AND TRADE 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JUNE 4, 2013 

Serial No. 113–49 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

(III) 

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

LEE TERRY, Nebraska 

Chairman 

LEONARD LANCE, New Jersey 

Vice Chairman 

MARSHA BLACKBURN, Tennessee 

GREGG HARPER, Mississippi 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVE B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

JOE BARTON, Texas 

FRED UPTON, Michigan, ex officio 

JANICE D. SCHAKOWSKY, Illinois 

Ranking Member 

G.K. BUTTERFIELD, North Carolina 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

JOHN D. DINGELL, Michigan 

BOBBY L. RUSH, Illinois 

JIM MATHESON, Utah 

JOHN BARROW, Georgia 

DONNA M. CHRISTENSEN, Virgin Islands 

HENRY A. WAXMAN, California, ex officio 

(V) 

C O N T E N T S 

Page 

Hon. Lee Terry, a Representative in Congress from the State of Nebraska, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 2 

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois, opening statement .............................................................................. 3 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, prepared statement ........................................................................... 142 

WITNESSES

Rick Judson, Owner, Evergreen Development Group, and Chairman, National 

Association of Home Builders ............................................................................. 5 

Prepared statement .......................................................................................... 8 

Answers to submitted questions 1 ................................................................... 144 

Curt Stevens, CEO, Louisiana-Pacific Corporation .............................................. 16 

Prepared statement .......................................................................................... 18 

Answers to submitted questions ...................................................................... 148 

George Kubat, President and CEO, Phillips Manufacturing Company .............. 26 

Prepared statement .......................................................................................... 28 

Edward Martin, President and CEO, Tilson Home Corporation ......................... 32 

Prepared statement .......................................................................................... 34 

Thomas S. Bozzuto, Chairman and CEO, Bozzuto Group, and Chairman, 

National Multi Housing Council, on behalf of National Apartment Association ........................................................................................................................ 39

Prepared statement .......................................................................................... 41 

Answers to submitted questions ...................................................................... 150 

Steven Nadel, Executive Director, American Council for Energy-Efficient 

Economy ................................................................................................................ 51 

Prepared statement .......................................................................................... 53 

Answers to submitted questions ...................................................................... 154 

James M. ‘‘Buddy’’ Robinson, IV, Senior Vice President, General Counsel 

and Corporate Secretary, Kohler Company ....................................................... 78 

Prepared statement .......................................................................................... 81 

Answers to submitted questions ...................................................................... 158 

William Shaw, Founder, William Shaw and Associates ....................................... 98 

Prepared statement .......................................................................................... 100 

Answers to submitted questions 2 ................................................................... 161 

Mark Wilhelms, Vice President of Architectural Sales, Midwest Brick and 

Block ...................................................................................................................... 105

Prepared statement .......................................................................................... 107 

Answers to submitted questions ...................................................................... 163 

Ludy Biddle, Executive Director, Neighborworks of Western Vermont .............. 115 

Prepared statement .......................................................................................... 117 

Answers to submitted questions 3 ................................................................... 166 

Brian Bovio, Operations Manager, Bovio Advanced Comfort and Energy Solutions ....................................................................................................................... 122 

Prepared statement .......................................................................................... 124 

Answers to submitted questions ...................................................................... 168 

1 Mr. Judson did not respond to submitted questions for the record. 2 Mr. Shaw did not respond to submitted questions for the record. 3 Ms. Biddle did not respond to submitted questions for the record. 

(1) 

OUR NATION OF BUILDERS: HOME 

ECONOMICS 

TUESDAY, JUNE 4, 2013 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND

TRADE, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:05 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Lee Terry (chairman of the subcommittee) presiding. 

Members present: Representatives Terry, Lance, Blackburn, 

Guthrie, Olson, McKinley, Bilirakis, Johnson, Long, Schakowsky, 

McNerney, Welch and Matheson. 

Staff present: Kirby Howard, Legislative Clerk; Nick Magallanes, 

Policy Coordinator, Commerce, Manufacturing, and Trade; Brian 

McCullough, Senior Professional Staff Member, Commerce, Manufacturing, and Trade; Gib Mullan, Chief Counsel, Commerce, Manufacturing, and Trade; Andrew Powaleny, Deputy Press Secretary; 

Shannon Weinberg Taylor, Counsel, Commerce, Manufacturing, 

and Trade; Michelle Ash, Democratic Chief Counsel; and Will Wallace, Democratic Professional Staff Member. 

OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA 

Mr. TERRY. Good morning, and welcome to our hearing. I am 

pleased to say that this is our fourth hearing in our ‘‘Nation of 

Builders’’ series and one that I have been looking forward to, particularly because I get to welcome somebody from my hometown, 

and frankly, a one-time neighbor, and that is George Kubat, who 

is the CEO of Phillips Manufacturing, a company that I am proud 

to have headquartered in my district, and particular in south 

Omaha, a notorious—I shouldn’t say notorious, but a well-known 

blue-collar area of my great city. 

Thus far in Congress, we have heard from the CEOs of the largest steel companies in the United States, representatives of the 

world’s largest auto manufacturing companies, and even had a 

showcase displaying the wide range of products being manufactured in each of our districts on this committee panel. And today 

we are welcoming our home builders and manufacturers of products that are included in home building. 

Of course, these industries are pretty different. A company like 

Ford, who testified at our hearing on auto manufacturing, is markedly different in many ways from my constituent on today’s panel, 

2 

Phillips Manufacturing. One makes cars, and one makes corner 

beads used for drywall finishing. Clearly, their products are different. Their companies are different sizes and serve different market sectors. Yet their message to our subcommittee is quite similar. 

Both the President of the Americas at Ford and Mr. Kubat from 

Phillips put three of the same issues in their top four areas for 

Congress to focus on. Now, I don’t think these two business leaders 

know each other, so I doubt they worked in concert, but they were 

remarkably consistent when it came to identifying places where 

Congress should focus and policy areas in need of improvement. 

They say we should pay attention to regulatory efficiency and certainty, tax reform, and worker education and training. 

Not surprisingly, the similarity between testimonies does not 

stop here. We have had over 35 witnesses testify at our manufacturing hearings and many of the themes and issues have been recurrent. It is time we start listening to these folks and what they 

are telling us, and start looking at ways we can take their advice, 

address their concerns and help them help Americans get back to 

work. 

I believe that the best way to grow our economy is by nurturing 

an environment where organic job growth is possible, and there is 

nothing more organic than in home multi-housing and single-family construction. According to the National Association of Manufacturers, U.S. manufacturing jobs pay around $77,000 a year, and we 

must find ways to facilitate growth in these domestic industries, 

and I hope today as we hear from the home building industry we 

can help create the organic environment they need to stay competitive and create good-paying jobs, all while building affordable housing for Americans. This is a nonpartisan issue. Not only will we 

create this environment, foster job creation, but it will also help 

our manufacturers build the next generation of energy efficient, 

more affordable and safer homes. 

I want to thank again our witnesses for being here today. 

[The prepared statement of Mr. Terry follows:] 

PREPARED STATEMENT OF HON. LEE TERRY

Good morning, and welcome to our hearing today on the national impact of the 

homebuilding industry. I am pleased to say that this is our fourth hearing in our 

‘‘Nation of Builders’’ series and one that I have been looking forward to-particularly 

because I get to welcome George Kubat, the CEO of Phillips Manufacturing, a company I am proud to have headquartered in my district. 

Thus far this Congress, we have heard from the CEOs of the largest steel companies in the U.S. and representatives of the world’s largest auto manufacturing companies, and even had a showcase displaying the wide range of products being manufactured in each district represented on this subcommittee panel. And today we are 

welcoming homebuilders and manufacturers of products that are included in homebuilding. 

Of course, these industries are pretty different. A company like Ford, who testified 

at our hearing on auto manufacturing, is markedly different in many ways from my 

constituent on today’s panel, Phillips manufacturing. One makes cars, and one 

makes corner bead used for drywall finishing. Clearly, their products are different. 

Their companies are different sizes and serve different market sectors. 

Yet their message to our subcommittee is quite similar. Both the President for 

the Americas at Ford and Mr. Kubat from Phillips put three of the same issues 

within their ‘‘top four’’ areas for Congress to focus on. Now, I don’t think these two 

business leaders know each other, so I doubt they worked in concert, but they were 

remarkably consistent when it came to identifying places where Congress should 

focus and policy areas in need of improvement. They say we should pay attention 

3 

to regulatory efficiency and certainty; tax reform; and worker education and training. 

Not surprisingly, the similarity between testimonies does not stop here. We have 

had over 35 witnesses testify at our manufacturing hearings and many of the 

themes and issues have been recurrent. 

It’s time we start listening to what these folks are telling us, and start looking 

at ways we can take their advice, address their concerns and help them help Americans get back to work. 

I believe that the best way to grow our economy is by nurturing an environment 

where organic job growth is possible. We have repeatedly heard about the good jobs 

manufacturing provides. According to the National Association of Manufacturers, 

U.S. manufacturing jobs pay around $77,000 jobs a year. Let’s find ways to facilitate 

growth in these domestic industries. 

I hope we will hear today from the homebuilding industry how we can help create 

the organic environment they need to keep building and creating good paying jobs 

while building affordable housing for Americans. This is a nonpartisan issue. Not 

only will creating this environment foster job creation, but it will also help manufacturers to build the next generation of more energy efficient, more affordable and 

safer homes. 

I would like to thank all the witnesses for appearing today and everyone for attending. 

# # # 

Mr. TERRY. Marsha, do you want a minute and a half? I will 

yield to the gentlelady from Tennessee. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, for calling the hearing today, and I want to take my time and welcome Curt Stevens, 

who is the CEO of Louisiana-Pacific Corporation. It is 

headquartered in Nashville, Tennessee, and we are proud to have 

it there. LP is not only one of the backbones of the housing industry but they are a leader in quality-engineered wood building products including OSB, structural framing products and exterior siding for use in residential, industrial and light commercial construction. As we talk about jobs in this committee, it is important to 

note that they employ 3,900 people and operate 25 mills located in 

the United States, Canada, Chile and Brazil. LP is striving not 

only to be seen as a respected manufacturer of building products 

but is creating jobs in local communities across the country. These 

are forest owners, truckers, loggers, suppliers, and we want to 

make certain that we keep that jobs growth environment in place. 

So Mr. Stevens, we welcome you and I look forward to your testimony, and Mr. Chairman, I yield back. 

Mr. TERRY. Thank you, and I will yield back the 8 seconds and 

recognize the gentlelady from Illinois, our ranking member, Jan 

Schakowsky. 

OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman, for yielding and for 

holding today’s very important hearing on the home building industry. 

In Chicago, where I am from, home sale prices dropped dramatically following the Great Recession 36 percent below pre-recession 

level. Housing in Chicago is rebounding from that low point. The 

median sale price for homes is 18 percent higher than last year, according to Trulia. However, the New York Times Magazine this 

4 

past weekend highlighted for many areas of Chicago the foreclosure 

crisis is still causing pain and we need to develop policies to support the rehabilitation of those neighborhoods. 

The home building industry has historically been a good indicator of strength of our economy, and I am pleased that the industry continues to recover from the recession. The industry supports 

almost 600,000 jobs nationwide, and with housing starts up 13 percent over the same period last year, I am hopeful that those job 

numbers are going to continue to grow. 

As we seek ways to foster growth in the home building industry, 

it is important that we do so in a thoughtful and forward-looking 

way. The topic of energy efficiency will be a major subject of today’s 

hearing, and for good reason. Energy is one of the three largest 

costs of home ownership. Incentivizing upfront investments in energy-efficient building materials, electronics and other products can 

save families thousands of dollars in the long run while also reducing pollution and improving public health. I look forward to hearing from our witnesses about how to motivate those investments in 

the development phase for new homes. 

And while we are on the subject of smart home design, I want 

to mention another important priority for me as it comes to housing. As we continue our housing recovery and our population ages 

and our military veterans return from the battlefield with severe 

physical disabilities, there is an increased need for accessible housing. The cost to renovate existing housing to make it accessible for 

those with physical disabilities can be tens of thousands of dollars, 

often forcing residents to move or become increasingly isolated or 

go to a nursing home, but if accessibility features are incorporated 

into housing at the time of construction, the additional cost can be 

less than $600. So next week I plan to reintroduce the Inclusive 

Home Design Act, legislation I have sponsored for more than a decade, really at the behest of the disability community. My bill would 

require homes built with federal dollars to meet inclusive design 

standards including at least one accessible or zero-step entrance 

into the home, doorways wide enough for a wheelchair on the main 

level, and let us face it, there is no magic to the size of a door 

width if you do it initially as opposed to having to rehab it, one 

wheelchair-accessible bathroom, light switches and thermostats at 

reachable heights from a wheelchair. This legislation is a commonsense approach to addressing the rising demand for inclusive housing. It is another case in which a low-cost investment early can 

prevent incredibly burdensome renovations later on. I have to tell 

you, I have made attempts in the past to deal with the home building industry, I hope that we can some of us have a conversation 

about this and that you would consider support for this commonsense legislation. 

I look forward to hearing from our witnesses about the state of 

home building, its impact on the overall economy, the increase in 

energy-efficient home design, and how we can incentivize further 

job growth in the industry. I yield back. 

Mr. TERRY. The gentlelady yields back. The gentleman from 

Texas, Mr. Olson, is recognized for 2 minutes. 

Mr. OLSON. I thank the chair, and I am thrilled to introduce the 

President of the Texas Association of Builders, the President and 

5 

CEO of Tilson Homes, and my friend, Eddie Martin. Eddie has a 

distinction that I will never have: he is a native Texan. Born in 

Pecos, Texas, he is a West Texas man. He got his bachelor’s degree 

from Abilene Christian University, his law degree from the University of Houston, and Eddie and his wife, Brenda, have been married for 33 years. Last September, Eddie and Brenda took another 

full-time job spoiling their first grandchild, Kate. So welcome, 

Eddie. Thank you for coming. I look forward to your testimony. I 

yield back. 

Mr. TERRY. Is there anybody else that wishes to be recognized for 

a statement? Seeing none, this should be written down in congressional history as the shortest opening statements. 

With that, we will start our testimony. As I mentioned, we are 

going to go from Mr. Judson to our right. At 5 minutes, if you are 

still talking, you will hear some progressively strengthening in 

sound tapping by the gavel. There are some lights there. Green, 

yellow is the last minute, so you should start when you see it turn 

yellow, start wrapping up. 

So Mr. Judson, you are now recognized for 5 minutes. 

STATEMENTS OF RICK JUDSON, OWNER, EVERGREEN DEVELOPMENT GROUP, AND CHAIRMAN, NATIONAL ASSOCIATION 

OF HOME BUILDERS; CURT STEVENS, CEO, LOUISIANA-PACIFIC CORPORATION; GEORGE KUBAT, PRESIDENT AND 

CEO, PHILLIPS MANUFACTURING COMPANY; EDWARD MARTIN, PRESIDENT AND CEO, TILSON HOME CORPORATION; 

THOMAS S. BOZZUTO, CHAIRMAN AND CEO, BOZZUTO 

GROUP, AND CHAIRMAN, NATIONAL MULTI HOUSING COUNCIL, ON BEHALF OF NATIONAL APARTMENT ASSOCIATION; 

AND STEVEN NADEL, EXECUTIVE DIRECTOR, AMERICAN 

COUNCIL FOR ENERGY-EFFICIENT ECONOMY 

STATEMENT OF RICK JUDSON 

Mr. JUDSON. Thank you. On behalf of the more than 140,000 

members of the National Association of Home Builders, I appreciate the opportunity to testify before you today. My name is Rick 

Judson. I am a home builder and developer from Charlotte, North 

Carolina, and Chairman of the Board of the National Association 

of Home Builders. 

Home building is dominated by small firms, and our membership 

reflects just that. Approximately 70 percent of the NAHB members 

build 10 or fewer homes per year, and their median revenue is 

under a million dollars. Collectively, however, we represent a massive industry employing literally millions of people and producing 

about 17 percent of the Nation’s gross domestic product. The recession, of course, has taken a heavy toll. Total employment in home 

building is down almost 40 percent from our peak of 2006 and it 

is down to under 2.1 million employees. Last year, the industry 

only constructed 534,000 homes. For a comparison, to keep up with 

population growth and replacement needs, we should be building 

about 1.4 million homes per year. 

There is, however, reason for optimism. Over the last 2 years, 

the housing market has started to heal and home building is beginning to pick up. Our growth creates jobs, something you have all 

6 

acknowledged. More than three full-time jobs are generated by the 

construction of each single-family home. Similarly, 100 new multifamily units will result in 116 new jobs. With just a normal production cycle, 2 million more job opportunities will be available to this 

country. Housing also provides a key tax base for State and local 

governments. Homeowners paid approximately $3 billion in property taxes last year. 

However, economic and policy headwinds are beginning to slow 

some recovery. For example, in response to the prolonged downturn, many building material companies cut back on production 

and capacity. Now that housing is coming back, the lack of product 

availability is resulting in rising costs. Pricing for lumber, wood 

products accounts for about 15 percent of the cost in new construction. OSB products jumped over 80 percent in the past year. Framing lumber is up 32 percent. Gypsum products—drywall, etc.—are 

up about 40 percent. This drives up the price for new homes, which 

particularly is tough on builders of affordable housing. It doesn’t 

take much of an effect to put people out of the ability to purchase 

a home. About 240,000 households will be priced out with every 

$1,000 increment in the cost of housing. Policies that streamline 

permitting, that attract investment into domestic mining, and that 

encourage multi-use forest management would all help in the pricing pressures that seem to ride this cyclical ride. 

We are also concerned with the trends in energy code development, to mandate certain or almost proprietary products or techniques. This significantly limits the choice for consumers and does 

not allow for the performance-driven value engineering that we 

would prefer. Further efforts to push energy efficiency without real 

consideration of cost is a huge problem. I am a certified green professional builder, and I understand the value of energy efficiency 

and its importance to the consumer, but even with those savings, 

there are significant upfront costs being incurred in the home. We 

are particularly concerned about the costs imposed in one of the 

most recent energy codes. It will take the typical homeowner about 

13 years to break even on that investment. In some States like Nebraska, it would be almost 17 years. Traditionally, the consumer is 

expecting and willing to pay for that capital investment that would 

be recovered in 7 or 8 years, so keep that in mind. These long payback periods will ultimately hurt housing affordability, and ironically, push lower-income owners into cheaper, older, less efficient 

homes. 

Possibly the most significant problem facing our industry is the 

lack of construction lending. NAHB strongly supports two bills, 

House Resolution 1255 and Senate Resolution 1002, that would require banking regulators to issue new guidance specifically addressing the key regulatory areas that have significantly hampered 

the flow of credit to our Nation’s home builders. 

There still is work to be done before we see a healthy housing 

market, but again, as I mentioned, there is reason to be optimistic. 

We have 2.1 million households that have not formed due to the 

economy. These are college students moving back in with their parents, like mine. There are people taking on extra roommates. These 

individuals represent significant demand in the near term for both 

rental and purchasing of homes. Forecasts predict that housing 

7 

starts over the next year will nearly double that of 2009. Future 

growth, if not impeded by the issues I discussed, will create jobs, 

will enhance small business, will create tax incentives for local and 

federal government. 

We are industry that is ready to get back to work, and we would 

appreciate your assistance in assuring the recovery and our ability 

to contribute to society. Thank you. 

[The prepared statement of Mr. Judson follows:] 

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Mr. TERRY. Thank you, Mr. Judson. 

Now, Mr. Stevens, you are recognized for 5 minutes. 

STATEMENT OF CURT STEVENS 

Mr. STEVENS. Thank you. My name is Curt Stevens. I am the 

CEO of Louisiana-Pacific Corporation. This year, Louisiana-Pacific 

celebrates our 40th anniversary. Over the years, we have managed 

millions of acres of forestland, operated hundreds of wood-products 

mills, and sold almost every building product that can be made 

from wood. 

A little more than a decade ago, we sold our forestlands and narrowed our focus to concentrate on what we do best: manufacturing 

and selling building products. Today we produce the wood products 

that build the roofs, walls and floors of single- and multi-family 

homes across the country. 

More than half of LP’s sales come from products made in 15 

manufacturing sites spread across 13 States, from northern California to Maine to Alabama. We are headquartered in Nashville, 

Tennessee, and also operate administrative sites in Oregon, Washington and Idaho. We operate another 10 plants in Canada, Chile 

and Brazil. 

LP employs 2,630 people in the United States. Twenty-two hundred of these folks are in our production facilities located in rural 

areas close to our wood supply. These are communities where jobs 

can be scarce, and LP is often the major employer. Besides these 

LP jobs, for every person LP directly employs, about three additional jobs are created in these communities for loggers, truckers, 

suppliers and others. In addition, LP provides income to thousands 

of local family forest owners by purchasing the timber that they 

grow. 

Even during the market recession, the wood products industry 

operated almost 1,000 manufacturing facilities across America, providing close to 400,000 jobs and a payroll of $16.5 billion, and this 

was in 2011. Over the years, LP has been through many up-anddown cycles in the housing market but we have never seen a dip 

as severe as the recent housing downturn from 2007 to 2012. LP 

along with others in our industry was forced to shut our mills, reduce hours and shifts, and lay off workers. 

The good news is that in the last year, housing starts are slowly 

but consistently improving. We are cautiously optimistic about the 

new few years. The signs of continued growth are there, but we 

still face economic headwinds and regulatory burdens that could 

slow growth and income and jobs. It is in this context that I would 

like to offer perspectives on several priorities to ensure that this 

fundamental American industry continues to strength and remain 

competitive. 

Environmental stewardship and compliance is one of LP’s core 

values, and the wood products industry has met many costly regulatory challenges over the years. The industry needs a reasonable 

and sustainable regulatory path based in quality science. For example, the Wood Maximal Achievable Control Technology, or 

MACT, or will cost LP upwards of $13 million. 

The wood products industry is a leading user of wood fiber and 

producer and user of carbon-neutral renewable biomass energy to 

17 

run our plants. Mandates and incentives including the Federal Renewable Electricity Standard, climate policies and the Renewable 

Fuel Standard promote the use of biomass for energy. Policymakers 

should be mindful of the growing demand that this created in the 

United States and internationally for biomass and the impact it 

could have on the mature wood products industry that rely on this 

fiber both as our raw material and a means for energy creation at 

our facilities. 

Additionally, wood products face a threat from the U.S. Department of Energy-supported 2012 International Energy Conservation 

Code, the IECC. Despite the ability of either product to contribute 

to equivalent thermal performance, the 2012 version of the IECC 

unjustifiably gives preferential treatment to one product—foam 

sheathing—over structural wood panels such as OSB. That preference could result in a loss of 20 percent of the structural wood 

market and thousands of jobs. 

As an international company, comprehensive tax reform, though 

not easy, is long overdue. At LP, these are real issues that affect 

daily decisions about where we make our products and hire our 

people. For example, Canada is one of many OECD member countries that have lowered corporate rates during the past two decades 

while U.S. corporate rates have remained nearly stagnant. 

Finally, LP supports immigration reform that helps ensure that 

we can find qualified labor to operate our mills, plant trees for sustainable forests that supply raw materials, and to contract the 

homes our products help to make. 

In summary, Louisiana-Pacific and the wood products industry 

play an important role in the economy of our Nation and the building of America. We are on the upswing, but we need your help in 

enacting and supporting policies to ensure that we have reasonable, science-based environmental regulation, energy regulations 

and codes that maintain a level playing field and fair competition, 

corporate tax return, and policies to address labor needs and skills 

gaps. We are proud to manufacture the materials that literally 

build America. 

Thank you for the opportunity to speak to you at this hearing. 

[The prepared statement of Mr. Stevens follows:] 

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Mr. TERRY. Thank you. Well done. 

And now Mr. Kubat, who is the President and CEO of Phillips 

Manufacturing, headquartered in Omaha, Nebraska, you are recognized for 5 minutes. 

STATEMENT OF GEORGE KUBAT 

Mr. KUBAT. Chairman Terry, Ranking Member Schakowsky, distinguished members of the subcommittee, good morning and thank 

you for the opportunity to testify today. My name is George Kubat, 

and I am the President and CEO of Phillips Manufacturing Company. 

Phillips is a drywall bead and trim manufacturer—the metal corners used in drywall applications and related products. We are a 

nationwide manufacturer and distribution company, employee 

owned and in business for over 50 years. 

Given my limited time in front of the subcommittee this morning, 

I will be focused on the following areas and request your help, 

which will benefit many manufacturers in the United States: one, 

over-regulation; two, vocational education; three, taxation; and 

four, unfair foreign competition. 

Over-regulation: My initial comment is a general concern that 

any time a representative of a government agency contracts a business and says I am from the government and I am here to help 

you, the immediate reaction of the business is to assume a defensive position. The growth and complexity of regulation and corresponding enforcement increases in all areas every year. Although 

the agencies may know the regulations and rules under their umbrella, it is impossible for small manufacturers to stay current with 

what they must comply. Of course, lack of knowledge or understanding is not a defense for noncompliance. To our 13 federal 

agencies whose regulatory umbrella Phillips Manufacturer must 

comply with, they are listed in my prepared comments. Certainly, 

there is a need for regulation and governance over manufacturing 

practices for many reasons including employee safety, quality of 

treatment, environment, immigration, health care, taxes and many 

more but it can’t possibly make sense for a relatively simple metal 

manufacturing business like Phillips Manufacturing to work 

through 13 federal agencies and dozens of State and local agencies. 

As difficult and expensive as compliance is for Phillips, it has to 

be impossible for the smallest of manufacturers, those with 50 or 

less employees. Over the past several decades in the United States 

we have created a labyrinth bureaucracy of government policy and 

complexity of regulation that makes it difficult for Phillips Manufacturing and especially smaller manufacturing companies to comply with today’s requirements. 

Vocational education: Another request for this subcommittee is to 

reverse the decline in vocational education. Phillips Manufacturing 

is not alone in its struggle to find enough workers to fill our open 

positions in skilled trades. I believe many manufacturers, and our 

customers in the building construction trades, share this same 

challenge. It is little wonder that we struggle to find enough people 

in the skilled trades when I reflect on the fact that, to my knowledge, high schools and community colleges have none or minimal 

shop-type classes. The local community colleges have switched 

27 

their marketing focus from skilled trades education to university 

preparation. Compare this situation to when I was in school, where 

almost every high school had shop classes and the local community 

college focused on the skilled trades education. 

Taxation: The U.S. tax code is archaic, complex, and beyond the 

ability of even the IRS to understand it. Tax rates only continue 

to increase including the tax increases mandated by the Health 

Care and Education Reconciliation Act of 2010, which, by the way, 

it seems no one really understands how this Act will fully impact 

our cost of doing business in the United States. One thing is clear, 

income tax rates for smaller businesses which are fortunate enough 

to make money will go up by 3.8 percent in 2013. In addition, payroll taxes will increase, as well as the cost of providing insurance 

benefits to our employees. These costs reduce our ability to reinvest 

in our business and be competitive with non-United States businesses. 

Unfair foreign competition: Earlier I referred to the global economy. What do we view as unfair foreign competition? Our regulatory and tax structure in the United States creates a higher cost 

of production for many products that Phillips manufactures. The 

unfair foreign competition is from products manufactured in countries where governments provide financial support. These products 

are of inferior material and quality. China is a major concern but 

there are also many other countries. It makes it difficult not only 

to compete with these products for sales in the United States, it 

makes it impossible to even think of exporting any of our products 

to foreign countries. Phillips Manufacturing only manufactures in 

the United States. 

In conclusion, please take action to lower taxes, stop the bureaucratic growth of regulation—less is better. Skilled trades are good 

jobs and people need to be trained and educated to fill the positions. Create and address unfair foreign competition. Phillips is 

proud to label all our products made in the U.S.A. 

Thank you for giving me the opportunity to present to you today. 

[The prepared statement of Mr. Kubat follows:] 

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Mr. TERRY. Thank you, Mr. Kubat. 

And Mr. Martin is the President and CEO of Tilson Home Corporation that we heard somebody up on this dais brag about. You 

are recognized for 5 minutes. 

STATEMENT OF EDWARD MARTIN 

Mr. MARTIN. Thank you, Chairman Lee Terry and Ranking Member Schakowsky and the members of the Subcommittee on Commerce, Manufacturing, and Trade. Thank you for the opportunity 

to testify today. My name is Eddie Martin and I am a home builder 

from Texas, and President and CEO of Tilson Home Corporation. 

I have 30 years of experience in the building industry myself, both 

as a practitioner and an industry representative. I am honored to 

participate in this hearing on housing’s role in sustaining and 

growing the national economy. 

Established in 1932, Tilson signs and builds custom homes on 

customers’ property throughout Texas. We are a family owned and 

operated now for four generations. Family members have managed 

our business. We are ranked by Builder magazine as one of one the 

100 largest builders in the United States. 

We have seen firsthand the housing market has improved over 

the last year, which is a welcome change to our industry and the 

economy. The building industry includes a vast network that includes general contractors and some contracted businesses, some of 

whom will testify here today. 

At the same time, this turnaround presents new challenges for 

the industry. At Tilson Homes, we are already experiencing labor 

shortage in both the high-skill and low-skill end of the construction 

labor categories. The most acute shortages are framing, flooring, 

roofing, HVAC, plumbing, and electrical contractors. My company 

has experienced delays due to the lack of qualified framing crews 

who are familiar with various structural building codes including 

windstorm codes on the coast. Plumbers and HVAC technicians are 

in short supply. We are struggling to find master plumbers and 

roughing crews who run the pipes and foundations before the concrete is placed because the workforce is aging, it is getting harder 

to find young plumbers to enter the trade. 

As a 100 percent committed EPA Energy Star builder, Tilson is 

required to use Energy Star-certified HVAC contractors. Finding 

new certified HVAC contractors is difficult because of the shortage 

of skilled workers trained in Energy Star. As a result of the shortage of skilled labor, on average it is taking my company a month 

longer to build our homes, which adds to our costs and makes it 

more difficult to satisfy our customers. 

As a state and national industry rep, I can attest the lack of 

skilled labor has become a nationwide problem. In the most recent 

NAHB/Wells Fargo Housing Market Index survey, 46 percent of 

builders experience delays in completing projects on time. Fifteen 

percent of the respondents had to turn down some projects, and another 9 percent lost or canceled sales as a result of the recent labor 

shortages. According to the 2011 American Community survey, foreign-born workers account for 22 percent of the construction labor 

force nationally. This number varies by state, and in some states 

such as Texas, we have nearly 40 percent foreign-born workers in 

33 

the industry. These are the states that will experience the most 

acute labor shortages once home building increases. I would also 

note that the immigrants are concentrated in some trades needed 

to build homes such as carpenters, painters, drywall, brick mason, 

and general construction laborers. These are the trades that require less training and education but consistently register the highest labor shortages in NAHB surveys. 

As Congress begins to consider immigration reform, I strongly 

believe that this is an important opportunity for the country to implement a new market-based visa system that would allow more 

immigrants to legally enter the construction workforce each year. 

Despite our efforts to recruit and train American workers, there is 

still a worker shortage, which is a very real obstacle to our industry’s full recovery as work is delayed or canceled due to this shortage. 

The housing industry is turning the corner and contributing to 

an improving labor market. However, I believe a long-term holistic 

approach to comprehensive immigration reform can maximize the 

recovery in housing and allow the industry to reach its full economic potential. 

Thank you for having me. I look forward to questions. 

[The prepared statement of Mr. Martin follows:] 

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Mr. TERRY. Thank you very much. 

I now recognize Mr. Bozzuto from the National Apartments Association. He is the Chairman and CEO of Bozzuto Group, and I 

thank you for taking the time to come to us, and you are now recognized for 5 minutes. 

STATEMENT OF THOMAS S. BOZZUTO 

Mr. BOZZUTO. Chairman Terry and Ranking Member 

Schakowsky, representing the National Multi-Housing Council and 

the National Apartment Association, I would like to thank you for 

this opportunity to testify on the multi-family sector’s contribution 

to the national economy. I am Tom Bozzuto, Chairman and CEO 

of the Bozzuto Group, and also Chairman of the National MultiHousing Council. I have been in the multi-family business for more 

than four decades. My firm focuses on the mid-Atlantic region developing, building and managing apartment properties. 

In our country, the strongest communities contain a mix of housing options, and that includes apartments. Apartment homes and 

our 35 million residents nationally contribute $1.1 trillion annually 

to the economy and help support more than 25 million jobs. I am 

proud to say that since the recession in 2009, my company, the 

Bozzuto Group, has developed, is building more than three-quarters of a billion dollars worth of projects that have collectively supported more than 10,000 jobs. 

Nationally, research by George Mason University economist 

Steve Fuller shows that in 2011 alone, apartment construction reflecting approximately one-third of all new housing starts had a 

total economic contribution of $42.5 billion and supported nearly 

324,000 jobs including 121,000 onsite positions. Furthermore, half 

of all new households formed this decade are expected to rent, so 

demand will continue to grow. Supply is already falling short as an 

estimated 300,000 to 400,000 units must be built each year to meet 

demand yet just half that number was delivered in 2012. 

It is important to realize that the multi-family industry relies 

heavily on our manufacturing partners to both develop new apartments and maintain the country’s 19 million apartment homes. 

Allow me to illustrate this with one of my own projects: Union 

Wharf. We are building this $72 million apartment community in 

Baltimore’s historic Fells Point neighborhood, and when completed 

later this year, it will provide 281 apartment homes and 4,500 

square feet of retail. More than 600 jobs will have been created by 

this project. On track to achieve LEED gold certification and build 

on an infill former industrial lot, the project showcases our commitment to sustainability and demonstrates how apartments spur economic growth. 

The manufacturing impact of this project is profound. The building required enough concrete to fill 240 swimming pools. End to 

end, the lumber used would span about 331 miles, and the drywall 

could cover more than 42 football fields. The sprinkler system alone 

required 56,000 linear feet of piping and almost 5,000 heads. In addition, we will use 204,000 pounds of granite, 290,000 bricks, more 

than 7,000 gallons of paint, and 1,700 appliances and 3,500 cabinets, and this is one building. A significant percentage of these materials were manufactured in America with more than 25 percent 

40 

coming within 500 miles of the site. The apartment industry, as 

demonstrated by this one project, is a robust economic engine that 

provides lasting job growth and spending nationwide. 

And now for our recommendations. As significant consumers of 

energy, policies that ensure continued access to affordable fuel 

sources are critical. Efficiency improvements made in apartment 

properties can generate significant energy reductions and can impact a large number of households. The committee should advance 

incentive-based strategies for promoting building efficiency that 

recognize the unique characteristics of apartments. We also caution 

against creating a rating system that grades buildings on their energy efficiency, and instead we support the expansion of wellknown energy management tools to apartments such as the Energy 

Star program. We also support voluntary green building programs 

such as the National Green Building Standard, the only standard 

written to be seamlessly incorporated into existing building codes. 

My written testimony also outlines several other key issues critical to the apartment industry such as a tax system that promotes 

economic growth without disrupting the real estate industry, a 

housing finance system that provides access to capital in all markets at all times, and a regulatory environment that does not inhibit our ability to provide housing to millions of American people. 

On behalf of the apartment industry, thank you for the opportunity to testify. 

[The prepared statement of Mr. Bozzuto follows:] 

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Mr. TERRY. And thank you. And now, speaking of home energy 

efficiencies, we have Mr. Nadel, who is the Executive Director of 

the American Council for an Energy-Efficient Economy. Thank you 

for being here, and you are now recognized for 5 minutes. 

STATEMENT OF STEVEN NADEL 

Mr. NADEL. Thank you, Chairman Terry and other members of 

the committee. I am very happy to speak before you today. As you 

noted, I am the Executive Director of the American Council for an 

Energy-Efficient Economy. We are a nonprofit organization that 

acts as a catalyst to advance energy-efficiencies policies, programs, 

technologies and investments. We were formed by energy researchers, and just celebrated are 33rd anniversary. Personally, I have 

been involved in energy-efficiency issues since the 1970s. ACEEE 

is a nonprofit organization. In our view, energy efficiency is a 

quintessentially nonpartisan issue since no one is in favor of energy waste. 

Today’s hearing is on home building and home economics. A critical part of home economics is making homes energy efficient so 

they have low operating costs. The major costs of home ownership 

are mortgage payments, property taxes, home insurance and energy. The mortgage industry commonly refers to PITI for principal, 

interest, taxes and insurance, but energy costs should also be included as they are usually higher than insurance costs and sometimes higher than taxes. 

In my written testimony, I provide some average numbers. Spe- cifically, mortgages average more than $12,000 per year for the average home, real estate taxes and energy each average just over 

$2,000 per year, and insurance is about $800 per year. While energy costs average just over $2,000 per year, some 

homes use more than twice that amount and others use than half 

of this amount. In most homes, energy use and energy bills can be 

reduced by 20 to 40 percent through cost-effective energy-efficiency 

investments. In my written testimony, I show how energy-efficiency 

investments in our homes cost less than new electricity supplies 

and often less than current natural gas prices. In addition to saving energy, another virtue of energy-efficiency investments are they 

tend to be very labor-intensive, helping to create jobs. 

Unfortunately, a variety of market barriers keep builders, homeowners, landlords and renters from realizing these savings. The 

barriers are many-fold and include such factors as split incentives, 

panic purchases and bundling of energy-saving features with extrahigh-cost bells and whistles. The term ‘‘split incentives’’ refers to 

the fact that landlords and builders often do not make efficiency investments because the benefits of lower energy bills are received by 

tenants and home buyers. 

In the United States, policies to improve the energy efficiency of 

homes, both new and existing, are primarily at the State and local 

levels. However, federal policy has had an impact, and at a minimum, the federal government can provide information and assistance in order to make it easier for States and local jurisdictions to 

undertake appropriate local actions. 

I discuss several current policies in my written testimony, but in 

the interest of time, I just wanted to note that only about 11 perVerDate Nov 24 2008 12:19 Feb 02, 2015 Jkt 037690 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-49 CHRIS
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cent of new homes qualify for the current federal new homes tax 

incentive. The other 89 percent could do better. And the home performance Energy Star program, the leading home retrofit program, 

has retrofitted less than 1 percent of the single-family housing 

stock and even less of the multi-family stock. Reaching more homes 

with these and similar programs will help reduce energy costs and 

improve affordability for many homeowners. Overall, the National 

Academy of Sciences in 2010 found that energy efficiency could reduce U.S. energy use by 25 to 30 percent below forecasted levels. 

Recently, Representatives McKinley and Welch, both members of 

this subcommittee, introduced the Energy Savings and Industrial 

Competitiveness Act, H.R. 1616, which is a bipartisan bill that includes multiple provisions to encourage energy efficiency. It is a 

companion to similar legislation introduced by Senators Shaheen 

and Portman. The Senate bill was recently reported out of committee on a bipartisan 19–3 vote and is expected to reach the Senate Floor in July. We hope that H.R. 1616 can follow in its wake. 

In this bill as well as a number of other bills that have been introduced or that amendments are expected on the Senate Floor, 

there are four specific policy recommendations I wanted to briefly 

mention here. First, support for model and State building codes. 

These codes are developed by groups like the International Code 

Council. DOE provides technical assistance to these bodies and also 

as the States are considering adopting them. H.R. 1616 makes the 

code revision process more transparent and encourages and assists 

States to consider the most recent model codes, and it will improve 

compliance with the codes. We recommend that this be included. I 

would note that decision-making remains at the State level. 

Second, I would note improving home mortgage underwriting. 

Most mortgage underwriting decisions are made based on mortgage 

payments, taxes and insurance but not energy costs. Investments 

in energy efficiency can reduce the carrying cost of a home, improving loan repayment rates and potentially qualifying more purchasers for mortgages. A recent study by researchers at the University of North Carolina found that efficient homes, meaning those 

certified to meet Energy Star criteria, had a 32 percent lower default rate than otherwise similar homes. In the 112th Congress, 

Senators Bennet and Isakson introduced a bill called the SAVE 

Act. It is now going through revisions, and I understand it may be 

reintroduced soon. Our understanding is that the revised bill is 

likely to direct HUD to develop guidelines for considering expected 

energy cost savings of a property when determining home loan eligibility and home value determinations, and in addition, it would 

encourage efforts to inform loan applicants of the costs and benefits 

of improving the energy efficiency of their homes. These changes 

will make efficient homes more valuable and affordable, while reducing homeowner energy bills. 

I also discuss ways to improve home energy benchmarking and 

how to enact temporary incentives for comprehensive home energy 

retrofits. 

I thank you for your time and look forward to your questions. 

[The prepared statement of Mr. Nadel follows:] 

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Mr. TERRY. Thank you. And now we go into the Q&A phase of 

our hearing. We get to ask the questions and you get to answer. 

This is the fun part. 

So Mr. Kubat, I will start with you. Will you describe for us the 

difference from number of employees that you have employed to 

make the one part, the drywall beads, from, let us say 2008 to current? 

Mr. KUBAT. Maybe just as a quick overview, I am old enough 

that I have had several lives, and it was in 2008 was the first time 

that I ever had to lay off people from positions where I wanted to 

keep them. We cannot control construction starts, and we have 

heard from several of the speakers today the pain that the construction industry went through that related to housing of any 

type, whether it is single, multi, apartments, condominiums. The 

cliff was very steep, and what we thought was a correction or a valley was a canyon. So back in 2007, before the collapse, our total 

employment would have been in the high 200s. We have heard statistics where up to 40 percent of people, I believe Mr. Stevens indicated Louisiana-Pacific had closing of plants and downturns. Fortunately, we did not have to close any plants. We have three plants. 

But we did have significant reduction in employment, and I can’t 

give you the exact number but certainly it was down significantly 

under 200, maybe 160, 170 people. We are now back with what I 

refer to as the rising tide, and certainly we have an improving construction market and hopefully we can continue to support it in the 

United States. 

We are continuing to hire, but one of the challenges that we have 

is this area of what are called skilled workers, and I am going to 

say that is primarily tool-and-die shop, and the training for that 

has to be onsite. There is not educational and vocational training 

bringing these people into the manufacturing market. We hope that 

you will be able to give us support in that area as we look to hire 

more people. 

Mr. TERRY. I appreciate that. So let me feed off of the aspect, because it is amazing of all the different hearings we have had, everyone has testified that they have job openings in the manufacturing and building area but lack the semiskilled and skilled workers necessary. So Mr. Judson, and I will just down the line, if you 

could be fairly quick, do you have any thoughts on where we should 

focus our efforts to try to develop the semiskilled and skilled workers necessary? 

Mr. JUDSON. From two fronts, the technical training is important 

and it has been something that has been deemphasized over the 

past few years. People have left our industry to go into other 

trades. There just was not the demand for their services so they 

have gone into other trades. The deglamorization of the construction trade has caused people in high school, for example, not to go 

into the trade arena so they are not learning a trade. The immigration laws at this point are prohibitive in allowing us to hire trainees as it might be to fill some of those beginning entry slots. So 

I would say to answer your question, a focus on technical training 

with trade schools and a focus on directing immigration labor opportunities into the industry. 

Mr. TERRY. All right. Mr. Stevens? 

64 

Mr. STEVEN. I would second what was said there. The only thing 

that I might add to that is that the immigration reform will help 

both the direct labor workers as well as the skilled laborers. Canada is an interesting example. Canada just basically waived their 

immigration requirements for skilled trades, and they are bringing 

in a lot of individuals from the Philippines and from Ireland to fill 

these skill needs, and that may be a model you might want to consider looking at. 

Mr. TERRY. Mr. Martin? 

Mr. MARTIN. Yes, I would echo Mr. Judson’s comments but I 

would also—you know, one of the problems is that high schools 

have no vocational training. In Texas, when they went to the fourby-four program, which required 4 years of science, English, social 

studies and math, they took out vocational training, and so there 

is no vocational training in Texas anymore, and there is actually 

a bill on the governor’s desk to reinstitute vocational training in 

the high schools, and I think that would start getting people, young 

high school men and women who are not willing to go to college 

or wanting to go to college to get into a trade. 

Mr. TERRY. Very interesting. Mr. Bozzuto? 

Mr. BOZZUTO. The apartment industry began to recover from this 

recession before the home building did, and we began to see the 

shortage of manpower sooner, and it is very severe and it is causing meaningful cost increases. I defer to my associates here and 

their comment about vocational education and agree with them. 

With respect to immigration reform, our industry, our associations 

clearly support comprehensive immigration reform at the federal 

level with a reliable system for the employers to verify credentials. 

Mr. TERRY. Thank you very much. Mr. Nadel, you don’t get to 

answer that question, but I have a feeling you’ll be asked a lot of 

questions. And that brings me to Mr. Matheson. Sorry. I am 

yanking it back. 

Mr. MATHESON. All right. No problem. 

Mr. TERRY. The ranking member is now recognized for her 5 

minutes. 

Ms. SCHAKOWSKY. I apologize. When family calls, you worry and 

take the call, so I apologize. 

I wanted to talk a bit about foreclosures. It has been a real problem and continues to be, as I mentioned in my testimony, in Chicago. An average family who simply lives in proximity to foreclosures and who may not have any trouble with their loans have 

already lost or will lose more than $20,000 in household wealth. It 

has also become clear that many of those companies that carried 

out foreclosures over the last few years kept poor documentation, 

sometimes employed abusive tactics, and in some cases committed 

outright fraud. 

On May 16, Representative Cummings introduced H.R. 1706, the 

Mortgage Settlement Monitoring Act of 2013, and I along with the 

chairman of our full committee, Mr. Waxman, are original cosponsors to try and ensure transparency in a federal settlement on 

mortgage servicers’ unsafe and unsound practices, and a few members of this committee are cosponsors. So Mr. Judson, the National 

Association of Home Builders states on its Web site that it ‘‘urges 

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tion with borrowers to avoid unnecessary financial distress.’’ It 

seems like it would be in the best interest of home builders and 

homeowners alike to reduce residential mortgage servicing and 

processing abuses as well as to promote transparency in any federal reviews. So I wanted to ask you, you may need to get more 

information, but on the surface, does this sound like a bill that 

could be supported? 

Mr. JUDSON. I think the concept of what you are proposing is certainly supportable. Our industry doesn’t deal in the writing or underwriting of mortgages. We build the homes that unfortunately 

have been foreclosed upon. We support that settlement. We support 

a fair settlement. The guilt associated with the foreclosure process 

is multifaceted, whether it be improperly underwriting, whether it 

be greed, whether it be people being truly misled on what their 

payments and obligation would be, it is across the board. We want 

that settlement done. We want it completed. These people need 

housing. If you can look at the housing stock in this country, the 

people that are being displaced or having to rent, and in some 

cases for more money than they could refinance their current home 

if they are paying a normal, regular rate. So we support that settlement. 

Ms. SCHAKOWSKY. Thank you. We would like you to take a look 

at that, and we will get that to you, the legislation itself, and hopefully if we had the support of the home builders, that would be a 

boost for us. 

Mr. JUDSON. Seventeen oh six? 

Ms. SCHAKOWSKY. That is correct. 

Mr. JUDSON. Thank you. 

Mr. SCHAKOWSKY. Yes, 1706. I also wanted to talk about energyefficient appliances, Mr. Nadel. I think you mentioned that various 

State and local but also federal-level energy-efficiency standards 

have come into effect. Residential and commercial appliances have 

evolved into high-performance machines, etc., but meanwhile, the 

price of energy-efficient appliances is falling. A new report by the 

ACEEE found that between 1987 and 2010, real prices of refrigerators, washers and dishwashers decreased by 35 percent, 45 percent and 30 percent, respectively, so I would like to ask you about 

this report and your other work on appliances, and can we conclude 

that State and federal energy efficiency standards for appliances 

are a highly effective, highly beneficial force for consumers and the 

environment, and if I get a new air conditioner that we are looking 

at, am I going to get the help I need in terms of some sort of a 

credit? 

Mr. NADEL. Thank you for that question. Yes, our recent report 

did find that for many, most of the home appliances as well as commercial products that are regulated under federal standards, prices 

have been actually declining. Manufacturers have sharpened their 

pencils and figured out ways to reduce the costs, even as they have 

dramatically improved energy efficiency. Energy savings are quite 

large as well, and the very interesting thing from that report is we 

found that consumer choice had actually either stayed the same or 

increased. The products work better today, have more features, better performance than before. So I do I think that program has been 

very successful in saving energy, saving money. The program has 

66 

been very careful to set those standards at levels that are cost-effective and technologically feasible, so yes, that is very good. 

In terms of your question about air conditioners, assuming you 

are in Chicago, I know Com Ed has a number of incentive programs that might be very useful to help you go beyond the minimum standard. For air conditioners, the minimum standard is 

called the CR rating of 13, but in many climates, 15, 16 might 

make sense. 

Mr. TERRY. Thank you. The gentlelady yields back. At this time 

the chair recognizes the vice chair of the full committee, Ms. 

Blackburn, for her 5 minutes. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. And Mr. Nadel, I 

want to stay with you on the energy-efficiency issue. I have to tell 

you, I have never met anybody that wants to pay more for their 

energy costs. Everyone is looking for a way to cut those costs, and 

I keep watching these DOE and EPA mandates and the way they 

apply the rules, you know, how they will take the laws and then 

they go about different things through rulemaking, and of course, 

where I am from down in Tennessee. I am sure Mr. Stevens will 

tell you, a lot of us down there like to have a ceiling fan in the 

kitchen or the bedroom or out on the back porch if it is a covered 

porch. So has your organization taken a position on the DOE regulatory framework on ceiling fans? 

Mr. NADEL. In general, as I replied to Ms. Schakowsky, we do 

support the efficiency standards program and particularly making 

sure that any new standards are technologically feasible and economically justified. On ceiling fans, that provision, as I recall, was 

enacted by Congress in 2005. 

Mrs. BLACKBURN. That is correct. 

Mr. NADEL. And yes, we supported that standard, and I believe 

that they are now reviewing that standard and trying to decide 

what, if any changes, may make sense. We plan to participate in 

that process. 

Mrs. BLACKBURN. OK. Let me ask you this. Do you think DOE 

should be in the business of mandating the efficient products or 

should they allow consumers the choice of choosing energy-saving 

products that are going to fit their needs? 

Mr. NADEL. Right. The minimum standards remove the least-efficient products from the market. They help address some of the 

market barriers but then give consumers many, many choices. As 

I mentioned before, they tend to actually improve consumer choice 

rather than decrease consumer choice. 

Mrs. BLACKBURN. Well, and see, I think that we should be encouraging consumers in doing things to open up that environment 

and not making it more expensive and more difficult. Ceiling fans 

are one of those things that are in the market that can help people 

reduce their energy use. Sometimes I look at this and I think that 

burdening the ceiling-fan manufacturers with increased regulations 

prices a lot of people out of that market, and then increases their 

reliance on cooling systems. Am I wrong about that? 

Mr. NADEL. We did not specifically look at ceiling fans, but for 

many of the products, the prices have actually declined with standards, not increased. So if we can have a win-win, I think it is 

67 

worthwhile. But again, we have not specifically looked at ceiling 

fans. 

Mrs. BLACKBURN. Well, see, and we need more win-wins. We 

need less regulation and more options and the ability of individuals 

to get into that marketplace. 

Mr. Stevens, I want to come to you. Mr. Judson sitting over there 

next to you mentioned that there had been a number of news articles about rising building material prices, and he also mentioned 

that there have been recent declines in wood prices and that his 

has been a positive development. So is this a trend we can expect 

to continue going forward, and can you confirm that this is a result 

of expanded production based on confidence that the recovery is 

real and justifies a return to higher levels of capacity and output? 

Mr. STEVENS. Our building products that we produce are generally commodities, and a commodity product is, by its nature, a 

decision between a supplier and a buyer on what that price will be. 

So let me just use oriented stand board as an example, or OSB. At 

the end of December, that price was $360 per thousand square feet, 

roughly. In the first quarter, it rose to $430 because there was 

more demand than there was immediate suppliers and so buyers 

and sellers arrived at a higher price. In the last 6 weeks, that price 

has fallen below $300. So you see that there is a wide range of pricing in these commodity products, and that will continue. It will be 

local supply-and-demand considerations. It will be production coming online or production coming offline. It will also be very contingent upon weather and other conditions for building. So it is both 

the demand and the supply side of that. 

I can speak directly to what LP has done. We made a decision 

in October to bring on a new plant in Alabama that we built for 

a cost of $240 million and ran it for 6 weeks. Then the housing 

market declined and we shut that plant down for 5 years. That 

took us about 9 months and over $10 million in capital to bring 

that plant online. We also announced last month that we are bringing on a plant in British Columbia to support the western United 

States in building products. So we are bringing on capacity at our 

plants to meet what we expect to be continued demand for building 

products. 

Mrs. BLACKBURN. Thank you. Mr. Chairman, I will submit in 

writing a question for Mr. Martin that I had, and I yield back. 

Mr. TERRY. Thank you. The chair recognizes now the gentleman 

from Utah. You are recognized for 5 minutes. 

Mr. MATHESON. Well, thank you, Chairman Terry. I appreciate 

that, and I appreciated the witnesses being here today. 

Mr. Judson, I had a question for you about the issue of the home 

building industry’s challenges it faces in the credit area, specifically for your AD&C loans, your acquisition, development and construction loans. Could you please talk to me about how those loans 

are used and the challenges that your industry is facing with those 

loans? 

Mr. JUDSON. A builder will usually apply to a lending institution 

to borrow funds to build a home for you, and under the current climate and what has existed for the past several years, the builder 

cannot get that loan to build a home. Even more difficult is the 

ability to get what is called a speculative loan where a builder 

68 

would build a model home or a home for sale waiting for the buyer 

to come along and buy the home. That is driven by the regulatory 

in-fighting that is taking place between the regulating agencies and 

the lending institutions themselves. Each blames the other person 

for it. The lenders say that the regulators are over-regulating and 

the regulators say that the banks are not properly underwriting 

their loans. So it is a catch-22 and caught in the middle is first the 

building and secondly the homeowner, who then can’t get a home 

built. Now, if by some miracle the builder can build the home, then 

the difficulty lies in being able to get that home financed, which 

includes the lender willing to make the loan underwritten, which 

was not in the case in the past. They were not properly underwritten. Loans today are properly underwritten. You can look at 

the GSEs, you can look at every single bank. They are making 

money because they are properly underwriting their loans. So it is 

important for us as builders to be able to have access to financing 

to be able to build the homes, the houses for people who want to 

buy the homes. 

Mr. MATHESON. And would suggest there may be some role that 

Congress could play in trying to clarify this regulatory uncertainty 

that you were describing earlier? 

Mr. JUDSON. Yes. Thank you. There were two bills that have 

been presented, one on the House side and one on the Senate side, 

that address the specificity of what a regulatory responsibility 

should be. It clarifies some of the capital requirements that should 

have and could have to make qualified loans to the consumer or the 

builder, but the congressional responsibility, I think, lies in their 

ability to more directly engage the regulatory arena in what their 

real responsibilities and authorities are. 

Mr. MATHESON. OK. I appreciate that. 

Mr. JUDSON. Thank you. 

Mr. MATHESON. Mr. Stevens, you mentioned in your testimony 

the challenge of the government policies that are picking winners 

and losers, and you specifically mentioned the renewable fuel 

standards mandate for biomass fuels as a policy that could hurt the 

long-term sustainability of forests. Can you expand on that and explain how the RFS could hurt not only forest sustainability but also 

users of forest resources and products? 

Mr. STEVENS. It all comes back to the proposed subsidies for renewable fuels. As an industry, for over 200 years the forest products industry has used trees for their primary raw material and to 

produce the energy to run their plants. For LP, an average OSB 

plant will produce 95 percent of the energy from the wood waste 

from our products. What we want is just a level playing field. We 

don’t want any subsidies. We want to play based on the economics 

of the use of that wood and to be fair across the board. 

Mr. MATHESON. OK. I appreciate that. Mr. Chairman, I will yield 

back. 

Mr. TERRY. Thank you. I am out of order but I have the gavel. 

It was interesting, a person that came to talk to me about the 

wood product industry and how they are producing solely to send 

woody biomass to Europe to meet their renewable standards, so it 

is not lumber that is being used in the United States but being 

milled and sent overseas. I thought that was interesting. 

69 

I now recognize the vice chairman of the subcommittee, Mr. 

Lance, for your 5 minutes. 

Mr. LANCE. Thank you, Mr. Chairman. Good morning to you all. 

In my home State of New Jersey, builders are reporting a surge 

in unit construction over last year’s figures, I believe 22,000 new 

units this year. This is good news. Data released by the National 

Association of Realtors shows growth in the State’s median residential real estate prices with multi-family construction growing the 

fastest. This is a first since the peak of the housing boom roughly 

a decade ago. 

Of course, the market in New Jersey remains heavily affected by 

Hurricane Sandy, and the lasting impact will be felt for quite some 

time as the shore region of our State continues to rebuild. The 

storm did, however, spur much-needed new construction and renovations, boosting the lumber, plumbing and electric industries in 

these areas. 

To Mr. Judson following up on what you had stated previously, 

what do you think we can do best to untangle the tangle that exists 

between those who wish to build and the fact that there seems to 

be a reluctance on the part of those who lend money to lend the 

appropriate amount of money? Before my service on this committee, I did serve on the Financial Services Committee, and this 

is a continuing issue both on that committee and on this committee. We have had repeated testimony that banks are not lending 

appropriately. 

Mr. JUDSON. I testified before that committee, as you probably 

know. 

Mr. LANCE. Yes, sir. 

Mr. JUDSON. If I had the answers, I would have told you then. 

Mr. LANCE. Yes, sir. 

Mr. JUDSON. But I am learning as this goes along—— 

Mr. LANCE. As are we. 

Mr. JUDSON [continuing]. It is an unfolding issue. I would go 

back to the specificity and the clear underwriting requirements for 

lenders. The banks had a knee-jerk reaction. I think this whole scenario was much of a knee jerk because of the dilemma that started 

several years ago with foreclosures and poorly underwritten loans. 

So it would start, I think, with a direction from Congress, Financial 

Services to the regulatory environment, working with lenders to 

support the home building industry, allowing them more latitude 

on the capitalization rates that they have. These have been suggestions that are current written into law have been taken as mandates that you cannot go over certain limits, whereas the community banks are now being literally put out of business from the construction lending standpoint. 

Mr. LANCE. The community banks had absolutely nothing to do 

with the financial meltdown, as you know better than I. They were 

good actors in this whole process, and from my perspective, they 

are scared to death by over-regulation here in Washington, especially after the passage of Dodd-Frank, for which I certainly did not 

vote. But be that as it may, we all want a better environment so 

that the American people can purchase the new residential real estate, and there is a pent-up demand in my judgment, and we are 

discouraged because we feel that is important for the progress of 

70 

the economics of the Nation that this occur. Do you believe that we 

should revisit statutory law or simply require the agencies that administer current statutory law to do a better job? 

Mr. JUDSON. That is a good question. It is probably some of both. 

The statutory guidelines could be specifically identified to address 

some of the concerns. I keep going back to the capitalization. But 

the willingness, almost encouragement, we spoke with Mr. 

Bernanke a couple of times and his term of the pendulum having 

swung too far I think is an accurate term. 

Mr. LANCE. Yes, sir. Thank you. Are there others on the panel 

who wish to address the issue I have raised? Hearing none, I yield 

back the 40 seconds I have, Mr. Chairman. 

Mr. TERRY. Very good. The chair recognizes the gentleman from 

California, Mr. McNerney, for 5 minutes. 

Mr. MCNERNEY. Well, thank you, Mr. Chairman. My daddy was 

a home builder, so I appreciate the work that you all do, and I appreciate also how important home building is to our national economy not only in terms of employment but in terms of just giving 

people confidence in the economy and their spending and so on, so 

thank you for coming this morning. Thank you for passion. 

I understand about 40 percent of our Nation’s energy is used by 

buildings. Of course, part of that is by commercial buildings and 

part of that is by home buildings, but I am very interested in energy-efficiency housing. So I would like to address my first question 

to Mr. Nadel. How much specialized training is required by the 

workers to produce high-efficiency, even net-zero housing as opposed to what would be required in terms of the building materials 

to accomplish those goals? 

Mr. NADEL. It will vary depending on the technique employed 

but generally it will require some extra training in terms of a very 

careful installation to prevent air leakage and whatnot, how to install some of the new materials, but it is not dramatic. There are 

usually short training courses available to help people get certified 

in doing these types of techniques. 

Mr. MCNERNEY. Well, how much does it cost, say, to build a netzero home compared to a standard home? 

Mr. NADEL. I don’t recall for a net-zero home. For a home—— 

Mr. MCNERNEY. For a high-efficiency home. 

Mr. NADEL. For a high-efficiency home that uses half the energy of a typical new home, the estimates range anywhere from $1,000 

to $4,000 or $5,000, depending on the type of home and who does 

the estimate, but these are for homes that cost hundreds of thousands of dollars. 

Mr. MCNERNEY. That sounds like a pretty good bargain. Does 

anyone else care to address the question that I posed about training requirements? 

Mr. KUBAT. This could be just a little different spin on it, Congressman, but a comment that maybe goes back a little bit to Ms. 

Blackburn too, but I had talked about over-regulation and the difference in regulation. In our manufacturing plant, which is a little 

bit different than residential, there is an OSHA standard for air 

quality. In the State of Ohio, the Ohio EPA also has a standard for 

air quality, and I don’t know if the Ohio EPA standard is based off 

of a federal EPA standard but it is significantly less than the 

71 

OSHA EPA standard. So our plant more than meets the OSHA 

EPA standard but did not meet the Ohio EPA standard, and as a 

result of that, the Ohio EPA, I am going to use the word ‘‘mandated’’, which could be a little strong because there wasn’t another 

solution that was—and a waiver was not available—that we are expelling in the winter time about 20 percent of the heated air in 

that plant out of the plant just out stacks into the atmosphere to 

meet the air standard of the Ohio EPA, and I think this question 

of, you know, where is the regulatory balance, how do we get to an 

OSHA standard that says we have also met versus an EPA standard, and I am going to call it Ohio EPA standard that we are not 

meeting, and the solution is take 20 percent of your heat out of 

your plant and—— 

Mr. MCNERNEY. Mr. Kubat, I appreciate your concern. Do you 

have legislative suggestions to alleviate this burden that would 

also ensure safety and quality of the product? Do you have any specific suggestions or are you just saying the regulations are bad? 

Mr. KUBAT. I am not an engineer. I can’t understand why there 

is an OSHA standard that we can meet and an Ohio standard that 

says it has to be significantly more, I am going to say more restrictive, and why is one so different than the other? I am not an engineer that can answer it other than they told me the answer is take 

20 percent of the hot air out of your plant and blow it out into the 

sky. 

Mr. MCNERNEY. Well, I appreciate your concern. Perhaps some 

legislative suggestions would be more helpful than just saying that 

you don’t like the current regime. Is Phillips Manufacturing producing energy-efficient components for new housing? 

Mr. KUBAT. The materials that we produce are used as part of 

building construction. They are not necessarily a direct energy-efficient component. It is raw form metal steel, and steel itself is not 

an item which would create an insulation or an energy barrier. 

Mr. MCNERNEY. Thank you. Mr. Martin, you mentioned the difficulty finding labor. You know, given the high unemployment in 

the last few years, do you have any way to explain why we are still 

having labor shortages in specific areas? 

Mr. MARTIN. Well, in Texas specifically, the unemployment is 

down mainly because of the energy sector and the two big oil plays, 

Eagle Ford shale and the Mill and Odessa play. So in Texas, we 

have a real problem because the oil industry is paying so much for 

their workers that they are leaving construction and going into energy. So that is our problem. 

Mr. MCNERNEY. At least locally? 

Mr. MARTIN. Yes. 

Mr. MCNERNEY. Thank you, Mr. Chairman. I will yield back. 

Mr. TERRY. Thank you, Jerry. And now I will recognize the gentleman from Texas, Mr. Olson, for 5 minutes. 

Mr. OLSON. I thank the chair, and welcome to our panelists. As 

you know, this is the Subcommittee on Commerce, Manufacturing, 

and Trade, CMT. I assume I am speaking for Mr. Martin, we 

should change that to mean Come Move to Texas. 

Mr. TERRY. I object. 

Mr. OLSON. I have a question for all of you if I have time, but 

first of all, I would like answers from Mr. Martin and Mr. Judson. 

72 

Clearly, I know I am blessed living in Texas 22. Right now, at least 

100 new homes are being built within 2 miles of my home in Sugar 

Land, Texas. The sounds of cement trucks, of hammers hitting 

nails at 7:00 in the morning are commonplace. But that growth we 

are experiencing in Texas is threatened by a shortage of labor. I 

know it is hard to find qualified workers. Mr. Martin mentioned 

unskilled workers such as framers, flooring personnel, HVAC, 

plumbers, painters, bricklayers, and the lure of the high-paying, 

low-skilled construction jobs is long gone. When I was growing up 

in the 1980s an 18-year-old, I could not get a construction job, and 

I craved a construction job. Those jobs paid six-plus dollars an hour 

compared to working minimum wage in some restaurant for just a 

little over two bucks and change. I mean, I wanted to get in that 

hot, boiling Texas sun with that asphalt, spread that wherever that 

needed to go because I am getting paid six bucks an hour. I love 

my 13-year-old son but his generation won’t make that choice. The 

work is too tough. I know that immigration reform is part of the 

solution but we have proven we can’t tailor our economic needs 

with our immigration policies. Somehow we have to get American 

kids interested in these jobs again. 

So my question is, what can we do to encourage our youth to get 

involved in these jobs again started in the high school and community colleges? What can we do? Mr. Martin, you are first up, sir. 

Mr. MARTIN. As I said earlier, right now on Governor Perry’s 

desk is H.B. 5, which is reforming our school system to allow for 

vocational training, and I think that will go a long way to start 

helping. The problem is, as I said earlier, right now the average 

age for a plumber, electrician, HVAC technician is in the upper 

50s, so they are getting closer to retirement age and there is this 

huge gap of the skilled workforce that we are going to have contending with as we try to bring these young high school kids and 

right-out-of-high-school kids up into the trades and get them 

trained so they can make a good living despite the lure of the oil 

and gas industry, but I think you have got to start this vocational 

training that we have in Texas had for 10 years. 

Mr. OLSON. Yes, and growing up, I took shop, wood shop, in 8th 

grade. Now seniors in high school is the first chance you have to 

take wood shop. Look, I have got all 10 fingers. It was safe. I 

learned a lot. 

Mr. Judson, a national perspective. What can we do to get kids 

excited about these jobs again, get Americans working in the construction industry? 

Mr. JUDSON. The educational training is the key, whether it be 

through the Home Builder Institute—I mentioned earlier about the 

deglamorization that has taken place for this industry. Kids coming 

out of high school do not want to go into the construction industry. 

It is a respected trade. It has been for years when we were coming 

up and working in the construction trade industry. It is now perceived that way now. I think there is a perception in the industry 

and some things that we as an industry need to do to indicate that 

it is a respected trade and it can be an industry that will foster 

from a beginning as a bricklayer to running a bricklaying crew. If 

our average member has 10 or so employees, that is a painting 

crew, that is a drywall crew, but until the high school student recVerDate Nov 24 2008 12:19 Feb 02, 2015 Jkt 037690 PO 00000 Frm 00078 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-49 CHRIS
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ognizes that is an opportunity for him to advance himself in his 

own career, it won’t happen. 

Mr. OLSON. And Mr. Kubat from Phillips Manufacturing perspective, running out of time but what can we do to encourage our kids 

to get that education? 

Mr. KUBAT. Well, I am going to go back to my prepared comments. I think it is a question that somewhere over time, however 

it was generated, the educational system has encouraged everyone 

to prepare for a college education, and not all people should be 

going to college. Some people have natural skills. Some people are 

born musicians, some people maybe have math skills. Maybe some 

people are born to be a doctor. But there are a lot of people that 

are born to be plumbers, electricians, I am going to call it tool-anddie craftsmen, but there is no opportunity for them to get trained, 

least in the experiences that we are seeing in the States that we 

operate in, either in the high school or the community colleges, and 

somehow we have to get that back into the system so that they see 

that these opportunities are there, and the level of unemployment 

we have now compared to the jobs that are available are simply 

people who do not have the skills or a place to go for training other 

than on-the-job training or employer-provided training to learn 

these trades. We have got to get it back to where it comes in at 

a much younger level. I am going to go back, and as you referred 

to, Congressman, as the shop classes that started in the high 

schools and then were continued in the community colleges and 

network those with manufacturers and contractors so that they can 

get credit while they work out on the job. Most of us learned a lot 

of what we learned not necessarily in school but on-the-job training 

when we got out of school, whether that was part of what we are 

doing in white-collar work or what people were doing in blue-collar 

work. Somehow we have got to get businesses, contractors to interact with the schools and get people back into training that will provide them a long-term skill and a long-term opportunity for compensation and retirement. 

Mr. OLSON. I am way over my time so I yield back, Mr. Chairman. Mr. Stevens, Mr. Bozzuto and Mr. Nadel, I will get you those 

questions for the record. Thank you, Mr. Chairman. 

Mr. TERRY. All right. Mr. McKinley, you are recognized for 5 

minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman. And Mr. Nadel, 

thank you very much for talking about our Energy Savings Act. I 

hope that we will get adequate consideration and we will get that 

bill worked. 

But perhaps my remarks should have been in an opening statement but I come from the construction industry. I started in construction in 1965, and I had a home building company over 40 

years ago I started that, so I come with some degree of awareness 

of what we are talking about here. But the concern I have not 

heard voiced strongly enough, maybe it is not your fault but I want 

to hear some direction. How are we going to get affordable housing 

for middle-class Americans and low-paid people across this country? I am looking for something in the $125,000 to $175,000 range. 

How are we going to achieve that in new homes or are we going 

to tell our American citizens they are not entitled to a new home, 

74 

they have to buy an older home and renovate it? I am really curious about where we are going as a country when we are dividing 

our major urban centers against rural America, and rural America 

cannot afford $300,000 and $400,000 homes when they are on an 

income that may be only $40,000 a year. So I am really curious. 

I hear the issues that you are talking about and I have experienced 

as a contractor, an engineer, an architect. I understand all those 

aspects. But I want to see from the other perspective, what are we 

doing for the people to give them homes that they can afford. Yes, 

sir. 

Mr. BOZZUTO. Mr. McKinley, I think perhaps we haven’t been as 

clear. When we object to regulation or express concerns about regulation, there is an unstated bias behind that, which is that our goal 

is to provide in the apartment industry is clearly the most affordable form of housing that can be built, but every time a regulation 

is mandated, no matter how meritorious, there is a cost implication 

that we end up having to put on, and this tradeoff that you have 

so appropriately pointed out is the one that is a struggle for us all 

of us in our industry. None of us want to see energy consumed unwisely. None of us want to design buildings that are not accessible 

to everyone. And yet every time a new law or regulation is enacted, 

whether at the federal level, the local level or the State level, or 

all together, it adds to the costs, making it more difficult for our 

industry to make housing affordable. 

Mr. MCKINLEY. Are there responses from some of the others as 

to how we might be able to achieve more affordable housing? I really don’t want to get a point that we tell middle-class America they 

are not entitled to a new home, they can’t afford one, they have to 

buy an older home and fix it up. I think everyone in America, I 

would love to see them be able to reach out so that they can have 

a new home. I can remember the first home I built was affordable 

housing, $30,125. People could afford that. Yes, sir? 

Mr. JUDSON. I would echo Mr. Bozzuto’s comments about regulation. It accounts for somewhere between 18 and 20 percent of the 

cost of a home, and that is not to say that all regulation is bad or 

that all codes are bad because they certainly are not. We support 

things from quality and safety to the energy efficiency but there is 

a point of diminishing return on all those components. We think a 

commonsense approach needs to be taken. We think that the bureaucrat regulators, and I say that with all due affection, need to 

use some common sense when you are adding, 10, 15, 20 percent 

to a house and it is not a function of soundness or safety and 

maybe it is not as necessary as what you might think. You have 

got 20 percent to the cost of the land. If there were some leniencies 

allowed for affordable housing when you are developing a piece of 

property and you could do it for half of that cost, you have cut 10 

percent out of the cost of the production of that house. So there are 

a lot of small components that could go into reducing that $130,000 

house to $100,000 if that is what you had the cooperation in generating. 

Mr. TERRY. All right. The gentleman’s time is expired. The chair 

recognizes Mr. Johnson from Ohio. 

Mr. JOHNSON. Thank you, Mr. Chairman. I associate myself with 

the comments that some of my other colleagues have made. The 

75 

American dream for millions of Americans is embodied in the idea 

of owning their own home, of finally putting a stake in the ground 

and saying this is my domain, this is my family, this is where we 

are going to plant our roots. And so this hearing that showcases 

the importance of the housing and rental market I think is extremely important to the American people. There is no doubt that 

the housing market is one of the main drivers of our economy, one 

of the main indicators as to the health of our economy as a whole, 

and we should do everything in our power to help not only these 

gentlemen and their companies sitting at this table but those all 

over the country have the resources and the ability, the tools that 

they need to help the millions of Americans find housing, build 

that home, enjoy the American dream and at the same time create 

the millions of jobs that are in the waiting. 

My first question is for Mr. Judson. There have been a number 

of articulates lately talking about rising building-material costs. 

What obstacles are builders facing in terms of obtaining necessary 

building materials to complete their projects? 

Mr. JUDSON. It is unfortunately a supply-demand scenario that 

is not uncommon. As was pointed out by Mr. Stevens, they had 

shuttered plants. The productive capacity has been diminished, and 

now that the industry is picking up again, it is a catch-up between 

building materials and the price but the prices escalate so dramatically as would be expected. It is not a price-gouging issue, it is just 

a supply-demand agreement between buyer and seller. But as was 

pointed out, if plants are operating more efficiently, if they can be 

brought on a little quicker, we can minimize the peaks and valleys 

in those cycles. 

Mr. JOHNSON. Are there any actions that you think Congress 

should take to try to help resolve that problem? 

Mr. JUDSON. From what I have heard today and what I have 

heard around the industry as I travel in the country is, the regulation for starting back up some of these plants is different than it 

might have been when those plants were built 5 years ago. So to 

have to operate to a new standard creates some hardship for them 

financially and creates some time delays in bringing that product 

back online. 

Mr. JOHNSON. Now you are talking about regulatory reform 

again. 

Mr. JUDSON. Yes, sir, I am. 

Mr. JOHNSON. And I agree with you. I am not saying that in a 

negative way. I agree with you. Every time a new regulation comes 

out that stymies the industry, that puts a plant out of business, 

even a new owner that might come in and try to start that back 

up, it takes more money, more time. You lose a lot of the intellectual property of the workforce, and it is a problem. 

What about on the soft side, the money side? I hear another common concern from home builders, realtors and potential home buyers the inability of obtaining loans and financing. Now, we all know 

that there was a serious problem in the last decade of predatory 

loan making and people taking out loans for which they simply 

could not meet their obligations. However, it now seems that perhaps Congress and federal regulators have overcorrected these mistakes and are stopping qualified home buyers from obtaining the 

76 

funds they need. You addressed this in your testimony as well as 

your opinion that the issue is ripe for Congressional action. Can 

you talk a little bit more about that? What do you think we ought 

to do? 

Mr. JUDSON. Well, the two bills that have been introduced already are solid bills. They have bipartisan support, and I don’t recall off the top, but I think it is Senate Bill 1002 and maybe the 

House 1255, but they both are pragmatic, they are both logical in 

their approach and again, as I mentioned, they are bipartisan. I 

think if there is lending available to the builders, then the houses 

can be built at a more affordable cost because builders now are 

paying almost a usurious rate for funding, to get funding. They are 

not getting it through the lending institutions that we traditionally 

were afforded. 

Mr. JOHNSON. One more quick question in my remaining time. 

What would the Wood MACT rule, the EPA’s proposed Wood 

MACT rule, how that would affect you folks? Mr. Stevens? 

Mr. STEVENS. In my testimony, what I said is, the current version of the Wood MACT would cost LP about $13 million with 

really no improvement in technology or in productivity. 

Mr. JOHNSON. And basically that is going to cost jobs, that is 

going to cost passing on costs to your customers. I mean, that 

money doesn’t come out of thin air, right? 

Mr. STEVENS. It is going to increase—not only do we have a $13 

million capital expenditure but also increase our use of natural gas. 

Mr. JOHNSON. Mr. Chairman, thank you. I yield back. 

Mr. TERRY. Thank you. The gentleman’s time is expired. Now the 

gentleman from Florida is recognized for 5 minutes. 

Mr. BILIRAKIS. Thank you, Mr. Chairman. I appreciate it very 

much, and I thank the panel for their testimony, and this question 

actually goes to the entire panel, whoever would like to respond. 

In recent months, sales of single-family homes in the Tampa Bay 

area, St. Petersburg, Clearwater and Tampa, that area, have risen 

by more than 17 percent. Throughout the entire State of Florida, 

sales have been up by almost 10 percent. While this is good news, 

many analysts have suggested that most of these sales are being 

made to cash investors, and I see that as well. To what extent does 

new home construction follow the trends in the larger real estate 

market? Who would like to go first? 

Mr. JUDSON. I will be glad to start. We go back to that supplydemand scenario. Florida was the epicenter of foreclosure, so the 

people are going in now to gobble up these houses and pay cash 

for them, many times from an investor standpoint. But as that supply diminishes, you are going to see new construction follow suit 

because you still have that pent-up demand. More families are 

being created. About 40 percent of the homes sold in this country 

are first-time buyers. So as those people are beginning to go into 

the market to look for homes and there is nothing available, new 

homes will be built, and if financing is available, not only for the 

construction process but for their permanent financing, then the 

economy will start again. 

Mr. BILIRAKIS. Very good. Anyone else? Thank you very much. 

Next question. This is for Mr. Bozzuto. You urged Congress to insist that any new rules from HUD or EPA or DOE have demonVerDate Nov 24 2008 12:19 Feb 02, 2015 Jkt 037690 PO 00000 Frm 00082 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-49 CHRIS
77 

strable benefits that justify the costs of compliance. Can you identify any current or proposed rules that do not meet that standard 

in your eyes? 

Mr. BOZZUTO. Well, I guess I will cite a recent HUD rule where 

HUD has changed the lending limits and requiring that on larger 

loans, the amount of equity that is required from the developer has 

to be significantly different, greater than it had been previously, 

yet this change was done absent any experience with loans of that 

nature having gotten in trouble. So it is the kind of thing that has 

major impacts on the industry, particularly if one was in the middle of the process. I suspect if I had 24 hours I probably could come 

up with 100 examples of rules and regulations that are in the nature of having been imposed because they were good ideas but not 

having any real benefit economically that justifies the costs associated with them. 

Mr. BILIRAKIS. Thank you. Anyone else want to jump in? Well, 

thank you very much, Mr. Chairman. I appreciate it. I yield back 

my time. 

Mr. TERRY. Thank you, Mr. Bilirakis. Now, Mr. Bozzuto, you 

don’t have a question because we are done, but one of the things 

that we get to do as Members of Congress is to submit questions 

to you to answer. Mr. Nadel, you didn’t have an opportunity to provide additional comments when we were talking about energy efficiency. You can guarantee I will submit a question, so you can provide that answer. Mr. Bozzuto, we will probably ask you a question 

giving you that opportunity to those list hundred examples. You 

may not have to be 100 but some good examples. Thank you. 

And for those folks that we submit a written question to you, we 

would appreciate a timely answer. Timely would be within a few 

days for me, for some folks it could be 6 months but I prefer a week 

or two, OK? I would appreciate the timely answer. You guys were 

excellent. All of you provided us good insight on a variety of different topics, and you are now excused. We are going to take a couple of minutes while we switch panels here, and you will see some 

work on our microphones. We have learned in our backroom, they 

couldn’t hear the witnesses. So we are going to see why that is occurring. So thank you all. You are dismissed. 

Again, I will ask unanimous consent to let Mr. Welch speak for 

1 minute. Hearing none, you are recognized. The gentleman from 

Vermont is recognized. 

Mr. WELCH. First of all, I thank the chairman, but I want to reassure the panel that you will be treated much better than I was 

when I arrived. 

I want to thank everybody for coming but I especially want to 

thank Ludy Biddle from NeighborWorks, who has been doing this 

incredible job in Vermont getting energy efficiency out into the 

remotest parts of a rural county and an old urban city, a city we 

are very proud of, Rutland, and the thing that has been so exciting, 

Ludy, to watch your work was, it is regular people getting out and 

making direct contact with homeowners and wading through all 

the challenges, financial and practical, that they face to make that 

decision to retrofit their homes. 

Mr. Chairman, I was down one time visiting some homes that 

they have worked on but then I went into this class where there 

78 

were all these folks who were laid out because of the housing collapse. This was a few years ago. And they were learning about how 

they could use their skills to do something in their neighborhood 

to save their neighbors money and get them back earning cash. So 

it has been so tremendous to see the implementation of an idea. 

You know, we talk a lot around here but you all do get things done, 

and we really appreciate it. So thank you so much for being very 

proud and I am very proud of all the work that you and your team 

have accomplished. 

Mr. TERRY. Thank you, Mr. Welch. Now the rest of you probably 

won’t have as glaring an introduction as glowing as that one was, 

but Ms. Biddle, you deserve that, especially as being our only 

woman panelist today, so I appreciate you being here. 

So by introductions, I am going to go down as I did before, and 

when you start to speak and are recognized, I will give you your 

introduction, so Mr. Robinson, Buddy, is Senior Vice President, 

General Counsel and Corporate Secretary for Kohler Company, 

who I think we have a few of your products in our house. 

Mr. ROBINSON. I am glad to hear it. 

Mr. TERRY. And so you are now recognized for 5 minutes. 

STATEMENTS OF JAMES M. ‘‘BUDDY’’ ROBINSON, IV, SENIOR 

VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE 

SECRETARY, KOHLER COMPANY; WILLIAM SHAW, FOUNDER, 

WILLIAM SHAW AND ASSOCIATES; MARK WILHELMS, VICE 

PRESIDENT OF ARCHITECTURAL SALES, MIDWEST BRICK 

AND BLOCK; LUDY BIDDLE, EXECUTIVE DIRECTOR, 

NEIGHBORWORKS OF WESTERN VERMONT; AND BRIAN 

BOVIO, OPERATIONS MANAGER, BOVIO ADVANCED COMFORT AND ENERGY SOLUTIONS 

STATEMENT OF JAMES M. ROBINSON, IV 

Mr. ROBINSON. Thank you, Mr. Chairman and members of the 

subcommittee. I am Buddy Robinson, I am with Kohler Company, 

and I thank you for the opportunity to present Kohler Company’s 

perspective on the current housing situation in the United States 

and prospects for its future. 

Although housing starts may exceed a million for 2013, no one 

in the industry would claim this is a robust market by historic 

standards. It is well below the 2 million starts we experienced in 

2005 but, thankfully, it is appreciably above the 500,000 starts at 

the bottom in 2009. 

Kohler Company has played an important role in housing for 

more than a century. We will celebrate actually our 140th anniversary later this year. John Michael Kohler, an Austrian immigrant, 

came to Wisconsin, bought a farm implements company making 

cast-iron and steel implements in 1873. He took a product out his 

line, heated it up to 1,700 degrees Fahrenheit. He put a bunch of 

enamel frit on it and he took a picture, he put in his catalog and 

he said of the product, it would work as a horse trough or hog 

scalder, that when furnished with four legs will serve as a bathtub, 

and thus Kohler got into the bath business. 

So Kohler ideas, craftsmanship and technology are at work all 

around the world. We currently have four corporate groups: kitchen 

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and bath, power, interiors and hospitality. We employ more than 

30,000 associates. We have operations including more than 50 

manufacturing facilities and we sell our products literally on every 

continent. 

Generally speaking, Kohler Company is bullish on the prospects 

for continued recovery and growth in the housing market. However, 

there are a number of economic obstacles and federal policies confronting America that could detail our rosy outlook. I will turn to 

a few of those now. 

First, home buyers and remodelers need access to affordable financing. Simply put, we need policies that encourage private institutions to participate in the home finance market. We need clarity 

in rules and regulations surrounding lending standards. We need 

consistent regulation and certification of appraisers and a greater 

general sensitivity in Washington toward burdensome processes 

that add time and cost without meaningful benefit to the mortgage 

finance market. 

Secondly, we need national water-use standards based on 

science. Patchwork regulations applied selectively create unreasonable burdens on enterprises and they virtually guarantee a race to 

the lowest water usage levels regardless of good science or maximum efficiency. Kohler wholeheartedly supports the EPA Water 

Sense program. This is a public-private partnership promoting 

water efficiency, and it is working well. It deserves congressional 

funding. EPA reports that Water Sense-labeled products have 

helped Americans save $287 billion gallons of water. That is $4.7 

billion in water and energy bills, you know, avoided. And we are 

proud to have been named EPA Water Sense Manufacturing Partner of the Year three times since the program was launched in 

2008 including this past year in 2012. 

Thirdly, we need policies that build the skilled and unskilled 

workforce. Kohler Company supports the intent of the comprehensive immigration reform pending in the Senate. It is overdue. As 

we face growing shortages in plumbers and other skilled trades, 

government should be doing what it can to support vocational and 

trade schools as well as supporting qualified apprenticeship programs. Furthermore, we need to offer work visas to all who graduate from U.S. colleges and universities, particularly those with 

science and engineering degrees. 

And finally, there needs to be greater sensitivity in government 

to rules and regulations that drive up manufacturing costs. Often 

we do not have sufficient lead time to prepare for oncoming regulations. In other cases, good science is missing and decisions are 

based on faulty or incomplete studies. In still other instances, contradictions occur between and among federal agencies that share 

regulatory responsibilities. 

So in conclusion, housing has pulled the U.S. economy out of 

every recession since the Great Depression. It remains critically 

important that governments at all levels help create and support 

an environment conducive to home building. Kohler Company’s 

success illustrates what industrious immigrants can accomplish 

through the free enterprise system and a healthy housing sector. 

I thank you for this opportunity and look forward to your questions. 

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[The prepared statement of Mr. Robinson follows:] 

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Mr. TERRY. Thank you for your testimony. 

Now, Mr. Shaw, you are the founder of William Shaw and Associates, and we look forward to your testimony. 

STATEMENT OF WILLIAM SHAW 

Mr. SHAW. Thank you. I appreciate the opportunity to testify this 

morning, Chairman Terry and members of the panel. My name is 

Bill Shaw. I am the founder of William Shaw and Associates. We 

are a design-build-remodeling company located in the great State 

of Houston, Texas. 

Few industries have struggled more during the Great Recession 

than the home building industry. While remodelers have not experienced the extreme highs and lows like single-family home building, the remodeling industry has struggled over the last few years. 

However, predictions indicate a very gradual yet steady recovery. 

Fortunately, predictions—remodeling is an industry right now that 

is heavily regulated, and given the regulatory environment we face 

as an industry and as small businesses, I would like to share with 

you my thoughts on some key regulations that could hamper our 

recovery. 

Recent amendments and changes to EPA’s Lead Renovation, Repair, and Painting rule are already constraining our businesses. 

The final rule, which took effect over 3 years ago, requires renovation work that disturbs more than 6 square feet in a home built 

prior to 1978 to follow the new Lead Safe Work Practices. Poor implementation of the rule by the EPA has resulted in considerable 

compliance costs and his hindered both growth and energy efficiency upgrades in older homes. The first important change to the 

RRP was the elimination of a consumer’s ability to waive compliance if no children under 6 or a pregnant woman resides in the 

home, also known as the opt-out provision. This change dismantled 

everything EPA originally included in the rule to ensure that it 

was not overly costly to small businesses. For small contractors, 

these additional costs have to be passed on to the consumer, which 

increases the chances that the consumer will hire another likely 

uncertified contractor do the work or, what we are finding a lot in 

Houston, they are going to do the work themselves, which may increase the likelihood of disturbing lead-based paint. 

The 2008 RRP also relied on a new lead test kit. The EPA expected the more accurate test kit to be commercially available by 

the time the rule went into effect. Three years later, we still don’t 

have a new test kit, and the old test kids can produce up to a 60 

percent false positives, meaning that in many cases, consumers are 

needlessly paying additional compliance costs. We believe the EPA 

should reopen the rule and redo their cost-benefit analysis. 

Another challenge we face is with green remodeling. The green 

remodeling trend is growing quickly, and I myself am a certified 

green professional. But one of the major barriers to investing in 

green construction is that appraisals often do not reflect the increase in construction costs or the value of future energy savings. 

If my customers cannot realize this value, they won’t seek green 

upgrades. Voluntary green building rating systems, though, have 

helped demystify the value of green. While there are many in the 

market, the ANCI-approved ICC 7000 national green building 

99 

standard is widely used in residential construction. This standard 

focuses on energy efficiency, water and resource conservation, and 

more. There are minimal requirements in each of these categories. 

It also features an entire section dedicated to remodeling, a key to 

addressing the inefficiencies found in older buildings which are the 

real gas guzzlers of the build environment. Federal buildings must 

now meet green standards, but unfortunately, only one system is 

allowed: LEED. LEED is not a consensus standard. Agencies are 

required to use these standards because they allow for all relevant 

stakeholders to participate while also protecting against special-interest groups hoping to prioritize one particular product or technique. Second, giving one priority organization a monopoly does not 

promote innovation or cost-effective decision-making. Different rating systems may also be better suited for certain project types. 

Lastly, no standalone residential green standard was reviewed, 

even though 16 percent of the federal portfolio is residential space. 

GSA is currently reviewing this policy, and I hope their recommendation allows choice. 

Thank you for the opportunity to testify today and I look forward 

to your questions. 

[The prepared statement of Mr. Shaw follows:] 

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Mr. TERRY. Thank you. 

Mr. Wilhelms, the Vice President of Architectural Sales, Midwest 

Brick and Block, I appreciate you being here, and you are recognized for 5 minutes. 

STATEMENT OF MARK WILHELMS 

Mr. WILHELMS. Thank you. On behalf of our company and the 

concrete masonry industry, I would like to thank you for providing 

us this opportunity to share our perspective on the importance of 

a healthy home building industry. My name is Mark Wilhelms and 

I am Vice President of Architectural Sales for Midwest Block and 

Brick. Our family business employs over 275 full-time employees at 

our 21 locations in Missouri, Kansas, Oklahoma, Arkansas, Tennessee, Kentucky and Illinois. We manufacture and sell concrete 

block, concrete landscape products and distribute a wide range of 

masonry and landscape materials to the residential market segment. However, only about 90 percent of our companies typically 

operate a single plant and in a local market and remain family 

owned. Nationwide, there are approximately 350 block manufacturing companies operating about 600 plants. In other words, we 

typically make and ship our products in about a 60-mile radius due 

to the heavy weight of our materials. This local market focus 

means that our employees, our suppliers and our customers are 

local. We are truly the ultimate American business model. 

I am pleased that your subcommittee is holding this hearing 

today on the value of the home building industry. The construction 

industry has suffered a lot these past 6 years. At our company, this 

recession forced us to cut over 30 percent of our workforce. When 

this poor construction market is combined with the ripple effect of 

the banking industry, a major increase in medical insurance costs, 

it becomes very difficult for producers to stay in business. In fact, 

over the past 15 years, we have seen close to 300 producers close 

their doors. 

Like most producers, our company began with the production of 

concrete block for the construction of basements in new homes during the 1940s. Back then, as the demand for homes grew, so did 

our company. The demand for homes created jobs in the local communities where our companies started. It is the same residential 

construction market that has led to every growth cycle experienced 

in our company. 

In fact, other construction sectors are driven by the residential 

market. We will begin to see longer delays in the construction of 

retail centers, schools, hospitals and municipal buildings as we 

wait for the housing market to recovery. We know a strong housing 

market is the stimulus for most all other building sectors. 

Looking beyond the effects of a poor housing market, we must 

also recognize the changing construction industry and our ability to 

adapt. The method and materials used to build buildings is changing quickly. The market is demanding more energy-efficient building materials, green building products, more education of architects 

and engineers, and a larger number of workers to move into the 

skilled trades. Each of these demands requires a consistent and 

substantial level of investment to remain competitive. 

106 

Within our industry, we recognize the need to invest in our products. However, with block being a relatively low-margin commodity-type product with many small producers, maintaining that 

consistent level of funding in our own research, education and promotion becomes difficult. 

For this reason, our producers overwhelmingly support an industry-led funding program. We have solicited the leadership and assistance of Representative Brett Guthrie and Representative Kathy 

Castor to introduce bipartisan legislation in the form of H.R. 1563 

to create a commodity check-off program for the concrete masonry 

industry. This legislation, which has been referred to this subcommittee, would not create the check-off program but simply authorize our producers to conduct a referendum, and if a majority 

support, then enact the program. We believe that this private industry approach, which requires no federal resources, is the only 

way to enable our industry to effectively promote itself and to continue to provide valuable building solutions for the public and generate the jobs that will naturally follow. 

In closing, our company and our industry sit with production capacity in reserve, and we are ready and anxious to support badly 

needed growth and development to compensate for pent-up demand. We encourage this subcommittee to play its role in supporting policies and legislation that will ultimately stimulate construction growth, stabilize property asset values, free up investment capital, and reduce the cost to operate domestic construction 

and manufacturing businesses. 

Thank you again for this opportunity. 

[The prepared statement of Mr. Wilhelms follows:] 

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Mr. TERRY. Thank you. Well timed. 

Now, Ludy Biddle is Executive Director, NeighborWorks of Western Vermont, and somebody that Peter Welch is very fond of. You 

are recognized for 5 minutes. 

STATEMENT OF LUDY BIDDLE 

Ms. BIDDLE. And it is mutual. Thank you, Chairman Terry and 

Ranking Member Schakowsky and all of the members of this subcommittee. This is a great honor, and thank you, Representative 

Welch, for making this possible. 

I am here to share with you the benefits that the residents of a 

small county in Vermont are enjoying from an investment made in 

energy efficiency and to encourage you to consider how the whole 

country could benefit from a similar investment. 

In 2010, NeighborWorks of Western Vermont, a small, nonprofit 

housing organization, joined an august group of cities and States 

to receive a Better Buildings grant from the Department of Energy. 

The purpose of the DOE program was to wrap up demand for energy-efficiency measures in the residential sector. We were the only 

housing group to apply. We said we would encourage 1,000 households in Rutland City to go through the retrofit process in 3 years, 

and no one thought we could do it because to put that into perspective, only 26 Rutland households had gone through the process in 

2009. Rutland County is the second poorest country in Vermont 

subject to all the social ills and economic challenges that our 

stressed communities are, so we were not the typical demographic 

for efficiency programs, but we heat our homes 6 months of the 

year. Our housing stock is some of the oldest in the country. Our 

low- and moderate-income residents, the least likely to participate, 

were the most likely to benefit from this program, and our mission, 

our experience is about helping make home ownership affordable. 

What better way to achieve savings and stability and comfort 

and health and safety for homeowners than to add air sealing and 

insulation and the occasional boiler and new roof to their homes? 

I will share some of the results and then tell how we accomplished 

this and what our hopes for continuing. 

As of the close of this year’s heating season, 570 households just 

in Rutland County had completed retrofits on their homes. The average homeowner is saving 386 gallons of fuel per year, which 

times about $3.85 a gallon equals about $1,500 a year, every year 

from now on. This means that this past winter because these 570 

homes were using less fuel, about $850,000 did not leave Rutland 

County to buy oil. Eight hundred fifty thousand stayed in this little 

county to fuel our own economy, and it will stay with us every year 

from now on. Actually, it will be even more significant because we 

hope another 400 households will finish their retrofits by the end 

of this summer. 

Another way we have contributed to the economy of Rutland 

County is in creating jobs. Most of the contractors, who are specially trained and Building Performance Institute certified through 

Efficiency Vermont, were, when we started, a one-man operation, 

often an independent builder who had been trying to augment his 

income during the recession. Since we began, every one of the 13 

or 14 independents have added people to their companies. We actuVerDate Nov 24 2008 12:19 Feb 02, 2015 Jkt 037690 PO 00000 Frm 00121 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-49 CHRIS
116 

ally have the names and addresses of 62 people who have jobs created around our program, so we are not just relying on statistics 

to indicate this. One of our One of our contractors, for example, 

went from three retrofit customers in 2009 to 40 retrofit customers 

in 2011 and 2012, producing a gross income just for his company 

of $300,000. At one point all the contractors were so busy, a 3- 

month backlog, that we created a small company of our own called 

LaborWorks for NeighborWorks. We now maintain a pool of workers we can loan out to the contractors when they need help keeping 

up with demand. 

How did we do this? We are and always have been a housing organization. We know that you don’t advertise or announce programs and they will come. For example, in Shrewsbury, we enlisted 

the five volunteer conservation commission members to call all 400 

residents. While incentive payments and rebates for efficiency 

measures are essential, we used our grant money to provide people 

to help other people understand this process, and we simply provided old-fashioned customer service, something we call the 

Melanie factor after the head of our coordinating team. We provided help with understanding the technical and financial choices. 

We like to tell people we will let the dog out, we will let the contractor in and we will help you understand all of the information 

you need in between. Because we were concerned and there was 

concern, of course, that providing these services was expensive and 

adding to the already existing efficiency programs, we engaged the 

Cadmus Group, a research firm that is highly regarded in the energy industry, to conduct an industry standard cost-benefit analysis. They found lower income households earning below 80 percent 

of area median income were 164 percent more likely to install 

measures. Our Heat Squad program, which is what we call it, is 

cost-effective for the societal cost test of 1.72, and the Heat Squad 

with Efficiency Vermont programs is even more cost-effective. In 

other words, not only is the added cost of the Heat Squad producing more benefit than it is costing, but also the NeighborWorks 

Heat Squad is providing non-monetized value to society in that significantly more people in the low- to moderate-income homes are 

benefiting. 

I will stop now and hope that you will have questions that would 

address the rest of my testimony. 

[The prepared statement of Ms. Biddle follows:] 

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Mr. TERRY. I think you can bank on that. 

Mr. Bovio, did I say that right? 

Mr. BOVIO. Yes, you did. 

Mr. TERRY. Fantastic. Operations Manager, Bovio Advanced 

Comfort and Energy Solutions. You are recognized for 5 minutes. 

STATEMENT OF BRIAN BOVIO 

Mr. BOVIO. Thank you. Thank you, Mr. Chairman, and distinguished members of this subcommittee for this opportunity to offer 

my perspective on the role of home performance contracting in 

home economics and energy policy. My name is Brian Bovio and I 

am Vice President of my family’s business—I gave myself a promotion—Bovio Heating, Plumbing, Cooling, Insulation located in 

New Jersey. We are a third-generation HVAC contracting company 

that has also transitioned in a whole-house energy efficiency retrofit company. We offer heating, air conditioning, plumber, insulation, weatherization and energy auditing services. Essentially, we 

work with homeowner to increase their home’s energy performance, 

comfort, health and safety. 

I come to this subcommittee both as a licensed contractor and as 

Chairman of the Board of Efficiency First. Efficiency First is a national nonprofit trade association of nearly 800 member companies, 

most of which are small businesses employing five to 50 people. We 

have membership in all 50 States and aim to support the policies 

that will support a sustainable and scalable home retrofit market. 

Efficiency First contractors work every day sitting at kitchen tables across America helping homeowners to understand why their 

energy bills are so high, why their daughters’ bedrooms are so cold 

or why their son’s asthma acts up when the furnace is on. Americans understand that energy efficiency is about their home economics and comfort and their ability to raise their families there. The average American family spends over $1,800 per year on en- ergy, which equates to over $200 billion across the Nation. This 

represents 22 percent of all U.S. energy consumption, 35 percent 

more than is used for passenger cars and trucks combined. 

Energy efficiency is unique in that it creates its own cash flow. 

Less money spent on energy means more money to purchase groceries and save for college. So why don’t all American homeowners 

undertake the energy efficiency upgrades they need? One key reason is the upfront costs. Efficiency First and I would like to thank 

Congress and Congressmen David McKinley and Peter Welch for 

their leadership on homes, home performance and for introducing 

H.R. 2128, the Home Owner Managing Energy Savings Act, or 

HOMES Act. This bill would help address the hurdle of those upfront costs by providing incentives for homeowners with rebates to 

help cover the cost of home energy efficiency upgrades. The rebates 

are earned. The size of the rebate is based on the energy savings 

the upgrade will provide, not the type of product they purchase, 

and homeowners will always pay at least half of the upgrade cost. 

Why should tax dollars be used to offset efficiency costs? Believe 

me, I understand the need to use public dollars wisely. As a small 

business, we understand the need to budget our own funds wisely 

so I am not asking for a handout. This country needs the energy 

savings that the HOMES Act provides. Saving energy is a public 

123 

good. Homeowners are being asked to provide that public good to 

save energy and make expensive efficiency investments because we 

want them to save money on their utility bills and because the 

country needs them to reduce cost across the energy system as a 

whole and help achieve the broader goals of energy independence, 

pollution reduction and job creation. 

We are not properly valuing the very real public and resource 

benefits energy efficiency provides. Instead, we are asking homeowners to pay for the full burden and cost of these improvements 

often upfront and out of pocket. The HOMES Act fixes that. 

Mr. Chairman, retrofitting inefficient homes will also create hundreds of thousands of U.S. jobs in some of the hardest-hit industries including construction and manufacturing. These new jobs are 

primarily jobs that cannot be outsourced. You cannot hire a contractor from China, and the materials used in improving homes average 90 percent made in the United States. Shipping insulation is 

as smart as shipping air. 

My business and employees know personally how home performance can create jobs. Bovio’s has been able to grow its business 

thanks to making the transition to a home performance company. 

Despite horrendous economic conditions, we have more than doubled our workforce in the past few years. All of these employees are 

working 40-plus hours a week, no short weeks and have full benefits. Revenues are also up dramatically from before we started in 

home performance. This change in my business and the businesses 

of many others across the country was made possible with the help 

of public dollars and incentive programs, incentive programs like 

the HOMES Act put forward by bipartisan policymakers at the 

State level, who saw the need and acted. 

Mr. Chairman, the major players we need to make the home performance industry economically sustainable over the long haul are 

already here. We are just not yet to scale. Those that claim the industry should stand up without incentives are not acknowledging 

that every other resource receives incentives despite already being 

at scale. Energy efficiency is an undervalued resource, and home 

performance deserves investment. We believe that a smart national 

incentive coordinated with local infrastructure will enable a transformation in the residential energy efficiency market. This subcommittee can help by supporting the passage of the HOMES Act. 

I want to thank the subcommittee on behalf of the thousands of 

contractors who are working every day to help homeowners invest 

and improve their homes. I thank you again for the opportunity to 

testify and look forward to your questions. 

[The prepared statement of Mr. Bovio follows:] 

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Mr. TERRY. Thank you very much. 

I will start with you, Mr. Shaw. It is interesting as a remodeler 

that I guess many of us, I didn’t think about the lead rule and how 

it would impact, and I would assume most of the remodeling is in 

older homes. So when the EPA eliminated the opt-out, what notice 

was there? Why did they do that and how specifically did it impact 

a typical remodeling job for a home built before 1978? 

Mr. SHAW. Wow, I don’t even know where to start on that. 

Mr. TERRY. Yes, and you have to do it in about a minute. 

Mr. SHAW. Yes. Thank you. You know, as an industry, and remodelers in particular, we were at the table with putting this 

whole thing together, and we are very serious about lead poisoning 

so I don’t want to imply that what happened after this thing went 

into effect in 2010, I think it was in July 2010—what happened 

was is that we didn’t get to the table to a change that occurred, 

I think it was in September, when because of a lawsuit and a settlement with the environmentalists, the EPA all of a sudden threw 

this opt-out and took it off the table. 

Mr. TERRY. So to interrupt. Was that part of the settlement 

agreement is to eliminate the opt-out? 

Mr. SHAW. Yes, it was. So what happened to us is, is that we 

went from 36 million homes to almost 80 million that were now included, and we also added about $336 million in compliance costs. 

So for us, it was a huge impact, probably one of the biggest things 

that took the ability of the consumer to make a choice. 

Mr. TERRY. Just real quickly, by eliminating that opt-out for a 

home that could opt out, what was the additional cost for a typical 

project, generally speaking? 

Mr. SHAW. What happened is, is that, you know, when you took 

the opt-out, then every single household that was in a home prior 

to 1978 became eligible, and now you take a test kit that doesn’t 

work, and what happens with most of the remodelers that I take 

that even want to get involved with this is that you have to assume 

every house has lead, so there is no alternative. 

Mr. TERRY. All right. Mr. Bovio, your company seems to be 

maybe not to the level of remodeling but certainly you will make 

some changes to a home under your program. 

Mr. BOVIO. Absolutely. 

Mr. TERRY. What is the typical assessment, assessment meaning 

conclusion, of what has to be done to a house that you will work 

on? What is the average cost? You mentioned incentives, and does 

that cover the cost and where do the incentives come from? 

Mr. BOVIO. Currently, I work in a program in New Jersey that 

covers up to half the costs. I am a third-generation HVAC contractor so most of our leads come in as someone that needs heating 

and/or air conditioning. So most of our jobs are starting them and 

then we convert them into a home performance project and we talk 

to them about upgrading their building shell, which would be air 

sealing, making the home tighter, performing insulation upgrades 

to reduce the BTU load of the heating and air conditioning equipment we need to put in, reduce the equipment sizing. Those 

projects can range around $15,000, generally speaking. 

Mr. TERRY. And the incentives program for New Jersey will cover 

$7,500 of a—— 

135 

Mr. BOVIO. Up to $5,000. 

Mr. TERRY. Up to $5,000? 

Mr. BOVIO. Yes. 

Mr. TERRY. Is there a financing mechanism for the rest? 

Mr. BOVIO. New Jersey does have a financing mechanism for the rest, a $10,000 zero percent loan, which is why I told you that average job comes in about $15,000. 

Mr. TERRY. Interesting. But Mr. Robinson, real quickly, you 

make a lot of products but I don’t figure or see where the energy 

efficiency occurs in the use of your products. Is there an energyefficiency component to your products? 

Mr. ROBINSON. Well, you have to remember we do more than 

make toilets so on—— 

Mr. TERRY. Well, yes, that is where I usually get reminded of 

your products, though. 

Mr. ROBINSON. You know, our name appears in all the best 

places, as they say. We also, on the power side of our business, 

make home gen sets, and, you know, this is becoming a less and 

less luxury and more and more something that as our population 

ages in place and they are expected to receive their health care 

needs in their home, we have—part of the spec of these homes 

often includes a backup power source because the power goes down 

and your dialysis or whatever machinery in your home doesn’t 

work, that is a real issue when you only have so much batter life. 

So I think, you know, when you look at energy and just broadly 

speaking energy issues in this country, we need to be looking more 

and more about the security, the infrastructure for energy delivery 

to homes as we look at homes more and more to accomplish more 

things. They will, as I say, become mini-hospitals for most of us as 

we age and they will also raise children and send people to college, 

et cetera. So I think the breadth of what we are asking this, you 

know, capital to do, this home on the ground to do is expanding 

and expanding and at the same time we are being asked to comply 

with far more, you know, detailed and I would say in certain circumstances say onerous regulations at all levels. 

Mr. TERRY. All right. Thank you very much, and m time is expired and I will recognize the gentlelady from Illinois, Ms. 

Schakowsky, for her 5 minutes. 

Ms. SCHAKOWSKY. Thank you. First, let me say, Mr. Robinson, I 

have been to the American Club. You spoke about immigration reform. Don’t you call it The Immigrants? 

Mr. ROBINSON. Yes, it is The Immigrant. 

Ms. SCHAKOWSKY. Great restaurant. 

Mr. ROBINSON. Thank you. 

Ms. SCHAKOWSKY. I wanted to just comment on the lead renovation and repair. I have been addressing the lead issue for a very 

long time in toys and homes, etc., and I have to say I am a big supporter of that rule because let us face it: these homes after renovation often are sold, flipped, people are moving in and out, and lead 

is one of the most dangerous toxins that affect more than 1 million 

children. I have met some of those children, and it is really devastating. Even exposures to very low levels of lead harms the development of children’s brains, causing learning disabilities, behavioral problems, etc., but it is also a concern for the workers who 

136 

can suffer cardiovascular damage, kidney damage, damage to central nervous system, and the National Institute for Occupational 

Safety and Health has found that construction workers bring lead 

dust home, leading to higher blood levels in the children of construction workers and in their neighbors. So I think the LRRP is 

an important tool in reducing these exposures and ensuring that 

renovations and repairs that disturb lead paint are done with basic 

safeguards by trained and certified professionals. It is very important. It has been supported by public health groups, by the International Union of Painters and Allied Trades, and it is being implemented. Renovation firms have been certified. Workers have been 

trained. In Illinois, there are over 5,000 firms certified for lead-safe 

renovations, and I just think that changing it to an opt-out would 

undermine important protections for workers, for future homeowners and their children and visitors to homes. 

But I want to turn to another subject for some questions. Mr. 

Bovio, in your testimony you wrote, ‘‘Efficiency First contractors 

work every day with homeowners sitting at kitchen tables across 

America helping them understand why their energy bills are so 

high and that ‘‘retrofitting homes will put energy savings back in 

the wallets of American families and communities and create hundreds of thousands of jobs,’’ et cetera. So I understand that your 

company has seen success lately. So yes or no, has it been your experience that if more consumers knew how much energy they could 

save and how much money they could save through retrofitting 

that we would see a lot more people improving the energy efficiency of their homes? 

Mr. BOVIO. Absolutely. 

Ms. SCHAKOWSKY. And Ms. Biddle, your testimony stressed the 

importance of informing homeowners of the money that they could 

save. Can you talk about the methods in your experience that have 

been the most effective and successful in helping people understand 

how they can save money and convincing them that these are really important things to do in their home? 

Ms. BIDDLE. Yes. As I said, as a housing agency for 26 years, we 

have known how to talk to people about their specific challenges 

or questions or needs. So we have addressed the efficiency measures in the same way. It is very much a one-on-one conversation 

or, where possible, two-on-one. But it is explaining the specifics. In 

most cases, you know, we can indicate that the cost of the loan— 

if a loan is necessary, the cost of a loan is less than the savings 

that would be accomplished on a monthly basis, and once a person 

understands that, you know, using their own numbers wherever 

possible, it is a very easy project to understand for anyone, and everyone benefits from it. It is a matter of making it very clear. It 

is still an esoteric kind of proposition to households. It is not, you 

know, like buying a granite kitchen counter. They don’t know yet 

what it involves and how to get it accomplished. 

Ms. SCHAKOWSKY. So you don’t wait for people to come to you, 

you go out to them? 

Ms. BIDDLE. No, we very definitely go out. We have outreach coordinators. One example I gave in Shrewsbury, five members of our 

town called 400 fellow residents and just explained, you know, I 

did this in my house and if you did this in yours, this is where you 

137 

would be this time next year. We are very definitely talking to people specifically about their homes similar to mine, that kind of 

thing. 

Ms. SCHAKOWSKY. So Mr. Bovio, you were talking about the legislation, the HOMES Act. 

Mr. BOVIO. Yes. 

Ms. SCHAKOWSKY. Are you saying that some States already have 

something similar to that and that this has proven to be a good 

model nationally? Could you explain? 

Mr. BOVIO. Yes. I mean, some States do have programs and some 

have very successful programs, New Jersey being one of them, that 

has had a lot of success for me and we have had a lot of energy 

savings in New Jersey with that program. If there was a national 

model that rolled out and could take home performance nationwide, 

that would definitely benefit the Nation’s energy independence. 

Ms. SCHAKOWSKY. Thank you very much. I yield back. 

Mr. LANCE. [Presiding] Thank you very much. Before recognizing 

Mr. Long, Mr. Bovio, where are you from in New Jersey? 

Mr. BOVIO. Southern New Jersey. I live in Williamstown. 

Mr. LANCE. Gloucester County or—— 

Mr. BOVIO. Yes, sir. 

Mr. LANCE. I live in Hunterdon County, which has even fewer 

people than Gloucester County, in the northwest, however. 

Mr. BOVIO. OK. 

Mr. LANCE. And to all of the panel, welcome, and of course to 

you, Mr. Bovio from New Jersey. 

Mr. BOVIO. Thank you, Mr. Lance. 

Mr. LANCE. Mr. Long from Missouri, you are recognized. 

Mr. LONG. Thank you, Mr. Chairman, and thank you all for 

being here today and for your testimony. My friend, Ms. 

Schakowsky, as she always does, made some very good points 

about the dangers of lead and lead-based paint, and it is a very serious concern, as we all know. I come from a 30-year background 

as a real estate broker and I hail from the town of Springfield, Missouri, that is the third largest city in the State, founded in 1838, 

so we are not as old as towns out on the East Coast but we do have 

a lot of older homes, and a lot of those homes are rental homes. 

They are starter homes for people that buy the older homes and 

things, and it is a very, very serious concern, and these rules that 

they come up with, the repair and painting rule I think what they 

referred to it as, we stand a chance of people—they don’t have to 

paint their house and they can let them rot down, they can let the 

25 years or whatever since 1978 or however many years it has been 

since 1978, they can just let that paint come off and then you get 

back to the thick lead-based paint that we all know chips. That is 

what children will eat and peel off the windowsill. So that is why 

we are so very concerned about it. I would like all of us to work 

together on both sides of the aisle and you all to come up with 

some kind of a rational program that will work and prevent that 

from happening because the danger of this paint coming off. The 

non-lead-based paint that people have used over the years that covered up, kind of acted as a pretty good protective coating, but now 

these houses are in need of painting. I know in Springfield they 

can’t even find anybody. In Illinois, Ms. Schakowsky said that 

138 

there are lots of people, but trying to get a house repainted in a 

town that has been there since 1838 is a serious problem. 

So Mr. Shaw, let me direct my first question to you. It is my understanding, and correct me if I am wrong, that the EPA is not 

even complying with their own rule by not providing a commercially available, accurate test kit. Do you know of any steps that 

they have taken—I am talking about the EPA—to satisfy the need 

for these test kits in the near term? 

Mr. SHAW. Well, first of all, the EPA wrote the lead test standards into their rule, number one. So NHB has asked them repeatedly to get a response from the EPA on what they are going to do 

with this lead test kit problem, and we have never received a response. We need to have a lead test kit that works. I mean, for us 

in Houston, 90 percent of our work are homes that are pre-1978. 

This rule really has a direct effect on us. And what we have been 

told by our attorneys time and time again is, we cannot take the 

risk of a false positive or a false negative. So if we think the house 

does not test for lead and it does and we don’t do the lead safe 

work practices, we are liable. 

Mr. LONG. Well, what does EPA tell you when you tell them, 

‘‘Hey, you know, you have got this written into the law and we 

need these test kits?’’ 

Mr. SHAW. Well, you are not going to believe this, but what they 

tell us—— 

Mr. LONG. Yes, I would. 

Mr. SHAW. They tell us that there is another way of doing this— 

that you can send the paint chips to their approved laboratories. 

Well, there are not enough of them. And then if I came into your 

house and tore your kitchen and your bathroom up and then did 

this testing and said, ‘‘You know what, you are going to have to 

wait 6 to 8 weeks for us to get the results back,’’ and people just— 

my customers are not going to wait. It is unreasonable. 

Mr. LONG. It is not just remodeling problem because you are in 

the remodeling business. It is, like I say, landlords that own these 

older homes that paint them every 3 or 4 years—but now with this 

new rule, they can’t go in there and paint over what they have 

been painting over since 1978 for these pre-1978 homes, so it is a 

very serious concern and I hope that we can get some help from 

everybody on this issue. 

Mr. Wilhelms, thank you for giving me a tour of Midwest Block 

on May 1st of this year in Springfield, Missouri—and very impressive operation there—I think that we both agreed things are kind 

of upturning in the economy and things are getting a little better 

around there, so again, I appreciate that. I know that you mentioned when I was down there about a check-off program that you 

all are interested in, and I know in Washington we are wanting to 

try to do less instead of more. So what would be the government’s 

involvement in a check-off program? I understand it is like the Got 

Beef or the cattle check-off program, things like that. Can you in 

1 second explain yourself? 

Mr. WILHELMS. Government involvement is minimal. Just give 

our industry the chance to see if it is a right fit for us—but with 

commodity product, we just need that authorization to allow our industry to take a vote. 

139 

Mr. LONG. OK. And I have to ask Mr. Bovio one question even 

though I am out of time. You have already admitted here before 

this committee that you gave yourself a promotion. Did you also 

give yourself a raise at the same time or was it just a title? 

Mr. BOVIO. I did not. 

Mr. LONG. OK. I yield back. 

Mr. LANCE. You have a right to remain silent, Mr. Bovio. Thank 

you, Mr. Long, especially for that last question for the gentleman 

from New Jersey. The chair recognizes Mr. Welch. 

Mr. WELCH. Thank you very much. I am going to ask a few questions and get to Ms. Biddle in a few minutes, but I want to ask 

Mr. Shaw a question first. How does the National Green Building 

Standard compare to some of the other rating systems with regards 

to energy efficiency? 

Mr. SHAW. One thing that is unique about the national Green 

Building Standard is that unlike the other main program, the 

LEED program, there is a minimum number of points that you 

have to score in every category including energy efficiency. Every 

category, you have to meet a minimum score. And if you look at 

the different levels of the National Green Building Standard, just 

to get a bronze is 15 percent above the 2009 energy code. So if you 

go into the emerald, that is 50 percent, and that is every single category, where if you compare it to the LEED program, and which 

I did a LEED project about a year and a half ago, a LEED gold, 

it was—the two architects that I did this particular work for, it was 

a game of picking and choosing out of different pots to try to get 

the points, so it became all about the points and really not about 

the energy efficiency across the board of a home. 

Mr. WELCH. Thank you. And then for Mr. Bovio. I appreciated 

your kind words about the HOMES Act, and we are pleased that 

we have the support of Efficiency First for that legislation. What 

would that legislation mean for the home performance contracting 

industry? 

Mr. BOVIO. It would mean a universal standard across the country, which we have never had, a program to put a firm footprint 

in the home performance place across the Nation, not a small program in this utility and, you know, that State that we have to deal 

with and it is hard to scale up, nationwide when you are dealing 

with 50 different programs across the country. If we had one program to shoot for, it could really build the industry up rapidly. 

Mr. WELCH. Thank you. 

Mr. BOVIO. Thank you. 

Mr. WELCH. Thank you. And Ms. Biddle, tell us a little bit about 

the contracting jobs. I mentioned in my opening remarks, it was 

just amazing to me to be there seeing all these folks getting training to be able to go out and work, and it was nice to see the kind 

of bounce in their step because times were pretty rough in Rutland 

then and these folks had been laid off, and they really had prospects. So I think it would be worth it for all of us to hear more 

about the contracting jobs that you have been able to create. 

Ms. BIDDLE. Well, as I said, we really started at the beginning 

of our grant period, which was 2010, with about 12 or 13 independent contractors, one-man companies, and as the demand increased, they were overwhelmed so we offered some assistance and 

140 

some encouragement for them to hire new people, and we provided 

the training because it is intensive, technical, advanced training 

that is required to be a BPI-certified contractor, and I think that 

is probably what you were part of. And as I said, 62 people now 

have new jobs that were created in the process of this 3-year period, some of them with even advanced specialties as well. It is a 

pretty amazing thing, and as I also said, we created a labor pool 

to augment those companies because they didn’t want to necessarily grow any faster or further than demand was building. But 

yes, you are right, it has been important. 

Mr. WELCH. What has been the practical impediment for homeowners to make the plunge? 

Ms. BIDDLE. Well, I think there are three things that we have 

addressed. One is the upfront cost of an audit. Traditionally, it had 

been $350, $450. One of the first things we did was to defer the 

cost so the cost remained the same but we took it out of the end 

check they got as an incentive, so the entry level was $100 rather 

than $450, and then there was concern that they wouldn’t—they 

get a cheap audit or a free audit and not convert to a retrofit, but 

with assistance from just sort of understanding the process, our 

conversion rate is 44 percent, and that is pretty high nationally. 

But it is about talking to them and explaining it. 

Mr. WELCH. Direct one-on-one interaction? 

Ms. BIDDLE. Absolutely. And then we offer construction management where that is important. Some people are working and don’t 

have time to be at home for the work to be done so we will actually 

provide that service, and then we have a very affordable loan product that is also in the minds of a lot of people. Financing is an obstacle. We find it is less of an obstacle once the process is understood by the individuals. 

Mr. WELCH. Great. Thank you very much. I yield back. 

Mr. TERRY. Thank you, and now to the gentleman from Kentucky, Mr. Guthrie, you are recognized for 5 minutes. 

Mr. GUTHRIE. Thank you, gentleman from Nebraska. I appreciate 

that. 

Mr. Chairman, H.R. 1563 that Mr. Long talked about just as he 

was concluding, he left you about, I think, 3 seconds, Mr. Wilhelms, 

to discuss it. I want to use my time discussing it, if that is OK with 

you. You know, it is questionable, which is interesting. You said it 

this way, what does the government have to do, and the one thing 

is, and for good reason actually, the government actually prevents 

some people from coming together to promote because they want to 

ensure competition in the marketplace and the system. My understanding is, as I have spent a lot of time with this issue, is that 

most concrete masonry businesses, or almost all are small, a lot of 

mom-and-pop shops that are local. Most masonry is distributed 

within 50 miles of where it is produced. So you don’t have the big 

players. You have a lot of small players in order to come together 

to promote their product. You just couldn’t run a national campaign from Springfield nor could you do national research from 

Springfield. And so the idea is to allow you all to choose if you so 

choose, and not being anti-competitive, but let you come together 

for the idea of not promoting your business but promoting your 

product, which is a commodity. So it is not like you are promoting 

141 

one or the other. The other thing I think is even more important, 

quite honestly, is that you get to do research and development on 

products that may be more appropriate for New England. We have 

a wonderful State of Vermont, talking about Mr. Welch, that I enjoyed when I was in New England in college going up there, and— 

but are hurricane resistant or hopefully someday tornado resistant 

as is very much on our minds today. 

So why is the concrete masonry business so small and so fractured and just disparate like it is? 

Mr. WILHELMS. I think you addressed a lot of it. It was for small 

family businesses operating in local areas. 

Mr. GUTHRIE. The ones the market kind of forced that structure. 

Mr. WILHELMS. Yes, the market has forced it, and you bring up 

some good points, and our ability to adapt and really get our word 

out. You know, my pet peeves are on the research and education 

side of it, you know, with the green building and energy code compliance we have heard so much about today, there is really a huge 

opportunity out there for our materials whether it be utilizing fly 

ash in our materials, a higher percentage of fly ash, whether it be 

using crumb rubber waste in our materials. There is opportunity 

to improve our energy efficiency but lacking that opportunity to get 

in and really do the testing and how does it affect performance in 

terms of energy or fire protection, you know, those are all things 

that require money and a consistent level of funding that we need 

over time. So a check-off program for our industry would provide 

the consistent level of funding we need to advance, you know, our 

industry really and education, research and promotion. 

Mr. GUTHRIE. My understanding is, it is hard for one player to 

come in. A lot of industries—I have a family business and we sell 

automotives for U.S.-based companies. There are a lot of other companies, the Big Three as we call them, have massive research and 

development. But it is difficult for you to do because you are so 

small, and I understand the reason you are small is because it is 

so expensive. You couldn’t just have one plant in Springfield, Missouri, and ship to New York or to Vermont and try to produce because it is so expensive to do so, so they perform in the local—that 

is kind of why you are disparate and small, right? 

Mr. WILHELMS. Yes. Shipping product that far would not be energy efficient. That is true, and the check-off program for us, you 

know, we see good support throughout our industry, over 70 percent through a third-party survey have indicated that yes, we need 

this and it would be right for us. So the fault we have is, we are 

not a product that grows so we don’t fall under the Department of 

Agriculture. We are doing this right, belong under Energy and 

Commerce, and unfortunately, being the first program that would 

get set up, we need to go through the proper steps. 

Mr. GUTHRIE. Well, thanks for doing that. So the proper steps— 

this bill does not create a check-off program, does it? 

Mr. WILHELMS. No. 

Mr. GUTHRIE. What does the bill actually do? 

Mr. WILHELMS. It gives us the authority to take a vote within 

our industry, and if it is approved by the majority of locations 

around the United States, then it would be enacted and overseen— 

142 

there would be government oversight but no costs would go into 

monitoring that program. 

Mr. GUTHRIE. And if you looked at other check-off programs, is 

this different or is it similar? 

Mr. WILHELMS. Very similar, yes. There’s over 35, I believe, 

check-off programs through the Department of Agriculture. The bill 

that is entered into the House is identical in the Senate, and they 

are based on that logic that has been argued before the Supreme 

Court and follows that same legislative process. 

Mr. GUTHRIE. You can’t do it if you are only promotional in nature, you have to also move your industry forward. 

Mr. WILHELMS. And the good part about this, just real quick, is 

that 50 percent of the funds go back to the local market so the person in Springfield or Bowling Green or whatever would have that 

opportunity to get back what they put in. 

Mr. GUTHRIE. Yes, Springfieldian, Mr. Hammonds, had a hotel in 

Bowling Green. I know you lost him this week, and that is a big 

loss to your community, and our prayers are with you all and his 

family. 

Mr. WILHELMS. Yes, a very philanthropic individual. 

Mr. TERRY. Thank you. Sorry, but there is no one else to ask 

questions, so that means our hearing is concluded. I remind you 

that there may be written questions submitted to you, and a timely 

response would be greatly appreciated. So you are dismissed and 

we are adjourned. 

[Whereupon, at 12:48 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. HENRY A. WAXMAN

Today, the Subcommittee examines homebuilding, remodeling, and relevant supplier industries. 

In recent years, these industries have faced massive turmoil and hard times. The 

financial crisis—triggered by a massive housing bubble—caused millions of people 

to lose their jobs or take mandatory pay cuts. Some Americans held mortgages they 

could no longer afford. Others had to put on hold their dream of owning a home. 

Demand collapsed, leaving contractors, builders, and suppliers in the worst shape 

they had been in decades. 

It’s important to remember how Congress responded. In 2010, this Committee 

crafted and passed the Home Star Energy Retrofit Act of 2010, introduced by Representative Peter Welch. The bill had the support of a remarkably broad coalition 

that ranged from local contractors to environmentalists to organizations like the National Association of Manufacturers and the Chamber of Commerce. 

Many groups supported Home Star because it would have created 168,000 jobs 

that wouldn’t be outsourced overseas. They would have been construction jobs in our 

neighborhoods and our communities. And they would have been manufacturing jobs 

for workers at factories in America. The bill also would have allowed 3 million families to retrofit their homes, increasing the homes’ energy efficiency significantly. 

But the Republicans on this Committee and in the House overwhelmingly opposed 

the bill. The Senate Republicans blocked its consideration there. They had a simple 

message. No amount of pain in the housing sector would cause them to lend a hand 

if it might be a victory for the President. 

Now, the homebuilding industry is improving. Building permits for new homes is 

up 35% in the last year. In my home state of California, the residential construction 

industry now contributes 120,000 jobs and over $20 billion per year to the state’s 

economy. 

Recent increases in home prices—around 20% year-on-year in some metropolitan 

areas—are welcome for many homeowners. But millions of Americans are still facing foreclosure or are struggling to make their monthly payments, particularly in 

California, where almost one-third of borrowers owe more than their home is worth. 

More can and should be done to help. For instance, the Federal Housing Finance 

143 

Agency (FHFA) should allow Fannie Mae and Freddie Mac to establish principal reduction programs to help underwater homeowners reduce their debt burdens. 

While the most important factor is the broad economic wellbeing of consumers, 

there are policies that can help spur growth in residential construction. 

With 2012 now behind us and a new residential energy efficiency bill by Mr. 

Welch and Mr. McKinley pending, I hope that the Committee can do the hard work 

to pass legislation. We need to craft legislation supported by a broad coalition of 

stakeholders. We know it’s possible because we did it in 2010. Such legislation 

would support jobs, support consumers, and support the environment. 

There are clear benefits of improved residential energy efficiency and I urge my 

colleagues to support these legislative efforts, as well as similar efforts by independent standards-setting organizations, the Department of Energy, and the states. 

Thank you. 

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