The 2009 Stimulus Package (ARRA) and Your Business: Appropriations

The U.S. government is directing billions of dollars to the building and remodeling industries through the American Recovery and Reinvestment Act (ARRA) stimulus package. Among the high profile appropriations are $500 million for green job training and $5 billion dedicated to weatherizing inefficient homes.

For contractors, all that money may seem like a lifesaver during desperate economic times. But before you call your congressional representatives and ask for your share, be forewarned: there are strings attached.

Here are some of the opportunities—and challenges—presented by the administration’s appropriations.

$500 million for green jobs training

The opportunity: Green jobs—those aimed at helping America develop a more environmentally sustainable economy and society—pay 10 percent to 20 percent more than other jobs, according to The Council of Economic Advisers. In May, the Obama administration announced that it would release $500 million from the stimulus package to fund job training for energy-efficiency and renewable-energy workers—that’s relevant for many builders and remodelers, who are already focused on improving energy efficiency.

The challenge: The money is tied to the Green Jobs Act of 2007, which stipulates that training programs must include equal participation from employers and labor organizations. The National Association of Home Builders (NAHB) expresses concern that the green training most relevant to residential construction will not be included, because the residential homebuilding industry is only marginally unionized.

“You might get green job training for skyscrapers, but maybe not the technologies that are relevant to residential builders,” says Jenna Hamilton, assistant vice president of government affairs for the NAHB, based in Washington, D.C. The NAHB does offer green building classes with a residential focus—but the group isn’t eligible for the grant funding.

$5 billion for weatherization

The opportunity: The Weatherization Assistance Program, aimed at helping low-income homes become more energy efficient, is not a new program. What is new is an increase in its budget from $250 million in 2008 to a $5 billion allocation in the stimulus package.

The challenge: Not all homes are eligible for the money, nor are all contractors. The money is targeted at low-income homes; in the lower 48 states the income cap is 200 percent of the poverty threshold, or $44,100 for a family of four. (The caps are slightly higher in Alaska and Hawaii.) That means 20 to 30 million families are eligible to take part in the project, according to the U.S. Department of Energy.

The stimulus money is distributed to state agencies, which, in turn, hire Community Action Agencies (CAA) to do the work. CAAs are non-profit groups that serve low-income communities through services like job training, early education and home building.

CAAs sometimes have their own crews to do the weatherization work, sometimes they hire contractors to do it and sometimes they use a combination. In Billings, Mont. for example, the local CAA has crews that perform most weatherization functions, but it hires subcontractors to do insulation work.

Contractors who are hired to do federally funded weatherization work are subject to the Davis-Bacon Act, a fair wage law passed in 1931. NAHB’s Hamilton says Davis-Bacon requirements are an issue for many smaller contractors, where the concern is not the wages, but the paperwork.

“It’s a huge regulatory and paperwork burden, and considering that 80 percent of our members have 10 or fewer employees, most of them just aren’t equipped to deal with it. A lot of them are having to walk away from these projects.”

The appropriations in the budget and stimulus package could be just the ticket to help your business become greener, more eco-friendly and more profitable. But before you get too excited, make sure the programs that control the money are the right fit for your business.

Read last month's article about which tax incentives provided by the ARRA can help your business.