Home Contractor vs. Homeowner

Worker's Compensation Information Available Online At the Massachusetts Department of Labor Website

2011-04-25T23:32:00.001-04:00

Mark Paskell first posted this at his blog,

http://www.thecontractorcoachingpartnership.com/Blog-Contractor-Coaching--Construction-Business-Coach-EPA-RRP-Lead-Rule/, but I think it is so important that I wanted to post here as well. Make sure all of your contractors have worker's compensation policies if they have employees. If not, you may be held accountable if someone gets injured on the job. Bravo to the government of MA for making this information available to the public.

Here is a brief excerpt from the Massachusetts Department of Labor website;

Patrick - Murray Administration Launches Free Web-Based Tool

Will help Public Verify if Businesses have Workers Compensation Insurance Policy

Boston, MA - The Executive Office of Labor and Workforce Development (EOLWD) today announced the launch of the Massachusetts Online Proof of Coverage Application (POC), a free web-based tool that will assist the public in verifying whether a particular business has a current workers’ compensation insurance policy.

While the POC application is not designed to detect fraud, it may also assist EOLWD’s Department of Industrial Accidents’ investigations in determining whether fraud exists.

Employers are required by law in Massachusetts to carry workers compensation insurance to assist workers in the event that they are injured on the job. While the vast majority of Massachusetts businesses carry a policy, those who are not in compliance shift the burden onto those business that do. As a result, over $53 million has been paid out of the Workers’ Compensation Trust Fund over the past 10 years to pay for injury claims of workers who were employed by businesses that were not in compliance. DIA works closely with businesses through payment plans and more aggressive enforcement measures to make sure they are compliant.

The Lead-Based Paint Renovation, Repair and Painting Law Goes Went Into Effect on April 22, 2010

2010-05-25T21:31:00.001-04:00

Homeowners who are considering doing a renovation must know that if their homes were built prior to 1978, their contractors are required to follow certain procedures if they are going to disturb more than 6 interior square feet of paint or 20 exterior square feet of paint. This law requires that the general contractor must become certified with the Environmental Protection Agency (EPA), and that the contractor himself take an eight-hour class in order to become a certified renovator and learn lead-safe practices that contain lead dust.

Although the EPA claims that it will be doing a publicity campaign to inform homeowners about the Renovation, Repair and Painting Rule (RRP Rule), I have heard very little about it outside of construction circles. So, I feel that it is important for me as a construction lawyer to educate the public about this rule.

First of all, the preparation and education needed to comply with the law are going to cost the contractors more money. This will be reflected in an increase in the cost of jobs. The contractors must pay at least $300.00 to certify with the EPA, $200-$300 on average for the certified renovator training, the costs of training their workers and/or subcontractors, and additional costs for materials (plastic, protective suiting, masks, duct tape) and very expensive HEPA vacuums.

Homeowners who ask contractors to circumvent these practices and operate in violation of the law are doing these contractors an extreme disservice. This law is in place to protect homeowners and their families (and more particularly, pregnant women and children under six) and the contractors from potentially toxic lead dust. Lead poisoning is a real problem with potentially tragic results, and following the lead-safe practices has been shown to significantly reduce the exposure to lead for all involved.

Please understand that your contractor is doing the right thing by giving you a lead-paint brochure and following the rules. He could also face significant fines ($37,500.00 per infraction, per day) for failing to comply with this law. So, please do not blame the messenger. Respect your contractor and do not ask him to break the law.

Exterior Remodeling Offers the Best Value for Home Improvement Projects

2010-01-16T10:10:00.002-05:00

If you're trying to decide on a renovation project, here's one way to make your decision:

http://www.realtor.org/rmodaily.nsf/pages/News2009121701?OpenDocument&WT.cg_n=RMO&WT.cg_s=RSSDaily

Green Houses are Booming

2009-12-11T09:53:00.001-05:00

Statistics keep supporting the fact that green construction is up, even though the construction industry has been hit hard by the economy. If you aren't learning about green construction, you should be.

http://content.usatoday.com/communities/greenhouse/post/2009/12/green-home-sector-booms-despite-housing-slump/1

Challenge to Massachusetts Contractors

2009-12-11T00:38:00.001-05:00

Send me your residential renovation or new construction contracts (residential or commercial). After signing an engagement letter, I will review your contracts for free! If I don't find five things that might hurt your business, I will donate $50.00 to charity. If I do, you agree to donate $50.00 to charity. That's it. No strings attached. You do have to let me explain my recommendations to you; preferably in person.

Why Builders Shouldn't Cut Their Prices

2009-10-21T22:30:00.001-04:00

In a previous post, I discussed why now is a good time to renovate. I pointed out that builders are not as busy and can devote more time to their projects, the economy has weeded out a number of "fly by night" contractors who were not truly dedicated to the profession and there have been sales on supplies and materials. One advantage that I did not mention, however, was the opportunity to ask builders to cut their prices. That's because I do not believe it's reasonable for owners to try to negotiate lower prices, and it's not good for the profession for builders to do so.

Professional builders are usually quite realistic when preparing proposals for projects. I have met many contractors who proudly tell me that their jobs do not go over budget (barring unforeseen circumstances). They are usually quite clear about their markups and profit margins and accurate when determining allowances. They exemplify the adage that "you get what you pay for."

Consider for a moment the bid that comes in that is significantly lower than the others. Owners may be happy to seize the opportunity to get a job done for a bargain price. However, I have frequently seen the rest of the story in my practice. The project begins and then the owner is hit with a series of change orders that jack the price up to those of the other bids, or once the work is finished, the owner receives a final bill for "extras" that achieves the same result. Or, the contractor cuts corners and substitutes inferior materials or does work that is not up to a reasonable standard. At that point, a huge dispute arises and the parties end up in costly litigation.

Although this post may be filled with cliches, if something seems "too good to be true," it is. Choose a contractor based on references and experience. Do not try to bargain and take advantage because construction is slow right now. It is better to change the scope of your project and pay a fair price. This benefits all of the parties in the end.

Time and Materials Contracts-Are They Illegal in Massachusetts?

2009-10-17T10:47:00.000-04:00

I must admit, this question has been plaguing me as it pertains to Massachusetts. This issue applies to residential renovation only, but I know of many high-end contractors who use this method for their projects.

Massachusetts law provides:

Chapter 142A: Section 2. Residential contracting agreements; requirements

Section 2. (a) Every agreement to perform residential contracting services in an amount in excess of one thousand dollars shall be in writing and shall include the following documents and information:

(1) the complete agreement between the owner and the contractor and a clear description of any other documents which are or shall be incorporated into said agreement;...

(4) a detailed description of the work to be done and the materials to be used in the performance of said contract;

(5) the total amount agreed to be paid for the work to be performed under said contract;

Given that a Time and Materials Contract does not have a price, I would argue that it violates the Home Improvement Contractor Law. Further evidence to support that belief was supplied by the Office of Consumer Affairs and Business Regulation. They administer the Home Improvement Contractor Arbitration Program that is run by the state. The program is supposed to provide consumers (and contractors) with a more economical alternative to resolving disputes than litigation and does not require the parties to hire attorneys.

The Office of Consumer Affairs and Business Regulation recently rejected a claim filed by a colleague because they said that the Time and Materials Contract made it ineligible for the program.

The purpose of a Time and Materials Contract is theoretically to protect both the owner and the contractor. The owner is only paying for the cost of the actual materials (usually with a mark-up) and the actual hours worked. The contractor does not run the risk of under-bidding a job and much of the risk is removed because he is paid for all of the actual effort expended. These kinds of contracts can be fraught with problems because homeowners frequently question the amount of time spent and are frustrated if the contractor cannot substantiate his records. That said, as long as the contractor stays in constant communication with the owner (I believe in weekly meetings), they can work well. They also allow for instantaneous change orders to keep the project within budget.

However, when one looks at the statute, it requires, "the total amount agreed to be paid." Contractors should keep in mind that any violation of M.G.L. c. 142A is an automatic, per se violation of the Consumer Protection Act, M.G.L. c. 93A. Under that law, the consumer may obtain up to double or triple damages, attorney's fees, interest and costs in a verdict against the contractor.

So, a colleague has suggested that one way to avoid this issue is to include a guaranteed maximum price (GMP) in your contract. The GMP could be adjusted if necessary when a change order occurs. It is also important to include a detailed scope of the work to validate that price. I strongly urge all of you to include a GMP in your contracts and make sure that you ask for no more than one-third of that price for your deposit (unless the deposit also includes the cost of custom materials).

I cannot guarantee that this will avoid the question of the legality of Time and Materials Contracts, but we will not find out until this solution is tested in the courts.

Protecting & Preserving Fine Wine

2009-10-15T21:13:00.002-04:00

Here's a great guest post from Paul G. Cox, the Business Development Manager at Vigilant Woodworks on wine cellars:

If you have a growing collection of wine, it may be time to think about building a wine cellar or tasting/entertainment area in your home. Some time ago the custom wine room was unusual; today more and more wine lovers are learning about wine cellar construction or contracting the work out to those who know how to do the job properly.

Wine cellars are more than a dark, cool place to stock a collection of wine bottles. Today’s custom wine cellar is a controlled environment where humidity and temperature are regulated to allow wine to correctly age without damage to corks, labels or the wine itself.

There are two styles of wine cellars. One is an area that has been particularly made to store wine in the correct environment and the other is a stand-alone system that duplicates those conditions. A stand-alone wine cellar is not as effective as a custom-built version, but some people like the aesthetics of a small cooled refrigerator over a custom wine cellar. Those who do choose a custom cellar have three basic considerations for proper creation…

Temperature Control and Venting

A wine cellar room is used to hold and age the wine in the bottle rather than keeping it at a serving temperature. (A stand-alone wine fridge is excellent for carrying wine out of the cellar to hold at serving temperatures.) Aging wine is a balance of time, temperature and the chemical reactions that happen as a outcome of the two.

Wine should be matured in conditions ranging between 55 and 65 percent humidity and a solid 55 degrees Fahrenheit, within approximately one degree. Wine stored at higher temperatures will mature quicker and wine experiences chemical reactions at higher temperatures that devalue the notes of the wine over time.

In some areas of the country, property holders with basements often realize that conditions are right for basic wine storage, but seasonal temperature and humidity variations ought to be avoided. The perfect storage solution is a custom-built or DIY-construction wine cellar with climate and humidity control using a wine cellar cooling component to maintain the temperature at a stable 55 degrees.

These units come in a variety of sizes and the dimensions of your wine room will dictate what size you need to purchase. Never select a wine cellar cooler too small for your room; you most likely will never get a accurate, optimal storage temperature and the wine cooling system will become overtaxed trying to keep up.

Wine cooling units demand proper venting, and your wine cellar construction project requires either a hole in the wall to allow venting outdoors or enough vent space to flow warm air out of the room. Check the specs of your wine cooling unit; most require a venting space at least two times as big as the wine room space itself.

Electrical power is also an issue. Custom wine cellar builders recommend a devoted power source to run a wine cellar cooling system. Those who want to use a common power source frequently find the system overloading with blown fuses and other electrical problems.

Insulation and Vapor Barriers

The wine cooling system is only part of your climate control plan for a custom wine cellar; you also need a vapor barrier made of plastic sheeting used on the “hot” side of the wall. Some people wrap the interior of the wine cellar before inserting the insulation, leaving the plastic loose so that insulation can be placed between the studs in the wall. Cover the ceiling and the walls, or your vapor barrier will be incomplete. After the barrier is put in, the insulation comes next.

Good wine cellar building needs the right kind of insulation for your walls and ceiling. For instance, if you are building a 2x6 wall, R19 insulation is recommended, but if you have a smaller wall of 2x4, R13 may be your best bet. (The “R” designation represents the heat resistance of the insulation.) Ceilings require R30. Custom wine cellar builders should not install the insulation loose without packing the material into the sections, as this decreases the insulation’s effectiveness.

The next step is to install a kind of drywall called green board, which is moisture-resistant, making it a bit more expensive than regular drywall. Install an exterior-grade door to the wine cellar and your climate control plan is complete.

Lighting and UV Exposure Control

Wine is destroyed by UV exposure, which is why the bottles are normally constructed out of dark glass. Avoid putting in fluorescent bulbs in the wine cellar room, as they give off UV radiation. Control the brightness by using recessed lighting on a dimmer and avoid shining light straight on your wine bottles for long periods of time. Some wine cellar racks are made with compartments that hide bottles from the light which can help reduce exposure, but if your bottles are stowed in clear view, try to avoid the “spotlight” effect on your bottles.

Other Concerns

Nearly any kind of flooring can be used in your custom wine cellar. If your home is big enough for a wine tasting room to complement your cellar, you may wish to give them both an identical look, but by no means use carpet and rugs in the cellar area. They simply can’t hold up to the required humidity levels without surrendering to mold. Mold growth will wreck your wine, as can any powerful odor from chemicals or cheeses. A wine cellar should be used only to hold wine; keep food in a separate area.

Constantly examine the temperature and humidity in your wine cellar with an external sensor or gauge. By no means guess that the wine cooling system will always function accurately. A quick glimpse at the external gauge can offer you early notice if the wine cooling unit is having difficulties, or if the unit is showing a wrong readout because of a bad sensor or other technical troubles.

Constructing a custom wine cellar room may require some attention to the design demands of correct wine storage, however once properly built, you may realize that your collection grows quickly; it’s simple to invest more money in wine when you know it will be held safely for maximum delight.

About Vigilant

Vigilant is a premier design/build firm for custom and specialty cabinetry and millwork, specializing in wine cellars and wine storage and display for the home and commercial markets. Check out our extensive educational resources focused on building a wine cellar on our web site, www.vigilantinc.com.

Stylish Solar Roof Panels-A New Product

2009-09-04T09:00:00.000-04:00

Check out these solar roof panels that look like traditional roofing tiles:

http://www.solarfeeds.com/energy-boom/8756-stylish-roof-solar-panels-are-coming.html

Five Excellent Tips to Get Your Home Ready for Fall

2009-09-03T00:05:00.001-04:00

All of these tips are quite doable and environmentally friendly.

http://www.managemyhome.com/mmh/authored/articles/5+Tips+for+the+Dog+Days+of+Summer?sid=twitter

Preventing Fire in Your Home

2009-08-21T09:00:00.000-04:00

An important post on preventing fire in your home:

http://www.managemyhome.com/mmh/authored/articles/Preventing+Fire+in+Your+Home?sid=twitter

This article provides a great public service.

13 Top Bathroom Remodel Trends

2009-08-21T00:14:00.001-04:00

http://realestate.msn.com/article.aspx?cp-documentid=13108041

This is a great article for contractors and homeowners alike.

Home-Energy Plan Spreads Out Costs

2009-08-20T10:18:00.001-04:00

Why can't Massachusetts do this?

http://online.wsj.com/article/SB125064722656442071.html

I know a contractor who has started a business doing energy audits and I am going to ask him to guest blog. Now we just need local loan programs to defray the costs of doing energy-saving retrofits. At the end of the day, the homeowner is saving money by improving the environment, the contractors are getting much-needed work, and everybody benefits.

Five Misconceptions About Home Energy Performance

2009-08-19T11:58:00.002-04:00

I really like this post about the latest options in green products, because it points out that one should educate oneself before "jumping on the bandwagon" when choosing green materials.

http://earth2tech.com/2009/08/13/top-5-misconceptions-about-home-energy-performance/#more-38989

Remodeling Magazine's article on Energy Retrofitting.

2009-08-01T16:26:00.002-04:00

Part of dealing with the difficult economy is considering whether it is time to focus on new areas of practice or developments in construction. This article by Leah Thayer suggests that retrofitting houses with energy efficient improvements can benefit both contractors and homeowners alike.

In fact, I recently met a contractor who had started a new business doing energy audits and making recommendations. I have said frequently that one way to deal with the recession is to take the time to learn a new skill or work on a new area for your business.

Energy saving measures seem full of opportunity. There are many rebates available for homeowners to implement them, so this can be a win-win for homeowner and contractor alike.

http://www.remodeling.hw.net/blogs/postdetails.aspx?BlogId=lthayer_blog&PostId=88266

Do Homeowners Need an Advocate

2009-07-22T23:29:00.001-04:00

http://users.homepros.com/content/blog/656-3

An informative and useful post from HomePros.

What the New Home Buyer Wants-From BuilderOnline

2009-06-21T22:49:00.007-04:00

Even as we worry about today, researchers, community planners, and pollsters are probing consumer demand to predict what they will want tomorrow and the definitive answer from those presenting their findings at the Pacific Coast Builders Show is something different.
The current economic situation has triggered a shift in people’s values from an era of indulgence to one of responsibility, trend tracker J. Walker Smith of Yankelovich said Thursday morning.
That translates to the home-buying consumer as a desire for homes that fit but don’t exceed space needs, are greener, and that are part of a community. It doesn’t mean that buyers are dour, though, he said. Instead, it means the opposite, because the more anxious we get about the economy, the more we look for the bright side of things, according to Smith.
It’s up to home builders to tap into those traits to find a market. “They (builders) have got to be the the voice of optimism for consumers,” Smith said.
Buyers are also looking for homes in a walkable environment with most of their daily needs met in a small footprint. That setting could be urban setting or “suburban-urban," which would be a new development that's not within an urban core, but does include some of the characteristics of a city in a planned community. “We have structurally overbuilt the wrong products in the wrong locations, delivering what the market doesn’t want,” said Christopher Leinberger, a land strategist, developer, and author of “The Option of Urbanism: Investing in a New American Dream."
Leinberger said he thinks there’s pent-up demand for walkable urban product, but concedes the industry hasn’t solved the difficult equation of building them. The infrastructure is costly, he acknowledged, but the final product does command higher prices.
In terrms of the suburban-urban model, master plan communities with urban touches in the form of town centers with grocery stores, restaurants, and retail stores nearby have boosted sales in Newland Communities’ projects as consumers look for convenience and bargains. “Consumers are adapting (to the new market),” said Malee Tobias of Newland Communities. “They are shopping even smarter than they ever did before.”
She also pointed to a new trend called “hiving," which means poeple are spending more time socializing within their community, with neighbors, and hosting events at home rather than driving distances for entertainment. “Entertaining at home is one thing they are not cutting back on,” Tobias said.

The Unrealized Value of Owning a Green High Performance Home.

2009-06-19T23:44:00.000-04:00

From Tony Marnella's Blog at http://tonymarnella.wordpress.com/.

I wrote back in January about the behind the scenes inspections and testing that the green high performance homes get that many don’t know about or if they do, don’t appreciate the intensity of them. Since we continue to hear about Buyers wanting the “Best Deal” or the “Best Value”, it occurred to me that the Value of these homes is also not being realized.

For instance, 100% of the homes we build here at Marnella Homes are built to the Earth Advantage/Energy Star “Gold” level. Our homes are extremely well sealed and with blow-in insulation achieve a very low leakage rating. Also, with our 95%+ HVAC systems, fully sealed ducting and all inside the home in conditioned space. Our home owners save on average $40 – $50 a month in our 1400 – 1600 sqft homes over a similiar sized code built home.

Home owners have been sold over the years all the features that builders put in and are told how great they are and sometimes even how many years the home owner will receive a payback from these features. What so many times doesn’t get either explained or truly appreciated by the home owner or buyer is the value of these features. We took on the venture of Green performance building with the “What’s in it for me” approach. Thinking just selling features to someone who doesn’t know much about the industry will tend to make their eyes glaze over. So, we have tried to show our home owners and buyers “what is in it for them”.

In the case of a monthly savings, this is a direct savings over what they would be paying for utilities at any other new code built home. Plus, even with many builders getting on the green built performance band wagon most are doing just the minimum to get their homes certified so, we are outperforming most builders in our area. This is money that can be for that massage every month, the manicure, dinner, a movie with the family, a ski lift ticket in the winter, etc. So, many things that these homes make easier to afford. Because, isn’t the old saying, “a penny saved is a penny earned” more relevant today than ever before in our life time?

Now that I have addressed the actual savings, let’s look at the added value. Using the $40 – $50 a month in savings, at today’s interest rates that is about $8,000 to $10,000 in additional value to the home. Of course, our lenders aren’t going to let you borrow more because we can show the energy savings, but wouldn’t it be great to know that you have built-in additional financial strength due to the lower monthly cost of home ownership? I do believe that some lenders will eventually see this value and want to work with builders like us once this resonates with them. However, I am not holding my breath for this to happen anytime soon.

Lastly, now that real estate has moved back to a more traditional style of ownership, I feel that the long term value that these homes offer is also important. Energy costs are going to continually rise so, in 5, 7, 10 years or so when we sell our homes doesn’t it seem that it will be a added value to your buyer that your home saves a considerable amount in monthly utility costs over the resale homes that will be on the market at the same time? I think it should now and most assuredly then.

So, buying a home isn’t just the countertops, the carpet and appliances. Sure those are the features that you can see, feel and touch, but don’t over look some of the most important features that truly create the “value” in your home. You can always change your carpet, appliances and countertops, but it tends to be a little harder to retrofit a high performance HVAC system inside your home in the conditioned space if you are replacing a traditional system it’s not very easy to go back and effectively caulk and seal up a home that is already completed.

Please share your comments. I would like to hear from you.

Renovation Junky

2009-06-13T12:41:00.000-04:00

Here's a fun, new site for renovation ideas and information: http://renovationjunky.com/

Building Products Top 100 List-53 Are Green Products

2009-06-11T19:54:00.000-04:00

http://www.ecohomemagazine.com/green-products/readers-top-requested-products-shine-spotlight-on-green.aspx

When Your Contractor Runs Out of Money

2009-06-04T00:13:00.003-04:00

I have gotten numerous calls over the last few weeks from homeowners whose contractors have run out of money. Either the contractors tell the homeowners that they are unable to continue, or warning signs occur. The contractor starts asking for payments ahead of the work, he presses you to sign new contracts or change orders for additional work, subcontractors start to complain that they aren't being paid, or he just disappears.

The homeowners are frantic and they ask me what to do. The contractor hasn't quit, but they are stuck.

First of all, I would recommend confronting your contractor and asking flat out if he or she is having cash flow issues. Contractors frequently apply funds to previous job, subs or suppliers, and in this economy, they are getting caught short. If the contractor is honest and tells you the truth, it may be worth your while to advance some money to the contractor or pay extra and ask for some extras. It may save you money and aggravation to pay your own contractor a little more to get the job done.

Second, do not just terminate or fire your contractor. If you do, you run the risk that your contractor may bring an action against your for breach of contract. Go back and read your contract and see if there are any clauses that address bases for terminating the contract.

Instead, write a demand letter to your contractor. In it, state that you are proposing a schedule for completion and payments to serve as an addendum to your contract. If the contractor does not agree to your proposed schedule or suggest one of his own, then you can state that he will be in breach, and you will "mitigate your damages" (reduce damages) by hiring another contractor to complete the job. That way, the contractor will be the one who is in breach.

A note to contractors: I represent contractors and construction companies and I am sympathetic to your situation in this economy. That said, it is better to be honest with owners and try to work things out then to disappear or keep asking for more money. Now is the time to fess up and ask for additional funds to complete the job. It may maintain the good will you have generated and result in more work from referrals in the future.

Solar Panels for Rent for Homeowners

2009-05-25T18:15:00.001-04:00

This was in yesterday's Boston Globe:

SUN FOR RENT

Boston Globe
It's an old energy problem with a new solution: After decades of facing prohibitively high costs to install solar panels, Massachusetts residents will be able to lease the panels for a tiny fraction of their upfront cost.
Beth Daley
May 24, 2009
-->
Sun for rent
State hopes affordable leases will make panels an electricity option for more homeowners
By Beth Daley, Globe Staff May 24, 2009
It's an old energy problem with a new solution: After decades of facing prohibitively high costs to install solar panels, Massachusetts residents will be able to lease the panels for a tiny fraction of their upfront cost.
Instead of paying $25,000 or more to buy solar panels, homeowners will have to shell out only about $1,000 to install the energy collecting devices on roofs. The companies involved in the leases say most homeowners will be able to recoup the initial cost within seven years through electricity savings - and then save money on future bills by locking in the rate they pay for the electricity generated by the leased panels.
The long-term leases - similar to how residents might contract for cable TV service - are now being offered through a private company, which will take advantage of federal and state subsidies to help lower costs.
"It's great from a green perspective but also from a straight economic argument," said Eric Friedman, a Newton homeowner and state environmental employee who just signed up to lease solar panels.
Governor Deval Patrick is hoping "solar as a service" will help the state reach an ambitious goal of getting 250 megawatts of solar power by 2017. Today, the state has 9.7 megawatts.
Unlike the sprawling Southwest and other sunny places, which can host giant solar parks to generate electricity, the crowded Bay State wants to build up its solar network on the rooftops of urban triple-deckers, big box stores, and suburban subdivisions.
Commercial buildings across the country have been able to finance solar panel lease deals in re cent years, but homeowners were often left out. The costs associated with financing such small projects just didn't make sense to banks.
But the available subsidies - and the high price of electricity here - make it possible for private companies to offer the lower-price option of leasing while still turning a profit.
A company called SunRun Inc., which has done similar business in California and Arizona, is the first company to enter the Massachusetts solar lease market for homes. It owns the solar panels and partners with local solar installers - in Massachusetts, Alteris Renewables and groSolar.
Here's how the program works: A homeowner calls one of the companies to assess the potential for solar at the home and install panels. A one-time, upfront fee of about $1,000 is charged, and the homeowner also is given an 18-year locked-in rate for energy the panels generate. That rate will be comparable to, or less than, what utilities charge, according to the companies involved. If the homeowner uses more energy than the panels produce, they then pay the utility its rate for the electricity.
A typical home getting about 62 percent of its electricity from solar might pay around $77 a month for the solar electricity - and maybe $46 more for electricity from the utility for a total of around $133, according to Alteris Renewables. If they were getting all their electricity from the utility, it might be $151, Alteris estimates.
"We did a lot of market research, and not surprisingly we learned the upfront cost [for solar panels] is too high for people," said Lynn Jurich, cofounder and president of SunRun.
Homeowners who sign up for the leasing program do not have to worry about upkeep of the solar panels: If a panel breaks, it is replaced at no extra charge. They are also freed of other details, such as tying the panels in to the electric grid or applying for the rebates and subsidies. The company - not the homeowner - gets the state and federal subsidies because it owns the panels.
The state subsidy program that helps make Massachusetts attractive territory for such lease arrangements is called Commonwealth Solar. It is offering $68 million in rebates over four years to residents, owners of commercial buildings, and communities. It gives back an average of 40 percent of the cost of solar panels to the purchaser.
Add to that a new federal tax break of up to 30 percent of the cost of the project - the previous federal incentive maxed out at $2,000 - and the price of solar comes down enough to be competitive with traditional utilities in Massachusetts.
The Bay State is not expected to have such generous rebates for long. Already, 716 Commonwealth Solar rebates have been awarded, amounting to more than $25.5 million, according to state officials. Of that, 587 are homes, 113 are commercial or industrial buildings, and 16 are public entities.
But the state hopes the flood of money now - along with other efforts to bring installers and solar manufacturers to the Bay State - will cement the industry in Massachusetts enough to drive competition and lower prices so such generous rebates are not as necessary in the future.
Without the subsidies, SunRun wouldn't be in Massachusetts, because solar is still more expensive than electricity from fossil fuels.
"The goal is to get enough competition to bring down that cost," said Ian Bowles, state secretary of energy and environmental affairs. He said other measures are helping, such as making it easier for homeowners to sell renewable energy they generate back into the grid, allowing utilities to own solar installations, and requiring long-term purchasing contracts with utilities to purchase renewable energy.
The state is also examining making solar a requirement for utilities and other electricity suppliers in the future.
Michael Durand, a spokesman for NStar, a large Massachusetts utility, said the company was supportive of any effort to help reach Patrick's solar goal. "Having a variety of options will be helpful in meeting that goal," he said.
For homeowners, there are some caveats. One, you need sun. The best place to put solar panels is on south-facing roofs that get direct sunlight. And rebates, final costs, and savings can vary based on energy use, how much sunlight you get, and competing electric rates.
One downside might be that panels' cost may come down in the future. Homeowners who move can transfer their solar agreement to the new homeowner, buy out the contract, or purchase the panels.
Still, state officials and solar advocates say the $1,000 or so investment makes sense even in a recession.
"Solar has a guaranteed return," said Adam Browning executive director of the San Francisco based Vote Solar Initiative, a nonprofit that works with states to improve policies to grow solar. "You tell me where else you can get this rate of return in this economic environment."
For Friedman, who is renovating his home as green as he can, his decision to have Alteris install solar panels made sense. Even with all the rebates and other incentives he is eligible for, it would have cost him around $11,500 to buy the panels. His $1,000 investment is expected to be paid back through lower electricity bills within four years.
Beth Daley can be reached at bdaley@globe.com.
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2009 The New York Times Company
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