SPECIAL REPORT
.30/.30 Criteria Stimulates Major Debate
Tax Credit Legislation—In-Depth Report
by Tara Taffera

When Congress passed the American Recovery and Reinvestment Act of 2009 with the goal of stimulating the economy, it also stimulated debate in the door and window industry. According to the new legislation, a tax credit is available for up to 30 percent of the door or window product, up to $1,500. But to receive the tax credit, the door or window must achieve a .30 or lower U-factor and .30 or lower solar heat gain coefficient, which is more stringent than the current Energy Star® specifications. Many were shocked by these numbers and the fact that the legislation ignored Energy Star specifications. As a result, fewer manufacturers were able to offer products meeting the criteria than would have if Congress had deferred to Energy Star. This created two groups in the industry—those who can meet it and those fighting to change it.

The debate still continues. Find out who’s winning, who’s losing, and what everyone can do to move forward. 

Opposing Camps
If you’re a manufacturer that offers at least some products that qualify then you’re probably breathing a sigh of relief. One such company is the Schield Family Brands, which includes Weather Shield Windows & Doors, Peachtree Doors and Windows, Visions Windows & Doors, Crestline Windows and Doors and Vetter Windows & Doors.

“The .30/.30 criteria is stringent and difficult for many manufacturers to meet, but the payoffs for individual homeowners and the country collectively will be significant in terms of energy savings,” says Dave Koester, brand manager for the Schield Family Brands.

Some manufacturers believe that the criteria could have been even more stringent. 

“If anything, the tax credit requirements are not tough enough,” says Wayne Gorell, president of Gorell Windows and Doors. “The reason for the credit, as I understand it, is to stimulate consumers to save this country energy by improving the energy efficiency of existing homes. It was not to accomplish anything else, so the tougher the standards that are possible to achieve, the better for our country.” 

Indeed the tax credit has been a help to those manufacturers whose products qualify. 

Simonton and Andersen, who both offer products that meet the criteria, have brought back workers previously laid off. Both say this is due in part to the stimulus legislation.

While many manufacturers are pleased, others are not, including some members of either the American Architectural Manufacturers Association (AAMA) and/ or the Window and Door Manufacturers (WDMA) Association. Both associations have asked Congress to consider modifying specific language pertaining to expanded tax credits for energy-efficient doors, windows and skylights through 2010.

“AAMA has received an extraordinary amount of feedback related to the new tax credit guidelines,” says its president and CEO Richard Walker. “The responses range from complete support to outrage. The majority of responses received favored an alignment with the fenestration criteria proposed by Energy Star late last year.”

AAMA is urging Congress to reconcile the conflicting language in Part III Energy Conservation Incentives, Section 1121, with Energy Star criteria for fenestration products. 

The WDMA is working to amend the language as well. In conjunction with its members, the association has launched a targeted grass roots effort through its OneVoice™ Advocacy Program to amend the ARRA fenestration tax credit language.

“This standard is likely to create confusion in the market for both retailers and consumers, and will severely limit—and in some cases eliminate—many energy-efficient products from qualifying for the tax credit that are now readily identifiable,” says WDMA president John Stoiber. 

“The Energy Star performance criteria were established through years of cooperative effort between the Department of Energy and window, door and skylight industry professionals and were accepted as the definitive requirement within the previous tax credit,” adds Walker. “As it’s currently written, the stimulus bill sets a somewhat arbitrary standard that not only eliminates the majority of proven energy-efficient window, door and skylight products available today, but also fails to take into account distinct differences in performance required by different climatic regions in our country.”

Some manufacturers, including the Schield family brand, don’t agree with the position of these associations

.In a March 6 letter to President Obama, Kevin Schield noted that the Act provides critical new incentives to encourage homeowners to purchase energy-efficient doors and windows. 

“The reality is that the Schield Family Brands—and many of its competitors—are able to produce windows and doors to the standards of the Act,” Schield wrote. “Any company in the industry could produce to these standards if they choose to make the effort that The Schield Family Brands and others have already undertaken. We urge you to resist firmly any efforts to undermine the energy conservation standards established in the stimulus bill.”

Stimulating the Economy
The goal of the stimulus bill was to jumpstart the economy, and according to those manufacturers who make products that qualify, it seems to be working as they are noticing an increase in business. 

Chris Pickering, vice president of marketing for Ply Gem windows, says that at the end of 2008 and beginning of 2009 consumers didn’t want to invest and there wasn’t a lot of activity in regard to window purchases.

“The stimulus bill really did what it intended,” he says. “We saw a significant uptick pretty quickly.” 

Ryon Ray, manager for NT Window Inc. in Forth Worth, Texas, says that in the first week of March, his company posted a 75-percent increase in orders. 

While there has been discussion in the industry of whether only high-end products qualify, this doesn’t seem to be the case, according to Ray. “All of our vinyl products [low- and high-end products] meet this new criteria with our standard glass combination of low-E and Argon,” he says. 

“We knew we were one of very few that would meet this new requirement, so we jumped on board as quickly as we could in order to inform everyone [dealers, etc.],” says Ray. 

If this legislation had been introduced one year earlier, Ray says the situation at NT Window could have been vastly different. 

“About eight months ago in anticipation of Energy Star changes and how competitive the market would get, we made two huge changes to our product’s features. “We changed to Super Spacer® and Cardinal 366 glass.”

So for NT Window, its standard products meet the criteria in the tax credits. 

Dove Windows in Wilkes-Barre, Pa., has a similar story. In 2008, the company switched to TruSeal’s Duralite so company officials breathed a sigh of relief when the tax credit criteria was released. General manager Bruce Dove says the company’s products would not have qualified if it did not make that change (for more on Dove, see article on page 42).

A Different Playing Field
In a competitive market Ray and Pickering say the tax credits also have given their companies a distinct competitive edge. 

“There has always been this large market where every window is the same, but this now separates some companies from others,” says Pickering. 

He adds that it allows his company to have a deeper conversation with customers in regards to energy efficiency.“

It changes the conversation and presents an opportunity,” he says. 

Pickering adds that some dealers can even use the tax credits as a way to close a sale. 

And for companies that have products that qualify, all say that they aren’t just getting increased business from current customers but are adding new dealers.

Pickering says some dealers may be looking to add to their line or some dealers may have worked with manufacturers that don’t have products that qualify, so they are looking for new products they can sell that meet the .30/.30 requirements.

Those manufacturers that are losing business are working hard to make changes so they can offer products that qualify. However, once the manufacturers make the required changes they then have to get those products tested at a lab. 

“It took us eight weeks to test our products,” says Ray. “If I were to do that now I’d have to wait three to six months … I do have a great advantage over the competition.” 

“Many manufacturers are scrambling to make changes and have their windows retested,” says Ray. 

This retesting can be an arduous process and some suppliers, such as vinyl extruder Chelsea Building Products, are serving in a consultant-type role and helping customers as they tackle this process. 

“We were helping our customers answer questions such as, ‘How does my current product perform and what would I need to do to get it to qualify [if it doesn’t already]?,’” says Gary Hartman, marketing manager.

The company also works with test labs to help make that process easier. Hartman says one of the reasons the labs are so backed up is because many manufacturers are experimenting with different components, etc., to see what products qualify.

“We’re in the vinyl business,” adds Hartman. “But we can help our customers through pointing them to other sources such as glass suppliers, etc., for example, to find a higher-performing glass package if needed.”

Glass manufacturers are indeed helping both their customers and consumers get the information they need regarding the tax credits. For example, Cardinal IG developed an energy calculator that allows individuals to input information to see how much money they would save by installing efficient windows. Its customers, including Jeld-Wen, are encouraging customers to take advantage of the tax credit and to use Cardinal’s energy calculator to see how much money they will save. 

Glass manufacturer Guardian created a guide for its customers and included a variety of helpful information to assist them in understanding the stimulus legislation. According to the guide, “The Stimulus Law does not specify whether the qualification criteria are for center of glass (COG) or total window performance, but there is broad industry endorsement of total window performance as the appropriate measure of window U-factor and SHGC. Total window performance values are required to demonstrate compliance or qualification with IECC, NFRC and Energy Star and it is expected that total window values will be required for the current Law, as well.” ||The Energy Policy Act of 2005 contained tax credits for doors and windows that were similar to those in the current law. Soon after the 2005 bill was signed into law, the IRS issued regulations stipulating that total window performance values were required to demonstrate qualifications for the tax credit. With this recent and directly related precedent as a guide, there is strong likelihood that total window performance will be required to satisfy the requirements of the new law.”

Guardian also points out there are many window configurations that contain Guardian or low-E products that easily meet the criteria, and some exceed it. It also says that there are many configurations from Guardian or competitive products that do not meet the criteria. “For example, aluminum and thermally-broken aluminum windows are not generally available in configurations that will qualify, regardless of which low-E is used.”

With all this information and so many points to consider it’s no wonder that glass manufacturers have been inundated with calls. Mike Rupert, director of technical services for PPG, also points to the fact that there are many variables involved with the window construction which account for whether or not a particular window meets the .30/.30.

“Some [of our customers] are on the fence as to how their products perform or maybe just miss the requirements,” he says. “They ask, ‘Do you have anything else that we’re not aware of? What about spacer materials? Can I gain enough improvement by changing spacers?’ A lot of these answers depend on how the window is constructed to begin with.”

PPG also has information available to its customers concerning how products perform. “We tell customers the benefits of not just the glass but certain spacers, gas filling, etc. The list [of qualifying products] gets to be fairly short when you look at a .30/.30 type requirement. There are not a lot of options for manufacturers to choose from. 

“The vast majority of our products will apply,” says Rupert. “But we would have had an even broader array [of qualifying products] if they had followed Energy Star or the IECC, [which are] more region-specific.”

While many in the industry, suppliers and manufacturers alike, say they were surprised at the .30/.30 numbers, Jim Larsen, director, technology marketing for Cardinal Glass, says, “The number wasn’t a shock. The shock was that it’s here now.”

He says the tax credits almost take the industry into what he describes as a three-tier program: the energy code, Energy Star, and then those that meet the tax credits. 

“These are tough targets to hit [in the tax credits] but they are not undoable,” says Larsen. 

He says the confusing part is that a manufacturer may analyze for one product line but now they have to analyze for all sizes. 

“We still have customers that have products that don’t qualify,” says Larsen. “Those that were marginally into Energy Star have little or no chance unless they step up to new frame designs, etc.”

He encourages customers to use his company’s online calculator tool to make predictions based off of existing window certification based on what combinations could get them into compliance.

“This offers pretty good predictions,” he says. “Don’t waste time testing a window unless you look at that.”

So why didn’t Congress defer to Energy Star? (For more on that, see box on page 26). Many wonder why Congress chose a one-size fits all approach when Energy Star has determined different regions require different products. 

“We manufacture products that qualify,” says David Crane, marketing manager for AGC Flat Glass. “But our message is that all products are not equal. We’re helping people understand the energy costs associated with heating and cooling.”

To this end, the company has posted information on its website to help its customers understand all the intricacies of the tax credits and the company’s position on the issue. 

According to Tim Andersen, product manager, AGC Building Products sales and marketing, to meet the .30/.30 qualifying windows must boast excellent insulation properties and outstanding solarblocking performance. “The problem with these criteria,” says Andersen, “is that in much of the [United States], a solar heat gain coefficient of ≤ 0.30 does not maximize year-round energy efficiency.”

“For the majority of the year, Northern homeowners are not challenged to block solar heat, but to capture it. If they install the right windows, they can actually lower their annual energy bills by supplementing home heating systems with passive solar heat during cooler months,” he says. “The new stimulus bill forces Northern homeowners to specify and install the same solarblocking windows as homeowners in the South—where solar heat truly is a year-round challenge—at least, if they want to receive tax credits from the federal government.”

Although it may not be the best product, manufacturers everywhere are working to change their products so they qualify and this includes those in the Northern zone.

“Every customer in the North is changing his products now,” says Crane. 

Just as AGC believes that the .30/.30 in some cases may account for more energy burned, Lowinski agrees this can be true in some cases.

“We could say that .30/.30 burns more energy than it saves,” he says. “Almost every door would meet .30/.30.”

Lobbying for Change
Thus many in the industry, both manufacturers and suppliers are lobbying members of Congress to amend the law with respect to the .30/.30 requirements. 

Lowinski points out that Rep. Phil Roe (R-Tenn.) has introduced a bill in the House of Representatives with another potential change to the tax code. He adds that the WDMA is working with Sen. Snowe’s office (for more on Snowe, see box on page 26) to get Phase 1 Energy Star requirements referenced for when it goes into effect January 4. 

He does acknowledge, however, that getting .30/.30 amended in the stimulus bill is a challenge. 

“No one on the Hill wants to touch the stimulus bill,” says Lowinski. “But it could be that as part of the energy package someplace later on that tax code could change.”

AGC is also attempting to work with members of Congress to push through a change. The glass manufacturer is working with members of Congress in the states in which it produces product, including Indiana, Kentucky and Kansas.

“We’re optimistic that the criteria will align with Energy Star,” says Crane. 

Others, including PPG’s Rupert, aren’t as optimistic.

“I think Congress has so much more on their plate to go back and revisit [than one or two lines in this bill] regarding this legislation,” he says Rupert. He does add, however, “I hope it happens.”

But Cardinal’s Larsen says simply, “It’s here.” “There are better areas [in which] to focus energies,” he adds. “Phase 2 of Energy Star will be here before you know it.”

He also finds a bright side to the .30/.30 confusion.

“If there is a blessing out of all of this it is that it got the entire industry heightened to energy performance. Future codes will get more stringent …. The only way to meet future requirements is to take these big leaps,” says Larsen.

.30/.30 is an Even Bigger Problem for Skylight Makers

While the recently passed American Recovery and Reinvestment Act of 2009 has raised concerns for many in the door and window industry, they are not only ones. Others, including some skylight manufacturers, have found issues with the .30/.30 provision. According to Roger LeBrun, product certification engineer for VELUX America Inc., the bill was crafted from a windows mindset.

“There are no residentially designed skylights on the market with an NFRC rating that will meet .30/.30,” says LeBrun. “The arbitrary U-factor limits for windows and doors were incorrectly applied to skylights.”

LeBrun explains that vertical windows are installed flush to the wall, while skylights by code must project 4 inches from the building in order to not be a hazard to those who may be working on the roof area.

“In addition, the NFRC rating says the skylight has to be rated on a 20-percent slope, which induces thermal currents on the insulating glass,” says LeBrun. “If you take a window, have it rated and it meets .30/.30, that same unit on a 20-percent slope rates about 70 percent higher.”

“There are fundamental differences between skylights and windows,” adds Wasco president and first vice chair of AAMA’s skylight council. “Skylights always tend to be overlooked.”

Jeff Lowinski, vice president of advocacy and technical services for the WDMA, echoes this concern for skylight manufacturers.

“Skylights got hit in the head with a sledgehammer,” he says. “To a certain extent it’s a completely different issue.” 

“The only way this can be reversed is through amending the law; I’m sure that out of that entire document this is not the only issue and I hope there is an opportunity for a technical correction,” says LeBrun.

To that end, the company has initiated a grass-roots national legislator letter writing appeal.  

Officials at Maine's Wasco are equally concerned and have also contacted members of Congress including Snowe and Sen. Susan Collins (R-Maine). 

“Collins’ office said they are working to change it while Snowe’s office sent a form letter, which didn’t address any of our issues,” says Magnuson. “We’ve certainly spoken up to AAMA as well,” Magnuson added. “They are definitely aware that we are in a different situation.”

AAMA did initiate a grassroots letter writing campaign and one of the letters addressed skylights specifically.

“This standard was arbitrarily set for skylights and is virtually impossible to achieve, and no dual pane unit skylight sold in the U.S. today meets the stated requirement,” the letter stated.

But while waiting to see what happens, Magnuson said Wasco is working on new products. “We’re trying to scramble to come up with a triple-glazed unit that would qualify,” he says.

Sen. Snowe’s Office Provides Some Answers Regarding .30/.30 

Members of the Northeast Window and Door Association (NWDA) participated in a Washington “fly-in” on April 23 during which members were able to speak with a representative from Sen. Olympia Snowe’s (R-Maine) office regarding the .30/.30 criteria for door and window tax credits provided for in the American Recovery and Reinvestment Act. Snowe’s office was responsible for the .30/.30 provisions. 

“Last fall, during the debate of which tax credits should be extended this [window tax credits] were not included,” said Patrick Woodcock, Snowe’s legislative assistant. “[Sen. Snowe] was irate.”

He said the credits were taken out because the cost had ballooned to a billion and a half dollars per year.So when the stimulus legislation came out in early 2009, Woodcock said Snowe was pleased that the proposal included windows, which he points out account for the largest part of the 25C tax credits. But as costs of the legislation continued to rise, cost became an issue.

“The score [costs] went up to $4.5 billion,” said Woodcock. “The Senate then looked to this provision for where to cut.”Another Snowe proposal was that the window tax credits would not take effect until January 1, 2010, was ultimately not included in the bill.

“By doing it now, Senate leadership thought it would save $700 million,” said Woodcock.

He added that Snowe would have even liked to see the tax credit at a higher number. “It was a modest tax credit,” he says.

As to why the .30/.30 numbers differ from Energy Star, Woodcock said the Department of Energy didn’t have its final criteria published, which made it difficult during the writing of this legislation.

He also said the final decisions regarding this were made rather quickly at 3 o’clock in the morning as the legislation had to be finalized. One NWDA member in attendance joked that next time he can call him to get valuable input.

But it’s evident that the numbers were made more stringent than Energy Star perhaps so all manufacturers wouldn’t qualify, which would save costs.

Once Woodcock explained how the legislation came to be, NWDA members told him that, while many manufacturers couldn’t meet the .30/.30 numbers right away, soon most will be able to hit those numbers. 

“As soon as you came out with these numbers, the industry went to work,” said Darryl Huber of BF Rich, who also serves as the NWDA president.

Tom Channell of Chelsea Building Products, NWDA second vice president, added that his company has spent a quarter of a million dollars helping companies recertify their products to meet the .30/.30 standards.

Several attendees asked if the fact that more companies will soon be offering products that meet the criteria would cause the numbers to change again.

Woodcock simply answered, “The legislation is law.”

The group then asked a variety of questions all relating to how the criteria will be enforced. Other questions include what happens to those consumers who purchased windows from January 1-February 17.

“No one should be able to answer that question,” said Woodcock. “Only the IRS can answer that.” 

“What concerns me the most is that there is no reference to a standard in the legislation,” added Jon Hill of Keystone Certifications.

Woodcock advised the NWDA to offer their comments regarding enforcement, etc., to Snowe’s office and she will make sure the comments are given to the IRS as that agency works out the details.Approximately 12 members participated in the meeting with Woodcock.

Karney’s Opinion on .30/.30
Earlier in the day, Richard Karney, program manager for the Department of Energy’s Energy Star program, spoke before NWDA members regarding Energy Star but also addressed the tax credits. 

“It hit me as quickly as it hit you,” said Karney. “We received many inquiries asking, ‘Why can’t you fix it?’” He then joked, “Even I can’t fix it.’”

He said even DOE found out about it at late as well.

“We had no idea it was coming until 24 hours before it was passed.” He added that DOE was never consulted on the criteria.

Karney also echoed what Woodcock would tell NWDA members later that day.

“Congressional staffers said that if it referenced Energy Star the cost to the U.S. Treasury would have been too high,” Karney said.

However, he did say there are two schools of thought on the issue and said he doesn’t have an opinion either way.

“First, I’d love to see Energy Star specified as it would give the program more credence. The second school of thought is, Why not make the windows more efficient?”

He also brought up a point that many NWDA members asked as well.

“The tax credit doesn’t specify a particular rating. Is it center of glass, etc.?”

He says the DOE is asking the IRS for clarification on this matter. The IRS says it will issue further information this spring.

Tara Taffera is the editor/publisher of DWM magazine. 

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