New Tax Break Takes Shape
Top-Dollar Tarps
Driving the Message Home
Outakes
Resources
University of Colorado Wins Solar
Decathlon
IRS Form
8903 to Be Released in January
Home builders and remodelers who pay W-2 wages may be able to
take advantage of a new tax deduction in the 2005 American Jobs
Creation Act, which was signed into law on October 22, 2004.
Dubbed the Domestic Production Activities (DPA) deduction by
the IRS, it amounts to 3 percent of net income earned from
"construction or substantial renovation of real property in the
United States" for the tax years 2005 and 2006. The percentage
ramps up to 6 percent for 2007 through 2009, and reaches the
targeted 9 percent in 2010.
"Substantial renovation" is defined by the IRS as "the
renovation of a major component or substantial structural part
of real property that materially increases the value of the
property, substantially prolongs the useful life of the
property, or adapts the property to a new or different use."
The Associated General Contractors of America (AGC) interprets
this to mean that purely cosmetic changes, such as painting,
would not be included in this definition. However, in the
September issue of Buildernews magazine, tax attorney Neil D.
Kimmelfield writes that painting and landscaping do qualify if
"the services are performed in connection with a real property
construction project."
The Department of the Treasury clarified in a January 2005 fact
sheet that the builder or remodeler doesn't have to own the
property in order to qualify for the tax credit, so more than
one person can take a DPA deduction for the same construction
project. For example, if a general contractor and a
subcontractor are involved in the installation of a roof on a
new building, both may claim a deduction; each will benefit
based on his own profit on the job.
Unfortunately, some builders and remodelers won't be able to
take the DPA deduction. Because the deduction is based on a
percentage of taxable income, a business operating at a taxable
loss doesn't qualify. Also, the deduction for each year "is
limited to 50 percent of the W-2 wages paid by the taxpayer
that year," so a self-employed contractor — who doesn't
earn W-2 wages — can't take the deduction, either.
IRS Form 8903, "Domestic Production Activities Deduction," and
its instructions are scheduled to be released in January 2006.
— Laurie Elden
Top-Dollar Tarps
Once again, blue-tarp roof repair in the aftermath of a
hurricane is costing the U.S. government a bundle. Knight
Ridder reports that FEMA and the U.S. Army Corps of Engineers
contracted to pay the Shaw Group of Baton Rouge $1.75 for each
square foot of tarp installed on New Orleans roofs damaged by
Hurricane Katrina. That's the same price the government was
criticized for paying the company last year for work in
Florida. Since the average repair requires around 1,500 square
feet of tarp, the bill for each house — roughly two hours
of work for a couple of guys — can top $2,500.
Youngstown, Ohio-based Simon Roofing and Sheet Metal has a
contract for $1.72 per square foot; its president, Steve
Manser, concedes that his company could shingle a roof for the
same amount, but told Knight Ridder that the cost of
mobilizing, feeding, and housing large crews drives up the
price.
Nevertheless, many observers are bound to agree with Mike
Lowery of Pioneer Roof Systems in Austin, Texas, who points out
in the article that the government is paying about 10 times
what his company charges to tarp a roof, adding, "It sounds to
me like these people are making a stinking killing." —
Laurie Elden
Driving the Message
Home
Many builders advertise their company name on their work
trucks, but how about on a customer's car? In an innovative
attempt to increase foot traffic through inventory homes,
Atlanta builder Forrest Homes offers new-home buyers a free,
two-year lease on a Volkswagen Beetle. But there's a catch:
Each car is plastered with advertising for the builder and the
dealership — and the $15,000 lease agreement specifies
that the homeowner must keep the ads on the car. Forrest Homes'
Beth Marconi-Law calls the bugs "rolling billboards" and says
they've provided the company with effective marketing: "They've
generated leads, sales, and great PR — and they've
created real buzz." — Carrie Braman
Forrest Homes has found the perfect advertising vehicle:
Volkswagen Beetles. Above, an eye-catching bug revs up sales at
the Mall of Georgia in Buford, Ga.
Outakes
Hurricane Katrina damaged about 19 billion board
feet of timber in Mississippi, Alabama, and Louisiana,
the USDA Forest Service reported in October. Researchers
estimate that the damaged timber, about 60 percent of which is
softwood and 40 percent hardwood, could provide enough material
to build 800,000 single-family homes and produce 25 million
tons of paper and paperboard. However, the Forest Service
emphasized the need to harvest the wood quickly, before
insects, disease, and fire take a toll.
A new Vermont law requiring carbon monoxide detectors in new
residences and apartment buildings probably saved the lives of
a family of five in October, reports the Burlington
Free Press. (See In the News, 7/05.) The family's detector
sounded after construction debris blocking a chimney caused
large amounts of carbon monoxide to leak into the Killington,
Vt., condominium. Readings taken afterward found concentrations
of more than 400 parts of the gas per million parts of air.
(OSHA standards prohibit worker exposure to more than 50 parts
per million averaged over an eight-hour period.) "There is no
question that the carbon monoxide poisoning would have been
fatal to all five family members if it had not been for the
detector," Killington fire chief Steve Finer told the Free
Press.
Regardless of their immigration status, injured
employees in California are entitled to workers' compensation
benefits, the California Second District Court of
Appeal unanimously ruled in October. In the case, Farmers
Brothers Coffee argued that Rafael Ruiz was not entitled to
benefits because he had used fraudulent documents to obtain
employment with the company and so was in violation of the
federal Immigration Reform and Control Act of 1986. The three
justices disagreed, noting that California law specifically
states, "For the purposes of enforcing state labor and
employment laws, a person's immigration status is irrelevant to
the issue of liability." The court further opined that denying
benefits to unauthorized workers would encourage "unscrupulous
employers" to hire more such employees in order to avoid paying
workers' compensation costs.
Fifty years ago, fewer than half of all American homes
had even a one-car garage. Today, almost
three-quarters of all new houses boast garages for two or more
cars. According to the NAHB, homeowners are increasingly
putting large multicar garages at the top of their wish lists;
the trend in upscale developments in particular is toward
three-car behemoths capped with roomy second-floor "bonus
rooms," which are frequently used as multipurpose recreational
space. For a bit of perspective, consider this: One of these
three-car garages is comparable in size — 1,000 square
feet — to the typical new home back in the 1950s. How's
that for progress?
Every year, more than 100 million birds in the U.S.
crash into windows and die, say researchers.
Skyscrapers, with their vast reflective surfaces and extensive
nighttime lighting, are especially hazardous. "Building staff
at one illuminated skyscraper have reported filling a 55-gallon
barrel with dead birds in the morning," Randi Doeker, founding
director of the Birds and Buildings Forum, told the
Environmental Building News in August. In response, a growing
number of concerned architects and builders are attempting to
reduce bird deaths by making simple adjustments to their
designs, such as using mullions to break up glass and create
visual noise; tilting glass so it reflects the ground; using
etched glass or window film; and installing screens on the
outside of windows.
Resources: Free
Unvented Crawlspace Design Guide
Crawlspace foundations are typically damp, which
in extreme cases leads to mold, rot, and insect damage to the
framing, plus musty air in the living space above. The
conventional approach to this problem — ventilating with
outside air — can make the situation even worse,
especially in the spring and summer; adding warm, moist outside
air to the cooler crawlspace raises its relative humidity and
increases condensation problems (see "Fixing a Wet Crawlspace,"
8/04, and "Building a Sealed Crawlspace," 10/03). Advanced
Energy — a private nonprofit corporation in Raleigh,
N.C., that researches energy use — offers field-tested
solutions to moisture problems in its 2005 publication "Closed
Crawl Spaces," by Bruce Davis, Cyrus Dastur, and Bill Warren.
Photographs, illustrations, and sample designs supplement the
text, which provides detailed instructions for designing and
building a closed crawlspace. The 75-page guide was funded by a
grant from the U.S. Department of Energy and can be downloaded
for free from the Advanced Energy Web site
(
www.crawlspaces.org).
One study of vented and closed crawlspaces in North Carolina
monitored relative humidity levels during the summer months.
The resulting data (above) offers persuasive evidence that
closed crawlspaces stay much drier.
University of
Colorado Wins Solar Decathlon
by
Casey Cass
The University of Colorado had its day in the sun in
October, when it won the 2005 Solar Decathlon. Teams from 18
colleges and universities in the U.S., Puerto Rico, Canada, and
Spain designed and built solar-powered houses for the U.S.
Department of Energy-sponsored competition and transported them
to the National Mall in Washington, D.C. Thousands of tourists
wandered through the resulting solar village while judges
ranked the homes in 10 categories, including architectural
design, comfort, and energy efficiency. Teams were also
required to generate enough extra solar energy to run a small
vehicle, and earned points based on the number of miles they
logged. The University of Colorado drove 318 miles to earn a
perfect 100 points in this contest, bringing its final score to
853 points out of a possible 1,100 for a first-place finish.
Cornell University snagged second place with 826 points.
The next Solar Decathlon will be held in 2007. For more
information, visit the DOE's Office of Energy Efficiency and
Renewable Energy Web site at
www.eere.energy.gov/solar_decathlon.— Laurie Elden
The University of Colorado's solar array
of 34 SunPower 200-watt panels produces 15 kwh per day, on
average. That amount is supplemented by a 180-watt PV system
that also serves to shade the windows on the house's south
side.
The winning team's solar-powered house
sits on the National Mall in Washington, D.C.
To build the walls, students used BioSIPs. These structural
insulated panels are manufactured by spraying BioBased 501, a
soy-based polyurethane insulation, between two recycled
waste-paper SonoBoard panels.
A member of the Colorado team installs translucent,
aerogel-filled panels at the top of the walls. The R-14 panels
let diffuse light into the building without sacrificing
insulation levels.