Under a North Carolina law that took effect January 1, thousands of businesses providing renovation, repair, and painting (RRP) services to certain homes and child-occupied facilities built before 1978 face stiff new fees and requirements. The new rules have caused such concern from small contractors that a key state senator has convened a meeting of state environmental and budget officials today to address some of the concerns.
In April 2008, the U.S. Environmental Protection Agency adopted sweeping new rules expanding the scope of regulations beyond the existing lead-abatement program to include firms that perform any work disturbing more than 6 square feet of painted surface in any room or more than 20 square feet of total exterior painted surface in homes and certain other facilities built before 1978.
States had until April 2009 to create a program to manage RRP activities or allow the EPA to enforce the provisions. North Carolina is one of only eight states that opted to create its own program.
Hardest hit by the new rules and fees are sole proprietors and small firms already struggling amid one of the worst housing downturns in decades. Many of these individuals are required for the first time to have their firms certified by the state.
One of the few bright spots in the housing market over the past couple of years has been renovations and repairs, as declining property values and tighter lending have forced many homeowners to remain in their homes rather than sell.
Small contractors performing renovations and repairs feel new fees required by the state, estimated by some industry experts to add from $300 to $1,000 per job, are excessive. The business owners fear they’ll have a harder time competing because larger firms should be better able to absorb the additional costs or pass them on to their customers.
House Bill 1151, sponsored by Reps. Jean Farmer-Butterfield, D-Edgecombe; Beverly Earle, D-Mecklenburg; Bob England, D-Cleveland; and Ray Rapp, D-Haywood, authorized the Division of Public Health to administer the RRP program with the goal of eliminating childhood lead poisoning. The Health Hazards Control Unit helped determined the state’s fees and will provide the services.
State fees higher than federal assessments
While the new EPA rules force businesses to complete approved training, become certified, and purchase special equipment and supplies, some business owners especially are angry about the state’s proposed fees, which are substantially higher than the EPA’s.
Under North Carolina’s program, certification or recertification of a renovation firm is $300 a year; the EPA charges $300 but requires renewal only every five years. To be an accredited training provider in North Carolina costs $150 per year and $2,000 per course per year, 14.3 times more than the EPA fee of $140 per course per year.
Of the eight state-administered programs, only Utah and Mississippi have fees roughly in line with North Carolina’s. However, Mississippi lawmakers set their fees after North Carolina had gotten its fees approved.
Robert Attaway, owner of Contractor Training LLC, a Raleigh-based firm that provides accredited lead renovator and dust sampling technician training in North Carolina and other states, said North Carolina’s fees are unfair because they require a sole proprietor to pay the same $300 to become a certified renovation firm as a large contracting operation employing 50 people.
North Carolina contractors doing business in states that border EPA-administered ones are at a greater disadvantage. If a North Carolina-based contractor bids on a job in South Carolina, the contractor has to charge more to account for the higher fees.
Davis Lane, a general contractor and real estate broker in Wilson, told Carolina Journal he is concerned that the state has not justifed either its requirement to pay fees annually or the higher costs of training and special equipment.
“Renovations are a larger share of business for many smaller companies because of the economy,” Lane said, “and these fees will hurt individuals who already work on limited margins.”
Tony Brown, owner of Realty World, which manages about 300 properties in the Charlotte area, said the fees will drive up maintenance and repair costs. Liability costs also are higher under the new rules, as property owners who want to work on pre-1978 homes either will have to become certified or hire contractors who are.
Why a state-run program?
CJ attempted several times without success to contact Farmer-Butterfield, one of the bill’s primary sponsors, to find out how sponsors determined the fees and why the state created its own program.
Dr. Megan Davies, epidemiologist with the N.C. Division of Public Health, told CJ that lawmakers created the program with the help of industry representatives, naming the North Carolina Association of Realtors as an example. Rick Zechini, director of government affairs for the association, responded in an e-mail that his organization neither supported nor opposed the legislation.
“North Carolina is coming from a public health perspective, not just a regulatory one like the EPA,” said Davies, “and we’ll do a lot of public education and outreach. We don’t resort to fines first, like the EPA does.” Davies also said all the fees will go to the state, not the U.S. Treasury as the EPA fees do.
The budget in HB 1151’s legislative fiscal note shows the Health Hazards Control Unit plans to create up to seven state jobs, costing $365,425 annually. In addition, half the transportation and lodging budget would be spent out of state. Davies declined to answer why so much travel was budgeted outside North Carolina.
Responding to constituent complaints, Sen. Neal Hunt, R-Wake, started asking questions. “Lawmakers and others are not connecting the dots,” Neal said, “and I had to press DENR [Department of Environmental and Natural Resources] officials to admit the fees are higher, but they didn’t say how they came up with those figures.”
Hunt has arranged a meeting for Monday, June 28, so that he and staff from the Fiscal Research Division and the Division of Public Health can discuss the issues.
A public hearing will be held on July 7, for comments on proposed permanent rules for the RRP program. Public comments also will be accepted by e-mail or in writing until Aug. 16.
Karen McMahan is a contributor to Carolina Journal.