Here is the text version of the Zero Energy Ready Home webinar, "Voice of the Builder - Cold Climate-Mountain," presented in July 2017. Watch the webinar.
Alex Krowka:
Presentation cover slide:
We're excited that you can join us today for our second Voice of the Builder webinar, this one focusing on cold climate mountain builders. Our presenters today are Bill Rectanus of Thrive Home Builders, and Hunter Mantell-Hecathorn of Mantell-Hecathorn Builders. Today's session is one in a continuing series of training webinars to support our partners in designing, building, and selling DOE Zero Energy Ready Homes. My name is Alex Krowka, and I provide coordination support for the program. I'm just going to take a moment here to cover some general notes on webinar housekeeping. All attendees will be in listen-only mode, however, we do invite you to ask questions throughout the session in the questions section of the GoToWebinar program. We'll monitor these throughout the webinar, and after each presentation we'll have some time to go over submitted questions that weren't answered during the webinar. This session is being recorded and will be placed on the resources page of the Zero Energy Ready Home website. Please allow some time for this, since it does take a few days to a week or so to go through the process to be added online. However, we will notify everyone once everything is uploaded. Now I'm going to pass it over to Sam Rashkin, chief architect of the Building Technologies Office of DOE, who will give a quick intro to the program and purpose of these webinars.
Sam Rashkin:
Hey, thank-you so much, Alex, and welcome, everyone. As everyone who's heard us speak before knows, we believe that Zero Energy Ready Home and all of its variations is the home of the future. The reason is pretty clear. It's a superior homeowner experience, and often for lower cost of ownership. And on the experience side of cost, of course we always speak to the fact that there's a completely different level of comfort, level of quiet, a level of durability and health and just feeling like you're living in a house that's ready for the future. And all the peace of mind that comes with that. And so, it's great to know that's the future, but we're only going to get there if we have leadership that shows it can be done. And we know it's not easy to go to Zero Energy Ready Home. There are changes that are sometimes hard for some builders to figure out. There are some market conditions that sometimes make it difficult to figure out how to achieve the technical requirements or how to get the sales messaging integrated effectively. And that's why these kind of sessions with builders who are actually successfully building Zero Energy Ready Homes are so important. In fact, when we do the Zero Energy Ready Home training classes, I would say without question my favorite part of the training is when we introduce the "Voice of the Builder." And we have builders unscripted, basically speak to their journey and their lessons learned and their vision for where their company is going. It's just so important to learn from this kind of leadership, because again, this is the home of the future. So, based on that, our team has decided that it would be a great opportunity for our stakeholders to learn from this group of special builders. And today we have two great examples of both Bill and Hunter. We really appreciate them coming, and I hope you keep your ears open and listen for good questions to ask them, because they have truly gone down the path to get to a very special place where they're delivering a great home. So back to you, Alex. I'll let you introduce Bill to start things off.
Alex Krowka:
Thanks, Sam. So yea, now over to our first speaker, Bill Rectanus. Bill is the vice-president of home building operations for Thrive Home Builders in Denver, Colorado. His responsibilities include the management and oversight of the construction, purchasing, and customer service departments. In addition to his daily responsibilities, Bill is also responsible for the implementation of Thrive Home Builders' high-performance building initiative. Bill is very active in the Denver home-building industry, serving on the board of directors for the Home Builders Association of Metro Denver, and formerly as chairman of the Flat Iron Building Council. So, go ahead, Bill. It's all yours.
Bill Rectanus:
Great; thanks a lot, Alex and Sam. I appreciate the opportunity to be here. One quick confession: Of all the PowerPoints I have put together in my life, this might be one of the more basic PowerPoints that I've assembled. Even though the visuals might be a little simple, I hope that the message is thought-provoking and really drives the participants to really think about their business and how they can make changes moving forward toward Zero Energy Ready Home program, or steps along that path to eventually get there. The Department of Energy has suggested a template for today, so I followed that template closely.
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I'm going to start off with a bit of a background. I think it helps when speaking to a group of people to understand where the presenter is coming from. I think companies of different sizes and different locations and different internal business missions have different perspectives. So that you understand my perspective on the industry and this business, I'll give you a quick background. Our company was founded in 1992, so this October will be our 25th year in business. We were originally founded under the name Greentree Homes, and as you can see from the name Greentree, energy efficiency, green building, has always been at the core of who we are as a company, or at least in the desire of our company and what we wanted to become someday. In 1999, we established the company of New Town Builders out of Greentree Homes, and this is when our company shifted from building more or less semi-custom products -- say, golf course communities -- to really becoming a new urban style developer, and a developer of our own communities, where we are actually doing the community development, and creating projects and communities from a raw piece of ground. In 2015, we transitioned the name once again, to Thrive Home Builders. And Thrive Home Builders was established just a few years ago in 2015. The ownership remains the same. The team remains the same. One of the reasons why we changed the name is to really make sure that as we changed and grew our vision and mission as a company, that the marketing of these changes that we'll talk about didn't get lost in the brand recognition of the previous organization. So in 2015 we continued to really desire to be a mission-driven and innovative market leader. And we had worked over the years to start delivering zero-energy homes to the marketplace. And as you can imagine, as you get close to zero, and you're successful in creating the energy efficiency within a home, to get a HERS score around zero, that there's not a whole lot further to go, other than really dialing in the quality of that installation, to make sure you're delivering it consistently with a high quality. At this point we shifted and started to continue our innovation path, maintaining our energy efficiency in the home but really starting to focus on the health aspects of the home. The DOE Zero Energy Ready Home program does a good job of bringing energy efficiency and health and durability all under one umbrella. It's one of the reasons why we adopted it as one of the third-party validations that we achieve for every home that we build, because it does a good job of bringing all of those things together.
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We are a Denver-based, midsized home builder, so we are privately held. We are in a market dominated by big national builders. If you know a big national builder, they probably exist in Denver and are some of our direct competitors. With that, we earn the top 20 for sales volume of all builders in the Denver marketplace. And that puts us right around 240 homes for this year. We are a good-sized builder for a Denver regional builder, but pale in comparison to the number of homes that the big nationals are putting out in our marketplace. And so one of the reasons or supporting reasons, besides our belief in our core mission within our company, that we really push hard to innovate every year and stay ahead of the curve and be the best we can be, in health and energy efficiency, and really strive hard to get the third-party validation from programs like the Department of Energy Zero Energy Ready Home program, is because we need to differentiate in our marketplace. We need to make sure that we stand out and stand above the powerful and dominating big builders in our marketplace.
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The product that we build, we build both single-family and multifamily products. This is a snapshot of the multifamily or the townhome products that we build. We build in several locations. Many of you will hear a lot today about Stapleton development. For those of you that are not familiar with it, it's the redevelopment of the Denver airport, the old Stapleton International Airport. It's a 20-year project. It's been going on out here in Denver, and it's one of the top-selling projects in the country. It's been a huge success in the Denver marketplace and for all the builders who've gotten to participate. We're very lucky to be in there. I'll talk a little bit more in a little while about the effects of being who we are and participating in the DOE Zero Energy Ready Home program have given us, the positive effects that have happened to us in that job site. As you can see here, we do have several product lines in Stapleton. So we have a Central Park Rows and our Bluff Lake Row homes. These are achieving regularly HERS in the mid-50s. We have our Sand Creek Rows that are achieving HERS in the mid-40s. The next one's something we're really proud of, the Stapleton income-qualified product. This is a product that is part of the Denver Affordable Housing Program. It's an income-qualified product that we have to keep the sales price under a certain level to meet 80 percent of median income. All of the buyers have to get qualified through the City of Denver to purchase within this program. And we are so proud to be able to offer these individuals high-performance DOE Zero Energy Ready Home-certified homes to move into, with HERS scores in the mid-30s. Who needs a low energy bill and consistency in energy bills more than someone who's income-qualified. So this is a huge source of pride within our company and within the City of Denver. The next project is our Ridgegate Rows down south. This is an A+ community on the south side of town. We deliver two different townhome series down there, in the HERS in the mid-30s. And this is the first townhome community where we have offered our zero-energy program as an option within that community, where we guarantee a HERS score to the buyer of 10 or less.
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We also build single-family detached, of course. Here's just a quick snapshot of those product lines. We have our Solaris III and Vita products with HERS in mid-40s, standard. These are optional solar communities where they can bring that HERS score down significantly with the inclusion of the optional solar. Hyland Village is a HERS in the mid-30s. That has a 2.4 kilowatt solar system on it to get it to that range, standard. And then the next three communities are what we call our zero-energy communities, where we guarantee our homebuyers a HERS score of 10 or less. This is our Lowry project with two series: Our Courtyard and Parkside, our ZEN 2.0, and our Panacea products. All of these homes are certified under the ENERGY STAR program, the EPA Indoor airPLUS program, the DOE Zero Energy Ready Home program, and now LEED for Homes. LEED for Homes has worked with DOE Zero Energy Ready on a DOE Zero Energy Ready Home pathway, where you can get LEED-certified simply by following the DOE Zero Energy Ready Home requirements. You get 98 percent of the way there. Accumulation of a couple extra points, and for us, our low HERS scores are enough to give us those couple extra points and gain the LEED certification, basically without doing anything extra above and beyond the program. So to continue to maximize the differentiation in our marketplace, we are working with LEED and certifying every home that we build with this, the LEED moniker, as well, through that DOE Zero Energy Ready Home pathway.
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One of the topics that DOE suggested we talk about was marketing. Marketing the DOE Zero Energy Ready Home logo is really important to us. We are a firm believer in third-party validation, where we can talk to our buyers all day long about what we do and why we do it, how great the home is. And there's a level of belief there, from our consumers. But that level of belief is amplified, supported, and validated through achieving these third-party validations and certifications through programs like DOE Zero Energy Ready. And so utilizing the logo and the information provided by those programs is really important to us.
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And some of the ways in which we do that -- obviously our sales collateral. We utilize those logos on every piece of sales collateral we have. You'll also notice on the sales collateral here that the healthy home is at the top of the list on here. Not only are we focusing on the logos at the bottom, but our included features list includes those things, and we talk separately about those items in the home that bring health and efficiency to a high level within that home, well above and beyond what they're seeing from other builders. So beyond the granite and the cabinets and the tile floors and the standard hardwood, we make sure to set aside a section of our included features sheet to talk about the included efficiency and the included health.
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Obviously our signage is really important to us, to have signage out to direct buyers to our communities. And it is also very important to us to make sure that we are continuing that differentiation out there, so they are going to a sea of builder signs out in the community and around the community, that there's something on this sign that sets us apart from the beginning. And the DOE Zero Energy Ready logo does a great job of that for us. You'll notice I listed window clings on here. I don't have a photograph of those. But we have some window clings created with the DOE Zero Energy logo, that we put on all of our models. So as you walk in the front door of our models, you see that window cling right there in the face of the buyer, before they walk in the front door.
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We use the material provided by DOE Zero Energy Ready Home. And this "Lives Better, Works Better, Lasts Better" sheet is one of the most powerful methods of delivering that message to our buyers we have. It's really concise, it's well-thought-out, simple graphics that show how much better the DOE Zero Energy Ready Home program is than existing homes and just a standard ENERGY STAR-certified home. This really helps us have that conversation in a basic and simple way without getting too technical to the buyer, or getting into conversations that the buyer is uncomfortable having or doesn't have the expertise to have. But it gives them this snapshot that they can take home with them, that really, again, sets us apart.
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Website. Clearly on the website, we're utilizing the logos on every page that makes sense. We actually have, as you can see at the top there, "Energy Efficient Living," we have a section of our website specifically dedicated to talking about our energy efficiency and our health. And one of the big shifts we've had in our company, in our marketing, that we'll talk in more depth about in another scenario here in a few minutes, is we've simplified our messages. We've always wanted to work really hard to get all the technical aspects of energy efficiency and health down, and execute them really well. And it's hard. And there's a lot of detail that you have to pay attention to out there in the field. And we want to tell everybody about it. We want to talk about all the things that make our homes different. Most buyers aren't interested in having a technical discussion when they walk in the front door. So we have shifted away from the list of features and talking about technical advancement, and really simplified our message to be more of a how-you-live-in-the-home and how it affects your life. Make it more personal and simple so that they understand it. Buyers will ask the questions. They'll get technical. And we're prepared to go there. But in the initial messaging, we keep it simple, meaningful, related to their life and how they'll live in the home, and how it changes their experience of living in that home.
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Obviously, social media, you see here, Facebook, Twitter, we're using the logo. We're proud of the partnership we have with DOE Zero Energy Ready Home. We're proud that we're able to get 100 percent of our homes validated within that program, and certified. So we talk about it on social media. And we use that moniker when we're talking about new plan releases. Interesting, this Tweet on right is actually from a local Realtor. And he has utilized some of our marketing material to talk about Thrive on our behalf out there on Twitter. Because we've utilized the logo in all of our marketing, he too is utilizing that when he's speaking about us on Twitter on our behalf.
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Obviously the Housing Innovation grand awards we're received are -- this is one of the biggest sources of pride within our organization, within our people. They were very proud to have been recognized by the Department of Energy with these awards. And so we talk about them. We actually had replicas made of all the different awards, and every single community has these crystal statues in their office somewhere, on display, once again reinforcing that we know what we're talking about, we're good at what we do. When we talk to you about the difference between our homes and the others, here's another source of validation given out by our competence. They're talking to somebody that is telling them that knows what they're doing. It's been really impactful to some of our buyers, especially for our sales people, to have just another touchpoint with them, to set ourselves apart from the competition down the street.
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This is a big one: Building Science Center, something that we've done for a long time. This has really transformed over the years. We build a Building Science Center in every model complex that we have. And we utilize that to once again illustrate the differences between us, other builders, and existing homes. And when we started this, we were technical, like I said. This was our initial Building Science Center, where we had cutaways of a typical home, an ENERGY STAR home, a Zero Energy Ready Home. And we would take people out there and talk about HERS scores and SEER values and HSPF, and you name it, we had a sign up there talking about it. We could say, HERS is better lower, SEER is better higher, E-values are better lower. And it just blew people's minds. They weren't prepared to have this conversation with us. Some of the engineers and physicians that we sell to loved it. They'd get into long conversations with us about it. But the majority of the buyers walked away. When we focus-grouped our buyers, they walked away with two things: These guys are different, and these guys care. And for us, that was a perfectly fine message for them to walk away with. But it gave us pause, that we're presenting information -- it's getting in the right messaging in the end, but it's too much. It's turn-the-firehose-on information on them, and it's not really the way we should be presenting this.
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So we shifted our approach. In partnership with one of our energy partners, Owens-Corning, we sat down and really started assessing how to best get the message across. This is one way in which we did it. We wanted to talk about the financial benefits of energy efficiency, delivering a zero-energy home. This is one of our zero-energy homes; it guarantees a HERS score of 10 or less. So we say, what's the power of zero? You can see the bubble there. And we're connecting the dots. The dot goes to a giant pile of money. This is the actual amount that, if you take the savings listed on the back of the actual HERS report for that house, and you multiply it times 30, as if you're putting that money under your bed in a shoebox, you come up with $108,000 that this house will save you over a 30-year mortgage. What do you want to do with that? Well, how about send your kid to college? Connect the dots. Simple message, powerful message, about your life, about your family. Trying to illustrate that this home will give you something different than others will. And we continued on really focusing on getting away, trying to find the perfect blend between technology and emotional messaging.
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And so we still wanted to talk about some of the technology that's in our homes. And we chose our double 2-by-4 wall, which we'll talk about in a few minutes, as well. This is really a way to differentiate and show how we stand apart, and give them just enough technological information and specific structural differentiation between other builders to support the emotional messaging we're giving them.
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We actually felt, after we completed that Building Science Center -- this is one of our newer ones -- we felt that maybe we left out an opportunity for some additional technical reinforcement. And so in this one, we added window sections back in, so we could talk about flashing. You'll see in the background there, we added heel height on our trusses to show our 14-inch heel height that we have, and how much more insulation you'd get out of it with that top plate. You'll notice down below that, we still have the wall sections. We have three separate wall sections that we're still showing that. And then the emotional messaging that we sought before is still delivered in that room; we just felt like we needed to up the technological support of that messaging.
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We also deleted a section out of the old one that we called "Zero Compromise," where we were talking about, you didn't need to compromise on the aesthetics of your home to get energy efficiency. You don't need a box with no windows. You can still get a beautiful home. We deleted that and replaced it with this DOE Zero Energy Ready Home messaging. You'll see that we took the bar graph of the trifold brochure and basically put it on our wall. Once again, I said how effective that was, to really have that simple conversation. So we felt that was a component of the DOE messaging we really wanted to incorporate in our Building Science Center to help us have those conversations. We have now really gone more emotional, more simplified messaging in our most recent one.
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So we're trying something new. We've looked at how some other big -- you know, the Apple stores, the Tesla stores -- how are they marketing their consumers? And we're trying something new this year. We still have those other Building Science Centers in production. They're still out in our active job sites. But one of our new communities, we tried this, where we've really distilled it down to simple, impactful, powerful messaging that allows us to have the conversation and still a little bit of that technology in there. So you'll see that graphic on the back wall. That's talking about the beetle lumber that we used to frame our houses with. The beetle blight in the mountains has been horrific. They're a dead force all over the Rocky Mountains. It's really impactful to our buyers to know that we are doing our part to take their standing dead trees that have already died and use them for a positive purpose in building in their home. So that's a powerful message from us. You'll see this box, this island down the middle, and that's "If these walls could talk" island, and you'll see on the front here, where once again it's still talking about that double 2-by-4 wall. The back side had our (inaudible) drywall on it, So we still have that technical aspect in there to give them those little points of reinforcement.
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But here's a great example of the simplified impactful, powerful messaging we're trying out. I'm not sure if you could read that, but this basically says -- this picture of the mother feeding the baby -- it basically says, "What she's breathing is just as important as what you're feeding her." And that gives us an opportunity to really start talking about the health, the ventilation system, the things that we do in our homes that are so different that are going to make an impactful difference in their lives in this home. A little more technology in the background. You'll see we've got the Tesla power wall back there. This particular series is offering the Tesla power wall as a standard feature, along with the inverter. So once again, we can talk about, we get to associate with a good industry partner and talk about the efficiency and give another visual. Most of the efficiency that we do in our homes is behind the walls. This is right in your face, right up front, that we get to talk about and they get to see in their homes every day. So we have this side in here.
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As far as technical strategies, to get the efficiency and the health that we deliver in our homes, we talked about the thermal envelope, the double 2-by-4 wall. In a cold climate like this, the R-value of the wall is very important. A lot of strategy in this type of climate is putting the insulation on the outside, with foam insulation. We've done a lot of studies on this, and it's our desire to deliver the most efficient home at the most affordable price, so that we can bring more efficiency to the general marketplace. And we've found this to be much more cost-effective (inaudible) in our market. We've also taken the time to step back and do the modeling to ensure that we're not causing a problem in our walls, so in this climate we're not getting moisture or mold. We've used some of our industry partnerships and ran significant amounts of working analysis to ensure that these walls are going to perform in a climate that we're utilizing them in. Not the right solution for every climate zone.
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Air-sealing. Thermal envelope and air-sealing are two of the most important things to tackle right off the bat if you're heading down a path to energy efficiency. This is where you're going to get the most bang for your buck, as far as energy efficiency and comfort. When we look at air-sealing, there are two components that we utilize that I think make the biggest impact. One is foaming the rim joist. The rim tends to be a high point of leakage. We do a thin skin coat of closed-cell foam around the rim to seal that up, and then batt behind it for additional insulation. That really tightens the house down. We use our drywall as the air barrier. So sealing that drywall, making sure it's tight, is really important to us. So we worked with our industry partner Owens-Corning, and they provided us a study of the highest points of leakage in a home. And taking that study and then pulling one of their products, this lower picture, this pink line across the top of the top plate -- that's Energy Complete. And what's really amazing about Energy Complete, is Energy Complete forms a gasket. It's soft and pliable, and it stays that way forever, unlike caulking, that will eventually dry and crack. So you may have a really tight house now, but how does it perform five or 10 years from now, after that caulking dries and potentially cracks? We don't know. So we felt that this was a great solution that provides a long-term air sealing for our homes. It's more expensive, but if we apply it strategically in the right places we're getting 95 percent of that air sealing that we want and getting these homes -- our average single-family home is 1.3 ACH 50 to go. Not the path of house standards, but a really, really tight, efficient home using this strategy.
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IAP documentation. So as far as the DOE Zero Energy Ready Home, Indoor airPLUS from the EPA is a component of that program. And one of the challenges we found with making sure that we had all the documentation that we needed, that we were getting the right product. One of the ways in which we did this, is we made sure it was in the specifications. You'll see here that the specification for paint says that the paint coatings much be certified by one of the following programs. Must meet the Indoor airPLUS program qualifications, then you must provide us a copy of that validation with your bid. This allows us to ensure that they saw that when they bid the project and we're not getting surprised that they didn't bid the right product or didn't provide us with the appropriate product that we're specifying for this home, and thereby give us not only a bust in our specifications but a bust in our budget. And once we get those, we accumulate all those into site-specific IAQ compliance binders that our field gets and our purchasing team gets. And we keep these updated as vendors change and as projects come online. We've got this for the Panacea project. You can see on the right. That's just an example of some of the certifications that we've seen from Mohawk that they are Green Guard certified. It's been a real help to us in that communication with the vendors, to actually require a piece of paper from them and make them think through that before they get the job. Hot water distribution can be another challenge. Within this program, we found a really effective solution to that via Navien tankless water heater. It comes with an integral recirculation pump and an adaptive learning strategy. So like the Nest, it learns the behavior of the occupants and distributes the hot water at times of day of high use, to make sure that we're getting that energy and water savings that we want. Obviously this goes along with a structured plumbing within the home. You have to plumb the house right with the right recirculation loop. You have to pay attention to the distance from the main loop to the branches and trees that go out to the individual fixtures. You need to make sure that they're the right length and that the vendor is paying attention to that, because we can't hold a lot of water in those types, outside of the loop. That loop needs to be as close to each fixture as possible. That's been a training issue with our vendors, that we spend a lot of time with in the field, on the first house, making sure they understand what the requirements for each, how to achieve it, and that the tool to achieve it is the Navien, but without their proper plumbing and the structured plumbing system it won't work.
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I just mentioned training. And I think training is a technical strategy that we pay very close attention to. The labor force is not as well-trained as it once was. It's certainly not as abundant as it once was. And as we continue to innovate and as we continue to deliver energy-efficient healthy homes to the market, not only do we have to make sure that our people are trained, our sales people are trained to deliver a message, we have to make sure our vendors are trained. And we have to provide that. We have found that if we want to ensure that our vendors know exactly what we want out of them, it's incumbent upon us to teach them. And so we do that. This is an example of an internal training, where I'm training our internal people. In this room are sales people, land development people, purchasing people, and our construction people. This is an all-hands meeting, and in every one of them, we spend 20 minutes talking about energy efficiency or health. And we go over a topic to ensure that we're constantly repeating this message out to our team, that they're paying attention to the detail that has to be not only specified and bid, but accomplished out in the field.
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We have trainings out in the field. Now this is a picture of a safety training, where we do the same thing for our vendors, where we'll fire up the barbecue grill and we'll come out, we'll pick a topic to train on, as far as energy efficiency, whether that's an air-sealing strategy or advanced framing strategy. A lot of times these are focused with trade groups. We've had a lot of insulation trainings recently with all the insulators, because that particular trade group is struggling in this marketplace, for whatever reason.
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Here's another example where we brought Schluter Systems into our office. This is another training where we have mixed vendors, Thrive employees, including purchasing, construction, and sales, all in this room learning about the product and how to properly install it, and why we're using it. It was amazing when we made the decision to go to the Schluter System. Not a requirement of the DOE Zero Energy Ready Home program, but a durability issue that we were dealing with, and a trade installation quality issue that we were dealing with in the field, that we solved through this method. But it's an example of why training works so well. Our purchasing team didn't really understand why we were spending the extra money on this. And then after this, one of my purchasing agents came to me and said, "Omigod, I don't want to go back to my house." Because she realized that her home doesn't have this. Why would you build a home that doesn't have some sort of water strategy for the wet areas of the home like this particular system? Seeing these light bulbs go off in these trainings has been so rewarding.
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This is an example of the training that we've recently started in selling ERVs as a ventilation strategy. So we had to make sure that our HVAC contractor long understood the method in which we wanted them installed, and that our energy rater knew how to commission them appropriately, and that our HVAC contractor knew how to set them up appropriately so the commission was successful. This is a manufacturer's rep giving us, our energy rater, and our HVAC contractors a hands-on training showing us how to do it. It is imperative to utilize the resources in your marketplace -- those experts, those energy raters, the building science experts, the manufacturer's reps, to ensure that you're getting what you're specifying in your home. And our training program has really been a key component of that.
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First business lessons learned. This is one of the topics that was suggested by the Department of Energy for me to talk about today, so I picked one. And I picked the one that everybody seems to ask: Do we get paid for what we do? I know a lot of arguments for energy efficiency say that, I don't get paid for it, so why would I put the extra money in your home? So I'm going to give you a couple of quick examples. There was recently a study out in the market showing that Thrive Home Builders has the second highest price per square foot in our marketplace. Sales price per square foot in our marketplace. The one builder that's ahead of us is a luxury home builder that has always been the highest in the marketplace. So that's a little worrying, right? Worrying for us -- we have the highest price per square foot in the market. Uh-oh. But then we compare our hard-costs-to-sales-price ratio with the national average put out there by the NAHB. The national average is 63 percent of sales price equals the hard cost of the home. We're at 62 percent. So a little bit higher, but not out of line, not in a way that makes me concerned about having the second highest price point per square foot in the marketplace. Opportunities for lots. This has paid off in spades for us. The Stapleton community, the most successful master plan community in the Denver marketplace, we now have eight product lines in that community. Developers never allowed a builder to have eight product lines before in a community. Recently, I think we know why. They're doing a grand opening media event with their new section of the community, and they want to hold it in our model. In our home, with our Building Science Center, with our Tesla power wall hanging on the wall, we are a good reflection upon their community. And by giving us the reward for that, the reward for being a good partner and a leader, has been more product lines in this community. For a small builder that builds 240 homes a year, this is incredible payment on our investment. Hyland Village is an example where the municipality actually sent the developer to us. The developer was trying to get their project approved through the municipality time and time again. It wasn't getting approved and the city literally said, if you want to get this community going, and you want to deliver upon your mission, call this builder. And we are building in that community today. Perrin's Row is another example where the developer was trying to get TIF financing -- this is tax increment financing -- and because we were a partner, because of the message of energy efficiency that we were able to deliver to that city council, and the level of brand awareness that came with bringing us to the table, the developer was able to get TIF financing, which reduced his costs, which in the end reduced our land costs and made the community work, made the numbers work on this job site. Interesting enough, we won a grand Housing Innovation Award for this particular community. We took the time to go back to the mayor, to the city council, and give them a certificate, letting them know that they have a grand award winner from the Department of Energy in their community. The next time we go to that city, to that municipality, with a project, I have full confidence that we are going to get every ear on the council and of the mayor listening to what we would like to do, because we have proven ourselves through the execution of that job and the recognition we received, and they received through having that Housing Innovation Award winner in their community.
And finally, a little anecdote from the meeting we had recently with the developer that has 3,000 lots that he's trying to bring to market. And we went and sat down with the developer and thanked him for the opportunity and said, you know, as a small builder in a sea of giants, we really feel blessed to be at the table talking to you. And he says, you may be small, but you are the gorilla in your space. And that has to do with brand. Brand does that for us.
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I talked about industry partnerships: Owens-Corning, Tesla, Panasonic, and just as important, other leading builder allies throughout the country. We have developed relationships across the country with giant manufacturers, other DOE Zero Energy Ready Home builders. And these industry partnerships pay dividends. The access to Owens-Corning's building science team or the ability to be a launch builder for Tesla for their power wall version 2 in the new home builder industry. To work with Panasonic behind the scenes on new ventilation strategies. To be the builder at the table having conversations about our needs and what we think the market needs as far as products. These are invaluable to be a part of, from a small builder. Not only do they get us on the cutting edge of the next technology, but they continue to build a brand. And so with that, my final I guess piece of advice for those people going down this path or utilizing the DOE's energy program, is build a brand. And that's hard, because you can't compromise. We've had many opportunities and projects to say, hey, you know, if we just didn't do solar, and we didn't do this, we didn't do that, we might be able to make the numbers a little better. But the one thing that we stood firm on, is we're not going to dilute the brand. And you know you did that when you can make the brand work for you. And a final story of a leading ally builder that we've become good friends with in South Carolina, 10, 15, 20 houses a year, you know, pounding the pavement looking for lots. He came to us and said, (inaudible), I just recently got two phone calls from people that hold land of 40 to 80 home sites, and they want me to be their builder. And he didn't have to go pound the pavement; they came to him. And our message to him was, you've made your brand work for you; congratulations. And so with that, that's my closing message. If you go down this road, if you're on this road, make the brand work for you. It's powerful. It helps. And I hope that I've shown a little bit of light on how it could be a benefit to your business.
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Thanks.
Alex Krowka:
Great; thank-you, Bill. That was fantastic. In the interest of time, though, we're going to hold off on the questions until the end of the webinar. So I'm going to do a quick introduction to Hunter Mantell-Hecathorn and then let him get started. Hunter and his father and business partner Greg have been building high-performance homes in southwest Colorado for over 11 years. Greg and Ledbetter Hunter built in Alaska and the San Francisco Bay area starting in 1975. Hunter earned his NAHB certified green professional designation in 2009. And he and Greg were the first two in the state to earn their master certified green professional designations, in 2011. Mantell-Hecathorn Builders is a two-time HIA award winner and is committed to building 100 percent Zero Energy Ready Homes. So go ahead, Hunter, it's all yours.
Hunter Mantell-Hecathorn:
Alright. Thank-you. And thank-you, Sam. Thank-you, Alex, thank-you, Bill. That was a great presentation. Lot of good stuff in there. Let's get this started ... There we go.
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So ... as Alex said, Mantell-Hecathorn Builders has been around since 1975, starting with my dad building super-insulated homes in Fairbanks, Alaska. When the economy collapsed in the mid-'80s, we moved to the Bay area of California, where we performed remodels and additions for discerning clients. After 18 years in the Bay area, we decided to move the business to Durango, where I went to college. We have now been in Durango for about 11 years, building custom homes. So it was here in Durango we decided to truly adopt green building practices. Part of the reason for making this effort was to differentiate ourselves as conscientious, high-quality builders in an area where there was no contractor licensing program and very outdated codes. But it was also because we saw true value, and it was something we really believed was just the right thing to do. We have built homes to quite a few different programs, starting with Built Green Colorado, but also NAHB Green, ENERGY STAR, and now Zero Energy Ready. Also like Alex said, we're 100 percent committed to building our homes to ENERGY STAR and Zero Energy Ready Home program. This means when clients make the choice to use us as builders, it is already just part of what we do and not an option we offer. We are known locally as the leaders in high-performance home building and have served on both city and county code adoption boards, trying to get them to update their codes beyond the current 2003 for county and 2006 for city levels they are at now.
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We build about two to three homes a year, ranging in size and complexity from 1,400 square feet to around 6,000 square feet. Durango is mostly in climate zone 5, with some of the areas by the ski resort in zone 6. Although it's certainly not Fairbanks, we do experience some decent winters, but also see the benefit of plenty of sunshine. Typically our homes achieve HERS scores that land in the 30s to the 50s before PV, and then depending on the clients' wants, needs, we kind of back into the PV section and see what they want to do. So marketing.
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When it comes to marketing, our number-one tool is our website. We have recently spent time updating and refreshing the look but also updating the content.
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As a small family-run company, it can be hard to find the time to spend on this, but I think especially in this day and age, it's crucial to stay on top of.
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Whether through search engines, print advertising, or our job signs, we are always trying to direct people to our website, where we can not only show great pictures of the houses we've built, but also to explain the benefits and reasons why building to standards like Zero Energy Ready matter.
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We also try to put ourselves and our message in front of people through a few local print publications.
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Our area sees a lot of tourism and out-of-town visitors, which is a primary source of clients for us, so publications like this, which was in the real estate guide, can have really good exposure for us. It's available as people are walking down Main Street, and around the community. And they can just pick it up when people are looking for land or looking for what things cost to build here.
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In the past, when we have been a finalist or selected as a Housing Innovation Award winner, we use this opportunity to further distinguish ourselves as leaders in high-performance building. Plus, we get to use a photo of Sam, which is basically like having a selfie with Taylor Swift. And yes, we both plan on wearing plaid shirts that day. I think one of the most powerful marketing opportunities you can use is client testimonials. I could go on and on about how cool HRVs and ductless minisplits are, but to have a client say something like, "Our house barely sifts energy.
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The bottom line for us is that our Durango house will cost us a tiny fraction of what our Texas house cost to operate. Factoring that into our cash-flow calculations, these savings will have a material impact on my retirement plans. In effect, selecting Mantell-Hecathorn Builders to build our house will likely allow me to retire three to five years earlier than I had planned. Pretty powerful stuff, for a fact. So thanking you, Greg, Hunter, and Tara, for giving me those years. They will be priceless to me."
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Or another one: "When we were exploring moving to and building in Durango, there was only one clear choice for a builder: Mantell-Hecathorn. The two deciding factors for me were, 1, their level of sophistication on best building practices. As someone who designs and engineers things for a living, every other builder was different build, same process. They were using the lowest level of insulation to build the materials as possible. If your prospective builder shows you a project and they use OSB for sheathing, you should run. 2, accountability. MHB is one of the few builders that I've encountered that conducts third-party independent testing of all their builds. It ensures that, as a homeowner, you have objective metrics and ratings on the quality and efficiency of your build, and not just the contractor's word. In short, I don't understand why anyone would build with any other builder. MHB is one of the best in the country. Durango is fortunate to have them based here." Yea, we didn't pay them to write those, but it is pretty darn -- I mean, it means a lot for a client to make those statements about us. I urge you, if you haven't already done so, to reach out to your past clients and get them to deliver your message for you. Because coming from somebody else, it means a whole lot more. I also completely agree with Bill about simplifying the message. I can be definitely guilty of geeking out and getting too technical when having discussions with clients. Usually they start to glaze over and I lose their interest. So, to help with that, there is a tool on Building America Solutions web page, which has already simplified the concept in technical terms to something clients can more easily grasp and understand. I do have a slide with that later, with the websites.
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Technical strategies. I could get lost in this, too, like I said. So I'll keep it brief. I think one of the biggest challenges when it comes to building a high-performance home would be the general lack of knowledge of what it means to achieve a certification like Zero Energy Ready. For our area, this is maybe even more difficult because of the current outdated codes we are following. So when subs or tradesmen come on the job, they are used to doing things the standard way.
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Luckily, we have been able to find and use the same subs for our jobs, so they have grown to learn what we expect. So this leads to a critical solution, which I'm very envious of Bill and his team to have learning centers and being able to get, have the resources available to put on training sessions, because they are invaluable. So for us, you know, we still try to educate our own crew, subs, suppliers, Realtors, clients, bankers, appraisers, pretty much anybody associated with the project. This may mean putting together binders with specific details and specs, including relevant sections within the contract and scope of work for each sub. Or maybe if you run your own crew, you could send them to a daylong education seminar to further their knowledge of high-performance building.
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If this isn't possible, turn them on to different resources available online, like Building America Solutions or Green Building Advisor. A lot of good content out there. Stuff's kind of already been figured out and simplified, like I said earlier. So something that guys that aren't real familiar with all of the jargon and stuff, they can quickly learn what it means through some of these things. I mean, shoot, even if you have to print out relevant articles and hand it to them, it's worth it. And I understand it's easier said than done, but getting those people who come on your job to be more aware and knowledgeable of their impact on the whole house will only make your life easier.
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So another challenge for us has been finding a truly cost-effective wall system. We've built double-stud walls, SIP panels, flash-and-fill cavity insulation, and outbound rigid insulation.
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The problem for us is each home is truly custom and unique, therefore what worked well on the last design doesn't necessarily work great for the next one. Lately, we've been doing a lot of rigid exterior insulation, along with the flash-and-fill in the cavity. The biggest problem has been the time-consuming process of attaching the furring strips, and then the time it takes to detail around windows, depending on your finish.
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But if I was to recommend a wall system, I'd probably lean toward the double-stud wall. This is what I did on my own house, and it was pretty darn efficient, and very effective as a high R-value. On mine, it was a 12-inch-thick wall. We actually had to do a 2-by-6 load-bearing outer, just because of wind loads and stuff, and a 2-by-4 inner. Then we actually did a flash for dewpoint considerations, flash of about an inch and a half, 2 inch, and then filled the rest with loose-fill fiberglass to get about an R-52. So great R-value. Allowed us to heat and cool the whole house with ductless minisplits. But one of the keys is incorporating this into the design from the beginning, so that the lost interior space due to the thick wall cavity can be accounted for and adjusted if necessary. You know, with only the rain screen material on the outside, it definitely saves time on the exterior siding at finishes.
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Business lessons learned. For us, we found that building a Zero Energy Ready high-performance home increases the hard costs about 10 to 12 percent, especially in our area. A few of the big-ticket items with this increase would be these triple-pane or high-performance window in our climate, insulation.
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Additional insulation costs more. And then other quote-unquote special (I just did air quotes) -- special building materials and products. Once again, basically Durango is kind of on an island with no immediate interstate near it. So getting materials here costs a little bit more. So this along with the need for additional oversight and onsite detailing mean that it is certainly not easy to build to these standards, especially at first. It does take a slight change in the way a house is constructed. It also requires a more holistic and methodical approach for the whole process from inception.
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Building to these standards means that the house has to be viewed as almost a living, breathing thing, in the way that if you change one element, it will have a direct impact on another. I'm sure most of you falling asleep right now probably already know this, but for those that don't, it's a very important concept to keep in mind as you decide whether building to these standards is for you. So I guess the bottom line is, is it worth it?
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Awesome slide. For us, yes. I love what I do, and I love the technical challenges and logistical challenges each new job brings.
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I love going to events or conferences like EEBA and learning about new products and new technologies to make our houses even more efficient and healthier.
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It's also a great way to network with like-minded professionals and share ideas and techniques with others who might have already done them.
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But I think most of all, I love hearing clients tell me how much they enjoy living in their house. They love bragging to friends and family about how little propane or electricity they used last winter.
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They love how comfortable and quiet the house is. And they love that their children and their children's children will be able to enjoy the house for years to come because of how durable and just the way that the house has been built. That pretty much wraps it up for me. Once again, I want to thank Sam and Alex and the whole team for their continuing efforts in making this such an awesome program. And thanks for everybody who took time out of their busy day to listen to me ramble for a little bit. Appreciate it.
Alex Krowka:
Awesome. Thank-you, Hunter. That was a great presentation. And it may be the first time I've ever heard Sam compared to Taylor Swift. But I do think that that's a pretty accurate comparison.
Hunter Mantell-Hecathorn:
They're both, you know, same fame.
Alex Krowka:
Superstars.
Sam Rashkin:
I'm going to shut this down right now. (Laughter.) Alex, while you tee up the questions, can I just -- I always like to summarize after the builders present some key takeaways. Because the reason we bring on such really special people like Hunter and Bill is because they've been to the rodeo. They really have done this. They've really gone through that lessons-learning process. And I always think it's really important that we stand back and look at the big takeaways from what these builders have learned. And a couple things I'll highlight as Alex gets to some questions. I really want to again emphasize how much both builders really leverage brand, and how when you're able to build in a zero space all of a sudden, your company has a brand. And what's the value of having a brand. In the case of Thrive, growing from 100 to 300, having outside groups coming and asking you to be part of their projects. The same with Mantell-Hecathorn in terms of by having and owning that space, people looking for them, asking for them, standing out in the local materials that are handed out. I also want to point out, just both emphasizing how important it is to be simple and emphasize the experience. And really, some things I thought were really powerful for instance with Thrive, this accountability process where they really force their trade partners when they bid -- in the case of the airPLUS requirements, to provide the label so they know that actually the bid is for what it's supposed to be. And the willingness on both Thrive and Mantell-Hecathorn to invest in the details. In the case of Thrive, using that latex foam at the top plate, there is no room for error. They both use double wall assemblies. You can't have any vapor flow in double wall assembly and not have some risk. So they invest in the right details. And they both invest in training with partners. Maybe Thrive has more resources at their training center, but they make the effort to do that.
And what really, really is an important takeaway, I hope you all picked up on, was the power of testimonials, particularly in the case with Hunter, where those really, really incredibly moving statements from his buyers, that a new sales force should have, that they can sell your homes. And I love Hunter's "why." He loves building homes that clients brag about. At the end of the day, there's a really special motivation around all of this. Again, these builders are so special, and I hope that you appreciate these are really, really significant lessons learned, and that it's a journey to get to where they are. And so hopefully many of you who are not there are beginning the process. Those of you that are doing it are sharing and learning from each other. And I'll hand it off to Alex to go through any questions that may have come in.
Alex Krowka:
Great; thanks, Sam. The first question that we got, which both of you, feel free to answer: Did any of the technical measures taken to make your buildings stand out result in a need to help the appraisers revisit their assumptions when working with lenders for underwriting?
Hunter Mantell-Hecathorn:
Absolutely. Yea, I mean, the appraiser, at least in our market, the appraisers have always been a challenge to overcome. Their argument is, well, your homes haven't sold, so we don't have the true comp to put to that. They do add value to it, just because of the quality of build and stuff like that. But boy, I think I was watching the last webinar, and one of the presenters had a really awesome handout that they gave to appraisers. So anyway, for our market, yea, appraisers are always tough.
Bill Rectanus:
Yea, we haven't had that issue. We've been lucky in the fact that when we really took our energy efficiency to the next level, we were in a rising market and today we sit with really being our own comp. We have enough houses on the ground now that we're our own comp and have not run into significant appraiser issues at this point.
Alex Krowka:
Got it. And then another question for the both of you: Do your designs include passive solar? If so, what percentage of heating load is supplied by it?
Hunter Mantell-Hecathorn:
Yea, no, absolutely. We always -- once again, as part of kind of the whole process and the whole concept, it's site development, site analysis. It's, if available, can you have a south-facing site? And if you can, yea, capture as much passive solar. As far as what the -- oh, man, what the percentage of heating load that it captures? I'd have to look at some of the stuff. But I'll tell you, it's definitely effective. I mean, we just built and moved in to our house last October to those standards. And it's south-facing and it does a great job in the winter. So, yea.
Bill Rectanus:
Yea, we have a bit of a challenge around that. I think we would love to really focus on implementing some passive solar standards into our homes. And we do pay attention to overhangs and porch roofs and really trying to build those features into the base plan of our homes. However, since we are a production builder and we work with developers and the developers will literally say, here's 40 lots, we don't necessarily get to pick the orientation of those lots. And it becomes a real challenge with anti-monotony rules, and oversight of the developer and the city to effectively utilize passive solar in every single lot. So we build those techniques into our homes, and they're going to be more beneficial on some lots than others. It's part of the nature of being a production builder and getting, you know, 40 lots facing four different directions.
Alex Krowka:
Got it; thank-you. And then, Bill, here's a question specific to you: Does Thrive build one-off custom homes or only developments?
Bill Rectanus:
We do not build one-off custom homes. We operate pretty much like a production builder. We'll go into a community and have the series of homes, maybe three to five plan types for a particular community, and build those on the 20, 30, 40, 50 lots that we receive from that developer.
Alex Krowka:
OK. And then a question for the both of you: Would your companies be willing to build out of state? And maybe in this person's specific case, in Bozeman, Montana, for example?
Hunter Mantell-Hecathorn:
I'd love to visit Bozeman, but family is based here, and we're pretty well-rooted in Durango. So I'd say unfortunately for us, probably not. But Boseman's beautiful.
Bill Rectanus:
Yea, similar response for me. We've looked at market expansion. Being a production builder, it'd be great to be located in multiple markets and reduce our risk associated with individual market fluctuations, but we have decided to be really good at what we do here, before we get distracted by market expansion.
Alex Krowka:
Got it. And then one of our Zero Energy consultants on the line, they specify exterior rigid mineral wool. Have you guys looked into the benefits of that over foam?
Hunter Mantell-Hecathorn:
Sure. Yea. It's -- I think mineral wool is a great, you know, substitute or whatever you'd want to call it, for foam. Once again, for us, availability. I mean, shoot, I have to order in foam. Nothing is stocked anywhere around here. So, price point, you know, is of course a factor. It's an uptick just to do rigid foam. We haven't done an analysis on it, -- the health benefits and the properties of it, I like a lot better. It's more on the price point and availability for us.
Bill Rectanus:
Yea, we have just gone through another exterior wall review session with our interior team, and you know, the things that we look at as a production builder -- you know, I've got to get 240 of these done this year, 240 homes. And so, I have to look at both costs, because our mission is to deliver the most energy-efficient home to the average home buyer at a price point that they can afford, and be competitive with those builders that are not doing this, as best I can. And in this particular market, labor is in such short supply that also weighing heavy on our decision is, do we have the labor force with the skill set to use this technique? Or do we have the bandwidth to train the labor force to implement this new technique? Or will this new technique drive them away and just have them framing for other builders, and not me. We have, through balancing all of those things, remained with the double 2-by-4 wall as our standard go-to that we feel best puts us in a position of success for all those different factors.
Alex Krowka:
OK. And then, in the interest of time, I think I'm going to ask one more question, and then cut it off. We've had a lot of people ask questions. Unfortunately we don't have enough time to answer everyone's, however in the follow-up email that I'll be sending everyone once the recording of the webinar is posted, I will include both Hunter's and Bill's contact info for anyone to follow up. So yea, the last question is: Do either of you use any modeling programs to achieve a set EUI goal?
Hunter Mantell-Hecathorn:
Um, you know, in house, no. We don't run really much modeling, honestly. It just comes down to lack of time. So our energy rater, he runs basically the energy modeling for us. And so therefore, he just -- each home is totally different and unique, so he does run an EU model. But we don't do it in house.
Bill Rectanus:
The main modeling that we run on our homes is a HERS model. We have positioned our marketing and our communication with our buyers around the HERS score. We feel that it's the one metric that most of the buyers understand. It's in the MLS now. Realtors are getting familiar with it. Us builders are using it. So we really focus our message on the HERS score. So that's really the modeling that we do, and we drive our design in conjunction with that HERS modeling. Like I said earlier, we also will use other modeling to ensure that we're not creating problems within our home, with the decisions we make, like the modeling. But as far as energy, the HERS score is the model that we base our business around, for the most part.
Alex Krowka:
Alright. Well, thank-you to the both of you, again. This has been a fantastic webinar. I think a lot of people learned a lot of useful information out of this. Again, just to reiterate, this is being recorded and we will post it onto the DOE Zero Energy Ready Home resources page. That'll take about a week or two. But I will notify everyone who registered for the webinar, once that does happen. And also, just in that same email, hopefully we'll have our next Voice of the Builder webinar scheduled, possibly for a hot-dry climate or northeast or mid-Atlantic. That hasn't been 100 percent decided. But yea, everyone just keep your eye out for messaging from us, letting you know once this is available, and I thank everyone for their interest and attending the webinar. Thank-you, Bill, thank-you, Hunter, for taking time out of your Friday for talking to us and giving us some insight into how you guys are such leaders. So yea, I hope everyone has a great weekend, and hopefully we'll see everyone soon.