South Mountain Company

Martha’s Vineyard’s integrated design/build company

This blog provides up-to-date news of goings on at South Mountain Company and occasional musings from John Abrams (and others).

Small Business

On Building Second Homes

By South Mountain Co. |

This piece was written for and published in Fine Homebuilding. Thanks to Kevin Ireton (former FH editor) for the idea and his stellar editing. As always, he held my feet to the fire.

“How can you justify devoting so much time and energy to building vacation homes for rich people?”

It’s a good question,and one that I’ve heard often during my nearly 50 years on Martha’s Vineyard. In resort communities, many don’t have a first home. They’re scrambling to find stable housing while more than half the houses sit empty much of the year. That’s a problem. And in light of our climate crisis, the significant materials and energy dedicated to building and operating those houses compounds the problem.

When I came here in the 1970s, designing and building homes was so thrilling that I was content to build anything that developed new skills and knowledge. Working with head and hands gave me great pleasure; the idea that people would pay me to do it felt like a bonus. After a few years, however, the joy of the work and the satisfaction of the results were no longer enough. By then second homes had become a staple of our company, South Mountain, and my colleagues and I began to ask ourselves how we could justify this work.

The answer came in 1980. It began with a phone call from a woman named Madeline, who asked if I would look at a piece of land with her. She was a 60-year-old librarian whose husband had recently died. They had no children, and they had always lived in rented apartments. Her dream was to own property. She had $7,000 in cash. A realtor showed her a lot priced at exactly that, but her friends advised against buying it due to its topography and location.

The steeply sloping parcel was adjacent to the main road from Vineyard Haven to Edgartown. Traffic on the road was noisy and constant. The property faced due south toward a beautiful little valley. Except for the proximity to the road, it was lovely. I suggested an earth-bermed, partially underground house and told her we could design the noise of traffic right out of the picture. She was excited. She bought it.

At about the same time, I was approached by a single mother who owned property in West Tisbury and wondered whether we could build a house she could afford. Her budget was too small, but we had heard that the Farmer’s Home Administration was providing 1% loans to those with low and moderate income. We hoped to bundle a nice passive-solar house for Cathy and the earth-bermed house for Madeline, though the Farmer’s Home fixed-expenditure cap did not take into account either the Vineyard’s high construction costs or the long-term energy savings our houses would realize. We applied anyway.

We created plans for simple, compact houses and submitted them to Farmer’s Home with a request that they raise the mortgage limit (from $40,000 to $48,000) on each house due to the energy savings, which we analyzed and documented. After some bureaucratic wrangling, the increase was approved. Unfortunately, it still wasn’t enough to build the houses, unless we cut our overhead and profit to nothing and reduced our labor rates to below cost. Additional subsidies were needed.

Enter David and Pat Squire, who had purchased land in Edgartown and designed a second home with a Boston architect. They asked if we would be interested in bidding on the construction, and I told them that South Mountain built only those projects that we designed and that we didn’t bid on construction projects. They persisted, and a radical thought occurred to me: What if we gave the Squires a bid that had an explicit “premium” built in to subsidize the two Farmer’s Home houses? I shared the idea with the Squires, and they invited us to submit such a bid.

Our bid, one of three, was roughly $40,000 more than the next highest. They chose us nonetheless, and we built their house. We also built the two small houses for Madeline and Cathy by making up the shortfall with our extra earnings from the Squire project. Dreams came true, and mortgage payments were under $200. The Squires’ philosophical alignment with our purpose led them to become strong supporters of affordable-housing efforts on the Vineyard. Years later, when the Island Affordable Housing Fund was established to raise money for affordable housing, David became an important board member.

That was the first and only time that South Mountain inflated the cost of a project to support affordable housing efforts, but the experience inspired an idea that shaped the future of our company. If we could become a reasonably profitable enterprise, we could devote a portion of our earnings to affordable housing work for our community, and we could engage our wealthy clients in the issue.

At that point, the work of building second homes became meaningful. From then on, I often told new clients that they could count on me to ask them, in the future, to help with the Vineyard’s affordable housing problem (which they exacerbate, of course). I have done that now for 40 years, and the response has been heartwarming millions of dollars donated for attainable year-round housing.

Building second homes also allowed us to experiment and take risks. One of these occurred in 1987 when, in response to a request from two long-time employees for a greater stake, I sold South Mountain to my employees (and myself). We became a worker-owned cooperative and began to introduce new values to our business activities. For example, we committed to the creation of lifelong living-wage jobs and family-first policies, such as flexible work arrangements and stellar benefits. We began to codify our commitment to our community by donating to essential nonprofits and engaging in pro-bono work. We became a triple bottom line company long before we’d ever heard the term, measuring our success not just by our profits but also by effects on people and the planet.

Our journey since then has been influenced by many others, but particularly by Patagonia, the outdoor clothing and gear company that has become the gold standard for corporate social and environmental responsibility. Just like our second homes, many of Patagonia’s products are nonessential. Not everyone needs a pair of $300 ski pants or a lifetime wetsuit. So the company balances that reality with its social and environmental contributions, its political advocacy, and its important innovations, such as pioneering the use of organic and recycled cotton, and buying back old garments to refurbish and resell for far less than new ones.

Inspiration from Patagonia and others, combined with our own cantankerous sense of justice, has helped South Mountain become at once a profitable business, an active agent of community change, and a supporter of the local economy that supports us.

Today our second-home work is unusual in several ways. First, we restrict the size of the houses we are willing to build. Only on rare occasions, on very large parcels, have we designed and built houses over 3500 sq. ft.

We also use our second-home work for de-facto research to advance the building industry, especially with regards to energy performance, comfort, health, and durability. By experimenting with the homes of our well-to-do clients, we’ve learned a lot about high-performance building. As a result, we set minimum performance standards for our buildings that are well above code. Now we mostly produce net-zero-possible buildings. We use reclaimed materials extensively and are beginning to reduce embodied carbon (a work in progress with net-zero carbon as the ultimate goal).

By elevating performance standards, we make models that others can emulate and that we can incorporate in our affordable housing work. For us, truly affordable housing differs from luxury housing in only three ways: it’s smaller, it’s less detailed, and it’s differently financed. The performance and quality are uncompromised.

Perhaps the biggest step we have taken with our second-home work is doing less of it. Over time, we diversified South Mountain’s work into five parts; here’s a rough breakdown over the past year in terms of dollars per category:
• Limited-use second homes: 10%
• Year-round, fully occupied homes: 20%
• Attainable workforce housing: 10%
• Institutional work for nonprofits: 35%
• Solar for homes and businesses not built by us: 25%

This is only one year, and it happens to be a year with an uncharacteristically small amount of second-home work, but it indicates a direction: less harm, more good. Causing no harm is impossible — we are part of the problem too — but we share our experiences and hope others will join our push to turn some of the negative impacts of building into positive benefits for communities and the environment.

An added benefit of our business practices is that the second-home clients we attract tend to share our values. We love working with them. They go from being clients to becoming partners in our efforts to make the Vineyard a better place. Many have become friends for life. The rewards of this work and these relationships have become deeply ingrained in our core purpose.

Coming Back Around

By South Mountain Co. |

The only time I ever built a physical model of a house was for the Chilmark house my late wife, Chris, our son Pinto, and I designed in 1982. He was 12, and our daughter Sophie, who would be born on the night we moved in (in late 1984), had not yet been imagined. I wonder what became of that foam-core model.

We built that house, lived there until Sophie was 15, and sold it in 1999. In those days, South Mountain’s shop, offices, and my family home were all located on our property adjacent to the Allen Farm. The company was growing, and we needed more space. We couldn’t expand on that site. It was time to move on. We migrated to West Tisbury to develop our current campus and Island Cohousing.

In 2011 I took the South Mountain architects to see the Chilmark house. Some of the younger ones had never seen it. “It’s very dynamic – the levels, the light, the textures,” said Matt Coffey.

The reason for the field trip was that the house was going to be torn down by its owners to make room for a new one. Only 28 years old, it was bulldozed, taken to the landfill and replaced with a high-end contemporary and pool.

It was one of my best buildings. It was hard to see it go, but we had experienced our emotional parting when we sold it 12 years before. Still, it was sad.

After the house was completed in 1984, for a time South Mountain’s work veered off-course. My colleagues and I had been on a design path that combined several threads: a “vernacular modern” style characterized by passive solar, natural daylighting, and dedication to craft and fine materials. But the vernacular and the craft began to take over; modern and solar took a backseat. It was to be a lengthy detour, at least 10 years, before high performance (in terms of energy, daylight, comfort, health, and durability) re-gained prominence in our work.

(Our country was charting a parallel course. Reagan was in office. The solar panels Jimmy Carter had installed on the White House were ridiculed and scrapped. Frivolous and tasteless post-modern design was all the rage – goofy pediments and all).

In 2005, I was working with Ryan Bushey (then a young architect, now our Director of Architecture & Engineering and one of my co-owners), on a zero-energy home. The site and solar opportunities were similar to that of the Chilmark house. I took Ryan to see it. Several aspects of his 2005 design were modeled after my 1983 design, but Ryan took it to another level.

The Chilmark house (where my family lived for 16 years) and another one completed in 1981, several miles away (that has been extensively remodeled in a way that took the soul out of the building) are, I think, the best examples of early SMCo work – both designed and built about 40 years ago.

One’s gone. One is a shadow of its former self. Fortunately, there are other decent examples of our early work, but those two have a special place in my heart (absence really does make the heart grow fonder).

I suppose I could have kept and cared for the Chilmark house. But I didn’t. It was important to make a break. The results of the development of Island Cohousing signified that SMCo was all the way back-on-track. And the Cohousing neighborhood was good place to live. It had its downs and ups. Chris succumbed to cancer in our house there in 2017; shortly after Sophie got married on the pond.

One of the prominent features of our Chilmark house was that it was built into a hillside and stepped down the hill in three levels. The lowest step was only 17”, the height of a chair. This was the dining area. A special round table with a large lazy Susan and a laminated semi-circular wood bench on the upper level provided some of the seating (the rest was chairs on the lower level). Everyone loved that table and space. Kids loved the lazy Susan. Dogs loved it that if someone left food on the table it was right at their height, ripe for poaching.

Before the house was torn down, the owner gave that table – lazy Susan and all – to a young neighbor, who grew up playing with Sophie. A few years ago, he passed it on to her. Our Shop Lead, Jim, restored and re-finished it, and replaced the lazy Susan bearings. Now Sophie, her husband John and their three young kids gather round it. Their twins, Bodie and Turner, born just two months ago, will know that table from birth, just as she did. Her three-year-old, Rockland, will probably ride the lazy Susan and tax those bearings just as she did. Maybe we’ll replace them for the third generation.

We find our calling and our path. The journey is complex. Along the way we stray. We find the way again. Things are dismantled and things are saved. Some circle back around.

There’s poetry in that.

P.S. The sweet little horse barn we built for Sophie and her friends on the Chilmark property remains. All is not lost, ever.

Riding Toward A New Future

By John Abrams |

More than 25 years ago, I was in a room somewhere organizing a conference for the Northeast Sustainable Energy Association. There were two new faces among the group – Marc Rosenbaum and Bruce Coldham – who were engaging and appeared to know their stuff. Not long after, The Wampanoag Tribe asked SMCo to design a new Headquarters, the first building they would raise as a tribe in 300 years. I was excited, but knew we had neither knowledge or capacity to take this on alone. I asked Marc (a mechanical and systems engineer from New Hampshire) and Bruce (an architect from Western MA) if they would collaborate. They agreed; we did that project together and several more after. Although we collaborated deeply on all aspects, at the heart of our shared work, Marc was Numbers, Bruce was Pictures, and I was Words. Together, a seamless composition.

Thus began a relationship that has endured. For several decades, Marc was our go-to consultant about all things energy and systems. He taught us so much about buildings that we wouldn’t have known otherwise. He still does!

Ten years ago, our relationship changed. Marc and wife Jill moved to the Vineyard. He became an SMCo employee, and later an owner. His contributions to the company, to our buildings, and to our institutional knowledge ever since have been entirely remarkable. He thinks in a way that is unlike anyone I’ve ever met. The thing about Marc is – he cares. About truth, excellence, people, life, and impeccable data-driven information. It matters to him to make a difference; he’s committed to improving conditions for people on our planet. He does – consistently, relentlessly, and generously.

At the end of this year, our relationship will change again. Marc recently announced to our leadership team that he will end his time as an employee-owner and transition back to being a trusted consultant. He has other endeavors he wants to combine with his SMCo work, so he wants to be more independent and flexible and . . . well, you know, unemployed. He’ll still work with our architects, engineers, solar team, and production staff on most of our projects. It really won’t be much different (since he’s not in the office these pandemic days anyway). We’ll still be asking “Hey Marc…” on a regular basis. He’ll still be finding the best intelligence, dreaming up new solutions, and teaching us all. We’ll still have the benefit of well-filtered know-how from his extraordinary nationwide network of experts. He’ll still be pointing out my typos and making bad puns.

He’ll still be here. We’re very lucky and very grateful. We all hope that his path forward is all-the-way fulfilling, as we’re sure it will be. After all, he’s never been one to waste opportunity.

Our mutual friend Jamie Wolf illustrates this point with an early NESEA conference story. He remembers this guy in the front row at every presentation. Invariably, his hand would shoot up to ask penetrating questions. “I first met the back of his head,” says Jamie. “Inquiry, scrutiny, mastery. That was his method. He embodied that – it’s the NESEA ethic, but we learned it, as much as from anyone, from Marc.”

About SMCo, Marc wrote after his announcement, “ . . . This community of people is extraordinary in so many ways. . . . . I’ve never been in a group where dedication to excellence, and doing the best one can, has been so prevalent. The richness comes from the diversity of what we define as excellence. That diversity leads to differences of opinion about what should be prioritized, but the commitments we bring are the foundation of goodwill that allows us to, together, create something profoundly better than any of us could do alone.”

The first time I visited Marc and Jill in New Hampshire, decades ago, I stayed in their finished basement. Hanging on a sheetrock wall in the hallway at the foot of the stairs, where you’d expect a painting to be, was a bicycle. I asked him about it. “Oh, that’s a bicycle I built for my senior thesis at MIT. At the time, it was the lightest bicycle in the world.”

Buildings are one of his passions. Bicycles are another. He’ll surely find time for both in this new chapter – The Rosenbaum Chronicles, part three.

Carver Ken Left His Mark

By John Abrams |

As we steadily approach a Nex Gen Transition that will culminate two years from now, a two way migration is occurring at SMCo. Elders migrate out, and new faces/new talents migrate in. In the last decade, six longtime employee-owners have transitioned to new careers or retired. Collectively, they represent 168 years of employment

The most recent retirement was that of Ken Leuchtenmacher.

We first ran into Ken working up on the hill above the Allen Farm at Rob Kendall’s camp. Must have been around 1988. At the time, he was building solar greenhouses under the Solar Sanctuary moniker.

Ken grew up on a farm in Iowa – a true corn-fed boy – who went on to study at the University of Iowa. When the school shut down in 1969 due to the horrific shootings at Kent State, he migrated to Minneapolis and studied art for a while at the Minneapolis College of Art and Design. Afterward, he worked a couple silk screening jobs: first for a bottling company, then for a sign-making firm that created all the posters for IDS tower, the tallest building in Minnesota. The grandparents of his best childhood friend had a camp on East Chop. Upon visiting in 1974, Ken was smitten. He went back to Iowa, dealt with the way-too-early death of his Dad, returned to the Vineyard, and never left. He worked at the hospital for a while before joining Roger Wey’s construction company. They poured the slab in the second house we ever built, in 1976. (I remember that slab. Can’t say it was the best ever.) Soon after, Ken signed on with Burnham and Magnunson, earning his carpentry chops before starting his own business in the early 80s.

In 1993, we began work on our largest project – by some measure – to date: the Kohlberg House at Swan Neck. By that time, Ken had formed a partnership with Patty Egan and Larry Schubert. We hired all three to help us with the endless carpentry in this highly crafted timber-framed house. Shortly after completion, Ken migrated to SMCo. For many years, he was Billy Dillon’s solid second. Quite the duo – Ken was the quiet, steady, curmudgeonly assistant who always kept his talented and rambunctious leader in line.

He would work in the shop on rainy days. In 2005, he became an SMCo owner. A year later, after a long shop tour-of-duty building the Marcus stairway, he stayed. And never left until this May. He was a fixture as Jim’s assistant shop lead. A craftsman through and through, and an artist too, he was always a steady force and a mentor to our younger carpenters and woodworkers.

He also became our resident stairway maven. I have no idea how many times he set up in the annex, crafted a complete housed-stringer stairway over the next month or so, disassembled it, took it to the job site, and installed it.

Ken doesn’t suffer fools gladly, he doesn’t tolerate injustice, and he’s never one to pull a punch. He has a way of giving you (and me!) a piece of his mind that always sticks. Because he is generally quiet, his voice, when raised, carries weight. And for Kenny, nothing ever stands in the way of quality, his one-word guiding star. He is a standard-bearer.

During his time at SMCo, Ken took classes and learned woodturning and wood carving. These began as avocations and became integral parts of his craft. The essence of professional development. He always continued to grow his skills.

Never one to stay idle, Ken was recently recruited by his old partner-in-crime Billy Dillon, and Camp Jabberwocky, to do an extraordinary job.

He transformed a swing pergola (that we built when we did our Jabberwocky renovation in 2018-2019) into a memorial to celebrate campers who have died over the 60 years of Jabberwocky’s storied past. He hand-carved their names – 24 of them – into the re-purposed tree trunks that support the pergola. “When you go to camp [as a kid] , you carve your name on a tree,” Ken said in a Vineyard Gazette article “It’s like they’ve been there and carved it themselves.”

Each day camp caretaker Jack Knower, a former counselor and keeper of institutional knowledge, would tell Ken about the campers whose names he would carve that day. Ken said it was almost a religious experience. “I really feel connected to these people.”

We will always feel deeply connected to you, Ken. You’re an essential part of our history.

The PV Diaries

By John Abrams |

As our primary sales contact these past 45 years, I have known every one of South Mountain’s clients. And I have usually known them well.

Until 2007, that is, when we began to install solar systems for people other than our design/build clients. At that time, Energy Technology Director Rob Meyers became the primary solar contact, shepherding hundreds toward clean, renewable, power. In those 13 years, we have installed roughly 500 systems for homes, businesses, and landfills across the island. Many of their owners I have never met.

Five years ago, I asked John Guadagno, our Energy Technology Project Manager, to alert me – from time to time – when he turns on new systems, so I could gain a sense of who we are working for and how their projects went. And so he began to email brief vignettes about client and job. Occasionally – very occasionally, unfortunately – I find the time to follow up on them personally. More often I run into people at Cronig’s or elsewhere who approach me and say, “You installed a solar system on my house!”

“Oh, amazing,” I respond, “thanks for saying. How’d it go?”

Invariably they gush.

Recently I read a post from JG and thought, “This is a remarkable record of the human side of doing business. I think I’ll look back, pull some up, and re-read.”

They seemed worth sharing; here are just a few of many:


8/17/15
Today I turned on the 14.7 kW roof mounted solar array at MV Shipyard. For me personally, this was the most enjoyable system to turn on. I have been talking about solar with Phil Hale (the former owner) since the 90’s. Phil has been wanting to do this for nearly 40 years. It is almost fitting that his son, James Hale (now President of MV Shipyard), led the charge. They are very happy. As you know, I really like happy clients. As you also know, these guys are both great friends.
[NOTE: Before coming to South Mountain, JG worked at the MV Shipyard for nearly a decade.]


Photo by Gabrielle Mannino.

5/1/17
Polly Hill PV2 – they are addicted! Another 24.85 kW added to the existing 10.46 kW we installed in 2013. They built a new Education center. We installed 12.4 kW on this new building and 12.4 kW on the existing “Cow Barn” building next door. Great clients. When I arrived to provide the walk through there was a crowd of maybe 15 Polly Hill employees. Lots of interest and great questions.


5/1/17
Lin Gallant – 9.66 kW roof mounted at their house in Vineyard Haven. Lin is a structural Engineer, has worked on many solar projects, and has built a new house in VH. He came to us for a HERS rating and consultation with Marc. Lin has turned out to be a great client. Very happy with his installation. We hired him to look at Cottle’s for PV. He will relocate to the Island with his wife and two young children soon. I hope we can work with him in the future.
[NOTE: This was the beginning of an important relationship. After Lin and family moved to the Vineyard, he quit his off-island job and came to work full time at SMCo, where he has brought the structural engineering discipline in-house, helping to integrate our design/build process more than ever.]


6/6/18
Today I turned on a 3.9 kW roof mounted array for Geneva and Calvin Corwin in Vineyard Haven. Geneva found a path for Cape Light Compact to pay for her entire solar array! She is so lovely, with two little ones running around their newly expanded home.
[NOTE: Cape Light Compact partnered with the Massachusetts Clean Energy Center in 2018 to offer grants covering the cost of solar on affordable housing. That grant program is no longer available.]


6/13/18
Yesterday I turned on a 5.76 kW roof mounted array for Primo at his house in Vineyard Haven. Fellow co-workers are some of my favorite systems to do. We are so psyched for Primo and his sweet new home.
[NOTE: Primo Lombardi is an SMCo employee and co-owner. We have installed 24 systems on the homes of employees and former employees.]


7/26/18
Today, I met Jim Feiner and Deb Dunn at their home in Chilmark. I turned on their array last week and met them today for a tutorial walk through of their new 7.92 kW ground mounted solar array. They were very excited. Deb said she has been thinking about this for over 15 years.



10/31/18
Yesterday, I met Sean Conley and Teri Mello at their Aikido Dojo (next to their house) in West Tisbury. They ‘flipped the switch’ while I provided a tutorial walk through of their new 7.85 kW roof mounted solar array. Sean has been a life-long Aikido student and now teaches youngsters. He rallied the community to help design and build this DoJo in the early 80’s. You may recognize one of the Harcourt brothers hanging (to right) in the trusses. Sean and Teri are thrilled.


11/30/19
On Wednesday I met Bill Connolly at his home in Edgartown. I ‘flipped the switch’ and provided a tutorial walk through of his new 17.28 kW roof mounted solar array. I met him late in the afternoon before the holiday and we struggled to get his monitor going. It took me about 30 minutes to discover his iPad was so old it did not support the Solar Edge App. His son was visiting for the Turkey holiday and quietly asked if Dad needs a new iPad. Bill emailed me on 11/29 to say he got a new one and the monitoring is fantastic!


6/23/20
Yesterday, I met Ann Lees at her home in Chilmark. I ‘flipped the switch’ and we sat outside while I provided a tutorial walk through of her new 5.76 kW roof mounted solar array. Ann was so lovely to work with (yes I know, broken record). We spoke several times over the phone through the process and yesterday we finally met in person. She is a long time seasonal resident and her husband remembers Hoppy (I think that was what we called your dad?). Ann and her late husband were both physicians. Long ago her husband worked with your dad in CA. She was thrilled to work with South Mountain and noted the whole team from Rob on down did not disappoint!
[NOTE: My Dad, who died in 2016 at the age of 95, was always called Hoppy by friends and family.]


7/17/20
On 6/24/20 I met Alex Morrison at his and Maggie’s new home in Edgartown. Alex ‘flipped the switch’ while I provided a tutorial walk through of their new 14.4 kW roof mounted solar array. Alex and Maggie are three-peat solar clients. We were all thrilled to work with them again and the install – which happened during the early stages of COVID – went smoothly.



7/17/20
Yesterday, I met Scott Stephens and Penny Uhlendorf at their home in Vineyard Haven and provided a tutorial walk through of their new 5.04 kW roof mounted solar array. They are great folks and thrilled with their experience and new solar array.
[NOTE: Scott and Penny own a house – one of my favorites – that we designed and built for Sally Coker (now deceased) maybe 30 years ago.]

That’s a sampling of JG’s reports. Some people consider solar panels and systems to be a commodity. These brief stories say something different – they show the personal side of these transactions, for our clients and for us. They speak of connections between people in our company and those we serve, connections that often last for decades.

We are grateful to our incredible energy technology team – Rob, Faren, JG, Phil, and John M – and to the others who support them – from our engineering team to our admin team, to our trade partners. It takes a village. From the outside, it would be hard to imagine how complex each of these projects are – from sales cycle to site assessments, from policy work to financing, from permitting to installation, from commissioning to long-term monitoring and maintenance.

As Rob and the team constantly improve this process, it becomes more efficient, effective, and client-centric. Systematization does not make it any less human, only more, and all work together to stay one step ahead of the ever-shifting solar policy landscape.

We are grateful, as well, to our clientele, the ones I’ve met and the ones I haven’t. They make this impact-driven work rewarding and meaningful.

The Flip Side of Mitch

By John Abrams |

Sometimes we are fortunate enough to catch glimpses of progress within our federal government (yes, there is some – despite Mitch McConnell’s relentless efforts to assure that nothing positive happens in Congress, he does not always succeed!) I had this chance several weeks ago.

In August of 2018, Trump signed a 788-page defense bill which authorized $717 billion for the military. Hardly anyone noticed that New York Senator Kirsten Gillibrand slipped in a provision to help workers own their companies – a modest attempt to tackle wealth inequality, and a timely one.

As baby boomers reach retirement age, we are undergoing a “Silver Tsunami” – several million small businesses in the U.S. stand at a crossroads: What will happen to them when their founders move on? Some will be passed down to family members. Some will be absorbed by larger companies (and likely, moved out of town). Some will close their doors. Others will explore the increasingly popular notion of selling the business to those employees who helped build it.

There are obstacles. It’s not uncomplicated. Gillibrand’s bill – the Main Street Employee Ownership Act of 2018 – was designed to help employee-owned companies gain better access to technical assistance and capital. On February 12th of this year, the House Committee on Small Business held a hearing to examine how the bill is working, how it’s not, and how it can be improved.

I was invited to testify as a representative of the worker cooperative model, along with two individuals who represented ESOPs (Employee Stock Ownership Plans) and one who represented a cooperative bank.

The experience was an eye opener.

The room held a significant sampling of the Democratic and Republican representatives who comprised the Committee. Chairwoman Nydia Velázquez of New York opened the hearing with this remark: “At a time when income and wealth inequality are at record levels, real wages for middle class workers are nearly stagnant, and retirement security is no longer guaranteed, one way to combat these problems is through the employee-owned business model.”

She displayed a firm grasp of the issues and a strong commitment. She knew her subject. I was impressed.

Each of us had five minutes to testify. My peers were knowledgeable and passionate advocates.

Mark Gillming, senior vice president at Messer Construction in Cincinnati, praised the tax advantages (passed by congress 45 years ago), which have caused the ESOP model to become widespread:

When I began working at Messer Construction, it was a medium size, family-owned construction company with a long history and a good reputation; but, like most companies in construction, it had little in the way of employee benefits.

In 1988, the last son of the company founder died, and we found ourselves with an uncertain future. The grandchildren of the founder wanted access to their wealth and, having no connection with the employees, were not committed to maintaining employment at the company. In 1990, the Messer employees were able to buy their future from the Messer family, using the ESOP structure. We could not have purchased the company if not for the important tax advantages that the ESOP model afforded us.

Our country’s investment in ESOPs allowed ninety-nine Messer employees to purchase their future; and the engagement that opportunity created, has resulted in growth. Messer now provides quality jobs and predictable retirement for over 1,200 individuals and has company-funded retirement assets for those employees totaling more than $400,000,000.

R.L. Condra, VP of Advocacy and Government Programs at the National Cooperative Bank in Arlington, Virginia, spoke to the changing nature of cooperatives and those who stand to benefit:

A prohibitive policy requirement by the Small Business Administration (SBA) is hindering the growth of the cooperative business sector. If this issue is resolved, lending institutions, like the one I work for, will be able to make loans that will help to grow small businesses, create quality jobs at increased wages, and provide healthy food and grocery options for communities throughout the country.

Cooperatives have evolved since the 1960’s when the SBA recognized them as buying clubs. There are now over 40,000 cooperatives in the US and the top 100 generated $222 billion in annual revenue in 2018. Some notable cooperatives include REI, ACE Hardware, Ocean Spray, Land O’Lakes, and Congressional Federal Credit Union.

Since the great Recession, worker cooperative numbers have doubled, and have become a business option for young people, women and minorities. According to the 2019 Worker Cooperative Economic Census, 50% of owners of worker co-ops are Latino and African American, and 62% of women make up the majority of the workforce.

Daniel Goldstein, President and CEO of Folience, a media company in Iowa, advocated for regulatory clarity that would lower the risk for businesses making the employee ownership transition:

I submit that the biggest obstacle to the formation and expansion of ESOPs is the chilling effect of the U.S. Department of Labor’s (DOL) actions. DOL has perpetuated an absence of formal regulatory guidance, while simultaneously pursuing a litigious approach to oversight. The effect has been a deep chill on the market.

Every year, hundreds of business owners who want to learn about ESOPs attend educational events hosted by The ESOP Association. And once exposed to the lack of clear guidance, many turn away out of fear that some unknowable misstep will invite never-ending DOL scrutiny.

Those fears are not unfounded.

Today, more than 45 years after ESOPs were established with the passage of ERISA, the Department of Labor has yet to finish its rulemaking process. They started. They nearly finished in 1988. But they never issued final regulations.

Operating without clear guidance is a risk ESOP companies should not be forced to bear; it is a risk that negatively affects the wealth and security of the 10.6 million employee owners DOL has been tasked with protecting.

But here is the travesty: It is impossible to prove how many American workers have lost the opportunity to become employee owners as a result of this chilling effect. And, due to the rapidly escalating retirements of baby boomer business owners, there is urgency to reduce the chilling effect this lack of regulatory clarity is causing.

And then it was my turn. I emphasized the value of employee ownership in our culture and the importance of sharing what we have learned:

I believe that owning our work is as essential to a good life as it is to own our homes. As former Treasury Secretary Lawrence Summers once remarked, “In the history of the world, no one has ever washed a rented car”. When employee owners are making the decisions, it is more likely that companies will stay rooted in place and be positive forces in their local communities.

Economist Richard Wolff says, “if our workplaces had been democratized, long ago, would the workers have stopped raising their own wages? Hardly. Would they have destroyed their own jobs by moving production overseas? Doubt it. Would they have employed technologies that pollute the local environment? No, they live there. Would they have allowed some to earn astronomical salaries while the rest got no raises? No way. Our economic history over the last thirty years would have been radically improved if we’d had a different way of organizing our enterprises – with a more cooperative community-focused method that is democratic at its core.”

Growing the worker cooperative approach has the potential to positively affect the economy, our democracy, and the quality of working peoples’ lives. It is not a stretch to say that the benefits of the democratic workplace may even aid and influence the essential repair of our battered civic landscape – it could change, in effect, the chemistry of our culture. If you spend your days working in an environment of collaboration, mutual respect, and shared power, it is bound to spill over into other parts of your life – better parenting, more civic engagement, kinder relationships.

The value and benefits of employee ownership continue to fly under the radar, and you can’t take this important step without knowing the option exists. So perhaps the greatest need is extensive education and publicity – the stories of employee ownership successes need to be shared and celebrated. Employee ownership “ambassadors” should be funded to visit companies who are considering transitions – to teach, train, advise, and inspire. Widespread technical assistance should be made available. Employee ownership should be the number one business succession planning option.

But it’s not. I hope this committee will build on the good work it has begun and I am grateful for the opportunity to make this request.

After our testimonies, the representatives asked questions. Good questions. Engaged questions. It felt worthwhile.

Government can work. We know that; we can remember when it did. My experience in Washington amped up my resolve to work hard this year to elect a real president, help democrats take back the Senate, and increase the number of voices involved in decision making. There’s never been a moment when it mattered more. Not in my lifetime.

As for South Mountain’s commitment to employee ownership: we make our Operating Policies, Bylaws and Employee Ownership Toolkit available online and are always happy to help other companies find their way. If you have questions, feel free to contact me at jabrams@southmountain.com – but please read our Toolkit first. It may answer some of your questions. Or it may answer some and provoke others.