New Ways of Thinking Licensing will always be an imperfect science, but hope is on the horizon. A number of jurisdictions are enacting or considering licensing — many for the first time — and they’re employing tactics to overcome resistance and make their laws meaningful. Here’s a look at developments taking shape.
• Compromise on registration. Licensing’s opponents range from one-man handyman businesses claiming compliance would bankrupt them to big home builders concerned it will inflate subcontractors’ prices. States such as Idaho and New Jersey have found workable compromises in registration laws, which let jurisdictions track and, if necessary, pursue contractors but tend to have fewer testing or financial requirements than licensing.
Idaho’s law, which takes effect next January, mandates having $300,000 worth of liability insurance and paying no more than $150 per year into a fund to cover administrative and enforcement costs. The state can also pursue contractors who flee to other states that have licensing or registration laws.
On the other hand, the New Hampshire HBRA recently helped defeat a contractor registration bill on the grounds that it lacked educational and testing components. As an alternative, the group is attempting to develop “an inclusive and comprehensive licensing program,” according to HBRA’s Buck.
• Fight fire with verbal gymnastics. After years of failing to squeeze a licensing bill past the powerful Pennsylvania Builders Association, Pennsylvania remodelers this spring finally got the bill before the legislature for a vote, which is expected sometime this year.
Factors integral to this development were repackaging the licensing bill as a registration bill and changing its name from “The Home Improvement Act” to “The Home Improvement Consumer Protection Act.” Mark Kinsey, an insurance broker and NARI member who lobbied to make the bill a reality, explains: “You don’t want to keep going back to ‘contractors, tradesmen.’ You want to keep going back to the gist of what the bill is intended to do” — protect consumers. “You need to make that crystal clear to legislators.”
• Find a consumer-oriented ally. Pennsylvania remodelers also teamed up with AARP. Not only are seniors frequent targets of shoddy contractors, but “they’ve got time on their hands, and they act,” Kinsey says. The mere invocation of this powerful name and mighty voting bloc helped convince state legislators that they needed to take the bill seriously, he says.
New Orleans remodelers leveraged similar clout by enlisting the local Better Business Bureau in pushing for a city law mandating registration for projects worth $7,500 or more. Builders wanted the threshold set at $50,000, says remodeler Toni Wendell of Olde World Builders & Remodelers. “They said we’d never get this, but we fought and got it.”
• Make testing relevant. Licensing exams may generate some scorn, but not in Roswell, Ga. As of last September, the city of 80,000 gives building permits only to licensed contractors who have passed either the exam of the International Code Council (ICC) or the testing component of NARI’s Certified Remodeler (CR) designation.
“The whole point is to ensure that the permit applicant has some knowledge of the code requirements,” says Allan Amick, Roswell’s chief building inspector. Both the ICC test and the NARI test “far exceed the simple code knowledge that’s required.”
The Roswell licensing process stands out in other ways. Inspectors are licensed, mitigating arbitrariness or favoritism. Roswell charges no licensing fees; all money changes hands through ICC or NARI. Convenience and efficiency are additional factors. ICC tests, for example, can be taken at any of more than 1,000 testing centers in airports and other public sites. Roswell also recognizes reciprocity for contractors who are licensed in other states.
NARI leaders have said they would like to see the organization’s CR designation be the basis for licensing education requirements in additional states that have licensing.
• Put teeth in the laws. Arizona has had licensing laws for decades, but they did little deterring until about 18 months ago when the state’s licensing agency, the Registrar of Contractors (ROC), launched a crack-down. Components include undercover sting operations at “bait houses,” unannounced neighborhood sweeps, and a homeowner education effort called the Neighborhood Ambassador Program.
“We could continue to do business as usual and work on complaint-driven cases, or make an impact by making people aware that we might be there,” explains Israel Torres, ROC director. Enforcers can’t be everywhere, so “we’re trying to blanket the state with uncertainty.” ROC also offers classes to help contractors get licensed. “We want to take away all the excuses” for not being licensed, Torres adds.
Arizona’s program protects trade contractors as well, says Rick Cornish, a remodeler who specializes in windows, skylights, and doors. Before subcontracting to a company, he can check its licensing at the ROC Web site. If it’s not listed, he doesn’t work for them. If it is and they don’t pay him, “I can file a complaint with the Registrar and go after their bond,” Cornish says.
• Share the burden with consumers. Legislators enact laws, lawmakers make arrests, and reputable remodelers play by the rules, but only homeowners hire remodelers. This has been a big part of the problem, says Berning, who notes two main reasons. First, “Lots of customers probably don’t give a hoot whether somebody is licensed” if they can get a better price elsewhere, he says. Second, is simply that “a lot of naïve, unsophisticated people are easily cheated.” To that end, Arizona’s Neighborhood Ambassador Program invites neighborhood groups and homeowners associations to attend quarterly “academies” that provide “a more detailed account of things to look out for, the most common types of scams,” Torres says.
Press releases and other efforts have furthered the message, a critical element of which is the fact that, similar to other states, homeowners in Arizona who use unlicensed contractors forfeit their ability to collect from the state Recovery Fund.
To its credit, California’s licensing program has a few teeth of its own. For instance, the CSLB’s fraud team conducts stings that slap first-time offenders with up to six months in prison and a $1,000 fine. And several public education programs warn homeowners not to hire unlicensed contractors. The efforts have promise, according to David Kalb, whose company, Capitol Services, helps contractors navigate licensing laws. After the recent fires and floods in Southern California, the state rapidly dispatched officials to warn homeowners not to hire the transient workers who “show up after every natural calamity.” There were no complaints, so presumably few or no abuses. Given California’s long history as a bellwether state, this could be the start of something big.