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SPONSOR: |
King |
DATE TYPED: |
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HB |
HJM 50/aHJC |
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SHORT TITLE: |
Study Regulation of Construction Industry |
SB |
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ANALYST: |
Maloy |
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APPROPRIATION
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
FY03 |
FY04 |
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Indeterminate |
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LFC Files
Responses
Received From
Regulation
and Licensing Department, Construction Industries Division
The House Judiciary
Committee amendments are as follows:
1.
The first amendment strikes language that
states that the existing law’s financial responsibility requirement “runs in
favor of” the state, and “does not protect or benefit the consumer”.
2.
The second amendment adds the “the
associated general contractors of
Synopsis of Original Memorial
House
Joint Memorial 50 requests the Construction Industries Division (CID) work with
the Attorney General’s Office to study
Significant Issues
HJM
50 sets forth the following factors for consideration:
1.
The intent of the Legislature in enacting
laws that govern the examination, licensing and certification of occupations
and trades in the construction industry is to ensure the highest quality of performance,
to require compliance with approved codes and standards, to provide uniform
procedures for application and enforcement, and to require those working in the
industry furnish and maintain evidence of “responsibility”.
2.
The Construction Industries Commission
has responsibility for establishing policy for the Division. The Division has responsibility for
developing codes, standards, rules and regulations to govern the industry,
subject to the adoption the Construction Industries Commission.
3.
In spite of the Division and Commission’s
joint efforts, there have been, and continue to be, “far too many instances in
which a member of the consuming public has suffered financial and other damages
because of violations” of the laws intended to regulate this industry.
4.
Several aspects of
When contractors
advertise that they are licensed and bonded, it is misleading to the
consumer. The bond is not insurance for
a consumer where they may seek compensation or reimbursement. The bond is a “licensing bond”. It is a bond the state may use to guarantee
payment of permit fees, inspection fees, fines and penalties. It does not protect the consumer.
5. The sanctions for violation of the laws, rules and codes established by the Division and Commission do not necessarily deter repeated violations, and do not provide consumers with an effective remedy.
The fiscal
implications for the Attorney General’s Office and the Regulation and Licensing
Department for the time and staff resources needed to conduct this study are
indeterminate.
OTHER SUBSTANTIVE ISSUES
1.
The regulation of this industry should be
focused on safety, on ensuring that through the adoption
of codes, plan review and inspections,
2.
The codes currently in place, and under
consideration for future adoption, are solid and promote safety. The Commission and the Division rely on national,
uniform standards in determining
3.
The problem is really enforcement and a
lack of consequences for violating the laws and standards.
·
The problem is enforcement of licensing
requirements and having a meaningful process for responding to those who
refuse to get licensed. The laws for addressing unlicensed contracting lack
teeth, and the courts have not historically taken unlicensed contracting (as a
criminal misdemeanor) seriously. At this
time, most unlicensed contracting cases are resolved through a “Stipulated
Agreement” in which the Division agrees to forego criminal charges against an
unlicensed contractor if he will agree to pay a penalty fine and agree to get
licensed. While this is good for future
consumers because requiring licensure pulls the individual under the
jurisdiction of the Division and Commission, it does little for the existing
injured homeowner(s).
At
this time, the Division has three investigators assigned to addressing unlicensed
contracting for the entire state. This
staffing is inadequate to make a meaningful impression on the industry and to
curb unlicensed behavior.
·
The problem is also enforcement of the
codes with licensed contractors.
Non-compliance with the state’s building codes and standards means a gap
in safety for the consumer. The Division
must have a comprehensive, effecting permitting system and a well-staffed,
thorough inspection process. Thereafter, the Division must be readily capable
of responding to complaints and identified non-compliance in a strong and
decisive manner that makes the consequences for the licensee who declines to
correct identified problems in his construction practices significant and
expected.
At
this time, licensees do not fear the Division’s code enforcement efforts. The Division no longer works with the
Attorney General’s Office toward the administrative prosecution of licensees
who fail to correct code violations.
Three years ago, CID cases were the Attorney General’s Litigation
Division’s greatest case load. Now, CID
has pulled the handling of these cases in-house, and as a result,
administrative hearings have come to a virtual halt. Code issues are resolved through a settlement
agreement between the licensee and the Division.
1.
What are
possible incentives / penalties that will deter unlicensed work? Unlicensed contracting is currently a
criminal misdemeanor.
2.
What are possible incentives / penalties
that will more effectively pressure licensed contractors into correcting
violations of the codes?
3.
Will the Attorney General’s Office
consider re-assuming the handling the CID’s administrative prosecutions?
4.
Should the Commission participate in this
discussion? Should any of the industry
groups, such as the Associated General Contractors, Home Builders Associations,
Unions, a consumer group? The industry
must “buy into” any recommendations for change if they are to be
effective.
SJM/prr