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State Contractors Board Falls Into Disrepair

Homeowners are upset that regulators can't better protect them from bad builders.

August 15, 2004|Jordan Rau | Times Staff Writer

SACRAMENTO — When the paint began to peel off the sides of her house in the San Bernardino Mountains, Patricia West protested to the board that regulates California's contractors.

A board-appointed examiner concluded that the work by Steve Kanallakan's construction company was substandard.

Also, a small claims court judge faulted the contractor over a bathroom make-over in Dara Elizondo's Laguna Hills house. The judge awarded her $4,075.

But it was not until July, nine months after complaints were filed, that the Contractors State License Board alleged that Kanallakan's firm had violated 13 construction laws. When the case will be resolved is unknown; until then, the company can continue to do business.

"It just amazes me," Elizondo said. "They took too long. They lost my trust in them to protect me. In my opinion, there's no reason to have a contractors board at this point."

Gov. Arnold Schwarzenegger's California Performance Review task force agrees. Earlier this month, the group -- charged with reconfiguring state government -- called for eliminating the board and letting a consumer affairs department with " 'chain of command' accountability" to the governor investigate incompetent and unscrupulous contractors.

But the difficulties at the contractors board provide a telling example of how the task force's emphasis on the architecture of state government obscures a more pressing problem for many state regulators: their dearth of resources.

After losing a fifth of its investigators since 1999, the contractors board has been forced to curtail much of its enforcement activity.

While residential building permits have skyrocketed by 40% in the last five years, the board has opened about 20% fewer investigations. Routine complaints of shoddy workmanship can languish until multiple grievances pile up.

The cases the board does examine take 169 days on average to conclude -- 49 days longer than board guidelines recommend. And the board has gutted some of its most innovative efforts to catch unlicensed contractors before they rip off homeowners.

Though the state has been in a fiscal crisis, much of this was avoidable. Like other regulators, the board receives its money from fees paid by the licensed professionals. That should have made it impervious to dips in the state's tax coffers.

But then-Gov. Gray Davis included the board in a blanket hiring freeze imposed on state agencies in 2001. Each year, vacated positions were abolished automatically.

Schwarzenegger lifted the hiring freeze in May, but his administration has not yet restored any investigative positions.

"We have largely dropped the ball for the California consumer," said Thomas A. Papageorge, who was an administration-appointed monitor of the board until last year. "We have the enormously ironic situation of important agencies having the money to protect consumers but not being allowed to spend it."

The contractors board oversees about 280,000 contractors, carpenters, cabinetmakers, landscapers, pool installers, plumbers and others in California's construction industry. It receives about 25,000 complaints a year.

Though the enforcement staff has dropped from 259 to 201 people, board officials say they still aggressively pursue the worst cases, especially those that involve health and safety, elderly victims and repeat offenders.

"It's one thing to receive a complaint, to have a good-faith dispute, but to commit the same mistake over and over again, that's not going to be tolerated," said David Fogt, the board's enforcement chief. "We've just redirected resources so we can go after those bad contractors quickly."

The board initiates fewer sting investigations, in which staffers pose as homeowners and answer ads to catch unlicensed contractors, a burgeoning problem during California's building boom in recent years. Industry officials say those illegal workers typically underbid legitimate contractors because they do not pay workers compensation for employees and do not carry a bond or liability insurance as protection for botched jobs and injuries.

Even more disturbing to outside monitors, the board has not been able to repair some of its documented areas of weakness in protecting the public from crooked contractors.

Consider the case of San Diego contractor Lee Mark Ross.

Despite a conviction for ripping off owners of homes he had pledged to repair, Ross secured a new license in 1992 by simply swapping two digits in his Social Security number. Over the next decade, his company racked up 70 more victims. One lost $93,750, court records alleged.

In response, Sacramento lawmakers mandated in 2002 that all new contractors be fingerprinted. But the board has yet to begin the program, which it now hopes will be running by January at the earliest.

Board officials blame the attorney general's office for the delay, but the attorney general's office says it has told the board it can begin vetting fingerprints any time.

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