Industry fights unlicensed contractors

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Brendan Farrington
AP Writer

Jacksonville, FL — When homebuilder Bob Liddell noticed the decline in the housing market more than three years ago, he supplemented his business with home remodeling.

But he ran into a different problem — competing with unlicensed contractors.

He estimated he lost about $200,000 in business during the last year and a half to people who undercut him because working out of the spotlight of regulators costs a lot less. So he decided to take action, letting state investigators use an empty home he owns to set up a sting that recently caught 15 illegal contractors in two days.

“I just got fed up with it,” Liddell said. “I don’t mind losing work, but I don’t want to lose work where people are underbidding me because they don’t pay insurances, they don’t pay their taxes and so forth.

“With the way the economy is now, there’s just so many people out there that don’t have jobs and so what they’re doing is running a little ad in the paper saying they’re remodelers.”

It’s hard to document if the problem has grown or just become more noticeable as the pool of work shrinks, but the down economy has made unlicensed contracting a bigger headache for people trying to work honestly. And many, like Lidell, are fighting back.

Ed Miller, president of the Northeast Florida Air Conditioning Contractors Association, has been in the business for 20 years, but it wasn’t until recently that he started actively fighting unlicensed contracting.

Now his association is teaming up with its counterparts in the electrical and plumbing industries to work with the state to stop unlicensed work.

Miller estimates his company lost about 20 percent of its business to unlicensed competition during the past year.

It’s not just a Florida problem. Venus Stromberg, a spokeswoman for the California Contractors State License Board, said there’s less work to go around because fewer homes are being built and fewer people are taking out home equity loans to make repairs.

“We just hear complaints anecdotally — ‘Hey look, I’m following all the rules. I’m paying workers comp, I’m bonded, I’m doing all of these, and I’m getting underbid by these people that are unlicensed,'” Stromberg said.

Nevada authorities say they’re hearing similar complaints. Department of Business & Professional Regulation Secretary Charles Drago went around the state to hear from licensees about what the department could do to improve its operations. The top concern wasn’t about how the department worked; it was the threat from unlicensed competition.

“They were getting underbid, underbid on all their jobs,” Drago said. “People were coming in and able to do the job for 20 percent cheaper.”

Florida has always had a problem with unlicensed activity after hurricanes, when there’s too much demand.

Now there is a similar problem when there’s less demand.

During the sting at Liddell’s house, investigator Sandra Rentfrow had a schedule from early morning to late afternoon of appointments with people the department found on craigslist.com. It was almost a matter of sitting and waiting as undercover investigator Sid Miller pretended he needed renovations on his new home.

The first person arrested freely admitted he wanted to be paid in cash because he didn’t want to lose his unemployment benefits. The man said he had worked for a licensed company, but his boss wanted to cut his pay 40 percent, so he decided to work for himself.

Liddell said he was pleased with the results of the sting.

“They’re not going to catch them all,” he said. “It’s still going to be a problem until the day I die. But if they can slow them down a little bit, then I feel they’re doing their job. When this economy starts getting better and people are back to work, it will start tapering off some.”