HIGHLIGHTS OF
THE CONTRACTORS STATE LICENSE BOARD
 FULL BOARD MEETING

San Diego, CA
November 1, 2007
By Sam K. Abdulaziz

                              FIRES

                                                             FIRES

                                                                                             MORE FIRES

The Contractors’ State License Board held a full Board Meeting on Thursday, November 1, 2007 in San Diego, California.

All Board Members were present. They are listed below.

Chair, James Miller; Vice Chair, Donald Zampa; Cynthia Mitchell; Eddie Barnes; Robert Brown; Matthew Kelly; Louise Kirkbride; Robert Lamb; Ed Lang; Stephen Matich; Bernadette Medrano and; John O’Rourke.

There are three vacant positions on the Board.

SPECIAL ITEM REGARDING WILDFIRES

Much to many peoples surprise, the day before the Board Meeting, a number of Contractors' State License Board Members and staff visited a number of properties that were damaged by the recent fires. The report was very well received by members of the audience and others. Board Member, Stephen Matich, even obtained a police helicopter to fly over some of the area.

Board Chair, James Miller, opened the session with a comment that we all owe a debt to how California reacts to disasters. In difficult times, California responds.

Rick Lopes played a television spot that was run in New York. It dealt with unlicensed contractors.

The overview was that there were many victims. Lots of people were affected. Lots of local people became involved. CSLB representatives were all over the place helping others. Numerous other agencies, including the Red Cross, and many, many volunteers were involved. The homes ran the gamut of luxury homes to shacks. Different areas had different types of problems. Surprisingly, sometimes one fire would make a 90-degree turn. Some houses did not burn and many others did. Many, many agencies responded.

The CSLB has learned from prior experience. There is a great deal of sharing of resources amongst the various agencies. Starting with Friday, the CSLB conducted stings and reminded people that acting as an unlicensed contractor, after a disaster, is a felony. District Attorneys and the Department of Insurance will start doing stings. Rick Lopes has gotten out a ton of press releases. There are a numerous warning signs dealing with both the good guys and the bad guys.

A rather passionate report was given by San Diego Deputy Attorney General, Paul Green. He specializes in elder abuse cases. He has put many people away.

With respect to something not on the agenda, one lady spoke about having lost her home and living in her car. This all resulted from an unlicensed contractor situation. However, she did commend the Chief of Enforcement, David Fogt, for his efforts on her behalf.

As always, the CSLB staff was well prepared and put on a good program.

I. ABDULAZIZ, PIRES, AND VERMEULEN ADDRESS THE BOARD – INDUSTRY UPDATE
Registrar Steve Sands thought it would be a good idea to have representatives of the construction industry address the Board on issues that they feel are important to the Board Members. The Registrar chose Sam Abdulaziz, Rick Pires, and Phil Vermeulen. Clearly, Sam Abdulaziz, was the best looking, marvelously dressed and most exceptional speaker of the trio.

A. The Abdulaziz Report dealt with the new cases of interest to the construction industry.

B. Rick Pires discussed Workers’ Compensation and the company he represents “Basic Crafts.”

C. The Vermeulen Report dealt with legislative matters.


II. LEGISLATIVE COMMITTEE REPORT

A. UPDATE ON BOARD SPONSORED BILLS

1. AB 243 – Nakanishi – This amends the Contractors’ State License Law and requires a disciplinary action to be filed against a licensee convicted of crimes related to the qualifications, functions and duties of a contractor within two years after discovery of the conviction. It also requires a disciplinary action regarding any alleged breach of an express, written warranty by a licensee to be filed within 18 months of the expiration of the warranty. This was signed by the Governor.

2. AB 244 – Nakanishi – It provides that a home improvement contractor furnishing a bond or bond equivalent or joint control approved by the registrar need not include the progress payment details in the contract. This was also signed by the Governor.

3. AB 936 – Assembly Business and Professions Committee – This deletes obsolete language. But it also requires a licensee whose license is renewable or whose license is canceled to notify the Registrar of Contractors in writing of a change of address of record. This was signed by the Governor.

4. SB 354 – Margett – This was also signed by the Governor. It authorizes the Registrar of Contractors to order a licensee to pay a specified sum to an injured party if the Registrar finds that the licensee has aided an unlicensed person in evading the Contractors State License Law or allowed an unlicensed person to use his or her license.

5. Many of the Bills have been put on hold until next year and others have been vetoed by the Governor.

B. LEGISLATIVE PROPOSALS

1. Owner Builder Permits
The Contractors' State License Board is working on a draft to better explain the risks and responsibilities in acting as an owner/builder. One of the most important things is a warning at the very beginning stating that a frequent practice of unlicensed persons is to have the property owner obtain the owner/builder building permit and an unlicensed contractor to do the work. It would also require the owner/builder to sign off on various provisions that he or she understands what he or she is getting into.

2. License Bond
The Contractors' State License Board states that there is a problem with respect to homeowners contracting for a home improvement upon homeowners personal family residence. The problem is said to be that the law grants a unique class of protection to consumers for the performance of work on their own homes by licensees. That is to say that the acts of the licensee need not be proven to be “willful or deliberate” in order for a claim to be actionable by the CSLB. The proposal is that the same protection should be extended to consumers who are contracting for the construction of a house that will be retained as their personal residence for at least one year.

3. Contractors License Bond – Small Claims Court Action
The Contractors' State License Board states that the portion of the bond that is available in small claims actions, was last increased in the early 1990’s and has not been amended. To keep pace with the increases in the amount of the bond itself, the Board proposes to increase the amount available.

4. Contractors Who Receive Funds for Works of Improvement and Fail to Complete Some or All of the Work of the Contract and Fail to Pay Subcontractors and/or Material Suppliers

This is clearly against the law. The problem that is raised by the Contractors' State License Board is that some District Attorneys will not take those cases or file criminal charges if there is not clear evidence to show the uses to which the contractor diverted the consumers money.

5. CSLB Arbitration Program

This law would increase the lid on Contractors’ Board arbitrations.

6. CSLB Voluntary Arbitration Program

The Voluntary Arbitration Program has been working very well. As stated, it is voluntary. The Contractors Board wishes to increase the Voluntary Arbitration Program from a lid of $50,000.00 to $100,000.00.

I have always championed the Voluntary Arbitration Program. There are a number of benefits, including cost.

However, one needs to pick good arbitrators if they are going to opt into that program.

III. ENFORCEMENT COMMITTEE REPORT

A. ENFORCEMENT PROGRAM UPDATE

From now on, we will put in a Macro that states that, “The Chief of Enforcement, David Fogt, and his guru, Peter Sugar, have done a wonderful job with Enforcement.” That way, I will not have to dictate it each time I talk about the Enforcement Program.

Here are some statistics:

1. Complaint Handling Statistics

The complaint handling at this time, over the past year, has remained steady and within Board-approved parameters.

2. Pending Complaints

The pending caseload has increased slightly from last year. However, despite the increase, the statewide caseload remains at a manageable level.

3. Aged Cases

The number of complaints over 270 days old is 76, which is under the Board’s established goal of 100 complaints.

4. Enforcement Representative Production

The Enforcement Representative production continues to exceed the weighted average of 10 complaint closures per Enforcement Representative per month.

5. Cases Closed as Settled

Again, the group has exceeded the established goal of settling 30% of complaints and settled 31.94 complaints. This is the second consecutive month that this goal has been exceeded.

6. Percentage of Licensee Complaints Closed

The percentage for 2007-08 fiscal year to date is 67.2%. This is below the 70% goal and less than the 2006-07 fiscal year average of 74.99%. This is as a result of fewer complaints being referred to small claims court.

7. Attorney General’s Costs

The average monthly cost through August, was some $338,000.00. The monthly average for 2006-07 fiscal year was almost $390,000.00.

8. Unlicensed Consultant Action Plan

The primary objectives of the plan is to identify and address unlawful advertisements by unlicensed individuals, and to pursue disciplinary action against unlicensed manufactured home and swimming pool consultants for building permit abuses.

The staff is working with CalBO and others to bring this to fruition.

9. Pilot Project

The city of Norwalk, Lodi, and El Dorado counties have been identified as pilot jurisdictions for certain activities. They are going to be reviewing business licenses issued to construction businesses that do not have a contractor’s license. They are also going after unlicensed contractors advertising on Craig’s List.org. They will assist building departments with a letter that they will send to property owners of owner/builder project sites warning them about the pitfalls of hiring an unlicensed contractor. They will then perform sweeps of owner/builder manufactured housing and swimming pool projects to verify licensure.

10. Partnerships

An employee of a Pleasanton general contractor, was fatally injured while nailing roof sheeting on a two-story single-family residence. The employee was not wearing fall protection equipment and no protective fall systems were in place at the jobsite. At the time of the accident, the contractor did not have workers’ compensation coverage for his employees. In fact, he had filed for exemption from workers’ compensation with the CSLB nearly one year before the accident.

As a result of the partnerships now going on between various agencies, CalOSHA issued a citation with a penalty assessment of $22,500.00. The Santa Clara DA’s office filed two criminal cases against the contractor. CSLB staff investigated the referral and issued and Accusation. On September 28, 2007, the contractor plead guilty to three felony counts and one misdemeanor count of workers’ compensation and tax fraud, as well as one misdemeanor count of violation of the Labor Code. He was sentenced in Santa Clara Superior Court to spend 90-days in the county jail and three years on probation. He was ordered to pay approximately $49,000.00 restitution to the State Compensation Insurance Fund and $50,000.00 to the mother of the victim’s minor son.

On October 16, 2007, the Los Angeles City Attorney, Rocky Delgadillo, held a press conference to announce the filing of criminal charges on 37 new cases referred to his office by the CSLB. As of July 2007, the City Attorney had filed 86 criminal cases with the court from cases reported by the CSLB. A press conference was held at the south Los Angeles home of a 76-year-old lady, a CSLB complainant. The elderly lady had paid an unlicensed operator more than $79,000.00 to renovate her home. He then abandoned the project.

Other unlicensed operators being prosecuted include one that collected $538,000.00 to build two town-house units in Panorama City.

Although partnership and sharing of information has been conducted by many agencies, the Contractors' State License Board was the first to knock on the doors of other agencies and ask for their help in protecting the public.

There are many more sting and sweep highlights that we can give you. However, suffice to say, that a lot more people are now being helped than had been in the past. Hopefully, convictions, incarceration, restitution will help in scaring the bad guys.

IV. LICENSING COMMITTEE REPORT

A. LICENSE PROGRAM UPDATE

1. License Application Workload

There has been an increase in the number of applications received over the past three fiscal years. The unusual increase in 2004-05 can be attributed to fingerprint requirements, which went into effect January 2005. License transaction processing times or “weeks to process” is used to determine the number of weeks to process applications and documents in the various units. Over time, temporary help, and redirection of staff continues to be utilized when necessary, to keep processing times at acceptable levels.

2. Licensing Information Center Update

The goal of the Licensing Information Center is to ensure that all callers received prompt and accurate responses to their questions. The unit continuously evaluates its processes and considers possible new ways to provide services in a more timely, efficient and professional manner. The License Information Center has continued to reduce the average call waiting time. Also, the number of abandoned calls is continuously decreasing.

B. TESTING DIVISION UPDATE

1. Waiting Times

The waiting for an examination date is currently 19 weeks for applicants who test in San Bernardino. The temporary test center in Norwalk was relocated to another floor in the same building because a new tenant is leasing the entire floor that was previously leased by CalTrans. This has stabilized testing in the Norwalk test centers and the waiting time should remain at four to five weeks. That is until the new test center is completed. Applicants who want to test sooner are permitted to walk in at all test centers and have a fair chance of getting an empty seat due to the failure of scheduled applicants to appear for the examination.

The examination waiting time at all other test centers is three to five weeks.

2. Budget Change

A budget change proposal was approved to fund five additional test monitor positions. These additional positions will reduce the CSLB’s reliance on temporary employees.


3. Examination Administration and Development

The new test center administration system (SCORE) developed in house by the Testing Division IT staff was successfully launched in the Sacramento testing center on March 8, 2007. Many of us viewed it in awe. SCORE has been successfully implemented at seven of the CSLB’s eight testing centers.

V. DISCUSSION OF GENERAL LIABILITY INSURANCE FOR ALL CONTRACTORS

This idea has bounced around for the last few years. Two bills were introduced that would have required General Liability Insurance for contractors. They never really saw the light of day. Almost the entire industry was against it.

At present, with respect to single-family homes that are to be retained by an owner for at least one year, there must be a General Liability Disclosure. That is to say, that a disclosure be made as to whether the contractor has or does not have General Liability Insurance. There was a great deal of discussion about this and probably everyone present thought that it was not doable from the standpoint of getting past the Legislature.

Since it was a communication item, the Licensing Committee voted to pass this on to the appropriate committee for action.

VI. COMMUNICATION AND EDUCATION COMMITTEE REPORT

A. PUBLIC AFFAIRS PROGRAM UPDATE

Rick Lopes and his staff continue to do marvelous things in the area of media outreach and public awareness. Lopes did a wonderful job in coordination, support and manpower with respect to the recent fires.

Rick Lopes was also interviewed on the Today Show and did a wonderful job. Tons of press releases have been sent out, press events, industry bulletins, media relations, news, new CSLB video, a new Contractors’ License newsletter, an employee newsletter, and a most wanted website feature are just some of the things that are going on along with senior scam stopper/community event/speakers bureau.

B. CSLB HEARING ROOM NAME CHANGE

John C. Hall was appointed to the Contractors' State License Board in November of 2000. He was a great person to help out the Contractors' State License Board and how it operates. While on the Board, John Hall served as Chair of the Legislative Committee and Enforcement Committee. He also served as the business manager for the Plumbers Union Local 78 in Los Angeles for more than 11 years. He was a dedicated CSLB advocate in protecting consumers. The Contractors' State License Board made a motion that was passed to change the name of the Contractors' State License Board hearing room to the “John C. Hall Hearing Room.”

VII. EXECUTIVE COMMITTEE REPORT

A. ADMINISTRATIVE PROGRAM UPDATE

1. Succession Planning

The Department of Consumer Affairs has taken the lead for all Boards and Bureaus based on the Department of Personnel Administrations’ Succession Plan model. The CSLB has prepared a charter, which will identify the major components needed to implement the succession plan. Clearly, many of the Contractors' State License Board employees will be retiring soon and it is the people that come after them that the succession planning is intending to aid.

2. Budget Briefing

The fiscal year 2007-08 approved budget was approximately $56 million. The expenses as of September 30, 2007, were $16,041,878.00. This left a balance of over $40 million, 71.5% of the budget.

VIII. STRATEGIC PLAN

This is based on the meeting that was held wherein the Board Members laid out a Strategic Plan.

This action plan has also done well, especially with respect to their target dates. Some of the objectives are as follows:

1. Hiring a consultant to conduct a business process improvement study with the objective of streamlining the transaction process of the CSLB;
2. Increase exam seating by expanding Norwalk and San Bernardino testing centers;
3. Conduct a study on a one-step, comprehensive license check system;
4. Create two dedicated bilingual licensing positions in the License Information Center;
5. Increase exam seating by expanding Fresno and San Diego testing centers (the only glitch is that the Fresno testing center has been spoken of as not being as secure as the Board would like).

IX. TENTATIVE SCHEDULE

February 7, 2008 – Board Meeting – San Jose

April 23, 2008 – Board/Strategic Planning Meeting - Monterey
 

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