Contractor Conundrum: Nailing down jobs hard when rivals are unlicensed

They're slashing prices, returning all phone calls and bidding on every job they can, but Stanislaus County's licensed contractors still are having a heck of a time finding work.

"We're really getting work stolen from us by unlicensed people. It's a bad problem," said Dan Snedegar, a general building contractor in Modesto. "It's just not fair. We pay a lot of money and go through a lot of stuff to get these licenses."

Remodeling and construction jobs are scarce as it is because of the housing market slump. But those with licenses say they're being underbid by those without licenses who work without paying for liability insurance, workers compensation, surety bonds, licensing fees, building permits or income taxes.

Several years ago during the building boom, Bill Allen of Allen Construction had a seven-man crew. When he bid a job, the Waterford general contractor said he figured his price based on $70 an hour for the work.

"I've dropped my wage (estimates) down to $25 an

hour and I still can't get a job," said Allen, who has had to lay off everyone but his son. He said so many unlicensed people are willing to work for $15 an hour, he can't compete. "I'm not trying to make a fortune. I'm just trying to pay my bills."

Paying for workers compensation, insurance, bonds and fees is expensive, said Jim Taliaferro of World Wide Construction in Oakdale.

While licensed contractors must pass those expenses on to homeowners, paying for licensed work provides homeowners with a measure of assurance that the job will be done right.

Fixes and 'handyman work'

"More than half my work these days is fixing things other (unlicensed) people started and either didn't finish or didn't do right," Taliaferro said.

He also hears complaints from homeowners about how they paid unlicensed workers in advance for materials, then never saw them again.

"If you're good at what you do and you're fast, you can keep working," said Taliaferro, noting that he now accepts lots of little jobs. "I'm doing a lot of handyman work."

Little jobs, unfortunately, don't pay a lot.

Snedegar recalled how during the building boom he was working constantly for top wages. In 2006, for instance, he said he earned $128,000.

Then the housing market collapsed. In 2007 he took in only $28,000, and 2008 wasn't much better.

"People are afraid to spend money. I see it in their eyes," said general contractor Chris Geletich of CG Construction in Modesto. "I know so many contractors who have gone out of business. It's so bad, I'm moving to Hawaii."

Geletich said he plans to return to Modesto once a month or so to do projects, but he doesn't expect Stanislaus County's home building industry to recover for at least two or three more years.

New home starts in Modesto have declined by 95 percent since 2006, said William Crew, the city's chief building official. Residential remodeling permits also are way down, falling from a peak of 765 in 2005 to 347 last year.

But those statistics are just for those who got permits, not for all the illegal remodeling being done.

Permits are for safety

"When money is tight, it's easy to cut corners," Crew said. "Many times consumers see the building permit process as an unnecessary, expensive roadblock without benefits. However, there are many advantages to getting a permit."

Crew said Modesto's Building Safety Division verifies contractors' licenses during the plan check process.

"We review each plan submitted for code compliance," Crew said. "This ensures the project meets the minimum life safety requirements prior to construction. Should the project be constructed before the plan check process, the contractor may be faced with necessary life safety revisions that could be very costly."

Crew warned that homeowners ultimately are responsible for construction projects.

"If the contractor does not get a permit and the Building Safety Division is notified, the owner and or the contractor will be responsible for proving that the construction meets the building code."

License is the law

California law requires anyone performing construction work on jobs that cost $500 or more for labor and materials be licensed by the Contractors State License Board.

To qualify for a contractors license, those applying must demonstrate they have at least four years of experience and education in the field they want to be licensed in. They must be fingerprinted, pass an FBI background check and be bonded.

Before hiring a contractor, Crew said it is extremely important to check references. "Ask the contractor to provide you a list of projects and phone numbers of owners."

Crew said homeowners should ask to see copies of the contractor's license, then contact the Contractors State License Board to verify it is valid.

Snedegar warned homeowners to be wary of unlicensed people who pretend to be licensed contractors by giving out someone else's license number. He said homeowners should make sure they're dealing with the person who has the license, and they should write checks only to the name of the person or company listed on the license.

"Be careful about entering into an agreement for construction without a good contract," Crew added. "A good contract should spell out in detail what is going to be performed and when the project is to be completed."

Crew also encouraged homeowners to talk often with their contractors.

"Do not be afraid to ask questions," Crew said. "Your home is one of the biggest investments you have, so it just makes good business sense to research everything."

Bee staff writer J.N. Sbranti can be reached at or 578-2196.

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