Unlicensed contractors can cost you more

On any given workday in Indian River Shores, Town Manager Richard Jefferson estimates there are 30 to 40 ongoing homeowner building or maintenance projects that require licensed contractors.

And of those jobs, he estimates about five are being completed by someone who is unlicensed and unqualified to do the work. While it may not be reaching epidemic proportions, Jefferson says he is seeing an increase in unlicensed activity that not only puts the homeowner at risk, but is cutting into the livelihood of legitimate contractors who have spent the time and money to register their services with the state.

“Because of the slowdown in the economy, a lot of people are laid off and doing a lot of work on the side,” Jefferson said. “We are trying to control it, we have citations that we issue for people who are not licensed or are uninsured.”

For Ray Hengerer, owner of Agua Vida Design Services, a pool and spa repair and design company that primarily works on the barrier island, the rise in unlicensed activity is obvious and is affecting his pocket.

“I started this company in 2001 and at the peak in 2006 I had four employees, three vehicles on the road — we were doing all right,” he said. “But once the economy started to tank, people started keeping a much closer eye on how and where they were spending money.”

Though it is difficult to quantify precisely, Hengerer estimates that jobs going to unlicensed workers cost him up to 20 percent of his business. He has had to lay off all employees — including his own brother — and is now doing most of the work himself unless the job is big enough to require another worker.

In fact, he is finding that the pool cleaner who used to recommend Agua Vida for jobs that required a contractor (replacing a burned out pump and the like), is now an unlicensed competitor.

“What I am seeing from my end is the pool guy who used to send me jobs to do their repair work is now, because of their economic shortfall and losing clients, not calling me,” he said. “The unlicensed activity has always gone on, but up until about two and-ahalf years ago, it was a handful at most and they were notorious around town.”

With unlicensed workers on the rise, inspectors are hard-pressed to get their hands around the problem.

Jefferson said he tries to keep an eye out, but mainly he relies on educating the public as to the dangers and legal consequences of having work done by unlicensed contractors.

At the Indian River County Building Department, the staff has been decimated by the budget cuts and has been reduced from a high of 49 to just 15. Interim Building Official Jose Guanch says his office receives about two complaints a week, but due to the cutbacks cannot investigate all the claims.

This creates something of a Catch-22 because if the unlicensed activity could be stopped, each of those jobs would require permitting, which in turn would bring money into the county coffers. However, the county does not seem to be focused on beefing up its enforcement activities, for the 2010-2011 budget it is projecting just $2,000 in unlicensed contractor fines — which is down $500 from its 2009-2010 projection.

So if the illegal activity is on the rise, but enforcement is being curtailed, what are the licensed contractors supposed to do?

For Hengerer it has been to take matters into his own hands. He does not hesitate to turn in illegal activity and is encouraging his fellow contractors to do the same.

While it seems like a simple and logical step, it is not always that easy to catch an unlicensed contractor. For the enforcement to stick, the worker must be caught red-handed doing the work.

“There was a case where I had a John’s Island client on my preventive maintenance program and I went to do my maintenance job and found the pool system down and the new pump in place, but not wired yet,” Hengerer said. “Needless to say the curiosity led me to ask the property manager, who had no idea what was going on, and I contacted the homeowner and they hadn’t authorized the work — they had no idea they even had a problem.

“It turns out it was the pool service guy, who wasn’t licensed to do that kind of work. Once I confirmed that nobody knew what was going on, I called the person who was servicing the pool and confronted him at the property. I asked him straight up are you doing this repair, and he said yes. I asked would you be so kind to show me your contractor’s license and he said I don’t have it. I finished my call and went over to (Indian River Shores Town Manager) Richard Jefferson’s office.”

In this particular case, Hengerer was asked to complete the job by the homeowner, but he was never able to confirm there was ever anything wrong with the pump in the first place.

“I was unable to get a chance to look at and troubleshoot the motor, so we had a diagnostic issue,” he said. “I asked the property manager and the owner to make sure all the old parts were returned, that didn’t happen. So I had to order all new parts, to replace what he took away costing them more money.”

Hengerer will always be at a disadvantage when it comes to bidding against the unlicensed worker as he has costs associated with his license and insurance that the unlicensed worker doesn’t have to worry about.

“What you have to look at is the time and expense to get licensed properly and insured properly and you have to figure those things in when you bid on a project,” he said. “So when I go out and bid on a one-horse power motor replacement, I have to figure all those costs in plus parts, labor and its up around $450, sometimes more depending on what parts are needed. An unlicensed guy is going to go out and do that job for $300. He is going to buy the motor from the wholesaler and charge them hardly anything for his time and he doesn’t have the overhead.”

He warns though, that the short-term savings could cost the property owner much more in the long run.

“We (licensed contractors) hear that we charge way too much for our services when in reality, it is the unlicensed guy that is going to cost the homeowner more in the long run,” he said. “He doesn’t have the training to do the diagnostic on the front end properly. I charge people not only for what I can do, but for what I know and a lot of times that is what really saves them money.”

Jefferson says the issue he tries to get across is the liability the homeowner assumes when he allows an unlicensed and uninsured worker on his property.

“Right now there are a lot of contractors who have let their insurance lapse to save money,” Jefferson said. “By pulling the building permit, we check to make sure they are insured. If (the homeowner) would just give us a call we can check and see if they are licensed and insured and we take all that responsibility off the homeowner.

Hengerer says his goal is to create a level playing field. He said he does not relish being a cop on the beat trying to catch illegal activity, he’d much rather be working on and designing swimming pools.

“All I am trying to do is bring some attention to the problem from my end of it,” he said. “I want people to know what is going on in their backyard and how things could go very badly for them.”


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