Lapsed licenses spark fear of illegal construction

PORTLAND — The number of Oregon contractors renewing their general contractor's licenses is declining, and some industry insiders worry that the drop signifies a more serious trend: an increase in unlicensed work.

According to the Oregon Construction Contractors Board, general contractor license renewals have dropped by almost 14 percent between the first quarter of 2008 and the first quarter of 2009, a decline of 699 license renewals.

The CCB for the first time released statistics on the amount of civil fines it issued to contractors working without a license. Between April and June of this year, the board fined 220 construction businesses or individuals a total of $352,200 for working, or offering to work, without a license.

Rob Yorke, a CCB board member and principal at Yorke & Curtis General Contractors, pointed to a familiar culprit.

"We think there is an increase (in contractors working without a license during the recession)," Yorke said. "There are a lot of Craigslist listings and informal work going on. Half of the people on Craigslist aren't licensed, and some of them even admit it."

In the past two years, the CCB has hired about a dozen additional inspectors, and they are targeting Craigslist for phony contractors, Yorke said.

A search of the Portland-metro area Craiglist's skilled-trade services section recently showed plumbers, HVAC workers, carpenters, electricians and others all offering their services. At the bottom of each ad is a space where the contractor can enter a CCB license number. Many ads left this space blank, or blatantly said, "unlicensed."

"The CCB has worked diligently to get out there and canvass Oregon and make as many site visits as possible, even without all of the funding they need to do it," said Sandy Trainor, CCB board member and president of Kodiak Pacific Construction.

"Whether we have more or less unlicensed contractors working during the recession doesn't make a difference," she said. "We should all recognize that unlicensed contractors impair anyone who uses them anytime."

"Normally our report totals all of the civil penalties issued for illegal activity," said Gina Fox, public information officer for the Oregon CCB. "In the past, our reports kind of lumped everything together. I thought it was important to look at the unlicensed contractors separately. We want to be certain that consumers are using a licensed contractor. If I didn't know what we were looking at, I wouldn't have something to tell consumers."

Out in the field, some contractors are seeing a real correlation between the economy and the number of unlicensed contractors trying to get work.

Tim Schmidt, owner of Got Power Electric, said he has received dozens of calls from people looking for work since the recession began, and many of them are unlicensed.

"I can't hire them," Schmidt said. "There is work going on out there that is unlicensed and unpermitted. I know that for a fact. People are stupid if they don't renew their license. Even if you're not going to use it, you should renew it."

Six weeks before their licenses expire, contractors are notified to renew at a cost of $260 every two years. The CCB employs people to periodically check construction sites for proper licensing, and also has online forms and a phone hotline for reporting unlicensed workers.

A contractor caught working without a license can be fined up to $5,000.

Unlicensed electricians and other handymen are a huge concern for John Killin, executive director of the Independent Electrical Contractors of Oregon, who says that the lack of checks and balances that goes along with having a contractor's license creates opportunities for danger.

"It is a scary thing to consider an unlicensed contractor or individual doing electrical work," Killin said. "You could burn down a house. A trained journeyman should know better. You have to have those licenses to make sure inspections are being made. When someone comes along and does this, it undermines the entire effort."

Killin is also concerned that journeymen are getting desperate and offering to take payment on the sly.

"Times are tough," he said. "There are circumstances at the bottom and top of the economy that lead to unlicensed work. I am concerned about the handyman who is not trained to do electrical, plumbing and HVAC, yet is advertising and doing the work with no inspections, no training, and no safety."

For Schmidt, the temptation to work under the table is very real. His small electric contracting company started out with five people and found success in the booming residential and commercial markets. Today, two of those people have been laid off, and all of the company's commercial opportunities have come to a standstill.

"We don't know what's going to happen with my small company," Schmidt said. "I have had customers ask if I give a discount for cash. They're essentially saying, 'You don't have to declare it, Tim.' For us, everything goes through the books. But it has crossed my mind, taking that money and putting it in my pocket."

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