Caleb Lopez is one of the lucky ones.
With several big development projects on his plate and a steady flow of smaller, private jobs coming in, Lopez might be considered a rarity when it comes to being a contractor in today’s economy.
Following the overall downturn of the nation’s economy and the collapse of the housing market last year, contractors have been working especially hard to stay afloat financially.
“Everything has changed,” said Lopez, a general contractor and owner of Cal Coast Construction.
Lopez, who for the last few years has maintained a strong presence in the local construction community, said that both bad and good has come out of the construction freeze.
The downside? A lack of construction work available has thinned down the number of contractors working on the Central Coast, he said.
And for several years, he said, construction was “people’s bread and butter” in San Luis Obispo and Santa Barbara counties.
But as the economy began to slow the business was forced to readjust to the changing economic climate. To make ends meet, companies tightened their tool belts by lowering prices, laying off laborers, or even filing for bankruptcy.
And while Lopez continues to do good business the state of his ailing industry stays on his mind like caulk on kitchen tile.
“The industry has a pattern that repeats itself over and over again,” he said. “Hopefully, you saved up when times were good.”
When it comes to the secret of his continuing success, Lopez credits hard work and strong professional ties.
Another explanation for his business’ success, Lopez said, can be found in a fable.
“It’s like the story of the [tortoise] and the hare: The people who are jamming to get work done are going to be sloppy and end up hitting the wall. The ones who work more slowly and do the job right are going to get more work,” he said.
Still, times are hard, even for many tortoises.
According to Leslie Halls of the San Luis Obispo Builders Exchange, development has slowed significantly.
She said the number of bidders per project is higher than it has been in 15 years.
“There’s just a lot more guys coming in chasing a lot less work,” Halls said. “It’s gotten incredibly competitive.”
In the first 11 months of 2008, there have been a total of 558 residential building permits in SLO County. In 2007, there were 982.
In order to become a contractor in California, a person has to obtain a contractor’s license from the Contractors State License Board.
But the board estimates that there are thousands upon thousands of contractors in the state operating without a license. The matter of having a license or not might seem trivial, but its effects can be damaging.
According to information provided by Contractors State License Board representative Pamela Mares, unlicensed operators are a major part of the underground—read: illegal—economy that takes billions of dollars away from legitimate licensed contractors in unfair competition.
Unlicensed contractors can underbid their licensed counterparts because they don’t have to pay taxes, carry insurance or bonding, or comply with worker safety programs.
The IRS estimates the federal government is losing $195 billion in revenue each year because of underground activity, which includes contractors and other businesses.
In an effort to impede California’s underground economy, Gov. Arnold Schwarzenegger in July of 2005 established the Economic and Employment Enforcement Coalition, a partnership of state and federal agencies dedicated to educating business owners and the public about labor, employment, and licensing laws.
One of those agencies is the Contractors State License Board, which is responsible for licensing and monitoring contractors and educating consumers. The board maintains an online database, listing contractors throughout the state, the status of their licenses, and whether they have any complaints filed against them.
In 2007, the board’s enforcement division opened 21,703 complaints, up from 21,028 filed in 2006. Complaints for 2008 have yet to be officially announced.
The board also runs the Statewide Investigative Fraud Team (SWIFT).
In 2007, SWIFT successfully conducted 51 sting operations targeting unlicensed contractors throughout the state. As a result of the stings, 778 unlicensed operators were cited for misdemeanor advertising, workers’ compensation, and other licensure violations.
Based on the statistics, Mares explained, she strongly advises the public to do their homework before hiring a contractor. That can include checking the status of someone’s license online, checking professional references, and viewing samples of a contractor’s work prior to hiring.
When looking at advertisements in the phonebook it’s important to look for a license number, Contractors Association member Linda Devey said. By law, licensed contractors are required to put their license number on anything that might be considered an advertisement, including ads, websites, and even T-shirts.
Contractors’ licenses are made up of six digits and don’t include any letters. Some unlicensed contractors advertise their five-digit business license—which are easily obtained—as a potential contractors license.
Second: Check out the status of each contractor’s license with the license board. They may be expired. It’s also important that a contractor have workers’ compensation if he or she also has employees. If not, the consumer could be held responsible for any accident that occurs on the property.
Third: Look the contractors up with the Better Business Bureau.
The fourth and final step, Devey said, is to trust your intuition: “How you feel about the guy? Are you comfortable? Is he the ‘shiny shoe salesman’ type who looks like he’s never pounded a nail in his life?”
And even if the contractor is licensed, Devey explained it’s important to “make sure you're comparing apples to apples,” meaning checking whether each of the contractors is licensed and has the same qualifications. The idea that a general contractor can do anything, Devey said, is a myth.
According to the Contractors State License Board, a general contractor can build any structure that requires the use of at least two unrelated building trades or crafts.
The qualifications can seem nitpicky—even overwhelming—but Devey said they’re what keep everyone in the business honest.
Contact Staff Writer Amy Asman at firstname.lastname@example.org. New Times Managing Editor Patrick Howe contributed to this story.