Gravel2Gavel Construction & Real Estate Law Blog

Change is inevitable but does it have to come right in the middle of summer? The Arizona Registrar of Contractors’ (AROC) rule changes become effective in two months. AROC warns that these changes will effect “nearly all applicants and licensees.” The new rules are expected to, among other things, change the classification of nearly 25% of the existing AROC licensees and to increase the bond amounts for all license classifications.

AROC has broken down the changes as follows:

License Classifications

• Changes to the letter designation for specialty contractor classifications: (A) “C” to “R” (see R4-9-103), (B) “L” to “C” (see R4-9-102), (C) “K” to “CR” (see R4-9-104); “C” indicates commercial, “R” indicates residential, and “CR” indicates commercial and residential
• Six digit license numbers will be changed, e.g., license C-123456 will be changed to license number R-123456
• License with dollar maximums have higher dollar limitations: (A) B-2 General Small Commercial Contractor increases from $250,000 to $750,000, (B) C-61 (now CR-61) Limited Remodeling and Repair Contractor increases from $25,000 to $50,000, (C) C-62 Minor Home Improvements increases from $2,500 to $5,000
• Roughly 25% of existing licensees will be impacted. Arizona has 238 license classifications. Arizona is reducing this number by consolidating many commercial and residential licenses into the comparable dual license. For example, the residential sign license (C-38) and the commercial sign license (L-38) will be consolidated with the dual sign license (formerly K-38, now CR-38). License classifications that will be affected by reclassification will be those chosen based on substantial similarities between the work performed on commercial and residential properties, and low counts of licenses in the classifications. Most of these licensees already have taken the same exam for the commercial, residential and dual license classifications. If, however, the reclassification would cause a change in exam, the licensee is “grandfathered in” and will not be required to take a new exam
• License reclassifications will occur automatically. Where the reclassifications cause a change in license fee, the different fee amount is not required until the next license renewal
• License reclassifications will result in some licensees having two of the same license. For example, if a licensee has both an L-1 and a C-1 license, each will be reclassified to a CR-1. In these situations, the licensee would save money in the future by cancelling one of the licenses

Fees For New Licenses

• All new licenses fees will be reduced (see R4-9-130)
• Fee amounts will show the application and license fees separately

Fees For Renewal Licenses

• Renewal fees are located in R4-9-130
• For the nearly 75% of licensees not impacted by the reclassifications, the changes will : (A) decrease fees for specialty commercial ($10), general dual ($410) and specialty dual ($380) classifications; and (B) result in no change of fees for general commercial, general residential and specialty residential classifications

Bond Amounts

• Increases nearly all bond amounts (see R4-9-112)
• Bond amount changes do not become enforceable until the next license renewal after June 30, 2014. For example, a June 2014 license renewal will not need to include an updated bond amount until the next renewal period in June 2016; however, a July 2014 license renewal will need to include an updated bond with the renewal

Applications For New Licenses Submitted On Or After July 1, 2014

• New license applications are to use the new license classifications, fees and bonds
• License applicant must have taken the correct trade exam

Other Key Clarifications

• Rewords license scopes to address common confusion in scopes of work (see R4-9-102, R4-9-103, R4-9-104)
• Confirms Registrar may waive a trade exam where the qualifying party has been the qualifying party within the preceding 5 years for a license in good standing in the same classification in Arizona, or a classification the Registrar deems comparable in another state (see R4-9-106)
• Updates the rule on “workmanship standards” to use gender-neutral language and clarify the meaning of “professional industry standards” (see R4-9-108)
• Adds a rule describing communication with the AROC that is unauthorized to avoid the possibility of prejudice in proceedings before the AROC (see R4-9-121)

Additional Source: Arizona Registrar of Contractors; Oregon’s Revised Structural Code, Mechanical Code and Energy Code is Effective July 1, 2014

Additional Source: NASCLA Sate Member News, Significant Changes to License Classifications and Examination Requirements in Arizona
Photo: Kevin Dooley, Arizona beauty taken Jul. 19, 2008 – Creative Commons

Last week, a San Jose jury awarded the residents of California Hawaiian Mobile Estates $111 million for an alleged litany of troubles at the mobile home park. This is the largest award of its kind, with previous awards in other California cases up to around $12 million. If the verdicts stand, 61 tenants out of 1,500 people who live in the park could receive an average of $100,000 each in compensatory damages plus punitive damages of $1.57 million each. Of course, the plaintiffs’ attorneys would also walk away with 40% of the award. In an April 16, 2014 press release, Marguerite Nader, Equity LifeStyle Properties, Inc.’s (ELS) Chief Executive Officer, confirmed that: “We could not disagree more strongly with the jury’s verdicts. We will vigorously seek to overturn them in the trial court or on appeal, including but not limited to asking the trial judge to grant a new trial and to reduce the grossly excessive damages.”

The tenants’ complained of, among other things, a once-scenic artificial lakes became slick with slime, sewers backed up into people’s homes, brownouts and blackouts being common, and inadequate street lighting posing dangers to the residents. They also complained that the water for the entire park of 420 households would frequently be turned off without notice for up to 20 hours at a time. Residents formed a homeowners association in 2007 and filed suit in 2009. According to the residents’ attorneys, ELS was spending between $101,000 and $273,000 on upkeep annually at the mobile home park and taking in more than $4.5 million.

It its April 16, 2014 press release, responding to the jury verdicts, ELS contended that “[w]ith respect to compensatory damages, no evidence was presented that any plaintiff suffered any physical injury requiring medical attention, and the documentary evidence of repairs to plaintiffs’ homes or property totaled less than $3,000 collectively for all plaintiffs. In addition, approximately 75% of the compensatory damages verdict was awarded as compensation for emotional distress even though there was no evidence that any plaintiff had sought or received attention from any healthcare provider of any kind for emotional distress.” It further reported that the mobile home park was “developed in the 1960s, and is 100% occupied,” and the plaintiffs’ complaints included various utility outages, which it contends are not uncommon in properties of similar age and that such issues were remedied.

Additional Sources: Inside Bay Area, Jury awards record $111 million to San Jose trailer park residents (Apr. 21, 2014); San Jose Mercury News, Jury awards record $111 million to trailer park residents (Apr. 20, 2014)

Change is in the air. The Oregon Building Codes Division’s (BCD) webpage confirms that the effective date of the Oregon Structural Specialty Code, Oregon Mechanical Specialty Code and Oregon Energy Efficiency Specialty Code is now July 1, 2014. Additionally, the BCD will allow a 3 month transition period for implementation of these codes from July 1 to September 30. The publication process for the new code is expected to be completed in the next couple of months, and code books to be available for purchase shortly afterwards and online access to the code to be available before September.

The Structural Code committee and board recommendations on code change proposals, chapter-related review, and other documents, are available online. For additional information, the BCD encourages you to contact Richard Rogers, Chief Building Official, at Richard.Rogers@state.or.us or 503-378-4472 or Steve Judson, P.E., Facilities Engineer, at steven.w.judson@state.or.us or 503-378-4635.

The Mechanical Code committee and board recommendations on code change proposals, chapter-related review, and other documents, are available online. For additional information, the BCD encourages you to contact Mark Heizer, Mechanical Code Specialist, at Mark.R.Heizer@state.or.us or 503-373-0205.

The Energy Code committee and board recommendations on code change proposals, chapter-related review, and other documents, are available online. For additional information, the BCD encourages you to contact Mark Heizer, Mechanical Code Specialist, at Mark.R.Heizer@state.or.us or 503-373-0205.

In California, a C-57 specialty contractor is a well drilling contractor that “installs and repairs water wells and pumps by boring, drilling, excavating, casing, cementing and cleaning to provide a supply of uncontaminated water.” Cal. Code of Regs., Tit. 16, Div. 8, Art. 3. In its Industry Bulletin 14-04, the California Contractors State License Board (CSLB) reminds C-57 licensees that certain portable engines to power well drilling equipment require registration.

C-57 licensees must register their fuel-powered portable internal combustion engines of 50 horsepower or greater used to power drilling equipment either with:

(1) the State using the Statewide Portable Equipment Registration Program (PERP) to operate their equipment using the engines throughout the state without stationary source construction and operating permits from local air districts, or

(2) (A) those C-57 licensees who drill within the San Joaquin Valley Air Pollution Control District (District), which includes San Joaquin, Stanislaus, Merced, Madera, Fresno, Kings, Tulare and part of Kern, may register equipment under Rule 2280 (Portable Equipment Registration), and (B) those C-57 licensees whose work takes them beyond the District, may register their equipment with the California Air Resources Board (CARB).

The Industry Bulletin also reminds licensees that the District also regulates the use of internal combustion engines used on a temporary basis to power agricultural wells while they are being connected to electric power. Use of this type of engine requires a permit from the District depending on the size of the farm. Farms subject to District permits must obtain an Authority to Construct (ATC) permit from the District in order to install and operate a new IC engine greater than 50 horsepower (continuous rating). Farms that are exempt from District permits require a District Permit-Exempt Equipment Registration (PEER) for each engine greater than 50 horsepower (continuous rating). For more information, read San Joaquin Valley Air Pollution Control District, Compliance Assistance Bulletin 2014, Electrification of New Irrigation Wells.

Today, Pillsbury attorney published her advisory titled Improvements Proposed to Regulations Governing Petitions to the California State Water Resources Control Board. The Advisory discusses the Regional Water Quality Control Board’s recent proposal to amend to Sections 2050, 2050.5, and 2051 of Title 23 of the California Code of Regulations to render petitions on which the Board has not taken action within 90 days of receipt, dismissed by operation of law. The proposed revisions should improve the petition process, but may result in an increase in the number of court challenges to Board decisions.

Today, Pillsbury attorneys Julia Judish and Keith Hudolin published their advisory titled President Takes Action Meant to Increase Pay Equity for Employees of Federal Contractors. The Advisory discusses the April 8, 2014 Executive Order and Presidential Memorandum issued by President Obama aimed at “closing the persistent pay gap for women and minorities,” at least for employees of federal contractors and subcontractors. These two executive actions direct the Department of Labor to issue new regulations that will (i) prohibit government contractors from retaliating against employees and applicants for asking about, disclosing, or discussing their compensation with other workers, and (ii) require contractors to report summary compensation data for their employees, by sex and race, to the Department of Labor. By limiting the reach of these measures only to employers that are government contractors, President Obama was able to act on his own executive authority, without needing the cooperation of Congress. Because government contractors comprise approximately a quarter of the U.S. workforce, these new regulations will directly affect a significant portion of employers, and may also have a ripple effect that extends even to wholly private-sector employers.

UPDATE: CSLB, Before You Turn a Shovel, Make a Call (Summer 2014)

Call 811, a nationwide safety service, is observing “National Safe Digging Month.” As part of the celebration, on April 1, Call 811 kicked off a month-long promotion offering users the chance to “dig” for prizes every day with a virtual shovel. Call 811 will be awarding lucky diggers the chance to win an iPad Mini, Kindle Fire HDX, Apple TV, Jawbone JAMBOX, Samsung Chromebook, Sony Cybershot X50 Camera, $250, $500, Call 811 Shirts, Call 811 Mugs and gift cards from VISA, iTunes, Amazon and Starbucks. Promotion ends April 30.

Sign up and you to can visit Call 811’s website to click 1 of 24 virtual “dirt piles” in hopes of finding a prize notification underneath. 1 dig per day – but look for bonus questions to earn an additional dig. Dig in the wrong area and you could hit a water, gas, power, phone or sewer line, resulting in no prize for that particular day.

California Government Code § 4216.2(a)(1) requires that “[e]xcept in an emergency, any person planning to conduct any excavation shall contact the appropriate regional notification center, at least two working days, but not more than 14 calendar days, prior to commencing that excavation, if the excavation will be conducted in an area that is known, or reasonably should be known, to contain subsurface installations other than the underground facilities owned or operated by the excavator and, if practical, the excavator shall delineate with white paint or other suitable markings the area to be excavated.” Under Section 4216.6(a)(1)-(2), any operator or excavator who negligently violates this law is subject to a civil penalty in an amount not to exceed $10,000, and any operator or excavator who knowingly and willfully violates any of the provisions of this law is subject to a civil penalty in an amount not to exceed $50,000). “Operator” is defined broadly to include “any person … that owns, operates, or maintains a subsurface installation”; it does not include an owner of real property where subsurface facilities are exclusively located if they are used exclusively to furnish services on that property and the subsurface facilities are under the operation and control of that owner. “Excavator” is broadly defined to include “any person … that, with their, or his or her, own employees or equipment performs any excavation.” If you have questions, call your regional notification center.

Additional Source: Hot Diggity – Licensing Board Is Digging Into Excavation Mishaps

We have all heard about 3D-printing by now. The technology of printing something in three dimensions is not new. But how exactly does it work? And more importantly, how could 3D-printing affect the construction industry?

How Does 3D-Printing Work?

Traditional machining techniques are “subtractive.” In other words, take a piece of material and cut or drill excess material to get your desired shape. To the contrary, 3D-printing is “additive.” Basically, the machine prints layers of material, one on top of another, until the desired shape is achieved. The process is somewhat akin to brick-laying, but with much less effort.

The process begins with a model of the object or objects to be printed. Models can be created through a CAD (computer aided design) program or with a 3D scanner.

The printer reads the 3D-model file and lays down successive layers to produce the three dimensional object. The two main manufacturing approaches are powder approach (as seen in this video), which creates the shape of the object by adding a binding agent to the powder and the polymer approach (seen here), which pumps out fine drops of polymer and cures the material with UV rays. The result of either approach is the same – a three dimensional object that was created by a printer.

How Can 3D-Printers Affect the Construction Industry?

The technology of 3D-printing has been around for a years, with 3D-printers becoming commercially available in the early 2010s. Researchers have been utilizing 3D-printing to further medical research and testing on various organs. In addition, 3D-printers have been used to print guns, clothes, shoes, and even food.

But what could 3D-printing do for the construction industry? “In the future, we will print our houses.” (Video.)

At last year’s 3D Printing Conference, Professor Behrokh Khoshnevis of The University of Southern California’s School of Engineering, lecturing about Contour Crafting, conveyed the very real prospect of constructing large scale structures, buildings in particular, with 3D-printing.”

According to Dr. Khoshnevis and his team, “Contour Crafting technology has great potential for automating the construction of whole structures as well as sub-components. Using this process, a single house or a colony of houses, each with possibly a different design, may be automatically constructed in a single run, embedded in each house all the conduits for electrical, plumbing and air-conditioning.” Dr. Khoshnevis’ 3D-printing technology uses concrete to build walls, which he believes is the future of the construction industry.

Meanwhile, last month in Amsterdam, a group of dutch architects began 3D-printing an entire house. The 3D Print Canal House, the brainchild of DUS Architects, is an architectural research project, testing the limits and capabilities of 3D-printing buildings. The house is being made of plastic and is expected to take 3 years to complete, which would hardly seem like a realistic alternative to traditional construction. Nevertheless, this project could serve as a breakthrough in construction using 3D-printing.

Other companies are jumping on the bandwagon offering 3D-print house construction kits and assembling villages of 3D-printed houses.

It remains to be seen how 3D-printing will alter the construction industry, but it is definitely a trend worth watching.

On Friday, April 11, 2014, the California Contractors State License Board issued a News Release confirming that drywall work on the “$150 million, 45-story Pinnacle Towers construction project in downtown San Diego has stopped after the [CSLB] determined the sub-contractor hired for the work, Clayton Wall & Ceiling Systems Inc. (Clayton), is not properly licensed in the state of California.” The News Release further confirmed that “[o]n April 4, 2014, investigators with CSLB, California Department of Industrial Relations (DIR), and the San Diego District Attorney’s Office, responded to an industry lead and performed an unannounced inspection of the construction site.” They “determined that drywall work began in January 2014, even though the company has not yet completed the licensing process.” The CSLB issued an administrative citation to Clayton for acting in the capacity of a contractor without a license and assessed a civil penalty of $15,000, as permitted by Cal. Bus. & Prof. Code § 7028.7. DIR’s Division of Labor Standards Enforcement (DLSE), also known as the Labor Commissioner’s Office, also cited Clayton for performing services without a valid state contractor license and assessed a $64,000 fine.

The News Release reported that the primary contractor, Pinnacle International Development Inc. (Pinnacle), contracted with Clayton on August 8, 2013 for the $6.34 million drywall job. Then, on December 3, 2013, Clayton applied for a California’s contractor’s license. “When it comes to contracting without a license the law is very clear,” said CSLB Registrar Steve Sands. “You cannot enter a contract to work, or actually do any work until you’re licensed. There’s no gray area here.” California law defines “contractor” broadly to include “any person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, parking facility, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or other structures or works in connection therewith …” It includes subcontractors and specialty contractors.

“An employer operating without a license creates an unfair advantage over businesses that follow the rules,” said DIR Director Christine Baker. “This case shows how the Labor Commissioner’s Office works effectively with other state agencies to enforce the law and protect workers and business in California.” Pinnacle may also face administrative action for contracting with a non-licensee.

The News Release further confirmed that Clayton’s license application will be on-hold until the fines are paid or until an appeal is heard. This will delay Clayton’s ability to work on the San Diego project, or any other project in the state. In addition, the Labor Commissioner’s investigation of the business will remain active.

Labor Commissioner Julie A. Su warned that “Scofflaws should know that state agencies are sharing information and finding violations that might have previously been overlooked.” “In challenging economic times it’s important to protect honest businesses from being put at a competitive disadvantage, and workers from being given less than their earned wage.” Su said.