Starting Jan. 1, Haines handymen will be required to get a state contractor’s license and secure a bond for all their jobs, however small.
The change is the result of SB 193, passed earlier this year. Previously, handymen working on projects under $2,500 didn’t have to bond for their jobs or hold a contractor’s license. Now, they will have to get a state contractor’s license in addition to a state business license, and will have to bond for a minimum of $5,000.
A bond acts as protection for the client. It guarantees the handyman or contractor will complete the promised work within the established price and time, and if he or she doesn’t, the client can make a claim on the bond and recover their financial loss.
The change is essentially a consumer protection measure, said Chuck Homan, president of the Alaska State Homebuilding Association.
Though Homan doesn’t know whether consumer complaints triggered the change, unlicensed contractors are a “big problem” in the state, he said. Using unlicensed, unbonded contractors, who frequently advertise their services through venues like Craigslist, leaves the client vulnerable to fraud, he said.
“They are putting the homeowner at risk,” he said.
According to the Department of Commerce, Community, and Economic Development, a contractor’s license costs $300 ($235 plus a $65 application fee). It is good for two years, and renewal costs $235.
Calculating how much a $5,000 bond costs is trickier. The cost is based on the contractor’s credit, so it’s conceivable someone with a poor credit record could end up paying through the nose, Homan said. But in all likelihood, a $5,000 bond should cost most people $250-$500 per year, he said.
Josh Benassi, owner of the handyman business Josh of All Trades, said while he isn’t happy about the extra costs he will incur due to the law change, he thinks it will weed out some of the unlicensed people doing shoddy business.
“I have had to fix a lot of things other people have really screwed up,” Benassi said. “And, I mean, it’s cool because it’s a job, but I don’t want the homeowner to go through that.”
Benassi specializes in odd jobs like installing shelves, laying flooring and doing small repairs. His jobs average $150 to $300, he said.
Benassi is licensed and insured, though not yet bonded. He usually closes up shop for four months between January and May, a time he will this year use to get the new law figured out and all the paperwork squared away.
“I do know I’ll have all my ducks in a row, because I don’t like to have loose ends that will hang me,” Benassi said.
Though Benassi holds insurance, liability insurance for the contractor still isn’t required for projects under $2,500, said Homan. Without liability insurance, however, a person can’t advertise their business in media or with signs, regardless of how inexpensive the work is, Homan said.
While Benassi called the law “positive,” he acknowledged it may also push more handymen to “go rogue,” or avoid the state’s requirements, Benassi said. “The enforcement is actually going to be really difficult,” he said.
The state’s Department of Commerce, Community, and Economic Development essentially has one person assigned to enforcement, Homan said. That department subcontracts out enforcement to the Department of Labor, which sends people into the field to check contractor licenses.
Still, consumer complaints are usually the triggers for enforcement and catching contractors operating under the table, Homan said.
Borough accountant Jessie Badger, who handles the municipality’s business licenses, said there are 69 licensed construction businesses in Haines.