Horror Stories Swamp Panel Studying Contractors Board : Legislation: An ‘unprecedented number of calls and letters’ has forced the Assembly committee to schedule a second public hearing Nov. 9 to gather more testimony.

The legislative panel reviewing the Contractors State License Board has been inundated with phone calls and letters from people with horror stories about experiences with the state agency and has scheduled a second public hearing for Nov. 9 to gather more testimony.

“We have received an unprecedented number of calls and letters since our original hearing on Oct. 6,” said Assemblywoman Jackie Speier (D-Burlingame), chairwoman of the Assembly Consumer Protection and Government Efficiency Committee.

Not even a well-publicized hearing two years ago into abuses in the funeral home industry drew as much response, said Richard Steffen, the committee’s chief consultant.

In a report issued in conjunction with last month’s public hearing, the consumer committee’s staff criticized the license board for abandoning its role as a consumer advocate, for failing to check the accuracy of information contractors supply on license applications about their experience and legal histories, and for permitting low passing grades--as low as 51% in the case of earthwork and paving contractors--for many license exams.

“The system is in desperate need of a heart transplant on behalf of consumers and the legitimate contractors out there who are attempting to do good work,” Speier said in an interview. “There are horrendous problems out there, and the board’s policy of discarding complaints subject to arbitration has given unscrupulous and fly-by-night contractors absolute insurance against any disciplinary action being taken by the board.”

The committee hearing earlier this month followed a Times Orange County Edition investigation of loopholes in the regulatory system that enabled contractors to conceal lawsuits, liens and arbitration awards from the public and to maintain unblemished records because the license board refused to investigate consumers’ complaints when a contractor used private arbitration to resolve disputes.

Though contractors are required by law to report liens, judgments and awards to the board, The Times’ investigation--as well as testimony from consumers in October--showed that contractors who fail to do so are rarely discovered because the license board has no system for making record checks of its own.

The consumer committee staff fielded more than 200 calls in 10 days after the October hearing, and it still receives calls and letters almost daily, panel consultant Steffen said. “Most of them are from people who have had a problem with a contractor and feel that the license board won’t help them.”

David Phillips, the board’s chief executive, could not be reached for comment. He is scheduled to appear before Speier’s committee Nov. 9 to address many of the criticisms.

His chief deputy, Mickey Matsumoto, said the board views its role as that of an independent third party “neither representing the consumer nor the contractor. . . . But it is a stretch to say that means we are not for the consumer.”

Speier has complained that the board has been reluctant to discipline contractors and has become an advocate for the industry.

“It is her perception, and it is unfortunate,” Matsumoto said. Other than that, he said, “I don’t know how to respond.”

In addition to receiving Phillips’ report, the consumer committee will examine methods of ensuring that results of private arbitrations are relayed to the license board and will hear testimony about the adequacy of the bonding requirement for contractors.

State law now requires licensed contractors to carry a $5,000 general bond--increasing after Dec. 31 to $7,500 when a license is renewed.

“But that’s it, for everything,” Steffen said. “Whether they are doing one job or 100, they just need that one bond.”

In testimony Oct. 6, a witness from Pasadena told the committee of being required to share the $5,000 bond payment equally with four other clients of a contractor who had abandoned all five jobs--even though damages in each case were well in excess of what the bond covered.

Regina Lamourelle, a Mission Viejo resident who spent more than $100,000 on legal fees and repairs during a five-year battle with an Orange County contractor over defects in her family’s custom home, called the $5,000 bond “ridiculously low.”