Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2468 entitled:

begs leave to report as follows:

The purpose of this measure is to lower the contract price threshold for the requirement of a contractor's license.

Your Committee received testimony in support of this measure from the Subcontractors Association of Hawaii, Hawaii Wall and Ceiling Industry Association, Pacific Electrical Contractors' Association, Painting and Decorating Contractors Association of Hawaii, Harvey's Flooring, and Kaulana Roofing Corporation. The Contractors License Board testified in opposition to the measure.

Currently, persons performing contracting work where the project price does not exceed $1,000 are not required to have a contractor's license. Originally, this "handyman" exemption applied to jobs with prices up to $100, but ten years ago the threshold was increased to $1,000.

Your Committee finds that the current law allows unlicensed persons to undertake substantial, skilled work without complying with the licensing standards, qualifications, and requirements established to protect consumers. While the "handyman" exemption was originally established to allow for the undertaking of relatively simple repair or maintenance work without a license, under the current threshold amount, unlicensed persons are allowed to perform substantial work involving more skill or experience than that contemplated by the exemption.

Your Committee received testimony that for $1,000, a homeowner can have several rooms in a house painted, carpet in a bedroom replaced, a ceramic tile entry installed, a garage reroofed, or solar vents installed. These jobs are currently being solicited by individuals who may not possess the necessary skills or experience, who do not maintain insurance or bonding, and who do not contribute to the contractors recovery fund. Consumers harmed by these unlicensed individuals are without recourse under the contractor's licensing law.

While your Committee finds that a decrease in the contract price threshold is warranted in order to protect consumers, it does not believe that it should be re-established at $100. Your Committee received testimony that if the threshold is set too low, consumers may experience difficulty in legally securing a contractor because licensed contractors may not be inclined or financially able to accept contract jobs below a certain amount. Therefore, your Committee has amended this measure by raising the proposed contract price threshold from $100 to $500. In addition, your Committee made technical, nonsubstantive changes to the measure to reflect preferred drafting style.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2468, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2468, S.D. 1, and be placed on the calendar for Third Reading.