North Liberty could soon require contractors to obtain a license

NORTH LIBERTY — A proposed city ordinance would require anyone applying for a building permit in North Liberty to first acquire a city-issued contractor's license.

While the potential rule would add another requirement for those seeking to build in North Liberty — one of the fastest growing cities in the state — city staff members said the ordinance will help ensure quality projects and reduce nuisances to residents.

Ryan Heiar, North Liberty city administrator, said he has had zero issues with the large majority of builders in the city. But a handful of projects — which had seen considerable delays in recent years — prompted discussion on the ordinance, he noted.

'I would say 99.9 percent of the builders out there do fantastic work,' he said. 'We have had a couple of cases that have caused substantial problems within neighborhoods as well as complying with building codes and compliance issues ...

We're here because we had issues and we want to be able to prevent those issues.'

If the ordinance passes the third and final reading on Tuesday, it would be one of a handful of its kind in the state.

Creating a new rule

City staff began discussing the ordinance after they faced issues with a few contractors who failed to complete residential projects in a timely manner, North Liberty Code Official Tom Palmer said. When projects linger unfinished, nearby residents have to deal with erosion issues, safety concerns and eyesores, he said.

With infrastructure and amenities such as sidewalks and seeding also tied to a project's completion date, unfinished homes can lead to unsightly yards and missing lengths of pavement.

The hope, Palmer said, is the city can take its subdivision ordinance — which requires developers to be acting in good faith with the community — make some tweaks and apply that standard to building permit requirements.

But while the proposed ordinance will require builders to be acting in good faith to build in North Liberty, the city cannot deny a building permit if the application is properly completed.

'Regardless of what's going on at other projects or if we have issues with that contractor, current ordinances do not allow us to deny based on other projects,' Palmer said. 'By law we have to issue a building permit.'

That's where the city-issued license comes in. If a contractor has had violations, has failed to complete projects or received complaints from the public, the city administrator will have the power to issue warnings, revoke a contractor's license or deny license applications.

'When that's going on, I think staff wants a procedure that we can use to say, 'We're not giving any new permits at this point until we can figure out what needs to be done so we can resolve these issues,'' Palmer said.

Without the license, a contractor will not be able to build in North Liberty.

If adopted, Palmer said the plan is to have a 12-month testing period for the new ordinance and contractor's license with existing building permits grandfathered in. Testing for three-year contractor's licenses — with licenses for commercial, specialty and residential projects — would begin in 2017.

While a city-issued contractor's license is uncommon in the state, Iowa law already requires a licensing process for plumbers, electricians and mechanical professionals.

North Liberty's contractor's license would be city-issued, but testing could be carried out by the International Code Council, a nationwide association that develops public safety and construction codes.

The council also provides testing for inspectors, contractors and other professionals.

Contractors can sign up online and tests can be taken in Davenport, Des Moines and Coralville.

Michelle Porter, director of certification and training with ICC, said the council administers nearly 100 customized exams in Iowa every year, but said candidates taking national exams within Iowa are not counted in that figure so the overall number of tests is likely much higher.

The exams are designed to show a minimal level of competency in the given field, with an exam likely to take between one and five hours to complete, Porter said.

The council does not disclose pass rates for any exams, but Porter said more experienced individuals are more likely to have success in testing.

Concern over discretion

Tim Ruth, with McCreedy and Ruth Construction and the 2015 president of the Greater Iowa City Area Home Builders Association, said the association supports standardized testing for all contractors, which he said will help ensure quality projects and ultimately best serve the customers.

That said, Ruth, who also is first vice president of the Home Builders Association of Iowa, is concerned North Liberty's ordinance allows for a certain degree of discretion when considering contractor's licenses.

'We're not against it. We actually, as a group in Iowa City, are in favor, we're in favor of testing,' Ruth said.

'I think there should be a very definitely defined set of rules — this is what it takes to have a license in our city and these are the following items that are very clearly stated, if you don't do this, we will take your license away from you, or not renew it.'

HBA, which has been in communication with the city while city officials draft the ordinance, has about 285 members, with more than 75 of those area contractors, Ruth said.

Unified testing eliminates the potential for out of state contractors or unskilled builders to take on jobs they cannot handle, he said.

'We're in a time when we need it,' Ruth said. 'Contractors need to be competent, they need to be educated and they need to know the codes.'

The problem with discretion, Ruth said, is that it opens up the possibility for lawsuits against the city from a denied contractor.

If the rules are clear cut, the city has more legal footing, he added.

Learning from other cities

With few nearby examples, North Liberty's Palmer turned to Council Bluffs and Davenport — which have similar contractor's license requirements.

Steve Carmichael, Council Bluffs chief building official, said his community implemented an ordinance similar to what North Liberty is considering, but for very different reasons.

The ordinance was passed more than 10 years ago following storms that left considerable hail damage throughout not only Council Bluffs, but nearby communities such as Bellevue and Omaha. After the storms left, contractors from all over — some of them unqualified — flooded to the area to repair roofs and siding.

'We had significant amounts of code violations or lack of permits that were obtained by those individuals in the roofing industry,' Carmichael recalled.

The city ultimately adopted a contractor's license ordinance with five levels of licensing and testing conducted by ICC.

That ordinance has not only proven effective, but it has increased the quality of work across the city, Carmichael said.

'It's really increased the competency of the contractors with respect to code compliance,' he said.

On the other side of the state, Davenport also requires contractors to take an ICC test, with a passing score of at least 70 percent needed to be issued a license, according to the city website.

A few isolated incidents

North Liberty staff began discussing the ordinance about a year ago, with officials citing a couple North Liberty residential projects that had seen considerable delays.

Several city officials pointed to two specific projects — at 295 Radcliffe Dr. and 1655 Red Barn Dr. — as being problematic. The Red Barn Drive home took almost three years to complete.

Capital Builders was the initial applicant on building permits for both those projects.

The issue isn't entirely rare, Palmer said.

'Every year we have one or two contractors who, for whatever reason, financial or not understanding the codes, that we struggle with trying to get projects completed,' Palmer said.

When asked about the two projects, Steve Stefani, developer with Marion-based Capital Builders, said in each case, the original purchasers of the homes had not fulfilled their contracts, which created construction delays.

Stefani said the Red Barn Drive home was sold in September and the Radcliffe Drive home has since been completed and a sale is expected in the next few weeks.

'We have worked well with the city of North Liberty in the past and we are committed to continue to work well with them,' Stefani said.

North Liberty City Attorney Scott Peterson said the typical avenue for the city to achieve compliance with builders is through municipal infractions. Such infractions are not rare, but the number filed with Capital Builders, particularly with the Red Barn Dr. property, was more than usual, Peterson said.

'In normal cases we don't have to file more than one municipal infraction,' he said. 'It was unusual, particularly for the Red Barn property.'

Infractions with both properties have since been resolved, Palmer said.

Not discouraging growth

Alex Nolan, general contractor with Minneapolis-based company Weis Builders, who is overseeing the construction of a 123-unit senior living complex at 1275 Forevergreen Rd., said he prefers a testing model such as the one being considered in North Liberty.

While he has not encountered an ordinance similar to what North Liberty intends to implement, Nolan said he believes the rule will ensure quality builders and better competition.

'We prefer that, just to level the playing field. If we're bidding a project against someone else, at least we know they're equally qualified. I think that kind of stuff is just going to root out the impostors,' Nolan said.

The ordinance might not address every issue, but it certainly should curtail some of the problems, Nolan added.

'You still might have somebody get this license and still be a real pain in the rear for the city, but they won't be able to do it twice,' Nolan said. 'They're only going to get away with it once.'

In the end, Palmer said the last thing the city wants to do is discourage builders, but the ordinance should help add a level of accountability.

'We don't want to tell builders they can't build here, but they have to understand that when they apply for these projects there's a process they need to follow and we want these projects done in a timely manner that's not creating issues for adjoining property owners,' he said.