Many pool builders oppose an Arizona bill that would remove a law meant to prevent builders from collecting disproportionate deposits and payments.
In the 1990s and early 2000s, Arizona and other Sunbelt states were plagued by pool-construction abandonments made worse by front-loading, a practice of collecting large deposits upfront. This would leave consumers upside-down. In response, the Grand Canyon State passed a law whereby pool and spa builders can only collect a $1,000 deposit at contract signing, then 30% at excavation, before shotcrete and before the deck, then the last 10% before plastering. Similar laws were passed in California and Nevada.
Among other things, Senate Bill 1116 would remove this progress payment schedule. At press time the legislation, introduced by Senator Steve Smith, had passed through its house of origin. Observers give the bill good odds of passing the House and gaining the signature of Governor Doug Ducey, who called a moratorium on new regulations in the spirit of streamlining government intervention.
In of a reversal to the norm, the pool industry opposes the loosening of the law, while the enforcing agency — the Arizona Registrar of Contractors — not only supports, but actually requested the bill.
The AZ ROC, as it’s known, considers the progress payment law unnecessary, given other available protections. Consumers can file complaints and initiate investigations, and those left in the lurch by licensed contractors of any kind have access to a $9 million recovery fund. AZ ROC believes it unfair to impose such a regulation on pool builders only, and believes it places an undue burden on these contractors if they can’t collect enough money upfront.
“[It] limits entry into the field and requires contractor financing for installation of swimming pools,” said Jim Knupp, spokesperson for the AZ ROC.
As proof that consumers enjoy enough protection, he pointed to those allegedly abandoned in 2015 by Paddock Pools, the historic Phoenix builder that closed that year. In total, 46 of the consumers collected $352,000 from the recovery fund, Knupp said. “And their down payments were not limited to $1,000, meaning the [progress payment] law did little to nothing to protect consumers,” he said. “There are safeguards for when something happens.”
Beyond the practical, Senator Smith offered philosophical reasons. He sees the payment schedule as something of a slippery slope. “Once you insert yourself somewhere, where does it end?” he asked.
He believes the contractor and consumer should be able to hammer out the terms of an agreement without government intervention. “If you have less regulation, and you have two private parties willing to come together, that’s free market capitalism at its best,” he said.
Some local pool builders became alarmed upon hearing of the bill. They believe the current payment schedule not only protects consumers, but establishes a certain standard for pool builders. This is serious construction, they said, so stable contractors should be able to finance projects to a certain degree, making some barrier to entry appropriate. As they see it, the regulation spares the local industry the bad reputation it suffered as a result of the highly publicized pool abandonments.
In fact, it was the industry that advocated for the payment schedule to start. They said it’s helped — even during the depths of the Great Recession. “I’m all for deregulation, but I think this is going too far,” said Mike Smith, with California Pools and Landscape in Scottsdale, Ariz. “There are some regulations that work, and I believe this is one of them.”
The Central Arizona and Southern Arizona chapters of the Association of Pool & Spa Professionals surveyed members and found the vast majority oppose repealing the payment schedule, said Susan Kregar, executive director of the chapters. APSP members will meet with legislators and staff to advocate their position on that portion of the bill.
Tim Murphy, one of the pool builders to advocate for the current law, believes it’s crucial. Said the CEO of Presidential Pools, Spas & Patio: “To have no law ... it’s the Wild West again.”