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Wednesday, 21 December 2011 21:07

UPDATE: Houston City Council Set to Vote on Auto Repair Ordinance, Draft Not Favorable to Shops

The city of Houston is moving to enact an ordinance to regulate the automotive repair and service industry that would regulate every type of business that touches a car, whether it’s a body shop, an independent auto repair shop, a dealership or a big store like Wal-Mart. The mayor has set the vote for Wednesday, Dec. 21, the last City Council meeting of the year, and after this issue goes to press.

“While this ordinance has good intentions, it paints the entire industry with one stroke. The proposed ordinance stems from an effort to eliminate a problem that comes from a small percentage of unscrupulous collision-repair shops, which is one segment of the automotive repair trade. This attempt at a solution will wrap an already difficult business in more red tape,” says Kathryn van der Pol, Past President of ASA, Houston Chapter, and co-owner of Adolf Hoepfl & Son Garage, which has been in business since 1946.

Writing in the Houston Chronicle, Van der Pol says there are some good features for the consumer in this ordinance:

“The ordinance will require all auto-repair facilities to post their license number on their advertising and invoices so that the consumer will know which companies are city-licensed repair facilities.

“It will also require auto-repair facilities to carry a minimum amount of liability insurance. Currently, there is no local or state law that requires a repair shop to have insurance. In an uninsured shop, car owners are liable for anything the garage owner does with their car. Good shops already purchase insurance, but virtually all shops that lack integrity will also lack insurance.

“Giving approval over the phone for any collision work will be illegal and limits will be placed on certain fees charged by collision shops. There is a good reason for this. Repairs resulting from accidents usually cost thousands of dollars. While we are hesitant to say that the city should set pricing for any private business transaction, we agree every approval for collision repair should be in writing.

The ordinance includes pages and pages that regulate how records will be kept, how repair shops may gain approvals from customers and establishes fines for sometimes honest mistakes that must be paid to the city.
If this new law takes effect, phone approvals for mechanical work will be allowed only if the customer provides a third signature permitting an estimate either to be given orally, in person, or over the phone. Records of that approval have to be maintained for two years. Automotive professionals are concerned about this for a few reasons.

“Our main concern,” continues van der Pol, “is that if your car is towed in to a mechanical shop, the facility can’t even look at the car until the owner comes in or faxes or emails a signature. If you are a business owner with a fleet account, you will have to email, fax or come to the shop to give approval of authorization or to sign a waiver. This will slow down the repair process and be an inconvenience for everyone involved.

“Mechanical work is entirely different from collision. It differs in that it’s quick, less costly and customers depend on our efficiency so they can get their autos back.
The city’s proposal will slow down this repair process. If it sounds complicated, it will be even worse when customers are confronted with the legalese. If they refuse to sign the waiver authorizing estimates by phone, the customer will have to return to the shop, find a fax machine or send an email.

“While the Automotive Service Association (ASA) fully supports efforts to root out bad players in our industry, we believe this ordinance overregulates and will be a burden to our customers who don’t own fax machines, have access to email or have a second car to come back to the shop for a signature. This is going to affect senior citizens, the disabled, those with lower incomes, and those who depend on one vehicle the most.

“Another provision is that no authorizations are required for repairs under $100. As long as your bill is $99.99, the repair shop does not need your permission to make repairs or perform maintenance on your vehicle. Our concern is that if you are dropping off your car for an oil change and the technician calls because he determines your coolant needs to be flushed, the work will exceed $100. Then you will have a delay in repair if you did not sign the waiver - even though we still have the two signatures required by the state. This provision seems unnecessary and could lead to confusion and abuse.

“If a shop neglects to put the license plate number, vehicle identification number, or mileage on a work order, or records it inaccurately, it could result in a criminal misdemeanor charge with a $200 to $500 fine.

“Why do the mayor and some members of City Council feel this ordinance is needed?

“The ASA was told it was necessary because there were some bad body shops taking advantage of insurance companies, resulting in a rise of insurance premiums.

“ASA requested information through an open records request about the complaints so that as an industry, we could better understand what problems the city is trying to address. The complaints did indeed support that there are some bad players in the collision repair industry who are charging excessive disassembly fees, administrative fees and are holding cars hostage. We were given 257 complaints filed over a three-year period with the Houston Auto Dealers, a division of the Houston Police Department that enforces automotive repair facility licenses. Of those, 61 complaints concerned excessive fees from collision shops—none from mechanical. It is a problem, but, “it’s like killing flies with a cannon instead of a flyswatter,” as Councilmember Jolanda Jones said.

“Last, there is the concern about increased costs of implementation that will be passed on to consumers. All our paperwork will have to change to comply. Not to mention all our fees and permits were increased this year. For example, in 2011 a Houston automotive repair facility license increased 147 percent, from $200 to $495.

“What do we recommend? Ideally, the city should create two separate automotive licenses, one issued to regulate the collision industry and another, simpler one, for the mechanical industry. Many at City Hall acknowledge that this would be a real fix, but there is a rush right now to pass the ordinance before the end of the year. What’s the rush? ASA has known about this proposal for less than a year, and we have been working diligently with the city to help.

The Automotive Service Association wants City Hall to slow down, listen to both industry and consumers and do it right the first time.

Houston City council approved changes to the city’s ordinance on Nov. 30 covering towing companies and auto shops geared toward “trying to make sure that an unhealthy relationship between the tow truck drivers and collision repair shops is monitored more closely,” Mayor Annise Parker said. “There are lots of reports that after accidents, tow trucks may be being paid bounties to take cars to particular collision repair shops.”

The Houston city council voted to delay voting on those provisions for two weeks (until Dec. 21). The majority of the council feels that more time should be granted to have input from additional small business owners. The delay will allow more time for further deliberation and communication with members of the Houston city council over potential changes in the proposed ordinance language.

Other key industry representatives, including the Houston Auto Body Association (HABA), applaud some of the proposed mandates but are quick to say others may end up bogging down reputable businesses, slowing their ability to serve customers.

James Brown, President of the Houston Auto Body Association (HABA), testified before the Mayor and City Council on behalf of HABA on November 29, voicing the HABA’s concerns with the current language in the ordinance. Brown was pulled into a private meeting with the Mayor’s Assistant, the City Attorney, and members of HPD Auto Dealers Division (Capt Baimbridge & Sgt Provost) following his testimony. The meeting lasted around an hour and a half and the group informed Brown that none of the latest revisions HABA requested would be honored for one reason or another.

“We do think there’s a lot of good things in there, said Brown to KHOU 11 News Houston. “But there are a lot of things that still need some work. There are a lot of things in there that give the insurance companies the same authority as the consumer—the owner of the vehicle—which we would like to see taken out.”

“HABA has been working with HPD Auto Dealers Division for over a year and that has resulted in a lot of positive changes,” said Brown, “HABA has also worked closely with ASA on the revisions and we have made a lot of progress but still have a ways to go.”

Councilwoman Sue Lovell, who spent a year meeting with auto repair industry representatives to craft the changes, said that once a car arrives, some unscrupulous collision repair shops charge more than $1,000 just to generate an estimate. She brandished a binder full of complaints to back her assertion that while most merchants are honest, there have been enough cases of abuse to warrant the city’s intervention. “It’s really about consumer protection,” she said.

Jeanette Rash, owner of Fast Tow and leader of a consortium of wrecker companies that clears freeway breakdowns for the city, supported the revisions in part because it will allow storage yards to increase daily rates for the first time in a decade, from $15 to $20.

Council members delayed action on other revisions that would have specifically regulated estimates and repairs to prevent the scenario Lovell outlined. Those changes would require mechanics and body shops to get written authorization for all work or a signed waiver allowing for a verbal approval from the customer. The changes would require shop owners to keep such records for two years.

Councilman Oliver Pennington had two problems with the revisions.

“I think it’s a classic case of overregulation,” he said. The record-keeping requirements are too onerous for the shops, he said. He also complained that the rule changes fail to make a distinction between collision repair shops, which have generated most of the complaints of alleged swindles, and mechanics, which have not been the subject of widespread complaints. Pennington said mechanics should be able to get a verbal OK from customers for prices that exceed the estimate instead of having to do more paperwork that creates an inconvenience and cost.

Council members Jolanda Jones and C.O. Bradford said the Parker administration got the changes to them too late for proper consideration. The final version of the changes did not arrive at council offices until November 28, meaning many council members did not see them until moments before November 30th’s meeting.

Targeting ‘bad guys’
The late changes also caused automotive repair industry representatives to hesitantly endorse a final version they acknowledged they were not yet familiar with based on how it had been described to them.

“We want to get rid of the bad guys in the body shop business,” adds van der Pol. “On the other hand,” she said, “We don’t want something that burdens small business with overregulation,” and she worries that the proposed revisions will criminalize an honest mistake, such as not collecting a signature authorization.

The Houston City Council says the new auto repair industry regulations for the city came about because of complaints that some body shops are deceiving consumers.

The changes are aimed at increasing transparency within the industry, said Lt. Wendy Bainbridge with the Houston Police Department, according to KHOU 11 News Houston. The ordinance comes after one Houston City Council member said she received complaints about body work done without customers’ consent.

“They’d charge (customers) for the estimate. Sometimes up to $1,000. And if you wanted to get your car out, you had to pay the $1,000. We thought that wasn’t fair,” Council Member Sue Lovell said to KHOU 11 News Houston.

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