8:00 a.m. - 11:30 a.m. Thursday, January 19th, 2012 Indian Wells, CA
Mission Statement: The Housing Committee is a Policy Committee. Its mission is to develop C.A.R.'s housing policy. It has original jurisdiction to evaluate housing legislation and regulation in the following issue areas: Common Interest Developments; Fair Housing/Equal Opportunity; Housing Policy; Manufactured Housing; Multifamily Housing and Property Management.
Presiding: John Torres, Chair Jay Avirom, Vice Chair
Issue Chairs (ICs): Dona Crowder, Common Interest Development Eva Garcia, Fair Housing/ Equal Opportunity Charlene Singley, Housing Policy Diane Conaway, Manufactured Housing Frank Oti, Multi-Family Housing Mike Fracisco, Property Management
I. Welcome and Opening Remarks - John Torres, Chair
II. Action Items
A. State Legislation Possible Sponsored Legislation: CID - Allow HOAs to garnish rent payments being made by a tenant to owner of CID Unit to cover delinquent HOA assessments for the owner’s unit.*
B. Questions or Motions from Committee Members
III. Report Items - Summary by each Issue Area Chair of the subject matter covered by the respective Issue Areas, and any issues of discussion interest from Housing Committee Members, in addition to those listed below. A. CID - Dona Crowder, IC 1. State AB 805 (Torres) Recodification & Simplification of Davis-Stirling CID Act - Sponsored by the State Law Revision Commission, AB 805 proposes to reorganize and recodify the Davis-Stirling Common Interest Development (CID) Act in order to achieve internal clarity and consistency. It groups related provisions in a logical order within a common part of the Civil Code; divides longer sections into shorter and more readable sections; replaces outdated references to other code sections; and also proposes to standardize terminology and guidelines relating to notices, recorded declarations, and governing documents. It further provides that this recodification of the Davis-Stirling Act would become operative on January 1, 2014, in order to give ample time for transition from the old law to new. There is no opposition to this bill. Status: Senate Transportation & Housing Committee Position: Favor
AB 806 (Torres) Technical Companion Bill to AB 805 - This bill makes technical and conforming changes to other code sections so that all cross-references to the Davis-Stirling Common Interest Development Act are consistent with the comprehensive reorganization and recodification of that Act, as proposed by AB 805. This bill is therefore contingent upon enactment of AB 805. Status: Senate Transportation & Housing Committee Position: Favor
SB 561 (Corbett) Delinquent Assessment Collection - The Davis-Stirling Common Interest Development Act regulates the way that a Homeowners Association (HOA) can collect delinquent assessments by allowing them to collect reasonable costs and fees but requiring any assessment payments made by a homeowner to first be applied to any assessment balance and requiring an HOA to contact and work with the homeowner prior to enforcing a lien or foreclosing. Third party debt collectors hired by HOAs to collect delinquent assessments on their behalf are not governed by the same requirements and often convince homeowners to enter into contracts that waive their rights under the Davis-Stirling Act. This measure would require a third party to apply any payments made by a homeowner to any outstanding assessments prior to being applied to any other fees. This will prevent third party debt collectors from applying payments to their own fees first then foreclosing because of a failure to pay. While C.A.R. is supportive of placing regulations on third party debt collectors, it is opposed to this measure because it too severely restricts the ability of HOAs to collect delinquent assessments that have been defaulted on when owners stopped making their CID unit mortgage and assessment payments. HOAs around the state have as much as 50% of their annual budgets impacted by delinquent assessments.
Sponsored jointly by the CA Alliance of Retired Americans (CARA) and CCHAL, it is supported by the CA Advocates for Nursing Reform, Congresswoman Jackie Spier, Consumer Attorneys of CA, and the Older Women’s League of CA. In addition to CAR, it is opposed by the Community Associations Institute (CAI), California Association of Community Managers (CACM) and the Executive Council of homeowners (ECHO).
2. Federal a. FHA Condo Rules Review In July of 2011, the FHA released Mortgagee Letter 2011-22: Condominium Approval Process for Single Family Housing - Consolidation and Update of Approval Requirements. The Mortgagee Letter was released along with an implementation schedule and the Project Approval and Processing Guide in an effort to clarify, expand, consolidate and update existing guidance. The new guidance provides increased flexibility for FHA to address individual circumstances so that the agency can be more effective at the neighborhood level.
In the new guidance, FHA made permanent the temporary measures from Mortgagee Letter 2011-03. The concentration limit is 50 percent but Homeownership Centers (HOC) may grant exceptions to go beyond 50 percent. FHA requires that 50 percent of units be owner-occupied but FHA will reduce this to 30 percent for new construction. At least 30 percent of units must be sold prior to endorsement of any mortgage by FHA. This pre-sale requirement is not applicable to existing projects or non-gut rehabilitation projects.
One of the more notable changes is in the calculation of delinquent homeownership association (HOA) dues. Previously, FHA permitted no more than 15 percent of units to be in arrears but this did not include bank-owned foreclosures. The new guidance states that the calculation includes all units - occupied, investor, bank-owned, and vacant). FHA did not increase the maximum permitted investor ownership of units or commercial space requirements.
B. Fair Housing/Equal Opportunity - Eva Garcia, IC AB 534 (Swanson) Making Homeless Persons a Protected Class under Civil Rights Laws - This bill proposes to grant homeless persons protections under the Civil Rights Act. It states that a homeless person has the right to be free from violence or intimidation by threat of violence directed against that person on the basis of that person's status as a homeless person. AB 534 also provides that it shall not be construed to enlarge or diminish an existing duty, if any, of an owner of residential rental or commercial property to protect a homeless person on the property from violence or threats of violence.
Status: Assembly Judiciary Committee Position: Not Favor
SB 783 (Dutton) Disabled Persons Access and Pre-Litigation Right of Property Owner to Cure Defect - Senator Dutton’s goal is to create pre-litigation procedural requirements that must be met prior to the filing of any claim under the state's civil rights and equal access to public or housing accommodation laws. It would require a detailed 30-day notice of violation to be served by personal service or certified mail on the property owner or other responsible party before any complaint can be filed in a court, with a possible 120-day additional waiting period during which the property owner or other responsible party may bring the property into compliance with disability access laws.
C. Housing Policy - Charlene Singley, IC; 1. State
SB 726 (Berryhill T) Flexibility in Local Agency Compliance with State Fire Sprinkler Requirements for Single Family Homes - The State Fire Marshal is currently required to adopt and administer the regulations and building standards necessary to establish and control a program for servicing, testing, and maintaining all automatic fire extinguishing systems, including fire sprinkler systems. Local government agencies are authorized by current law to make changes or modifications that are more stringent than the requirements published in the California Building Standards Code relating to fire and panic safety by the State Fire Marshal.SB 726 would authorize, until January 1, 2014, a county, by ordinance or resolution, to opt not to be subject to a State Fire Marshal regulation published in the California Building Standards Code requiring the installation of a fire sprinkler system in single-family residential dwellings.
2. Federal a. Homeownership Visa In an effort to stimulate the housing market, Senator Chuck Schumer (D-NY) has introduced S. 1746, the Visa Improvements to Stimulate International Tourism to the United States of America Act. The proposed legislation would ease visa requirements many different ways, including the purchase of a home. Under the bill, if a non-U.S. resident purchases one or more homes using at least $500,000 cash and stays in the property for a minimum of 180 days a year they would qualify for a visa. The alien would not be allowed to work under this specific visa, nor would they be eligible for any form of assistance or benefits.
This issue was discussed in multiple committees at NAR’s Anaheim business meetings last November. The committees have created a working group to further research and analyze the legislation and its potential pros and cons. This working group is expected to report back to their committees at NAR’s May meetings.
b. Disposition of Government REO In August 2010, the Federal Housing Finance Agency (FHFA), the U.S. Department of the Treasury, and the Department of Housing and Urban Development (HUD) published a Request For Information (RFI), seeking input on new options for selling single-family real estate owned (REO) properties held by Fannie Mae and Freddie Mac (GSEs), and the Federal Housing Administration (FHA).
The FHFA, Treasury and HUD requested input on what was essentially a proposal to expedite the disposition of the REO inventory currently on their books, as well as their expected future REOs. The RFI put forward three different models: • The GSEs and FHA partner with a third party to rent out a portion of their existing REO inventory. • The GSEs and FHA do a bulk sale of a portion of their REO inventory to investors (anywhere from $50 million to $1 billion in size) who would then be obligated to rent those units out. • The GSEs and FHA do a bulk sale of a portion of their REO inventory to investors with no restriction. This would mean investors could rent and/or sell as many or as little of the properties as they see fit.
The RFI was extremely vague on any details and was asking for the industry and interested parties to submit what they believe the bulk sale process should look like.
Recently, the regulatory agencies released a response to the comments submitted to the original RFI. While still lacking in many details, it is now clear a pilot program will be implemented within the coming months, possibly by the time of the C.A.R. Winter Business Meetings. While the response lacked details of what the pilot program will look like, it does appear that a rental requirement will be part of the program. D. Manufactured Housing - Diane Conaway, IC 1. AB 317 (Calderon C) Exemption from Local Rent Control for Second Homes - Sponsored by the Western Manufacture Housing Association (WMA), this bill proposes to revise the conditions under which a tenancy is treated by local rent control provisions by exempting from rent control any manufactured houses or mobile homes that are not the sole residence of the homeowner. AB 317 designates the criteria which must be exist to permit management of a manufactured housing community or mobile home park to determine whether a residence is the home owner's sole residence, including such factors as evidence that a home owner rents, leases, occupies, or has a present ownership interest in another place of residence.
Status: Assembly Housing & Community Development Committee Position: Favor
2. AB 579 (Monning) Parkowner Liability to Local Agency for Agency’s Attorney’s Fees in Challenges to Local Rent Control Ordinances - Proposes to permit, for the first time, the award of attorney's fees and, in some cases, other litigation expenses, to a local governmental entity in an action brought by the owner of a manufactured housing community or mobile home park to challenge the validity or application of a local mobile home park rent control ordinance, if the local governmental entity is determined to be the prevailing party. AB 579 would also subject certain causes of action against a local government entity regarding manufactured housing communities and mobile home parks rent control to a special motion to strike a cause of action that challenges the validity of a local rent control ordinance, unless the court determines that the plaintiff mobile home park owner has established that there is a probability that the plaintiff will prevail on the claim.
a. AB 19 (Fong) Water Submeter Requirements for Multi-Family Residential Structures - Mandates that water purveyors adopt policies requiring that multi-family residential structures that install water connections after January 1, 2014, have submeters supplied to each individual dwelling unit as a condition of new water service. The following types of housing are excluded from this requirement: Low-income housing; student dormitories; long-term health care facilities; time-share properties; and any structure that is greater than four stories, if the owner or his or her agent demonstrates to the satisfaction of the water provider that the structure's plumbing configuration incorporates multiple points of entry in each dwelling unit that renders the installation of the submeters infeasible.
Status: Assembly Housing & Community Development Committee Position: Favor
b. SB 744 (Wyland) Water Submeter Testing Standards - Proposes to exempt water submeters from testing and approval by the county sealer prior to installation if tested by equipment that is regularly calibrated pursuant to specified national standards. The bill further provides that no water submeter shall be considered to have been unlawfully placed into service prior to its installation if the water submeter is to be used in a multiunit residential structure. The author’s intent is to ensure an adequate supply of submeters in California for installation and use in multi-family rental housing, particularly newly constructed housing. Submeters have been found to be the most effective means of measuring water use in rental housing and thereby promoting increased water conservation.
Status: Assembly Floor Position: Favor
2. Federal a. Rural Housing Service and HUD The Rural Housing Service (RHS) continues to experience delays in funding the Section 502 single family loan guarantee program. This program provides zero-downpayment loans to low-income rural families (defined as those making less than 115% of local area median income). In 2009, the program provided financing for approximately 85,000 families in rural communities.
At their November business meetings, NAR discussed the idea of moving RHS out of the Department of Agriculture and combining it with the Department of Housing and Urban Development (HUD). At those meetings NAR took the following position:
“That NAR strongly oppose combining the Rural Housing Service (RHS) with the Department of Housing and Urban Development (HUD). However, if there is a consolidation, the uniqueness, efficiency, and resources of the two agencies must not be reduced, and NAR should seek to ensure that there is no disruption of existing programs.”
F. Property Management - Mike Fracisco, IC 1. AB 265 (Ammiano) Unlawful Detainer Notification - Currently, a tenant is guilty of unlawful detainer if they remain in possession of real property after defaulting on the rent payment and the tenant has been provided with a three day notice, in writing, to correct the violation or vacate the premises. C.A.R. opposed AB 265 as introduced because it proposed to increase the notice that landlords are required to provide to delinquent tenants before they can file for unlawful detainer from 3 days to 14. AB 265 was gutted and amended to instead allow a court to release a tenant from an unlawful detainer action if the tenant pays his or her delinquent rents, current rent, as well as the costs of the proceedings. C.A.R. continues to oppose AB 265 because, as amended, it would permit a tenant to indefinitely avoid paying rent when it is due, effectively "gaming the system."
AB 265 is sponsored by Tenants Together and is supported by virtually all "tenants' rights" organizations represented in Sacramento, including the Western Center on Law & Poverty, ACLU, and CA Rural Legal Assistance Foundation. In addition to C.A.R., it is opposed by the CA Business Properties Association, WMA, and 10 other rental property owner or management organizations.
Status: Assembly Floor Position: Oppose
2. AB 934 (Feuer) Privileged Communications - Civil actions are privileged communications under existing law, meaning that what is said in litigation cannot be the basis of subsequent lawsuits for defamation, slander or libel against participants in the litigation. AB 934 would exclude from the current definition of a privileged communication any communication related to real property transactions, regulation of rents, termination of tenancy, eviction of residential tenants, or discrimination against tenants. Amendments added to the bill restored only the "defamation" allegations involving real property transactions to the definition of a privileged communication. C.A.R. is opposed to AB 934 because, by eliminating the "litigation privilege" even partially, as now proposed by this bill, rental property owners pursuing unlawful detainer actions could be repeatedly exposed to vexatious litigation by disaffected tenants.
This legislation brought out all of the "guns" representing landlord organizations on one side and tenant organizations on the other. Supporting the bill are such groups as CA Rural Legal Assistance Foundation, Western Center on Law & Poverty, San Francisco Tenants Union, the L.A. City attorney's Office, and 11 other "tenants' rights" organizations. Joining C.A.R. in opposing AB 934 are such groups as the CA Apartment Association, CA Business Properties Association, San Diego County Apartment Association, Santa Barbara Rental Property Association, and 19 other organizations representing the owners and managers of rental housing.
3. SB 184 (Leno) Rent Control - Local legislative bodies are currently allowed to regulate the zoning ordinances within their jurisdictions. Under the Costa-Hawkins Act new construction is exempt from rent control. This measure would effectively repeal that exemption by allowing a county board of supervisors to impose inclusionary zoning as a condition of new housing development. This would require a developer to include affordable residential units in their development plans. C.A.R. is opposed to this measure because it does not provide any financial incentives for developers to build affordable housing, does not address any of the factors that cause high housing costs, and eliminates the new construction exemption from rent control law.
Much as AB 934, this bill brought out most of the "tenants' rights" groups in support of it and groups representing owners and managers of rental housing against it. CA Rural Legal Assistance Foundation and Western Center on Law & Poverty led 13 other tenant organizations in support of this proposed erosion of the Costa-Hawkins Act. C.A.R. and CAA led the opponents, which numbered more than 14 organizations representing landlords.