Sheraton Grand Hotel
Sacramento, California
June 4, 2009
9:45 am – 11:20 am

Presiding:
Mike Riley, Chair
Vicki Carpenter, Vice Chair
Gary Macrides, Vice Chair
Bill Jansen, Committee Liaison

C.A.R. Staff:
Dave Milton

I. Opening Comments

II. State Legislation

A. 2009 Bills of Interest

AB 313 (Fletcher) CID Assessment Procedures – This bill is sponsored by the Rancho Santa Fe Homeowners Association (formed in 1928). It proposes to prohibit a homeowners association (HOA) in a common interest development (CID) from levying assessments based upon the taxable value of separate interests, unless the declaration creating the HOA allowed such an assessment practice on or before December 31, 2009. Only Rancho Santa Fe and an HOA in Palos Verdes are known to determine assessments based upon the assessed taxable value of the home. DRE's regulations generally require that assessments be paid equally by all homeowners in a CID. In Rancho Santa Fe, depending on when a home was purchased and how big the home is, annual assessments range from a low of $261 for a single family residence purchased in 1952 to a high of $65,000 for a single family ranch in the HOA that is valued at $46 million. This bill is identical to AB 1955 (Plescia) of 2008 that was vetoed by the Governor using his Budget-related generic veto.
Position: Watch    Status: In Senate

AB 899 (Torres) CID Disclosure Requirements – Sponsored by the Executive Council of Homeowners (ECHO), this bill proposes to expand on the disclosure requirements for homeowners in CIDs. Current law requires an HOA to provide specific documents to a purchaser of a unit in a CID. This bill proposes to require an association to distribute annually to its members a "Disclosure Documents Index" that lists each document and where its requirement can be found in the Davis-Stirling Act. It would also require the Assessment and Reserve Funding Disclosure Summary required by Civil Code Section 1365.2.5. to include a specific statement as to the projected interest rate to be earned by the reserve funds and the assumed long-term inflation rate to be applied to major component repair and replacement costs.
Position: Favor    Status: Assembly Housing & Community Development Committee

AB 927 (C. Calderon) Construction Defect Claims in CIDs – This measure has no official sponsor and is supported by the California Building Industry Association (CBIA) and the Civil Justice Association of California (CJAC). It proposes to extend for seven years the existing sunset date of the special pre-litigation procedures applicable to construction defect disputes in CIDs. These procedures require an association to complete certain actions, such as filing a notice regarding commencement of legal proceedings and participation in a dispute resolution process, before a lawsuit for construction defects can be filed. This bill essentially 'maintains the status quo" for filing of construction defect lawsuits in CIDs.
Position: Watch    Status: In Senate

AB 1020 (Emerson) Anti-Entrapment Requirements for Swimming Pools – The State Department of Health (DPH) is sponsoring this bill because California law is currently inconsistent with the new federal law (Virginia Graeme Baker Pool and Spa Safety Act, effective 12-19-08) establishing safety standards to prevent injuries and drowning associated with entrapment by drain systems in pools and spas. While federal law requires public pools and spas to have federally-approved anti-entrapment drain covers, current state law requires only that wading pools, new pools, or pools undergoing renovation are required to have such drain covers. AB 1020 places into state law a requirement that all public swimming pools be equipped with anti-entrapment devices or systems that meet federal requirements. It further requires the DPH to consult with county health officers in the development of a form to be utilized by public swimming pool owners to indicate compliance with the safety requirements of AB 1020.
Position: Support    Status: Assembly Appropriations Committee

AB 1061 (Lieu) Water-efficient Landscapes in CIDs – Makes provisions of CID governing documents that interfere with water-efficient landscaping void and unenforceable. It resolves a conflict between local water conservation laws and CID law, in an effort to support greater urban water conservation. Equity among urban water users will be important to the success of urban water conservation. If water ordinances require water-efficient landscaping from some landowners, but cannot affect other landowners, then complaints may be prompted about inequities of enforcement, causing resistance to landscaping modifications that improve water-use efficiency. The potential conflict between the CID law allowing boards to regulate foliage, and water conservation ordinance requirements that may be more stringent, could lead to such an outcome. This bill would eliminate the conflict in favor of enforcement of water conservation laws and regulations.
Position: Favor    Status: Assembly Appropriations Committee

AB 1328 (Salas) Contract Authority for HOAs in CIDs – Sponsored by the California Association of Community Managers (CACM), Assembly Bill 1328 proposes to clarify that a homeowner or condominium association may enter into a contract for more than one year if the Board reasonably anticipates the contract will result in verifiable savings or other benefits to the association. Currently, governing documents in some associations have a provision limiting the duration of all contracts to one year. The problem is that savings from viable energy and water efficiency programs cannot be realized within one year and it may not be practical to install the infrastructure needed to obtain such efficiencies for only one year. Consequently, it is not feasible for vendors to enter into contracts with these associations. The process for amending governing documents is costly for members as well, making a statutory fix the most efficient remedy in these limited cases. This bill would allow associations to enter into contracts in excess of one year in order for them to take advantage of energy and water efficiency technologies. Because associations are funded by homeowner assessments, this bill would result in a savings to the homeowners themselves. It is estimated that water and/or energy efficiency programs can reduce costs by approximately 50%.
Position: Favor     Status: Assembly Housing & Community Development Committee

SB 259 (Benoit) Elections of Board of Directors in CIDs – The Davis-Stirling Act contains requirements with respect to elections for the board of directors of an association (HOA) in a common interest development (CID). It provides, upon a finding that mandated election procedures were ignored, or certain rules were not followed, a court may void any results of the election. This bill would provide that, if a court voids any results of an election for one or more board members under current law, the court shall not invalidate a decision of the board that was reached after the board was seated pursuant to that election unless the court finds that the action of the board was contrary to law or the governing documents.
Position: Watch     Status: Two-year Bill

B. Potential C.A.R.-sponsored Bill on the "Right-to-Rent" Issue for 2010 Session of Legislature (Mike)*

Issue:
Should C.A.R. sponsor legislation in 2010, in response to the Governor's veto in 2008 of the C.A.R.-sponsored AB 2259 (Mullin)**, that would provide that an owner’s right to rent a separate interest in a CID can only be changed pursuant to a written ballot approved by a super-majority vote of the CID's home owners' association (HOA) membership?

** This bill proposed to provide that an individual owner's right to rent an individual interest in a Common Interest Development (CID), that existed at the time the separate interest in the CID was purchased, could not be restricted during the term of his or her ownership absent written permission of the owner.

Status/Summary
At the January, 2009 C.A.R. meetings, in light of the Governor's veto of AB 2259, the CID Committee Chair appointed a Working Group to examine the issue of rental restrictions being imposed upon CID property owners. The CID Committee requested the Working Group to consider for recommendation to the Board of Directors whether an effort to legislate around the Governor's veto was worthy of pursuing by C.A.R. The Working Group conducted two conference call meetings between the January and June meetings in 2009 and unanimously approved the following recommendation:
That the California Association of REALTORS® sponsor legislation in 2010 providing that a governing document shall not be adopted or amended to prohibit the rental or lease of a separate interest in a common interest development, unless the provision that imposes the prohibition was enacted, pursuant to a written ballot, by a vote of all owners of separate interests in the common interest development (CID) and is approved by not less than 2/3 of the owners of separate interests in the CID.

III. HOA Registry- An Update (Vicki)

IV. C.A.R. Course on CIDs- An Update (Mike)

V. CID Guide Noted in C.A.R. Forms- An Update (Vicki)

VI. New Form for HOA Management- A Discussion (Tica O'Neill, Vice Chair, PMC)

VII. Other Business

VIII. Adjournment

* An Issues Briefing Paper is attached to assist this discussion.