Date: 04/27/2015

Final
BILL SUMMARY for SB15-177

HOUSE COMMITTEE ON STATE, VETERANS, & MILITARY AFFAIRS

Votes: View--> Action Taken:
Postpone Senate Bill 15-177 indefinitely. The moti
Refer Senate Bill 15-177 to the Committee of the W		PASS
FAIL



04:16 PM -- SB15-177

The committee took a brief recess.

04:33 PM

The committee returned to order. Representative DelGrosso, co-prime sponsor, presented Senate Bill 15-177. The reengrossed bill requires that a homeowners' association (HOA) use mediation or arbitration before a lawsuit can be filed in disputes involving construction defects against a development party. If an HOA had governing documents that required mediation or arbitration at the time of construction, the HOA must adhere to that original policy in construction defect cases.

The parties involved in a dispute must mutually agree upon a mediation or arbitration service provider, with preference given to a provider specified in the HOA governing documents. The mediation or arbitration must take place at a mutually agreeable location in the judicial district in which the HOA is located. The mediator or arbitrator must:

If no mediation or arbitration service provider is outlined in the HOA governing documents, and the parties are unable to agree upon a provider, the parties may petition the district court in the HOA's jurisdiction to appoint the provider. In the arbitration of a construction defect action, the arbitrator is required to follow the substantive state law with regard to any remedy granted, and a failure to do so is grounds for a district court to vacate or refuse to confirm the arbitrator's award.

In addition to submitting to mediation or arbitration before filing a construction defect lawsuit, the HOA's executive board must send advance notice to all unit owners that includes a general description of the claim, the relief sought, and a good-faith estimate of the benefits and risks involved in a format outlined in the bill. The HOA's executive board must obtain signed, written consent from a majority of the unit owners acknowledging that the owner has received the notice required under the bill and approves of the board's proposed action.

Prior to the purchase and sale of property in an HOA, the bill requires that, effective January 1, 2016, a disclosure notice inform the purchaser that he or she is required to become a member of the HOA, and be subject to its rules and bylaws.

The bill also adds notice requirements for lawsuits initiated by HOAs in matters other than construction defect claims. Specifically, the HOA must provide notice to unit owners at least 30 days prior to commencement of the legal action.


04:40 PM

Representative DelGrosso distributed a petition in favor of the bill (Attachment F). He responded to questions from the committee.

15HouseState0427AttachF.pdf15HouseState0427AttachF.pdf

04:52 PM -- Amy Hansen, representing the Homeownership Opportunity Alliance, testified in support of the bill. Ms. Hansen stated that the bill will not prevent homeowners from filing lawsuits related to construction defects. She explained the arbitration process. She provided copies of Section 38-33.3-124, Colorado Revised Statutes (Attachment G). She responded to questions from the committee.

15HouseState0427AttachG.pdf15HouseState0427AttachG.pdf

05:02 PM

The committee continued to discuss the bill with Ms. Hansen.

05:09 PM -- Molly Foley-Healy, representing the Community Associations Institute, testified in opposition to the bill. Ms. Foley-Healy expressed her opinion that the bill will increase costs for HOAs, is unfair, and presents a major burden to HOAs. She responded to questions from the committee.


05:19 PM

The committee continued to discuss the bill with Ms. Foley-Healy.

05:25 PM -- Mayor Phil Cernanec, representing the City of Littleton, and Mayor Bob Murphy, representing the City of Lakewood, testified in support of the bill. Mayor Murphy discussed suburban redevelopment and owner-occupied attached housing in Lakewood. Mayor Cernanec spoke about the problem of a lack of affordable owner-occupied attached housing in Littleton. The mayors responded to questions from the committee about affordable housing in Colorado.


05:36 PM

The committee continued discussing the bill with Mayor Cernanec and Mayor Murphy.

05:40 PM -- Mary Lavia, representing herself, testified in opposition to the bill. Ms. Lavia discussed her experience as an HOA manager and with construction defect litigation.

05:45 PM -- Tamra Ward, representing Colorado Concern; Kevin Hougen, representing the Aurora Chamber of Commerce; Tom Clarke, representing the Metro Denver Economic Development Corporation; and Mizraim Cordero, representing Colorado Competitive Council, testified in support of the bill. Ms. Ward listed a number of business-related organizations that support the bill. Mr. Hougen spoke about the Aurora Chamber of Commerce and business development in Aurora. Mr. Cordero expressed concerns about the lack of condominium development in Colorado. Mr. Clarke discussed affordable housing legislation.

05:56 PM -- Pat Pacey, representing herself, testified in opposition to the bill. Ms. Pacey discussed her economic analysis of the housing market in Colorado. She expressed her opinion that the demand for housing has been low in recent years due to a low earning potential for younger potential home buyers. She indicated that there is no evidence that this bill will help fill gaps in the housing market. She responded to questions from the committee.


06:06 PM

The committee continued discussing the bill with Ms. Pacey.

 06:15 PM -- Sara Reynolds, representing Housing Colorado; Stefka Fanchi, representing Habitat for Humanity of Colorado; Christi Craine, representing the Urban Land Conservancy; and Kathie Barstnar, representing NAIOP Colorado, testified in support of the bill. Ms. Reynolds discussed the demand for single-family homes, condominiums, and townhomes as affordable housing options, and the rental housing market in general. Ms. Fanchi spoke about the affordability of home ownership in Colorado. Ms. Craine distributed and discussed a handout that addressed some of the challenges of building affordable condominiums in Colorado (Attachment H). Ms. Barstnar read a letter from a member of her organization who has experience with construction defect litigation.

15HouseState0427AttachH.pdf15HouseState0427AttachH.pdf

06:29 PM

The committee discussed the bill with the preceding four witnesses.

06:35 PM -- Melissa Sullivan, representing 9 to 5, testified in opposition to the bill. Ms. Sullivan spoke about equal access to judicial remedies. She responded to questions from the committee about her experience with home ownership.

06:38 PM -- Chris Waggett, representing The Transit Alliance, testified in support of the bill.

06:43 PM -- Gene Lucero, representing the Colorado Association of Realtors, spoke in support of the bill. Mr. Lucero spoke about measures of home buyer demand and commented that sale price increases for condominiums are outpacing price growth for single family homes.

06:45 PM -- Troy Gladwell, representing Beecher Communities, spoke in support of the bill. Mr. Gladwell talked about affordable rental housing and how a lack of condominium development squeezes the rental market. He talked about developers' fears of lawsuits.


06:47 PM

The preceding three witnesses responded to questions from the committee.

07:00 PM -- A.J. Rose, representing himself, testified in opposition to the bill. Mr. Rose discussed his experience with construction defect litigation. He spoke about affordable housing.

07:07 PM -- Jesse Witt, representing the Community Associations Institute, testified in opposition to the bill. Mr. Witt expressed his opinion that the bill provides legal immunity to developers of affordable housing communities.

07:11 PM -- Edward Fronapfel, representing Solutions Before Solutions After, testified in opposition to the bill. Mr. Fronapfel expressed concerns about the ambiguity of the bill. He responded to questions from the committee.


07:19 PM

The preceding three witnesses responded to questions from the committee.

07:31 PM -- Michael Gifford, representing Associated General Contractors, testified in support of the bill. Mr. Gifford commented about the quality of contractors in Colorado.

07:34 PM -- Ralph Lufen, representing National Affiliated Contractors, testified in support of the bill. Mr. Lufen spoke about apprenticeship training programs for construction contractors. He expressed his opinion that the current legal climate stifles growth and development.

07:36 PM -- Tony Milo, representing the Colorado Contractors' Association, testified in support of the bill.


07:37 PM

The preceding three witnesses responded to questions from the committee.

07:40 PM -- Marcella Caywood, representing herself, testified in opposition to the bill. Ms. Caywood spoke about construction defect litigation her HOA board initiated against a builder.

07:45 PM -- Neval Gupta, representing himself, testified in opposition to the bill. Mr. Gupta discussed a construction defect arbitration process in which he was recently involved. He expressed his opinion that the bill would insulate builders in Colorado from taking responsibility for their work.

07:50 PM -- Paula Norlin, representing herself, testified in opposition to the bill. Ms. Norlin spoke about construction defect litigation her HOA board initiated against a builder.

07:53 PM -- Terry Jones, representing the Colorado Mortgage Lenders' Association, testified in support of the bill. Mr. Jones expressed his opinion that current Colorado law negatively impacts new condominium development.

07:57 PM -- Bill Short, representing Hindman Sanchez, testified in opposition to the bill. Mr. Short distributed and read a written statement (Attachment I). He responded to questions from the committee.

15HouseState0427AttachI.pdf15HouseState0427AttachI.pdf

08:09 PM -- Frank Sturgell, representing himself, testified about the bill. Mr. Sturgell discussed incompetence in the construction industry.

08:11 PM -- Shelby Scott, representing herself, testified in support of the bill. Ms. Scott spoke about her experience as a first-time homeowner. She expressed her opinion that her peers want to own their own homes. She responded to questions from the committee.

08:20 PM -- Walt Ackerman, representing himself, testified in opposition to the bill. Mr. Ackerman discussed his HOA's experience with construction defect litigation.

08:23 PM -- Adam Maldonado, representing Reconstruction Experts, testified in opposition to the bill. Mr. Maldonado discussed his experience with mitigating the damage of construction defects.

08:27 PM -- Chad Otto, representing himself, testified in opposition to the bill. Mr. Otto expressed his opinion that the bill does not only apply to new construction and condominiums.

08:32 PM -- Dave Ford, representing the Community Associations Institute, testified in opposition to the bill. Mr. Ford addressed the notice of claims process provision in the bill.

08:34 PM -- Melissa Cobb, representing herself, testified in opposition to the bill. Ms. Cobb discussed construction problems in her condominium building and the difficulty she has had in getting the developer to correct those problems. She responded to questions from the committee.

08:41 PM -- Brandon Helm, representing the Community Associations Institute, testified in opposition to the bill. Mr. Helm spoke about the notice, consent, and proxy requirements in the bill

08:44 PM -- Brian Matise, representing himself, testified in opposition to the bill. Mr. Matise distributed and read a written statement(Attachment J).

15HouseState0427AttachJ.pdf15HouseState0427AttachJ.pdf

08:48 PM -- James Sim, representing himself, testified in opposition to the bill. Mr. Sim reiterated the testimony of prior witnesses.


08:52 PM

The preceding three witnesses responded to questions from the committee.

08:59 PM -- Suzanne Leff, representing the Community Associations Institute, testified in opposition to the bill. Ms. Leff reiterated the testimony of prior witnesses regarding notice and consent requirements. She expressed her opinion that the bill is overly broad and is not fair and balanced.

09:04 PM -- David McLain, representing himself, testified in support of the bill. Mr. McLain addressed a number of arguments posed by the opposition witnesses. He responded to questions from the committee.


09:15 PM

Representatives DelGrosso and Singer wrapped up their presentation of the bill and asked for a favorable recommendation.
BILL:SB15-177
TIME: 09:43:53 PM
MOVED:Neville P.
MOTION:Refer Senate Bill 15-177 to the Committee of the Whole. The motion failed on a vote of 5-6.
SECONDED:Willett
VOTE
Foote
No
Humphrey
Yes
Lontine
No
Neville P.
Yes
Primavera
No
Tate
Yes
Thurlow
Yes
Tyler
No
Willett
Yes
Salazar
No
Ryden
No
YES: 5 NO: 6 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:SB15-177
TIME: 09:44:03 PM
MOVED:Salazar
MOTION:Postpone Senate Bill 15-177 indefinitely. The motion passed on a vote of 6-5.
SECONDED:Foote
VOTE
Foote
Yes
Humphrey
No
Lontine
Yes
Neville P.
No
Primavera
Yes
Tate
No
Thurlow
No
Tyler
Yes
Willett
No
Salazar
Yes
Ryden
Yes
Final YES: 6 NO: 5 EXC: 0 ABS: 0 FINAL ACTION: PASS



09:44 PM

The committee adjourned.