Amended Version of HB 1359 - Clears the House
On Monday, April 27, 2009, the House passed an amended version of House Bill 09-1359 ("HB 1359"). This legislation, introduced by Representative Andy Kerr, was granted late bill status and is speeding through the legislative process. As you know, this legislation addresses reserve studies, information disseminated to members of boards of associations and who is eligible to be appointed as a committee chair. Late last week, representatives of the homebuilders got involved in the legislation which led in part to "friendly amendments" that were passed last week on the floor of the House.
The most significant of these amendments was a change to the reserve study section of the original bill which now requires, as amended, that associations adopt a responsible governance policy concerning "When the association has a reserve study prepared for the portions of the community maintained, repaired, replaced, and improved by the association and whether there is a funding plan, projected sources of funding, and whether the reserve study is based on a physical analysis and financial analysis. For the purposes of sub-paragraph (IX), an internally conducted reserve study shall be sufficient."
Whether or not you believe reserve studies should be required for associations, our concern with this language is that it is vague and does not clearly indicate whether associations must actually have a reserve study. In our opinion, the language "when the association has a reserve study prepared" could be interpreted to imply that associations are required to have reserve studies conducted or it could be interpreted to say that associations can adopt a policy that they will never conduct a reserve study. If the intent of the original bill was to ensure that associations take the steps necessary to plan for future repair and replacement obligations of the association, we do not believe this amended provision of HB 1359 provides that level of protection.
In addition to some other basic clean-up of the original bill, the version - as passed by the House - also provides that the provisions of HB 1359 will apply to pre-CCIOA communities.
HB 1359 will now be sent to the Senate for action. We will continue to provide you with updates on the bill as it proceeds through the legislative process.
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