HB 1359 Going to Governor for Action
On May 5, 2009, we informed you in a posting on HOA Legi-Slate, that the Senate had just passed an amended version of House Bill 09-1359 ("HB 1359") which cleaned-up some language of the bill that addresses association reserve studies, dissemination of information to board members and qualifications of committee chairs. Later that day, the Senate amended version of HB 1359 was sent back to the House which voted to concur with the Senate amendments. That version of the HB 1359 has been sent to Governor Ritter today for action. We fully expect Governor Ritter to sign HB 1359 into law.
Reserve Studies
As we have addressed in previous postings on HOA Legi-Slate, the most significant portion of HB 1359 addresses the issue of reserve studies. The original version of the bill, which would have required associations to have reserve studies conducted every three years beginning in 2010, has been amended to now require that associations must 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; whether there is a funding plan for any work recommended by the reserve study and, if so, the projected sources of funding for the work; and whether the reserve study is based on a physical analysis and financial analysis. For the purposes of this subparagraph (IX), an internally conducted reserve study shall be sufficient." Unfortunately, this final version of HB 1359 does not clarify whether associations are actually required to have reserve studies conducted.
Assuming HB 1359 is signed into law and a referendum petition is not submitted, this provision of the bill will go into effect on August 5, 2009. In order to comply with the reserve provision of the HB 1359, associations will need to either amend their current SB 100 policy addressing investment of reserve funds or adopt an additional policy to comply with this provision of the bill. HindmanSanchez is ready to assist your association with this process. To learn more about your options send us an email to hoalaw@hindmansanchez.com.
Dissemination of Information to Board Members
As we also discussed when HB 1359 was first introduced, constituent concerns received by Representative Andy Kerr were the impetus behind the inclusion of language in the bill that requires members of association boards to be provided with the information necessary to exercise their fiduciary duties. That language has been cleaned-up and now provides in part: ". . . all members of the executive board shall have available to them all information related to the responsibilities and operation of the association obtained by any other member of the executive board. This information shall include, but is not limited to, reports of detailed monthly expenditures, contracts to which the association is a party, and copies of communications, reports, and opinions to and from any member of the executive board or any managing agent, attorney, or accountant employed or engaged by the executive board to whom the executive board delegates responsibilities under this article." Whether this provision of HB 1359 has the potential of interfering with the attorney-client privilege, is subject to debate.
Assuming HB 1359 is signed into law and a referendum petition is not submitted, this provision of the bill will go into effect on August 5, 2009.
Qualifications for Committee Chairs
The final provision of HB 1359 addresses the qualifications of committee chairs. Working under the assumption that this bill will be signed into law, any committee chair appointed after August 15, 2009, "shall meet the same qualifications as are required by the governing documents of the association for election or appointment to the executive board of the association." It's important to point out that this provision applies only to an individual appointed to preside over a committee of their association. It does not require that other individuals appointed to participate on a committee of their association be eligible to be appointed to or run for a position on the board.
We will update you when Governor Ritter signs HB 1359 into law. We will also be providing a legislative update on this, and other bills passed during the 2009 legislative session, to managers and board members on August 19, 2009. To register to attend a legislative update session click here.