BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 952| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 952 Author: Mullin (D) Amended: 7/5/07 in Senate Vote: 21 SENATE TRANSPORTATION & HOUSING COMM. : 6-2, 7/3/07 AYES: Lowenthal, Cedillo, Corbett, Kehoe, Simitian, Torlakson NOES: McClintock, Ashburn NO VOTE RECORDED: Dutton, Harman, Yee SENATE JUDICIARY COMMITTEE : 3-2, 7/10/07 AYES: Corbett, Kuehl, Steinberg NOES: Harman, Ackerman ASSEMBLY FLOOR : 45-32, 5/21/07 - See last page for vote SUBJECT : Common interest developments: assessments and affordable housing units SOURCE : Author DIGEST : This bill provides that a regular or special assessment that is subject to a vote within a Common Interest Development must be approved both by a majority of all residents and a majority of owner-occupants of affordable units and requires an association to establish a payment plan for all regular and special assessment imposed on affordable units for those owner occupants who request CONTINUED AB 952 Page 2 one. ANALYSIS : Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments (CIDs), including their ability to levy regular and special assessments. Existing law allows the association to levy regular and special assessments sufficient to perform their required obligations. Annual increases in assessments shall not be imposed unless the board has prepared and distributed an operating budget, as specified, or obtained the approval of owners, constituting a quorum, casting a majority of votes. Existing law provides that the board of directors may not impose a regular assessment that is more than 20 percent greater than the regular assessment for the association's preceding fiscal year or impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association without the approval of owners, constituting a quorum, casting a majority of the votes. This bill, instead, requires approval of the owners, constituting a quorum, casting a majority of the votes at a meeting or election of the association, and the approval of owner-occupants of affordable units, constituting a quorum, casting a majority of the votes of those owner-occupants at the same meeting or election. This bill defines "affordable units" as units that are required to be provided to low- or moderate-income purchasers pursuant to a recorded document, or document referenced in a recorded document. This bill would define "quorum" of owner-occupants of affordable units as more than 50 percent of the owner-occupants of those units. This bill further states that its provisions do not limit the imposition of emergency assessments. Existing law permits an owner to submit a written request for the board to consider a payment plan for an assessment debt, but does not require the board to approve that request. AB 952 Page 3 This bill requires an association to establish a payment plan for owner-occupants of affordable units with respect to regular or special assessments that were approved by a quorum of owners and a quorum of owner-occupants of affordable units. This bill requires the payment plan to not assess interest or late charges if the assessments are fully paid within 12 months of the commencement of the plan. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 7/11/07) American Federation of State, County, and Municipal Employees California Alliance for Retired Americans California Rural Legal Assistance Foundation Golden State Manufactured-Home Owners League Gray Panthers League of California Cities Western Center on Law and Poverty OPPOSITION : (Verified 7/11/07) California Association of Community Managers California Association of Realtors Community Associations Institute Executive Council of Homeowners Sun City Roseville Community Association ARGUMENTS IN SUPPORT : According to the author's office, assessment fees and the process used to implement them can be excessive and unfair for individuals in low and moderate income units, resulting in people on the margin being needlessly priced out of their units. The author's office cites a press article describing the case of a homeowner who bought an affordable studio in a condominium development. Two years later, she received notice of a $4,000 special assessment and, shortly thereafter, notice of an increase in the monthly assessment from $355 to $630. Ultimately, she was able to work out a payment plan for the special assessment and make sacrifices to cover the AB 952 Page 4 additional monthly dues, but if there are further increases she will be forced to sell. (San Francisco Chronicle, January 17, 2007). The author states that protections from excessive fee increases are necessary to maintain the affordability of housing located in common interest developments. ARGUMENTS IN OPPOSITION : Opponents argue that this bill will give veto power over assessments to affordable unit owners and reduce the value of homes in CIDs by making it more difficult to pass assessments generally. They also point out that while the owners of affordable units met the income restrictions at the time of purchase, they could have higher incomes than their neighbors now. Opponents believe that this bill will pierce the vale of privacy currently enjoyed by affordable unit owners and create two classes of owners. ASSEMBLY FLOOR : 45-32, 5/21/07 AYES: Arambula, Bass, Beall, Berg, Brownley, Caballero, Charles Calderon, Carter, Coto, Davis, De La Torre, De Leon, DeSaulnier, Dymally, Evans, Feuer, Garcia, Hancock, Hayashi, Hernandez, Huffman, Jones, Karnette, Krekorian, Laird, Leno, Levine, Lieber, Lieu, Ma, Mendoza, Mullin, Nava, Parra, Portantino, Price, Richardson, Ruskin, Salas, Saldana, Solorio, Swanson, Torrico, Wolk, Nunez NOES: Adams, Aghazarian, Anderson, Benoit, Berryhill, Blakeslee, Cook, DeVore, Duvall, Emmerson, Fuller, Gaines, Galgiani, Garrick, Horton, Houston, Huff, Jeffries, Keene, La Malfa, Maze, Nakanishi, Niello, Plescia, Sharon Runner, Silva, Smyth, Spitzer, Strickland, Tran, Villines, Walters NO VOTE RECORDED: Eng, Soto, Vacancy JJA:nl 7/11/07 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****