BILL ANALYSIS �
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 563|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 563
Author: Senate Transportation and Housing Committee
Amended: 3/30/11
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE : 8-1, 5/3/11
AYES: DeSaulnier, Gaines, Huff, Kehoe, Lowenthal, Pavley,
Rubio, Simitian
NOES: Harman
SUBJECT : Common interest developments: meetings
SOURCE : Author
DIGEST : This bill generally prohibits a common interest
development (CID) board from conducting meetings via
e-mail, clarifies that executive sessions are meetings,
reduces the notice period for CID board meetings held
solely in executive session, and provides standards for
teleconference CID board meetings.
ANALYSIS : A CID is a form of real estate in which each
homeowner has an exclusive interest in a unit or lot and a
shared or undivided interest in common area property.
Condominiums, planned unit developments, stock
cooperatives, community apartments, and many resident-owned
mobilehome parks all fall under the umbrella of common
interest developments. CIDs are governed by a homeowners'
association with an elected board of directors. The
Davis-Stirling Common Interest Development Act within the
CONTINUED
SB 563
Page
2
Civil Code provides the legal framework under which common
interest developments are established and operate.
One section of the Davis-Stirling Act is known as the CID
Open Meeting Act, which defines a meeting as "any
congregation of a majority of the members of the board at
the same time and place to hear, discuss, or deliberate
upon any item of business scheduled to be heard by the
board, except those matters that may be discussed in
executive session." The act contains all of the following
requirements for CID meetings:
Unless the time and place of a meeting are fixed in the
bylaws or in the case of an emergency meeting, the
association must notify members at least four days in
advance of the time and place for a meeting, and the
notice must include the agenda for the meeting. An
emergency meeting is allowed when "circumstances that
could not have been reasonably foreseen require
immediate attention and possible action by the board,
and which of necessity make it impracticable to provide
notice."
The association must allow any member to attend
meetings, except when the board adjourns to executive
session. Executive sessions are allowed to consider
litigation, contracts, member discipline, personnel
matters, and member payment plans.
The association must allow members to speak at any
meeting.
Many CID associations are incorporated and therefore also
governed by the Nonprofit Mutual Benefit Corporation Law
within the Corporations Code. This law contains a
provision allowing the boards of such corporations to take
an action without a meeting if all members of the board
consent in writing to that action.
This bill generally prohibits a CID board from conducting
meetings via e-mail, clarifies that executive sessions are
meetings, reduces the notice period for CID board meetings
held solely in executive session, and provides standards
for teleconference CID board meetings. Specifically, this
CONTINUED
SB 563
Page
3
bill:
1. Redefines "meeting" as follows:
To include any item of business that is
within the authority of the board, as opposed to
items scheduled to be heard by the board.
To include executive sessions.
To include a teleconference, provided that
the notice for a non-executive session meeting
specifies at least one physical location where
members may attend and where at least one board
member will be present. In addition, all board
members participating in the meeting must be able to
hear one another and members of the association
speaking on matters before the board.
2. Explicitly provides that the board of directors shall
not take action on any item of business outside of a
meeting and that a majority of the board shall not hear,
discuss, or deliberate on any item of business outside
of a meeting.
3. Precludes meetings via e-mail except to conduct an
emergency meeting.
4. Requires associations to provide members with notice of
the time and place of all meetings, even if the meetings
times and places are fixed in the bylaws.
5. Reduces the required notice for meetings held solely in
executive session from four days to two.
6. Allows an association to provide notices of meetings via
e-mail with the consent of the member.
7. Clarifies that board must allow a member of the
association to attend and speak at that portion of a
teleconference meeting that is open to members.
8. Provides that the agendas of executive sessions are
association records accessible to members.
CONTINUED
SB 563
Page
4
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/3/11)
California Alliance for Consumer Protection
California Alliance for Retired Americans
Californians Aware
Center for California Homeowner Association Law
Executive Council of Homeowners
OPPOSITION : (Verified 5/3/11)
California Association of Community Managers
Community Associations Institute
Golden Rain Foundation of Laguna Woods
Woodbridge Village Association
ARGUMENTS IN SUPPORT : According to the author, staff on
the Senate Transportation and Housing Committee has
received a number of complaints that CIDs have used the
provisions of the Corporations Code to conduct regular
board meetings via e-mail and without the participation of
members of the association. In order to ensure open
meetings and the ability for members to participate, this
bill clarifies that no CID, whether incorporated or
unincorporated, may conduct meetings via e-mail except in
emergency situations. This bill also clarifies that a CID
board member may participate in a meeting by telephone or
video conference if at least one board member is present at
a physical location where members may attend and speak and
if the connection allows all participants in the meeting to
hear and be heard. This bill will improve the transparency
of CID board actions and ensure that members can
participate in decisions that affect their lives and
property.
ARGUMENTS IN OPPOSITION : Opponents argue that providing
notice for executive sessions will add to costs and only
lead to member frustration when members realize that they
are not able to attend the executive session meeting. In
addition, opponents object to eliminating the opportunity
for CID boards to take action on items via e-mail outside
CONTINUED
SB 563
Page
5
of a meeting. They argue that volunteer board members do
not necessarily have the time to convene to act on
relatively minor issues and that routine matters cannot
always wait for four days to satisfy the notice period.
JJA:kc 5/5/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED