BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 563|
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                                 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 
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          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 

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          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.

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           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 

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          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

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