BILL ANALYSIS Ó ------------------------------------------------------------ |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