BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Kevin Murray, Chairman
770 (Mullin)
Hearing Date: 8/7/06 Amended: 8/7/06
Consultant: Nora Lynn Policy Vote: B, P & ED 3-2
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BILL SUMMARY: AB 770 creates, until July 1, 2009, the Office of
the Common Interest Development Ombudsperson within the
Department of Consumer Affairs (DCA) to provide education and
dispute resolution services to homeowners and homeowners
associations' officers.
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Fiscal Impact (in thousands)
Major Provisions 2006-07 2007-08 2008-09 Fund
Fee revenues ($2,200)** ($4,300)**Special*
Ombudsperson admin, dispute resolution $7,100
$10,900Special*
Printing, training materials $5,389***
$10,778*** Special*
SOS: administration, IT $250 $350 Special*
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* Fee Account of the Common Interest Development Ombudsperson
Fund, created in bill
** Based on estimated 4.3 million CID units paying $2 fee every
two years
*** AB 770 authorizes the recouping of costs for these materials
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STAFF COMMENTS: This bill meets the criteria to be placed on the
Suspense file.
Common interest developments (CIDs) are groups of homeowners
who, in addition to owning their own homes, also jointly own
common interest in a property - for example, condominiums,
housing cooperatives and planned unit developments. Current law
regulates CIDs and their home owners' associations (HOAs),
requiring among other things that they register with the
Secretary of State every two years.
Effective July 1, 2007, AB 770 creates an ombudsperson's office
for HOAs and CIDs. The office would be required to offer
training and educational materials to CID directors and
homeowners on the operation of a CID and its rights and
responsibilities; to maintain a website and toll-free telephone
number to provide information; and places requirements on
homeowners' association directors and agents. The ombudsperson's
office will additionally, beginning in 2008, offer CID dispute
resolution services "within the limits of available resources."
AB 770 does not permit the ombudsperson's office to charge a fee
for these services.
Ombudsperson activities would be funded by the proceeds of a
biennial fee assessed on HOAs based on their number of "separate
interests," or owners of separately-owned properties within a
CID. AB 770 sets the per-separate-interest biennial fee at $2
and requires HOAs to submit the fees upon filing information
with the Secretary of State
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AB 770 (Mullin)
(SOS) every two years. The SOS then deposits these funds into
the Fee Account of the Common Interest Development Ombudsperson
Fund, created in the bill, to be used for purposes of
administering AB 770's provisions. AB 770 would sunset July 1,
2009.
The number of "separate interests" in California is unknown,
though the Public Policy Institute of California estimates there
are more than 36,000 CIDs in the state and that CIDs make up
more than 3 million total housing units, representing
approximately one-quarter of the state's homes. It is also
unknown how many of these HOAs are unincorporated and, as a
result, not required to register with the state.
For purposes of an estimate, DCA assumed there are 4.3 million
CID units who would pay a $2 fee every two years, leading AB 770
to generate $4.3 million annually in fee revenues for the
office. DCA estimates administering the program, adopting needed
regulations, reimbursing the advisory committee's per diem and
expenses, preparing the required reports, creating and
maintaining a CID tracking system and website, staffing a
toll-free telephone line and two informal dispute resolution
offices, producing training materials, and general office
expenses will cost $8.7 million annually.
Staff estimates additional one-time costs to SOS for computer
hardware and database modifications of $100,000, ongoing
information technology costs of $50,000 and additional ongoing
staff costs of $300,000 annually to process increased payments,
phone and mail inquiries.
STAFF NOTES the $2 fee appears insufficient to offset fully the
programmatic requirements of AB 770. The author may wish to
consider increasing the initial fee to $6 and permitting the
ombudsperson to adjust it after one year of operation as needed
to fully offset all administrative and programmatic costs.