BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 313|
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THIRD READING
Bill No: AB 313
Author: Fletcher (R)
Amended: 5/19/09 in Senate
Vote: 21
SEN. TRANSPORTATION & HOUSING COMMITTEE : 11-0, 6/9/09
AYES: Lowenthal, Huff, Ashburn, DeSaulnier, Harman,
Hollingsworth, Kehoe, Oropeza, Pavley, Simitian, Wolk
ASSEMBLY FLOOR : 75-0, 4/30/09 - See last page for vote
SUBJECT : Basis for assessments in common interest
developments
SOURCE : Rancho Santa Fe Homeowners Association
DIGEST : This bill prohibits a homeowners association of
a common interest development from basing assessments on
the taxable value of the individual units unless the
association currently bases assessments on taxable value or
pays property taxes on behalf of its members.
ANALYSIS : A common interest development (CID) is a form
of real estate where 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 are
all CIDs. Each CID is governed by a homeowner association
according to the recorded declarations, bylaws, and
CONTINUED
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operating rules of the association. The Davis-Stirling
Common Interest Development Act provides the legal
framework under which homeowner associations operate in
CIDs.
The Davis-Stirling Act requires a homeowner association to
levy regular and special assessments sufficient to perform
its obligations but prohibits the association from levying
fees in excess of the amount necessary to defray its costs.
The law is silent on the issue of what bases an
association may use when levying assessments, implying that
an association may use any reasonable basis it chooses.
Current law provides that the covenants and restrictions in
a declaration are "enforceable equitable servitudes, unless
unreasonable." In Nahrstedt v. Lakeside Village (1994),
the California Supreme Court interpreted this provision to
mean that CID governing documents "should be enforced
unless they are wholly arbitrary, violate a fundamental
public policy, or impose a burden on the use of affected
land that far outweighs any benefit."
This bill prohibits an association of a CID from basing
assessments on the taxable value of the individual units
unless (1) the association, on or before December 31, 2009
and in accordance with the governing documents of the
association, based assessments on taxable value; or (2) the
association is responsible for paying taxes on the separate
interests and only that portion of assessments that is
related to the payment of taxes is based on taxable value.
Prior Legislation
This bill is almost identical to AB 1955 (Plescia),
2007-08 Session. Governor Schwarzenegger vetoed that
bill, stating:
"The historic delay in passing the 2008-09 State Budget
has forced me to prioritize the bills sent to my desk
at the end of the year's legislative session. Given
the delay, I am only signing bills that are the highest
priority in California. This bill does not meet that
standard and I cannot sign it at this time."
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FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/11/09)
Rancho Santa Fe Homeowners Association (source)
California Association of Community Managers
OPPOSITION : (Verified 6/11/09)
Executive Council of Homeowners
ARGUMENTS IN SUPPORT : Rancho Santa Fe is a CID in
northern San Diego County that was created in the 1920s.
Since its inception, the association has used the taxable
value of the individual interests as the basis for its
assessments. According to the author's office, court
decisions made over the years could be interpreted to
challenge the association's long-established method of
assessment. The author's office believes that Rancho Santa
Fe's current practice is legal but would like to see the
law state so explicitly. Homeowners have made significant
financial decisions based on this method of assessment.
This bill protects association members from the unintended
consequences of potential lawsuits.
ARGUMENTS IN OPPOSITION : Opponents believe that
establishing a specific exemption within the Davis-Stirling
Act for one or two CDIs is bad public policy and sets a
troubling precedent. Opponents suggest that Rancho Santa
Fee instead seek injunctive relief from the court or a vote
of its membership to continue assessing its members based
on assessed value.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Chesbro,
Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore,
Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Gilmore,
Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue,
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Bonnie Lowenthal, Ma, Mendoza, Monning, Nava, Niello,
Nielsen, John A. Perez, V. Manuel Perez, Portantino,
Price, Ruskin, Salas, Saldana, Silva, Skinner, Solorio,
Audra Strickland, Swanson, Torlakson, Torres, Torrico,
Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Carter, Garrick, Miller, Nestande, Smyth
JJA:cm 6/9/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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