BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 563
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: T&H Com.
VERSION: 3/30/11
Analysis by: Mark Stivers FISCAL: no
Hearing date: May 3, 2011
SUBJECT:
Common interest developments: open meetings
DESCRIPTION:
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 common-interest development (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 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
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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 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.
Specifically, the bill
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.
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.
SB 563 (TRANSPORTATION AND HOUSING COMMITTEE) Page 3
Precludes meetings via e-mail except to conduct an emergency
meeting.
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.
Reduces the required notice for meetings held solely in
executive session from four days to two.
Allows an association to provide notices of meetings via
e-mail with the consent of the member.
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.
Provides that the agendas of executive sessions are
association records accessible to members.
COMMENTS:
1.Purpose of the bill . Committee staff 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. The 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.
2.Emergency meetings . While this bill generally prohibits
e-mail meetings, it does allow for a board to conduct
emergency meetings via e-mail. There may be circumstances
such as a disaster that require immediate action, and if board
members are away, e-mail may be one of the few practical
methods for the board to respond to the emergency. Current
law already exempts emergency meetings from the meeting notice
requirement, and this bill does not change that.
3.Executive sessions . This bill clarifies that executive
sessions are indeed meetings subject to notice requirements
but also reduces from four days to two the notice period for
meetings held solely in executive session. The purpose of
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providing notice for executive sessions is twofold. First,
notice provides an important check and balance on the board by
giving members an opportunity to object if the board intends
to take up ineligible subjects in executive session. Second,
members may have an opinion on a matter that the board will
discuss in executive session, such as pending litigation,
contracts, or personnel matters, and notice allows these
members to share that opinion with one or more board members
prior to the meeting at which they are not allowed to attend.
4.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 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. One of the opponents also believes that
the prohibition on a majority of board members discussing
association business matters outside of a meeting engenders
inferior decision making based on insufficient deliberation
and consideration.
POSITIONS: (Communicated to the Committee before noon on
Wednesday, April 27,
2011)
SUPPORT: California Alliance for Consumer Protection
California Alliance for Retired Americans
Californians Aware
Center for California Homeowner Association Law
Executive Council of Homeowners
two individuals
OPPOSED: California Association of Community Managers
Community Associations Institute
three individuals