After much behind the scenes work, legislation focused on improving the state statues that govern the process utilized by homeowners and development professionals when an issue or dispute arises around construction will be introduced in the Colorado General Assembly tomorrow.
Colorado is experiencing a lack of multifamily product in the for-sale arena due to the current law, which encourages litigation, causing developers and builders to step away from constructing this product and instead focus on apartment construction. While apartments are an important piece of the housing mix, for-sale product is not only wanted, but also needed as a key ingredient in creating a vibrant and thriving community.
The long-anticipated bipartisan legislation, sponsored by Sens. Mark Scheffel (R) and Jessie Ulibarri (D), will begin its journey in the Senate. Representative Jonathan Singer (D) and House Minority Leader Brian DelGrosso (R) will lead the effort in the House of Representatives.
Addressing this issue is a strategic priority of Colorado Concern. We are a founding member of the Homeownership Opportunity Alliance (HOA), a coalition of more than 50 organizations representing affordable housing advocates, business and economic development groups and industry trade associations bound together in our fight to better the law and grow our multifamily housing market. The 41 elected leaders who are members of the Metro Mayors Caucus also are engaged on behalf of their local communities.
The legislation specifically would establish:
- Alternative dispute resolution - mediation or arbitration - as the preferred pathway for resolution of construction issues, instead of filing a lawsuit. Additionally, the bill states that if ADR was required by the association's governing documents when the alleged construction issue occurred, then the dispute should be resolved using that process instead of filing a lawsuit.
- Majority vote of all association homeowners before legal action can go forward, putting an end to a handful of owners or the association board deciding to proceed with costly and time-consuming litigation that impacts all owners within a community.
- Disclosures to all homeowners providing detailed information on:
- Nature and scope of the proposed litigation - and the relief sought;
- Estimated costs to the association, including any special assessments on members or use of the association's reserve funds;
- Expected impact on values of units included in the legal action, and
- Expected impact on values of units not included in the legal action - including the effects on refinancing and prospective buyers gaining mortgage financing.
The debate around this legislation will be heated. Your voice will be critical in helping our elected leaders understand the importance of passing this measure. We will get back to you, asking you to utilize our ENGAGE system, communicating directly with key legislators, in the coming weeks.
Should you have questions about this bill, or any other measure before the Colorado General Assembly, please don't hesitate to contact me at tamra@coloradoconcern.com.
Warmly,
