Lawmakers rework bills
Hope still alive for compromise as three measures die in the state legislature.
Three bills introduced in the legislature this year attempting to amend the state’s construction defects law have failed or are likely to die, but supporters of a fix say there’s still time to reach compromise that has eluded them in recent years.
At least one of the rejected bills is being replaced with a new version, and movement on legislation is happening earlier in the session than in the past.
Senate Bill 156, which calls for disputes over claims of shoddy workmanship in new condominiums to be settled in mediation rather than in a courtroom, was assigned last week by Democratic leaders to the State, Veterans and Military Affairs Committee — often referred to as a “kill” committee because the measure has little chance of passage there.
Two related bills died in legislative committees this month — one would have given developers a right to repair faulty work before being sued, while the other would have required that a majority of residents in a condo complex approve a defects claim before it is filed.
The bills are among a package of measures introduced this year as a multipronged approach to addressing what some say are severe shortcomings in Colorado’s construction defects statute, which has been blamed for creating an exceedingly litigious environment and skyrocketing insurance rates around new condo construction. That, in turn, has scared developers away and left a gaping hole in the metro area’s mix of housing products as home prices continue to rise, proponents of reform say.
New condo starts in metro Denver have dropped as a proportion of all new housing starts from more than 20 percent a decade ago to less than 5 percent today.
“We recognize there are deep divisions and we recognize that politics as usual has derailed this effort,” said Rep. Cole Wist, RCentennial. “But my goal is to solve this so that developers can move forward and homeowners feel protected.”
To do that, Wist has teamed up with colleagues across the aisle to author a new bill requiring homeowner consent to a defects claim that will be more amenable to both sides than the one introduced in the Senate. House Bill 1279, which would require majority approval by homeowners to initiate a legal action against a builder rather than leaving that decision to a homeowner association board, was introduced late Friday night after a bipartisan group of lawmakers spent weeks hammering out the bill’s details.
Co-sponsor Rep. Alec Garnett, a Denver Democrat, said he’s hopeful that the new bill in concert with Senate Bill 45, which would help ease the insurance burden borne by developers by spreading that cost among both subcontractors and the general contractor, will provide some relief to the homebuilding sector. SB 45 is still under consideration in the Senate.
Garnett, noting that the halfway point in the 2017 legislative session was just reached a week ago, said unlike years past when the fight over construction defects was relegated to the last few weeks of the session, this time the conversation started on the first day of the session. And the speaker of the House took the lead by co-sponsoring the bipartisan insurance relief bill, he said.
“There’s still time on the clock,” Garnett said.
Suzanne Leff, a delegate to the Community Association Institute’s legislative action committee, said despite the failure so far of three construction defects bills, the conversation around the issue has been more substantive than in past sessions.
“These would be steps that are more productive than many of the steps that have been taken in the last four years,” she said. “Even though we’ve seen bills fail, we’ve heard some important conversation on these bills.”
The Community Association Institute, which represents homeowner association boards and HOA managers, has been at the forefront of battling reform legislation in recent years. And the institute rigorously opposed SB 156 as a law that would have essentially stacked the deck in favor of developers by stripping homeowners of their right to sue in court.
But Leff said some issues, such as homeowner consent and insurance reform, should get a hearing at the state Capitol.
Former Republican state Sen. Mike Kopp, who now heads Colorado Concern, a powerful business group, issued a scathing statement after SB 156 was assigned to the kill committee. It had been passed by the Senate on March 7.
“The pretend hearing that this bill will receive is an insult to Coloradans looking for affordable homes,” he said.
Later, in an interview, he said the Metro Mayors Caucus’ backing of the bill speaks volumes about how Colorado’s construction defects law is impeding the ability of cities and towns to attract multifamily, owneroccupied housing — especially units that can be offered at a lower price point. Nearly 20 municipalities, including Denver and Aurora, have passed their own construction defects ordinances over the last couple of years in an effort to make it less likely that defects disputes will end up in court.
“They are reflecting the frustration of their constituents who want affordable homes to buy,” Kopp said. “They’re saying, ‘Give me something to buy.’ ”
Denver Mayor Michael Hancock released a statement last week after SB 156 was assigned to the military affairs committee, urging state lawmakers to continue pursuing a solution to the issue of construction defects reform this session.
“People who are working hard but struggling to find an affordable place to live need relief now, and they can no longer afford for the legislature to once again fail to take meaningful action on construction defects reform,” he said.
Proponents of the measure have pointed out that it would not preclude individual homeowners from taking a builder to court over a defects claim — it would just stop the homeowner’s association as an entity from doing so.
In a statement released last week, House Speaker Crisanta Duran, who assigned SB 156 to the military affairs committee, said it is “well-equipped to thoroughly vet this legislation in a thoughtful way.”
“I am committed to passing legislation that addresses the root causes of the issue while protecting the rights of consumers, especially when it comes to their single greatest investments — their homes,” the speaker said.