Imagineers Spring 2010 Newsletter

Connecticut Condominium/HOA Legislative Session Update

The 2010 Legislative Session is the most unique and challenging the Connecticut General Assembly has faced in decades. The session convened on February 3rd and will adjourn on May 5th. Currently, the state faces over a $500 million dollar deficit for fiscal year ending June 30, 2010. Projections for fiscal year 2011 indicate a deficit of over $700 million. The deficit for both 2012 and 2013 is projected to be in excess of $4 billion dollars each year. Currently, all state revenue sources including the income tax, corporate tax and sales tax are far below what was anticipated. Unemployment is approximately 9% and growing. The Legislature is consumed with dealing with these problems; however, ideology and politics have yet to provide a solution. The Democratic controlled Appropriations Committee narrowly passed a budget by a 29 - 25 margin, with unanimous opposition from the Republicans as well as several "moderate Democrats". The Governor, Senate Democrats and Legislative Republicans have all proposed their own Deficit Mitigation Plan to close the current $500 million gap in state funding. At this point in time, no Deficit Mitigation Plan has passed.

In this daunting atmosphere, the Legislature is still considering over 1,000 bills during this "short" 13 week session. Not all of these bills are budget related and among them are several bills that affect the condominium industry including: 1.) SB 129, "An Act Establishing An Office of Condominium Ombudsman"; 2.) SB 203, "An Act Permitting Condominium Associations to Benefit From Clean Energy Fund Programs"; and 3.) HB 5434, "An Act Concerning Minor and Technical Changes to the Common Interest Ownership Act".

The following is a summary of the content and status of these three pieces of legislation:

SB 129, "An Act Establishing an Office of the Condominium Ombudsman".
This proposal, which establishes an Office of Condominium Ombudsman within the Department of Consumer Protection (DCP), was brought forth by Attorney General Richard Blumenthal. It gives the DCP Commissioner certain powers relating to investigating and resolving complaints concerning common interest communities, and analyzing and making recommendations concerning the laws that govern them. The bill allows unit owners to file a request with DCP to review their complaint regarding alleged violations of the Common Interest Ownership Act (COIA). The bill requires, by January 1, 2011, each condominium association or common interest community association to establish a dispute resolution process for unit owner complaints regarding the association's compliance with the law. The bill also requires each condominium or common interest community unit to pay the DCP commissioner a $4.00 fee, and it increases the fee for a certificate of registration as a community association manager from $100 to $400. However, it makes the registration certificate expire biennially instead of annually. An amendment was offered by Senator Kevin Witkos (R, Canton) in the General Law Committee which would suspend or reduce the $4.00 fee for each condominium or common interest community unit if it raises enough funds to cover expenses at the DCP. The amendment passed on a voice vote.

During the discussion on this bill in the General Law Committee, various legislators expressed concerns about the bill, saying it expands government at a time when we should be making government smaller and more affordable. Legislators expressed concern about the current state hiring freeze and how it would impact DCP's ability to fill the ten positions needed to address this bill. Although this is a difficult financial time, Committee chair Representative Shapiro (D, Stamford) stated that the bill is revenue neutral and only aimed at the people who would benefit. While legislators like the idea of having a formal process in place, many agreed that this language needs work and should be scaled back.

SB 203, "An Act Permitting Condominium Associations to Benefit From Clean Energy Fund Programs" was proposed by Senator Kevin Witkos (R, Canton). The bill, which received a public hearing by the Energy and Technology Committee, would make Connecticut Clean Energy Fund Programs accessible to condominium associations. It establishes a condominium renewable energy and efficient energy grant program. Under the proposed bill, Connecticut Innovations, Inc. would make grants under the program to condominium associations for (1) converting to more efficient heating systems in common areas or within individual units; (2) purchasing renewable energy sources, including solar energy, geothermal energy and fuel cells or other energy-efficient hydrogen-fueled energy; and (3) funding natural gas pipeline extensions (this provision was eliminated by amendment). SB 203, as amended, passed unanimously out of the Energy and Technology Committee. If approved by the entire Legislature, the bill would allow condominium associations to apply for such grant-in-aid on and after October 1, 2010. The Connecticut Clean Energy Fund (CCEF) provided testimony stating that the demand far exceeds its current funding streams. While condominium associations and tenants are "eligible" to apply under CCEF's current program structure, the organization recognizes the challenges associated with specific project scenarios. CCEF said it would be glad to work with individual condominium associations to establish a method to further support renewable energy.

HB 5434, "An Act Concerning Minor and Technical Changes to the Common Interest Ownership Act". This bill modifies Public Act 09-225, which became law in the last legislative session. Last year's public act changed how association business is conducted in general including voting, meetings, member participation and association records and the applicability of CIOA to "pre-1984" or "pre-CIOA" associations. The changes require more formality in the general operations of the community and more accountability from those in charge. HB 5434 makes various technical changes recommended by the Legislative Commissioners' Office concerning grammar, clarity, accuracy of internal references and consistency in the Common Interest Ownership Act that was passed last session. Recently, the Legislature's Judiciary Committee unanimously passed this bill out of committee. The Law Revision Commission Chair, Representative Arthur O'Neill (R, Southbury) stated that further changes to HB 5434 are forthcoming and will be drafted into an amendment and offered on the House floor. However, the content and nature of the amendment is not known at this time.

At this point, it is difficult to predict the fate of these bills due to the unusual circumstances of this legislative session. Many bills, including those related to condominiums, could conceivably get lost in the budget debate and die on the calendar. There is also the possibility of a budget stalemate which could promote the passage of non budget related bills, with little controversy, prior to the May 5th adjournment. Most likely, any bill with a fiscal note (one that costs the state money) will not survive the legislative session.

Prepared by Lori J. Samele-Bates, Law offices of Brown Rudnick on behalf of Imagineers LLC

Thank you for reading the Imagineers Board Newsletter. If you have any question or need any additional information on any articles provided in this newsletter, please contact us at 1-800-560-7268.

Imagineers LLC
Phone: 1-800-560-7268
Fax: 860-236-3951