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(Colorado Springs Gazette file photo/Rich Laden)
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Colorado legislative leaders fear there may be no solution on construction defect litigation

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Construction defect litigation reform talks have become so troubled that conversations may stall, House Democrats said Wednesday.

Rep. Alec Garnett and House Speaker Crisanta Duran, both from Denver, placed blame at the feet of developers, business leaders and local government officials.

The Homeownership Opportunity Alliance’s policy committee on Tuesday night voted to oppose a bipartisan bill that aimed at striking a compromise, which offers an ominous sign. The policy committee’s vote is only a recommendation. The coalition’s executive committee must still hold a formal vote.

At issue is House Bill 1279, which would require a majority of homeowners in an association to approve a lawsuit and also require disclosure to homeowners of a proposed suit.

The bill – as with all construction defect measures – aims at spurring housing development by relaxing concerns from developers over facing expensive lawsuits.

Even though lawmakers placed blame on the shoulders of the Homeownership Opportunity Alliance, Duran and other legislative leaders will be the ones forced to answer for a failure to act. Leadership, along with Gov. John Hickenlooper, made defect reform a priority issue this year, essentially promising voters that the legislature would act.

The effort’s demise could come down to a few short words in the legislation itself, which addresses a pause in the time homeowners have to file a lawsuit under a statute of limitations. The clock would pause during a 120-day voting and disclosure period as a homeowners’ association decides whether to file a lawsuit. Developers don’t like that.

Lawmakers and homebuilders acknowledge that to the average observer it is a minor issue that should not sink an overall defect reform effort. But it appears talks have once again fallen apart.

“I’m frustrated because I’m getting to a point where I’m realizing there may not be a solution for Coloradans,” Garnett, who is co-sponsoring House Bill 1279, said at a media availability Wednesday afternoon.

The legislation was scheduled to be heard in a House committee on Wednesday. But sponsors decided to delay the hearing after the Homeownership Opportunity Alliance vote. Garnett said he hasn’t given up on the bill, but that it faces an uphill battle.

If House Bill 1279 dies, it would be the third defect bill to die in the legislature this year.

Another effort, Senate Bill 156, has seen concerns from Duran and faces a precarious future. That bill would require arbitration or mediation before filing suit and has the support of developers. It has been sitting in the House State, Veterans and Military Affairs Committee since March 14 after passing the Senate.

With House Bill 1279, three defect bills are pending in the legislature.

Senate Bill 45, which aims at equitably dividing litigation defense costs, has the potential to lower insurance rates, which would decrease costs for developers. The bill is sponsored by Duran and Senate President Kevin Grantham, R-Canon City. But it is opposed by the very groups it is intended to help, including developers.

Another measure, Senate Bill 155, would define “construction defect” in state law. Homeowners are concerned that the bill would give developers immunity from having to repair defects, and so the bill faces a tough battle ahead.

Some fear that the Homeownership Opportunity Alliance is planning on opposing House Bill 1279 in retribution for Duran expressing concerns with Senate Bill 156. But the coalition says it is still committed to finding a solution.

“The HOA is an enormous coalition of mayors and respected business leaders, not politicians or special interests. Its goal is to reduce the size and frequency of multi-million dollar class action lawsuits that has all but dried up Colorado’s condo market,” said Mike Kopp, a former state senator who is president and chief executive of the business group Colorado Concern, which is a member of the coalition.

“It’s too bad legislative leaders are suggesting that it’s time to call off the dialogue with our group. We have fundamental disagreements on a small number of issues that we remain hopeful can be resolved. When viewed against the backdrop of last year, however, and the year before that, one does have to wonder if the status quo is just too attractive for folks to let go of.”

Lakewood Mayor Adam Paul, with the Metro Mayors Caucus, a member of the Homeownership Opportunity Alliance, added, “This is why we’re going to continue to work and we’re going to try to get this done. That’s my understanding why the bill was delayed today, so we can continue to have conversations and work towards a meaningful solution … Let’s get back to the table and get this done.”

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