Grantham: Don’t call new construction defects bill a ‘compromise’
Author: Ernest Luning - March 20, 2017 - Updated: March 20, 2017
Senate President Kevin Grantham tossed some cold water this weekend on the bipartisan backslapping that greeted the introduction of a new bill aimed at resolving longstanding tensions over construction defects litigation policy and spurring moribund condominium construction across the state.
“Don’t call it a compromise,” the Cañon City Republican told The Colorado Statesman on Saturday. “It isn’t a compromise.”
House Bill 1279, introduced late Friday night, includes policies in common between two competing Republican-sponsored and Democratic-sponsored bills that have met their end or will soon meet it in committees controlled by the opposing party. The new bill requires a majority of the members of a condo project’s homeowners’ association to OK pursuing a complaint for defective construction against builders. It also requires strict disclosures about the anticipated cost of filing a complaint and the potential difficulties selling units while a lawsuit is under way.
But the new legislation also sheds elements from the two bills that legislators across the aisle have said are unacceptable, including the centerpiece of Republican-sponsored Senate Bill 156, which is headed for defeat in the House “kill committee.” That bill would require disputes over construction quality in condo projects to go to binding arbitration instead of allowing HOAs to file class-action lawsuits off the bat. (In addition, the new bill drops restrictions on the kind of contact builders can have with homeowners while they’re deciding whether to initiate a complaint and a provision allowing HOAs to go ahead on complaints under $100,000 without getting the support of a majority of homeowners, as the Democratic-sponsored Senate Bill 157 included.)
Builders have nearly abandoned the condo market in Colorado in recent years, even as demand for housing has skyrocketed, saying the ease of filing lengthy, expensive class-action lawsuits over construction defects in Colorado has driven the cost of insurance out of sight.
Grantham shook his head and said that requiring alternative dispute resolution — arbitration or mediation, instead of a lawsuit — was key to fixing the situation.
“It’s one of the pieces that makes things work,” he said. “So calling it a compromise is pretty tough.”
The bill might be a lot of things, but it isn’t a compromise if key stakeholders weren’t at the table when it was drafted, he added, including some of those backing Senate Bill 156, which passed out of the Senate earlier in March with Democratic lawmakers among its supporters.
“It’s popular to call things compromise and consensus when, in fact, maybe they’re not,” Grantham said. “We’ll see. We’ve got a long process ahead, like we do with any bill. We’ll see how it gets from A to Z.”
While the word “compromise” floated around the halls of the Capitol in the days leading up to the bill’s introduction Friday night, and The Statesman’s headline reporting the news termed it a “bipartisan compromise bill,” the legislation’s backers used different vocabulary. “Bipartisan accord on construction defects,” read a release issued by the House Democrats late Friday. Legislators used variations of the word “balance” to describe what the bill intends to achieve.
House Bill 1279’s prime sponsors are Assistant House Majority Leader Alec Garnett, D-Denver, House Minority Whip Lori Saine, R-Dacono, Senate Minority Leader Lucia Guzman, D-Denver, and state Sen. Jack Tate, R-Centennial. (Assistant House Minority Leader Cole Wist, R-Centennial, will be listed as a co-sponsor due to House rules limiting the number of chief sponsors, Garnett noted, but was as involved as any of the sponsors in crafting the legislation.)
“This bill will establish a fair and balanced process for all homeowners and will establish confidence in the marketplace for developers to break ground,” said Garnett in a statement when the bill was introduced.
Supporters of the new legislation emphasized that it’s a piece of a package they believe will encourage builders to get back in the business of building condo projects in the state.
Another key element, they say, is a bipartisan bill sponsored by Grantham and House Speaker Crisanta Duran, D-Denver, Senate Bill 45, to set firm guidelines for allocation the costs of defending a construction defects claim among general contractors and subcontractors after lawsuits have been filed. That bill, introduced at the beginning of the legislative session, has passed one Senate committee and is awaiting action in another.