As local governments wait for the General Assembly to begin its work on Senate Bill 15-177, the construction defects bill, others continue to make decisions about their own ordinances, in hopes of attracting more affordable multi-family construction.

Tuesday night, the Lone Tree City Council, located in the south metro area, unanimously passed an ordinance partly based on one passed late last year by the Lakewood City Council. The vote came after about two hours of testimony from representatives of the Community Associations Institute and several Lone Tree realtors.

Lone Tree’s ordinance, according to City Attorney Neil Rutledge, applies only to condos, not other multi-family projects such as townhomes. Like Lakewood’s ordinance, it requires notice and consent from a majority of homeowners in the complex before filing a claim. Unlike Lakewood’s ordinance, builders/developers who own units in the complex, which is a common occurrence when a multi-family complex is being developed, are excluded from voting on whether to file a claim.

Whether the Lone Tree ordinance precludes a homeowners’ association from taking a claim to trial by jury differs depending on who you ask. Jeff Kerrane of Benson, Kerrane, Storz & Nelson, a construction defects attorney who is a member of the CAI, pointed out to Rutledge before the meeting that the ordinance would prevent an HOA from having jury trials. As a result, the city council went into executive session to discuss amendments to the ordinance. They later amended it to add language that they believed would fix that problem. But Kerrane told The Colorado Statesman he believed the ordinance would still prohibit trial by jury. The ordinance as amended also would not allow the HOA to change its bylaws once defects are discovered.

Another major difference with the Lakewood ordinance is that homeowners cannot object to any offers of repairs made by a builder or developer, even if the homeowner believes the repair will not fix the defect. Lone Tree’s ordinance does encourage the homeowner to allow repairs but does not give the builder the right to make repairs against a homeowner’s objections.

Lone Tree City Manager Seth Hoffman told The Statesman that the city, incorporated in 1995, has not had a new condo project built since 2005, although seven apartment complexes were constructed. The city is slated to become part of the expansion of the RTD Light Rail southeast line, with three stations planned. One would be near SkyRidge Medical Center, on the west side of I-25. The other two would be south of that and east of I-25, and that’s where the city anticipates most of its growth will take place in the near future.

But unlike many other communities along the Front Range, Lone Tree has several multi-family projects approved and in progress. Commonwealth Heights is approved for 190 units. Hoffman told the Council that the developer is wavering between building them as condos or apartments. However, the website for the complex markets them as condos.

Two townhomes projects also are approved, for a total of 86 units; and there is a 224-senior complex that would include 124 independent living units.

The new developments mark a change in the market for Lone Tree – one that realtors eagerly await. Realtor Steve Mikolajczak, a member of the Lone Tree Planning Commission, has been selling homes in Lone Tree for 18 years. If he brings a client into the area for condos, he told The Statesman, he has to take them to Highlands Ranch or Parker. There’s nothing available right now in Lone Tree, he said.

Mikolajczak said he favored the construction defects laws as passed in 2001. He noted that in the late 1990s, developers came in from out of state and built poor-quality products. Mikolajczak and another area realtor, Dave Kirchner, both spoke in favor of the Lone Tree ordinance Tuesday night.

The council heard from one former Lone Tree resident, Jack Bergey, via letter. Until recently, Bergey lived in Heritage-Enclave in Lone Tree, a patio-home community “plagued” by construction defects. The community pursued a claim against the builder that allowed them to repair the defects.

“Today, our community is financially sound and a highly desirable place to live,” Bergey wrote.

Dee Wolfe of CAI told the council that passing the ordinance is likely to result in lawsuits against the city. It would allow builders and developers to set the rules for arbitration in a community’s governing documents, with arbitrators chosen by the developer/builder and paid for by the homeowner. It interferes with the right of an HOA to govern itself, instead requiring a majority of all unit owners to vote in favor of legal action, which “would never happen.” It’s “anti-homeowner and anti-consumer. It protects builders, developers and big business at the expense of homeowners,” she said.

Bill Short, an attorney who represents HOAs, said the ordinance makes condo owners into second-class citizens in home ownership because they cannot go to court, although he said builders, developers, and those who own single-family homes have the right to go to court.

Lone Tree Mayor Jim Gunning told The Statesman that the council’s intent with the ordinance is to strike a balance between homeowners and builders/developers. That’s what inspired the modifications the council made to the Lakewood ordinance used as a model for Lone Tree.

“Finding our way back to balance will be difficult. What we did here is a start down that road. I’m not sure it’s the final solution,” Gunning said.

After the meeting Wolfe told The Statesman that at least two or three other local governments, including Englewood, Broomfield and Brighton, have put their own studies of construction defects on hold, waiting to see what will happen at the state Capitol with SB 177.

– Marianne@coloradostatesman.com