The 2014 legislative session ended with a whimper, not a bang, on the condo construction defects issue. This year’s session on the same issue will end the same way.

But supporters of the efforts vow they will be back next year.

Last week, Speaker of the House Dickey Lee Hullinghorst, D-Boulder, assigned the Senate’s major construction defects bill, Senate Bill 15-177, to the House’s “kill” committee, the House State, Veterans and Military Affairs Committee. They voted along 6-5 party lines to kill the bill after a five-hour hearing Monday.

At the same time, House Democrats have their own fix for the problem. Three bills, sponsored by Rep. Max Tyler, D-Lakewood, go after what Democrats say is the real issue: affordable condo housing.

But chances that the Republican-controlled Senate will view those bills favorably are virtually nil.

SB 177 sought to modify construction defects laws, first passed in 2001 and amended in 2003, 2007 and 2010. The bill would have required a condo homeowners’ association to go to mediation and/or binding arbitration prior to filing a class-action construction defects claim. Prior to filing a claim, the HOA board would have had to obtain written consent from a majority of unit owners after disclosing projected costs, duration and financial impact.

Earlier in the day a press conference was hosted by the Homeowners’ Opportunity Alliance. Mayors Michael Hancock of Denver and Bob Murphy of Lakewood led the pleas of dozens of supporters to Hullinghorst to give the bill a “fair hearing.”

Last fall, the Lakewood City Council approved an ordinance to allow builders and developers an opportunity to repair construction defects before homeowners and condo associations could sue. As with SB 177, the ordinance requires condominium boards to receive permission to sue from a majority of their homeowners. Several other municipalities have passed their own ordinances, some modeled after Lakewood’s.Supporters warned during the press conference that should the bill fail, more communities intend to go down Lakewood’s path. Mayor Phil Cernacec of Littleton said his council is already at work on such an ordinance.

Throughout the hearing later in the day, Vice-Chair Rep. Joe Salazar, D-Westminster, asked proponents if they could guarantee that changing the law would result in construction of affordable condo housing in the $150,000 to $200,000 price range. “We can’t guarantee it,” replied co-sponsor House Minority Leader Rep. Brian DelGrosso, R-Loveland. But nothing’s being built now, and the bill will start the process, he added.In response to the same question, Murphy pointed out that passing the ordinance in Lakewood brought developers into his community. As to whether those future projects are “affordable,” Murphy said the market and the need are in that price range.

Those against SB 177, including attorney Molly Foley-Healy, legislative liaison for the Community Associations Institute, said the bill “is window-dressing for the destruction of homeowners’ rights.” She said arbitration is often more expensive than going to trial, and to require a majority of homeowners to approve a lawsuit is unrealistic. The committee also heard from economist Pat Pacey, who pointed out her study showed the lack of condos is due to a combination of market and economic factors rather than the construction defects law.

But builder Chris Waggett of D4 Urban, LLC, who testified in favor of SB 177, told The Colorado Statesman that without a fix in the law, he won’t be building any multi-family condos anytime soon.

Waggett is a partner in several housing projects in Denver, including market-rate apartments adjacent to several RTD light rail stations. “I have a passionate commitment within my land holdings for diverse housing at diverse price points,” Waggett said.

His next project is slated for the largest vacant property in Denver, at 73 acres. Waggett said he wants to divide it into three types of housing: senior, rental and condo units ranging from $250,000 to $500,000. But said he won’t build the condo portion until the law changes.

“I’d love to do a condo product, but I won’t do it if I know I’m going to get sued,” he said. Waggett indicated it is too easy to sue on condos in the metro area, in part because it’s “a viable business model” for trial lawyers.

On Tuesday, CAI, which represents homeowners’ associations, held out an olive branch to the Homeowners Opportunity Alliance and other bill supporters. The organization has been frustrated because they claim they have never been allowed a seat at the table on negotiations around the law.

Foley-Healy suggested the Alliance and CAI “create an environment where builders and homeowners can work in good faith to resolve construction defects during the notice-of-claims stage.” Such an alternative, she said would incentivize builders and homeowners to resolve defects early in the process.

SB 177 co-sponsor Senate Majoirty Leader Mark Scheffel, R-Parker, told The Statesman this week he was disappointed by the House action Monday. “There will continue to be an issue with the demise of SB 177,” he said Tuesday. Most of all, he said he was disappointed for the Alliance that spent countless hours on the effort.

But Scheffel is far from done fighting for changes to the construction defects law. “Our system of government mandates that we continue to work on this. Even in the face of discouragement, you have to continue.”

A second bill, to cut in half the statute of limitations for filing a claim, also went down to defeat in the same committee. SB 91 would have cut the total time for filing a claim from eight years to four years. The House State Affairs committee killed that bill on a 6-5 party-line vote on April 22.

With both Senate bills gone, what remains are three Democratic bills. All three flew through the House State Affairs Committee Wednesday.

House Bill 15-1383 modifies the state’s low-income housing tax credits issued by the Colorado Housing and Finance Authority. Those tax credits are allocated to builders of low-income rental housing developments. HB 1384 allows the State Treasurer to transfer one-third of the available balance in the state’s Unclaimed Property Trust Fund to CHFA and then to the state Division of Housing. The money would be used for rental assistance or to help construct owner-occupied or rental housing for low-income households. The third bill, HB 1385, sets up a voluntary external review process for construction of new multi-family housing, to be paid for by builders, to prevent construction defects.

But all three bills are most likely dead on arrival in the Republican-controlled Senate, in part because they all lack Republican sponsors, and the Senate is still smarting over the defeat of SB 177. Tyler is on the House State Affairs committee and voted to kill SB 177.

Two of the bills, on the review process and the low-income tax credit, were sent to the House Finance Committee for further action. The third, on using the Unclaimed Property Trust Fund money for low-income rental assistance, is awaiting action from the full House.

— Marianne@coloradostatesman.com