Gibbons vetoes controversial bill

CARSON CITY — A bill that would have made what one lawmaker said were numerous consumer-friendly changes to how homeowners associations operate was vetoed by Gov. Jim Gibbons on Friday.

“This bill makes a variety of sweeping changes to common-interest communities,” Gibbons said in his veto message. “Some aspects of this bill represent good public policy.”

But he said other aspects of the bill could have unintended consequences, such as the possibility of increased assessments, and “the possibility of dramatic changes to common areas without an opportunity for homeowners to participate.”

Gibbons recommended having full hearings on the bill at the 2009 legislative session, since many parts of the measure were included at the last minute without a chance for the affected parties to comment.

Sen. Mike Schneider, D-Las Vegas, long a champion of the rights of homeowners who live in associations, including many Southern Nevadans, called the veto a loss for homeowners.

“The consumers really lost on this, and I can’t believe the governor would fold on this bill,” he said. “He told me a week ago this past Wednesday that he would sign it. He went back on his word.”

But others opposed Assembly Bill 396 and welcomed Gibbons’ veto.

“It’s too bad because a lot of people worked very hard to get some good legislation done,” said Las Vegas attorney Michael Schulman, who wanted a veto because of several questionable provisions in the bill. “But the bad outweighed the good.”

Schulman, who represents hundreds of homeowners associations in Southern Nevada, was particularly concerned about provisions that would have allowed homeowners to install rolling shutters in common areas. In his letter, Schulman said this section of the bill was drafted “at the behest of one or more special interests groups who sell rolling shutters.”

“I hope the factions that are at odds can work together, maybe putting together a presentation before the Legislature returns,” he said.

Ultimately it was the rolling shutter issue, and the placement of such devices in common areas, that doomed the bill. Several opponents of the bill said allowing residents to place shutters in common-area windows would be an unconstitutional “taking.”

Gibbons’ office was flooded with e-mails and phone messages to veto the bill, which opponents said gave residents of associations too much power.

David Stone, president of Nevada Association Services Inc., a collections agency for homeowners associations, said AB396 would have been a disaster for community associations.

“This bill allows unit owners to install shutters and other window coverings on the outside of their units and common areas,” he said in a statement issued last week. “This is a lawsuit in the making. Government has no right or authority to allow for the taking of property without, especially by another person, without at minimum, due process. AB396 allows for an unconstitutional taking of property.”

Schneider said the takings issue was seized on by Gibbons to veto the bill, even though the legislative counsel’s legal opinion said the measure did not involve any takings.

“I think that was just an excuse,” he said. “A couple of big developers called and put pressure on him is my guess.”

The right to put shutters on windows is both an issue of safety and of energy conservation, Schneider said. There are break-ins that occur in association complexes, and shutters could protect residents, he said.

The Legislature will get a chance to override Gibbons’ veto, but not until February 2009; the 2007 session ended June 5 and lawmakers are not expected to reconvene before then.

Schneider said the Assembly will likely override the veto. The Senate, which passed the bill 19-2, could also override, but the Republican majority might choose instead to support the governor, he said.

The right to install the shutters was just one of the consumer-based provisions in the bill, which was a compromise including concerns raised by many different lawmakers, Schneider said.

The bill also would have required two signatures on checks from association bank accounts to protect against theft; bonding of association managers so homeowners would be protected financially against theft; and a prohibition on delegate voting.

Under the delegate voting concept, homeowners association boards cast ballots from people who do not vote in board elections as voting for the current members. Many homeowners do not vote in board elections.

Other provisions would have prohibited an association from assessing a speeding fine against a homeowner for the actions of a pizza delivery driver or a visiting plumber, Schneider said. It would have allowed police and firefighters to park their emergency vehicles at their homes, he said.

It would have prohibited associations from having the right to review rental agreements between a homeowner and renter, and it would have prohibited an association from using dues toward a homeowner’s outstanding fine, Schneider said.

Now when monthly dues are paid, any fine is removed from that payment. The homeowner is then determined to be in arrears on dues and foreclosure proceedings are initiated, he said.

The bill would have blocked homeowners associations from assessing “transfer fees” of as much as 1 percent when a member sells a home to another person, Schneider said.

Associations can provide for all of these types of policies now, but most don’t, he said.

Some people claim most residents of homeowners associations are pleased with their boards, but Schneider said any one of them can have a bad board at one time or another.

Schneider vowed to try again in 2009, bringing a new bill with even more provisions to protect residents of homeowners associations.