CAI Press Release on Schwarzegger Veto (emphasis added by me)


FOR IMMEDIATE RELEASE

CAI Wins Critical Legislative Victory in CaliforniaALEXANDRIA, VA, October 1, 2004

“ Seven million Californians living inhomeowners associations have Gov. Arnold Schwarzenegger to thank for vetoinglegislation that would have jeopardized the financial stability of communityassociations throughout the state.Acting on appeals from countless homeowners, community associations and others,the governor vetoed a measure (AB 2598) that would have had the practical effectof legalizing assessment delinquency up to $2,500 and, ultimately, adding tothe financial burden of responsible, dues-paying homeowners."Thousands of Californians urged the governor to find a solution that helps themajority rather than AB 2598, which creates a process that's the wrong answer atthe wrong time," said Bob Browning, chair of the California Legislative ActionCommittee (LAC) for Community Associations Institute (CAI). A reservespecialist, Browning is a member of the CAI Board of Trustees."Speaking for millions of Californians, we're gratified that Gov. Schwarzeneggerhad the strength and foresight to veto this misdirected legislation," said CAIChief Executive Officer Thomas M. Skiba. "By recognizing the financial havocthis legislation could have created, the governor made the right choice forhomeowners, communities, municipalities, developers and lenders. CAI will workconstructively with state officials as this issue undergoes additionallegislative review." Schwarzenegger's veto message directed state agencies to work with interestedparties to clarify California foreclosure statues.Homeowners, associations and municipalities aren't the only ones who wouldhave been hurt by AB 2598. The legislation would have created businessdisincentives for builders and lenders, who are central to responding to thestate's population growth.Developers expressed concern that they would not be able to sell units if newbuyers could willingly avoid paying the dues needed to maintain the property.Banks and lenders said they would have stopped loaning money to developers andhomeowners associations because their loans could be impaired.In his veto message, Schwarzenegger said, "While the intent of this legislationis laudable and intended to protect homeowners from being foreclosed upon forsmall sums of delinquent assessments, this bill is overly broad and couldnegatively impact all homeowners living in common-interest developments.""We faced an uphill struggle on an issue of critical importance to our members,"Skiba said. "We didn't know if we could carry the day given the emotional appealof the bill and the timeframe, but we knew the facts were on our side. That –along with a lot of hard work – led to this positive outcome. We're gratefulto our LAC and the countless CAI members who stood with us in defense ofcommunity associations in California."After hearing about the veto, homeowner Sam Dolnick of La Mesa, said, "As an86-year-old retired Californian, I applaud the governor for opposing this bill.By doing so he has protected millions of seniors and folks living on fixedincomes. We thank the governor for finding a better solution." Dolnick is amember of the Board of Directors of the Foundation for Community AssociationResearch. For members and general inquiries, contact the CAI Direct customer service team:Community Associations Institute225 Reinekers Lane, Suite 300Alexandria, VA 22314Phone: 703-548-8600Fax: 703-684-1581Email: CAIdirect@c...MEDIA CONTACT: Frank RathbunPhone: 703-548-8600, ext. 261Fax: 703-684-1581Email: FRathbun@c...+++++84100104

----------------------------
So it seems that, as I reported over the last couple of weeks, CAI was lobbying the Governator heavily after the legislature passed this bill. This veto suggests that the most revolutionary of the HOA activists have just hit a stone wall in their efforts to take power away from HOA boards in California. As long as Arnold is in Da House, he can be expected to use his veto pen like an Uzi on anything that looks like it would impair the financial viability of HOA living or make it hard for BODs to govern. That's the way I read it, at least. This veto is a watershed event and suggests that for the foreseeable future no dramatic reforms will be enacted in that state.

I support foreclosure reform, but it is clear that the next effort at foreclosure reform will have to be more modest. With such an enormous share of the state's housing being in CIDs, state and local governments just can't afford to have large numbers of insolvent CIDs, and mortgage bankers just won't allow that to happen either. So somehow the reformers have to prove that they aren't really out to wreck HOAs. Given the way some of the more extreme activists express themselves in various newsgroups, the moderates may not be able to carry that burden of proof because they will get tarred with the same brush as the Bastille-stormers.