After state stalemate, Aurora tackles construction defects

406

Aurora took the issue of citywide condominium construction into its own hands Aug. 24 after city council approved an ordinance intended to make it tougher for homeowners to sue builders over construction defects.

Council voted 9-1 in favor of the ordinance, which outlines the same three-pronged approach other cities have implemented in similar defects measures. Specifically, the new rule gives builders the right to repair defects before litigation is pursued, requires that the majority of home owners in a home owners association — as opposed to just a majority of HOA board members — approve of any lawsuits, and allows builders to offer monetary settlements to homeowners in lieu of repairs.

“Ultimately, the message from our city council is that we have a problem,” said City Attorney Mike Hyman, whose office worked for more than two years with area attorneys, the Colorado Municipal League and the Metro Mayor’s Caucus on drafting the ordinance. “We have a lack of this for-sale, multifamily product in the city, which really would help our workforce and give them opportunities to actually become homeowners. I think it’s really kind of a fundamental issue of fairness.”

At-large Councilwoman Barb Cleland was the lone dissenting vote on the measure.

Existing condominiums in the city are exempt from the new regulations as the ordinance will only apply to new condo developments, such as those that city officials would like to see spring up along the forthcoming I-225 light rail line, according to Hyman. There are currently no condominium projects being developed in the city, according to city documents.

Proponents say the ordinance will help jump-start a stagnant market of owner-occupied condominiums across the city. Over the past decade, a slew of Front Range cities have seen the construction of owner-occupied condo units grind to a near standstill with critics pointing to builders’ fear of being sued and skyrocketing insurance costs as the primary causes.

Between 2009 and 2013, the actual number of condominiums in Aurora declined by about 4,000 units, according to Bob Watkins, director of the city’s planning and development services department. Watkins added that the city issued just six permits for new condominiums between 2013 and 2014, which is dwarfed by the 60 annual condo permits the city was issuing before the economic downturn of 2008.

“We’re not keeping up with demand,” Watkins said. “You need condominiums to get the full range of housing choices.”

But opponents to the kind of construction defects reform Aurora has pursued argue that such measures supplant the rights of homeowners and fly in the face of state law.

“Local ordinances like these directly conflict with state law under the Colorado Common Interest Ownership Act,” said Brian Matise, a Denver-based HOA attorney. “You’re going to end up with failed condominiums that are like ghettos with bad construction and leaking roofs.”

In 2009, Matise helped win a construction defects claim for his own HOA at the Flats at Fulton Court in Aurora after experiencing multiple problems in the 136-unit development, including gas leaks and flooding. Going forward, he said that Aurora should look to use already available tools such as special districts and tax increment financing to fund affordable housing at coveted new transit-oriented development sites.

“If the purpose of this was to spur TOD developments, why don’t they just limit the ordinance to TOD districts?” Matise said. “They don’t so obviously that’s not the purpose, and I think (that reasoning) is a Red Herring.”

Proponents say the ordinance will help jump-start a stagnant market of owner-occupied condominiums across the city. Over the past decade, a slew of Front Range cities have seen the construction of owner-occupied condo units grind to a near standstill with critics pointing to builders’ fear of being sued and skyrocketing insurance costs as the primary causes.

State Sen. Morgan Carroll, D-Aurora, said that she agrees with Matise’s assessment as to the illegality of municipal defect rules and emphasized that city officials shouldn’t have the ability to trump the rights of citizens.

“I think there’s a lot of political pressure for (the city) to take something up at the behest of the developers, but I think it is incorrigible for them to say, ‘we’re exempt and we’re going to have different HOA laws,’” Carroll said. “Those are statewide laws and statewide concerns. It doesn’t matter if 99 percent of the people in a development don’t have a defect and you do, it should never be contingent on the vote of others for you to exercise your own right.”

Carroll, who fought during this year’s legislative session to kill several construction defects reform measures, pointed to the city’s nearly two dozen tax increment financing sites — which use future tax incentives to court modern development — as successful examples of how Aurora could woo affordable housing developers without usurping resident rights.

Aurora is only the latest metro municipality to craft its own construction defects ordinance following years of failed attempts to remedy the issue at the State Legislature. Lakewood, Commerce City and Lone Tree each have passed similar ordinances in the past 10 months.

“Each one of these ordinances gets a little more refined and a little more input from everybody — from the legal side to the community side to the developer side — and as each one of these ordinances is written, they’re frankly going to be better,” said Lakewood Mayor Bob Murphy.

But opponents to the kind of construction defects reform Aurora has pursued argue that such measures supplant the rights of homeowners and fly in the face of state law.

Murphy pushed for Lakewood to become the first city in the state to tackle the issue of construction defects at the municipal level last October. Murphy said that Lakewood has yet to have any new condominiums come online, but that the city is now in talks with about eight builders interested in pursuing projects.

“We have one party putting three land parcels together right now near a light rail line and he tells us that he would not be doing it if it wasn’t for that ordinance,” he said. “By the time the legislature reconvenes in January I believe you will see 10 cities with a total population of over 2 million that will have passed their own ordinances.”

The longstanding stalemate regarding construction defects at the state level is what led many council members in Aurora to agree to the citywide measure.

“The sad part is we have to do it at all — it’s clearly a legislative action,” said Aurora Mayor Steve Hogan. “We’re looking at five TOD sites in the city of Aurora with builders who have no clue what they can build. While this won’t solve all of their problems, this will provide some clarity.”

A final version of the Aurora ordinance will go to a city council vote on Sept. 14.

— Staff Writer Rachel Sapin contributed to this report.

0 0 votes
Article Rating
8 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
davebarnes
davebarnes
7 years ago

Within 3 years there will be a shoddy construction lawsuit that is won by the homeowners. Builders just can’t help themselves–it is in their blood to go cheap.

soowcarters
soowcarters
7 years ago
Reply to  davebarnes

WORK AT HOME SPECIAL REPORT………After earning an average of 19952 Dollars monthly,I’m finally getting 98 Dollars an hour,just working 4-5 hours daily online….It’s time to take some action and you can join it too.It is simple,dedicated and easy way to get rich.Three weeks from now you will wishyou have started today – I promise!….HERE I STARTED-TAKE A LOOK AT….dc..

➤➤➤➤ https://welcome2googlehotspotworkzone/key/work/…. ⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛⚛

Fed up
Fed up
7 years ago
Reply to  davebarnes

Could be. Like malpractice insurance. Not sure of the solution though

MoreFreedom2
MoreFreedom2
7 years ago
Reply to  davebarnes

While I don’t doubt that some builder will be sued for shoddy construction, I’d also expect most builders want to maintain their reputation as reputable builders, so they can stay in the business.

What concerns me more than the occasional shoddy developer, are schemes by which developers get in bed with government politicians to shield themselves from being held accountable for shoddy construction. And that’s what I’d say this law is. Why should someone who buys a condo, require other people’s approval to sue a builder for defective work? Won’t the HOA board and membership be mostly the builder until most of the units are sold? Thus, this requires getting approval from the builder to sue him.

Joe Hardhat
Joe Hardhat
7 years ago

Requiring a majority of HOA residents instead of only HOA board members is a step in the right direction, but still much more needs to be done to attract most contractors back into the low to medium end of the condo market. The low end will only cme back to life via subsidies from affordable housing programs such as the City of Denver, whose expansion will emphasize home “ownership” over rental or Section 8 projects.

MoreFreedom2
MoreFreedom2
7 years ago
Reply to  Joe Hardhat

“The low end will only come back to life via subsidies….”

Why should government provide subsidies to rich condo builders if people won’t buy them in a free market? And why should a homeowner have to get approval from either a HOA board, or a majority of other HOA members to sue a builder for construction defects for a condo they alone bought?

In a free market, I’d expect an inspection of the home with the contract subject to no defects (or defects not exceeding a specified value).

Joe Hardhat
Joe Hardhat
7 years ago
Reply to  MoreFreedom2

Subsidies to go homeowners or renters, not builders. Denver wants to raise at least $15M per year by raising property and sales taxes in order to make it affordable for low income folks to “buy” homes.

RedEye21
RedEye21
7 years ago

That’s what we need is Aurora to get in the business of
making rules that confuse an already in place state statute that has teeth that
holds builders accountable. If Aurora Council feels so strong about shoddy work being
produced they need to look at their own building inspection department. When
things are built up to standards they just don’t fall down. The inspectors have
the duty to insist on the code. But of course the inspectors aren’t fluent in Spanish
and today the main work force on these projects are done with Mexican legal and
illegal labor and therefore the defects
are too overwhelming for the inspectors and exemplify a practical reason and political don’t
bother attitude. So go ahead Aurora council and show us your brilliance and
pass the ordinance, that will fix it.