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Summary: HB 503 would allow board members and their immediate family members who have ownership in a business to have a contract for the project for a homeowner's association as long as the board member or family member enters the bidding process, two other bidders who are not associated with the association bid for the project, the board member does not have access to the other bids, the board member does not get involved in discussing or deciding to whom the contract is awarded, and the bidder is disclosed to the remainder of the board.
The other aspect of HB 503 would address a contract during the development period as follows: "...[E]xempts from its provisions a contract entered into by an association during a development period, defined in the bill as a period stated in a declaration during which a declarant reserved a right to facilitate the development, construction, and marketing of the subdivision and reserved a right to direct the size, shape, and composition of the subdivision" (Bill Analysis).
Analysis: Under current law an HOA may contract for services with a board member or family of a board member. However, there are no regulations preventing board members or their families from being given preferential treatment. This means that on the basis of being on the board or being connected to a board member, a person might get preferential treatment including possibly a no-bid contract or information about other bids that would allow them to under bid. HOAs have a fiduciary duty to their members to handle community finances ethically and responsibly and should not be allowed by a loophole in the law to give preferential treatment to connected contractors at the expense of the best interest of the homeowners. We are neutral on this legislation.
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