By now, almost everyone has heard the news: HB1212 renewing community association manager licensing is no more! But why did Governor Polis veto the bill after all the work that went into it and the rigorous legislative process it underwent that ultimately resulted in a one-year extension of the licensing with a required stakeholder input?
On May 31, 2019, Governor Polis issued a veto statement explaining his thoughts on manager licensing and why he decided to veto the bill. Specifically, the Governor noted, “the data we have reviewed does not demonstrate that regulating community association managers has had the intended effect of reducing harm to consumers.” The governor went on to surmise that owners, in fact, have been negatively impacted by licensing as the cost of regulation was passed on to them through higher assessments.
The Governor also believes the way to protect consumers is not through licensing community managers, but by addressing “broader issues with regard to Homeowners’ Associations (‘HOA’s”).” As a parting note in the statement, the Governor directed DORA to examine and make recommendations concerning the licensure of community association managers and whether licensure is needed to protect consumer safety, approaches to improving transparency, methods to reduce costs, and strategies to promote homeowners’ rights.
What does this mean for currently licensed CAM’s? It means you, at a minimum, have a yearlong reprieve from licensing fees, continuing education requirements (unless you hold a CAI designation), and responding to complaints filed against you with DORA. However, we anticipate this not completely over and in the next legislative session we will see manager licensing rear its head once again in one way or another.
What do you think? Do you agree with the Governor’s veto? How do you anticipate the next year will look without the licensing requirement? Share your thoughts.
3 responses to “Why Oh Why Did Manager Licensing Die?”
Normally I am against most licensing because often government control is not as effective as letting the market place control. But through my many years of being involved with homeowner associations I have been involved with too many poor to bad property managers. Thus I am in favor of their licensing.
I do agree with the Governor’s reasons for the veto, and have long held them myself. I do not believe that licensing helped homeowners or associations in any substantive way, as we still hear the very-same complaints we heard before. It did increase costs in the way of higher fees charged by management companies, but this did not translate into higher wages for rank-and-file managers, and in fact, cost them additional time and money. The result was a depreciation in the number of managers, as many chose to leave the profession or simply not to enter it. This was both predictable and predicted. Licensing did not increase the “professionalism” of managers, who continued to manage as they had prior to licensing. There are a few good managers in the business, and this requirement did not affect their commitment to the industry.
As a manager who is retiring after 25.5 years, I opposed licensing from the beginning and continue to do so. The managers I know echo my statements above. What licensing does do is to give homeowners the false impression that managers will somehow behave differently. It seemed to absolve boards’ of their responsibility to perform their due diligence in the hiring of a management company. Indeed, it caused boards to abdicate their responsibility to the State. You can impose all the restrictions in the world, but you cannot change behavior.
I got into this business because I had discovered the embezzlement of $50,000.00 from the association of which I was the president in 1989. The manager held the PCAM designation, and, the year prior, was the president of the Board of the Rocky-Mountain Chapter of CAI. What that taught me was that a designation and a title did nothing to change her behavior. And when she and her husband fled to Las Vegas and opened up a new management company there, I called the local chapter to alert it, so that it could warn prospective clients. The response was that the chapter could do nothing based on my admonition because it was “hear-say.” This, despite the fact that there had been a conviction in Arapahoe County. The wife and husband team had also been guilty of failure to provide worker’s-compensation insurance and to file payroll taxes to both the state and the federal governments. I worked closely with the district-attorney’s office and insisted on restitution. It took ten years, but the entire amount was paid back to the association. Now, some would say that this case cried out for manager licensing, but it did not. There were already laws in place to deal with the crime and there still are today, yet those don’t seem to stop people from stealing from associations. This manager would surely have been licensed, had that program been in effect in 1989. And it is a major reason for my opposition. Laws do not seem to be a deterrent to crime. They merely provide for penalties after the fact, after the harm has been done. Additional, with regard to money, there are few managers who actually handle money or the bookkeeping therefor. That is done by people in the “back office.” If we’re worried about theft and cover-ups, why not require those folks to be licensed?
Which brings us to CCIOA, a seemingly-useless compilation of laws that likewise seem not to deter managers and directors from doing as they wish, with the added detriment of not providing any penalties for violations. Instead of working on trying to revive a failed program, I suggest that interested parties, most notably attorneys, work to pass legislation that provides monetary penalties for violation of the provisions of CCIOA without aggrieved owners’ having to hire their own attorneys and take their associations to court. This is no way to enforce laws or to settle disputes.
I would also submit that interested parties should work to institute some type of dispute-resolution process for HOAs that would be accessible without hiring attorneys. Now I realize attorneys would never advocate for such a thing, because it might cost them money, but aren’t HOA attorneys already busy enough? And maybe we have too many of them, anyway, while, at the same time, there is a paucity of attorneys that are willing to represent homeowners.
The vast majority of owner complaints are frivolous, anyway, and result from their ignorance of laws and their associations’ covenants, rules and regulations. So it’s not as if this resolution process would be backlogged. But on the other side, we have bad directors who are either equally ignorant or deliberately choose not to abide by laws, their own documents or rules. And many managers are fearful of challenging those directors for fear of losing clients. How-many times have we heard “I’m just doing as the board instructs me?” I have lost clients whose boards refused to listen to sound advice and chose to violate laws and documents. This paradigm is one fraught with problems.
We also need a state advocate for doing the right thing for associations and those who live in them. (And no, the two are not mutually exclusive.) I proposed this back in the mid ’80s and called it an “ombudsman.” I still support such a position at the state level. We thought that’s what we were getting when the HOA Office of Information and Resource was instituted, but that turned out to be nothing more than a depository and compiler of complaints. Decent people have left this position because of this.
As the Governor said, there are many ways in which the State could more efficiently and adequately address the needs of associations and their residents. But it would take people who are willing to think outside the box and advocate for real change that would work to everyone’s benefit. Is there anyone at Altitude Law who fits this description? Is there anyone at CAI who is willing to take up the challenge? Is there anyone in the General Assembly? Time will tell.
I believe Mr. Felice presented some good thoughts and I agree with him about some the nuances of association management. When licensing was first instituted I was outraged and figured it was just another grab by the State for more revenue, or to make the State “swamp” larger for no good reason. Then I became used to the program and was ok with it. Having been a licensed CAM since the inception of the program, I can argue both sides. In my town there was a CAM that offered the lowest management fees of anyone around and we lost much business because we could not match her fees. It turned out that she was embezzling quite a bit of money from her associations on a regular basis. This embezzlement was discovered, an audit was performed and she lost her CAM license forever. This was a good thing, though I suppose she can now hang out her shingle again and lure other hapless associations into her web. But word has gotten around pretty widely now in my town and law suits are in play, but maybe Las Vegas is an unsuspecting place for her.
On the other side, the CAM program added a lot of expense and hassle to our business, which we passed on to out associations, although we do not plan to reduce our fees now that the CAM program is dead. The death of the program will allow us to be more profitable however, with those associated expenses gone, though now most anyone can offer to manage associations, whether they know anything about it or not. I feel that much time, energy and money was wasted on what was basically an experimental program, with management companies as the test subjects. Most management companies are small businesses and one of the last thing they need is more regulations for their industry.
Even with the death of the CAM licensing program, CCIOA is still in effect as rules that associations must follow. Since most board directors I have come across are woefully ignorant about CCIOA requirements, it will still be up to the association manager to acquaint them with the proper governance rules, though in many cases the directors will not listen.