88th Texas Legislative Session
by Ralph Troiano

The Texas Legislature meets every two years. The 88th session convened on January 10th and will continue its 140-day regular session until May 29th.  This year 9,592 bills were filed before the March 10th deadline. Only emergency and other special types of bills can be filed after this date. After going through the legislative process, typically about 20% make it into law. 

There are always bills that affect Property Owners’ Associations. The Community Associations Institute’s Texas Legislative Action Committee keeps track of the bills, does an analysis of the impacts and lets us know key calendar dates on important bills. Occasionally, there are good bills which clarify parts of existing law or extend protections for owners or associations. But more often, there are proposals which would have negative impacts on associations or just make you wonder what prompted this.

Here are brief summaries of the ten most interesting or concerning bills.

• Architectural Review – In the last session, a bill was passed which prohibited members of the same household from simultaneously serving on the Board and architectural review committee. HB 3776 provides the ability to appoint an otherwise ineligible person if no other volunteers are available. The process to make this happen is not burdensome.
• Political Gatherings – It appears the original purpose was to prevent a Board leaning one political direction from preventing political activity in the neighborhood leaning in the other direction. As initially introduced, there were no limits on use of the common areas. So for example, a member could demand to use the pool area in the off-season and the Association cannot require lifeguards, limit the size of a gathering, or charge the normal rental fee for a clubhouse. An alternative HB 3775, applies equally to all gatherings, political or not, for use of association common areas. This is more reasonable – the only impact is that an association cannot deny use based on the political message.
• Chickens, Rabbits & Gardens – There are several bills addressing raising your own food. The challenge here is crafting a state-wide law that works for everyone. A couple of chickens and a 10’x20’ garden on 5 acres is no big deal. But what about 8 chickens & rabbits on a 45’x100’ lot with that garden in the front yard? Perhaps chickens & rabbits should be left up to the city or HOA. And what freedoms are being abridged by requiring gardens to be in the backyard behind a fence so critters don’t eat your crop? Hopefully, progress will be made without tossing out all rules.
• Cottage Food Operation – HB 276 takes home gardens to the next level and anticipates people wanting large enough gardens so they can sell the fruits & vegetables from their homes, maybe like the roadside stands. It does allow the association to regulate the signage associated with the cottage food operation.
• Wind Capture – HB 330 (and also tucked into chicken bill HB 92) will not allow a POA to prohibit or restrict a wind power facility of an “appropriate residential scale.” This is vague enough to be of concern when the 1st application comes in. There are wind capture devices that are less obtrusive than the windmills we see in wind farms.
• Collections – This bill would impact all associations and especially hurt those with lower collection rates. HB 886 adds three additional monthly notice requirements and a 180-day waiting period after the date of the third notice before an association can file a lien for delinquent assessments. For an association with annual assessments, the lien is normally filed as early as April. The new law would increase costs and push the filing back to at least December. And by that time the next year’s assessments are coming due and it will be even harder for a struggling owner to pay. For associations with quarterly assessments, three quarters would be overdue before filing a lien on the first quarter amount.
• Financials Audits – HB 1252 would require an audit every year with a copy provided to each member. The cost of an audit would typically start around $1,500 for a small association and rise to several thousand dollars for a large one. Reproducing and mailing a copy to each member would cost about $4 each. The management company will need to expend additional effort to provide records and assist the CPA. This will increase costs for associations. Audits are a good way to have a 3rd party expert look at the books to make sure the financial reports fairly represent the position of the association. In addition, conscientious Board members are approving expenditures and review the financial reports on a regular basis.
• Board Member Removal – HB 1367 would have a chilling effect on volunteerism and association finances. The first part is a process for the members to remove a Board member. This is not a concern because most Bylaws already handle this. The problem is in the second part (a similar bill did not pass in the last session). Any owner may file a lawsuit against the Association in JP Court for any perceived violation of the association’s governing documents or the Texas Property Code. The Court could require the removal of one or more Board members and award damages to the owner associated with the alleged violation. This could be used to harass Board members, force them to spend their personal time in defense of the lawsuit, increase legal and management costs to the association and raise the cost of Directors & Officers insurance for the association.
• Street Parking – HB 1799 is a strangely narrow one – there must be a backstory for its origin. This says an association may not prohibit a vehicle owned by the state, an agency of the state, or the federal government from parking in the street in front of the home where the government employee or contractor resides. It doesn’t matter if the streets are private. It doesn’t matter if the vehicle is a dump truck or a Bradley Fighting Vehicle! And since this only applies to government vehicles, an unmarked Ford F-150 used by a Parks & Wildlife employee could park in the street but the same truck used by a city Parks & Recreation employee could not.
• Amendments – HB 2428 seeks to change the voting on amendments to dedicatory instruments. The first change may just be sloppy drafting – it changes the requirement to pass from 67% of the votes to 67% of the property owners. Typically, there is one vote per lot. But if a property is owned by a husband and wife, under this bill, that property would get two votes whereas the widow next door would just get one. This would be very difficult to administer since the association would be obliged to determine the number of legal owners of each property as of the time of the vote. Finally, it eliminates the ability to use absentee or electronic ballots leaving only in person or proxy voting. Gathering 67% for in person voting would be practically impossible.

We all heard about Silicon Valley Bank’s failure in March. It was astonishingly fast collapsing to an FDIC takeover in just 48 hours. This was more about the management of the bank and its unique mix of clients and investors than a comment on the whole banking system. Unfortunately, the regulators had not responded to red flags but the red flags existed because of bank management decisions.

At C.I.A. Services, most of our client funds are handled through one of two banking partners: CIT Bank (CIT) and Alliance Association Bank (AAB). Both are divisions of much larger banks (First Citizens Bank and Western Alliance Bank, respectively). We use these two because they are the best, in our opinion, of the handful of banks around the country that understand and specialize in community association banking. Please see these links which highlight the strengths, capitalization, and asset quality of these banks: CIT (First Citizens); Western Alliance

Although bank failures are rare, we are focused on protecting your money. Unless a client has adopted a different investment policy, we use three priorities.

1. Protect Principal. We do not invest in instruments with fluctuating asset values. That means no stock, bonds, or most other instruments from the stock market. We use bank accounts and certificates of deposit.

2. Maintain Liquidity. Make sure money is available when needed to pay bills. When investing in certificates of deposit, we do a cash flow analysis in advance to ensure CDs are maturing when funds for operations or projects are needed.

3. Earn Interest. Only after satisfying the first two priorities can we think about interest. Every dollar paid by a bank is one less dollar that needs to be collected from the members. CDs earn more than a savings account which earns more than a checking account. We periodically move money between these accounts to earn a few more dollars.

We guard against bank failure by making sure all funds are covered by FDIC insurance. In the case of a failure, the FDIC will guarantee up to $250,000 in funds at a bank for each tax ID. For clients with less than $250,000 at any time, all their funds can be kept in one bank. For those with more, it takes planning and effort to keep everything insured. If most funds are at CIT, we can purchase CDs at AAB. But that would only protect up to $500,000.

That’s where CDARs and ICS accounts come in. This is a program offered by most banks working through the IntraFi Network. With this, working through your bank, you can buy CDs or put money into nearly 3,000 banks with each one providing its own $250,000 of FDIC coverage. IntraFi keeps track of everything and makes sure your funds are always put into different banks. The bottom line is that CIT and AAB are exceptionally strong banks with association expertise. And at C.I.A. Services, we make sure your funds are safe and insured. 

Every month we appreciate the communities that are celebrating their anniversaries with us.  Since this is a double issue, we are celebrating both March & April anniversaries.

Our goal has always been to create a positive, long-term relationship with all of our client communities. We are very proud to be managing all of these communities.

Thank you for allowing us to be your partner!

March

• Colony Grant Homeowners Association — 23 years
• Fairfax Village Homeowners Association — 20 years 
• Summerwood Commercial Property Association — 17 years
• Cross Creek Ranch Community Association —15 years
• Brays Forest Patio Homes Maintenance Fund — 14 years
• Lake McQueeney Las Brisas Homeowners Association — 5 years
• Encino Mesa Homeowners Association — 5 years
• Summer Lake Ranch Property Owners Association — 4 years
• Churchill Homeowners Association — 2 years
• Stillwater CommunityAssociation — 1 year 

April

• Ridgepoint Community Improvement Association — 33 years 
• Pine Forest Village Community Association — 30 years 
• Sonoma Ranch Homeowners Association — 20 years 
• Telfair Commercial Association — 17 years
• Southwinds Commercial Owners Association — 4 years
• Clayton’s Corner Community Association — 1 year

We are very pleased to announce our newest client that recently joined us! 

Loma Vista Ranch (LVR) Property Owners Association joined us in March and will be managed out of our San Antonio office.  Loma Vista Ranch is a new gated community that will be home to 329 families at full development.

Join us in welcoming Loma Vista Ranch!

March Anniversaries

Priscilla Aleman celebrated 15 years with the company last month! Priscilla is the West office receptionist and is always a friendly face to greet our visitors.  She enjoys spending time with friends, doing activities with her church, and going on mission trips around the world.

Sally Lohrke reached her 9^th anniversary with C.I.A Services in March! Sally is the fearless Team Leader for the Financial Team at the Bandera office.  From transitioning in new communities to overseeing property and income taxes, it’s impossible to list everything she does.  Sally enjoys game nights with her family and friends and adores her two grandchildren and is looking forward to the next one that is on the way!

Rose Housos of our accounting office is celebrating her 6^th anniversary! She is a top A/P – A/R clerk with numerous other duties including bank research.  Rose enjoys time with her husband and their friends – they love spending weekends at the coast for some good fishing.  

Shyamal Guha of our North Houston office celebrated his 5th anniversary and became a company stockholder! Shyamal is a Community Specialist within our customer service department.  He is incredibly polite with a very calming demeanor which makes him ideal in this arena.  Since Shyamal started working for us, he has also celebrated becoming a citizen of the United States.  

April Anniversaries

Congratulations to Rhonda Duffield on her 33^rd anniversary with C.I.A. Services! Rhonda is the Maintenance Assistant at our North Houston office. Not only does Rhonda assist in the maintenance department, but she is also our go-to person for special projects and tasks. During her personal time, Rhonda loves to cruise and spend time with her family.  She’s looking forward to her next big cruise to Hawaii!

This month, we will be celebrating the 16^th anniversary of Angela Douglas! Angela is a Vice President and oversees many areas within the company.  Angela is instrumental in all things tech as well as employee development.  She enjoys traveling anywhere and spending time with her family.  She is currently looking forward to her next Disney trip, where she must have a frequent visitor pass!

Kristen Craig will be celebrating 12 years at C.I.A Services this month! Kristen is a Vice President at our North Houston office and manages one of our master-planned communities. Kristen enjoys church worship, singing, and traveling.  This is a special year for her as her only daughter and youngest child will be graduating from high school.  They are currently working on plans for the big graduation trip.

This April will be the 10^th  anniversary for Robert Pampell. Robert is a Maintenance Coordinator out of our West Houston office.  Robert and his wife love to take small weekend road trips to interesting places.  Their dog, Poppie, loves joining; she has become an excellent road-tripper!

Christina Mann is our newest stockholder as of this month with the celebration of her 5th anniversary.  Christina is one of the HIR Coordinators out of the North Houston office.   

Christina is engaged to be married to her long-time love Robert, they have one son Micah together and raising her stepson, Theseus. They purchased a home last year and enjoy living in Baytown. 

1-Year Anniversaries

Steven Soto is celebrating his 1-year anniversary with the company this month!  Steven works as an Onsite Maintenance Tech in one of the master-planned communities we manage.  Steven does a great job keeping the community looking great and helping the residents.  When not in the community, Steven enjoys family time with his wife and their 3 kids.  He can frequently be found in their backyard in front of the barbecue grill.

April is also the 1st anniversary of Cody Carmichael. Cody is a Community Specialist in the Customer Service Department out of our North Houston office.  Cody joined the company shortly after graduating high school and has found his place with us.  When not working, he likes to spend time at the gun range, checking out the latest movies, and hanging out with friends and family.    

Congratulations to Sam Dykstra, on his 1st anniversary.  Sam works as a Community Specialist in our Customer Service Department at our North Houston Office.  Sam also joined us shortly after graduating from high school. He enjoys trying out new restaurants with friends, is a big basketball fan, and loves all things outdoors. 

Associations in Practice

Our Associations in Practice Series is an offering of short videos with very specific topics.  Our newest video is Texas 87th Legislative Session.  The 2021 session of the Texas legislature produced significant changes to the Texas Property Code affecting property owners’ associations. This video explores those changes and provides specific follow-up recommendations. 

Stay Plugged in With Webcasts

We offer each of our seminars in the form of a recorded webcast on demand for you to watch at any time! If you are interested in one of our seminars, they are available on our YouTube channel. The following seminars are now available:

• Board Member Orientation
• Practical Deed Restriction Management
• Understanding Collections and Financial Reports
• Meetings and Records - The Legal Requirements
• The Essentials of Architectural Control
• The Super-Budgeting Process
• Advanced Topics for Board Members

To watch any of the webcasts, simply click on the links above.

C.I.A. Services, Inc. has a long and proud history of providing up-to-date news on our company happenings, industry news, and association governance.  Each month, we are pleased to share with you our eNews Monthly.  Each issue is loaded with great information! 

We have broadened our social media presence to include LinkedIn and Facebook. With these additional layers of communication, you can always find the latest information about our company, employees, association management, and other related news.  

If you are not already following us, please ”Like” us on Facebook and “Follow” us on LinkedIn to stay up-to-date on all things C.I.A. Services and beyond

Every month, we issue an electronic newsletter, eNews Monthly, to keep clients informed about Association items, spotlight clients, answer frequently asked questions, and let you know what is happening with the company. Old issues of eNews Monthly are available on our Library page.