Senator wrote HOA bills while working for HOA

By David McGrath Schwartz

Sunday, April 3, 2011 | 2:01 a.m.

Sen. Allison Copening has introduced seven bills to regulate homeowners associations this session, the product of nearly 18 months working with industry experts.

During hours of hearings on her bills over six weeks, Copening, D-Las Vegas, did not disclose that she is also employed by an HOA. On Friday, after the Las Vegas Sun contacted her with questions about the bills, she disclosed that she works for a homeowners association for Del Webb, a subsidiary of one of the country’s largest builders, which has taken an active role in shaping the legislation she introduced.

Randy Watkins, executive director/vice president of Del Webb Community Management, who is Copening’s employer, was on a working group that helped develop the legislation. Copening began working for Del Webb in September as a lifestyle director for a community in Henderson.

“I needed a full-time job,” she said of the $40,000-a-year position. “They were kind enough to offer me a job.”

Copening’s job and her legislation have placed her at the center of a fight between real estate investors and collection agencies over fees those agencies charge homeowners who haven’t paid their dues.

Investors say collection agencies hired by the HOAs are gouging homebuyers — including families purchasing first homes — often for several thousand dollars to cover a debt of a few hundred.

Multiplied by the hundreds of thousands of homes in foreclosure — 276,721 houses have been issued notices of default in Nevada since 2007, according to foreclosure tracker RealtyTrac — the fees at issue in the legislation amount to huge sums.

But homeowners associations, such those under the Del Webb umbrella, argue the fees need to be high enough so collection agencies have an incentive to take on the task of collecting the debt.

•••

Nevada’s citizen Legislature makes conflicts between governance and day jobs inevitable. Lawmakers receive a salary of $8,373.60 per session, plus a per diem during the 120-day session that totals $18,480.

Still, lawmakers typically disclose relationships that could be perceived as conflicts before votes.

Copening, however, took her job while she was working on the home-owners association legislation.

With the Legislature in session, Copening works part time, on weekends, making about $600 a month, she said. She plans events at the Club at Madeira Canyon in Henderson and writes a community newsletter.

Copening disclosed her employment during a committee hearing on an unrelated bill on Feb. 15, after a citizen asked the committee if anyone was employed by an HOA board, she said.

Copening was director of public affairs for Pulte/Del Webb from 2002 to 2006, and served on the Sun City Aliante homeowners association’s board. She was elected to the Senate in 2008.

After the 2009 legislative session, she decided to gather industry insiders to develop legislation. The resulting bills, she said, were not influenced by her employment.

Watkins said her elected office and work on the legislation had nothing to do with her being hired. “Absolutely not,” he said.

He praised Copening’s work on the legislation. But homeowners associations, which regulate many quality-of-life aspects in their communities, often stir strong emotions, and Copening’s legislation has critics. The most controversial is Senate Bill 243, which would limit fees charged by collection agencies at $1,800 per home, plus some costs.

A group of investors argues the bill is falsely being sold as a cap on such costs.

Others said Copening’s employment is a conflict of interest and that she favors the industry that pays her salary.

Copening’s bills “are anti-homeowner and homeowner-unfriendly,” said Jonathan Friedrich, a Las Vegas resident and homeowners association activist. Friedrich said he has filed a complaint against Copening with the state Ethics Commission.

(It’s unclear if the commission would have jurisdiction; a state Supreme Court ruling found the commission can’t judge legislators performing a primary function. The Senate has a rule governing ethics, and a committee that could hear complaints against a senator. No such complaint has been filed.)

Stephanie Cooper-Herdman, a Las Vegas attorney who handles collections, said Copening’s involvement with the legislation while being employed by a homeowners association “is very disingenuous.”

When she learned of it, she said, “I about lost my lunch.”

During a hearing on the bill to impose caps on collection fees, Cooper-Herdman testified she charges a $1,200 flat fee per house that is going through foreclosure. She called the $1,800 cap “excessive.”

She also the bill is “not a real cap. There are too many loopholes.”

Cooper-Herdman supports another bill aimed at capping fees, Senate Bill 195. She testified in favor of the measure, proposed by Sen. Elizabeth Halseth, R-Las Vegas, which would limit collections at $1,475, including costs.

But Copening said the criticism is coming from a minority of unhappy homeowners.

Her bill is based on a year of work by the Common Interest Community and Condominium Hotels Commission. She said she listened to all sides and tried to balance the interests of homeowners, collection agencies and investors.

“HOAs will go broke if a collection agency doesn’t think it will be paid at the end,” Copening said in an interview. “That being said, (collection agencies) have overcharged.”

When she introduced the bill, she said investors buying up the foreclosed homes were trying to squeeze collection agencies. “Nobody is happy with the way the collection companies conducted their business these past few years, but we need to ensure that we do not put these companies out of business resulting in more Nevadans in the unemployment line,” she said.

In February, when Copening’s first HOA bill was introduced in the Senate Judiciary Committee, Watkins gave senators and members of the public an overview of HOAs. Studies find homeowners are overwhelmingly happy with their HOAs, he said.

Copening didn’t disclose at the time that Watkins was her boss.

On Friday, during a hearing on Halseth’s competing bill, Copening disclosed her employment. The legal branch of the Legislative Counsel Bureau signed off on her accepting the HOA job on Sept. 27, she said.

•••

Although the collapse of Nevada’s housing market resulted in an unprecedented loss of wealth for property owners, it has also been a moneymaking opportunity for investors to buy homes at deep discounts and rent or flip them.

Two such investors, Rutt Premsrirut and Rick Korbel, have formed the Concerned Homeowners Association Members Political Action Committee, or CHAMP, which is lobbying against Copening’s bill.

Collection agencies have also profited. Homeowners going through foreclosure stop paying HOA fees and their association eventually turns over that debt to a collection agency. When the home sells, the buyer is responsible to pay the back dues, plus collection fees.

Investors have shown lawmakers letters from collection agencies demanding thousands of dollars to cover dues totaling a few hundred dollars.

Chris Ferrari, a lobbyist for CHAMP, said it’s often at the last minute that a buyer, whether an investor or first-time buyer, learns of the thousands of dollars in liens placed by the association and collection agencies.

The 2009 Legislature recognized the problem and passed legislation that capped the amount HOAs could collect from a homeowner at nine months of dues.

The Legislature directed the Common Interest Communities and Condominium Hotels Commission, a regulatory body, to adopt regulations limiting fees imposed by collection agencies. That regulation, developed last year, would have set a fee cap of $1,950 per house for collection agencies.

But it never took effect. When Gov. Brian Sandoval came into office, he issued a moratorium on new regulation.

At the same time the commission was coming up with its regulation, Copening formed a working group of about 30 people from the industry, including HOA managers and board members, attorneys and collection agencies, to work on what would become her seven bills. She told the group to aim for consensus, but unanimity was not necessary. Disagreements would be noted when the bills were presented to lawmakers, she said.

They were all experts and every perspective was represented, she said. “In the homeowner association world, these were not friends. They were natural adversaries. We were going to have a good debate.”

The steering committee included Michael Buckley, an attorney at law firm Jones Vargas, with clients who are developers. Buckley is also chairman of the Common Interest Communities and Condominium Hotels Commission.

“The fact that the process was opened to a large group of people is great,” Buckley said. “Sen. Copening had the right idea to get as much input, to get as many ideas as she can through a well-thought-out process.”

Watkins sat on the group’s steering committee. He said he didn’t want Copening’s collection bill to go to the Legislature. Rather it should be passed as a regulation, which could be tweaked more often than every two years, when the Legislature meets. He was unsure about capping fees anyway.

“You let the fair market take care of it,” Watkins said. “Those associations that pay too much ... will migrate to other services. It would not make sense to stay with (a collection agency) that charges twice as much.” His reasoning: The higher the fee, the harder it would be for new buyers to close escrow.

Copening said, like her boss, she now supports pulling her bills and asking the Legislative Commission to pass a regulation setting a collections cap of $1,950, plus costs.

“This is a heated issue,” she said. “If the Legislature makes a mistake because of a lack of knowledge and hurts the HOAs, it can’t be fixed for two years.”

Copening said fellow lawmakers warned her not to get involved in legislation governing HOAs.

They said “this would bring me nothing but grief, as there are a handful of vocal anti-HOA people who dislike legislators who don’t buy into their ideas,” she wrote in an email. “Most people enjoy living in an HOA. I do, despite the occasional letter I get because of weeds in my yard!”