by secret ballot be used to provide common interest community associations with a similar option. Although condominiums and common interest communities are different types of associations, this is one situation in which harmonizing the statutes makes sense.
At the time of writing, HB4177 had not passed out of the House by the deadline. It appears that the bill may be dead for this session. However, the final disposition of the bill should be known by the time of publication.
Capping Budget/Assessment Increases
HB4620 amends the Common Interest Community Association Act. It eliminates the language providing for unit owner referendum rights if a budget or special assessment would result in regular and special assessments payable in the current year to exceed 115% of the sum of all regular and special assessments payable during the preceding year. In place of that language, the bill would provide that no budget or special assessment can result in the sum of all regular and special assessments payable in the current year exceeding 105% of the sum of all regular and special assessments payable during the preceding year. That would mean that the budget could not increase more than 5% over the previous year’s budget. That would also mean that if a special assessment was necessary to pay for an unexpected expenditure, if that special assessment resulted in an increase of more than 5%, then that special assessment could not be adopted. The bill, if enacted into law, would place an arbitrary limit on the board’s ability to raise the money necessary to pay common expenses, which could result in a severe financial hardship for the association. For example, a board would not be able to increase a budget to cover increased costs of insurance, utilities, and regular maintenance if such increases exceeded 5% of the previous budget. That would force an association to have a deficit budget. ILAC worked closely with the sponsor to explain the adverse consequences of the bill.
HB4620 is expected to be a dead bill. At the time of writing, the bill had not moved out of the House by the deadline to do so. Although that status is not expected to change, the final disposition of the bill should be known by the time of publication.
Reserve Studies
HB220, as amended by House Amendment No. 1, amends the Condominium Property Act and the Common Interest Community Association Act. The bill creates new sections in those Acts that will require associations to obtain a reserve study and update that reserve study every five years. That requirement will be applicable to condominium, master, and common interest community associations.
www.cai-illinois.org • 847.301.7505 | 21
In the wake of the collapse of the condominium building in Surfside, Florida in 2021, a national conversation was sparked about the structural condition and maintenance of community association buildings. Both legislators and the community association industry across the United States explored ways to ensure that community associations are adequately maintained to avoid catastrophic tragedies. As part of that national conversation, the Community Associations Institute (CAI) issued new policy statements regarding reserve studies and reserve funding. CAI now supports legislation that establishes reasonable requirements for reserve studies and reserve funding. Several states have already enacted laws that require reserve studies or reserve funding or both, including California, Colorado, Delaware, Florida, Hawaii, Maryland, Nevada, New Jersey, Oregon, Tennessee, Utah, Virginia, and Washington State.
Looking at our community association industry here in Illinois, ILAC prepared and proposed legislation that would require associations to obtain reserve studies, which resulted in the proposed bill HB220. The bill does not establish any reserve funding requirements. It only deals with reserve studies because reserve studies are important and useful tools for boards in budget and reserve planning. A reserve study includes a review of the community’s significant structural components, a review of the community’s financials, and provides a recommended plan. It provides boards with the necessary information to properly plan for future deferred maintenance and capital repair and replacement projects so that money (i.e., reserve funds) is available to fund those projects without the need for burdensome special assessments. The bill furthers CAI’s commitment to the community association housing model and protecting the owners and occupants of those associations.
At the time of writing, HB220 had passed out of the House and was moving through the Senate. It is expected to become law in 2024. The final disposition of the bill should be known by the time of publication.
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