devices and the energy systems they rely upon will need to convert from natural gas or petroleum-based products to electricity. In some applications, these changes will be limited; in others, they may create significant one-time conversion costs or greater on- going service and maintenance costs. Those responsible for the long-term maintenance and financial stability of their communities would be well served by seeking expert advice on the impact that these regulatory changes will have on their community finances. (See OC View, “Are California’s Condominium Associations in Hot Water?” Nov.–Dec. 2023.)
Refrigerants and Light Bulbs Your community probably has begun to feel the impact of limitations on the production and sale of certain refrigerants and multiple types of lighting equipment. For example, SB 1206 was chaptered in September 2022, and curtails the manufacture of common refrigerant gas types, such as hydrofluorocarbons (“HFCs”) based on their assigned Global Warming Potential (“GWP”). Most pre- 2010 installed A/C systems utilize R-22 Freon refrigerant, which has been illegal to produce since 2020. Common replacement systems utilize R-410A, which has a 2,090 GWP and will not be permitted to be manufactured either starting in 2030. This means that depending on the availability of recycled older refrigerant gas and parts, the above phase out dates could significantly impact the planned life of A/C units in a community’s reserve studies. (See OC View, “Your Association and Member-Owned HVACs are almost Obsolete,” September/October 2023 issue.)
Starting in 2024, AB 2208 prohibited the sale of mercury-containing lighting, specifically certain types of fluorescent and compact fluorescent lamps. Screw-in or bayonet-based lamps and pin-based and linear fluorescent lamps are prohibited. Associations should already be in the process of trying to convert plug-in and screw-in CFLs to LEDs and engage electricians to replace other fluorescent lamps with new LED fixtures. The simplest plug-and-play-type LED lamps become more cost-effective when buying in bulk. (See OC View, “What Do You Mean, ‘I Can’t Buy a Replacement CFL?’” November/December 2023 issue.)
As of the spring of 2025, the phase-out of high Global Warming Potential (GWP) refrigerants
is underway, affecting the
maintenance and replacement of HVAC systems. Additionally, the ban on specified mercury-containing lamps is in effect. Associations that have not assessed their current equipment
and developed and implemented plans for necessary upgrades to comply with these regulations will be competing with other homeowners, businesses, and communities that also failed to get ahead of the curve. The impact on an association’s budget could be substantial, as these regulations may require the replacement of heating and air-conditioning equipment, light fixtures, service lines, utility electrical panels, and possibly an upgrade to the community’s electrical service capacity from the power company. All of which would require significant financial investment from association members.
Solar Power continues to be a popular alternative for some communities despite California Public Utility Commission changes in Net Metering having affected the cost to owners of solar power photovoltaic systems.
In circumstances where homeowners have exclusive use common area available for application of panels, the usage rate is high. In apartment or townhouse style properties, where installation of solar panels may be limited, the demand may be limited by the available common area. Homeowner leaders and community management should consult with legal counsel, insurance brokers, and qualified, licensed service providers to determine the best course of action for your specific community.
Financial Implications CAI updated its Reserve Study Standards of Practice (SOP) in 2023. The updated standards included emphasis on 30+ Useful Life expectancy components, such as potable plumbing systems or elevator modernizations that may have an extended life expectancy, but not an indefinite life expectancy. The inclusion of these long-life components helps to ensure the community is funding all its assets over the life span of the equipment and not just requiring expenses to be shouldered by the ownership group at the time of replacement.
Additionally, the updated standards recognize the need for non-physical items to be included in the component inventory. These might include structural inspections, such as the Exterior Elevated Elements Inspections required by Civil Code § 5551, also known as SB 326, the Balcony Bill, which are now required to be conducted at least once every nine years. Other non- physical items that may now meet the definition of a component in the updated SOP include reoccurring structural or geotechnical reviews, the creation and regular updating of a community maintenance manuals and activity logs, and (potentially) necessary amendments or restating of the CC&Rs. However, boards should consult their legal counsel about whether they are able to use reserve funds for these types of services. Including such updated information in an association’s reserve studies and component inventories will help create more awareness by the board and members of various component responsibilities and the services necessary to properly maintain the community and funding required across the component lifecycle.
Given the complexity and evolving nature of the above regulations, associations should engage their professional experts (legal counsel, licensed engineers, and qualified reserve analysts) to ensure that they are navigating compliance effectively. Boards should also keep their membership regularly informed about ongoing (and additional upcoming) changes so that there can be collective preparedness for the inevitable impact that these issues will continue to have on communities.
While personal opinions may vary as to the value of these environmentally-based changes,
it is undisputed that these
changes will have a significant impact on how your community maintains its assets and amenities. Homeowner leaders and community managers should continue to educate themselves and their members about how the above regulations will impact their community, so that they can be better prepared for the inevitable changes that have occurred and are still coming.
www.caioc.org
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