May 10, 2016 Central PA: Fundamentals of Financial Management
May 17, 2016 Manager Designations Happy Hour
The Pennsylvania Legislative Action Committee (LAC) has reviewed and taken the following positions on Bills currently pending. Click here to read our 2016 Community Associations Day at the Capitol White Paper.Click here for a list of all Bills in Pennsylvania currently being tracked as relevant to community associations. Enter your zip code in the box below and hit "Go" to contact your federal and state legislators about issues important to community associations.
CAI supports this Bill with amendments. Introduced and Referred to House Urban Affairs Committee on January 5, 2016 by Rep. Rosemary Brown (R-Monroe): This legislation assigns the investigation and mediation of complaints regarding planned communities, cooperatives, and condominiums under Title 68 (Real Property), to the Office of Attorney General’s Bureau of Consumer Protection. CAI has submitted an amendment to narrow the scope of the Bill. CAI's Legislative Action Committee will support the Bill with this amended language.
CAI Supports this Bill. Introduction and Referred to House Environmental Resources & Energy Committee on November 30, 2015 by Rep. Rosemary Brown (R-Monroe): This legislation establishes the Pennsylvania Private Dam Financial Assurance Program and the Private Dam Financial Assurance Fund. Early in 2014, the Pennsylvania Department of Environmental Protection (DEP) issued new regulations requiring private dam owners to provide a mechanism for financial responsibility over their dams, in the event of a dam breach. The deadline for the financial responsibility tool was January 1, 2016. This new requirement was in addition to new registration and dam project fees in the thousands of dollars. For the many community associations throughout Pennsylvania that own a private dam, this meant that by January 1, 2016, the community needed to have surety or collateral bonds in place. However, it has been found that adequate insurance products are simply not available, requiring community associations in some cases to put up tens of thousands of dollars in bonds. These sums are simply beyond the financial ability of many community associations who depend on their lakes for recreational amenities for owners and visitors alike. House Bill 1712 would offer financial assurance for the owners of private dams to meet the financial obligations imposed under the Dam Safety and Encroachment Act.
CAI Supports this Bill. Introduced and referred to the House Urban Affairs Committee on Monday, June 15, 2015 by Rep. Martina White (R-Philadelphia): This legislation amends the Pennsylvania Uniform Planned Community Act (UPCA) and the Uniform Condominium Act (UCA) under Title 68 (Real and Personal Property) to ensure that community associations are not affected negatively by a recent U.S. Court of Appeals decision and new federal mortgage underwriting guidelines. Details of the legislation include:
Amendments to Section 3219 (d) and Section 5219 (d) of the Title 68 Acts – Amendment of Declaration
As a result of current mortgage underwriting guidelines, a condominium might be ineligible for mortgage financing if the number of rental units in the community exceed fifty (50%) percent. A community association that is declared ineligible for financing suffers dramatically from decreasing values of the units and a chilling effect on sales. Therefore, to preserve such eligibility status, many condominium associations have adopted, or are in the process of considering, amendments to their governing declarations to limit the number of rental units to below fifty (50%) percent. Amendments to declarations governing condominiums and planned communities are authorized under the Acts upon an affirmative vote of sixty-seven (67%) percent of the unit owners. However, unanimous consent is required under the Acts if, among other things, the amendment changes the “use to which the unit is restricted.” Most practitioners agree that an amendment limiting the number of rental units permitted in a community association does not change “the use” of a unit as the unit has been, and will remain, used for residential purposes. However, to avoid any confusion on this issue and insure that associations will be able to comply with federal underwriting standards, the Acts must be amended. These amendments would make it clear that the term “uses to which any unit is restricted” does not include the leasing of units.
Amendments to Section 3315 (d) and Section 5315 (e) of the Title 68 Acts – Lien for Assessments
Condominium and homeowner associations rely on unit owner assessments to pay for various obligations imposed on them by their governing documents and the Acts. In most cases, these obligations entail not only maintenance and repair of unit components such as roofs and siding, but also infrastructure components, including roads, storm water management and utility systems. Continued payment of assessments as well as the ability to collect them, is therefore, vital to these communities. To assure continuous funding of community associations via unit owner assessments, the above-noted sections of the Acts impose upon each unit a “lien for assessments”. This statutory lien serves as an effective mechanism to promote the payment of assessments and as appropriate security in the event of a serious delinquency. However, most often, associations seek to recover unpaid assessments by obtaining a personal judgment against the delinquent unit owner(s) rather than foreclosing on the statutory lien. Such a collection procedure is much less expensive than a foreclosure action and enables the homeowner to retain ownership of his or her home. In 2014, the US Court of Appeals held that a personal judgment obtained by a community association does not preserve the statutory lien. This means that unless associations file lien foreclosure actions within three years of a delinquency, the lien for assessments is extinguished. As a result, associations will be required to resort to much more drastic, aggressive, and expensive foreclosure proceedings to assure continued financial viability. In turn, collections of unpaid assessments will become substantially more expensive and time-consuming, with the increased costs being passed on to homeowners. The proposed amendments to Section 3315(d) of the UCA and Section 5315(e) of the UPCA will solve the serious problem caused by the decision and enable associations and their members to resolve assessment delinquencies without putting ownership of homes at risk through foreclosure proceedings intended to protect the association’s lien position.
Most Recent Updates:
June 26, 2015 - Reported out of House Urban Affairs Committee
June 30, 2015 - Third consideration and final passage in the House
April 6, 2016 - Third consideration and final passage in the Senate
April 20, 2016 - Signed into law by Governor Tom Wolf
CAI Supports this Bill. Introduced and referred to the Senate Urban Affairs Committee on May 29, 2015 by Sen. Mario Scavello (R-Monroe): Senate Bill 855 would improve community planning through the inclusion of data on planned communities in county reports. The legislation follows a study by the Joint State Government Commission of the impact of planned communities, formally known as Common Interest Ownership Communities (CIOCs), on the Commonwealth and its local governments. The study uncovered an absolute lack of readily available and transparent government information on CIOCs across Pennsylvania. While it is estimated that 2.8 million Pennsylvania residents are in a CIOC and that roughly 80 percent of new housing starts since 2000 are CIOCs, the actual number and location of these communities is unknown. Senator Scavello’s legislation would amend the Municipalities Planning Code to require County Planning Commissions to include CIOC data in their currently required annual report. The tracked information, already in county-controlled databases, would include:
• CIOC name, physical locations, land area, lot size and number of units.• The presence of a mixed use development; and to the extent available,• Infrastructure, including sanitary sewer, water and storm water systems.• Dedication of roadways including roads built to specification.• Common infrastructure and recreation facilities.
CAI Supports this Bill. Introduced and referred to the House Urban Affairs Committee on May 4, 2015 by Rep. Thomas Caltagirone (D-Berks): Pursuant to the Pennsylvania Uniform Condominium Act (UCA), and the Uniform Planned Community Act (UPCA) , all amendments to a declaration must be recorded. Unfortunately, what has historically been an administrative act at minimal expense, has become a large financial burden. A number of counties have implemented a requirement to index each amendment against each parcel number in the condominium or planned community. And, for indexing amendments against each parcel number, these counties have adopted a “per parcel” fee. CAI has compiled the following examples of skyrocketing fees for recording a change to an association declaration:
|County||Association||Declaration Changes||Recording Fee|
|Bucks||Villages of Flowers Mill||Three page amendment||$6,822|
|Chester||Orchard Valley HOA||Changes to conform with state law||$1,862|
|Dauphin||Meadows of Hanover||Changes to sub associations||$8,300|
|Montgomery||Blue Bell Country Club CA||Six page amendment||$8,731|
|Montgomery||Morgandale Condo||Three page amendment to regulations||$5,738|
Many other counties around the Commonwealth have adopted similar fees. Such fees are not only absurdly high, they bear no relation to the work required to record documents. Moreover, as recording is a legal requirement, such fees could prevent associations from complying with the UCA or the UPCA. Additionally, in some instances Declaration amendments are required to comply with Federal law requirements, as in the case with FHA or FNMA regulations. CAI supports adoption of House Bill 1101 which would bring filing fees down to reasonable levels.
List of Pennsylvania Counties that are charging per parcel fees as of December, 2014.
CAI Supports these Bills. Introduced and referred to the Senate Urban Affairs & Housing Committee by Sen. Patrick Browne (R-Lehigh): In the court case of Shaffer v. Zoning Hearing Board of Chanceford Township, the township objected to the creation of a planned community and conveyance of parcels among family members. The township took the position, which was adopted by the county court and affirmed by the Commonwealth Court, that the creation of a planned community fell within the definition of land development under the Municipalities Planning Code. The PA Supreme Court affirmed the decision of the Commonwealth Court without an opinion. CAI is advocating for this legislation which will make it clear that the creation of condominium associations and planned communities out of existing land or facilities does not require municipal approval unless and until new structures or buildings are constructed within the association or planned community. This legislation will eliminate the unnecessary conflict of legal statutes to which condo associations and planned communities are now exposed and remove a potential impediment to the viability of residential and commercial associations and communities throughout the Commonwealth.
Most Recent Updates:
April 22, 2015 - Reported out of the Senate Urban Affairs & Housing Committee
June 16, 2015 - Third consideration and final passage in the Senate
June 26, 2015 - Reported out of the House Urban Affairs Committee
June 29, 2015 - Third consideration and final passage in the House
July 10, 2015 - Signed into Law by Governor Tom Wolf
CAI opposes this Bill. Senate Bill 1302 was introduced on March 26, 2014 by State Senator Folmer and referred to the Senate Urban Affairs and Housing Committee. As written, the Bill would drastically alter the Uniform Planned Community Act’s existing requirements for meeting quorums, create legislative inconsistencies regarding the adoption of budgets and imposition of fines, and create unnecessary pitfalls to hinder an associations ability to collect assessments. The legislation proposes unworkable solutions to non-existent problems. The Act authorizes an association board to levy fees (assessments) through an annual budget process. Section 5303 (b) of the Act requires that notice of the adoption of the annual budget or approval of a capital expenditure be delivered to each Unit Owner promptly after such approval; and furthermore provides that the Owners may vote to reject same. Section 5302(a)(11) of the Act requires that fines and penalties be preceded by notice and an opportunity to be heard. To require that assessments, fines and penalty amounts be approved by the membership at an annual meeting is thus unnecessary, and inconsistent with existing consumer protection provisions of the Act. Furthermore, such a change would seriously impact an association’s ability to maintain the revenue necessary to cover the expenses of managing the community.
Learn why CAI opposes this Bill.
Update: On October 8, 2014, the Senate Urban Affairs Committee unanimously voted to amend the bill and remove the provisions that CAI's PA LAC opposed, and added a provision to permit absentee, electronic and internet-based voting for association meetings. The amended Bill passed the Senate. The Bill died at the expiration of the 2013-2014 legislative session without a vote in the House.
Unless otherwise noted, the Bills listed below died with the expiration of the 2013-2014 legislative session in December, 2014.
CAI supports this Bill. On July 2, 2009, the Pennsylvania House of Representatives passed HR 350, which directed the Joint State Government Commission (JSGC) to study the impact of Common Interest Ownership Communities (CIOCs), commonly referred to as planned communities, on the Commonwealth and its local governments. The JSGC study, completed in December, 2011, provided critical data, insight and recommendations. One key finding of the JSGC study concerns the absolute lack of information on CIOCs across Pennsylvania. While it is estimated that 2.8 million PA residents are in a CIOC and that roughly 80 percent of new housing starts since 2000 are CIOCs, the actual number and location of these communities is, by large and far, unknown. House Bill 1688 would mandate the collection of data including information such as name, physical location, land area, lot size, number of units, location, infrastructure age, and articles of incorporation or other non-profit organization registration information filed with the Department of State. Introduced in the PA House by Representative Mario Scavello (R-Monroe County) on September 17, 2013.
Learn why CAI believes this Bill is necessary for community associations in Pennsylvania.
CAI supports this Bill. House Bill 551 would allow a unit owner in a common interest ownership community (planned community) to deduct 75% of his or her association assessments (or dues) from his or her personal income tax. The purpose of this legislation is to address the problem of residents of associations paying taxes for municipal services that are often not provided to them. Introduced in the PA House by Representative Mario Scavello (R-Monroe County) on February 6, 2013.
CAI's PA LAC objects to certain provisions and supports amendments to these Bills. House Bill 319 was introduced by Representative Bernie O'Neil (R-Bucks County) on January 23, 2013. Senate Bill 557 was introduced by Senator John Rafferty (R-Montgomery/Chester County) on February 22, 2013. These Bills addresses open meetings and open records in common interest ownership communities. CAI strongly agrees that the sharing of information and access to documentation are essential components of proper functioning of community association governance. However, there are laws and rules already in place that ensure openness and that unit owners have access to the records and documents of their community association.
There are two fundamental, and erroneous, assumptions which appear to be the underpinnings of this legislation: that associations are all the same and that associations are similar to municipalities. A thorough review of associations in the Commonwealth of Pennsylvania would reveal that neither assumption is accurate and the adoption of this legislation, in its current form, will likely have several unintended consequences that will adversely impact the ability of associations to function properly. Issues including the availability of meeting space, availability of minutes within a defined period of time, use of recording devices and enforcement provisions will have a chilling effect that will discourage volunteers from serving on boards of community associations. For these and other reasons, CAI seeks amendments to these Bills.
House Bill 319:
House Bill 1254:Read the text of the Bill // Bill History // Co-Sponsor Memo // View Roll Call Votes
Senate Bill 557:Read the text of the Bill // Bill History // Co-Sponsor Memo // View Roll Call Votes
Both the Uniform Planned Community Act and the Uniform Condominium Act provide that control of the board of a planned community or condo must be turned over from the developer to a unit owner-elected board no later than the sale of 75% of the units within the development, or seven years after the conveyance of the first unit in the development, whichever first occurs. CAI seeks amending language that clarifies that these Bills make no changes in the period of declarant control. The amendment supported by CAI states:
The foregoing amendments to Sections 3206(2), 3219(a), 5206(2) and 5219(a)(3) of Title 68 of the Pennsylvania Consolidated Statutes shall specifically apply only to those Sections; and shall not apply to, or alter any other Sections of Title 68 of the Pennsylvania Consolidated Statutes, including, by way of example and not limitation, Sections 3303, 3411, 5303 and 5411. All other time periods listed in Title 68 of the Pennsylvania Consolidated Statutes are therefore unaffected hereby.
The foregoing language was accepted by the Bill's sponsors and included in the current version of the Bills, therefore, CAI has no objection to the Bills.
House Bill 1122:
House Bill 1122 was adopted by both legislative chambers and signed by the Governor on July 2, 2013.