2014 Legislative Roundup What's Happened, What's Happening, What Might Happen

2014 Legislative Roundup

The 2014-15 legislative session in Trenton is underway, and as always, several housing-related bills are being debated or introduced. Some impact the state’s condos and HOAs as well as its relatively small number of co-ops. Others, while they have a wider impact, still influence what happens in condos and HOA developments as well as the more common single-family homes. And don’t forget that legislative action is also brewing in the municipal arena. Looming all over this is the lingering specter of Superstorm Sandy, since recovery is still a hot issue in much of New Jersey.

A listing of general housing-oriented bills in the Assembly and state Senate as of March 13, provided by Christopher T. Mangold, supervisor of legislative information and bill room for the New Jersey Legislature’s Office of Legislative Services, showed 31 bills. Among the other housing-related topics were construction codes, finance, hotels and multiple dwellings, landlord-tenant, and, most of all, affordable housing.

Mangold also provided a list of 18 bills dealing with “housing—cooperatives, condominiums and mobile homes.” (Why mobile homes are lumped in with condos and co-ops is a mystery.) Some of these include the “Owners’ Rights and Obligations in Shared Communities Act,” (A1251) a bill that “concerns membership and management of homeowners’ associations,” (A2092) a bill requiring condo and HOAs to “provide information to federal home loan insurance providers at no cost to potential buyers” and one (A869) that requires the Division on Civil Rights and the Department of Community Affairs (DCA) to post information regarding disability accommodation rights for owners and occupants of condominiums, cooperatives, and other common interest communities.

And animal lovers will surely rejoice at A1897, which prohibits enforcement for a year of homeowners’ association bylaws forbidding domestic animals if the owner is a FEMA-designated displaced person after a declaration of emergency by the president or the governor.

Big Bills

These bills aside, what are some of the biggest housing-related issues in the state? Conor Fennessy, vice president of government affairs for the New Jersey Apartment Association (NJAA), says that for his group (which mainly consists of owners of rental units, although there is some overlap as far as issues are concerned) it is Superstorm Sandy. “[This is true] even now,” he says, “because the federal funding is still flowing, and the federal funds began to flow only about six months after Sandy. Nine counties were decimated—the entire eastern shoreline, from Bergen to Cape May.”

According to attorney Thomas C. Martin of the law firm of Nowell Amoroso Klein Bierman PA in Hackensack, former chair of the Community Associations Institute of New Jersey’s (CAI-NJ) Legislative Action Committee, “A lot of community association-related Sandy legislation deals primarily with things like having to have a generator in the clubhouse, and having a certain stock of supplies. There is also some talk about opening private community associations up to the public in the event of a natural disaster.”

While overall laws in respect to building codes and insurance regulations have been strengthened in the wake of the disaster, “Laws that affect clubhouses and common property are still up in the air,” he says.

“When you’re dealing with a community association,” Martin says, “the way it used to work is that a unit owner would not be underwater. The association would be paying the mortgage. If the owner was not paying maintenance fees, the association would go to the bank, and the bank would put the unit owner on notice. Sometimes the bank would pay the maintenance fee arrears and roll it into the mortgage.”

And, he notes “If the unit owner was not paying the mortgage and the bank foreclosed, the association could ride the bank’s coattails through the foreclosure, and there was a likelihood there would be a sufficient amount after the sheriff’s sale to pay and reimburse the maintenance fees. That does not happen anymore, except in unusual circumstances—primarily because the borrowers are over-leveraged, and the banks don’t want to lend more, in that sense,” he adds.

“With so many mortgage holders being saddled with loans that are in excess of the value of property, the entire system has been turned upside down.” Currently, says Martin, there is a movement afoot in the state legislature to make the banks pay maintenance fees during the foreclosure process, but only for 55-and-over, age-restricted associations.

Another organization that is active in the state’s housing scene is the Institute of Real Estate Management (IREM). While the group represents managers of all types of commercial and residential real estate properties, community associations are also part of the mix. Scott Dalley, senior vice president at Access Property Management and chair of IREM's New Jersey Chapter 1 Legislative Committee, says that his group is following a measure that would license managers of common-interest communities such as condos, HOAs and co-ops. Dalley says that most of the group’s members tend to favor the bill because it “gives clients a certain comfort level” with the expertise, ethics, competence and industry involvement an official licensure would represent.

In addition to Superstorm Sandy, Fennessy says another concern of the group is a growing trend of municipalities trying to raise non-tax revenue by creating fees that used to be covered under the general tax code. “Duplicative and redundant municipal registration is a perfect example,” he says. “In New Jersey, there’s statewide registration of apartment communities, but many towns are asking duplicate fees. The state charges $10 per building, but some municipalities charge $50 to $100 per apartment. Through the legislature, we’re trying to call attention to this double standard.”

Turning to the federal arena, another matter of concern to the condo/HOA community involves the new Fannie Mae/Freddie Mac lending regulations. Among these regulations are provisions stating that developments must have 10 percent or more of their funds set aside in a reserve fund, that no more than15 percent of the units can be more than a month behind in maintenance or common charges, that the budget must include provision for insurance deductibles, and more.

These rules are difficult for associations to contend with, and are making it harder to buy homes and/or get mortgages and loans. Dalley, for one, feels they will be toned down somewhat in the near future. Martin adds that “The national CAI is trying to have a realistic approach to cut through the morass of papers that have to be filed every time a loan is filed by FHA.”

Manager Licensing

CAI-NJ’s LAC has been tracking and monitoring a number of bills to make sure the voice of the membership is heard in Trenton. The LAC is currently monitoring more than 100 bills that may substantially affect how HOA communities are run. One of the bills that CAI-NJ is following closely is S1367, which calls for the licensing of community association managers. Some states like Florida and Illinois require managers to be formally licensed, but it has not been adopted in New York and New Jersey. A previous version of this bill was vetoed in January 2014 by Gov. Chris Christie, saying that it would cost the state $1.2 million to implement.

The bill sponsored by Sen. Jeff Van Drew, (D-1, Atlantic, Cape May and Cumberland), would create within the Department of Community Affairs (DCA), an entity called the Common Interest Community Manager Board. The board would be comprised of nine resident members and one member from the department in the executive branch appointed by the governor. At least six of the members had to have at least five years of experience as property managers. The purpose of the board is to administer the act, issue and renew CAM licenses, adopt a code of ethics, examine, evaluate and approve all licensing examinations and procedures, maintain records, and annually publish names and addresses of all persons licensed under the act.

FirstService Residential’s James Magid, CMCA, PCAM, LSM, chair of the New Jersey chapter’s LAC, says that the committee is currently working with the governor’s office to bring down the estimated costs to execute the legislation, “which we feel is excessively high compared to other states.”

Representing Their Interests

Now that we’ve been “introduced” to CAI-NJ, IREM and NJAA, how do these organizations and other housing-related groups represent their memberships before lawmakers?

On one level, they serve as a resource for busy legislators, providing information and expertise about the housing field and, at times, guiding them through the process. They also will communicate to the legislators whether a particular bill is beneficial and should be passed, or whether it needs change and could hurt the community. Each organization does this in a different way.

Speaking about CAI-NJ, Martin says, “You’ve got to get out there, meet with the legislators and their staff, and try to serve as a resource for the legislator about community associations. We’re not single-family homes, we’re not rental apartments—we’re talking about a community association of homes or a high-rise building. If you’re not familiar with...who owns what and who controls what, it’s very easy to get legislation drafted by a staffer or some special interest group that has a myriad of unintended—and perhaps intended—consequences.”

Fennessy, speaking for NJAA, says, “We engage bills at the committee level,” talking to committee staff, committee chairs, other legislators. “The more legislators know about our industry, the better it is for us.” NJAA, he says, also has a legislative site-visit program, in which the organization asks its members to call their local legislators and have them take a tour of a property. “Most of the legislators don’t know about the business side of what we do,” he says, and these visits help put a face on the industry and those who work and live in it.

Dalley says that the national IREM has a yearly legislative visit day in April in which members from all over the country converge on Washington D.C. They are briefed by a lobbyist, then they visit their representatives. While speaking to the representatives, they can raise not only national, but local issues as well. For dealing with Trenton, the chapter has a “call to action” in which members call their state representatives on particular issues.

As far as lobbyists are concerned, Martin says, “Lobbyists will help you gain a voice in that [the legislative] field.” It may be easier to launch communications by employing a lobbyist, he says—“not that that will change the outcome necessarily, but it serves as a navigator.”

Affordable Housing

Lobbying and advocacy aside, one issue that affects the co-op and condo community, the apartment rental community and the mainstream single-family home industry alike is that of affordable housing—especially in this era of cutting costs. The bill information provided by Mangold shows that, as of mid-March, there were no fewer than 43 bills before the legislature dealing with affordable housing—the highest single sub-category under “Housing” and far more than the number of condo- and HOA-related bills.

Several of these bills are amendments or modifications to the federal Fair Housing Act; one (A681), establishes tax credits for “qualified residential housing;” another (A2675) requires green building standards for affordable housing construction; a third (A1077) deals with the state Affordable Housing Trust Fund; and several address the problems of veterans or attempt to reform the foreclosure process.

Several bills also concern the actions of the state’s Council on Affordable Housing (COAH), an agency within the state Department of Community Affairs (DCA) that is responsible for ensuring that all 566 of the state’s municipalities provide their fair share of low- and moderate-income housing.

“On one hand,” says Martin, “the Governor’s Office is trying to sunset the Council on Affordable Housing, which grew out of the Mount Laurel decisions of the 1970s and ‘80s. On the other hand, the Mount Laurel legislation was designed, as it relates to master deeds and bylaws, to sunset after a period of time. We’re approaching the 30-year level, but a move to extend it in perpetuity is being introduced in a number of different items.”

Earlier affordable-housing rules for the council were struck down by a state Appellate Court in 2010. A ruling by the state Supreme Court in March gave the Christie administration more time to formulate new rules for the agency. As we mentioned above, Christie had tried to disband the council but was rebuffed by the court in 2013.

In general, the recession has had a definite effect on the types of bills being proposed in the legislature. For one thing, the recession gave rise to an increase in foreclosures, a situation that nobody wants (except, perhaps, for people who want to buy foreclosed properties at a low cost).

Several bills in the Assembly would establish the “New Jersey Residential Transformation Act.” According to the New Jersey State League of Municipalities (NJLM) website, “this bill would establish a statewide program to transition foreclosed property into affordable housing. Under the bill, a new corporation would be created under the New Jersey Housing and Mortgage Finance Agency (HMFA) to use funds from the state Affordable Housing Trust Fund to purchase and deed-restrict foreclosed properties to be used as affordable housing. The corporation would expire at the end 2017.”

Many, if not most, of the bills that have been introduced will never get onto the floor. Which bills will advance to the governor’s desk? Will legislation that has been endorsed by the housing organizations succeed in helping unit owners, managers and others? Keep following legislation, check legislators’ websites, keep reading the New Jersey Cooperator, and speak to representatives of condo- and HOA-related organizations. Above all, know how the process works.

Raanan Geberer is a freelance writer and a frequent contributor to The New Jersey Cooperator. Editorial Assistant Tom Lisi contributed to this article.

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