LEGISLATIVE UPDATE

APRIL 2005

by Mike Pesce, PCAM

Many of you have read about pending and conflicting legislation concerning the way community associations are operated. As you may know, I have long been active on the Legislature Action Committee of the Community Associations Institute (CAI). Accordingly, I thought it would be helpful to provide you with information on these major bills, and to offer the position of CAI (and not coincidentally, me) on both.

Specifically, CAI supports S2344 in the Senate (sponsored by Senators Doria & Asselta) and A3855 in the Assembly (sponsored by Assemblymen Caraballo & Biondi) and strongly opposes S2016 in the Senate (sponsored by Senators Turner & Rice) and A3988 in the Assembly (sponsored by Assemblymen Chiappone and Bateman). Highlights of these two (2) bills are enclosed.

By way of background, S2344/A3855 was initiated by CAI approximately eight (8) years ago, to modernize the legislature framework governing associations and to make these laws applicable to all types of associations (as many now apply only to condos). Over the years, this bill has been revised to incorporate reforms intended to address some acknowledged problems in a minority of associations, covering issues such as competitive bidding, election oversight, disclosure of records and alternative dispute resolution. Many of these reforms were negotiated with the New Jersey Department of Community Affairs (the DCA), which would oversee association operations under both bills. Thus, S2344/A3855 represents a compromise bill, balancing needed reforms with the need of associations to operate efficiently and, as importantly, to encourage good people to be willing to volunteer and serve on Boards.

S2016/A3988, on the other hand, represents a radical approach to these same topics, emanating from a viewpoint that the leaders of associations cannot be trusted to govern fairly. Accordingly, that bill would impose an absolute cap on annual maintenance fee increases (of 3% over the CPI), incapable of being overridden, even by a homeowner vote, for such issues as excess snow removal costs, escalating insurance premiums, etc. It would also impose a $6 per unit per year fee/tax on all association units, to be devoted not only to overseeing association operations, but also to fund the subsidy of affordable housing units in associations and Rutgers University (To be fair, S2344/A3855 also has a fee, to support DCA oversight only, averaging less that $1 per home per year). As a final example, S2016/A3988 would permit unit owners to secretly tape association meetings and subject Board members to personal fines and penalties if found to be in violation of governing statutes or regs.

CAI is asking for help in supporting S2344/A3855 and opposing S2016/A3988 and has prepared the enclosed sample letters and names/addresses of influential legislators. Original letters are also encouraged. Further information on these bills can also be obtained on CAI’s New Jersey website (www.cainj.com). CAI is also planning a series of educational town meetings across the state over the next several months which will be very valuable. That schedule will also be on the website. Finally, copies of the bills themselves (which are about 100 pages each ) can be downloaded from the New Jersey Legislative website (www.njleg.state.nj.us).

I hope this information is helpful and encourage you to get involved. Your CMC property manager attended a seminar two (2) weeks ago and is also knowledgeable about these bills. Please also feel free to call me with any comments or questions.