PRINTER'S NO. 3126
No. 2188 Session of 2008
INTRODUCED BY WALKO, PETRONE, J. TAYLOR, ARGALL, BELFANTI, BRENNAN, CALTAGIRONE, CAPPELLI, COHEN, CURRY, FRANKEL, FREEMAN, GEIST, GEORGE, GINGRICH, HALUSKA, HARKINS, HENNESSEY, JOSEPHS, KOTIK, LONGIETTI, McGEEHAN, MELIO, MICOZZIE, MYERS, PRESTON, READSHAW, ROEBUCK, SAYLOR, K. SMITH, THOMAS, WANSACZ, J. WHITE, YOUNGBLOOD AND YUDICHAK, JANUARY 23, 2008
REFERRED TO COMMITTEE ON URBAN AFFAIRS, JANUARY 23, 2008
AN ACT 1 Providing for court-appointed conservators to bring residential, 2 commercial and industrial buildings into municipal code 3 compliance when owners fail to comply. 4 The General Assembly of the Commonwealth of Pennsylvania 5 hereby enacts as follows: 6 Section 1. Short title. 7 This act shall be known and may be cited as the Abandoned and 8 Blighted Property Conservatorship Act. 9 Section 2. Legislative findings and purpose. 10 The General Assembly finds and declares that: 11 (1) Pennsylvanian's older communities are important to 12 the Commonwealth's economic health by providing a focal point 13 for businesses and services and to this Commonwealth's 14 quality of life with its rich histories and diverse 15 communities. However, many older communities suffer from 16 blighted properties that have been abandoned by their owners.
1 (2) Many citizens of this Commonwealth are adversely 2 affected by abandoned and blighted residential, commercial 3 and industrial properties, including those citizens who live 4 in proximity to such substandard buildings as well as those 5 who own property in the vicinity of such buildings. 6 (3) Substandard, deteriorating and abandoned 7 residential, commercial and industrial structures are a 8 public safety threat and nuisance and their blighting effect 9 diminishes property values in the communities in which these 10 properties are located. 11 (4) If these buildings are not rehabilitated, they are 12 likely to remain abandoned and further deteriorate, resulting 13 in increased costs to the Commonwealth, municipality and 14 taxpayers to secure and ultimately demolish them. 15 (5) Providing a mechanism to transform abandoned and 16 blighted buildings into productive reuse is an opportunity 17 for communities to modernize, revitalize and grow and to 18 improve the quality of life for neighbors who are already 19 there. 20 (6) If the owner of a residential, commercial or 21 industrial building fails to maintain the property in 22 accordance with applicable municipal codes or standards of 23 public welfare or safety, it is in the best interests of the 24 Commonwealth, the municipality and the community for the 25 court, pursuant to the provisions of this act, to appoint a 26 conservator to make the necessary improvements before the 27 building deteriorates further and necessitates demolition, 28 resulting in the removal of the building from the housing 29 supply or prohibiting future productive economic use. 30 Section 3. Definitions. 20080H2188B3126 - 2 -
1 The following words and phrases when used in this act shall 2 have the meanings given to them in this section unless the 3 context clearly indicates otherwise: 4 "Building." A residential, commercial or industrial building 5 or structure and the land appurtenant thereto. 6 "Code." A building, housing, property maintenance, fire, 7 health or other public safety ordinance enacted by a 8 municipality. 9 "Competent entity." A person or entity, including a 10 governmental unit with experience in the rehabilitation of 11 residential, commercial or industrial buildings and the ability 12 to provide or obtain the necessary financing for such 13 rehabilitation. 14 "Cost of rehabilitation." Costs and expenses for 15 construction, stabilization, rehabilitation or demolition, 16 including reasonable nonconstruction costs associated with the 17 project, including, but not limited to, environmental 18 remediation, architectural, engineering and legal fees, permits, 19 financing fees and a developer's fee consistent with the 20 standards for developers' fees established by the Pennsylvania 21 Housing Finance Agency. 22 "Court." The appropriate court of common pleas. 23 "Nonprofit corporation." A nonprofit corporation that has as 24 one of its purposes community development activities, including 25 economic development or the promotion or enhancement of 26 affordable housing opportunities. 27 "Owner." The holder or holders of title to, or of a legal or 28 equitable interest in, a residential, commercial or industrial 29 building. The term shall include an heir, assign, trustee, 30 beneficiary and lessee provided the ownership interest is a 20080H2188B3126 - 3 -
1 matter of public record. 2 "Party in interest." A person or entity who has a direct and 3 immediate interest in a residential, commercial or industrial 4 building, including: 5 (1) The owner. 6 (2) A lienholder and other secured creditor of the 7 owner. 8 (3) A resident or business owner within 500 feet of the 9 building. 10 (4) A nonprofit corporation within the municipality 11 where the building is located, including a redevelopment 12 authority. 13 (5) A municipality or school district in which the 14 building in located. 15 "Public nuisance." A property that, because of physical 16 condition or use, has been declared a public nuisance in 17 accordance with the local housing, building, health, fire or 18 related code or is determined to be a public nuisance by the 19 court. 20 Section 4. Initiation of action. 21 (a) Filing of petition.--A petition for the appointment of a 22 conservator to take possession and to undertake the 23 rehabilitation of a building may be filed by a party in interest 24 in a court in the county in which the building is located. 25 (b) Contents.--The petition submitted to the court shall 26 include a concise statement of the reasons a conservator should 27 be appointed and, to the extent available to the petitioner: 28 (1) A copy of any citation charging the owner with being 29 in violation of municipal code requirements or declaring the 30 building to be a public nuisance. 20080H2188B3126 - 4 -
1 (2) A recommendation as to which person or entity should 2 be appointed conservator. 3 (3) A preliminary plan with initial cost estimates for 4 rehabilitation of the building to bring it into compliance 5 with all municipal codes and duly adopted plans for the area 6 in which the building is located and anticipated funding 7 sources. 8 (c) Notification of owner and lienholders.-- 9 (1) Upon filing the petition with the court, the 10 petitioner shall notify the current owner of the property and 11 all lienholders of the filing by registered or certified mail 12 to the last known address of each and by posting a copy of 13 the notice on the building. 14 (2) In the event the registered or certified mail is 15 returned with notation by the postal authorities that the 16 recipient refused to accept the mail, the petitioner may mail 17 a copy to the recipient at the same address by ordinary mail 18 with the return address of the petitioner appearing thereon. 19 (3) Service by ordinary mail shall be presumed complete 20 if the mail is not returned to the petitioner within 15 days 21 after mailing. 22 (4) In the event the registered or certified mail is 23 returned with the notation by the postal authorities that it 24 was unclaimed, the notice shall be personally served. 25 (5) In the event that the personal service is not able 26 to be made after two such attempts, then the petitioner shall 27 mail the petition to the recipient at the same address by 28 ordinary mail with the return address of the petitioner 29 appearing thereon with service by ordinary mail deemed 30 complete if the mail is not returned to the petitioner within 20080H2188B3126 - 5 -
1 15 days after the mailing. 2 (6) The petitioner shall also notify the owner and each 3 lienholder of the hearing date and provide notice that the 4 owner and lienholders may petition to intervene in the 5 action. 6 Section 5. Appointment of conservator. 7 (a) General rule.--The court shall act upon a petition 8 submitted by holding a hearing within 90 days of receipt of the 9 petition and rendering a decision no later than 30 days after 10 completion of the hearing. 11 (b) Intervention.--Subject to the court's discretion, a 12 party in interest may intervene in the proceeding and be heard 13 with respect to the petition, the requested relief or any other 14 matter which may come before the court in connection with the 15 proceeding. 16 (c) Hearing.--At the hearing, any party in interest shall be 17 permitted to present evidence to support or contest the 18 petition. 19 (d) Conditions for conservatorship.--If a petition is filed 20 under section 4, the court may appoint a conservator if the 21 building has not been legally occupied for at least the previous 22 12 months, has not been actively marketed during the 60 days 23 prior to the date of the petition and the court finds at least 24 two of the following: 25 (1) The building or physical structure is a public 26 nuisance. 27 (2) The building is in need of substantial 28 rehabilitation and no rehabilitation has taken place during 29 the previous 12 months. 30 (3) The building is unfit for human habitation, 20080H2188B3126 - 6 -
1 occupancy or use. 2 (4) The condition and vacancy of the building materially 3 increases the risk of fire to the building and to adjacent 4 properties. 5 (5) The building is subject to unauthorized entry 6 leading to potential health and safety hazards and: 7 (i) the owner has failed to take reasonable and 8 necessary measures to secure the building; or 9 (ii) the municipality has secured the building in 10 order to prevent such hazards after the owner has failed 11 to do so. 12 (6) The property is an attractive nuisance to children, 13 including, but not limited to, the presence of abandoned 14 wells, shafts, basements, excavations and unsafe structures. 15 (7) The presence of vermin or the accumulation of 16 debris, uncut vegetation or physical deterioration of the 17 structure or grounds has created potential health and safety 18 hazards and the owner has failed to take reasonable and 19 necessary measures to remove the hazards. 20 (8) The dilapidated appearance or other condition of the 21 building negatively affects the economic well-being of 22 residents and businesses in close proximity to the building, 23 including decreases in property value and loss of business, 24 and the owner has failed to take reasonable and necessary 25 measures to remedy appearance or the condition. 26 (e) Appointment.-- 27 (1) If the court determines after a hearing that the 28 property has met the conditions of subsection (d), the court 29 may appoint a conservator and grant such other relief as may 30 be just and appropriate. 20080H2188B3126 - 7 -
1 (2) The court may appoint a nonprofit corporation or 2 other competent entity. In appointing a conservator, the 3 court shall consider any recommendations contained in the 4 petition or otherwise presented by a party in interest. 5 (f) Conditional relief.-- 6 (1) If the court finds after a hearing that the 7 conditions for conservatorship set forth in subsection (d) 8 have been established, but the owner represents that the 9 violations or nuisance or emergency condition will be abated 10 in a reasonable period, the court may allow the owner to 11 proceed to remedy the conditions. 12 (2) If the conditions set forth in paragraph (1) have 13 been satisfied, the court shall enter an order providing 14 that, in the event that the violations or nuisance or 15 emergency conditions are not abated by the owner by a 16 specific date or that other specified remedial activities 17 have not occurred by a specific date or dates, an order 18 granting the relief requested in the petition shall be 19 entered. 20 (3) The court may also require the owner to post a bond 21 in the amount of the repair costs estimated in the petition 22 as a condition to retaining possession of the building. 23 (g) Hearing on conservator's final plan for abatement.--At 24 the time the court appoints a conservator, the court shall set a 25 date for hearing on the conservator's final plan for abatement 26 to be held within 120 days. 27 (h) Conservator's lien.--The conservator shall file a lien 28 against the property in an amount based on the estimated costs 29 to be incurred during the conservatorship. The lien amount may 30 be adjusted from time to time. 20080H2188B3126 - 8 -
1 (i) Immediate possession.--The conservator shall promptly 2 take possession of the building and other property subject to 3 the conservatorship and shall immediately be authorized to 4 exercise all powers of this act. 5 (j) Removal by court.--A conservator may be removed by the 6 court at any time upon the request of the conservator or upon a 7 showing by a party to the action that the conservator is not 8 carrying out its responsibilities under this act. 9 Section 6. Powers and duties of conservator. 10 (a) Full powers and duties.--The conservator shall have all 11 powers and duties necessary or desirable, from time to time, for 12 the efficient operation, management and improvement of the 13 building in order to bring it into compliance with all municipal 14 building and housing code requirements and to fulfill the 15 conservator's responsibilities under this act. Such powers and 16 duties shall include, but not be limited to, the power to: 17 (1) Take possession and control of the building, 18 appurtenant land and any personal property of the owner used 19 with respect to the building, including any bank or operating 20 account for the building. 21 (2) Collect outstanding accounts receivable. 22 (3) Pursue all claims or causes of action of the owner 23 with respect to the building and all other property subject 24 to the conservator. 25 (4) Contract for the repair and maintenance of the 26 building. The contracts shall be appropriately documented and 27 included in the reports and accounting which the consevator 28 is required to submit or file under the provisions of this 29 act. 30 (5) Borrow money and incur credit in accordance with 20080H2188B3126 - 9 -
1 section 8. 2 (6) Contract and pay for the maintenance and restoration 3 of utilities to the building. 4 (7) Purchase materials, goods and supplies to accomplish 5 repairs and operate the building. 6 (8) With the court's approval, enter into new rental 7 contracts and leases for a period not to exceed one year. 8 (9) Affirm, renew or enter into contracts providing for 9 insurance coverage on the building. 10 (10) Engage and pay legal, accounting, appraisal and 11 other professionals to aid the conservator in the conduct of 12 the conservatorship. 13 (11) Apply for and receive public grants or loans. 14 (12) Sell the building in accordance with section 9. 15 (13) Exercise all authority that an owner of the 16 building would have to improve, maintain and otherwise manage 17 the building. 18 (b) Affirmative duty.--While in possession of the building, 19 the conservator shall: 20 (1) Maintain, safeguard and insure the building. 21 (2) Apply all revenue generated from the building 22 consistent with the provisions of this act. 23 (3) Develop a final plan for abatement of the conditions 24 which caused the petition to be granted or, if no such 25 feasible final plan can be developed, to develop 26 alternatives, including the closing, sealing or demolition of 27 all or part of the building. 28 (4) Implement the final plan referred to in paragraph 29 (3) upon approval by the court. 30 (5) Submit a status report to the court and parties to 20080H2188B3126 - 10 -
1 the action annually or more frequently as the court may deem 2 appropriate. The status report shall include: 3 (i) A copy of any contract entered into by the 4 conservator regarding the improvement of the building. 5 (ii) An account of the disposition of all revenue 6 generated from the building. 7 (iii) An account of all expenses and improvements. 8 (iv) The status of developing and implementing the 9 final plan pursuant to this subsection. 10 (v) A description of any proposed actions to be 11 taken in the next six months to improve the building. 12 (c) Submission of final plan.-- 13 (1) The final plan referred to under subsection (b)(3) 14 shall be submitted to the court and to all parties to the 15 action. 16 (2) After notice and an opportunity for a hearing, the 17 court may amend the final plan. 18 (d) Accounting.--Upon the implementation of the final plan 19 approved by the court, the conservator shall file with the court 20 a full accounting of all income and expenditures during the 21 period of time it took to implement the final plan. 22 Section 7. Ownership of property. 23 (a) Ownership interest of conservator.--A conservator 24 appointed under section 5 shall be deemed to have an ownership 25 interest in and legal control of the property for the purposes 26 of filing plans with public agencies and boards, seeking and 27 obtaining construction permits and other approvals and 28 submitting applications for financing or other assistance to 29 public or private entities. 30 (b) Liability of owner.--Notwithstanding the appointment of 20080H2188B3126 - 11 -
1 a conservator under section 5, nothing in this act shall be 2 construed to relieve the owner of any civil or criminal 3 liability or of any obligation to pay taxes, municipal liens and 4 charges, mortgages, private liens or other fees or charges, 5 whether incurred before or after the appointment of the 6 conservator. 7 Section 8. Incurring indebtedness. 8 (a) Borrowing.--From time to time a conservator may borrow 9 money or incur indebtedness in order to cover the cost of 10 rehabilitation, improve, preserve, insure, manage or operate the 11 building or to otherwise fulfill the conservator's obligations 12 under this act. 13 (b) Liens.--In order to facilitate the borrowing of funds 14 for the rehabilitation of the building, the court may grant a 15 lien or security interest with priority over all other liens 16 with the exception of municipal or other governmental liens, 17 provided, however, that prior to granting a priority lien, the 18 court has found that: 19 (1) The conservator sought to obtain the necessary 20 financing from the senior lienholder, but the lienholder 21 declined to provide financing on reasonable terms. 22 (2) Lien priority is necessary in order to induce 23 another lender to provide financing on reasonable terms. 24 Section 9. Sale of property. 25 (a) Sale by owner or lienholder.--If a property subject to 26 conservatorship is sold by the owner or foreclosed upon by a 27 lienholder or if any interest therein is transferred, such sale, 28 foreclosure or transfer shall be subject to the conservatorship. 29 (b) Sale by conservator.--Upon application of the 30 conservator, the court may order the sale of the property if the 20080H2188B3126 - 12 -
1 court finds that: 2 (1) Notice was given to each record owner of the 3 building and each lienholder of record. 4 (2) The conservator has been in control of the building 5 for more than six months and the owner has not successfully 6 petitioned to terminate the conservatorship under section 10. 7 (c) Sale free and clear.-- 8 (1) The court may authorize the conservator to sell the 9 building free and clear of all liens, claims and 10 encumbrances, provided that the proceeds of the sale are 11 distributed pursuant to subsection (d) at settlement. 12 (2) In the event that the proceeds of the sale are 13 insufficient to pay all existing liens, claims and 14 encumbrances, the proceeds shall be distributed according to 15 the priorities set forth in subsection (d) and all unpaid 16 liens, claims or encumbrances shall be extinguished. 17 (d) Distribution.--The proceeds of the sale shall be applied 18 in accordance with the following priorities to: 19 (1) All court costs. 20 (2) Municipal or other governmental liens. 21 (3) Costs and expenses of sale. 22 (4) Principal and interest on any borrowing or 23 incurrence of indebtedness granted priority over existing 24 liens and security interest under section 8(b). 25 (5) Costs of rehabilitation and any fees and expenses 26 incurred by the conservator in connection with the sale or 27 the safeguarding, insuring or maintaining of the property. 28 (6) Valid liens and security interests in accordance 29 with their priority. 30 (7) Any unpaid obligations of the conservator. 20080H2188B3126 - 13 -
1 (8) Costs incurred by the petitioner in requesting the 2 court to place the property in conservatorship. 3 (9) The owner. 4 Section 10. Termination of conservatorship. 5 Upon request of a party in interest or the conservator, the 6 court may order the termination of the conservatorship if it 7 determines: 8 (1) the conditions that were the grounds for the 9 petition and all other code violations have been abated or 10 corrected, the obligations, expenses and improvements of the 11 conservatorship, including all fees and expenses of the 12 conservator, have been fully paid or provided for and the 13 purposes of the conservatorship have been fulfilled; 14 (2) the owner, mortgagee or lienholder has requested the 15 conservatorship be terminated and has provided adequate 16 assurances to the court that the conditions that constituted 17 grounds for the petition will be promptly abated, all 18 obligations, expenses and improvements of the 19 conservatorship, including all fees and expenses of the 20 conservator, have been fully paid or provided for and the 21 purposes of the conservatorship have been fulfilled; 22 (3) the building has been sold by the conservator and 23 the proceeds distributed in accordance with section 9(d); or 24 (4) the conservator has been unable after diligent 25 effort to present a plan that could be approved under section 26 6(b)(3) or implement a previously approved plan or, for any 27 reason, the purposes of the conservatorship cannot be 28 fulfilled. 29 Section 11. Effective date. 30 This act shall take effect in 90 days. A16L68DMS/20080H2188B3126 - 14 -