PRINTER'S NO. 3126

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

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.
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     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
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     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.
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     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
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     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,
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     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.
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     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.
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     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
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     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
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     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
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     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
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     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.
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     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.
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