Regular Session 2017-2018 House Bill 1430 P.N. 1816

PRINTER'S NO. 1816

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1430

Session of

2017

INTRODUCED BY TAYLOR, FREEMAN, MILLARD, DRISCOLL, DAVIS, JAMES,

W. KELLER, DAY, V. BROWN, O'BRIEN, SOLOMON, READSHAW,

NEILSON, McCLINTON, BIZZARRO, A. HARRIS AND DeLUCA,

MAY 23, 2017

REFERRED TO COMMITTEE ON URBAN AFFAIRS, MAY 23, 2017

AN ACT

Amending the act of November 26, 2008 (P.L.1672, No.135),

entitled "An act providing for court-appointed conservators

to bring residential, commercial and industrial buildings

into municipal code compliance when owners fail to comply,"

further providing for definitions, for initiation of action,

for appointment of conservator, for powers and duties of

conservator, for incurring indebtedness and for sale of

property.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Sections 3, 4(e), 5, 6(a), 8(a) and 9(d)(4.1) of

the act of November 26, 2008 (P.L.1672, No.135), known as the

Abandoned and Blighted Property Conservatorship Act, are amended

to read:

Section 3. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Abandoned property." Any property that meets the

requirements of conditions for conservatorship as provided in

section 5(d).

"Actively marketed." A "for sale" sign has been placed on

the property with accurate contact information and the owner has

done at least one of the following:

(1) engaged the services of a licensee under the act of

February 19, 1980 (P.L.15, No.9), known as the Real Estate

Licensing and Registration Act, to place the property in a

Multiple Listing Service or otherwise market the property;

(2) placed weekly or more frequent advertisements in

print or electronic media; or

(3) distributed printed advertisements.

"Building." A residential, commercial or industrial building

or structure and the land appurtenant thereto, including a

vacant lot on which a building has been demolished.

"Code." A building, housing, property maintenance, fire,

health or other public safety ordinance enacted by a

municipality.

"Competent entity." A person or entity, including a

governmental unit with experience in the rehabilitation of

residential, commercial or industrial buildings and the ability

to provide or obtain the necessary financing for such

rehabilitation.

"Conservator's or developer's fee." A fee equal to the

greatest of the following:

(1) an amount equal to $2,500, adjusted upward by 2%

each year;

[(2) a 20% markup of the costs and expenses for

construction, stabilization, rehabilitation, maintenance and

operation or demolition as described in the proposed

conservator's plan and any subsequent plan approved by the

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court; or]

(2.1) a 20% markup of the actual and final costs and

expenses of construction, stabilization, rehabilitation,

maintenance, operation and demolition as performed by the

conservator;

(2.2) a 20% markup of the estimated costs and expenses

of construction, stabilization, rehabilitation, maintenance,

operation and demolition as provided by the conservator or

proposed conservator's plan or, where the conservator or

proposed conservator has proposed several plans, the plan

recommending the greater scope of remediation; or

(3) twenty percent of the sale price of the property or

an appraisal obtained by the conservator.

"Costs of rehabilitation." Costs and expenses for

construction, stabilization, rehabilitation, maintenance and

operation or demolition, including reasonable nonconstruction

costs associated with the project, including, but not limited

to, environmental remediation, architectural, engineering and

legal fees and costs, permits, financing fees and a

conservator's or developer's fee.

"Court." The appropriate court of common pleas.

"Historic property." A property which is listed on the

National Register of Historic Places or is a contributing

property in a national register historic district or is located

in a local government ordinance historic district.

"Immediate family." A parent, spouse, child, brother or

sister.

"Interrelated function." Includes functions not limited to

storage, parking, farming or use as a side-yard.

"Legal occupation." A condition under which a property or

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structure is occupied without being designated hazardous and

unsafe by the Commonwealth or municipality or is in compliance

with the habitability standards of the municipality.

"Nonprofit corporation." A nonprofit corporation that has,

as one of its purposes, remediation of blight, community

development activities, including economic development, historic

preservation or the promotion or enhancement of affordable

housing opportunities.

"Owner." The holder or holders of title to, or of a legal or

equitable interest in, a residential, commercial or industrial

building. The term shall include an heir, assignee, trustee,

beneficiary and lessee provided the ownership interest is a

matter of public record.

"Party in interest." A person or entity who has a direct and

immediate interest in a residential, commercial or industrial

building, including:

(1) The owner.

(2) A lienholder and other secured creditor of the

owner.

(3) A resident or business owner within 2,000 feet of

the building.

(4) A nonprofit corporation, including a redevelopment

authority, which:

(i) except as set forth in subparagraph (ii),[ is

located] has a residence, office, primary mailing address

or registered address with the Bureau of Corporations and

Charitable Organizations of the Department of State in

the municipality where the building is located; and

(ii) for a building located in a city of the first

class, [is located] has a residence, office, primary

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mailing address or registered address with the Bureau of

Corporations and Charitable Organizations of the

Department of State in the city and has participated in a

current or previous project within a five-mile radius of

the location of the building.

(5) A municipality or school district in which the

building is located.

"Pending foreclosure." During the pendency of a foreclosure

action, action for deficiency judgment, or ejectment action and

for two years thereafter.

"Public nuisance." A property that, because of physical

condition or use, has been declared by the appropriate official

a public nuisance in accordance with the local housing,

building, health, fire or related code or is determined to be a

public nuisance by the court.

"Substantial rehabilitation." Repairs to the building where:

(1) the cost of repairs, replacements and improvements

exceeds 15% of the property's value after completion of all

repairs, replacements and improvements; or

(2) more than one major building component is being

replaced. Major building components include:

(i) roof structures;

(ii) ceilings;

(iii) wall or floor structures;

(iv) foundations;

(v) plumbing systems;

(vi) heating and air conditioning systems; and

(vii) electrical systems.

Section 4. Initiation of action.

* * *

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(e) Adjacent properties.--The petition may include one or

more adjacent properties in a single action if:

(1) the property that is the primary subject of the

action is owned by the same owner as the adjacent property;

and

(2) either of the following apply:

(i) the properties are or were used for a single or

interrelated function[.]; or

(ii) the adjacent properties independently meet the

conditions for appointment of a conservator under this

act.

Section 5. Appointment of conservator.

(a) General rule.--The court shall act upon a petition

submitted by holding a hearing within 60 days of receipt of the

petition and by rendering a decision no later than 30 days after

completion of the hearing. The court may hold a call of the list

every 30 days. At that time, if service has been made upon all

required parties, the court shall assign a hearing date to the

matter to be heard within 60 days.

(a.1) Interior property inspection.--The court shall act

upon a request submitted by a party of interest to grant an

interior property inspection within 30 days, allowing all

parties in interest, in coordination with up to three experts

per party, to remove and replace any securing mechanism and

enter the property for a reasonable amount of time to evaluate

the interior condition, upon a showing that:

(1) the party in interest has made a prima facie showing

of entitlement to the relief requested; and

(2) on the face of the petition, at least one of the

conditions specified in subsection (d)(5) has been met.

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(b) Intervention.--A party in interest may intervene in the

proceeding and be heard with respect to the petition, the

requested relief or any other matter which may come before the

court in connection with the proceeding. The opinion or

recommendation of an intervenor may not supersede that of the

conservator.

(1) At the hearing, any party in interest shall be

permitted to present evidence to support or contest the

petition, including, but not limited to, the schedule of

encumbrances.

(2) The court may bifurcate the hearing to first

consider whether the property meets the conditions specified

in subsection (d) and, upon successful demonstration,

consider the appointment of a conservator under subsection

(f).

(d) Conditions for conservatorship.--If a petition is filed

under section 4, the court may appoint a conservator if all of

the following apply as of the date of filing:

(1) The building has not been legally occupied for at

least the previous 12 months.

(2) The owner fails to present compelling evidence that

he has actively marketed the property during the preceding

60-day period and made a good faith effort to sell the

property at a price which reflects the circumstances and

market conditions.

(3) The property is not subject to a pending foreclosure

action by an individual or nongovernmental entity.

(4) The current owner fails to present sufficient

evidence that he has acquired the property within the

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preceding six months. The evidence shall not include

instances where the prior owner is a member of the immediate

family of the current owner, unless the transfer of title

results from the death of the prior owner, or where the

current or prior owner is a corporation, partnership or other

entity in which either owner or the immediate family of

either owner has an interest in excess of 5%.

(5) The court finds at least three of the following:

(i) The building or physical structure is a public

nuisance.

(ii) The building is in need of substantial

rehabilitation and no substantial rehabilitation in

accordance with the municipality's property maintenance

code has taken place during the previous 12 months.

(iii) The building is unfit for human habitation,

occupancy or legal use.

(iv) The condition and vacancy of the building

materially increase the risk of fire to the building and

to adjacent properties.

(v) The building is subject to unauthorized entry

[leading to potential health and safety hazards] and one

of the following applies:

(A) The owner has failed to take reasonable and

necessary measures to secure the building.

(B) The municipality has secured the building in

order to prevent such hazards after the owner has

failed to do so.

(vi) The property is an attractive nuisance to

children, including, but not limited to, the presence of

abandoned wells, shafts, basements, excavations and

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unsafe structures.

(vii) The presence of vermin [or the accumulation of

debris, uncut vegetation or physical deterioration of the

structure or grounds] has created potential health and

safety hazards and the owner has failed to take

reasonable and necessary measures to remove the hazards.

(vii.1) The accumulation of garbage, debris or

vegetation has created a potential health and safety

hazard and the owner has failed to take reasonable and

necessary measures to remove the hazard.

(vii.2) The physical deterioration of the structure

has created a potential health and safety hazard and the

owner has failed to take reasonable and necessary

measures to remove the hazard.

(viii) The dilapidated appearance or other condition

of the building negatively affects the economic well-

being of residents and businesses in close proximity to

the building, including decreases in property value

[and], the ability to sell or rent nearby properties, the

ability to obtain insurance or loss of business, and the

owner has failed to take reasonable and necessary

measures to remedy the appearance or the condition.

(ix) The property is an attractive nuisance for

illicit purposes, including prostitution, graffiti, drug

use and vagrancy.

(x) The property, if a vacant lot with no building

currently erected on the lot, has received State or

municipal code violations for a period of at least three

years.

(e) Appointment.--

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(1) If the court determines after a hearing that the

property has met the conditions of subsection (d), the court

may appoint a conservator, certify the schedule of

encumbrances and grant such other relief as may be just and

appropriate. The certification shall be binding with respect

to all mortgages, liens and encumbrances, including municipal

liens, arising or attaching to the property prior to the date

of the petition.

(2) The court shall give first consideration for

appointment as conservator to the most senior nongovernmental

lienholder on the property.

(3) In the event the senior lienholder is found to be

not competent or declines the appointment, the court may

appoint a nonprofit corporation or other competent entity. If

the property is located in a city of the first class, the

nonprofit corporation or entity must [be located] have a

residence, office, primary mailing address or registered

address with the Bureau of Corporations and Charitable

Organizations of the Department of State in the city and must

[have participated] participate in a project within a five-

mile radius of the location of the property. In appointing a

conservator, the court shall:

(i) consider any recommendations contained in the

petition or otherwise presented by a party in interest;

and

(ii) give preference to the appointment of a

nonprofit corporation or governmental unit over an

individual.

(f) Conditional relief.--

(1) [If the court finds after a hearing that the

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conditions for conservatorship set forth in subsection (d)

have been established, but the owner represents that the

conditions, violations or nuisance or emergency condition

will be abated in a reasonable period, the court may allow

the owner to proceed to remedy the conditions.] Should the

owner elect conditional relief under this section, the court

may allow the owner to sell the property or remediate the

conditions of the property to a standard not lesser in scope

than the proposed conservator's plan.

(2) [If the conditions set forth in paragraph (1) have

been satisfied,] Should the owner elect conditional relief

for remediation of the conditions of the property, the court

shall enter an order providing that, in the event that the

violations or nuisance or emergency conditions are not abated

by the owner by a specific date or that other specified

remedial activities have not occurred by a specific date or

dates, an order granting the relief requested in the petition

shall be entered.

(3) The court shall also require the owner to post a

bond in the amount of the repair costs estimated in the

[petition] proposed conservator's proposed plan recommending

the greater scope of remediation as a condition to retaining

possession of the building.

(3.1) The court shall require the owner electing

conditional relief under this subsection and intending to

sell the property to present to the court for approval a

buyer who intends to remediate the blighted conditions within

a reasonable time.

[(4) Upon a finding that:

(i) the petition states conditions for

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conservatorship; or

(ii) the owner elects to either:

(A) remedy all violations and nuisance or

emergency conditions; or

(B) sell the property subject to the

conservatorship,

the owner shall reimburse the petitioner for all costs

incurred by the petitioner in preparing and filing the

petition in accordance with the requirements of section 4 and

the conservator's or developer's fee.]

(4) After a hearing and upon a finding that the

conditions for appointment of a conservator have been met,

the owner shall reimburse the petitioner for all costs of

rehabilitation incurred by the petitioner.

(5) If the owner elects to proceed prior to a hearing on

the merits by conditional relief under this section, the

owner shall reimburse the petitioner for all costs of

rehabilitation incurred by the petitioner and one-half of the

conservator's or developer's fee.

(g) Conservator's lien.--The conservator may file a lien

against the property in an amount based on the costs incurred

during the conservatorship, including, but not limited to, costs

of rehabilitation, attorney fees and court costs. The lien

amount may be adjusted from time to time.

(h) Immediate possession.--The conservator shall promptly

take possession of the building and other property subject to

the conservatorship and shall immediately be authorized to

exercise all powers of this act.

(i) Removal by court.--A conservator may be removed by the

court at any time upon the request of the conservator or upon a

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showing by a party to the action that the conservator is not

carrying out its responsibilities under this act.

Section 6. Powers and duties of conservator.

(a) Full powers and duties.--The conservator shall have all

powers and duties necessary or desirable, from time to time, for

the efficient operation, management and improvement of the

building in order to bring it into compliance with all municipal

building and housing code requirements and to fulfill the

conservator's responsibilities under this act. Such powers and

duties, which shall not require court approval unless expressly

provided in this subsection, shall include, but not be limited

to, the power to:

(1) Take possession and control of the building,

appurtenant land and any personal property of the owner used

with respect to the building, including any bank or operating

account for the building.

(2) Collect outstanding accounts receivable.

(3) Pursue all claims or causes of action of the owner

with respect to the building and all other property subject

to the conservator.

(4) Contract for the repair and maintenance of the

building. The contracts shall be appropriately documented and

included in the reports and accounting which the conservator

is required to submit or file under the provisions of this

act. The conservator shall make a reasonable effort to

solicit three bids for contracts valued at more than $25,000,

except when the contractor or developer provides or obtains

financing for the conservatorship.

(5) Borrow money and incur credit in accordance with

section 8.

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(6) Contract and pay for the maintenance and restoration

of utilities to the building.

(7) Purchase materials, goods and supplies to accomplish

repairs and operate the building.

(8) With the court's approval, enter into new rental

contracts and leases for a period not to exceed one year.

(9) Affirm, renew or enter into contracts providing for

insurance coverage on the building.

(10) Engage and pay legal, accounting, appraisal and

other professionals to aid the conservator in the conduct of

the conservatorship.

(11) When the building has been designated a historic

property, consult with the municipality's historical

commission or board of historical and architectural review, a

local historic preservation organization or, in the absence

thereof, the Pennsylvania Historical and Museum Commission

for recommendations on preserving the property's historic

character.

(12) Apply for and receive public grants or loans.

(13) Sell the building in accordance with section 9.

(14) Exercise all authority that an owner of the

building would have to improve, maintain and otherwise manage

the building, including the extent to which rehabilitation

will satisfy the goals of the conservatorship.

* * *

Section 8. Incurring indebtedness.

(a) Borrowing.--From time to time, a conservator may borrow

money or incur indebtedness in order to cover the costs of

rehabilitation or to otherwise fulfill the conservator's

obligations under this act and the preliminary or final plan.

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* * *

Section 9. Sale of property.

* * *

(d) Distribution.--The proceeds of the sale shall be applied

in accordance with the following priorities to:

* * *

(4.1) Costs of rehabilitation incurred by the petitioner

[in preparing and filing the petition in accordance with the

requirements of section 4].

* * *

Section 2. This act shall take effect in 60 days.

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