This post highlights Pennsylvania HOA reform legislation under consideration for CIOCs. (Homeowners, condominiums, and cooperatives) in the 2023-2024 session. Two of the bills have been filed following the Joint State Government Commission’s March 2023 report of the state of Common Interest Ownership Communities (CIOCs).
By Deborah Goonan, Independent American Communities deborahgoonan@gmail.com
JSGC recommends new PA HOA reform legislation in its second report on CIOCs
As established by state House Resolution in 2021, the Joint State Government Commission (JSGC, hereinafter referred to as the “Commission”), conducted its second study of, and published its report on Common Interest Ownership Communities in March 2023.
According to its mission statement, the JSGC conducts “non-partisan, bicameral research and policy development agency for the General Assembly of Pennsylvania.”
The Commission has a fourteen-member Executive Committee of state leaders from the House and Senate (7 members from each).
By Resolution in 2009, the Commission filed a a report of HOAs (CIOCs) in 2011. The House renewed that resolution ten years later. The Commission submitted its most recent report to the Governor in March 2023.
Unfortunately, the state has yet to address any of the HOA problems identified in 2011 report. As stated in the preface to the 2023 report:
Staff found the same obstacles that existed for the 2011 report, e.g., there is no official count of CIOCs in the Commonwealth, nor are there data on the number of people living in CIOCs or their tax status. Nonetheless, staff analysis resulted to four actionable recommendations for the General Assembly’s consideration. Recommendations include establishing a CIOC registry, requiring pre-sale disclosure of the existence of owners’ associations, establishing reserve accounts and conducting audits, and consideration of the Uniform Common Interest Ownership Act.
JSGC report on CIOCs, March 2023
I’ll explain the Commission’s recommendations in a bit more detail.
No one knows exactly how many HOAs exist in the state of Pennsylvania
The Commission attempted to create a list of all CIOCs (HOAs, condo and co-op associations) in the Commonwealth by surveying County governments. However, only 23 out of 69 Counties responded to the survey. That’s because most counties do not track the existence of CIOCs. Some of the responding counties keep inconsistent records of planned communities, condo and townhouse developments governed by mandatory membership owners’ associations.
The Community Associations Institute (CAI), a trade group of the HOA industry, provided some assistance to the Commission. CAI data comes from its membership lists. That provides some useful connections to management companies and law firms that provide services to HOAs. CAI supplied a list of close to 2,600 CIOCs in Pennsylvania.
The Commission also researched the Department of State’s Corporation Bureau database for non-profit organizations, as identified by keywords that can indicate the existence of a CIOC. This cumbersome research identified hundreds of additional CIOCs that were not part of CAI’s list.
Interesting fact: The state commission reportedly found almost no overlap between the lists provided by CAI and the Corporation Bureau!
In other words, contrary to its implied claims, CAI does not maintain a contact list of ALL homeowner, condo, and co-op associations in the U.S. The organization simply keeps records of the CIOCs that maintain contracts with CAI members.
Frankly, I am not surprised by this fact. On many occasions I have opined on IAC that no one should take CAI’s homeowner satisfaction survey results seriously. Why? Because the residents answering the trade group’s online questionnaires are not representative of all HOA residents in the U.S. Pennsylvania’s 2023 report on CIOCs underscores this stark reality.
Additional sources of CIOC lists included local governments, property management firms and real estate listings. Piecing all of this information together, the Commission found that PA has at least 5,022 CIOCs. There are likely many more that exist under the radar, and others that may be entirely dormant of defunct. The public simply has no way of determining a full and accurate account of all HOAs in the state.
The rough estimate, based upon limited available data, suggests that about 10% of Pennsylvanians live under the governance of some sort of CIOC.
The Commission’s list does not include all HOAs
I took the liberty of examining the list of HOA-governed housing communities in the appendix of the report.
It’s readily apparent that many small condo and HOA townhouse developments are missing from the Commission’s list.
For instance, in Lackawanna County, there is no data to suggest the existence of several townhouse and single-family home communities. The ones I am thinking of have fewer than 20 housing units. I am also aware of communities that exist in several small (non-reporting) municipalities. The Commission’s list does not include many less-populated townships in Lackawanna County.
In addition, I know of several HOA and condo communities in Union County, which is not included in the list. This could lead readers to assume there are no CIOCs in Union County, when, in fact, there are several.
These are just two glaring discrepancies. It’s safe to assume that many more CIOCs are not included on the Commission’s list.
What else don’t we know about the impact of HOAs (CIOCs) in PA?
We don’t know exactly how much tax revenue is collected from CIOCs and their residents by governments in the Commonwealth.
There are two reasons for this. First, as I just explained, there’s no accurate accounting of all CIOCs. Second, HOAs in PA are unevenly distributed across the Commonwealth.
Therefore, it’s statistically impossible to calculate an accurate estimate of statewide or local impact of tax revenue generated by CIOCs.
Therefore, readers and housing advocates should be wary of any statistics provided by CAI regarding tax dollars that CIOCs collect. These tax dollars reported by CAI supposedly ‘benefit’ local and state government. But the stats are purely anecdotal and fictitious.
That said, the Commission gathered enough data to draw some general conclusions. Obviously, most of the CIOCs in PA are located in the cities of Philadelphia and Pittsburgh and their surrounding counties. Somewhat smaller concentrations of CIOCs exist in Erie County, Center County (the location of Penn State University), and the Pocono resorts region. The remaining counties have few or no CIOCs.
We also don’t know how much of the state’s important infrastructure is privately maintained by HOAs.
It follows logically, then, that we also don’t know the relative condition of CIOC infrastructure.
For the purposes of the Commission’s report, CIOC owned and maintained “infrastructure” includes:
- Drinking Water Systems
- Private Dams
- Stormwater Management
- Wastewater and Sewage Systems
- Roads
- Private Security
The Commission was unable to compile and accurate and complete list of all CIOCs in existence in PA. But the Commission did collect some data on the state’s private dams, wells, stormwater management systems, and wastewater treatment facilities. This fragmented data was available only through agencies such as the U.S. Department of Environmental Affairs and the Pennsylvania Department of Environmental Protection (DEP).
Because of this limitation in its research, the Commission could not draw any meaningful conclusions about the state of infrastructure in CIOCs as compared to infrastructure outside of CIOC boundaries.
PA Joint State Government Commission recommendations for Common Interest Ownership Communities (CIOCs, AKA HOAs)
The CIOC Commission presents four recommendations for HOAs, including condominium and cooperative associations, summarized as follows.
- Establish and maintain a state registry of CIOCs. (An example of legislation enacting this recommendation is found at House Bill 731, Printer’s No. 716 (2021.) This bill was introduced in 2021, but it did not progress in the Legislature.)
- Presale disclosure of the existence of an Owner’s Association. (House Bill 62, Printer’s No. 51 (2023) is an example of a proposal that would accomplish earlier disclosure. It’s another bill that has gone nowhere in the Assembly.)
- Each CIOC should be required to establish a Reserve Account for all capital expenditures, conduct updated reserve studies every five years, and submit annual audit reports. (No current state law requires reserve funds or audits of CIOCs.)
- Consider adoption of relevant portions of the Uniform Common Interest Ownership Act (UCIOA), last updated in 2021. (Caution: UCIOA is model legislation originally designed by and primarily for the benefit of HOA industry stakeholders such as developers and management companies. Therefore, not all of its recommended legislative provisions are consumer friendly. For reference, here is a link to the final version of UCIOA 2021.)
In addition, with regard to assistance for planned communities in need of infrastructure repairs, several Legislators introduced a bill on March 17, 2023. See House Bill 499, Printer’s No. 468 (2023). According to the Commission’s report, “The bill amends the Municipalities Code to permit municipalities and CIOCs to enter into joint purchasing agreements for mutually beneficial projects like roads, real property, stormwater facilities, or utilities projects.”
The Assembly did not pursue this legislative proposal either.
To read the 2023 CIOC report, go to:
2023-03-23 CIOC REPORT 3.23.23 at 1030am.pdf (state.pa.us)
State law now reforms elections and process of amending bylaws in HOAs
In case you missed it, Act 115, enacted in 2022, became effective in summer of 2023. Pennsylvania state law now requires an “independent reviewer” for all elections in common interest ownership communities of 500 or more dwellings. State law outlines a process for smaller community associations to opt in to using an independent reviewer to monitor and tally election ballots. And, in an effort to empower HOA member homeowners — and rein in the power of HOA boards — Pennsylvania law affirms new homeowner rights to vote on amendments to HOA community bylaws.
See this previous IAC post for a more detailed summary and analysis.
Update: PA HB1795 is now law • Independent American Communities
PA Bills related to housing issues and homeowner rights for members of HOAs, condominiums, and cooperatives
Source: Pennsylvania state Legislature website
Interested readers can follow the bill numbers on this list.
2023-2024 Legislation Amending Title 68 – PA General Assembly (state.pa.us)
Legislators consider a ‘right to dry’ bill that could prevent your HOA from banning the practice of drying your laundry outdoors
Well, maybe.
This bill is dubbed “right to dry” and is favored by advocates for sustainability and affordable housing. The original intent of HB1179 was to allow residents of homes, condos and townhouses to dry their laundry on a clothesline or rack outside. However, the current version of the bill, Printer’s number 3135, includes the phrase ‘EXCEPT AS PROVIDED IN THE DECLARATION’ to provide a gaping loophole for Associations to effectively ban the practice anyway.
As long as the HOA’s governing documents restrict hanging your laundry outside to dry, this bill – as written — won’t override that restriction. Furthermore, the bill currently gives HOAs the right to designate time and place restrictions. One provision in the bill states that your laundry must be entirely hidden from view by neighbors. In many cases, this conditional ‘approval’ of the right to dry will effectively ban clotheslines and laundry racks.
Now, if your HOA’s official covenants and restrictions do not currently prohibit clotheslines and racks, you might be able to skip your clothes dryer without triggering an HOA violation. However, there’s nothing in this bill to prevent your HOA from attempting to amend the Declaration of Covenants to create new restrictions on clotheslines and laundry racks.
Legislature makes it easy for HOAs to remove racially discriminatory covenants
HB 1289 was a no-brainer for Legislators. Of course, it should be simple and inexpensive for HOAs to erase old covenants that restrict homebuyers according to their racial, ethnic, or religious background. The bill allows HOAs to file a simple form with their County to amend their documents.
Technically, the legal term used in this law is “repudiation of unlawful restrictive covenants.” (See Printer’s number 1757.) Since discriminatory covenants are already against federal and state laws nationwide, they are unenforceable. However, it shouldn’t cost HOAs a fortune in legal fees to remove the offensive covenants from their governing Declaration.
The Governor approved HB 1289 in December 2023. You can view the votes here:
Bill Information – House Bill 1289; Regular Session 2023-2024 – PA General Assembly (state.pa.us)
HOA reform transparency bills filed, but will Legislators seriously consider them?
Two additional bills to watch for the 2023/2024 session are HB 2240, HB 2149. These bills follow the Joint State Government’s Commission recommendations. (See previous section in this post.)
HB 2240 would require developers to file a report with the local government that specifies the number of units in the CIOC, its land area, and listing infrastructure in the community. (Water, sanitary sewer, and stormwater systems, roads, recreation areas.)
HB 2149 would, for the first time in PA history, require board meetings to be open to all unit owners, and would mandate 7 days’ advance notice of each meeting. Owners could also participate using remote technology. The Association would be required to supply both meeting agendas and meeting minutes to homeowners.
Sometimes a CIOC board will be advised by their HOA attorney to make technical, non-substantive corrections to their Covenants and Restrictions. Current law allows the HOA to vote to approve technical amendments in lieu of requiring a vote of the entire membership. For example, changes in HOA or condo statutes or lending regulations might require the Association to amend their documents to comply with the law.
To this end, HB2149 would also require that the executive board’s vote take place at an open board meeting, with 30 days’ prior notice. The notice would need to include a copy of each amendment and a legal opinion as to the necessity of the technical changes.
Finally, as an added measure of transparency, the bill requires the executive board to distribute a copy of their approved annual budget. The unit owners then would have 30 days to vote to disapprove (veto) the budget.
Both of these bills offer potentially beneficial reforms and consumer protections for homeowners. If you own property in a CIOC, it might help to write to your House Representative and ask them to support these bills. Pennsylvania’s current Legislative session ends on November 30, 2024.
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