DELEGATE HOLMES IN THE NEWS

The Maryland Legislature and Housing (2017)

Marvin E. Holmes Jr. on June 1, 2017
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As Chair of the Housing and Real Property subcommittee within the House Environment and Transportation Committee, we conducted multiple hearings and in December of 2016 we merged the conversed information of June through November into legal language just in time for the Legislative Session that begin in January of 2017.  There was a myriad of topics discussed, but the common concern through the summer was how to protect the value the housing stock throughout the entire state of Maryland and what were the causes of the declining monetary comparable equivalences in certain communities.

Our summer hearings focused on issues such as blight elimination, foreclosed and abandoned properties, the Foreclosed Property Registry, notifications for the foreclosure process, certification of vacancy, and maintenance responsibility of vacant properties just to name a few. We were very inclusive during our discussions and the summer audience included The Community Development Network of Maryland (CDN), Maryland Municipal League (MML), Maryland Association of Counties (MACO), Community Associations Institute (CAI), in cooperation with the Housing Opportunities Commission of Montgomery County, Office on Common Ownership Communities in Prince George’s County, The Center for Community Progress, the City of Baltimore, the Maryland Bankers Association, and jurisdiction as far as Dorchester County were involved on a frequent basis.

Out of those conversations came the idea to conduct a study of the counties and municipalities about the challenges they face related to vacant, abandoned and blighted properties. The results of that study found that only 44% of the respondents said their county/municipality uses the Foreclosed Property Registry. Of those, 37% said it was not useful to them, mostly because the information about the property was entered at the end of the process (the foreclosure sale) and not earlier. Jurisdictions and common ownership communities want more information sooner on which party is responsible for the maintenance of the property or who the jurisdictions are to bill for their work maintaining the property. This is where the concept of (HB1048) “Foreclosed Property Registry” came from. This legislation added a requirement that banks must file with the Department of Labor, Licensing and Regulation (DLLR) notice of foreclose at the Order to Docket stage of the foreclosure, rather than at the end of the foreclosure process.

The issue of managing and governing community associations and homeowner’s associations is not well understood by most the 141 members of the House of Delegates and the 47 Senators that establish the policy for these institutions in the State of Maryland. As a practicing member of a property management firm and as an active real estate agent, I sometimes have difficulty explaining to my colleagues the need for many of the policy recommendations presented to me from practicing organizations. This crisis of a basic lack of understanding by the legislature, both at the state and federal level, will become more problematic as the issue of condominium repairs, condominium board governing, and massive amounts of condominium debt continue to increase.

I am very concerned about the sustainability of condominiums as a viable type of homeownership. It is a basic fact that condominiums will continue to be a viable real-estate ownership alternative for if lending institutions continue to fund them. When a condominium’s maintenance fees and the real estate taxes exceed the cost of comparable rentals in certain communities, the demand to buy will disappear. Once the purchase appeal is diminished and the condominiums become purely investment properties, the government will be forced to decide if funding this types of homeownership is to the best interest of the tenants (because most occupants will be renters) and the federal government.

I tried this session (HB651) to force condominiums and homeowner’s associations to at least prepare a reserve study every five years for major repairs and replacement of the common elements. For the condominium structure to remain purposeful, cyclical maintenance is required and replacement of major components are required over time. When a condominium building reaches 40 to 50 years of age it will have gone through several partial or complete retrofits, hopefully in stages, so that costs are spread out. Properly governed and managed condominium complexes maintain amortization funds and the required accumulation of moneys for replacements of the common elements without facing undue financial hardships. Without a reserve study, boards and homeowners may be faced with huge amounts of unaffordable special assessments. When this happens, as professionals in the industry, we know that the condominium will begin its rapid infrastructure and financial decline.

When assessments aren’t paid, repairs are not made, tenants complain then depart, units can’t be rented, FHA guidelines aren’t met, resale is only available to conventional and cash buyers, and then property values decline.  We have all heard stories of condominiums owing $60,000 to $70,000 water bill arrearages, or where the HVAC company refuses to answer a service call again, because of an outstanding balance.

As soon as the foreclosure, vacant and abandoned property crisis subsides, the condominium crisis will finally come to the forefront.  The question is, as members of the industry and as members of the legislature, what do we do?

 

Marvin E. Holmes, Jr.

 

Delegate Holmes has been a member of the Maryland General Assembly since January 2003 and has served in several capacities such as House Chair, Joint Committee on Legislative Ethics; Chair, House Democratic Caucus; Deputy Majority Whip; Ground Rent Workgroup of the Environmental Matters Committee; Land Use and Ethics Subcommittee of the Environmental Matters Committee; Affordable Housing Workgroup of the Environmental Matters Committee; Washington Suburban Sanitary Commission Committee, Prince George's County Delegation; Task Force to Study Rent Stabilization for the Elderly in Prince George's County; Task Force on Business-Owner Compensation in Condemnation Proceedings; Chair, Affordable Housing Subcommittee, Governor's Commission on Housing Policy.

Professionally Delegate Holmes has had opportunities as follows: Senior Project Manager, Civil Engineering, Greenhorne & O'Mara, Inc.; Executive Director, Marketing and Land Planning, The Tech Group, Inc.; W. F. Chelsey Real Estate, Inc., Commercial Real Estate; Project Manager of Land Planning and Engineering, K. Hovnanian Homes; Director, Real Estate Division, Majerle Management, Inc.

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