Ladies of LAC Discussion

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An agenda and overview of our program presented by USI Insurance Services.

Presentedbythe 2021CAI-NJWomen’sLeadershipCommittee 2021 ACT LIKE A LADY THINK LIKE A BOSS RETREAT LADIES OF LAC PRESENTED BY THE LEGISLATIVE ACTION COMMITTEE WEDNESDAY, MARCH 10TH

Agenda

CA-NJ’s Legislative Efforts, Successes, & Current Priorities Michele Jaker, MBI-GluckShaw, Partner

Board Member Training & Adequate Reserves and Benefits Derived Barbara Drummond, CMCA, PCAM, Prime Management, Inc., President

Electric Vehicle Charging Stations, Generators in Retirement Communities & Priority Service by Public Utilities to Age-Restricted Communitie s Caroline Record, Esq., Hill Wallack, LLP, Partner

Radburn Regulations Christine F. Li, Esq., Greenbaum, Rowe, Smith & Davis LLP, Partner

COVID -19 & Pending Immunity Legislation

Karyn Kennedy Branco, Esq., Cutolo Barros, LLC

National/CAI-NJ Join Federal Initiatives & Federal Housing Assistance Dawn Bauman, Senior Vice President, Community Associations Institute, Government & Public Affairs, Vice President

Closing – Q&A

Sponsored By

Presentedbythe 2021CAI-NJWomen’sLeadershipCommittee 2021 ACT LIKE A LADY THINK LIKE A BOSS RETREAT BOARD MEMBER TRAINING ADEQUATE RESERVES AND BENEFITS DERIVED In February 2018 we learned that Assemblywoman Annette Quijano (Legislative District 20 - Union County) was looking to sponsor a bill requiring Board member training. Shortly thereafter a group of our Homeowner Leaders and LAC members met and made some recommendations. In June of 2018, the group working on this met with Assembly woman Quijano and reviewed various options and she agreed to work with us before drafting the bill. Several meetings were held to discuss the best approach and how to implement a program that is not too onerous for volunteer board members to participate in. PRESENTED BY: BARBARADRUMMOND, CMCA, PCAM, PRIMEMANAGEMENT, INC., PRESIDENT BDRUMMOND@PRIMEMANAGEMENTINC.COM | (609) 693-0090

Some of the options presented were:

1. Mandatory Training - Required to serve as a board member Enforcement by a State Agency

Result - Better educated board members Fewer board volunteers

2. Incentivized Training - Required to serve as a board member No enforcement by the state Incentive to be worked out

(ie. tax benefit to members of obtain a training certificate)

Result - Better educated board members

More board members would serve with a financial incentive

3. Voluntary Training - Not required to serve as a board member but would have a better idea of what their duty to the association.

Result - Perhaps fewer educated board members, but at least likely more board volunteers

It should be noted that any Mandatory or Incentivized training would require some kind of administrative services for tracking purposes and/or enforcement and these services will come with a cost. So, as you can see, this is a very complex issue with many aspects to consider. Dawn Bauman from CAI National provided information on the Public Policy regarding board member education and on other states that are creating legislation dealing with this idea. To simplify, CAI’s Public Policy is as follows: “While CAI realizes the importance of education for all governing board members, state mandated requirements deserve careful evaluation by legislative action committees. Any state mandated education requirement should focus on incentives and tools to encourage boards to utilize existing industry tools to achieve education goals rather than create new processes or burdens.” Board members should receive education on ethics and leadership, financials and reserves, insurance and risk management, rules creation and enforcement, meetings and elections, communication, conflict resolution and community building. Board members should attest to comply with CAI’s Model Code for Ethics for Community Association Board members. Over the span of many months, various calls to set up meetings with Assemblywoman Quijano were unsuccessful. Sometime last year we learned that she plans to move forward with a bill requiring mandatory training for board members and we are still trying to meet with her to discuss CAI National’s position on this. At the January NJ LAC meeting, a subcommittee of volunteers was formed to try to get this back on track. In an effort to facilitate a smoother transition process for Community Associations, the New Jersey Builders Association (NJBA) and members of the Community Associations Institute New Jersey (CAI-NJ) Legislative Action Committee (LAC) formed a Task Force on Transition in 2017. The goal of the Task Force was to propose to the New Jersey Department of Community Affairs (DCA) suggested amendments to N.J.A.C. 5:26-8.6 (Assessments for Common Expenses and N.J.A.C. 5:26-8.7 (Budgets) of the Planned Real Estate Development Full Disclosure Act (PREDFDA) governing Community Associations that are mutually beneficial to community associations and the developers who build them. Often transition disputes regarding reserve funding and benefits derived are based on “interpretations” of the Regulations and could be resolved if the language were more clearly defined. So, the members of the Task Force set out to come to an agreement on more specific language to better define the ambiguous items. In order to accomplish this, the Task Force met several times including meetings with representatives of DCA. A letter was sent to the DCA detailing the joint recommended amendments and we received a response from them in February 2019. Comments were sent back to DCA and then the regulation writers were supposed to prepare the final language. After that step the regulations are sent up to the Governor for review. The regulations were published for comment and a response was sent back by the members of the Task Force. We are now waiting on an update from DCA. Nearing the final stage, only four years later! Adequate Reserves and Benefits Derived

Just a few highlights are:

5:26-8.6 Assessments for Common Expenses, Working Capital to be collected from members upon acquisition of title shall be used for: - one-time expenses for startup operations - unforeseen expenses in lieu of a special assessment

While the developer maintains control of the association it shall not be used for: - budget line items - to minimize assessments - to lower the amount due for developer’s obligation

Assessments for Common Expenses shall be due from: - unit owners (who purchased units conveyed)

- developer units (units for which a building permit was issued) - developer registered units (unsold units that are registered with NJDCA for sale)

The developer shall also be assessed for the portion of the common expense assessment associated with completed common amenities that are in service, ie pool, clubhouse, tennis court, etc. Here is where the developer will pay for their share of the amenities in place for unsold but registered units = benefits derived. Assessments shall be based on either an Annual Budget or the Full Occupancy Budget as stated in the governing documents. The developer’s assessments shall be paid on the same schedule as the unit owner’s assessments. 5:26-8.7 Budgets Prior to making an annual assessment, the Association shall prepare and adopt an operating budget to include common expenses including adequate reserve funds for repair and replacement of the common elements and facilities, specifically: - May include repair or replacement of a component of a mechanical system or facility - Monies dedicated for repair or replacement of common elements at the end of useful life without special assessment - Must be determined by an independent licensed engineer or architect as a part of the reserve study - Must be maintained in a segregated account in the name of the association, not commingled with other accounts - Must be in a bank FDIC insured and licensed to do business in NJ - Must be used for the items for which they are collected - May not be used by a developer-controlled association board unless: a. the common element is included in the reserve study b. at the end of its useful life c. and has been fully funded in accordance with the association budget.

We also made recommendations on: - how the reserve study could be amended as a community expands - require a new reserve study when facilities and common elements constructed differ from the original plan - require a letter of adequacy from the preparer of the reserve study - require the developer to pay for the reserve study while the developer is in control of the association

In conclusion, the importance of adequate reserve funding cannot be overstated. Essential to that goal, is to update the reserve study every 3 to 5 years and to set aside the amount recommended in the study, so that the common elements can be replaced when necessary without a financial burden to the members of the association.

Presentedbythe 2021CAI-NJWomen’sLeadershipCommittee 2021 ACT LIKE A LADY THINK LIKE A BOSS RETREAT ELECTRIC VEHICLE CHARGING STATIONS, GENERATORS IN RETIREMENT COMMUNITIES & PRIORITY SERVICE BY PUBLIC UTILITIES TO AGE-RESTRICTED COMMUNITIES • Signed by Governor Murphy into law on October 19, 2020 • Association cannot adopt rules and regulations prohibiting or unreasonably restricting installation of EVCS in designated parking space • Association required to grant license over and across common areas to allow installation of EVCS in designated parking space and including exclusive use of common area parking space • Owner must have equipment installed by licensed contractor and licensed electrician; provide evidence of acceptable insurance protecting association; indemnify association against damage and pay for electrical usage and other reasonable charges imposed by Association for review and approval of application. A2360/S3285 • Would require utility company to charge residential rate for EVCS installed by customer. LAC seeking amendment to include EVCS installed by Association Generators in Retirement Communities (A2596) • Retirement communities would be required to have a standby emergency power generator provide electricity for common area use (community room/clubhouse) in order to be used as a shelter in an emergency • Generator must be able to operate a minimum of 14 days and sustain a heating unit and basic electrical necessities • Public Utility to Provide Priority Service Restoration to Age-Restricted Community (A4629/S2911) • Results from “major event” arising from conditions beyond control of utility that affects distribution or transmission system to at least 10% of customers in operating area or municipality • State of emergency must exist • Utility service cessation lasting more than 48 hours after major event Restrictive Covenants on Property (A5390/S2861) • Community association board has authority to remove unlawful restriction contained in governing documents PRESENTED BY: CAROLINE RECORD, ESQ., HILLWALLACK LLP, PARTNER CRECORD@HILLWALLACK.COM | (973) 946-7020 Electric Vehicle Charging Stations (A3367/S1951)

Presentedbythe 2021CAI-NJWomen’sLeadershipCommittee 2021 ACT LIKE A LADY THINK LIKE A BOSS RETREAT PRESENTED BY: CHRISTINE F. LI, ESQ., GREENBAUM, ROW, SMITH&DAVIS LLP, PARTNER CLI@GREENBAUMLAW.COM | (732) 476-2680 RADBURN REGULATIONS Effective May 18, 2020, the New Jersey Department of Community Affairs (“DCA”) adopted several amendments to its regulations under the Planned Real Estate Development Full Disclosure Act (“PREDFDA”). The amendments broadly address membership voting rights, elections, and By-Law amendments and are commonly known as the “Radburn Regulations.” A full version of the Radburn Regulations, as amended, are attached. Many of the changes merely affirmed how community associations in New Jersey already operated and managed common interest communities. However, there are provisions which give rise to difficulties in interpretation and implementation. For example, one position on the board is to be reserved for representation by the owner of a household subject to low- or moderate-income controls. What if no affordable owner wants to run for the board? Or, if in a 500-home community only ten homes are designated for income-restricted owners, is it reasonable that one out of the five positions on the board be reserved for an affordable owner? These and other thorny issues are raised by the Radburn Regulations, which include requirements on counting ballots, the inspection of ballots, anonymous voting, the dissemination of sample ballots, write in candidates, open meetings. and many other components of community association life. Of significant importance is the right of the DCA to levy fines and issue penalties against community associations for failure to comply with the Radburn Regulations. Another overarching concern is the fact that PREDFDA, pursuant to which the Radburn Regulations were promulgated, is clear that the conduct intended to be regulated is that of the developers and sponsors, and not that of community associations formed to govern and administer the communities created by those developers or sponsors. Beginning with a letter dated July 16, 2019 to the DCA, the New Jersey Chapter of the Community Associations Institute (“CAI-NJ”), on behalf of community associations throughout the State of New Jersey, voiced its objections to the Radburn Regulations. CAI-NJ also attempted to engage representatives of the DCA in discussions relating to the Radburn Regulations but to no avail. Faced with no other alternative, CAI-NJ filed an (amended) notice of appeal on July 10, 2020, appealing the Radburn Regulations in the Superior Court of New Jersey, Appellate Division. The DCA filed a Motion to Dismiss CAI’s Appeal, and over the objections of CAI-NJ, the Appellate Division panel granted the DCA’s motion. The panel simply stated that CAI must first exhaust certain administrative remedies, without providing any further opinion or analysis. CAI-NJ is now appealing the Appellate Division’s decision to the New Jersey Supreme Court, while at the same time, filing a petition directly with the DCA so as to exhaust the administrative remedies that the Appellate Division pointed to.

Presentedbythe 2021CAI-NJWomen’sLeadershipCommittee 2021 ACT LIKE A LADY THINK LIKE A BOSS RETREAT PRESENTED BY: KARYNKENNEDYBRANCO, ESQ., CUTOLOBARROS LLC KKENNEDYBRANCO@CUTOLOBARROS.COM | (732) 414-1170 COVID -19 AND PENDING IMMUNITY LEGISLATION

Pending Legislation

A4979 Establishes immunity relating to COVID-19 spread in planned real estate developments

Relates to any illness, injury, death, or other damages arising from or related to exposure or transmission of COVID-19 on community association property

Not applicable to acts or omissions constituting a crime, actual fraud, actual malice gross negligence, recklessness, or willful misconduct

https://legiscan.com/NJ/text/A4979/2020