Housing Alliance of PA

1. Housing Alliance of PA Statewide membership organization that works for homes within reach of people with low and moderate incomes. Helped gain passage of seven new state laws to make the acquisition and disposition of blighted, abandoned properties faster, easier and cheaper. Annual Homes within Reach Conference December 9,10 and 11 in Harrisburg.

2. Housing Alliance of Pennsylvania • The Blighted and Abandoned Properties Conservatorship Law, Act 2008-135 (H.B. 2188), 68 P.S. §1101 et. seq. • Effective as of February 24, 2009 • Spearheaded by the Housing Alliance of PA to provide local communities with new tools to address blighted and abandoned properties.

3. Blighted and Abandoned Property Conservatorship (Act 135) What it is, briefly stated: A powerful new tool that gives interested parties the right to petition the court for temporary possession of a nearby blighted, abandoned property for the purpose of fixing it up and returning it to market, or demolishing it. Conservatorship is a surgical tool, not designed for large scale revitalization, but for that one troublesome property where all else has failed.

4. Conservatorship Act 135 • Purpose of Today’s Session: To provide participants with enough basic information about this new tool to be able to assess a property for appropriateness for a conservatorship action and take the first steps toward identifying a petitioner and filing a petition. To inform participants about the Conservatorship Clearinghouse on the Housing Alliance Website to track progress and share experiences and information.

5. ConservatorshipTraining Presenters Martin J. Danks, Esq., Assistant City Solicitor, City of Allentown, has extensive municipal law experience including lien enforcement, debt collection, code enforcement, and nuisance bar. He is currently in the process of preparing Conservatorships action on behalf of the City of Allentown. Irene McLaughlin, JD, is working with the Housing Alliance to monitor and support the implementation of Conservatorship. She was the Pittsburgh City Magistrate specializing in municipal code prosecutions. She has provided legal services to the Beaver County Blight Reduction Program and manages ‘tangled title’ legal services for lower-income homeowners.

6. BUILDING PETITIONER CONSERVATOR COURT OF COMMON PLEAS Act 135CONSERVATORSHIP

7. The Blighted and Abandoned Properties Conservatorship Law, Act 2008-135 (H.B. 2188), 68 P.S. §1101 et. seq. • Effective as of February 24, 2009 • The Housing Alliance is committed to supporting municipal and neighborhood leadership in using new tools to address blighted and abandoned properties.

8. Act 135 CONSERVATORSHIPROLES BUILDING residential, commercial or industrial structure that meets conditions of conservatorship PETITIONER a ‘party in interest’ authorized to initiate a conservatorship action; recommends a person or entity to be appointed conservator

9. CONSERVATORSHIP Roles CONSERVATOR third party that has capacity to take possession, effectuate rehabilitation and manage the conservatorship process COURT OF COMMON PLEAS authorized to appoint conservator, approve rehabilitation plan, accounting, status reports, create a senior lien position for conservator financing, order sale of the property

10. ALL must apply: Not legally occupied for 12 months Not marketed for 60 days No foreclosure action Current owner longer than 6 months PLUS three (3): A public nuisance Needs substantial rehab Unfit for occupancy Increases risk of fire Subject to entry Not secured by owner Attractive nuisance Hazards Decreases property values Illicit Activities Act 135 BUILDINGConditions for Conservatorship

11. Act 135 PETITIONERS Party in interest has direct and immediate interest in blighted building including: • owner • lien holder • resident or business owner w/in 500 ft • nonprofit located in municipality* • the municipality or school district *special Philadelphia criteria

12. Act 135 CONSERVATORS In order of preference in the law: • Senior lienholder • Non Profit Corporation • Governmental Unit • Individual

13. Act 135 COURT OF COMMON PLEAS • Appoints conservator • Approves conservator plan • May “grant a lien or security interest with priority over all other liens with the exception of municipal or other governmental liens” • May “authorize the conservator to sell the building free and clear of all liens, claims and encumbrances…” • Authorized to approve distribution of proceeds of sale, if any, in accordance with listed priorities

14. Act 135 Conservator Expectations • Develop a preliminary plan for the building • Take possession immediately upon appointment • Maintain, safeguard and insure the building • Develop a final plan to be approved by court • Implement final plan • Submit status reports

15. What about the owner? Petitioner notifies owner(s) and lienholder(s) of • Filing of Petition • Hearing date on conservator appointment • Submission of final plan

16. If owner responds, court may set a date for owner abatement. If none, conservator appointed Conservatorship does not relieve owner of any liability or responsibilities Owner may petition to terminate conservatorship but must make conservator whole Owner is on list of distribution of proceeds What about the owner?

17. What is conservator’s exit strategy? • Code compliance achieved, conservator made whole, conservator purposes fulfilled • Owner, mortgagee, lienholder requests termination, assures code compliance, conservator made whole, conservator purposes fulfilled; • Conservator sale and proceeds distributed; OR • Conservator unable to present approvable plan, or conservator purposes cannot be fulfilled.

18. Act 135 STEP BY STEP • Identify/Research Property • Prepare Court Action • Start Court Action • Court appoints Conservator • Conservator takes possession and control of building • Final plan submitted and approved • Implement plan, submit status report • Terminate conservatorship by fulfilling conservatorship plan, party in interest redemption, or sale

19. Timeframes • Appointment hearing set within 120 days of filing; • Appointment decision within 30 days of hearing; • Final plan hearing set within 120 days of appointment; • Status Reports annually, “or more frequently” • Six (6) months of conservatorship required for court to consider sale

20. NEW LAW CAUTION • Law is created over time through the process of legal challenges and appellate review of trial court decisions • There are many unknowns and uncertainties associated with the new authorization to appoint conservators • Traditional providers of financing, property insurance, title insurance may be unwilling or reluctant to take risk associated with conservatorship

21. Suggested FirstCase Criteria • Conservator is last resort approach • Owner is not likely to respond • Not enough property value for lienholders to pursue or to contest • Funding available (not dependent on conservatorship lien) • Demolition is not out of the question

22. Conservatorship Examples • Boro of St. Clair, Schuylkill Co. – First known PA case • Baltimore • Cleveland

23. Questions, Concerns, Comments ????????????????????? ????????????????????? ?????????????????????

24. Housing Alliance of PA Housing Alliance may support prospective petitioners and conservators in using Act 135 by providing technical assistance on strategy, drafting petitions, service of process, etc. Contact: 215-576-7044 (Philadelphia) 717-909-2006 (Harrisburg) 412-281-1137 X116 or 117 (Pittsburgh) blightedprop@housingalliancepa.org