Legislation could change CA operation

Higher assessments stir Pendergrass to draft bills

Ceiling on increases sought

Homeowners would have more say in association

Columbia

December 04, 2003|By Laura Cadiz | Laura Cadiz,SUN STAFF

In response to residents' outcry about high Columbia Association assessment costs, Del. Shane E. Pendergrass has drafted two bills that would drastically change how the homeowners organization operates.

One bill would impose a 10 percent ceiling on the change in property assessments. The other would allow a majority of property owners to amend the association's covenants - a significant change from the current requirement of unanimous approval from all property owners.

Pendergrass, a Howard County Democrat, drafted the bills after east Columbia property assessments increased an average 33.4 percent when the state reassessed values there last year. That rise brought in an extra $2.7 million in assessment revenue - which is based on property values - to the homeowners association.

Association President Maggie J. Brown said the homeowners organization has the ability to offer financial relief to residents.

"There is no need for legislation. I truly believe that," Brown said.

She pointed out that the association board has tentatively reduced the assessment rate 10 cents, to 63 cents per $100 of valuation assessed on 50 percent of the fair market value. The board asked the staff to place that rate in the draft 2005 budget, which will be approved in February.

Brown also said the assessment rate has a cap by not being able to exceed 75 cents, and the board is scheduled to discuss rebating $2.6 million of the surplus in the 2003 budget at its Dec. 11 meeting. The board learned that it had the ability to rebate a surplus higher than budgeted without jeopardizing the association's nonprofit status after staff members requested a ruling from the Internal Revenue Service.

Brown said that while she cannot speak for the board, she believes the association should take whatever steps are necessary - which could include lobbying against the legislation - to protect itself.

"I feel it's my responsibility to ensure the financial integrity of this organization," she said.

Pendergrass' bills don't name the Columbia Association, but they would be relevant only to that organization because the bills apply to a development that has at least 13,000 acres (Columbia is built on 14,272 acres) or a population of at least 80,000 (Columbia has more than 96,000 residents) and is governed by a homeowners association that imposes an annual charge.

Columbia Association board Chairman Miles Coffman said yesterday that because the legislation is targeted at CA, he was upset that Pendergrass had not consulted the association.

"If she was going to go that route, she should have been working with us to see if there were options we could agree on," said Coffman, who said he had not seen the bills but had a general understanding of what they entailed.

Pendergrass said that on at least four occasions she extended herself to association staff or board members - including a meeting with Brown and other staff to gather information. She said she also attended a board meeting, where the board did not invite her to speak.

"I'm sorry that [Coffman is] unhappy, but I think that at every step of the process I've tried to include them," Pendergrass said.

In her legislation, Pendergrass proposes a ceiling of at least 10 percent on the change in assessment in the association's billings. Now, the association imposes the maximum amount instead of phasing in the assessed property value over a period of years. The law would be retroactive to the recent increase in east Columbia.

The bill would bring "discipline and reasonableness to the association's funding source and the burden that Columbia residents pay," Pendergrass said.

Her other bill proposes allowing Columbia Association covenants to be changed by at least 10 percent of the property owners petitioning for an amendment, which would then have to be approved by 51 percent of those casting ballots.

Pendergrass said such a law would let residents participate in the governing of the association, allowing the community to impose changes.

"Do I think it's likely that there needs to be things done to improve [the association's] functioning? Yes, I do," Pendergrass said. "And I think citizens need to have a role in it, and I think that's the way it was envisioned by [Columbia founder] Jim Rouse. I think this is completely consistent with the history of Columbia."

Coffman said the association likely would get a legal opinion on the bills, and he is worried that Pendergrass' legislation could spur lawsuits from the association's bondholders.

He said bondholders could be placed at risk "if you're going in and capping income ... if you're going to pass a bill that allows people to go in and change the deed. That one right there may be the scariest part."

Pendergrass said she doubts that the bondholders would sue and she is confident that the association would legally have to abide by legislation.

"I've been working with the attorney general to make sure that these [bills] are constitutional, and they are," she said.

Board member Phil Marcus of Kings Contrivance said he did not believe any of the ideas in the legislation would harm the bondholders.

"We will not impair their security, we will not make them feel upset," said Marcus, who said he had not yet seen the legislation but supports it in principle.

Joel Pearlman, a spokesman for the citizens watchdog group Alliance for a Better Columbia, said the group - which has been lobbying the association to address the assessment rate issue - fully supports Pendergrass' legislation.

"We will be trying to talk with all of our state representatives both in the House of Delegates and the Senate on these matters to try and gain their support," he said.

Pendergrass expects to file the bills in the first week of the legislative session, which begins Jan. 14. She said she has e-mailed members of the county's House delegation, asking if they want to co-sponsor the bills.

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