It’s tempting to credit fate for the momentous occurrences of 2008, there were so many and they piled up so quickly. Perhaps a unique alignment of the stars propelled the Phillies to the championship. The Eagles made the playoffs because of a fantastic combination of NFL wins and loses on the last day of the regular season, and Pittsburgh is in the Super Bowl (way to go Steelers!). Add this to November’s elections and for many the theory of changing zeitgeists rings true. It is fun to imagine, as we celebrate these remarkable triumphs, that we are at the dawn of an Aquarian age, where the constellations align in a precise manner and deliver to humankind an era of progress, peace and happiness.

But a closer look should bring us all down to earth. The Phillies had a terrific bull pen, the Eagles have an abundance of talent and Pittsburgh has been the team to beat all season. Additionally, let’s not forget the most crucial occurrence of 2008 was anything but upbeat. Defaults on sub-prime mortgages and the collapse of credit markets kicked our economy into a huge downward spiral. By most accounts, we’ll be tumbling for some time to come. The election, as well, may not have been the realignment it first appeared to be. At least most pundits are encouraging the new President to move to cure the recession but then concentrate on moderate policies.
Therefore, when considering the role of changes in the heavens, the oldest rule of the universe must not be overlooked. It played the biggest part in 2008 politics and sports, and it’s no coincidence that it plays the most crucial role in our Association members’ successful approach to Government Affairs: Nothing worthwhile is ever achieved without lots of hard work. Luck is usually only a minor player. We have not relied solely on the cosmos to single-handedly deliver our achievements. Stars can guide us, but we do the navigating.

Our Association members “get” the essential element in shaping our political destiny is a sustained collective effort to educate and sway legislators about apartment industry issues. We worked together in 2008 to build relationships with legislators in Harrisburg and at local levels. Despite changes in leadership and the prevailing political agenda our Association is a force to be reckoned with in Washington, Harrisburg and local towns across the Commonwealth. Our collective voice, considerably stronger than any one industry member, is taken seriously because we work hard to impress our legislators with the efficacy of our issues. Looking ahead to a challenging 2009, to paraphrase the eternally relevant bard,

“The answer dear Brutus, is not in our stars, but in ourselves”.

The following is a summary of our Government Affairs activity in 2008.

STATE

Taxes on Leases:
Municipalities are now indisputably prohibited from imposing taxes on leases, thanks to a judicial interpretation of established law from the highest court in our Commonwealth and a crucial reasoned directive from the people’s elected representatives. Our lobbying played a major role in the success of the legislation.

Pennsylvania municipalities derive their taxing power from the state. Currently most of Pennsylvania municipalities’ taxing powers are governed by the Pennsylvania Local Tax Enabling Act ( LTEA). The Act contains lengthy, complicated language regarding areas where taxing is allowed and where it is prohibited.

A few years ago the Borough of Millersville in Lancaster County imposed a tax on residential leases at a rate of $30 per lease. A property management company with 178 units in Millersville filed a lawsuit claiming the ordinance is a violation of the LTEA. Our state’s highest court agreed.

The case, Lynnebrook and Woodbrook Associates v. Borough of Millersville, was decided in December, 2008. The Court ruled the LTEA grants municipalities the authority to tax certain types of goods or transactions. But the Act specifically excludes leases, among other kinds of transactions, from that taxing authority.

While the Court was considering the Lynnebrook case, the Pennsylvania Legislature was busy passing a law that placed even clearer language in the LTEA to prohibit taxes on leases. A strong ally of the apartment industry, Senator Patrick Browne (R-16) introduced the legislation. PAA was at the forefront of lobbying efforts to get this much needed law passed. We viewed a change in the statute as imperative to once and for all prevent the possibility of future taxes on leases. Our lobbying and grassroots letter campaign advanced the cause and Governor Rendell signed Act 130 in to law in October, 2008. The Act contains the clear wording we suggested. The Lynnebrook Court acknowledged the possibility of a statutory amendment to the LTEA in its opinion and specifically stated they welcomed legislative efforts to clarify the issue.

Abandoned Personal Property:
Property managers throughout Pennsylvania are all too familiar with the problem of what to do with the personal property tenants often leave behind after surrendering an apartment. The Pennsylvania Landlord Tenant Act (LTA) does not speak to the issue. The PAA had several meetings with Senators Browne, Fontana and their staff to offer language for SB 906, which was voted favorably out of Committee in February of 2008. Through lengthy negotiations with tenants’ rights groups and meetings with legislators, we reached agreement on several key clauses included in the proposed legislation. But the bill did not see final passage before the close of the last regular session. We will continue our work in the coming new session to establish evenhanded procedures for handling abandoned personal property.

Blighted Real Property and PAA Testimony before the Pennsylvania Senate Committee on Urban Affairs:
Several bills were introduced in the Pennsylvania House and Senate in 2008 posing procedures for dealing with neighborhood blight caused by poorly maintained properties and owners who fail to comply with municipal property maintenance codes. Most of the legislation proposed dealt with all kinds of property, single family, multi-family, and commercial.

We testified before the Senate Committee on Urban Affairs regarding SB 1291, and submitted written testimony in the House regarding an identical bill, HB 2445. We opposed the harmful and unnecessary provisions in both bills that would provide a cause of action to aggrieved owners, tenants and other interested parties, as well as provisions that would deny permits to applicants of properties with no problems if the owner also owns other property determined to be in violation of codes or delinquent in tax payments.

Additionally, we challenged overly broad and constitutionally questionable language that would deny professional permits, certifications or licenses to applicants who own real property with delinquent taxes or other charges. This troublesome language did not survive in the final versions of both bills.

But we did not oppose the idea of appointing conservators over blighted properties. Conservators could be helpful in getting problem properties in to the hands of responsible owners.

We also contributed as a major stakeholder in HB 2188 during its journey through the legislature. Governor Rendell signed House Bill 2188, providing for court-appointed conservators to bring problem properties up to code, as Act 135 of 2008. With the tragic passing of Senator James Rhoades, a key advocate of blight legislation, and a change in Senate Committee leadership, it remains to be seen if legislators will pursue other bills dealing with blighted properties in the 2009 session. As stakeholders, we will continue to consult with legislators on the issue.

PAA Lease and Law Handbook, a Respected Reference:
The first edition of our Pennsylvania Apartment Association Lease and Law Handbook continues to serve as concrete evidence of our Association’s expertise in the apartment industry, our credibility as a responsible organization, and as a reflection on our member’s commitment to professionalism. We have made a point of making copies available to legislators and will continue our campaign to mail a complimentary copy to every Municipal Judge and Magisterial District Justice in the Commonwealth. The Handbook is serving a secondary role as a kind of a “calling card” with several members of the General Assembly.

An order form for this valuable Handbook is available at www.aagp.com or by contacting cgertz@aagp.com.

Pennsylvania Childhood Lead Poisoning Elimination:
We are participating in a statewide Lead Elimination workgroup that consists of healthcare and other advocates in both the private and public sectors. However, we apparently are the sole representative for Pennsylvania’s rental housing owners. The purpose of the Task Force is to develop strategies to eliminate lead poising in children. The Apartment Association is participating to contribute a realistic perspective on the issue of lead paint in apartment communities.

Act 113, Scrap Material Theft Prevention Act:
We lent our support as the “go to” authority for the apartment industry for legislation requiring scrap processors and recycling facility operators to collect certain information relating to the purchase of scrap material. Act 113 became law at the end of 2008. The bill will hopefully deter theft of valuable materials from properties and construction sites.

Consumer Notice from Real Estate Brokers and Salespersons:
The State Real Estate Commission amended their regulations in accordance with the Real Estate Licensing and Registration Act (RELRA) to require brokers and agents to provide a Consumer Notice to consumers at their initial interview. This includes licensees entering in to a business relationship with prospective renters. The Commission intends for consumers of real estate services to make informed decisions about the business relationships they may have with real estate brokers and salespersons (licensees). The regulations went in to effect in December of 2008, but licensees have until June 15, 2009 to begin using the required notice form. An electronic copy of the form is available through Christine at the Apartment Association.

Meth Labs:
The 2007-2008 regular session of the General Assembly saw several attempts to address the growing problem of crystal meth labs in Pennsylvania. Among the issues covered were attempts to prohibit the operation of meth labs, establish minimum penalties, and prevent illegal dumping of meth waste. But the most dangerous initiatives, in terms of possible consequences for rental owners, were several attempts to impose requirements on rental owners to disclose prior use of rental units for the manufacture of controlled substances, including meth labs. Our growing influence with legislators is nowhere more evident than in our record of successful lobbying throughout the legislative session against everlasting disclosure of prior use. We remain on high alert for future bills.

On the horizon:
As bills wind their way through caucuses, committees and both houses of the General Assembly, the interplay of any number of factors can influence their chance for survival. So it is safe to never assume a particular issue has left for good. The prudent approach is to continuously watch for anything that could have an impact on the industry. Several subjects of bills in 2008 are gone but not forgotten. They include:

• Evictions: Interest remains in amending the Landlord and Tenant Act to deal with ambiguities in the current law and conflicts with the Pennsylvania Magisterial District Justice court rules. HB 235 remained in the House Judiciary Committee throughout 2008 and its companion bill in the Senate, SB 906, was laid on the table (effectively killed). But both bills had been re-filed from the 2005 regular session, and they could come up again. We will be encouraging new legislation to deal with this issue.
  
  
• Escrow funds: The 2007-2008 session included attempts to amend the Landlord and Tenant Act provisions that deal with tenants’ escrow funds. We raised specific objections and were successful in getting more favorable language in the bill being considered. We hope to repeat our successful efforts should the need arise.
  
  
• Carbon monoxide detectors: Past legislative attempts have been poorly constructed with broad or vague requirements.
  
  
• Fire extinguishers: Vagueness and ill-conceived requirements have plagued past bills.
  
  
• Termination of leases for unusual circumstances such as terminal or mental illness or loss of employment: We’ll continue to oppose such measures because they would have a major impact on the financial stability of any apartment community.
  
  
• Green buildings: There have been several attempts to amend the tax codes to provide for high-performance buildings tax credits. There are sure to be more bills in the future.
  
  
• Low interest loans for sprinkler systems and other fire suppression systems.
  
  
• Immigration: Legislation dealing with employment of undocumented immigrants could easily re-surface.
  
  
• Harrisburg Visit, March 24 & 25, 2009: With these critical issues before us, members must continue to personally communicate with Harrisburg leadership. Legislators will listen to those who have first-hand knowledge of how laws affect their business’s bottom lines. We need apartment professionals in Harrisburg on March 25, 2009! Contact Christine at cgertz@aagp.com for information.

NATIONAL

New Federal Rules for Pools and Spas:
Apartment communities with pools or spas must comply with new regulations that went in to effect on December 19, 2008. The Virginia Graeme Baker Pool and Spa Safety Act requires apartment communities to install approved anti-entrapment devises. More information on the law and its requirements is available the CPSC web site at www.cpsc.gov/whatsnew.html#pool.

“Red Flag” Regulations:
New federal identity theft prevention rules went in to effect on November 1, 2008. The FACT Act amends the Fair Credit Reporting Act and imposes rules on financial institutions and credit card companies to combat identity theft. Apartment firms, as users of credit reports, must comply with the rule that implements Section 315 of the FACT Act. Landlords are specifically mentioned in this section.

Under the new regulations businesses must take additional steps to authenticate a person’s identity when there is a pattern, practice of specific form of activity that indicate a possible existence of identity theft. A red flag in the apartment industry might present itself, for example, as a fraud alert or credit freeze in included in a consumer report.

NAA Capitol Conference - We must make sure they “get it”:
At the National Housing Forum on December 8, 2008, James Lockhart, Federal Housing Finance Agency Director was asked about the impact our troubled economy is having on rental housing. Mr. Lockhart said,

“It is extremely important to get multi-family [housing] working again”

The National Apartment Association and its affiliates are continuing their campaign to convince all federal legislators of the wisdom of Mr. Lockhart’s words. A vibrant rental market is an absolute necessity in our diverse nation. If ever there was a time to promote this very basic idea, it is now. The apartment industry is vital to our economic recovery and “homeownership at any cost” has never been a sound policy.

Please attend the NAA Capitol Conference, March 8 through 11, 2009. Contact Christine at cgertz@aagp.com for details.

PAC COMMITTEE

The need for Political Action funds is growing along with our stature and influence in Harrisburg. Because we need to continually contribute to candidates’ fundraisers a formal PAC Committee was established in 2008. It’s no secret the key ingredient to our success in waging our ongoing lobbying efforts is money. The Pennsylvania Apartment Association is tremendously grateful to everyone on their PAC Committee for making political action possible.

We’ve got your back….
The financial health of any industry depends in large measure on the willingness of industry leaders to pay attention to government affairs. Legislators are confronted with thousands of pieces of legislation every year and much of it will have a direct bearing on the bottom line of every rental owner.

Knowing people with similar interests would inevitably collaborate for a common cause, our nation’s founders actually designed our democratic system to accommodate the lobbying efforts of associations. A collective voice that presents a principled point of view will always have more clout with politicians.

But the key to any association’s successful lobbying efforts is its members. It is your story they want to hear. Please let us know your concerns. Together, we will broaden our influence and protect our industry.

For more information: Contact Christine Young Gertz at cgertz@aagp.com with questions about these or any other issue.

NAA Capitol Conference, March 8 through 11, 2009.

Harrisburg Visit, March 24 - 25, 2009. We meet informally for dinner the evening of March 24 and visit legislators on March 25.

Respectfully submitted,
Christine Young Gertz, Esq.
Government Affairs Director

Click here for Legislative Update Newsletters and links on the Pennsylvania Apartment Association web site.