Recommendation
Staff recommends that the Mayor and Council direct staff to:
1) Seek input from property owners on the value of the services provided by the Commission on Common Ownership Communities to supplement the input received from HOA and condo association representatives.
2) Prepare an agenda item for the September 14, 2009 Mayor and Council meeting to present the additional input gathered, and receive direction from the Mayor and Council to begin the process of adopting Montgomery County Code Chapter 10B.

Change in Law or Policy
Montgomery County Code Chapter 10B established the Commission on Common Ownership Communities (CCOC). Chapter 10B requires every common ownership community in Montgomery County, excluding those located in municipalities, to register with the County and makes them all eligible to use the services provided by the CCOC. For Rockville common ownership community residents to be eligible, the Mayor and Council would need to adopt County Code Chapter 10B.

Discussion
Introduction
Councilmember Gajewski referred to City staff two residents of a common ownership community in the City of Rockville who recommend that Rockville residents have access to Montgomery County's Office of Common Ownership Communities (CCOC). Staff collected information about the CCOC and briefed the Mayor and Council on January 12, 2009. The Mayor and Council directed staff to seek feedback from homeowner and condominium association leadership on their interest in becoming eligible to use the CCOC's services. This agenda item summarizes the input received from association representatives who responded to a City survey, an attorney who represents common ownership communities in Rockville, and City staff who receive questions and concerns related to common ownership communities.

Survey Results
The City posed six questions to the presidents and property managers of Rockville homeowner and condominium associations to gather input about the value of accessing CCOC services. The on-line survey was distributed to 79 individuals and 25 responded, for a 32% response rate. Background information about the Commission, the services provided, the County's annual fee and the Commission's web address were included with the survey. The survey results are summarized in the table below.

Response	Number of Responses	Percent of Responses
Would educational programs and technical assistance offered by the Commission on Common Ownership Communities (CCOC) be useful to your board and property owners?
No	6	24%
Yes	17	68%
No Response	2	8%
Do you feel that the commission’s dispute resolution services would be useful to your community?
No	8	32%
Yes	14	56%
No Response	3	12%
Approximately how often do disputes occur between your association board and property owners that would lend themselves to CCOC dispute resolution services?
Never	5	20%
0 - 4 per year	17	68%
5 - 10 per year	1	4%
More than 10 per year	0	0%
No Response	2	8%
Would you support the Mayor and Council adopting legislation that provides access to CCOC services?
No	8	32%
Yes	14	56%
No Response	3	12%

56% of the respondents indicated support for the Mayor and Council adopting legislation that provides access to CCOC services. The majority of respondents indicated that both the education and dispute resolution services would be useful to their community, with 68% responding that the education services would be useful and 56% responding that the dispute resolution services would be useful. The survey also collected information about the number of disputes between associations and property owners. The majority of respondents, 68%, indicated that zero to four disputes generally occur annually. Only one respondent reported more than four disputes annually.

Each survey question provided space for additional comments. The comments related to the value of dispute resolution services and Rockville adopting legislation were informative. It appears that the 32% of respondents who do not find value in the dispute resolution services and do not support the legislation have not faced difficult to resolve conflicts. Several respondents indicated that the board and property owners have been able to resolve disputes through processes outlined in the association bylaws, and communication and coordination with the property owner. Those respondents do not feel that the cost to participate is worthwhile because existing dispute resolution practices have worked.

These survey results represent input only from association board members and property managers. Staff began community outreach with them because they represent an important stakeholder group and we have convenient access to this group by e-mail. To date, we have not sought input from the other primary stakeholder group, the property owners in homeowner and condo associations.

Input from an Attorney Representing Common Ownership Communities
Attorneys from Lerch, Early and Brewer, Chtd., a full service commercial law firm servicing businesses, individuals and nonprofit corporations, approached staff to discuss the value of the CCOC. Lerch, Early and Brewer represents multiple common ownership communities in the City of Rockville. Staff discussed the CCOC with Jeremy Tucker from Lerch, Early and Brewer for an additional perspective on the communities' needs and the value of the CCOC. In addition to representing Rockville HOAs as an attorney, Mr. Tucker lives in a Rockville HOA and serves on the City's Historic District Commission.

Mr. Tucker indicated that property owners and association boards in Rockville would benefit from access to the CCOC services. He does not see any down side to opting in to the CCOC other than the annual fee. He reports that association boards of directors need to enforce the community bylaws and covenants. If property owners do not cooperate, the association doesn't have any specific enforcement mechanism other than a costly court case. Similarly, the CCOC provides assistance to property owners who disagree with an association decision or process. The CCOC also provides a check to ensure that associations are operating properly and residents are treated fairly. Mr. Tucker recognized that disputes are usually resolved through association procedures and coordination between the boards and property owners. However, he noted that the CCOC services are intended to provide assistance when the normal processes do not work.

Mr. Tucker has worked with the CCOC as a representative of associations located outside the City limits. He reports that the CCOC's education component does not appear to be the primary focus of the CCOC at this time, so most of the value is associated with the dispute resolution services. While the dispute resolution process can be time consuming, his experience shows that it is a very important resource for property owners and associations unable to resolve a conflict and unable to afford going to court.

City Experience
The City occasionally receives requests from Rockville residents who need assistance resolving conflicts with the leadership of their common ownership community. The requests to the City generally come from property owners who have concerns about a board decision or decision making process.

Four residents of common ownership communities in Rockville have approached the City over the past six months for assistance resolving a conflict with their association. The topics of conflicts vary, but residents generally report feeling that the association board treated them unfairly. They express frustration with the fact that they cannot access the CCOC services, and feel that they do not have anyplace to go for help and cannot afford to go to court. They also express feeling powerless because they don't have the resources typically available to association boards, such as attorneys and professional property managers.

City staff refers these callers to Rockville's mediation program. If both parties agree to participate, staff organizes a mediation to attempt to resolve the dispute. All four of the callers who approached the City over the past six months were referred to the mediation program. In two cases, the property owner decided not to seek a mediation. In one case the HOA did not accept the invitation to mediation. The HOA and property owner resolved the fourth dispute on their own. While participation in the CCOC's dispute resolution process is mandatory, Rockville's mediation program is voluntary. A party can choose not to participate and effectively eliminate this road to resolution.

There have been a couple of conflicts between property owners and HOAs over the past five years that required significant time from staff across several City departments. Some City staff time could have been saved if the residents could have accessed the CCOC for assistance. One example involved a conflict between the Fallsgrove Association and a resident seeking a fence higher than the association rules allow for protection from coyotes. In another instance, staff was involved in a conflict between a property owner and the HOA about the placement of the neighborhood sign on the resident's property.

Mayor and Council History
The Mayor and Council initially considered adopting County Code Chapter 10B when the County adopted the legislation and created the CCOC in 1991. The Mayor and Council learned that a number of homeowner associations did not support adopting Chapter 10B due to the requirement in the legislation to register with the County and pay the annual fee. The Mayor and Council chose not to opt in to the program at that time.

Following an inquiry from two Rockville residents in 2008, the Mayor and Council requested information about the CCOC and received a briefing on January 12, 2009.

Options Considered
County Code Chapter 10B is written to require all common ownership communities to register and participate in CCOC services. That Code language leaves the City with two options: 1) adopt the language, requiring every common ownership community to register and pay an annual fee, or 2) not adopt the legislation, continuing to exclude all Rockville HOA/condo residents from the CCOC services.

The information gathered by staff indicates that association bylaws generally include procedures to address conflicts and that the number of conflicts between associations and property owners is less than five per year. It appears that most association boards and property owners won't ever need the CCOC's help. However, it provides a valuable resource in those instances when the standard processes do not lead to a resolution. In those cases, it benefits both parties to have professional assistance from the County, to avoid going to court, and to have a resolution that is binding and enforceable. It gives City staff a resource to refer residents who feel they have no place else to go. While it won't always be needed, it is an additional resource for Rockville residents.

While the $2.75 annual fee per housing unit is not significant, staff is sensitive to the burden of imposing a new fee during difficult fiscal times. The County requires each HOA to pay the fee and most associations likely pass the cost on to property owners. Attachment A lists the common ownership communities in Rockville, representing approximately 7,900 housing units total. That number is significantly higher than when the CCOC was established in 1991. Attachment A also shows the cost that the County will charge each association if the City opts in to the CCOC services.

The input collected from HOA/condo representatives to date has been informative and helpful, however it does not necessarily reflect the views of all HOA and condominium property owners. It is entirely likely, however, that property owners will have views similar to the association representatives. For example, some property owners will not anticipate having conflicts that require CCOC services and not find value in paying an annual fee for the "insurance" provided. Other property owners, who may have experienced a conflict or anticipate the possibility of future conflicts with their association, will find it worth the investment to have the service available if ever needed.

If the Mayor and Council would like input from property owners before making a decision, staff recommends including a link on the City website to a short survey. Staff will compile the results to share with the Mayor and Council at their first meeting after summer recess. Staff would also prepare a draft resolution to adopt County Code Chapter 10B so that process could begin right away upon Mayor and Council direction. County Code Chapter 10B is included as Attachment B.

Public Notification and Engagement
Staff engaged homeowner and condominium association representatives through a survey about the value of CCOC services. The survey is described in the Discussion section of this agenda item.

Fiscal Impact
There is no fiscal impact for the City government associated with adopting County Code Chapter 10B. If adopted, all common ownership communities will be required to register with the Commission on Common Ownership Communities and to pay an annual fee of $2.75 per unit.

Attachments

City Manager:

Scott Ullery, City Manager
Approved on: 07/06/2009