Discussion and Instruction on an Ordinance to amend Section 1-8 of the Rockville City Code entitled "Application of County Law" so as to allow Chapter 10B entitled "Common Ownership Communities" of the Montgomery County Code to apply in the City.

Mayor and Council

For the meeting on:	January 11, 2010
Department:	City Manager
Responsible staff:	Jenny Kimball, Assistant City Manager phone: (240) 314 - 8104 jkimball@rockvillemd.gov

Subject
Discussion and Instruction on an Ordinance to amend Section 1-8 of the Rockville City Code entitled "Application of County Law" so as to allow Chapter 10B entitled "Common Ownership Communities" of the Montgomery County Code to apply in the City.

Recommendation
Staff recommends that the Mayor and Council discuss the background information and public input provided and direct staff on whether to bring back the Ordinance for adoption on January 25, 2010.

Change in Law or Policy
The ordinance amends the City Code to allow property owners and boards of homeowner associations (HOAs) and condominium associations located within the City of Rockville to use the services of the Montgomery County Commission on Common Ownership Communities (CCOC). The ordinance, introduced on October 12, 2009, is found in Attachment D.

Discussion
Montgomery County defines a common ownership community as a development, residential condominium, or cooperative housing project that is subject to a declaration enforced by a homeowners’ association. The Commission on Common Ownership Communities (CCOC) was established by County Code Chapter 10B in 1991 to provide oversight of common ownership community activities. County Code Chapter 10B is found at Attachment A.

The commission is organizationally located in the County’s Office of Consumer Protection. The FY10 adopted operating budget for the CCOC totals $382,220 and includes 2.5 workyears. The majority of the budget funds personnel which includes one full time commission staff person and portions of additional positions that devote some of their time to the commission. The budget also supports commission operations including public outreach, education and dispute resolution procedures.

Commission Membership

The County Executive appoints members to the commission, subject to confirmation by the County Council. The fifteen members consist of:

Six residents of self-managed and professionally managed common ownership communities,
Six members from the ranks of professionals associated with common ownership communities (attorneys, property managers, investor-owners), and
Three members from the category of real estate sales and developers.

The County Council is considering a bill that would adjust the composition of the commission to increase from six to eight the number of residents of associations; increase from six to seven the number of professionals associated with common ownership communities; and merge the real estate sales and development category with the professional category.

Designees of the County Council, Planning Board, Department of Environmental Protection, Department of Permitting Services, Department of Transportation, and the Department of Housing and Community Affairs are ex-officio, nonvoting members of the commission.

Commission Mission and Responsibilities

According to County Code Chapter 10B, the CCOC was established to promote an equitable balance between the powers of community governing bodies, owners and residents. To that end, the CCOC’s mission is to provide owners, tenants, residents, boards of directors, and management companies of self-governing residential communities with information, assistance, and impartial dispute resolution programs that:

Improve the quality of life in the community,
Strengthen the self-governing community structure, and
Enhance the value of residential property in community associations.

Responsibilities of the commission and CCOC staff include:

Ensuring proper establishment and operation of homeowners’ associations, condominium associations, and cooperative housing corporations;
Promoting awareness and understanding of the rights and obligations of living in a common ownership community;
Reducing the number and divisiveness of disputes, encouraging informal resolution of disputes, and holding formal hearings as needed;
Maintaining property values and quality of life in these communities;
Assisting and overseeing the development of coordinated community and government policies, programs, and services which support these communities; and
Preventing potential public financial liability for repair and replacement of common ownership community facilities.

Common Ownership Community Registration

Chapter 10B of the Montgomery County Code requires that the leadership of each common ownership community, excluding those located within the limits of incorporated municipalities, register annually with the Office of Common Ownership Communities. The Licensing and Registration Unit of the Department of Housing and Community Affairs manages the registration process. Registration involves completing a registration form, submitting a complete and current copy of the association’s recorded governing documents, and paying an annual registration fee based upon the number of units located in the common ownership community. In FY 2009, the registration fee was $2.25 per housing unit. In FY 2010, the fee increased to $3.00 per unit. Commission staff does not expect the fee to increase in FY11.

Table 1 presents registration data from the Commission on Common Ownership Communities. Once a community is registered, the Licensing and Registration Unit automatically generates a renewal notice each year. Any common ownership community that fails to register with the County is subject to a class A violation and may have to pay civil fines as a penalty.

Table 1. Montgomery County CCOC Registrations

Registrations	2005	2006	2007	2008	2009
Number of registered communities	833	852	905	954	968
Number of units	116,532	118,248	121,101	122,082	123,083

The bill currently before the County Council would add a requirement that the governing body of a community association must at least annually distribute information to notify all owners about the availability of the CCOC services. That information could be included in any annual notice or other mailing to all association members.

Advisory and Education Services

The CCOC advises the County Council, County Executive and County Government offices on matters related to common ownership communities. For example, the commission provides opinions on bills pending in the State legislature, on fees that could impact common ownership communities, and on the impact of the foreclosure crisis on the communities.

The commission staff provides technical assistance, information and advice to association boards and residents on topics associated with leading and residing in a common ownership community, including conducting elections, adopting budgets, and appropriately enforcing association bylaws. Staff works with parties on informal resolution of disputes and provides information about how to submit a formal complaint.
To educate common ownership board members and residents, the CCOC provides the following on-line resources:

FAQs on architectural control, assessments, condominium elections, meetings, records & documents.
A Bill of Rights and Responsibilities for owners in common ownership communities outlining 12 principles found in state law.
A Common Ownership Community Manual and Resource Guide.

Funds from the increase in the registration fee for FY10 will fund a contract for additional education services for common ownership residents and boards of directors.

The CCOC also hosts an annual meeting for all residents and board members for training, networking and information sharing. Upon request, commissioners also speak at association.

Dispute Resolution Services

The CCOC dispute resolution services apply to disputes between association residents and governing bodies such as an HOA board of directors. The CCOC does not resolve disputes between neighbors or disputes with property managers (unless the complaint alleges that the governing body is responsible for the actions of the property manager).

County staff reported that between 50% and 60% of the complaints are filed by associations and most of those are related to violations of architectural controls or parking requirements. The other 40% to 50% of complaints are filed by property owners and involve a variety of topics related to association management and conduct.

County Code Chapter 10B indicates that the County Executive may establish reasonable fees in amounts sufficient to fund the provision of dispute resolution and technical assistance. At this time the CCOC charges a $50 mandatory filing fee for each complaint filed with the CCOC.

The commission manages disputes that involve the authority of a governing body under the laws and documents of the association (documents of an association include master deeds, declarations, incorporation documents, bylaws and rules). Disputes under the commission’s jurisdiction include any disagreement involving the authority of a governing body to:

require any person to take any action, or not to take any action, involving a unit;
require any person to pay a fee, fine or assessment;
spend association funds; or
alter or add to a common area or element.

In addition, the commission has the authority to manage a dispute that involves the failure of a governing body, when required by law or an association document, to:

properly conduct an election;
give adequate notice of a meeting or other action;
properly conduct a meeting;
properly adopt a budget or rule;
maintain or audit books and records; or
allow inspection of books and records.

The bill currently under consideration by the County Council would add two items to this list:

maintain or repair a common element if the failure results in personal injury or property damage; and
require any person who is subject to association documents to comply with those documents.

The CCOC’s jurisdiction does not include disagreements that involve:

the title to any unit or any common area or element;
the percentage interest or vote allocable to a unit;
the interpretation or enforcement of any warranty;
the collection of an assessment validly levied against a party; or
the judgment or discretion of a governing body in taking or deciding not to take any legally authorized action.

Dispute Resolution Process and Timeline

The CCOC resolves disputes through informal communication and coordination with CCOC staff, mediation, or a hearing before a panel of commissioners. The workload varies from year to year. Table 2 provides data on workload since 2005, including the number of inquiries, cases filed, mediations and hearings held.

According to staff, the time to complete the dispute resolution process typically ranges from 3 to 12 months. The length of time varies depending on the complaint and the pace of activity by the parties in the dispute. For example, staff report that the parties in a hearing frequently request more time to prepare for the hearing than the CCOC needs to schedule the hearing.

Table 2. CCOC Dispute Resolution Activity

Dispute Activity	2005	2006	2007	2008	2009 through 12/23/09
Inquiries/ Advice Given	1163	1133	945	883	845
Cases Filed	100	88	81	85	72
Mediations	33	34	29	37	21
Hearings	17	21	23	17	13
Cases Closed*	93	94	69	84	78

* More cases may be closed than filed in any given year because cases filed one year may be closed in the following year. As of December 23, 2009, 72 cases were filed, 84 were closed and 66 were pending.

Inquiries and Advice CCOC staff regularly responds to requests for information about common ownership communities and about disputes between property owners and boards of directors. During 2009, CCOC staff responded to 845 requests for information and advice.

The commission requests that any party interested in filing a formal dispute with the CCOC first exhaust all dispute resolution procedures or remedies in the association’s governing documents. The commission also addresses a dispute if 60 days have elapsed since a party followed their association’s written dispute resolution procedures, and the association has failed to resolve the dispute. The first provision keeps dispute resolution at the community governance level, unless the association processes do not lead to a resolution. The second provision ensures that associations resolve disputes brought to the board in a timely manner.

Complaint Filed The dispute resolution process formally begins when an individual or board of directors files a case or complaint with the CCOC staff. The commission staff reviews all complaints submitted and immediately forwards any that are clearly outside the CCOC’s jurisdiction (e.g., a complaint from a Rockville HOA). That first step and subsequent steps are outlined in Table 3 with information about the timeline to complete each step. A significant proportion, approximately 40%, of disputes brought to the CCOC are resolved at this initial step. The CCOC staff work with parties to understand and resolve the problem before even participating in a mediation.

Mediation Within one to five days of filing, CCOC staff send the complaint to the other party in the dispute. The other party has 30 days to reply. Upon hearing from the other party, the CCOC staff works with the parties to arrange a mediation with the Conflict Resolution Center of Montgomery County. Two qualified mediators from the Conflict Resolution Center meet with the parties and attempt to come to an agreement to resolve the dispute. After an agreement developed through mediation is carried out, the case is closed. The CCOC does not stay involved after closing a case or enforce a mediation agreement. If any issues arise between the parties, they can take the matter to court. Approximately 20% of all cases filed with the CCOC are resolved through mediation.

Commission Consideration of Jurisdiction If a party does not respond to the CCOC’s letter, either party refuses to attend mediation, or mediation fails to resolve the dispute, the resolution process continues. The commission reviews the complaint at the next monthly meeting and determines whether it falls under their jurisdiction as defined in County Code Chapter 10B. The County Attorney provides advice. If the CCOC rejects jurisdiction, the case is closed and the parties have the option of going to court or file a new CCOC complaint.

Hearing If the commission accepts jurisdiction, a hearing date is set. Staff sends a “Summons and Notice of Hearing” to both parties. The parties have 15 days to send each other document requests and questions to be answered in writing, under oath. On the scheduled date, the commission convenes a 3-member panel to hear the dispute. The commission may compel the attendance at a hearing of witnesses and parties, administer oaths, take testimony under oath or require the production of evidence. The commission may also issue summonses for witnesses, documents, or other evidence. The County Attorney may enforce the summons in a court with jurisdiction. At any hearing, a party or a witness may be advised by counsel.

The hearing panel must apply state and county laws and all relevant case law to the facts of the dispute, and may order the payment of damages and any other relief that the law and the facts warrant. If any party does not appear at the scheduled hearing, the hearing panel may order any relief to another party that the facts on record warrant.

Decision and Order After the hearing, the panel has 45 days to issue a Decision and Order. Two examples of hearing panel decisions are at Attachment B to provide a better understanding of the type of cases brought before and panel, information considered and decisions made.

The losing party usually has 30 days to obey the order or appeal the order to the Circuit Court. The decision of the hearing panel is binding on the parties, subject to judicial review. The commission, acting through the Office of Consumer Protection and the County Attorney, may enforce a decision of the hearing panel by taking any appropriate legal action. Any person who does not comply with a final commission order issued under this Chapter has committed a class A civil violation. CCOC staff reports that they issue citations for not complying with a hearing panel order a couple of times each year. Staff prepares the charge and the County Attorney’s Office files the charge in the District Court.

Table 3. CCOC Dispute Resolution Process

Staff receives a complaint
Staff notifies the other party – 1 to 5 days
Other party responds to the notification – up to 30 days
If parties agree to mediation:	If no response from other party, mediation is declined, or mediation is unsuccessful:
Staff arranges a mediation session conducted by CRCMC – 3 to 8 weeks	CCOC considers jurisdiction over the complaint at their next monthly meeting – up to 30 days
Dispute resolved and case is closed	Jurisdiction not accepted and case is closed	Jurisdiction is accepted and hearing date is set – at least 30 days
		Hearing panel issues a Decision and Order and case is closed – up to 45 days

Dispute Resolution Results

Table 4 outlines the results of the dispute resolution process in calendar year 2009. The data shows that the majority of the disputes are resolved very early in the process. Upon receiving a formal written complaint, CCOC staff gathers information and discusses the complaint with the parties. Of the 84 cases resolved in 2009, 34 or 40%, were resolved through this informal coordination and assistance with CCOC staff.

Formal mediation through the Conflict Resolution Center of Montgomery County (CRCMC) also successfully resolves complaints. Of the 84 complaints resolved, 20% were resolved through mediation. Four additional complaints failed to come to resolution during mediation but were resolved prior to a hearing with the commission.

Of the 84 complaints resolved, 28 moved forward to the commission for consideration of jurisdiction. The commission closed 9 or 11% because they did not meet the jurisdictional requirements in the Code. Nineteen cases, or 23%, went to a hearing before a panel of commissioners.

Table 4. Dispute Resolution Process Results (as of December 23, 2009)

Resolution	Number of Cases	Percent of Cases
Resolved prior to mediation	34	40%
Resolved through mediation	17	20%
Resolved prior to a hearing	4	5%
Resolved at a hearing	19	23%
Case withdrawn	1	1%
CCOC determined no jurisdiction	9	11%
Total	84*	100%

* More cases may be closed than filed in any given year because cases filed one year may be closed in the following year. As of December 23, 2009, 72 cases were filed, 84 were closed and 66 were pending.

Rockville’s Common Ownership Communities

There are currently 57 common ownership communities in the City of Rockville. They represent 7,886 housing units, including single family homes, townhomes and condominiums. A list of the common ownership communities and the number and type of housing units in each is provided in Attachment C. The list also shows the annual registration fee, at the current $3.00/unit rate, which would be due from each association if Rockville participated in the CCOC.

Currently, residents and board members of any of these communities may contact the City when faced with a dispute that they are not able to resolve. Most of the requests for assistance come to the City Manager’s Office as a Citizen Service Request (CSR) or to the Community Mediation Program.

Between calendar year 2004 and 2008, the City received eleven requests from residents for help resolving a dispute between the resident and the association board of directors. Disputes involved topics like the approach that an association took in collecting payment for property maintenance violations, association rules for use of the community swimming pool, and allegations of inconsistent application of HOA covenants. One dispute was resolved through a formal mediation. Five other disputes were resolved informally through communication and assistance from the Mediation Administrator.

During calendar year 2009, eight association residents contacted the City for assistance resolving a dispute. The eight complainants live in seven different common ownership communities. The topics in dispute included tree removal, fees, architectural controls, unit repairs, and parking. Staff invited all complainants to participate in mediation, with the following results:

Mediation was held and successfully resolved the dispute – 2 instances
Conflict was resolved through assistance from the Mediation Administrator, without holding a formal mediation – 1 instance
Complainant declined mediation due to fear of retaliation by the association – 1 instance
HOA declined the invitation to mediate – 1 instance
Complainant continues to work with the association on a resolution after consulting with the mediation Administrator – 2 instance
Complainant is considering mediation – 1 instance

Rockville’s Participation in the Commission

In order for Rockville communities to participate in the CCOC, the Mayor and Council would need to adopt an ordinance to amend Section 1-8 of the Rockville City Code entitled ”Application of County Law” so as to allow Chapter 10B entitled “Common Ownership Communities” of the Montgomery County Code to apply in the City. An ordinance to amend the City Code was introduced by the Mayor and Council on October 12, 2009 and is found in Attachment D.

The City Council considered participating in the CCOC when it was established in 1991. A considerable number of common ownership communities reported to the Mayor and Council that they did not support participation, primarily because of the cost. Some boards of directors reported that the communities have a cap on the increase in association dues charged to property owners annually. For some communities, passing along the commission registration fee to property owners would result in the Boards exceeding the allowable percentage increase. The Mayor and Council decided not to participate in the County’s program.

In response to the then Mayor and Council’s request, a group of common ownership community representatives developed the Rockville Common Ownership Communities Association (RCOCA) in 1991 to provide dispute resolution services in Rockville. A city staff member from the Department of Community Development was assigned to serve as liaison to RCOCA and as the point of contact for persons and organizations seeking assistance.

RCOCA operated for five years. During its initial two years, the organization received applications to mediate 5-6 cases per year. The RCOCA board obtained the services of volunteer trained mediators to resolve the disputes. Virtually all of the cases concerned enforcement of architectural requirements by community associations, with a significant number of the inquiries related to the prohibition or regulation of satellite dish installations. Participation was voluntary and the results of mediations were not enforced.

Community associations also occasionally contacted RCOCA for assistance such as information about contractors or instructions for filing for County financial assistance for providing roadways. Those types of inquiries were answered by experienced Board members or by reaching out to the Community Association Institute, a national professional organization specializing in common ownership community concerns.

The requests for service diminished greatly after the first two years. With the creation of the City’s Mediation Program, a separate source of mediation through RCOCA was no longer necessary and the organization disbanded. The Mediation Program began providing formal mediation services as well as advice, support and information for parties in a conflict.

Implementation

If the Mayor and Council adopts the Ordinance, the CCOC will send a letter to each common ownership community board of directors welcoming them and informing the leadership that they need to register with the County within 30 days and pay the annual fee. Fees would be prorated to represent the point in the year that Rockville associations register with the County. As soon as the association is registered, the board and property owners can use the commission's services.

The commission will ask the boards of directors and management companies to forward information about the CCOC's services to all property owners in the association. The commission is also considering holding an information session specifically for Rockville associations and residents to introduce the services available.

Benefits of participating in the CCOC

1) The commission promotes an equitable ‘balance of power’

Montgomery County Code Chapter 10B states that “The Council finds that there is often unequal bargaining power between governing bodies, owners, and residents of homeowners’ associations, residential condominiums, and cooperative housing projects. Owners and residents in these common ownership communities are in effect citizens of quasi-governments, which provide services in lieu of government services, levy assessments, and otherwise have a significant impact on the lives and property of owners and residents.”

The Commission on Common Ownership Communities was created to promote an equitable balance between the powers of governing bodies, owners and residents through regulation, education, and dispute resolution services. If the Mayor and Council adopted County Code Chapter 10B, Rockville’s 57 common ownership communities and their residents would have access to dispute resolution services, information and support from experts in the field of common ownership communities.

2) The Commission's dispute resolution process provides an alternative to going to court

If a party in a conflict is not open to mediation or mediation is not successful in resolving a conflict, Rockville associations' and property owners' only other option is to go to court. The cost to take a dispute to court prohibits some from every resolving a dispute. The commission provides another step beyond mediation in the form of a hearing before a commission panel. It provides another opportunity to resolve the dispute without the costly and time-consuming process of going to court.

3) The number of common ownership communities in Rockville has increased since 1991

As the number of homeowner and condominium associations in Rockville increases, the number of individuals and boards of directors eligible to use the CCOC’s services and the potential need for the CCOC services increases. Overall the number of common ownership communities in the City increased from 31 in 1991 to 57 in 2009, an increase of 84%. The total number of units increased from 3,889 to 7,886, an increase of 103%. Additional data is presented in Table 4.

The biggest increase is in the category of condominiums and communities with a combination of condominiums and townhouses. Fifteen new communities have been added since 1991 - 10 in King Farm, 3 in Fallsgrove, and 2 in Town Center. This represents an increase of 188% over the 8 communities that existed in 1991. The number of condominium units has increased by 1300, from 1216 to 2516 units, an increase of 107%.

The other category of housing units that increased significantly since 1991 is neighborhoods with a combination of townhouses and single family units. That increase reflects the new developments like King Farm, Fallsgrove, Rose Hill Falls and Legacy at Lincoln Park. The number of units in townhome/single family communities increased by 2,145 or 165%.

The 2005 Census Update reported 21,895 households in the City. Based on that figure and the 7,886 common ownership units currently in Rockville, common ownership units represent approximately 36% of Rockville's households.

Table 4. Rockville Common Ownership Communities and Units – 1991 to 2009

	# of Commun- ities 1991	# of Commun- ities 2009	% Inc.	Number of Units 1991	Number of Units 2009	% Inc.
Condo & Condo/TH	8	23	188%	1216	2516	107%
TH	14	17	21%	759	986	30%
TH & SF	4	9	125%	1300	3445	165%
SF	5	8	60%	614	939	53%
Total	31	57	84%	3889	7886	103%

TH = Townhome
SF = Single Family

4) The commission’s hearing process requires parties to resolve disputes and the hearing panel decision is enforceable

Rockville’s Community Mediation Program is voluntary. If either party in the dispute chooses not to participate, a mediation session is not held and the case is closed. In contrast, if a party refuses to attend a mediation session organized by the CCOC or the mediation does not resolve the dispute, it goes to the commission. If any party does not appear at a scheduled commission hearing, the hearing panel may order any relief to another party that the facts on record warrant.

City staff checks in informally with mediation participants one month after the mediation session, but does not enforce agreements reached in mediation. If any conflicts continue, the parties are welcome to meet with the mediators again. The decision of a CCOC hearing panel is binding on the parties, subject to judicial review. The commission, acting through the Office of Consumer Protection and the County Attorney, may enforce a decision of the hearing panel by taking any appropriate legal action. Any person who does not comply with a final commission order issued under Chapter 10B has committed a class A civil violation.

Disadvantages of Participating in the CCOC

1) The commission’s annual fee is mandatory

If the Mayor and Council choose to participate in the program, every common ownership community in the City of Rockville will be required to register with the County’s Office on Common Ownership Communities and to pay a registration fee. The County designed the program and wrote the legislation to require all communities to participate, so all Rockville's HOAs would need to pay the fee annually. Given the 7,886 units in Rockville, the total amount that the County would collect from common ownership communities in Rockville under the current $3.00 per unit fee equals $23,658. Fees per community would vary significantly due to the range of sizes of common ownership communities in Rockville. The fee that would be charged to each community is listed in Attachment C.

The County has increased the annual registration fee in previous fiscal years. When the CCOC was established in 1991, the fee was $1.50/unit/year. It was subsequently increased to $2.25/unit/year and to $3.00/unit/year in FY 2010. No increase is anticipated in FY11, but the fee could increase again in the future to keep pace with the cost of operating the commission.

2) The demand for the commission’s dispute resolution service may be low and the majority of the disputes may be resolved through mediation

It is difficult to predict how many disputes will be brought to the commission by Rockville associations and property owners. In addition, CCOC staff reports that approximately 60% of the cases filed with the CCOC are resolved through informal or formal mediation and do not go to the commission for a hearing. If that trend applies to Rockville disputes, it is possible that the majority of any cases brought by Rockville residents and associations could be handled through the City’s existing Mediation Program.

During 2009, City staff received eight requests for assistance with a dispute. The City’s Mediation Program successfully resolved three of them and three disputes are not yet resolved. The remaining two requests appear most appropriate for the services of the CCOC because one association declined mediation and one resident declined mediation due to fear of retaliation by the association. That represents low demand for the CCOC's dispute resolution services in relation to the total number of common ownership communities in Rockville.

Public Input

Staff solicited public input on the option of Rockville participating in the CCOC through a survey of common ownership community leaders, a survey of common ownership community residents, and a public hearing. The results of the two surveys were presented and reviewed at the Mayor and Council meetings of July 13, October 12 and November 23, 2009. Of the 25 board members and property managers who responded to the survey, 56% supported the Mayor and Council adopting legislation that provides access to CCOC services. Of the 99 residents who responded, 55% supported adopting legislation.

The Mayor and Council held a public hearing on November 23 and kept the record open until December 23. Ten individuals spoke at the hearing and 31 comments were submitted to the City by e-mail/mail. A summary of the input is in Attachment E. It shows the name, whether the individual supports or opposes, and an summary of the comments submitted.

Of all the spoken and written input, 16 or 52% of individuals/associations support and 15 or 48% oppose an ordinance to amend City Code to allow County Code Chapter 10B to apply in the city. Individuals who weighed in both at the public hearing and in writing are counted once.

Responses to Questions

Responses to questions raised by the Mayor and Council and the public are listed below.

1) Does the CCOC address disputes about association fees?

Under County Code Chapter 10B, the CCOC can address disputes involving the authority of a governing body to require any person to pay a fee, fine or assessment. In other words, an HOA resident could file a complaint indicating that an association charged a fee that the association is not authorized to charge. The CCOC does not have jurisdiction to address a dispute about the collection of an assessment validly levied. In other words, the CCOC would not get involved if a resident failed to pay a fee that was appropriately charged, such as the monthly association dues. CCOC does not serve a collection agency role.

2) Is a common ownership community board of directors required to have an attorney at a CCOC hearing?

No party in a CCOC hearing is required to have an attorney. It was a requirement for association boards of directors prior to 2006. State law was amended to remove that requirement.

3) What proportion of cases brought to the CCOC are from condominium associations, townhome associations and single-family associations?

The CCOC does not track that data.

4) What criteria does the CCOC use in deciding whether to hear a case?

The commission assesses whether a) the facts alleged by the complainant provide reasonable grounds to conclude that a violation of applicable law or association documents occurred and b) the complaint falls under the CCOC’s jurisdiction as defined in County Code Chapter 10B.

5) How are CCOC decisions enforced?

The commission, acting through the Office of Consumer Protection and the County Attorney, enforce hearing panel decisions. County staff reports that parties usually comply with CCOC decisions. If any party does not comply, the County issues a class A civil citation. They will take a party to court if needed.

6) Does the CCOC always side with the property owner in decisions coming out of hearings?

According to the CCOC staff, the commission hearing panels do not always side with the property owner. Both “sides” are represented on hearing panels. Each panel must include a commissioner from the resident category, a commissioner from the professional category and a panel chair. The hearing panel decisions have all been unanimous for the past four years.

7) What is the turnaround time for cases that go to the CCOC?

Approximate times required for steps in the dispute resolution process are included in Table 3. According to staff, the time to complete the process can range from 3 to 12 months. The length of time varies depending on the complaint and the pace of activity by the parties in the dispute. For example, staff report that the parties in a hearing frequently request more time to prepare for the hearing than the CCOC needs to schedule the hearing.

8) How effective is the dispute resolution process and how satisfied have parties been with the CCOC's assistance?

Approximately 60% of the disputes filed with the CCOC are resolved prior to mediation or through a mediation. If not resolved at mediation, the complaint is brought to a CCOC hearing. The hearing panel comes to a decision on every complaint before them.

The CCOC has not conducted satisfaction surveys of all users of the services. The Conflict Resolution Center of Montgomery County (CRCMC) does survey CCOC clients who participate in a mediation. CRCMC’s latest compilation of survey results indicated that 57% of participants “strongly agree” and 17% “agree” that they are satisfied with the mediation results. The survey results also show that 60% of respondents “strongly agree” and 23% “agree” that they are satisfied with the mediation process.

9) What about residents who do not live in common ownership communities or residents in common ownership communities who have a dispute with a bordering neighbor who does not live in a common ownership community?

The CCOC’s dispute resolution services apply only to disputes between common ownership community governing bodies and community residents. The CCOC “was established to promote an equitable balance between the powers of community governing bodies, owners and residents”. It does not address disputes between neighbors. The City’s Mediation Program is available for those disputes.

10) What will Montgomery County do with the revenue from Rockville common ownership community registration fees?

Fee revenue will fund CCOC staff and operations, including responses to requests for information, review and processing of complaints, conducting hearings, and providing education. The majority of the CCOC’s spending is on personnel to support the program.

11) How could the City “beef up” the Rockville Community Mediation Program to serve a function similar to the CCOC?

Rockville’s Mediation Program operates very similar to the mediation portion of the CCOC dispute resolution process. However, Rockville does not have a representative body in place to hear cases when parties refuse mediation or when mediation does not resolve the dispute. Under the County’s program, the commission offers another level of dispute resolution service by forwarding disputes not resolved by mediation to a hearing panel.

To provide that level of service, the City would need to:

establish a volunteer body to hear dispute cases,
amend the City Code to give the body the authority to provide the types of services available at the CCOC,
devise staff policies and procedures for implementing a hearing function,
dedicate staff time to support the function, and
train staff to operate the expanded function.

The Mayor and Council would need to appoint a group of residents who, like the CCOC, represent common ownership community boards, common ownership community residents, and individuals in professions associated with common ownership communities. Language would need to be added to the City Code to give the body the types of authority found in County Code Chapter 10B. Examples include the authority to convene a panel to hear disputes between parties, to compel the attendance at a hearing of witnesses, to issue summonses, and the authority to award costs to any party. The City Code would also need to establish procedures for conducting hearings.

City staff in the Mediation Program and the City Attorney’s Office would need to be dedicated to this new function to provide support to the volunteer body in the same manner that County staff in the Office of Consumer Protection currently provide and may require the creation of additional staff positions. The specific workload would depend on the number of complaints brought to the City but would involve investigating complaints, preparing for hearings, coordinating with complainants, and supporting the volunteer board and hearing panels.

An attorney in the Montgomery County Attorney’s Office devotes part of his time to supporting the CCOC. The County Attorney representative attends every CCOC meeting, attends some CCOC hearings, reads cases submitted for a hearing to provide an opinion on whether the case falls within the CCOC’s jurisdiction, reviews draft decisions prepared by the hearing panels, provides legal advice, and assesses whether the County should get involved when a hearing panel decision is appealed to the Circuit Court. If the county decides to intervene, the attorney represents the County in the appeal.

Staff training and establishment of policies and procedures for managing the new function would be required. The commission staff provides technical assistance and information to association boards and residents on topics related with leading and residing in a common ownership community (e.g., conducting elections, adopting budgets, and appropriately enforcing association bylaws). Existing City staff does not have that skill set and would need to acquire knowledge and experience to provide advice and technical assistance on HOA related topics.

The Mayor and Council would need to consider establishing a registration system and annual fee like Montgomery County's in order to support the cost of the new service.

12) What is the benefit of forcing an additional layer of bureaucracy and unnecessary level of time intensive review on common ownership communities?

In all disputes, the resident and association board of directors is first responsible for resolution through the processes outlined in association bylaws. The CCOC only comes into play when either or both parties in a dispute request their assistance. The CCOC provides an opportunity for boards of directors and residents who are not satisfied with a resolution at the community level and would like an alternative to going to court. Any association board or resident can go directly to court at any time with a dispute and not use the services of the CCOC. While progressing through the CCOC dispute resolution process takes time, any dispute taken to court also takes time to resolve.

Mayor and Council History
Following an inquiry from two Rockville residents in 2008, the Mayor and Council requested additional information about the CCOC and received a briefing on January 12, 2009. Survey results were presented to the Mayor and Council on July 13 and October 12, 2009. The Mayor and Council introduced the ordinance to amend Section 1-8 of the City Code on October 12, 2009 and held a public hearing on November 23, 2009.

Public Notification and Engagement
Staff has corresponded with each HOA and condominium association via e-mail and at association meetings with updates about the Mayor and Council's consideration of participating in the CCOC. Residents were invited, through a Rockville Reports article and through their HOAs, to complete an on-line survey. Residents were also invited to comment at the public hearing. The public hearing was advertised in the Gazette and a Rockville Reports article, through announcements at association meetings, and by e-mail to our list of HOA board members/managers and our list of all Rockville's neighborhood leaders. Ten individuals spoke at the public hearing. Thirty one individuals commented by email or letter.

Fiscal Impact
There is no fiscal impact for the City government associated with amending City Code Chapter 1, Sec. 1-8 to adopt County Code Chapter 10B. If the Mayor and Council amends the City Code, all common ownership communities will be required to register with the County's Commission on Common Ownership Communities and to pay an annual fee to the County of $3.00 per unit. The fee is set at $3.00 for FY10 but could change in future fiscal years.
Next Steps
Upon direction by the Mayor and Council, staff will bring back the ordinance in Attachment D for adoption on January 25, 2010. If adopted, City staff will provide contact information for Rockville's HOA and condo associations to the CCOC. The CCOC will communicate with each association with instructions to register with the County. City staff would maintain communication with the CCOC and will be available to Rockville associations to answer questions.

Attachments

City Manager:

Scott Ullery, City Manager
Approved on: 01/05/2010