Delaware-2017-SB23-Draft

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend § 7003, Title 25 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline and redesignating accordingly as follows:

§ 7003. Definitions.

Unless otherwise expressly stated, if a word or term is not defined under this section, it has its ordinarily accepted meaning or means what the context implies. In this subchapter, the following definitions apply. apply:

(3)a. “Capital improvement or rehabilitation work” means work that primarily benefits the manufactured home community; increases the longevity, utility, or worth of the property; and meets at least one of the following:

1. The construction, installation, or assembly of a new asset, or the alteration, expansion, or extension of an existing asset to accommodate a change in function, unmet programmatic needs, or to incorporate new technology.

2. Constructed asset deficiencies where there is non-compliance with a building code or state or federal law, if the applicable code or law was enacted after construction of the asset was completed.

b. “Capital improvement or rehabilitation work” includes architectural or engineering services that support the planning, design, and execution of the work in paragraph (3)a. of this section.

c. “Capital improvement or rehabilitation work” does not mean work that is routine maintenance for the purpose of keeping property in ordinarily efficient operating condition.

Section 2. Amend § 7008, Title 25 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:

§ 7008. Fees; services; utility rates.

(n)(1) A community owner may charge a fee to recover the cost of capital improvement or rehabilitation work, as defined in § 7003 of this title.

(2)a. A community owner may only charge the fee under this subsection if the community owner is in compliance with the requirements under § 7042(a)(1) and § 7043 of this title.

b. The fee under this subsection may be challenged in the manner and procedures under § 7043 through § 7044 of this title.

c. Proceedings to challenge a fee under this subsection may be consolidated with proceedings to challenge a rent increase under § 7042 or § 7043 of this title.

(3) The fee to recover the cost of capital improvement or rehabilitation work must be recovered evenly over the number of years necessary in an amount that is the lower of either of the following:

a. Ten percent of the cost of the capital improvement or rehabilitation work.

b. Ten percent of the rent.

(4) Ninety days written notice of the fee must be provided to tenants and must set forth the following:

a. The specific capital improvement or rehabilitation necessitating the fee.

b. The total cost of the capital improvement or rehabilitation necessitating the fee.

c. The amount of the fee.

d. The date at which the fee terminates.

Section 3. Amend § 7042, Title 25 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline and redesignating accordingly as follows:

§ 7042. Rent justification.

(1) The completion and cost of any capital improvements or rehabilitation work in the manufactured home community, as distinguished from ordinary repair, replacement and maintenance;

(2) Changes in property taxes or other taxes within the manufactured home community; community.

(3) Changes in utility charges within the manufactured home community; community.

(4) Changes in insurance costs and financing associated with the manufactured home community; community.

(5) Changes in reasonable operating and maintenance expenses relating to the manufactured home community including, but not limited to: including: costs for water service; sewer service; septic service; water disposal; trash collection; and employees; employees.

(6) The need for repairs caused by circumstances other than ordinary wear and tear in the manufactured home community.

(7) Market rent. — For purposes of this section, "market rent'' means that rent which would result from market forces absent an unequal bargaining position between the community owner and the home owners. In determining market rent rent, relevant considerations include rents charged to recent new home owners entering the subject manufactured home community and/or by or comparable manufactured home communities communities, or both . To be comparable, a manufactured home community must be within the competitive area and must offer similar facilities, services, amenities and management.

(8) The amount of rental assistance provided by the community owner to the home owners under § 7021A of this title.

(d) A community owner may charge a fee under § 7008 of this title to recover the cost of capital improvement or rehabilitation work, as defined in § 7003 of this title, in the manufactured home community.

(e) A community owner shall may not incorporate the cost of a civil penalty, criminal fine, or litigation-related costs for rent-related proceedings into rent charged under any circumstance. A community owner also shall may not utilize as justification for any future rental increase the cost of capital improvements or rehabilitation work, once that cost has been fully recovered by rental increases that were incorporated into a prior rental increase in excess of CPI-U, where the prior rental increase was fees that were properly implemented under this subchapter. section.

SYNOPSIS

Section 7042 of Title 25 of the Delaware Code lists the completion and cost of any capital improvements or rehabilitation work in a manufactured home community, as distinguished from ordinary repair, replacement, and maintenance, as a factor that may justify an increase in rent but only until the cost of the improvement has been fully recovered. Like Senate Substitute No. 2 for SB 23, this Act clarifies this provision by making the recovery of such capital improvement or rehabilitation work a fee under § 7008, the fee section of this chapter, so that it is a separate charge from rent and provides notice requirements regarding the fee. This Act provides a revised definition of capital improvement and rehabilitation work. This definition is placed in the definitions section of Chapter 70. Chapter 70 defines rent as including fees, preserving a community owner’s ability to enforce payment of the fee. By identifying this assessment as a fee, it is clearly identified as separate from a base rent increase.

Senate Substitute No. 3 for Senate Bill No. 23 differs from Senate Substitute No. 2 for Senate Bill No. 22 as follows:

1. It removes lines from the definition of capital improvement or rehabilitation work that conflict with the rest of the definition.

2. It adds the requirement that capital improvement or rehabilitation work must benefit the entire manufactured home community.

3. It limits the correction of deficiencies to comply with changes to building codes or laws enacted after construction was completed.

4. It clarifies that the community owner must still comply with other provisions of the rent justification law, § 7042(a)(1) and § 7043 of Title 25, before imposing this fee.

5. Permits a challenge to the fee to be consolidated with other proceedings challenging a rent increase under § 7042 and § 7043 of Title 25.

6. It adds that the fee must be collected at a rate of 10% of the cost of the capital improvement or rehabilitation work or over the number of years necessary to not exceed 10% of the rent, whichever amount is lower.

This Act also makes technical corrections to conform existing law to the standards of the Delaware Legislative Drafting Manual.

Author: Senator Ennis

SPONSOR:	Sen. Ennis & Rep. Carson
Sen. Bushweller; Reps. Kowalko, Lynn, Wilson