Bill Text: NJ A5016 | 2024-2025 | Regular Session | Introduced
Bill Title: Modifies requirements for associations to protect structural integrity of certain buildings; expands timeframes for associations to establish adequate reserves.
Spectrum: Partisan Bill (Republican 7-0)
Status: (Introduced) 2024-11-14 - Introduced, Referred to Assembly Housing Committee [A5016 Detail]
Download: New_Jersey-2024-A5016-Introduced.html
Sponsored by:
Assemblyman PAUL KANITRA
District 10 (Monmouth and Ocean)
Assemblyman GREGORY P. MCGUCKIN
District 10 (Monmouth and Ocean)
Co-Sponsored by:
Assemblymen Rumpf, Myhre, Assemblywoman Fantasia, Assemblymen Inganamort and Clifton
SYNOPSIS
Modifies requirements for associations to protect structural integrity of certain buildings; expands timeframes for associations to establish adequate reserves.
CURRENT VERSION OF TEXT
As introduced.
An Act modifying and clarifying certain provisions imposed to enhance the structural integrity of certain buildings and amending P.L.2023, c.214.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 2 of P.L.2023, c.214 (C.52:27D-132.3) is amended to read a follows:
2. As used in P.L.2023, c.214 (C.52:27D-132.2 et al.):
"Balcony" means an extension of the interior living space of the building that extends outwards from the facade of a covered building and is exposed to the elements.
"Bureau" means the Bureau of Housing Inspection in the Department of Community Affairs.
"Corrective maintenance" means maintenance to be undertaken following the detection of deterioration of the primary load bearing system with the goal of remediating the condition reported by the structural inspector.
"Covered building" means a residential condominium or cooperative building that is three stories or more in height and has a primary load bearing system that is comprised of a concrete, masonry, steel, or hybrid structure including, without limitation, heavy timber and a building with podium decks, but not including an excluded structure.
"Covered building owner" means the owner of a covered building, whose name appears of record with the county clerk or register, or the association of a common interest community.
"Excluded structure" means:
(1) International Standardization Organization ISO Type 1 construction or frame-built construction with combustible walls or roofs, but not including a podium deck on which the frame-built construction is situated;
(2) a building with ancillary elements that are not part of the primary load bearing system such as, but not limited to, elevator shafts or concrete, masonry, steel, or heavy timber that the primary load bearing system does not deliver a building's load to the foundation;
(3) a building that is not a condominium or cooperative, and consists primarily of rental dwellings; or
(4) a single-family dwelling.
"Podium deck" means a structural slab or deck that transfers applied loads from the structure above to the structure below.
"Primary load bearing system" means the assemblage of structural components within a building comprised of columns, beams, or bracing that by contiguous interconnection form a path by which external and internal forces applied to the building are delivered to the foundation. The foundation as well as any connected or attached balconies shall be included as part of the primary load bearing system evaluation.
"Structural inspector" means:
(1) a construction official, as that term is used in section 8 of P.L.1975, c.217 (C.52:27D-126), who is also an engineer licensed by the State;
(2) an employee of the bureau who is also an engineer licensed by the State; or
(3) an engineer licensed by the State who has the same qualifications required of an engineer under contract with the enforcing agency with whom the covered building owner contracts to perform inspections of covered buildings under section 3 of P.L.2023, c.214 (C.52:27D-132.4).
(cf: P.L.2023, c.214, s.2)
2. Section 6 of P.L.2023, c.214 (C.45:22A-44.2) is amended to read as follows:
6. a. [Any] Each association formed for the management of, and obligated to maintain, the common elements and facilities of a covered building within a planned real estate development shall undertake and fund a capital reserve study [which shall] to determine or assess the adequacy of the association's capital reserve funds to meet the anticipated costs [of replacement or] to repair [of] or replace components of the [capital assets of a common interest community that the association is obligated to maintain] primary load bearing system of the covered building. All capital reserve studies shall be prepared in conformity with the latest edition of the National Reserve Study Standards of the Community Associations Institute or similar standards by another recognized national organization. A capital reserve study conducted pursuant to this section shall be performed or overseen by a reserve specialist who is credentialed through the Community Associations Institute or an engineer or architect who is licensed by the State and shall include, but be not limited to, the following:
(1) the association's capital reserve fund balances;
(2) the association's anticipated income and expenses;
(3) an analysis of the physical status [and] of the [common area] components of the primary load bearing system of the covered buildings [and other common areas] that the association is obligated to maintain;
(4) the anticipated costs associated with the building maintenance, as well as the anticipated costs of repair or replacement of [common area building] components of the primary load bearing system of the covered buildings, which are necessary to maintain the structural integrity of the covered buildings [and other common area components that] , which the association is obligated to maintain;
(5) a reasonable estimate of the cost of:
(a) future reserve studies;
(b) reserve study updates; and
(c) periodic structural inspections required pursuant to section 3 of P.L.2023, c.214 (C.52:27D-132.4);
(6) a reasonable estimate of the costs associated with implementing any corrective maintenance deemed necessary pursuant to section 3 of P.L.2023, c.214 (C.52:27D-132.4);
(7) a proposed 30-year funding plan, as described in section 7 of P.L.2023, c.214 (C.45:22A-44.3) that establishes the adequate proposed capital reserve funding over a 30-year time period; and
(8) any other information necessary to perform an analysis of the adequacy of the association's capital reserve funds relative to maintaining the structural integrity of the primary load bearing system of the covered buildings [and common areas] which the association is obligated to maintain.
b. Associations which have not undertaken a reserve study within five years of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) shall undertake a reserve study within one year of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.). Associations formed after the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) shall undertake a reserve study as soon as practicable after the election of a majority of an executive board pursuant to section 5 of P.L.1983, c.30 (C.45:22A-47), but in no event shall such study be undertaken more than two years following the election of a majority of the executive board under section 5 of P.L.1983, c.30 (C.45:22A-47).
c. A covered building owner, as defined in section 2 of P.L.2023, c.214 (C.52:27D-132.3), shall ensure that a capital reserve study conducted pursuant to this section shall be reviewed by a licensed architect, engineer, or credentialed reserve specialist and that a capital reserve study be conducted and reviewed at least once every five years.
d. This section shall not apply to an association of a planned real estate development with less than $25,000 in total common area capital assets.
(cf: P.L.2023, c.214, s.6)
3. Section 7 of P.L.2023, c.214 (45:22A-44.3) is amended to read as follows:
7. a. An association of a planned real estate development shall [obtain] undertake a reserve study, including a 30-year funding plan, in order to ensure that the association has adequate reserve funds available to repair or replace, in a timely fashion, the [capital assets located on the common elements and facilities that] components of the primary load bearing systems of the covered buildings which the association is obligated to maintain, without [need] requiring the association to [create] impose a special assessment or undertake a loan obligation, except that in those cases in which a [capital asset] component of the primary load bearing system of a covered building reaches the end of its established useful life earlier than predicted by the reserve study, nothing herein is intended to prevent the imposition of a special assessment or obtaining a loan. These reserve funds shall be used for the repair or replacement of components of the primary load bearing system of a covered building that have reached the end of their established useful life as set forth in the most recent reserve study undertaken pursuant to section 6 of P.L.2023, c.214 (C.45:22A-44.2).
b. When an expenditure of the reserve funds is required to repair or replace a component of the primary load bearing system of a covered building, pursuant to subsection a. of this section, the association shall use only the amount of reserve funds allocated by the reserve study to make such repair or replacement, unless:
(1) the use of such additional funds from the reserve fund is not reasonably anticipated to prevent or interfere with the ability of the association to undertake additional repairs or replacements in the five years subsequent to the additional expenditure; and
(2) the association's executive board adopts a written resolution requiring that the expenditure of these additional funds shall be recovered within the following five fiscal years.
c. If an association existing as of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) does not have an adequate reserve fund as described in subsection a. of this section, and the increase in the association's budget line item for reserve funding to render it adequate as set forth in the reserve study would, without reference to any other budget line item adjustments, require an increase of more than 10 percent of the previous year's common expense assessment, the deficiency shall be made adequate within the earlier of the following [10] 20 fiscal years, or the projected date predicted by the reserve study by which absent increased funding, the balance in the association's reserve account would fall below zero. In either case, the annual increase in reserve funding during the required period of time shall be an equal annual line item increase in the reserve fund until the reserve fund is made adequate, notwithstanding causing an increase of more than 10 percent in the annual common expense assessment.
d. If an association existing as of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) does not have an adequate reserve fund as described in subsection a. of this section, and the increase in the association's budget line item for reserve funding to render it in conformity with the reserve study would, without reference to any other item adjustments, require an increase of less than 10 percent of the previous year's common expense assessment, the deficiency shall be made adequate within the following [two] four fiscal years.
(cf: P.L.2023, c.214, s.7)
4. This act shall take effect immediately.
STATEMENT
This bill amends a recent enactment, P.L.2023, c.214, (C.52:27D-132.2 et al.), which imposed various requirements upon associations responsible for the management and maintenance of the common elements and facilities of residential buildings within planned real estate developments. The bill also limits applicability of the capital reserve study and funding requirements of P.L.2023, c.214, (C.52:27D-132.2 et al.) to residential condominium and cooperative buildings that are three stories or more in height. The bill further modifies current law to enable impacted associations to increase the amounts required to hold in necessary reserve funds over a longer period of time.
The Legislature enacted P.L.2023, c.214 for the purpose of enhancing the structural integrity of the primary load bearing systems of residential buildings. However, language contained in the underlying enactment may be interpreted as having imposed requirements to protect against failures of common areas and capital improvements even though they do not impact a building's structural integrity. The recent enactment may also be interpreted as imposing requirements on non-residential buildings as well as residential ones. This bill modifies language from the recent enactment to address these issues and to limit applicability of P.L.2023, c.214 to residential buildings that are three stories or more in height.
Additionally, the bill would double the timeframe imposed under current law within which an impacted association is required to establish and maintain a reserve fund in an adequate amount.
