The County Council Monday unanimously passed a bill that will prohibit a property owner from obtaining a county rental license if they are more than 30 days behind on their condominium association or homeowner association fees.
"The key is that we want to ensure that those who are renting out continue to meet their obligation to their neighbors," said Columbia Democrat Calvin Ball, the bill's lead sponsor.
He added: "I'm pleased that we've empowered communities to protect one of the most important investments someone can make, the investment in their home."
The bill, which was co-sponsored by the council's other three Democrats, also allows the county to suspend or revoke a license if a condo association or homeowner association proves the license holder is behind on his or her fees.
The main goal of the bill, Ball said, is to help condo associations reduce their delinquency rates, which is the percentage of property owners in a community who are 30 days or more behind on their dues. If the delinquency rate in a condo association community climbs above 15 percent, the community can lose its Federal Housing Administration certification.
Unlike with homeowners associations, condo associations own the ground and the buildings in which units are located, and thus are required to have an FHA certification to ensure the community is in good fiscal health so people who want to buy a unit can get FHA financing. Many first-time home buyers rely on FHA financing to get an affordable down payment.
Of the 131 condo associations in the county, 75 — or 57 percent — have expired FHA certifications, according to council data.
The issue was brought to the council's attention by the Howard County Association of Realtors. Without FHA financing options, sellers are forced to turn to cash buyers who "typically purchase below market rate, thus devaluing the community at large," David Vane, the association's president, said at a council hearing April 16.
"The homeowners are probably unaware that not paying their condo dues is really clobbering their values, simply put," Vane said at the hearing. "So for not paying a $150 or $200 monthly fee, they could see a 50 percent reduction in the value of their home."
Council member Jen Terrasa, a Columbia Democrat, thanked the association for "bringing what's a very real issue in our communities to our attention."
While acknowledging that his bill will not solve the entire delinquency rate problem, Ball said it will give communities one tool they can use to collect unpaid fees.
"We believe that this innovative legislation is the first of its kind in the state and may also be the first of its kind in the nation," he said.
At the same meeting, the council also unanimously passed the annual update to the Howard County Building Code with an amendment, submitted by Ball and Fulton Republican Greg Fox, that allows property owners to replace gas-powered appliances without a county building permit. Currently, residents have to pay a fee to apply for the building permit and have an inspector come to their home.
Removing the requirement, Ball said, will reduce administrative paperwork for the county Department of Inspections Licenses and Permits and the time and money homeowners have to invest when deciding to replace outdated appliances.
"Eliminating that unnecessary step may also encourage our neighbors to purchase more environmentally sustainable appliances, such as dryers or ovens," Ball added.