DELAWARE STATE SENATE

150th GENERAL ASSEMBLY

SENATE BILL NO. 199

AN ACT TO AMEND TITLE 25 OF THE DELAWARE CODE RELATING TO RENT JUSTIFICATION.

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 as follows and by redesignating Delaware Code provisions accordingly:

§ 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. For purposes of this chapter:

(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 1 of the following:

1. The construction, installation, or assembly of a new asset.

2. The alteration, expansion, or extension of an existing asset to accommodate a change in function, unmet programmatic needs, or to incorporate new technology.

3. 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 § 7020, Title 25 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:

§ 7020. Fees; services; utility rates.

(n)(1) A community owner may charge a fee to recover the cost of capital improvement or rehabilitation work.

(2)a. A community owner may only charge the fee under this subsection if the community owner is in compliance with the requirements under § 7052(a)(1) and § 7053 of this title.

b. The fee under this subsection may be challenged under § 7053 through § 7054 of this title.

c. Proceedings to challenge a fee under this subsection may be consolidated with proceedings that challenge a rent increase under § 7052 or § 7053 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 1 of the following:

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

b. Ten percent of the rent.

(4) A community owner shall provide at least 90 days written notice of the fee to tenants. The written notice must set forth all of 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 § 7052, Title 25 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:

§ 7052. Rent justification.

(c) One or more of the following factors may justify the increase of rent in an amount greater than the CPI-U:

(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. [Repealed.]

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

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

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

(5) Changes in reasonable operating and maintenance expenses relating to the manufactured home community including costs for water service; sewer service; septic service; water disposal; trash collection; and 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 relevant considerations include rents charged to recent new home owners entering the subject manufactured home community and/or or by 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 § 7022 of this title.

(d) A community owner may charge a fee under § 7020 of this title to recover the cost of capital improvement or rehabilitation work.

(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 use the cost of a capital improvement or rehabilitation work as justification for any future rental rent 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 a fee that was properly implemented under this subchapter. section.

SYNOPSIS

Section 7052 of Title 25 provides that the completion and cost of any capital improvements or rehabilitation work, as distinguished from ordinary repair, replacement, and maintenance, may justify an increase in rent in a manufactured home community but only until the cost of the improvement has been fully recovered. This Act clarifies this provision by doing all of the following:

1. Creating a clear definition of capital improvement and rehabilitation work.

2. Making the recovery of costs for capital improvement or rehabilitation work a fee so the recovery of this cost is a separate charge from rent.

3. Limits the amount of a fee to recover costs for capital improvement or rehabilitation work to 10% of the cost of the capital improvement or rehabilitation work or 10% of the rent, whichever is lower.

4. Providing notice requirements for a fee to recover costs for capital improvement or rehabilitation work.

The Chapter 70 definition of rent includes 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.

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

Author: Senator Ennis