COVID-19 UPDATE: SCHOOLS, POOLS, CLOSURES AND CASH

Published on: May 1, 2020

Now more than a month in, we continue to adjust to the new COVID-19 world in which we live.  With time passing and temperatures warming, many associations are focusing their questions on the future.  This update is meant to provide information which may be used for guidance in dealing with some of the issues ahead.

Governors Baker, Sununu and Raimondo have closed schools through the end of this academic year in Massachusetts, New Hampshire and Rhode Island.  Thus, school-age children will be waiting to return to the “old normal” until at least the Fall.  With children being home, working parents will continue to face work-related challenges whether they are attempting to work remotely or when they are cleared to return to the office.  With more people at home, some associations will see increased interest and demand relative to their amenities.

When it comes to pools, associations will experience different circumstances in different locations.  Some municipalities require pool permits.  At MEEB, we have been communicating with governmental officials in the course of providing legal services to our clients.  In at least two Massachusetts municipalities, the Boards of Health will not issue pool permits this season unless and until guidance is provided from the Massachusetts Department of Public Health.  Given the communication between cities and towns and the human tendency to track with the “herd”, it would not be surprising to see others follow suit.  For those associations unable to obtain a pool permit, the “silver lining” will be the avoidance of a difficult decision.  For other associations, boards will need to weigh the available information and risks and base a decision on the best interest of the community.  Although residents will likely want to see pools opened, there may be no practical manner to comply with social distancing requirements or limitations on group gatherings at an open pool.  Given the unprecedented health crisis and the potential liability, boards may wish to err on the side of caution.  Boards may wish to reserve pool openings for when governmental guidance provides an affirmative “go ahead” or when the social distancing requirements or limitations on group gatherings have been reduced.

As of this writing, Governor Baker has extended the Massachusetts “stay at home” order (and related business closures) until May 18, 2020.  In New Hampshire, Governor Sununu has publicly announced that the current “stay at home” order (lasting until May 4, 2020) will only be addressed closer to its deadline.  It is widely expected, however, that Governor Sununu will extend the order.  He expressed an intention to track with Massachusetts to a certain extent in order to avoid New Hampshire becoming a destination for those prohibited from roaming in Massachusetts.  In Rhode Island, Governor Raimondo’s existing “stay at home” order lasts until May 8, 2020.  With most agreeing that a “phased” approach is safest, it is likely that we will see extension, at least in part, of the “stay at home” and business closure orders.  Under a phased approach, our return to normalcy will occur in pieces over time, as opposed to a sudden and complete shift.  Although difficult to accept, this approach may be best overall.  Experts agree that a resurgence of the virus caused by too much normalcy happening too quickly will be more devasting than this first round of the virus.

With so many people experiencing financial hardship associated with the pandemic, many associations are experiencing reduction in the payment of assessments.  While boards should show compassion and attempt to work with owners, at some point the board will need to take action sufficient to at least preserve the association’s rights with respect to the funds owed.  However, even under normal circumstances, the lien enforcement process takes time.  Fortunately, there may be another option for associations in need of urgent funding.  Although this may not have been apparent at first glance, some of the federal relief programs may be applicable to associations.  While the “Paycheck Protection Program” loans available to small businesses were not designed for associations, communities may qualify for a variation known as the Economic Injury Disaster Loan.  These loans are available in amounts up to $2,000,000.00 with terms up to thirty years.  Interest is approximately 2.75% and payments may be deferred for a year.  Community associations may qualify because loan funds can be used for fixed debts and accounts payable.  An “economic injury” is a change in financial condition leaving an organization unable to meet its financial obligations.  Thus, an association that can demonstrate serious delinquencies relative to unpaid assessments may meet the standard.  As of this writing, the first round of funding for the federal programs has been depleted.  However, a second round of funding has been approved and new loan applications are once again being accepted.

If your association requires assistance with COVID-related issues or otherwise, feel free to contact your MEEB attorney.  We continue to work through this crisis and to provide our clients with continuing legal services.

 

Written by Gary Daddario

gdaddario@meeb.com