Category: Opinion

Posts by GKS

Who is the only true HOA stakeholder?

I’m tired of hearing the term, stakeholder, over and over again by CAI, and used by others including legislators. I don’t think that they know the real meaning of “stakeholder” as bastardized by CAI. Let me explain.

The term or concept of “stakeholder” is not found in the HOA “bible,” the Homes Association Handbook of 1964. I cannot find it either HOA texts, in the 1992 book by Prof. Jay Dilger, Neighborhood Politics, or in Prof. McKenzie’s 1994 book, Privatopia. However, McKenzie describes the beginnings of CAI in 1973 as an organization to solve the problems with HOAs. It was to consist of various “interest groups” that had an interest in making the HOA legal scheme work.

Even then, the real focus, as is today, was on the HOA directors and not on the homeowners per se – the five groups were: public officials (rapidly departed), professionals (attorneys), managers, developers and “homeowner associations directors (referred to by CAI as ‘homeowners’)”. Under “professional” there was reference to landscapers and accountants, etc., which makes these stakeholders also equal partners in your home, according to CAI. Gee, what would your spouse say to that? Talk about redefinitions and “newspeak.”

The term or concept of “stakeholder” is also not found in the 2000 CAI – ULI jointly funded testament to CAI, Community Associations, by Donald R. Stabile. But, in his discussion of history, Stabile speaks of The Homes Association Handbook (1963), “To establish the satisfaction all components of the housing industry expressed for [HOAs] . . . TB50 evaluated the perspectives of each [group].” It reflects the concern of various business interest groups – the stakeholders (this term is not used by Stabile), but not the homeowners, just the “association owners.” Stabile does point out that CAI was initially organized (1973) by these same groups of “interested” parties necessary to make the problems with HOAs go away, but then again, he mentions “homeowner leaders of associations,” but not homeowners.

 I believe this was the genesis of what later became the CAI argument that the stakeholders have an equal stake in the member’s private property home, for which the owner alone has monetary liability.

It should be obvious by now that the term “stakeholder” as used by CAI definitely excludes the homeowner, and has evolved from the long term focus on the “interest groups” with a stake in selling and making the HOA concept a success. It is obvious, too, from the false and misleading statements before Arizona legislative committees that CAI had met with all the stakeholders, but not one homeowner rights advocate was ever invited or attended these stakeholder meetings, just who CAI sees as “stakeholders.”

Who controls CAI and its 50 state HOA lobbying committees?

CAI recently announced a record membership of some 31,000 members. But what does that mean?  Just what is the composition of its membership between attorneys, managers  and management firms, individual “volunteers” from HOAs, and others?  Is the composition of CAI’s governing body  similar to that of its membership?

CAI membership facts (CAI Industry Data)

Estimated percent members from different HOAs:                                  9.8%

Estimated percent members who are individual HOA members:          5.9%

Estimated percent individual members to  people in an HOA:                 .6%

In comparison: Estimated AARP percentage membership:                  36.0%

Estimated members who are individuals in a distinct HOA:                 18,600

CAI’s latest “Industry Data” shows 314,000 HOAs in America, making its membership some 9.8% of HOAs. Just about what it was back in 2006 when I did a similar analysis. BUT, and a big but, is it really 9.8%? Only if all members came from a different HOA and all members live in an HOA. For instance, do all lawyers and managers live in an HOA? Not revealed by CAI.

Before CAI reacted to my revelations in 2006 and “circled its wagons,” I was able to determine that “individual volunteers” amounted to some 55% – 60% of its membership, which was 26,000 strong. And that was after dropping HOAs per se as members and allowing for this new category. Discounts were allowed for multiple members from the same HOA. It is assumed by this offer that it is the HOA itself that is paying for these “volunteers.” (Prior to this change in membership, CAI advertised some 16,000 members).

 Looking at the ratios again, CAI could have members in at most only 5.9% different HOAs (.6 x 31,000 / 314,000). About the same as in 2006. Yet, its lobbyists like to say before the media and legislative committees that there are 10,000 or 4,000 HOAs in this state without indicating their “at best” membership size.

 Taking the CAI “people” figure of 62.3 million residents, that means CAI “represents” a meager .6% – that’s .006 – of the people living in HOAs.  In contrast, 2010 AARP states membership of 35,700,000, and that’s  36% of the 50 plus population based on the US Census  estimate.

CAI Governing body (CAI Governance, 2012)

Estimated percent individual representation on CAI Board:                         14%

Estimated percent individual members:                                                          60%

CAI is governed by a 14 person Board of Trustees, not to be confused with its “three Membership Representation Groups (MRGs), elected members who give their constituencies a voice in crafting CAI policy and work to ensure that CAI continues to provide services and benefits that members need and value.” (My emphasis). They are: Association of Professional Community Managers (APCM) Board, Business Partners Council, and Community Association Volunteers Committee, none of which can be accessed by the public.

 However, from a CAI recent press release, the14 member Board of Trustees consists of:

*  CAI’s president and president-elect are elected by members of the Board of Trustees.

* Four at-large members are appointed by a board-selected Nominating Committee (“at large” members), and

* eight members are appointed by CAI’s three membership representation groups:

* four by APCM Board members (managers), and

* two each by the CAVC (“volunteers”) and BPC (service providers).

Note that no attorneys are listed, but the BoT in 2006 showed 4 attorneys as members. The 2012 composition is the same:

President/president-elect – 2 managers

Trustees – 6 managers

4 attorneys (including Scott Carpenter)

2 “volunteers”

That’s about 14% representation by homeowners on the CAI governing body whose membership consists of 60% homeowner “volunteers.”

 Surely CAI is NOT an association representing HOAs or even homeowners, but representing the business interested vendors serving HOAs.

No HOA reforms? blame it on the legislature

As of this morning, of the 16 Arizona HOA reform bills that I’ve been following, only 3 bills have a chance of becoming law: HB 2160, elections reform, HB 2170, HOA cannot charge escrow agents for fees, and SB 1239, zoning board prohibitions against mandatory HOAs. The 3 bills carrying penalties against wrongful acts by HOA boards, and holding the boards accountable, are all DEAD!

Except for the possible penalties in regard to elections, there are no deterrents to the intentional abuse and violations by the HOAs regarding fines, failures to provide corporate documents, or to respond to homeowner inquires in order to resolve payment disputes.

The absolute “sanctity of contract” argument by CAI lobbyists continues to be thrown at the legislators, and shamefully accepted by many. This acceptance by these legislators insults homeowners as it carries an implied attitude that homeowners are masochistic, and openly and fervently signed a solid contract to be treated harshly if they dare raise a question — the “a contract is a contract no matter what” excuse to deny your rights. Shameful!

Actually, if they had consulted their legislative council, there are indeed restrictions on the validity of covenants, — not everything goes. (Remember, we must educate the legislators otherwise they will continue to accept the “gospel of HOAs” from CAI, as taught in their “educational” indoctrination classes and seminars).

Covenants that are 1) contrary to public policy, 2) arbitrary and capricious, 3) unreasonable, and 4) unconstitutional are invalid no matter if they were approved by the membership. And that’s the whole point of the issue: HOAs and legislators cannot ignore the laws of the land and do as they please, in spite of what the CAI attorneys like to proclaim. But, some legislators actually believe in “everything and anything goes.”

NOTHING WILL CHANGE UNTIL THE LEGISLATURE STOPS SUPPORTING DE FACTO HOA GOVERNMENTS AND RECOGNIZES HOAs AS DE JURE GOVERNMENTS SUBJECT TO THE LAWS OF THE LAND, AS REQUIRED OF ALL OTHER GOVERNMENT ENTITIES

Under these conditions, do not ask for assistance unless you have the personality and will to fight for your rights all by yourself, and are willing to spend your money to do the state’s job for them, JUST MOVE OUT! The laws and governing documents all favor the HOA against you and the rights that you thought could not be taken away.

AZ House supports HOA dominance over municipalities

In an unbelievable acquiescence to the secession of legitimate public government control to private government HOAs, this bill, SB 1113, regulating public streets within HOA subdivisions,  was soundly rejected by the House Judicial Committee. Welcome to the New America of HOA-Land brought to you by your elected representatives who take an oath to uphold the Arizona and US Constitutions.  The bill was defeated 2 – 6.

The only worthwhile commentary was from the Chair, Rep. Eddie Farnsworth, who concluded with, “I find it disturbing that this committee rejected this bill because the police says its too difficult to enforce.”  Nationally known Sheriff Joe Arpaio was against the bill.  Farnworth also remarked that the political realities of the 2,000 member exclusion amendment was needed because of the “highly paid lobbyists like the one you see before you,” referring to CAI lobbyist DeMenna.

And still, there are those who truly believe that the Constitution is only about the absolute right of HOAs to write contracts that supersede the Constitution.

I am continually amazed that some legislators still use this as an excuse to stop bills that seek to reign in lawless conduct by HOA boards.   Legislators who do not want to hold boards accountable under the laws of the land are condoning HOAs as above the laws of Arizona, above the Arizona and US Constitutions.  Surely they must realize this.  Surely they do not realize the consequences of this unexplainable position on HOAs.

The failure of the Judiciary Committee to pass this very important bill to prevent private entities from usurping legitimate government functions is very disturbing.  The purpose of a committee is to recommend a bill for the entire body to consider, and not to kill such an important bill and thereby not giving all the elected representatives  their due voice.   This is politics under the influence of special interests.

If the HOA boards and officers refuse to join our democratic society, then they should be allowed to fail!  It is unconscionable to do otherwise!  If this is too much for some people, that their “free ride” is over, well, then they can just move out!

Once, long ago, America had people of character, of integrity and of honor.  Now, it’s just “what’s in it for me” and “how will it affect my legacy” — self-centered concern about themselves and not about their responbilities and duties as public servants for the people.  The people have the right to expect that their elected representatives would protect their rights and freedoms under the Constitution, and not to support the unconstitutional delegation of legislative powers to private entities.

AZ HB 2160, HOA elections reform, provides misdemeanor penalties

One of the most needed bills for enforcement to protect the rights of homeowners in HOAs is Arizona’s HB 2160, which passed the House and goes on to the Senate.  This bill makes “A corporation or other entity that intentionally violates subsection [ ] of this section is guilty of a class 1 misdemeanor.”

In a subculture where legalized extortion goes unpunished, and where recourse to democratic election processes to elect and replace corrupt government “officials” are woefully inadequate, the Arizona Legislature is finally putting its foot down on such acts against public policy. HOAs hide behind the fact that they are private contracts and are not bound by constitutional protections while proclaiming how HOAs are a great town hall democratic institution.

However, the newly elected President-elect of CAI’s College of Community Association Lawyers, Arizona’s Scott Carpenter, protests this bill: “Where is the evidence that voting ballots should have a cloud of criminal prosecution having over it? Criminalizing the counting of homeowners association and condominium association ballots should outrage Arizona’s citizens.” (Criminalization of HOA Elections).

Why should citizens be outraged? While complaining about no justification to hold violators accountable, Carpenter offers know valid reason not to.  Perhaps the newly elected President-Elect doesn’t understand the difference between criminal and civil law. Let me explain.

Civil law is in regard to disputes between two parties, like a contractual dispute. Criminal law, on the other hand, are violations against the state and its laws. Nothing new, nothing different. It is there to “protect society . . . from those forces that most threaten the peace, the harmony . . . and society as a whole.” It is there to deter and to punish.

This bill is an affirmation that the violations of state laws by HOA boards and officers, and their agents, are contrary to the good of the greater society and must cease. The bill says that HOAs are no longer independent principalities doing as they wish without fears of liability for wrongful acts. If this is too much for some people, that their “free ride” is over, well, then they can just move out! But, the American system of government that treats all people equal and applies the law equally, and that now applies to HOAs, cannot continue to tolerate this separation from constitutional government.

It is the gross and prolonged failure of the industry to police itself in the midst of such abuse that has caused the legislature to act. It is the gross and prolonged failure of the “national HOA educator” organization with all their attorney lobbyists to work in support of, and not in opposition to, these bills that protect society as a whole that has caused the legislature to act.

A Class 1 Misdemeanor is an offense that carries up to 6 months in jail (ARS 13-707(A)(1)), and up to $2,500 in fines (ARS 13-802(A)). Neither are mandatory. However, a fine for a misdemeanor committed by an enterprise is up to $20,000 (ARS 13-803(A)), but is not mandatory either.