Category: Opinion

Posts by GKS

Sun City HOA: a real independent principality

Sun City, AZ. a renowned retirement community, is an unincorporated town under the governance of the Sun City HOA (SCHOA).  It does not qualify as a planned community or as an HOA under the state’s statutes. SCHOA is a private nonprofit corporation — no mayor & no town council, governs it.  A sort of a throw back to the times when the sovereign, the king, issued charters or grants of authority to private organizations to conduct business or to govern new lands.

In modern times, does the nonprofit corporation charter by the state, the new “sovereign” of a republic, truly grant a nonprofit corporation the right to function as the legitimate government of a sub-division of the state?  This could not possibly the intent of the corporation statutes since the state abounds with municipal corporation statutes — cities, towns, special districts, etc. — and with methods and procedures for incorporating new towns and cities.  The appeal of direct democracy, local government control or “home rule” is understood, and agreeing to be governed by a business form of government under corporate laws could be viewed as a strong desire for independence from unwanted influences and intrusions.

Sun City is indeed such an independent government, not answerable under state municipality laws or the Constitution, as it is not subject to the planned communities statutes. Sun City is just subject to the broader corporation statutes that were in no way written to establish a democratic form of political government.  This sort of independent principality status has more in common with a tribal society where the inhabitants of the village are loyal first and foremost to their tribe and village, and to the leaders of the tribe, than to their state or country.

This tribalism reveals itself as the Sun City HOA does not require mandatory assessments, yet each deed requires that the owner make mandatory payments to another nonprofit, the Recreational Centers of Sun City (RCSC).  And in order for RCSC to qualify for common area real estate tax treatment, all owners “must be obligated to pay mandatory assessments to maintain and manage the common areas.”    Consequently, to accomplish this reduced tax basis without having to be subject to state planned community laws, a separate agreement is required to be signed by the owner agreeing to pay, not the HOA, but RSCS dues.  This is extraordinary, since the deed itself could simply require mandatory payments to a bona fide HOA that would own and manage the common areas, as is the case with a genuine HOA.

The strong desire to independent of state laws, yet to use them as above, required an amendment to the common area valuation statutes, ARS 42-13402 et seq., adding the “must be” clause above in 2000 (Ariz. Sess. L. Ch 196; HB1251).  What could have possibly been the intent of this statute other than to bestow a gift upon Sun City, an unincorporated community, tax benefits amounting to an estimated $113,000 per year, or $1,130,000 over the past 10 years?

Today, the residents of this independent “principality” are coming once again before the legislature, with the SCHOA attorney (a member of the national pro-HOA lobbying group, CAI), to deny the state its legitimate right to regulate and control the public streets within Sun City (HB 2153).  Suddenly, parking has become a safety issue in spite of the fact that, from the very beginning, the county planning board approved these alleged unsafe streets, and legal mechanisms are available to SCHOA to obtain variances on a case-by-case basis.

Don’t buy it!  Sun City is demanding complete freedom from the state with no interference into the “internal affairs” of their principality.  State cooperation, provided it is consistent with the aims and goals of Sun City, however, is acceptable and welcomed.

Is the delegation of legislative authority to private HOA entities constitutional?

When it comes to delegating governmental power and authority to state agencies, one only needs to look at the body of law surrounding the grant of authority to a state agency.  The authority for an agency to make and to enforce laws, under the state’s Administrative Procedures Act,  is subject to constitutional law with its requirements and prohibitions.

Please note that, in Arizona, the pro-HOA national lobbying organization (Carpenter Hazlewood law firm) managed to have the Office of Administrative Hearngs (OAH), a state agency, adjudication of HOA disputes declared unconstitutional, thereby depriving homeowners of their only just hearings of disputes, of due process of law. OAH resulted in 42%  of the cases being won by the Pro Per homeowner against the HOA and its attorney.  This alone speaks for the abysmal failure of HOA private governments to operate in a just and fair mode.

Understanding the above, the question arises as to the legitimate grant of governmental powers and authorities to private organizations. While not officially recognized as a de jure (under law) government, the various state HOA statute and “Acts” do grant authority to these private governments to act independent of the state laws and local ordinances.  And many times in many states, these private government arrangements, not approved or subject to review by the state,  are sometimes held superior to or supplement state laws (as when we see with, “unless otherwise provided in the governing documents”). 

The following legal doctrine and holdings apply to any private organization, and not specifically to the HOA, making any defense with respect to not being a mini-government irrelevant.

Under the “delegation doctrine”,  tests of the constitutionality of the delegation of legislative authority took place during the New Deal era of the 1930s.  With respect to the Bituminous Coal Conservation Act of 1935, private businesses were allowed to set standards and rates. Struck down because “the setting of requirements by private producers was an unconstitutional delegation of legislative power to private persons.”[i]  And in Schechter Poultry (1935), the Supreme Court held the National Industrial Recover Act to be “delegation in its most obnoxious form”, as it is “delegation to private persons whose interests may be and often are adverse to the interests of others in the same business.”[ii] 

In more recent times,  a private group controlling its competitors would not be considered an excessive delegation issue, but perhaps a procedural due process issue. The question to be answered is: Are the competitors “being deprived of due process by being subject to the will of entities with interests contrary to theirs?“[iii]  This question of delegation to private organizations can be summarized as follows,

While delegations to private organizations may be suspect, they are by no means inappropriate. . . . where delegations in limited and technical areas  . . . are quit useful  [e.g. in setting technical standards and codes for health and safety concerns].  The legitimacy of this course will, however, turn on whether these standards have been formulated by private groups that are  so constituted as to dampen special interests and whether these standards involve limited and technical areas as opposed to broad matters of public interest.[iv]

 

And in particular relevance to the setting of zoning ordinances, we have Eubank v. Richmond, 226 U.S. 137 (1912) and Eastlake v. Forest City Entr., Inc., 426 U.S. 668 (1976) where private parties were  denied the right to set zoning ordinances.  Consequently, the setting of public street parking ordinances by HOAs as private entities, for example, would be an unconstitutional delegation of legislative authority.  And by virtue of the Restatement of Servitudes, § 3.1, Validity of Covenants, any such HOA covenant would be viewed as contrary to public policy and unconstitutional as well.  (See my public statement to the Government Committee).

The pro-HOA supporters object to the above reality and argue that the homeowner voluntarily, knowingly and freely 1) agreed to be bound by the CC&Rs, and 2) to the surrender and/or waiver of his rights and freedoms when he took possession to his deed under servitudes law.  My reply, as I argue my public statement to the Government Committee, is a resounding not so!

Furthermore, the CAI national pro-HOA lobbying group and the “true believer” HOA supporters would have you believe that the HOA is just another nonprofit organization, and like these other nonprofits it’s allowed to set rules and regs, issue fines, withhold benefits in terms of privileges and access to amenities, etc.   But, where can you find another private organization whose governing documents are just about echoed by statute, thereby giving the illusion of legitimacy?  I submit that if indeed another organization can be found that controls and regulates the inhabitants within a territory, then it will be functioning as a de facto private government, or an unincorporated town or village under the municipality laws of this state.

The bona fide government interest to create a better community under local government authority and control, a form of “home rule”, be achieved today under the state’s special taxing district laws. All the private amenities, community ordinances (“rules and regs”), taxes (assessments), and enforcement rights are all doable under special taxing district laws.   What would be gained is the accountability of the district to the laws, ordinances and constitution laws to which all other forms of political government are held.  No more special laws and no more special treatment for HOAs.

Enabling HB2153 to become law will serve to draw a line in the ground.  A line directed at the HOA not to pass.

OHIO SB 187 establishes HOAs as superior to state law

The Ohio Planned Community bill, SB 187, establishes and supports the homeowners assocation second form of American local political government, an authoritarian private government that repudiates the US Constitution and the principles of democratic government.

Sec. 5312.15. In the event of a specific conflict between this chapter and express requirements or restrictions in such a governing document, the governing document shall control.

HOAs are de facto governments unrecognized as de jure governments as a result of such laws as the Ohio Planned Community Law, rather than being established and delegated powers and authority under the municipality laws of state, yet are very much functioning governments like Cuba, which is unrecognized by this country.  Ask anyone living in an HOA if the HOA is not an authoritarian government.

 
Read the following excerpts expressing  1) the violations of democratic rule by the members, 2) inadequate due process as required under the law of not only a hearing, but adjudication by an independent tribunal, with witnesses and evidence allowed, 3) violations of open meeting laws, and 4) the lack of “public” disclosure of enforcement activities and procedures, all of which your public government would not be allowed to get a way with.
 
 
Ohio Planned Community Law (excerpts)  http://www.legislature.state.oh.us/bills.cfm?ID=128_SB_187
  
Sec. 5312.03.
(C)(1) If provided in the declaration, a declarant may control the owners association for the period of time the declaration specifies. During the time of declarant control, the declarant or the declarant’s designee may appoint and remove the members of the board. The period of declarant control shall terminate not later than the time at which all of the lots have been transferred to owners.

(2) Not later than the termination of any period of declarant control, the owners shall elect a board of directors comprised of the number of members the declaration or bylaws specify.

Sec. 5312.04.
(B) A board may act in all instances on behalf of an association unless otherwise provided in this chapter, the declaration, or bylaws.
 
C) Except during a period of declarant control, the board shall call a meeting of the owners association at least once each year.
 
(F) No owner other than a director may attend or participate in any discussion or deliberation of a meeting of the board of directors unless the board expressly authorizes that owner to attend or participate.
(G) . . . . No private right of action additional to those conferred by the applicable state and federal anti-discrimination laws is conferred on any aggrieved individual by the preceding sentence.
 

Sec. 5312.15.  In the event of a specific conflict between this chapter and express requirements or restrictions in such a governing document, the governing document shall control. This chapter shall control if any governing document is silent with respect to any provision of this chapter.
 

Sec. 5312.05. (A) Unless otherwise specified in the declaration or bylaws, the owners may amend the declaration and bylaws by the consent of seventy-five per cent of the owners, either in writing or in a meeting called for that purpose. No amendment to the declaration or bylaws is effective until filed in the office of the county recorder.

(B) A vote to terminate the applicability of the declaration and to dissolve the planned community requires the unanimous consent of owners.
 
 
Sec. 5312.07.
(B)(4) Information that relates to the enforcement of the declaration, bylaws, or rules of the owners association against other owners; [a denial of HOA records]
 
Sec. 5312.11.
(D)(1) To request a hearing, the owner shall deliver a written notice to the board not later than the tenth day after receiving the notice this division requires.
 
 
Sec. 5312.13. All owners, residents, tenants, and other persons lawfully in possession and control of any part of an ownership interest shall comply with any covenant, condition, and restriction set forth in any recorded document to which they are subject, and with the bylaws and the rules of the owners association, as lawfully amended.

 

"This is not Mayberry anymore" as mayor supports HOA usurpation of city's legitmate authority

Excerpts from my response to the advocacy for HOA governments by the Mayor of Glendale, AZ : —

I thought that the regulation of public streets was under the legitimate authority and powers of the City of Glendale, and any unsafe streets are the responsibility of the City of Glendale.  The fact that citizens are held bound to a private agreement does not grant the HOA the legitimate right and authority to regulate the usage of public streets. 

As to the buyer’s “understanding that there would be control of safety and welfare”, it does not warrant turning a blind eye to the HOA control of public streets.  These buyers are mistaken, or have been misled by those special interests, that the HOA rules supreme. 

This use of “all” is argumentative and does not explain objections by residents of HOAs to the regulation of public streets by a private organization, of “banana republic” due process, etc.  My experience shows that many homeowners are shocked at the invasion of the privacy of their homes by the HOA, and, contrary to sanctity of individual private property rights, that their rights can be trampled upon by a vote of their neighbors, without their consent.

Is this the position you are defending when you say you are speaking for your constituents?   Supporting a constituency that rejects the supreme law of the land, the US and Arizona constitutions in favor of a private “contract”? A contract that these people regard as superior to the Constitution? 

Read the complete email response at Mayor.

Declaring the HOA as a legitimate government

The following is a model bill that would place all homeowners associations under the 14th Amendment and state laws, thereby bring the equal application of the law to all citizens within the state living or not living in an HOA.  This model bill would go a long way to removing the second form of local political government in this country, while retaining the beneficial features of planned communities.
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“It is the intent of the Legislature that planned community and condominium associations, being private, contractual de facto governments, be subject to the same public laws governing local public governments and entities as all legitimate government entities are so required.  These associations would be subject to, including but not limited to, fair elections processes, due process protections by means of independent tribunals, and with respect to its officers and directors, to the equivalent laws and penalties as are mayors, council members, and agency/department heads.  The Legislature affirms, for all to know and understand, that the US Constitution is the supreme law of the land.
 
“A municipal planning agency or other agency responsible for the approval of the development of a residential subdivision may approve a subdivision development that imposes a homeowners association, provided that the Declaration of Covenants, Conditions and Restrictions contains the following:
 
 
“Association as a public entity. 
 
“Anything in the governing documents to the contrary notwithstanding,
 
“1.  it is understood and irrevocably agreed to by the Declarant and members of the Association that,  for the purposes of the application of the Fourteenth Amendment to the US Constitution,  the Association is a public entity, and is subject to the US and Arizona Constitutions and to the laws of the State of Arizona governing public entities. 
 
“2. that the Association may exercise the powers granted to it in the governing documents provided that any such powers are consistent with applicable public law.
 
“3.  That the members of the Association may waive or surrender their rights, privileges and immunities that they possess as citizens of the State of Arizona, provided that such waiver or surrender  is consistent with the public laws of the municipality and with the constitutional laws governing the legitimate surrender or waiver of these rights.
 
“4.  Until such time as state agency consumer warning and/or advisories are provided to prospective buyers, as the equivalent of the securities “red herring” documents since buying a home is similar to the purchase of a privately held business, an implied surrender or waiver of the rights indicated in (3) above shall not be construed as a surrender or waiver of any such rights, privileges and immunities.”