Why haven't the 1983 HOA problems of America II been resolved?

  Robert Louv is a journalist and contributing editor for several magazines.  His book began as an assignment for the San Diego Union where his job was to cover long-range political and social trends.  He writes,

My emphasis is on the America II social agenda: the growing privatization of public services . . . . America II  is an examination and critique of underlying values and social issues, especially those that threaten traditional democratic values.

 

The America we know is dying, but a second America is rising from the body of the first. This second nation [is] America II. yesAmerica II is the shopping mall, condominiums and large, planned communities, private police forces and sophisticated residential security ystems.

This new nation of mini-governments populating the landscape that he calls America II, I simply call the New America of HOA-land. A nation that continues to beencouraged, supported and defended by a certain element of our society, whom I classified as neo-Americans to distinguish from neo-conservatives and neo-fascists.

 As an educated observer of the scene, Louv notes that, “In a single decade, condominiums and planned communities have given rise to an enormous number of private minigovernments” [sic]. And makes an astonishing announcement: “These minigovernments now outnumber all the other elected local governments (cities, towns counties).”  My research, from 2005 census data and CAI estimates, shows just under 19% of the population now live under the regulation of these mini-governments. 

Speaking of this new concept in housing, which Louv calls “capitalist communes, an inheritor of utopian thinking”, economist and Progressive Movement leader, Robert Ely “described it . . . as representing ideas alien to democracy: ‘It is not the American ideal.  It is  benevolent, well-wishing feudalism, which desires the happiness of the people, but in such a way as to please the authorities.”   

While Louv writes that “These communities bring built-in social structure and private minigovernments”,  buyers did accept the promotional brochures pushing the buying of “a lifestyle”. As one interviewed homeowner said, the HOA “harkens back to the old values of small town America; the idea of local control, of knowing your neighbors“, and “We’re not really involved”. Then there’s the justification that is still with us today: “Community Associations are here to protect our interests, not let the community deteriorate.  That’s not regulation; it’s common sense.”  And there’s the HOA sales director speaking of their “mavericks”:  “Some of these people are against what everyone else is for.  They get in all kinds of arguments about architectural control.”  Sounds familiar, don’t they? 

But, what happened to the dreams, the idealistic promises of a better, more democratic America?  The answer lies in the rationalization, that still exists today, “it’s the people.”  “If only they would follow the rules” and attend those CAI “educators”, now turned lobbyists, educational training seminars. These seminars are sponsored in many areas by local governments and several states’ have hired CAI for manager and director training  programs.  If only!

Other issues of governmental control and regimentation  were either ignored or dismissed by the believers.  At the time of publication of

America II in 1983, some 19 years had past since the 1964 publication of the  homeowner association “bible”, The Homes Association Handbook.  Three years later the Handbook was critiqued by researchers at the University of California in a Public Affairs Report.  Louv’s 27 year-old time capsule shows us that the problems with the HOA model are still with us, and that they were still occurring 10 years after the creation of CAI to solve these problems through education.  Either CAI is incompetent, or the problems are endemic to the HOA model, and reflect basic flaws with authoritarian homeowner association governance.

   

An authoritarian form of government is contrary to the expectations of Americans who have lived all their lives under a democratic government that places the rights and liberties first and foremost.  Louv agrees:

 

Perhaps the most distinctive characteristic of these communities is that they are controlled by private, democratic governments (community associations) that wield the kind of control over  people’s personal lives and tastes that, heretofore, most Americans would never have accepted from any government.    
 
Indeed, the control often reaches into intimate details of resident’s lives in ways that may be infringing on constitutional rights. [p.128].   We need to start asking some serious questions about how this new level of government affects democracy and freedom.
It is not the amenities, the landscaping, or the closeness of homes placed on smaller lots that have  been the serious causes of discontent and dissatisfaction with planned communities.  It has, and still remains, the oppressive, authoritarian HOA government based on corporate law rather than on constitutional law that  is the “root of all evil.”  I believe the failure to solve the problems with HOA living, from the very inception of HOAs to today, is a systemic defect in the HOA legal, social, and political basis, and, as the past 44 years attest, are insolvable.
 
  

There are existing alternatives to the governance of planned communities that do not permit these HOAs, currently operating as “independent principalities”, to secede from the Union; and still retain the local community privacy of amenities and community “ordinances.”

Notes 

1.  America II: The Book That Captures Americans in the Act of Creating the Future, Richard Louv, Penguin Books, 1983.

2.  Richard Theodore Ely (13 April 1854 – 4 October 1943) was an American economist, author, and leader of the progressive Movement who called for more government intervention in order to reform the injustices of capitalism. (Wikipedia).

 

In 1978, CAI was concerned about HOAs as mini-governments

I’ve written several times [1] on the utopian visions that had their role in the development of the planned community/HOA socio-political model of American society. Newly uncovered material, by me, sheds a brighter light on the idealism surrounding the promotion of the HOA model. The material comes from several new sources, all dealing with David B. Wolfe, president of Community Association Corporation (a property management firm) [2] and member of the founding team that created CAI in 1973 [3] . He is also the author of the joint ULI and CAI handbook, Condominiums and Homeowner Associations That Work on Paper and Action (ULI & CAI, 1978).

Richard Louv [4] writes of Wolfe, ‘David Wolfe, for one, holds to the original dream that these communities can bring people together rather than segment and restrict them.‘ He quotes Wolfe, “Not since the advent of the industrial revolution and its major society-impacting product, the automobile, has any event risen with so much potential for changing the American way of life” [5].  However, Mckenzie in Privatopia quotes Wolfe, ‘The common interest community is fundamentally a creature of land economics, and of man’s preference for owning his own territory. In an locale there is only so much land available for settlement. . When this condensing or stacking takes place, the means of owning one’s own territory must also be modified'” [6].   This statement reflects the more practical, business, property manager view of HOAs.

With respect to political and governmental concerns, Louv continues with, “Wolfe believed that ‘These new communities have the potential of giving us our roles back, allowing people to live and work in a way reminiscent of the small towns of a century or more ago.’ “

And the direct loss of direct town hall, face to face democracy would be redressed, as

“Wolfe believes, by the minigovernments that govern these post industrial villages, these capitalistic communes. But adds Wolfe, ‘the reality is different from the utopian dream.’ And suggests we take a very close look at that reality, because in the near future, many of us aren’t going to much economic choice about whether or not we live in one of these America II communities.” [7]. 

As a side thought, it seems that a utopian ideology, even the planned community affordable housing ideology, must have conformity and adherence to its principles in order to survive, especially if it mandates a behavior pattern at odds with the greater society in which it finds itself. HOAs require adherence solely to the goal of maintaining property values with individual rights and freedoms secondary. It is obvious then that the HOA must have a disciplined following, “true believers”, in order for it to survive amidst a democratic society as we have here in America. In a mass merchandising promotion and selling effort, as occurred with HOAs, it would become more and more difficult to obtain the necessary and sufficient numbers of true believers for problem free communities.

This very important and practical issue — the status and recognition of HOAs as a government — “remains a vexing issue for CAs“, as Stabile writes in 2000  [8], even today in 2010. Stabile sheds a bright light on this sensitive issue, referencing Wolfe’s 1978 handbook mentioned above.

“By the late 1970s, according to Wolfe, CAs had taken on many functions that resemble the provision of public goods much as local governments did. Whether this entitled them to the legal status of a government was open to debate within the CA movement and in the courts. Wolfe then presented both sides of the debate over the definitions of CAs as governments. One legal opinion offered in support of construing CAs as a government noted that the Supreme Court had required constitutional procedures in a ‘company town’ and with ‘political parties’ [Marsh v. Alabama, 1946]; from this view CA actions were ‘public’ in a constitutional sense. At the same time CAs were corporations . . . . Wolfe concluded that a new definition of a CA as a government was needed to bring about Lewis Mumford’s [9] vision of a democracy.” [10]. 

“In some cases, courts interpreted CAs as a business, but ‘with regard to individual rights and obligations, the courts may hold associations to the standards of public government law’. Legal cases were forcing them to do more . . . . ‘These suggest that the consideration and adoption of resolutions, in the manner associated with traditional governmental and political processes have a place in CA government’.” [11].

Conclusion
While these materials introduce a clearer picture of the history of HOAs and CAI, the important question on the governance model needs a little more light shed on it. I will be reviewing the Wolfe handbook in detail on the question of HOA governance; what was discussed and what were the conclusions at the time, in 1978. In this way, we can ask ourselves what went wrong with our government institutions and agencies that allowed these private, authoritarian governments to flourish. And maybe shed more light on whether the developers of the HOA legal scheme were putting one over the American people in their pursuit for profits.

Notes
1.  See Establishing the New America of independent HOA principalities, p. 78, 138; The Foundations of Homeowners Associations and the New America, p. 90.
2.  America II: The Book That Captures Americans in the Act of Creating the Future, Richard Louv (Penguin Books, 1983), p. 90.
3.  Privatopia: Homeowners Associations and the Rise of Residential Private Government , Dr. Evan McKenzie (Yale University Press, 1994) p. 112.
4.  Supra n.2, p.137.
5.  Supra n.2, p. 90.
6.  Supra n. 3, p.84
7.  Supra n.2, p. 92.
8.  Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing , Donald R. Stabile (Greenwood Press, 2000), p.167.
9.  Lewis Mumford followed early utopian community promoters, such as Ebenezer Howard’s vision of “garden cities” and “privatized street associations” under restrictive covenants. In 1928 Mumford, part of the Regional Planning Association of America, developed the Radburn, NJ planned community. The Radburn government was an HOA based on the city manager model. See Supra n.6, p.8-9.
10. Supra n.8, p.164.
11. Supra n.8, p. 166-67.

Ethics case study #2: HOA attorney fails to tell board about needed CC&Rs amendment

This case study involves an Arizona condo concerned about the condo’s finances, and adopts a resolution to do away with the 15-day grace period for the payment of assessments. The November 2009 Mesa Terrace board meeting minutes show that a homeowner objected to the removal of the grace period, but cited the wrong Arizona statute in his argument. The minutes contain the following entry:

The communication was reviewed with the HOA Attorney. He determined that the statute cited was incorrect as Mesa Terrace Condominium is not a planned
community, but rather a condominium association. Different statutes apply.

Statue 33-1242 is the proper statute which applies to Mesa Terrace Condominium and Section 11 and 12 permit the current late fee(s) and late fee(s) procedure currently in effect.

The minutes indicate that a motion was made to proceed with the no-grace period change, and unanimously adopted. There were no other related entries in the minutes.

Now, within 1 hour of being informed of this issue, it was discovered that:

1. The CC&Rs contain section 7.4.1. granting a 15-day grace period on the payment of assessments.

2. The quoted ARS sections in the minutes, related to the powers of the board, and attributed to the attorney, do grant the HOA power to levy assessments and late fees, but is silent on any grace period. Not mentioned in the minutes was any reference to the relevant ARS sections, 33-1255 and 1256, pertaining to assessments and late payments. Neither said anything about any grace period.

3. Given the silence of the condo statutes (the planned community statutes, however, do impose a 15-day grace period) one must look to the CC&Rs for answers. And, as indicated in (1) above, there is a CC&Rs 15-day grace period. Consequently, didn’t the attorney know about this section and advise the board accordingly? Or, did the board ignore the advice of the attorney, if it were given? We don’t know. We don’t have any written advice to request from the board, and as proper board procedure requires, attached to the board minutes as an exhibit. All “according to Hoyle”, all above board.

4. In order for the no-grace period to be valid, the CC&Rs would have to be amended in accordance with the procedure in the Declaration., sec. 12.5, which requires a 2/3 vote of the members. There is no such amendment.

Taking the minutes at face value, it seems that the attorney was providing half-truths in violation of ethical conduct rules, 4.3, Truthfulness to Others. (See my Commentary on this issue of attorney ethics at “HOA ethics: vigorous performance or collusion?”). It is unconscionable and unethical that the HOA attorney gave such half-truths. (Read my comment to the above-mentioned Commentary on failure to obtain written attorney advice).

The attorney appears to be Maxwell & Morgan, CAI member attorneys. CAI is a national lobbying organization dominated by lawyers and management firms, and is a business trade group. It cannot have HOA members. Maxwell is a member of its College of Community Association Lawyers.

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Case study: HOA attorney – member relations

This post is basically a second case study on HOA atttorney – member relations.
Excerpt:

In my email to the Board’s attorney I stated:

“…., I believe you have forgotten that you are also representing all the other Homeowners and myself in Morrison Ranch Estates Homeowner’s Association so your representation should be in the best interest of all Homeowners. It is quite apparent that you are now working (your fees are paid exclusively by the Homeowners) trying to defend the Board members for not following the Bylaws, CC&Rs and Civil Codes that govern us.”

This exchange between a California HOA attorney and a concerned homeowner can be found on the Morrison Ranch Neighbors blog The blog is not the “official” Morrison Ranch HOA website.