Tag: legislative delegation

Sun Cities rec centers: politics at the AZ legislature

I have cautioned homeowner rights advocates to be respectful of their legislators as they are the only game in town to bring about HOA reforms.  But there come times to hold the legislators accountable for their abuse of discretion and power amounting to violations of the US and Arizona Constitutions, and failure to “establish justice, insure domestic tranquility . . . promote the general welfare and secure the blessings of liberty.”  (Preamble to the US Constitution).

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Background

Many hours were spent in researching the facts surrounding this bill to determine the real intent behind its sponsorship and the true motivations for its support.

The AZ House GOV committee just passed this reincarnation of the failed HB 2374 by a 6-5 vote (Reps. Kavanagh, Payne, Blackman, Petersen, Rivero and Thorpe all voting in favor of the bill) with the assistance of Senator Borrelli who allowed SB 1094 to be used for a S/E replacement of HB 2374. Their reasons are completely untenable giving 1) the nature of the bill, the misleading assertions, convoluted language including double negatives, 2) unbelievable legislative intent “to clarify” a 1994 bill some 24 years later, and 3) the constitutionality of the proposed statute.

Before proceeding, it must be understood that in 2015 the Superior Court in Anderson v. SCRC held the Sun City rec center, SCRC, to be an HOA.[1]  Now, 4 years later, this bill is an attempt to overturn this ruling.

In reading the bill several statements caught my attention.  I will explore them one at a time.

First, there is the question of the purpose of “before January 1, 1974.”  I cannot find any justification for this date, as prior dates are used to get around grandfathering problems to avoid litigation.  Here the bill seeks application to ‘associations” prior to this date, under the same conditions found in today’s bill.  However, Sun City was incorporated in May 1968 and SCW in Sept. 1979.  Where does 1974 come from?

1.  Nature of the bill et seq.

SB 1094 is an attempt to avoid my position that the original Sun City bill, HB 2374,  violated the AZ Constitution being a special law for a particular entity, the 2 Sun Cities.  The heart of the bill has now become permitting the “voice of the people” to be heard to reject or uphold the PUD statutes in question.  In what I referred to as cute, slight-of-hand manipulation to confuse the public, the bill permits a vote of the HOA members to decide whether or not their rec center should be an HOA or not. Say what??

The bill is cleverly worded with convoluted statements containing double negatives[2] or wording amounting to a double negative.  “This chapter [regulating HOAs] does not apply [to] a nonprofit corporation . . . that does not have authority.  And then adds an illogical approval by the membership to not accept –to reject —  the law. It seems designed to cause confusion. Read Subsections C and D carefully.

Further confusing is the redefinition of “Association” to include associations not operating as a de facto HOA to elect to become an HOA and be regulated. Say what?

Each of the 3 sections discussed is a statement that the rec centers, now “harmlessly” disguised as “associations,” are exempt from the PUD Act and regulation by the state, unless an illogical vote by the membership approves obedience to the law  — we want to be an HOA — as ruled by the court in Anderson.[3]   (This aspect of the bill is covered in more detail in (3) below).

  1. Outrageous claim of legislative intent

The PUD enabling act of 1994 is a short 2-page, 6 sections Act, of which I have a copy and have read.[4]  It does not contain any statement of legislative intent.  Its version of 33-1802, Definitions, remains essentially intact, for our purpose here, after 24 years.  SB 1094 claims to uncover an error, an oversight into the legislative intent and seeks to clarify it and set it straight. This defense is without merit, plain and simple!

The bill in its new form remains an unconscionable support of a special law for a special, miniscule application for just 2 HOAs: Sun City and Sun City West.  Furthermore, by issuing this “legislative intent” the Sponsor claims that it speaks for all the Arizona legislators aside from the 6 House GOV committee Representatives who supported SB 1094

  1. Unconstitutional delegation of legislative power

SB 1094 does not escape the constitutionality challenge  that it is an invalid delegation of legislative authority to private persons, flying in the face of long held doctrine declaring such acts as unconstitutional. This unconstitutional delegation was dealt with in McLoughlin v. Pima County  (CA-CV 2001-0198, Div. 2,  2001) concerning zoning restrictions determined by the people. In its discussion the Court quoted from several cases, and for brevity,  

“However, it is a well-established theory that a legislature may not delegate it’s authority to private persons over whom the legislature has no supervision or control.” 

The bill declares that a rec center (after redefining what an HOA is) is not subject to HOA regulation unless a majority of the owners want it to be as described in (1) above.  The people, the homeowners, are making law! That’s a mockery of the law! It is an unconscionable bill that turns the Constitution on its head and grants more freedom to the independent HOA principalities.

It is a very astute political ploy and a surprising acknowledgement of the political and social dynamics at work within HOAs.[5]  The legislative mantra, here and in other states, is that the homeowner is free to vote on amendments under the governing documents.  The wording of this bill shows that the legislators know better and understand that overthrowing the HOA board is a very high barrier to overcome.

The underlying misleading picture ignores the fact there is general apathy and indifference to homeowner participation, just like with the voter outcome in our general public elections.  In short, the likelihood of an approval of an amendment is very small, especially when there would be no lobbying by the HOA board to support the vote. Why didn’t the sponsor construct the bill to seek a positive response by the membership for approval, rather than allowing the law to be changed by the highly likelihood occurrence of a default vote —  people not voting.   It’s a rigged bill to overturn the Anderson ruling by the court.

Good ol’ fashioned politics at work “here in River City.”

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Notes

[1] Anderson v. Recreation Centers of Sun City,  1CV 2015-012458, Maricopa County (2018).
[2]   “Double negatives are two negative words used in the same sentence. Using two negatives turns the thought or sentence into a positive one. Double negatives are not encouraged in English because they are poor grammar and they can be confusing.” Your Dictionary.com. 
[3] Supra n. 1.
[4] See Enabling Act.
[5] See The HOA-Land culture (2019).  “We must make the injustice visible”  Mahatma Gandhi.

Now comes HOA taxes or assessments

In Biggs v. Betlach[1] instead of an issue of public or private agency we have the question of what’s a tax and what’s an assessment. The pro – con briefs are very instructive as relating to the HOA question of: Are HOA assessments like public taxes or like fees and assessments? If HOA assessments are clearly a tax, if public, then we have one more argument that HOAs function as public entities.

The case involves a group of AZ legislators seeking to have a federal Medicaid expansion bill declared unconstitutional, because the bill deals with tax increases and requires a 2/3 vote, which did not happen. (Why it was sent to the Governor is a guess, except they probably thought Governor Brewer would veto it, but she didn’t). Skipping the other issues in this case, I deal with what’s a tax and what’s an assessment as argued in the Goldwater filings.[2]

Note the clear statement of what’s a tax and what’s an assessment. Goldwater cites several references (not provide here) in its brief presentation of the law regarding taxes:

“In Arizona, taxes are defined as levies that are mandatory and not calculated based on the service received, whereas fees are voluntary and related to the benefit received by the paying entity, and assessments are levied against property that is specially benefitted by the improvement they fund.”

For example, “[O]ne key difference between university tuition and the [Medicaid] tax – university tuition is a fee, not a tax, because it is collected in direct exchange for a service provided and benefit received – specifically, education.” Similarly, we have various license fees, registration fees, etc. that are paid for a service of personal benefit. To help make it clearer, although the term “property assessment” is used quite often, it does not refer to the valid property tax but to the monetary valuation of the property, which is used to determine the amount of tax. It is a tax.

Goldwater goes on to argue that the purpose of a law cannot trump and supersede the constitution, nor can the legislature interpret what is constitutional. The position that a law serves “To promote effective government administration and pragmatic problem solving” is viewed as “Defendant’s preferred ‘public policy’ cannot trump voter intent or supersede constitutional provisions.”  Does that sound familiar?  HOAs provide benefits and, implicitly, therefore the laws and Constitution can be ignored?

Particularly relevant to HOAs is the argument that,

“Constitutional restrictions on legislative authority cannot be waived by the legislature itself, especially in collusion with special interests who benefit from the unconstitutional act. . . . The legislature cannot delegate to another branch of government—least of all an unelected administrator—the quintessential legislative power: the power to tax.”

So, forgetting about under what laws HOAs are created, what say you about HOA assessments as taxes and hiding behind a corporation structure[3] whose constitutionality is defended by the legislature and not the courts. In HOA-Land, while the names have been changed to protect the guilty, their functions are basically the same. The HOA assessment is a tax hiding behind a corporation shield.

Notes

[1] CV2013-011699, Maricopa County Superior Court, yet to be decided. Biggs is the Senate President with numerous legislators as co-plaintiffs. Betlach is an agency director. Prominent constitutional lawyers from The Goldwater Institute (for plaintiffs), the Arizona Center for Law in the Public Interest, and The William E. Morris Institute for Justice (for defendants, the state) are involved,

[2] PLAINTIFFS’ REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT; PLAINTIFFS’ COMBINED RESPONSE TO DEFENDANT’S AND INTERVENORS’ MOTIONS FOR SUMMARY JUDGMENT.

[3] See corporations cannot be used to evade Constitution and CC&Rs are a devise for de facto HOA governments to escape constitutional government