Glad to hear the Middle East is in good hands now...

After Tony and Kofi fail, Brad and Jennifer try Mid-East diplomacy
By Inigo Gilmore in Jerusalem
from The Telegraph
(Filed: 26/10/2003)


Bill Clinton failed, Tony Blair drew a blank and Kofi Annan made little progress. But now a team of Hollywood film stars is about to visit the Middle East on a private peace mission, in the belief that their charms will work magic on the Israeli-Arab conflict.

Brad Pitt, his wife, Jennifer Aniston, and Danny DeVito are among the stars who aim to succeed where world statesmen have stumbled.

"The past few years of conflict mean that yet another generation of Israelis and Palestinians will grow up in hatred," reads a statement from Pitt and Aniston. "We cannot allow that to happen."

Here's the whole story. Now, if only we could get them to take on HOA mediation...

Oppression: pick your brand, public or private
Apropos Oak Park, this place bans handguns, overnight parking on the streets, nuclear weapons (via signs posted at all main street entrances to the village), and all forms of non-niceness. It's the municipal equivalent of an HOA.

HOA tackles swingset blight
Now, here's something to be proud of. Stamping out those kiddie swing sets that are a little too tall. Way to go, board members. Nothing like grabbing favorable press for your community.

"Kids' play-set clash pits Gilbert families vs. HOA"

by Stephanie Paterik
The Arizona Republic
Oct. 25, 2003 12:00 AM

"Joel and Kerri Pogar have written the governor, rounded up their neighbors and spent six months in a law library drafting a suit against their homeowners association.

"The issue at hand? A backyard play set.

"The Gilbert couple say the HOA in Power Ranch, one of the town's poshest neighborhoods, forced them to get rid of a $4,000 play set because it was 2 feet higher than the 10 feet allowed by HOA design standards."


Read it all here.

Moving is hell
My wife and kids and I are in the middle of packing for a move from The People's Republic of Oak Park, Illinois, in the heart of Cook County, to a suburban setting in Lake County where I am told there are Republicans. Not in museums or zoos, either. They actually roam around free and even vote. All our neighbors here in OP--one of the strongest bastions of the left wing to be found on any continent--think that we will be shocked by the Neanderthal mentality that will surround us. I kind of doubt it. I have no problem seeing a flag flying from most every porch. Ours is up every day, along with a "We Support our Troops" sign, and we are a little tired of being the only ones. In fact, I think HOAs would be better places if they were a little less tightly-wound about this whole flag thing. When did the American flag ever reduce property values?

Go Cubs!
Condolences to Floridians, who have to deal with all the issues of common interest housing as well as the Floundering Fish. As I write it is 7-0 Cubs in Game 4. Matt Clement, he of the cow-pie-on-the-chin, Amish-farmer-on-the-mound look, is inexplicably winning the game. Until tonight I considered him a curse on the Cubs, some sort of albatross, or perhaps albacore, who was sent to torment the team that has been sentenced to permanent ignomnity for not letting a guy bring his goat into the stadium in 1947, or some such rot. But here's a guy with a goat beard winning a game that any rational human would think he was going to lose. It could change at any minute, but so far it is a strange and terrible thing to behold. As a Chicagoan I can do nothing but chortle with glee as The Man With the Strange Thing on His Face inches toward a victory.
Go figure.

Request for comments on CAI Bill of Rights
In February I will be speaking at the annual Community Association Law Seminar sponsored by the Community Associations Institute. I'll be at a panel discussion on "Is 'Rights and Responsibilities for Better Communities' the Answer to HOA Critics?" That is a reference to a document that you can view on line at the CAI website, here. The other panelists will be attorneys Molly Foley-Healey (primary author of "Rights and Responsibilities") and Dave Ramsey, and property manager Sandra Denton.
I would appreciate receiving any intelligent, reasoned opinion on the subject from interested observers. Note "intelligent, reasoned." That means, please, no venomous screeds, conspiracy diatribes, or calls for the abolition of common interest housing. This is a panel about whether or not the CAI "Rights and Responsibilities" document will satisfy HOA critics. If yes, then why? If no, then why not? I don't promise to answer all the e-mails I get on this, although I'll try to acknowledge them all. But I am genuinely interested in taking in whatever you all have to say. The deadline for submission of my paper to CAI is Monday, November 3, so keep that in mind. Thanks for your help.

McKenzie is back on the air!
Sorry for the long absence. We went on vacation in Panara, Iowa and had no computer access at all except for one visit to a nice lady at the management office of the local homeowner association who let me sit at her desk and check my e-mail. How's that for irony?
Then I went to the American Political Science Association annual meeting in Philadelphia, where 5000 political scientists had to wait in long lines to check their e-mail at about 12 computers.
Then my son and I went to Glasgow, Scotland, where I spoke at an international conference on gated communities. This was put on by the University of Glasgow, and it was a great success. The papers will be posted on the web soon, along with some of the Powerpoint presentations, and I'll give you all the URL when it is up.

Can't blame this on an HOA...
"After eight months of scouring Northern California for a slice of tranquility to purchase as his family's vacation property, Berkeley resident B. J. Miller found 40 acres deep in the El Dorado County wilderness. With the closest neighbor a quarter-mile away, Miller began settling into his corner of the wild. The troubles of the world, however, caught up with him. Sometime in the past two months, somebody stole everything inside Miller's house -- and then stole the house. "
As Thomas Hobbes said, life in a state of nature is solitary, poor, nasty, brutish, and short.
Read the story.

California Law Revision Commission site
After reading the previous post, some people may want to check out the Commission's work product to date. Follow this link to the
California Law Revision Commission.

Remarkable memo to California Law Revision Commission
I can't vouch for the authenticity of this memo, but it looks to be a genuine correspondence from retired Judge Charles Egan Goff to the California Law Revision Commission, the body that is currently considering major reforms to the law governing HOAs in California. Here's the lead, followed by a link to the whole document:

Charles Egan Goff
California
MEMORANDUM - July 3, 2001
TO: CALIFORNIA LAW REVISION COMMISSION

RE: HOMEOWNERS' ASSOCIATIONS - STUDY H-851 Law Revision Commission
RECEIVED
JUL 12 2001

File:__________________

In 1791 Thomas Paine wrote in Rights of Man: "Defects of every government
and constitution, both as to principals and form, must be on a parity, be as
open to discussion as the defects of a law, and it is the duty which every
man owes to society to point them out...."

It's a tribute to California's Legislature and Executive that this body
exists to improve their work, even to disagree with it when necessary. So it
is especially an honor for this worshipper of Our Constitution to address
you.

Briefly I beg you to consider turning Homeowners' Associations from purely
for-profit business enterprises into democratic societies, recalling Madison
's statement: "Justice is the end of government. It is the end of civil
society. It ever has been and ever will be pursued until it is obtained, or
until liberty be lost in the pursuit." (Federalist #52.) This is an ancient
law: "Justice and only justice you shall pursue." (Deuteronomy 16:19.)

My concerns and recommendations are six...

...and on that dramatic note, you are invited to proceed to the full document. I added the italics around the money quote.

HOAs in the American Heartland
I take a certain childish pleasure in having been ridiculed for saying back in 1985 that private residential government was the most significant trend in housing and local governance. One Los Angeles Times reporter--Bob Sipchen, if memory serves--referred to me as a "crackpot." Book publishers told me confidently that homeowner associations were only found in Florida and a few other hot places where retirees congregated in condominiums and played shuffleboard while waiting for Death.

Here's a story from the Des Moines Register, in Iowa. That's IOWA, the landlocked, potato covered, football-crazed center of gravity of the American heartland. Can anybody read this and still underestimate the significance of common interest housing?

Neighborhood property rules for homes a growing trend
By MICHOLYN FAJEN
Register Correspondent
07/31/2003
--------------------------------------------------------------------------------
Residents who live in West Des Moines' Southwicke town homes must keep their garage doors closed, and they can't have big pets. If the town-home owners want to build a deck, they must first get permission from the homeowners association.

Members of Urbandale's Lake Halice homeowners association can't swim in the lake or use gas-powered boats.

Nationally, homeowners associations govern an estimated 80 percent of new homes. More than 55 million Americans are in homeowners associations, according to the California-based American Homeowners Resource Center. Of those homeowners, 75 percent believe the rules that govern their neighborhoods are appropriate.

"It protects us all and keeps the neighborhood beautiful," said Jody Warth, a member of West Des Moines' Heatherwood Association. "The goal is to avoid eyesores. Our neighborhood is a huge green space that works hand-in-hand with nature, and it's because we don't mess around with the natural aesthetics of the area."

Homeowners associations usually are created by the developer or builder and are typically run by an elected board. Common covenants - or property-use rules - cover the signature features of a neighborhood. Rules may include having a specified number of trees planted in the yard, muted colors of siding, requirements on fencing material or type of shingles. Association membership usually isn't optional.

"We do operate essentially as a government," said Jerry Manning, president of Country Club homeowners association in Clive. "You have a governing body, covenants that dictate what the homeowner can do, the power to assess dues and to enforce those dues and guidelines. But that power essentially comes from the people."

The emphasis in the last graph is mine. By all means, read the whole thing...

...and Chris Webster responds to Sarah
Further upgrading the intellectual quality of this blog, Chris Webster (see below) responds to Sarah's comments...

From Chris:

Continuing the discussion...a few thoughts in response to Sarah's comments.


Sarah, your first and second contrasted pictures do not seem mutually exclusive
to me. It may be that municpal government has over-reached itself and this is
why private governance has stepped into the breach. This is not inconsistent
with the private version being riddled with inefficiecies and inequities. The
state steps in to mitigate against private neighbourhood market failures. And so
the iterative process proceeds. If the institutions of demoncracy and
accountability are open, transparent etc, one might assume, (with Karl Popper)
that the social experiment ends up with a net gain to society (forgetting about
the spill-over issue for the moment and just concentrating on the welfare of
those within private communities - the same argument can be developed in respect
of social spill-overs but will have a different conclusion).


Talking about market failure, Oliver Williamson's idea of remediability as an
efficiency criteria is an interesting one (eg Williamson 1999 Public and Private
Bureacracies JLEO Vol 15). Neo classical economists got it wrong by defining
efficiency in terms of utopia (Demsetz 1969 - 'Nirvana economics' JLE Vol 12) -
markets failing when compared to the 'perfect market'. The big mistake there was
to ignore the costs of the government interventions which such analysis
prescribed (the zero transction cost assumption of orthodox economics).
Actually, as Ronald Coase (1964 'The Regulated Industries' AER Vol 12) points
out, 'until we realize that we are choosing between social arrangements which
are all more or less failures, we are not likely to make much headway'.
Williamson's transaction cost approach, while having its flaws, seems a useful
one for exploring the issues of private government. Its emphasis is on
evaluating the match between, on the one hand, the attributes of a particular
set of transactions (for example the transactions between neighbour and
neighbour; home-owner and the agency owning the local public good assets etc)
and on the other, alternative governance frameworks. The sunk costs of the
extant set of institutions (eg. traditional municipal government) should
feature in the evaluation - hence the idea of remediability - do the costs of
creating new institutions outweigh the benefits of change? The costs of the
American urban system turning to private government include the post-contract
adjustment costs of litigation (which are, of course, unkown at the time of
individual home-owner investment but which become more predictable over time).
As these costs become more predictable they can be factored into contracts,
private governance rules and state institutions via special provisions (as Sarah
notes exist in the UK system to protect lesees from forfeiture, for example, or
they can be factored into price (higher price to reflect risk). Either way,
society learns over time how to organise itself to progressively reduce the
costs of competition and conflict over scarce resources.

Sarah Blandy's comments on the NYT article
Sarah Blandy is Senior Lecturer in Housing Law, based in the School of Environment and Development, Sheffield Hallam University, England. She is part of the international network of scholars on gated and private communities. I'm happy to be able to post her comments:

From Sarah Blandy:
Some thoughts from an English lawyer on the NYT article and Chris's response:
- it's an interesting cyclical process if you accept the view that private governance steps into the gap left by inefficient national
government (lack of security and fear of crime) and by inefficient local government (poor provision of services), but then itself becomes
too oppressive and has to be curbed by government legislation;
- I think the above gives a more realistic picture than GCs being a response to / retreat from over-reaching municipal government accreting
to itself neighbourhood level governance functions; - there are checks against corrupt municipal government - and I suppose GCs can be self-correcting in that oppressive officers of HOAs can
be voted out, but this appears not to be happening in the States (is that right?);
- I think the GC phenomenon is culturally determined; American culture seems to be very litigious, but on the other hand a lot of American
cultural values make their way over to the UK sooner or later... but I would be surprised if we saw the same scenarios as in the NYT article
over here. This view is partly based on the difference in property law between the States and England, which means that GCs have a
different legal framework. Here, most GCs are set up on a leasehold basis, and there is a long history of mutually enforceable leasehold
covenants in blocks of flats and in many housing developments - but not a lot of litigation between residents or between management company
and individual residents (there have been some cases); and English law provides considerable protection for leaseholders against forfeiture
of the lease for breach of covenant.

Thoughts Provoked by Chris Webster's Comments
I've been saying for 18 years that the governance issues are the Achilles heel of this form of privatization.

Internally, many associations tend to display either too much apathy or too much conflict. Most are under-reserved, and the bottom third of the CID price curve is filling up with first-time buyers who have zilch in the bank, so when major repairs are needed associations tend to borrow the money and using their assessment stream as the security. The incentives work to almost guarantee inadequate reserves--if Americans move every five years on average, why pay today for somebody else's new roof in ten years? Sure, a smart buyer checks out the reserves, but how many buyers are that smart?

Externally, it is still unclear how CIDs are going to be built into the intergovernmental system, other than the fact that local governments like using them as cash cows.

Some state legislatures are indeed beginning to address these issues seriously, but they have had a tendency to focus on piecemeal, micro-management issues, passing laws saying it's OK to fly Old Glory if it isn't too big, or precisely how to handle proxies in HOA elections, instead of addressing the big issues--civil liberties, financial responsibility, secession, tax equalization, etc.

This policy area went from invisible to "Oh, my God," in about ten years--the 1980s. Now those who understand the problems are scared that touching things will make them worse.

Chris laid out the alternatives very well, I think. Maybe things are evolving toward greater accountability and maybe they aren't. We will see. I'd be interested in hearing what others think.

Chris Webster comments on NYT Article
One of the most knowledgeable and perceptive people studying the rise of private local government is Chris Webster, Professor of Urban Planning and Director of the Centre for Education in the Built Environment at Cardiff University in Wales. He has studied gated communities in China and is co-organizer of an international network of scholars studying the rise of private communities around the world, the next gathering of which is in Glasgow, September 18-19, 2003.

Chris has two websites that people interested in this subject should check out. One is
www.spontaneous-cities.com, and the other is www.gated-cities.com.

Chris has these reactions to the NYT article, and in my view he has framed the issues beautifully:
"I'm a self-confessed neutral in the private governance debate but find the kind
of behaviour documented in Evan's wonderful article as appalling as the
antagonists undoubtedly do. Some of the questions raised for me are: (a) Is this
just a step in an evolutionary process by which society works out an acceptable
institutional framework for governing neighbourhoods effectively. There is
evidence of a process at work, with laws appearing to curtail HOA powers,
requiring them to hold minimum sink funds etc. Such laws are appearing thick and
fast in countries all around the world. Their purpose - to constrain the
competition for shared resources within privately governed neighbourhoods - a
competition that appears to be frequently stacked unacceptably in favour of
powerful members of committees, developers etc. One could assume that in twenty
years time some of the worst excesses of the emerging market in private
neighbourhoods will have been ironed out. (b) Alternatively, will private
neighbourhoods burn themselves out with litigation. In which case, we are
witnessing a market-led social experiment that might end up proving, after all,
that traditional municipal government is in fact a rather efficient
institution. One should ask the question - if municipal bureacracies are such an
inefficient way of managing cities at the fine grained scale (as alleged by HOA
protagonists), why did they emerge in the way they did in the first place? They
must be good at something. c) Related to this - are the transactions governed by
neighbourhood governments (traditional of proprietary) what James Wilson has
called 'Sovereign Transactions' - transactions where the integrity of the state
is at risk. Also, are they charactersed by strong asset specificity? On both
accounts, there may be apriori reason to govern them by bureacracies. (d)
Conversely, have municipal governments over-reached themselves during the past
100 years by accreting neighbourhood level governance functions to their other
bureacratic functions? (e) Is the scenario depicted in Evan's piece a peculiarly
North American phenomenon? Does proprietary n'hood government have to evolve
that way or might it follow a different path in societies with different
cultural values? It is widely accepted in some Asian countries without strong
traditions of modern municipal government."

Update on Hamilton, NJ, case of POW/MIA Flag
See June 27 Privatopia Papers, below: Pay our lawyer and we'll call it even...
Seems that after all the bad press the association that went after a vet for flying the POW/MIA flag is moving toward what it sees as a reasonable solution: pay the association's legal fees, amounting to $1000, and a $50 fine.
So goes the story...

Heaven or Hell: We Build, You Decide
Homeowner horror stories: Associations are heaven or hell
By Paul Bannister • Bankrate.com


To many people it's Shangri-La. Heaven. Paradise.

Everybody's lawn is manicured. No one's gone to an electric chartreuse and fuchsia color scheme. No one's got her granny panties -- or thongs, for that matter -- flapping on a clothesline. No junk cars in the side yard. No sofas on the front porch.

Everything looks wonderful.

To others, it's sheer hell. Hades. Purgatory.

Skip one Saturday mowing the lawn and the Gestapo comes down on you. Four hundred and some houses are the same boring shade of beige. You can't get that nice fresh-air fragrance in your unmentionables. That classic Corvette you were planning to restore got towed away, and your wife has been officially informed that the cute little swing near the front door is a violation punishable by death.

Depending on your perspective, your homeowner's association is either the best of all worlds ... or the worst

Read at Bankrate.com, and check the mortgage rates while you're at it.

New York Times Weighs in on HOAs, Quotes Your Humble Correspondent
Homeowner Boards Blur Line of Who Rules Roost
By MOTOKO RICH
The New York Times, July 27, 2003

PHOENIX — Joseph Haggerty may own the most expensive garbage can in America.

Because he kept it in the front yard, not the back, his homeowners association took him to court for violating community rules. After a four-year standoff over whether neighbors could see it behind a shrub, he lost and was ordered to pay $11,978.75 in fines and legal fees.

For Ralph Blevins, the problem was an unsightly toolshed behind his town house in Raleigh, N.C. His homeowners association removed the shed one night, and Mr. Blevins, a 62-year-old civil engineer, protested by withholding $750 in maintenance fees. The association foreclosed and bought the town house at an auction for just $3,000.

About one in six people in the nation, or roughly 50 million residents, lives in a community governed by a homeowners association, from co-op buildings in New York City to suburban subdivisions. Formed to take care of the small tasks that fall through the cracks of municipal government, like picking up garbage and repainting curbs, some homeowners associations are asserting far broader powers, backed by local courts.

Cities and counties, which are reluctant to raise taxes to pay for services, have in many cases stepped aside, allowing associations to become de facto governments with increasing authority over daily life.

The growth of associations has created "a whole sector of people who don't use public services," said Evan McKenzie, a professor of political science at the University of Illinois in Chicago who has written widely about the subject. Homeowners who live in such communities, he added, "don't need local governments."

Read and download before it disappears...

Prepare to be Assimilated...
Richard White: Get used to the idea of homeowner's associations

Sunday, July 27, 2003

By RICHARD WHITE, Special to the Naples Daily News

Q. When we purchased our home two years ago, it was not until after we signed all the papers and all funds transferred did we find out the home was located in an area with a homeowner's association. Neither the seller nor real estate agents mentioned this fact. We did not want a home in this type of area and now we are stuck. Were any of these people in violation of the law? If so, what can we do about it? S.U. — Miami

A. The obvious answer is to contact an attorney for an opinion. But, that is not the total answer. The fact is that more than 90 percent of all homes resold today are in some type of association. Almost 100 percent of new home are in an association. It is the future of home buying to expect that there will be an association of some type. I wish I could help, but you should have asked the question in the beginning. You could write letters to the real estate offices and boards, but it will not solve your situation. Sorry.

So shut up and go read the rest of the Q & A, Pilgrim.

The States Aren't So Broke After All? Well...If You Say So...
U.S. States Are Morbidly Obese, Right or Wrong?: Joe Mysak
July 24 (from Bloomberg.com) --

The belief that U.S. states and municipalities are staggering under mountains of debt is a popular one. It's wrong.

And if you think California is among the top 10 states showing the most debt, wrong again.

That's what a new report by Moody's Investors Service shows. For all 50 states, the median net tax-supported debt as a percentage of personal income is 2.2 percent, the same as it was a decade ago, according to Moody's.

What this level of debt means is that most states have the capacity to sell a lot more bonds in hard times, which is good news.

As to which state is debtor No. 1, it's Hawaii, not California. California has an expenditure problem, not a debt problem.

Read the whole thing...

Take Down That Flag, Says HOA...
From Channel 10, NBC, in New Jersey...

Homeowners Group Denies Permit For Flag
POSTED: 4:28 p.m. EDT July 21, 2003
UPDATED: 7:12 p.m. EDT July 21, 2003


HAMILTON TOWNSHIP, N.J. -- A homeowners group is threatening to fine an Army veteran $25 a day for flying a POW MIA flag in the housing development.

The whole story...

Everybody into the pool....NOT!
From Channel Three in Memphis...
Filthy Pool Declared Public Health Hazard

Updated 4:55 PM, Monday, July 21

By Andy Wise

HICKORY HILL, MEMPHIS -- Something's in the pool at the Kirby Oaks Condominiums.

Like a scene out of "Swamp Thing," a film of green scum blankets water black as coffee. A fire extinguisher, bottles, a life-preserver and children's Legos float on the surface.

The Memphis-Shelby County Health Department cited the complex's homeowners association for code violations on the pool -- more than a year ago.

"They didn't clean up the pool," says Dee Jamison, inspector for the health department. "Now we're back in the same conditions, so we're going to attempt to serve them again."

Coin Management manages the property from a Memphis post office box. Manager Barbara Milam blames delinquent homeowners and renters at Kirby Oaks who haven't paid their maintenance fees. She says 70 percent of the residents have not paid their dues. They owe more than $100,000 to the Kirby Oaks homeowners association.

Read the entire unpleasant story, but not while eating.

Does Anybody Remember Frances T.?
Regarding the previous post, one more thing: Hello, Mr. President of Sunrise Villas Homeowners Association, and members of the Board of Directors. I have some light summer reading to suggest for you. It's an opinion from the California Supreme Court in the case of
Frances T. v. Village Green Owners Association, 42 Cal. 3d 490 (1986). It's all about how the association and the individual directors can be held liable for injuries to a unit owner after making her take down the lights she put up to keep crooks away. She did as the board ordered and that very night was raped and robbed. And then she sued.

Oh, sure, you are in Nevada, not California, but as far as I know there is still tort law in Nevada, so if I were you I'd read the opinion in Frances T. before making this owner take down her shutters. And if you do make her take them down, maybe the board members should take turns keeping watch outside her unit 24 hours a day. It might save you some money.

When Will They Ever Learn Dept., Installment No. 2653...

Woman vows to keep her security shutters
Homeowners association says 70-year-old has to play by rules

By Jen Lawson
LAS VEGAS SUN

After burglars ravaged Mae Roy's southeast Las Vegas home several years ago, she saved up her money to get security shutters installed over her back sliding glass door.


But her homeowners association is insisting that Roy remove the shutters immediately, despite a new law making it illegal for associations to keep residents from installing the shutters.


The impasse has resulted in controversy at Sunrise Villas IV, a quiet, 62-unit community near Desert Inn Road and the Pecos-McLeod Interconnect.


"I will not take them down until they take me with them," the 70-year-old Roy vowed.


Lacey Casagrande, president of the homeowners association, said: "We certainly don't want her not to feel safe. ... (But) these are the rules and if you don't abide by them, there are consequences."


Read the whole thing and you'll see I'm not making this up. Thanks to Monica Caruso for passing this story along.

Link to full story.

At my condo law class last night I had a wonderful guest speaker, attorney Herbert Fisher of Chicago, who knows more about the law of housing cooperatives than just about anybody. It's natural to compare co-ops with condos. Why are there so many condos and so few co-ops, while at the same time there is so much conflict in condos and substantially less (from what I can see) in co-ops?

There is no one explanation, of course, but I think in a general sense the relative lack of conflict in co-ops and their small share of the housing market are probably explained by the same things: actual choice and real consent. The key reason for all the turmoil in CIDs is the fact that people are drawn by marketing and lack of alternatives into a form of shared ownership that many of them don't understand or like much, without ever really agreeing to live by the rules and accepting a reduced sense of dominion over their property.

If that is true, it suggests that if people had to actually ask to live in the CID and be interviewed by the BOD to get their approval, and had to actually mouth words of understanding and assent, there would be both less conflict and a lot fewer people living in CIDs. The ones who believe their home is their castle would get so angry during the interview ("Who do you people think you are, asking me all these questions?") that they'd either be rejected by the board or they'd qive everybody the finger, stomp out of the room, and cancel the sale. Probable net result: less conflict in condos, but a much smaller market share for condos. You could extend this logic to CID housing in general, including all the townhouse and HOA developments.

Does this mean that the law should give CID boards the power to interview and reject owners? It's not that simple, because there are many other differences between CIDs and co-ops. For example, in CIDs you have individual owners with individual mortgages, and they need to be relatively free to sell them. But it is an interesting thought experiment to engage in if you are trying to figure out why there is so much litigation coming out of CIDS.

HOA-loaded areas lead nation's growth
From CNN: (see quote from Robert Lang in bold at the end)
Arizona town leads nation in population growth
Thursday, July 10, 2003 Posted: 10:10 AM EDT (1410 GMT)
GILBERT, Arizona (AP) -- Searching for an affordable place to open a business and a quiet community to raise his daughter, Darrell Miklos left California a month ago to settle in this affluent suburb.

Gilbert, 20 miles southeast of Phoenix, offered what Miklos felt was a good deal on a house. He also decided to open a new location for his boat manufacturing business in nearby Mesa.

"Arizona is a godsend when compared to California," Miklos said.

Many here in Gilbert would agree. The town had the biggest population jump in the nation between April 2000 and July 2002, according to estimates released this week by the U.S. Census Bureau.

Gilbert has grown by nearly 25 percent in the two-year period, beating out swelling suburbs around Las Vegas, Los Angeles and San Diego for the title of nation's fastest-growing community. It now has 135,000 residents.

The census found that while some of new residents left larger nearby cities, much of the metropolitan growth was attributed to the continued migration to the South and West.

"Most of the places aren't job centers. They are mostly residential, master-planned, large-scale and very homeowners-association heavy," said Robert Lang, a demographer with the Metropolitan Institute at Virginia Tech.

California Appellate Court Rules for HOA in Disclosure Case

The Second District Court of Appeals has ruled that an HOA did not have to disclose to owners that it had filed a lawsuit against its insurance carrier. The plaintiff sold his condo before he found out about the lawsuit, and when the suit settled for $20 million the new owner of plaintiff's unit got a payment of $180,000. Not bad for a unit they bought for $53,500, eh? Read the whole thing here.

AP does story on HOAs
And if you follow the link to the whole story you will find yours truly quoted...

Homeowners following house rules
Associations becoming norm across nation

By Jim Wasserman, The Associated Press
July 6, 2003

GOLD RIVER -- As the war in Iraq became imminent, emergency room doctor and Vietnam veteran Bill Durston protested by taking down his American flag and raising his United Nations flag.

Citing its rules, his neighborhood homeowners association told him to take it down. Citing the Constitution, Durston refused.

The flag remains, as does the dispute between Durston and the association. It's one of many in the growing conflict between the nation's fastest-growing way of life -- life inside a homeowners association -- and traditions of liberty and free speech. Tension among the estimated 8 million Californians and 50 million Americans living under rules of a private residential government has lawmakers across the nation dealing with residents' rising unrest.

In a country founded on private property rights, homeowners associations, practicing what some call "micropolitics," increasingly dictate the nation's home colors, landscaping, pet sizes and placements of satellite dishes. They also restrict many forms of political expression Americans take for granted, even, until recently in many parts of the nation, flying the U.S. flag.

Experts call this still-accelerating trend one of the most stunning transformations in how Americans live, rent and buy homes.

Twin Rivers Complaint On Line Courtesy of AHRC
The American Homeowners Resource Center has posted on its web site the complaint in the case of Committee for a Better Twin Rivers v. Twin Rivers Homeowners' Association here.
The major dispute in this case is whether the actions of homeowner associations are subject to the requirements of the New Jersey state constitution. It is, in other words, the main case in the nation on whether some HOAs should be viewed as quasi-governments for some purposes. This case is filed in Mercer County, New Jersey, and is now at the stage where cross-motions for summary judgment have been filed, and the judge will rule on them perhaps as early as this summer.
I am the expert witness on liability for the plaintiff, Committee for a Better Twin Rivers. The lead plaintiff counsel is Frank Askin, of the Rutgers Law School Constitutional Litigation Clinic, who is one of the nation's leading civil liberties attorneys. His summary judgment brief is a masterpiece. Also representing the plaintiffs is Steven Siegel, who wrote the best law review articles I've ever seen on this issue ("The Constitution and Private Government," 6 William and Mary Bill of Rights Journal 461, published in 1998).
I will keep you up to date on this case as events unfold. This is the one to watch.
Thanks to the folks at American Homeowners Research Center for posting the complaint.

Un-Neighborly Actions
Flag Falls Victim to Tyrants of Taste

Commentary
By John Stossel (from ABC 20/20 web site)



July 4— It's gotten this bad. One man was so angry with his homeowners' association he burst into their meeting in Peoria, Ariz., three years ago and began firing.

Read the whole thinghere.

ABC 20/20 to Broadcast Flagpole Saga Friday, 7/4
From Barbara Walters:
"My partner, John Stossel, has a red, white and blue holiday story
about a flagpole and a Vietnam veteran. The former soldier ran
afoul of a homeowner's association rule, wound up in court, lost his
flagpole -- and got stuck with legal fees of $150,000. To that,
John says, "Give Me a Break!" Please be sure to watch 20/20
on Friday at 10 p.m. (9 o'clock Central),
and also be sure to let us know what you think. My address
is BarbaraWalters@abcnews.com"
(Thanks to Fred Pilot for passing on the message from Babs.)

I have received some thoughtful responses to my post on the HOA activist movement.
I think conventional political activity--organization, marshalling information, using the media, lobbying, finding allies in the short and long term, lawsuits, etc.--are the way to go. I think a number of state legislators are starting to catch on to these issues, and see the potential for abuse as never before. Many in the media are starting to listen. But some others, not satisfied with all the signs of progress, seem to think the proper course is to vilify people and organizations on the internet, scream about "conspiracy," and claim with a straight face that their lives in a CID are just as bad as life in Stalinist Russia or Nazi Germany. I am concerned that the HOA activists who do such things could lose all credibility with the media and policy makers. That would be a very unfortunate thing, because these groups are critical to the prospects for reform. They need to be perceived as credible. This dilemma confronts all social movements. To get attention, they need to say and do unconventional things, but to get anything changed, they need to be credible. It isn't easy bringing about change from the outside. I hope that people can keep this in mind.
Thanks for your posts, everybody. I won't quote anybody by name without your approval, by the way.

Here's a contribution from Fred Pilot, including an article and his commentary on it, for your consideration. He's pondering the impact of the California budget crisis (something we see in smaller scale in other states as well) on the future of residential private government. One possible response to fiscal crisis is more privatization. Another response would be to strengthen the financial position of local governments. Here's Fred's take on the article that follows, and he highlighted in bold the text that I have also bolded for your convenience:

Fred says: "This proposal, being floated in hopes of getting both Republican and Democratic support for passage of an overdue state budget, would provide local governments greater property tax revenue from housing and thus reduce their need to privatize residential development as common interest developments governed by private homeowners associations."

Now, you may want to read the whole thing, but here's the top half of the Sacramento Bee Article:,

State extends its hiring freeze
The move, paired with a purge of vacant jobs, may save $550 million.
By Alexa H. Bluth and John Hill -- Bee Staff Writers - (Published July 2, 2003)
As California's fiscal year began without a budget Tuesday, Gov. Gray Davis issued dual orders aimed at trimming costs from the state's work force.


Davis also predicted a quick end to the legislative budget standoff as the outlines took shape of a possible deal to finance a chunk of the state's deficit without raising taxes.


"While everyone else prophesies doom and gloom ... I continue to believe that we will see action by the end of this week," Davis said after signing the pair of executive orders.


One would chop $250 million from the budget by eliminating 20,000 vacant government jobs.


The second would extend for at least two years a hiring freeze first imposed by Davis in October 2001 when the state's fiscal slide was becoming apparent. The governor said the savings would amount to about $300 million.


The hiring freeze does not apply to public health, safety and security personnel, including those hired by the California Highway Patrol, the Office of Emergency Services, the Military Department, and some Department of Health Services offices, according to Davis' order.


Davis urged the Legislature and the judicial branch to join the halt in hiring.


The move is designed to reduce California's payroll costs, but Davis administration officials also are attempting to persuade state workers' unions to agree to salary or benefit reductions, or face layoffs to achieve $855 million in payroll cuts.


In the absence of a spending plan and a deal with workers' unions, the Personnel Department has issued 9,000 notices warning state employees they may lose their jobs. But Davis said Tuesday's move might spare some from losing their posts.


Legislators failed to pass a budget by the midnight deadline Monday. State Controller Steve Westly has warned that state cash will soon dry up and he will begin halting payments to state vendors, community colleges and schools.


Lawmakers have for weeks been frozen in disagreement over raising taxes to help fill a budget deficit expected to reach $38 billion by the end of this fiscal year. Democrats have put forth several plans that contain program cuts, borrowing, and sales tax and other tax increases. Republicans have called for deeper cuts and rejected tax hikes of any kind.


Legislative leaders, however, talked informally Tuesday about a possible compromise that includes financing $10.7 billion of the state's deficit over several years using complicated maneuvers that avoid a tax increase.


"The key sticking point upstairs is how in fact we are going to sell current-year deficit bonds," Davis said. "One reason for my optimism is that I do see the sides narrowing on that issue."


The complex deal would work something like this, several sources said Tuesday: The Legislature would repeal a half-cent or a quarter-cent of the sales tax now dedicated to local government, replacing it with a sales tax increase of the same amount for the state. Consumers would pay the same tax on purchases, but part of the revenue that used to go to local coffers would instead go to the state treasury.


To compensate local governments for lost revenue, the state would give them the same amount in property tax. In effect, that would reverse the change that occurred in 1992, when the state shifted property taxes from local governments to schools to reduce its own costs during the last fiscal crisis.

I am increasingly convinced that the trend toward privatization of local
government will continue and even accelerate for the forseeable future. Problems that people keep pointing out with homeowner association private government will continue to receive increased media attention. This will lead to increased regulation by state governments in California, Texas, Arizona, Virginia, Maryland, New Jersey, Illinois, and other places where over half the new housing in major metro areas is in HOAs. There will also be more fiscal problems in under-reserved associations.

But those who advocate doing away with CID housing, or who think somehow the whole phenomenon will just go away, are wrong, I think. The mortage banking industry is quite happy with CID housing; municipalities and counties will continue to favor it due to fiscal
constraints that are only getting more acute; builders will continue to profit
from it; and most people will continue to buy it. The bottom line is simple:
there's no alternative yet that satisfies all these incentive structures as
well as CIDS. So the only responsible course of action is to find a way to
make it work, unless and until something better comes along--something that is
supported by the mortgage bankers, cities, builders, and consumers.

Right now the Community Associations Institute and other influential groups are trying to fix some of the problems with existing association governance. Whatever CAI does won't satisfy the HOA activist groups, of course, and it shouldn't. The condo
commandos have the potential to be a force for positive reform and they need to have their own agenda and advocate on behalf of the CID homeowner.

But I am increasingly concerned that some of these folks are teetering on the edge of being permanently dismissed by the press as neighborhood kooks and chronic malcontents. When you read the posts on the various newsgroups of HOA advocates, you find people railing against CAI, the Urban Land Institute, lawyers in general (well, I guess that isn't so unusual), politicians, the media, and everybody else with any professional credentials.

Personally, I am just sick and tired of hearing this sort of thing. It's a shame that they can't see what harm they are doing to their own cause, because it is a valid cause. But reading some of their posts reminds me of the one and only SDS meeting I ever attended back in 1968. I heard people screaming about how everything is bad, everybody is corrupt, the whole system has to be scrapped. I left the room just shaking my head in wonderment at the pure recklessness of the entire group. I was against the war in Viet Nam then, but I certainly didn't want to trash the entire country and vilify all it's institutions. But with SDS there was no middle ground. That mindset is very dangerous.

Now, in the debate over CID housing, we are talking about a couple of trillion dollars in home equity representing most families' only significant investment, and more trillions in mortgages. I have no problem with strong criticism--I've done plenty of it myself. But criticism needs to stay within certain bounds or it becomes nihilistic. Criticism should be aimed at making things better, not tearing them down and hoping that whatever arises from the ashes is better than what went before. Critics need to give some serious thought to the stakes ordinary people have in the status quo, and what the alternatives are.
People who want to smash the status quo without much thought to the consequences should read Edmund Burke's "Reflections on the Revolution in France". It was written in 1790, and it is still true today.

Colorado Supreme Court says HOA can force people to join and tax them
Here's a summary of the case, from Patrick Randolph's DIRT-L list:
Supreme Court of Colorado,
En Banc.
EVERGREEN HIGHLANDS ASSOCIATION, a Colorado non-profit corporation,
Petitioner,
v.
Robert A. WEST, Respondent.
No. 02SC242.
June 16, 2003.

Subdivision lot owner sought declaration that amendment to restrictive
covenants requiring membership in homeowners association and assessing
mandatory dues was invalid. The District Court, Jefferson County, Tom
Woodford, J., entered judgment for homeowners' association. Owner appealed.
The Court of Appeals reversed and remanded, 55 P.3d 151 (2001). After grant of
certiorari, the Supreme Court, Rice, J., held that, as a matter of first
impression: (1) modification clause in covenants which stated owners "may
change or modify any one or more of said restrictions" was expansive enough to
allow adoption of new amendment, and (2) homeowners association, as common
interest community by implication, had implied power to collect assessments.
Reversed and remanded.

This looks like a major case and I will have more to say about it after I have read it more carefully.

Florida: Alliance forming between HOA activists and a fair housing group
This is from the Cyber Citizens for Justice website:
"The Florida based grassroots organization Cyber Citizens for Justice, Inc. is proud to announce that another great consumer organization, FHC (Fair Housing Center of the Greater Palm Beaches), is joining their growing consumer alliance. Both organizations pursue many common goals, especially the improvement of housing conditions in the State of Florida. While CCFJ, Inc. is more specialized in pushing for necessary legislative reforms regarding mandated properties, FHC is a "Private" Enforcement Agency with the mission is to ensure equal and affordable housing opportunities for all people by promoting culturally diverse communities through open housing and the elimination of all barriers to that goal.

"Vince Larkins, President/CEO of the FHC, says that phones are ringing off the hooks at the FHC offices from residents who live under Condo and Homeowner Associations. 'We are excited about the great opportunity we have to come to the needs of residents under assault by unscrupulous individuals at the helm of many associations in Palm Beach County and throughout the State'."

Add this sort of alliance to the Nevada idea of an owner-funded oversight commission and you have the potential for a framework that could protect homeowner rights. That would be good for everybody--owners, boards, professionals, and developers.

HOA Oversight Commission for Nevada Becomes Law
From the Las Vegas Sun of June 13:
--quotation begins here---
Homeowners with complaints about their homeowners associations -- ranging from missing funds and kickbacks to harassment of residents -- now have a place to turn.

With the signing into law this week of Senate Bill 100, a state commission will be established to hear complaints about association boards of directors. The law goes into effect Oct. 1.

"These are governments and they have the power to tax and fine," said Sen. Mike Schneider, D-Las Vegas, who sponsored SB100. "And we have got to get them under control."

Eldon Hardy, ombudsman for the homeowner association, says his office receives 1,500 telephone calls a month from dissatisfied homeowners who feel they are abused by the elected board that rules the units.

Hardy, with his staff of three, try to mediate some of the complaints but there is no enforcement power.

"Big changes will soon be available to the homeowners," with the bill, Hardy said.

Schneider said SB100 will level the playing field and serve as a model for the rest of the nation.
--end of quotation---
Read the whole thing here. This could turn out to be a major event. If the commission proves to be more effective than the ombudsman's office has in curbing abuses by HOA boards, it could be a significant step toward a working reform model. Senator Mike Schneider has taken the lead on HOA issues in Nevada for a number of years and has a lot to be proud of. Congratulations, Senator Schneider!

Watch for Bankrate article on HOAs
Bankrate will have an article about homeowner associations sometime in July. Their website gets about 3 million hits per day. I expect a balanced treatment of the issue from the consumer's perspective.

O'Reilly Irritates the Blogosphere
Fox News host Bill O'Reilly is whining about the internet. As usual, it's all about him. Somebody somehow erroneously reported that some radio station dumped his show. Nobody would have known without O'Reilly screeching about it, of course. It wouldn't matter to anybody except that now this is the occasion for him to fulminate about how awful it is for a medium to exist that allows people to speak without their words being screened by a corporate editor. This, from a person who brags constantly about how the great Himself cannot be controlled by the "mainstream media," and how great that unfettered competition has been for America. On that point, he may be right. But when this freedom trickles down the food chain to people like Matt Drudge and a million other people, and somebody occasionally has the temerity to do to O'Reilly what he gleefully does to the broadcast networks and CNN, suddenly the internet is the end of civilization. That sounds pretty much like what the major media have said about Fox News, doesn't it? I have enjoyed O'Reilly's bombastic style and often intelligent treatment of issues, but he's losing his perspective. Equating a fairly technical mistake about his radio show (which is in fact not doing well here in the Chicago area) with child pornography and using that false equation to lambaste the entire internet is, itself, irresponsible, and I wonder where his editor is.

The internet is making it possible for people to connect with each other who in the past would probably never have known of each other's existence. The impact of blogs and other internet publications on politics is enormous and overwhelmingly positive. Three refutations of O'Reilly's screed can be found at Lileks, Instapundit, and The Volokh Conspiracy.

And that's the memo.

So now we hear from Norway:
"A homeowner in the southern Norwegian city of Kristiansand is seeing red because his front door is green. His family of four now faces eviction because their green door doesn't satisfy the board of his homeowners' association. The board of the Brattbakken homeowners' association (borettslag) only allows doors to be painted blue, red, gold or white. Green isn't an approved color, and thus has unleashed the eviction threat."
Read the whole thing here, and thanks to Fred Pilot for the pointer.

Co-housing is an alternative to developer-created private communities. The people who find it co-housing attractive tend to be white liberals, and they are trying to diversify themselves a bit. This week the National Co-Housing Conference is taking place in Boulder, Colorado. As an article on the conference observes, "Planners brought the biennial event to Boulder because Colorado is one of the hottest co-housing markets in the country. Colorado and Washington state share the distinction of having the second-largest number of completed co-housing communities in the nation, with nine each. Only California has more, with 14 finished projects." The plus side is said to be a stronger sense of community and lots more personal interaction with neighbors. As one co-housing consultant said, "Instead of going next door and asking for a cup of sugar, you go next door, open the cupboard and get the sugar."
In some neighborhoods, that could get you shot.

What is the trend line of privatization? Should we expect the number of private communities, for example, to continue to increase, and for how long? And what about the rate of increase? Should we expect CID housing to constitute an increasing share of the new housing stock, and for how long? I'd say both the number and the rate will increase for the forseeable future. If I'm right about the reasons for the CID revolution, there are three incentives: 1.) Rising land costs lead developers to seek ways to make high density palatable to middle class consumers; 2.) Fiscal problems affecting local governments lead them to permit high levels of CID construction as a "cash cow," because CIDs generate high property tax revenues without demanding much from those revenues in return; 3.) Some consumers like the idea of private government and local control. You can read about this in my article that appeared in Urban Affairs Reveiw. It is located at this link.
I see all of these incentives becoming more powerful. Sprawl, the budget crises affecting many states, and the popularity of gated communities seem to be driving this form of privatization to unprecedented levels.

Last night I taught the first class of my summer course on Condo Law (RE 617--Condominiums, Cooperatives, and oOher Forms of Common Ownership Communities) at John Marshall Law School in Chicago. Going over the course content with the students it struck me once again how there is a disconnect between private and public law. I come to this subject from a public law perspective, thinking in terms of municipal and constitutional law, along with civil rights and liberties. But most of the legal authorities in the field--especially the law professors--bring a private law perspective with them, grounded in the law of real property, contracts, and corporations. This second group strenuously resists the intrusions of people like me. I can see why. The values of public and private law differ. The values of public law include equality, for example, while in private law the idea is to protect people's ability to become unequal according to their individual choices. Some get rich, some loose their shirts, and it's all for the greater good. When I was practicing in the field of common interest development law, I was comfortable juggling all these private considerations, such as the language of insurance policies, the liability of real estate developers to home buyers, the powers of associations to make decisions affecting the common property, and so forth. But as a teacher and writer on the subject, I find myself thinking more about the larger values of public law and how the whole CID phenomenon fits into a larger social picture. Seems to me that this disconnect must pose a bigger problem for legislators contemplating issues of CID reform in California and elsewhere.

Part One:

Strange and powerful forces may be stirring again in the state of California. Faced with a $32 billion deficit, a Democratic governor facing a recall movement, a Republican party that says it will not raise taxes, and a public that is already financially strapped, the Golden State must either improvise or implode.

This has happened before, and when it did the ramifications for the nation were enormous. In 1978, Proposition 13 launched the national property tax revolt, and that movement was at the heart of what soon became a powerful anti-government reaction in middle America--one that carried Ronald Reagan to the presidency in 1980. The Great Society programs of the 1960s and 1970s were largely abolished, and many people began to write of the "plight" of cities. Without federal funds to address social welfare needs, they argued, cities would collapse, because they were in an impossible situation. If they taxed the wealthy to help the poor, the wealthy would leave and take their resources to low-tax jurisdictions in the suburbs. But if cities failed to address these social needs, their voters would revolt, their politics would become chaotic, their streets unsafe, their institutions destitute, and ultimately cities would become ungovernable.

But this is not what happened. Instead, state and municipal governments found new ways to do business. They used gambling--lotteries and casinos--to raise revenue from people who didn't perceive their losses as taxation. They turned to stimulating tourism to capture funds from non-residents. And above all they embraced the logic of privatization and the ideology of privatism.

Cities made deals with and offered incentives to corporate employers, developers, bankers, private contractors, non-profits, and just about anybody who could bring resources to bear on a project that needed doing. Central to this privatization project, though, and little understood except by a few, is the rise of common interest housing developments (CIDs). For over twenty years, cities in California and elsewhere have been forcing private real estate developers to pay for construction of infrastructure such as roads, streets, sewer systems, freeway offramps, parks, and even schools. Cities simply condition issuance of building permits on the developer's agreement to build these facilities. Of course, the builders simply pass these costs on to the home buyer, which is one reason why new housing in California is so expensive. And then the new owners become responsible for maintaining all this private infrastructure, through monthly assessments paid to their homeowner association (HOA).

And as the inevitable byproduct of this process, HOAs have become a new level of government in California. The cultural, economic, and political consequences of this revolution are far-reaching. And it is from this new institutional sector that the impending revolution in California governance may emerge.

(to be continued)

First post. Just testing.