Saturday, June 12, 2004

REALTOR: Calif.: Illegal Condo Conversions Brings Headaches, Lawsuits

Fred Pilot sent me this link to the latest developments in a story I posted on some time ago:
The City of Huntington Beach, Calif., has started a criminal probe to find the reason for up to 120 illegal condominium conversions in the Orange County city. Among the latest victims of an allegedly fraudulent conversion are Scott and Renee Tarnow, who learned earlier this year that their condominium hadn't been legally converted after spending $80,000 in improvements to the unit, according to The Los Angeles Times. - News - Here's why people move to gated communities...
Accused Arsonist Mugs For Camera
DA: Dinsmore Wandered Neighborhood Setting Cars On Fire

POSTED: 1:23 pm MDT June 11, 2004

DENVER -- A 21-year-old Denver man was formally charged with arson Friday after police said he wandered around a Denver neighborhood, setting fire to cars.

By all means, follow the link and take a look at the mug shot.

Friday, June 11, 2004

California Supreme Court ruling in Terifaj case coming on Monday
S109123 (E029449; Riverside County Superior Court No. 1NC13318)
Argued in Los Angeles 4-06-04
This case includes the following issues: (1) Is a restriction on the keeping of
pets that is adopted by a homeowners association and is recorded after the purchase of
a unit in a common interest development enforceable against the owner of the unit as
an equitable servitude under Civil Code section 1354? (2) What is the proper
standard that governs the validity of such a restriction, and is the restriction at issue
here valid?
Opinion(s) in the above case(s) will be filed on:
Monday, June 14, 2004 at 10:00 a.m.

Thursday, June 10, 2004

Financial Times:Greenspan says Fed ready to act on inflation
Alan Greenspan, the chairman of the Federal Reserve, on Tuesday indicated that interest rates might have to rise faster than expected to keep inflationary pressures under control. Speaking from Washington via satellite link to a conference in London, Mr Greenspan said he remained confident that the Fed could afford to remove monetary stimulus from the US economy gradually but that he was ready to take stronger action if necessary. Although the reaction in financial markets was muted, economists said the comments marked a significant shift in Fed rhetoric, with inflation starting to take centre stage.

So, those of you with adjustable rate mortgages might wish to sprint for the nearest finance company without stopping Go or paying 9% interest. - News - Beekeepers Remove 700,000 Bees From Man's Home
WEST PALM BEACH, Fla. -- Lake Worth resident Norm Gitzen didn't mind the more than half-million bees living in the roof of his house until recently.Rather, he said, they were "kind of mesmerizing," and he often sweetened his morning coffee with honey dripping from the hives. But when the bees started coming into the house, stinging him and his nephew, his love of that cohabitation changed. Local beekeepers started removing at least 700,000 bees from a tower above his breakfast nook on Tuesday, filling four buckets with honey weighing close to 65 pounds...
See why people need HOAs? And you thought it was just so your neighbor couldn't rebuild his 1960 Rambler on the front lawn over a two-year period. - 24-hour camera surveillance in city is part of bigger plan
This is cute:
Financed by homeland security grants, new network aimed at fighting terrorists as much as drug dealers
By Doug Donovan
Sun Staff
Originally published June 10, 2004
From the Inner Harbor to the Bay Bridge, local and state homeland security authorities are beginning to build a regional network of 24-hour surveillance cameras that will first go live this summer in Baltimore.

The closed-circuit video surveillance system of public spaces will begin in the Inner Harbor by summer's end, and a $2 million federal grant accepted by the city yesterday will expand the cameras into downtown's west side by early November.

"We're trying to build a regional network of cameras," said Dennis R. Schrader, director of homeland security for Gov. Robert L. Ehrlich Jr.

What of privacy concerns raised by groups opposed to cameras constantly monitored by retired police officers or college students?

"We're at war," Schrader said.

There's more, so by all means read it all. But I bolded that last little bit to show how cavalier government officials are about privacy these days. Gated community leaders will have to get busy if they are going to even keep pace with the security measures now in place in many major cities. The old days when the GC types had the edge are long gone. Soon you will be under more surveillance walking in downtown Chicago or Baltimore than when you enter Security Pointe Villas.
CAI Seeks Extension of Terrorism Insurance Support

(this is a press release from CAI that I am passing along)

ALEXANDRIA, VA, June 10, 2004 – Community Associations Institute (CAI) is urging the U.S. Department of the Treasury to extend and expand provisions of a law that enable community associations to obtain reasonably priced insurance coverage for acts of terrorism.

CAI wrote treasury officials June 4 urging an extension of the "make-available" requirements of the Terrorism Risk Insurance Act (TRIA) of 2002. Passed by Congress in response to the September 11 attacks, the act ensures that the federal government will partner with insurers to cover losses resulting from a catastrophic terrorist attack. The make-available provision is scheduled to expire Dec. 31, 2004.

TRIA stipulates that federal government resources will be used to protect insurance companies from ruinous financial losses as a result of catastrophic terrorist attacks. With that backing, insurance providers are able to provide affordable and comprehensive terrorism coverage. Without it, few if any insurance providers would be willing to offer terrorism insurance.

TRIA limits insurance industry liability to the deductible, which is established by law, and 10 percent of further losses up to the capped limit.

CAI told treasury officials that a lack of adequate insurance coverage diminishes the ability of community associations to obtain loans and comply with the insurance requirements on existing loans. That’s because many financial institutions require terrorism coverage as a hedge against default and massive losses.

"Thousands of community associations – and millions of Americans who live in them – will be put in a tenuous situation if TRIA isn't extended," says Thomas M. Skiba, CAI's chief executive officer. "The federal government needs to fill this void until these complicated issues can be resolved by the insurance industry."

The underlying problem is the inability of anyone to assess the true risk of a terrorist attack. According to CAI and the insurance industry, this has hindered the ability of insurance providers to develop accurate risk assessments and to price terrorism insurance accordingly. In fact, TRIA was created in part to give the insurance industry a transitional period to create, price and provide terrorism coverage.

CAI cited the dilemma faced by insurance carriers: "If the federal government cannot predict the probability and scope of terrorist events, the insurance company should not be expected to pull out the proverbial crystal ball to gather the same information."

The cost of property and liability coverage for community and condominium associations has as much as tripled in many regions of the country, according to CAI. These costs could "skyrocket" in high-risk areas without the make-available provision and without federal government backing, CAI said, "adding to the already-monumental costs of property and liability coverage."

CAI and the insurance industry are also urging treasury officials to recommend that TRIA be expanded to cover losses resulting from nuclear, biological and chemical terrorist attacks. TRIA does not require that reasonably priced terrorism be made available to cover these particular forms of terrorism.

In testimony before a Congressional subcommittee in April 2004, the General Accounting Office (GAO) warned of insurance industry reluctance to offer terrorism insurance. Without the TRIA caps, GAO said insurance providers likely would be "unwilling to sell terrorism coverage because they have not found a reliable way to price their exposure to terrorist losses." GAO told the panel that current risk models "do not have enough historical data to dependably estimate the frequency or severity of terrorist events, and therefore cannot be relied upon for pricing terrorism insurance."

CAI is the only national membership organization dedicated to fostering vibrant, responsive, competent community associations. The 16,000-member organization and its 55 chapters represent managers, community association volunteer leaders, management companies and professionals who provide products and services to association-governed communities.

For members and general inquiries, contact the CAI Direct customer service team:
Community Associations Institute
225 Reinekers Lane, Suite 300
Alexandria, VA 22314
Phone: 703-548-8600
Fax: 703-684-1581

MEDIA CONTACT: Frank Rathbun
Phone: 703-548-8600, ext. 261
Fax: 703-684-1581

My comments: Federal subsidies to make sure HOAs have insurance against terrorism? Is that privatization in action? Or has somebody just figured out another handy use for big government?
Peter Levine's blog: June 06, 2004 Archives
Peter Levine, who is an economist at the University of Maryland and is not a libertarian, was one of the participants at the Liberty Fund conference in Montreal on "Private Neighborhood Associations and Liberty." He has posted some of his thoughts on his own weblog at the link above. The discussion he started is continuing at the web log Crooked Timber. I'd suggest first following the link to Peter's comments on his blog, and then going to the ensuing discussion on Crooked Timber.
AB 2598 Assembly Bill - Status
The foreclosure reform bill that passed the Assembly and is now in the Senate has been referred to the Senate Judiciary Committee. Tick, tick, tick...

Wednesday, June 09, 2004

AB 1836 Assembly Bill - Vote Information
SB 1836 (see below for explanation) has passed unanimously in the Senate Housing and Community Development Committee and has now been referred to the Judiciary Committee. This is the ADR bill that incorporates the recommendations of the California Law Revision Commission.

Monday, June 07, 2004

AB 1836 Assembly Bill - Bill Analysis
This is the alternative dispute resolution bill that passed the Assembly and is now in the Senate Housing and Community Development Committee. This particular bill would enact the recommendations of the California Law Revision Commission on ADR. Thanks to Fred Pilot for flagging this as I somehow managed to forget to subscribe to the automatic notification service for this bill.
BBC NEWS | Science/Nature | Satellite images 'show Atlantis'
How cool is this? And it's sort of a gated community, to boot:

A scientist says he may have found remains of the lost city of Atlantis.
Satellite photos of southern Spain reveal features on the ground appearing to match descriptions made by Greek scholar Plato of the fabled utopia.
(read the whole thing--it even has a photo)

Sunday, June 06, 2004

Why I have been off the air since Thursday.
I just got back from Montreal after a truly excellent conference titled "Private Neighborhood Associations and Liberty." It was sponsored by The Liberty Fund, an organization that puts on many conferences dealing with liberty. This one was proposed and put together by Robert Nelson, the University of Maryland economist who has written a great deal about the use of HOAs as a replacement for municipal governments. There were 15 people at the conference, and a very distinguised group it was (not counting me), including law professors, economists, and a few from other backgrounds, such as Linc Cummings, one of the founders of CAI. Some of the attendees are libertarians or so inclined, but others were coming from quite different perspectives. We had two full days of lengthy and intense conversations. All told, it was the best meeting I have ever attended on this subject. I will talk more about this, but for now I have to get some rest as it has been a long four days.
The News-Press: Local & State - Some Island Club residents set to sue
Builder misled them about decks, they say

Published by on June 6, 2004

Some residents of the Island Club in Estero plan to sue the builder they claim misled them into thinking it was legal to build lanais, decks and concrete pads on property they don’t own.

About 150 homeowners attended the informational meeting Friday night, which was meant to raise a legal fund against builder Ronald L. Davis, owner of RLD Homes.

Resident Michael Towns, who organized the meeting, said 207 of the 250 homes have either concrete pads, lanais or decks — all in violation of county code for extending onto common property. The lanais and decks also were built without permits.

“I’m no builder, but somebody knew you don’t build lanais on property you don’t own. It says it in (county) code,” Towns said.

The county had been negotiating with the community for two years to bring the structures into compliance. However, Commissioner Ray Judah recently ordered that the structures be torn down because of safety and flooding concerns.

Towns said his group, which is separate from the homeowners association board, hasn’t yet determined whether it will include any government agencies in the lawsuit.

“There’s also culpability with the county,” Towns said. “There were inspectors crawling all over the community, but people weren’t paying attention. They weren’t insisting the rules be followed.”

When you get an HOA, a municipality, a homeowner's organization, and a few lawyers in the mix, I'd say major litigation may not be far behind. What do you think?
Buying into a community group

For many, homeownership means abiding by HOA regulations
Of The Post and Courier Staff

(This story includes some quotes from me and also from Shu Bartholomew. It is interesting because the reporter went into the issue of municipal dependence on HOAs. Here's the whole story because the link requires registration.)

Ben Allen didn't worry much about the rules he and his neighbors would have to follow when he moved into his Snee Farm home in Mount Pleasant five years ago.
"We picked the house first and read the covenant last," he recalled.

The letter of the development's law became more important to him last summer, though, when a neighbor decided to install a pre-fabricated garage.

"We wanted construction to stop," he said. Allen lobbied against it, saying it wasn't permissible under Snee Farm's covenant, but the Snee Farm Community Foundation, his homeowners association, had already approved the project.

The neighbor building the garage happened to be a member of the association's board of directors.

"We felt because he sat on the board they showed him more leeway, so we challenged it" in court, he said.

His story is not uncommon. In Charleston County, homeowners association disputes often wind up in small claims court. Last year, the county's small claims magistrate heard about two cases every week.

There are about 500 homeowners associations in Berkeley, Charleston and Dorchester counties; across the country, about 250,000. Most act as small governments, handling responsibilities such as landscaping, zoning enforcement and road and drainage repairs. They have the power to exact fines on residents, put liens on homes, and some can foreclose if all other discipline fails. Some even sue the cities within which they're situated.

In Snee Farm, the homeowners association sued the town for installing speed humps, a traffic calming device that some residents opposed.

Often people who buy a new home--and into an HOA--aren't aware of the powers such organizations wield. Some don't allow flags to fly or satellite dishes to be visible. Others forbid open garage doors and cars propped up on cinder blocks. Problems also can arise when the people running the associations, which have budgets that often reach into the millions, don't have the training or staff to handle the financial responsibilities.

Evan McKenzie, a political science professor at the University of Illinois in Chicago, has been tracking and studying homeowners associations for 20 years and has written a book about it titled "Privatopia: Homeowner Associations and the Rise of Residential Private Government."

Part of the reason HOAs have increased from 500 in 1960 to a quarter million today is because cash-strapped municipal governments can't always afford to build roads and other necessities that new developments require, McKenzie said.

HOAs often pay for landscaping and roads previously financed by cities and towns.

"It's like a subsidy for local governments," McKenzie said. "Governments actively promote it."

Not only do municipalities save money on costs absorbed by HOA fees, but some charge developers fees for the impact on infrastructure that development brings.

Mount Pleasant Planning Director Joel Ford said homeowners associations have benefited the town over the years.

"We would have needed more in tax dollars to support (that) development," Ford said.

Typically, local governments don't exert much control over homeowners associations. North Charleston Planning Director Bill Gore said the city formally recognizes HOAs but has no say over how contractual disputes are resolved within them. Such disputes could involve zoning and infrastructure matters, issues typically seen as the purview of government.

"They have to attend to those agreements on their own," Gore said.

Developers benefit from the relative independence their communities have from local government. Paying for their own infrastructure enables developers to have more control over scale.

"It's very lucrative for builders to build this way because they can get much higher densities," McKenzie said. "Streets are a large expense. If you can make streets 5 or 6 feet narrower than the town allows, then that's all profit."

In the long run, though, these benefits can translate into problems for residents. Shoddy infrastructure often comes back to haunt residents who pay for repairs out of increased homeowners fees. Problems also can arise because some HOA directors have no experience handling the money or problems that accompany a planned development.

"They don't get any training, they don't know what they're doing, and they've got a lot of responsibility," McKenzie said.

Complaints about how property is managed have been common at Snee Farm. Some residents and members of the HOA's board of directors said decisions are made without voting, and that Michael Hart, the board's head, has taken on responsibilities that are not his to assume.

Hart said he does not manage the property, but enforces covenants and restrictions. He added that the community has never looked better.

"Nobody is claiming fraud or any other crime, but we are concerned with mismanagement," said Emilie Carey, who is on the board of directors and has lived in Snee Farm for 10 years.

The lawsuit filed against the town of Mount Pleasant over speed humps is central to the issue, and is yet to be resolved. Carey claimed the board never voted to sue or to hire a lawyer, but Hart denied this. "Everything is voted on by the board," he said.

Not all associations are as contentious as Snee Farm's.

Jim Trusso, president of the Little Oak Island Condominium Association at Folly Beach, said the biggest issue the group faces is homeowner ignorance of community living.

"People don't know or have a good grasp of what condominium or community living is all about," he said.

Michael Parades is trying to change that. He's a local property manager and the South Carolina chapter president of the Community Associations Institute. Educating homeowners and the 3,500 HOAs in the state, he said, is key to making them work smoothly.

"We're trying to get more homeowner participation," he said. "Most homeowners don't understand what they've bought into when they buy into a homeowner association."

Reaching out to untrained HOA managers is also key to making sure the communities are run more efficiently.

"Community managers need to know a lot of things. They need to know legal (matters), they need to know about insurance, they need to know about maintenance," he said. "In South Carolina, there's nothing that says you can't get into community management."

Many HOAs hire property managers to handle chores such as maintenance and tracking down residents who are overdue on fees.

At Bayview Farms on James Island, the homeowners association only gets involved if legal action seems imminent.

Karen Rapchick has served on the homeowners board at Bayview for three years and said that usually a small claims court notice is enough to get residents to cough up fees. Sometimes, though, they have to go to court.

"We just started using the smalls claims court two years ago for dues issues," she said.

Other associations will foreclose on homes.

Michael Michalak is vice president of the Autumn Chase and Lakes Homeowners Association and said that while this West Ashley community hasn't taken anyone to court, it has forced one resident to move.

"We foreclosed on two places," he said. "They paid. One stayed, and one moved."

Nationwide, there are few laws governing HOAs. Local governments typically take a hands-off position, McKenzie said. Over-regulation is certainly a consideration, but McKenzie fears under-regulation could lead to trouble for the associations and the people who depend on them.

Since HOAs are private, they don't have the safety net that relatively small municipal governments have. Town, city and county governments can be bailed out in case of a financial emergency.

"Who's going to bail out a homeowners association?" McKenzie asked. "They have no institutional friends."

Shu Bartholomew started a radio show devoted solely to homeowners association issues after serving on one. Her show, On the Commons, is broadcast in northern Virginia on Saturdays and on the Internet. The show allows people from all over the country to have discussions about problems that arise in home ownership and in homeowners associations.

"We've been able to put a lot of issues on the table," Bartholomew said.

Five years after moving into Snee Farm, Ben Allen hopes he can resolve some issues of his own. The case regarding his neighbor's garage, a case he brought last October, is still being heard in Charleston County Court of Common Pleas. He hopes it will be resolved soon through mediation.

"We got a better understanding, basically by digging a little bit," Allen said.

Michael Gartland covers East Cooper. Contact him at 937-5902 or

Click here to return to story:
PLANETIZEN: Is Suburbia Killing Us?

As national and North Carolina overweight and obesity rates climbed to 59 percent in 2002, and runaway health-care costs hit the economy, writes University of North Carolina-Chapel Hill Endeavors magazine writer Neil Caudle, many researchers looked beyond the usual suspects of ''fast food and too much television'' and began to implicate ''the 'built environment,' much of which was built around cars'' and gradually morphed into the ever-farther suburbs. ''We grow up with the understanding that the only way to travel is by car, and the only way for communities to develop is with a separation of uses,'' but the time has come for governments and businesses to grasp the value of mixed uses and ''the economic advantage of having people out and about without cars,'' stresses UNC School of Public Health's Department of Health Behavior and Health Education Associate Professor Rich Killingsworth.

So...suburbanites drive too much, and that leads to obesity, and that leads to death? I'd have to read the study to be sure, but I'm starting out with a good deal of scepticism. Are suburbanites really fatter than people who live in central cities?