Reflections on recent posts
If you look over the recent posts here, you can see that the situation facing homeowners is troubling on a number of fronts.
1. Credit is tight, property values are weak, and it is harder than at any time in the recent past to borrow money or sell--at least, for a lot of people.
2. Owners who are in financial trouble with their homes aren't paying assessments, and neither are the banks when they foreclose. That means associations are hurting financially. That in turn means the solvent owners have to pay for those who are not paying.
3. And the falling property values are reducing municipal tax revenues, which is hitting municipalities and of course school districts and other units of local government.
4. The tax resistance of the average voter has to be at an all-time high. That means voters who have to approve tax increases (due to tax cap legislation in many states) will not want to bail out local governments through tax increases.
5. But we are in an election year where the Democrats figure to win big across the board, due to Bush having thoroughly discredited the Republican party. It looks like there will be gains for the Democrats in the House and Senate and in many state legislatures, and the presidential race currently favors the Democrats (although that could change quickly). The Dems in Congress, and of course Obama, have a host of costly programs in mind that will require substantial federal tax increases. Increasing taxes in the middle of an economic slowdown is bad medicine, but the voters have nothing to say about it after Election Day. If the Dems want to do it, that's that.
6. The cost of college education is going up, up, and up. So is the cost of health care. And I could go on. But pay is not going up, up, and up.
What does this all add up to? I realize the economy will turn around at some point, but the next three or four years or so should be interesting to say the least.
I think we are going to see increased conflict over taxing and spending at the local government level. I think the solvency of CIDs is going to become an issue (I have been predicting this for a long time, but now it is on the horizon). And I expect all sorts of demands for state and federal assistance for public and private local governments. But my guess is that the home-owning middle class is going to be expected to solve its own problems for the most part. As a member of that group, I'm not entirely happy with that conclusion, so please show me where I'm wrong.
3 comments:
It seems possible if not probable that requests for public assistance by private local governments, i.e. CIDs comprised largely of detached dwellings, will call into question the policy of privatizing local government. Policymakers may well ask what is the point of privatizing local government if it is going to hit up the taxpayers for public support since the underlying policy goal is to reduce demands on the coffers of public local governments.
I don't know. Seems like even public government gets handouts from entities higher in the governmental hierarchy.
Given that we all hear far too often that "Community Associations" are businesses, perhaps it is high time that some of them go out of business.
Ordinary businesses have to be concerned about costs in order to keep customers. Due to involuntary membership, however, HOAs can pretty much rape the membership financially and there is little that can be done. Cities have externalized their costs onto HOAs. HOAs have externalized their costs onto the involuntary members.
The HOA would never spend $6000 chasing a $360 assessment. However, because the HOAs externalize the cost through vendors, the assessment becomes an excuse to impose tremendous, unrealistic costs onto the homeowner.
Just a couple of weeks ago in Austin, News8 did a story about a $360 assessment that has turned into a $6000 debt and is expected to become $10,000 soon. This is rampant in Texas. The law firm involved is the same firm that was involved in the infamous Wenonah Blevins case.
The man couldn't pay the $360 and that shouldn't be an excuse for an HOA attorney to simply heap on additional costs. The attorney will get paid before the HOA will and because of the manner in which the HOA externalized costs, the HOA is likely to never recoup those assessment dollars. The HOA valued the non-owner attorney more than it valued its own member. No one wants to live in that environment but they are forced to because there is no meaningful housing alternative.
We can hope some of the HOAs will be forced to go out of business. The business judgement rule is skewed in HOA-land, however. Perhaps the lenders now stuck with the properties will put their considerable resources behind legislative changes as they start feeling the pain that the homeowners have been feeling for many years.
HomeOwner Associations (HOAs) are all about control. First and foremost is the control over the mandatory HOA "members" of the mandatory HOA "non-profit" corporations. These "members" are the "homeowners," (really home-owers) or "titleholders." At the next level of control are the HOA management companies with their (in Florida) state licensed CAMs (community association managers.) In turn, the management companies have control over the lower level HOA Industry service providers contracted by HOA "management" possibly with many opportunities for "perks" for themselves and HOA board directors and officers. "D and O" insurance rates have "gone through the roof," but that's O.K. because the "homeowners" must pay the insurance premiums under threats and penalties of lien and HOA foreclosure!
At the top of this pyramid of exploitation and control is the Community Association Institute (CAI) comprised of many CAI HOA lawyers that not only exert control over HOA boards and management companies, but over legislators as well. The HOA Industry must make sure that no laws are passed, and possibly enforced, that might free and protect the "homeowners" from exploitation.
Is there a pattern emerging here? Is this a hierarchy of power and control or what? We needed a place to live (a home), we did not want to or know that we would become serfs living under a financially crushing regime of exploitation and control!
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