Unfinished subdivisions stuck with underfunded HOAs: "Developer abandonment is likely to become a serious issue in the coming year for as many as 200 of the more than 10,000 Arizona communities under HOA control, both opponents and supporters of Arizona's HOA policies say."
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Detailed and scary story. These developer abandonment cases are only part of the problem, though. Foreclosures, mismanagement, embezzlement, and litigation will continue to plague many communities.
Fred Pilot notes that the numerous comments to this linked article are striking--take a look.
3 comments:
This story points up the flawed state and local government policy favoring the privatization of local government in the form of mandatory membership HOAs.
In HOAs, it is developers who form the governing entity and provide initial capitalization. Their fortunes as this story clearly shows are inextricably linked to the HOA's viability as a governing unit. When developers fail, the HOAs they create are in danger of going down with them.
Fred Pilot said:"When developers fail, the HOAs they create are in danger of going down with them."
I will add to that the fact that the HOA becomes a financial and liability black hole for those who bought into the development.
The comments in the article are telling, except for the CAI stooge "Marcy," who must be a brain dead plant. The others well point out the gross failure of private local government and show that the policy of local governments to require HOAs for all new developments is going to come back and bite them severely in the end. Now they will have privatized blight.
A better way to govern subdivisions needs to be found to replace the private HOA corporations that have been an abject failure. It should be a public entity with limited specific powers constrained by state and federal constitutions. Regulations need not be more than is usually found in municipal ordinances.
"A better way to govern subdivisions needs to be found to replace the private HOA corporations that have been an abject failure. It should be a public entity with limited specific powers constrained by state and federal constitutions. Regulations need not be more than is usually found in municipal ordinances."
There are such limited purpose local governments known as special districts. In California, these are typically community service districts.
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