The Cheerleading For State Bankruptcies And Municipal Defaults Is Downright Ghoulish:
Maybe. But this underscores one of the main differences between real governments and CIDs. Real governments have a support network in the political system and in a wide range of public and private institutions. CIDs don't. The difference isn't theoretical. It has huge consequences for the millions of people who own HOA and condo units. For example, there is a profession called "public administration" that trains people to serve in government jobs, and it includes university departments, academic journals, a hundred years of published research, and major professional organizations in nations all over the planet. CIDs have the Community Associations Institute. Cities do national searches for the best city manager they can find. HOAs take their chances in their local area and may end up with a real winner, or they may get a crook or an incompetent. I could go on, but I think you get the point.
One of those consequences is clear from the current discussion of municipal bankruptcy. Cities and counties can go bankrupt under Chapter Nine, and now Republicans are agitating to include states within that provision as well. If they win big in 2012, you can bet that this will happen. When a government goes bankrupt, they can restructure their debts, including their agreements with their employees and their unions if any. That includes their employees pensions, which are a gigantic liability that has resulted from public officials making incredibly stupid sweet deals with public employee unions. But if you are a taxpayer in one of these cities, you get out from under what would otherwise be a crushing tax increase. You, as a citizen, can be relieved of a burden that your elected officials put on your shoulders, if whoever is overseeing the Chapter Nine proceeding decides it is the only way to keep the city going.
Compare that with a CID. When the HOA or condo association goes belly up, the owners remain liable for the debts of the association, including multi-million dollar judgments resulting from bad decisions made by the BOD. The limit of any individual owner's debts? The equity they have in their unit. If the board refuses to levy a special assessment to pay the debt, a judgment creditor can have a court appoint a receiver. The receiver levies the assessment and secures it with liens on the units. Owners who don't pay lose their homes in foreclosure. (Sound familiar?) See the Le Parc, Oak Park Calabasas, and Kingsbury Court cases for a description of how these judgments are handled.
So, while people certainly have lost their homes for not paying their property taxes, just like they lose them for not paying their assessments, there is a floor, or a safety net for them. How about for all these millions of CID residents? Not so much. HOA bankruptcy really doesn't accomplish much for the owners, who remain financially responsible, in most cases right up to the point of their own fiscal ruin.