Tuesday, March 15, 2016

Thoughts on micropolitics and macropolitics

When I first started writing about CIDs, I realized that there were two sets of issues I wanted to write about, and I divided them into micropolitics and macropolitics. Micropolitics means all the things that go on inside associations that are ruled by private governments, and for me the most important issues have to do with the relationship between unit owners and their BOD. Macropolitics refers to the relationship between associations and the rest of society, such as governments and developers. One important issue of macropolitics is to what extend this type of real estate development contributes to segregation--by race, income, age, and other factors.

Both these issue areas are important.  Unfortunately, many people are intensely interested in issues of micropolitics, but don't care about the macropolitics issues at all.  This is really too bad.  It speaks to a lack of political awareness that undermines a lot of the activism people are involved with. When people trot off to the state capitol to make impassioned pleas for the rights of CID unit owners, claiming oppression at the hands of BODs and professionals, they run into legislators who may be unsympathetic.  Why? Because they are thinking of these activists as over-privileged homeowners who have voluntarily isolated themselves from the rest of society in exclusive enclaves, and who now want to remake the deal they agreed to.When I tried to interest foundations in studying this subject and doing adult education, I ran into the same stereotype there.

Over the years I have done everything I could to dismantle that perception. I have written and talked about municipal mandates, adhesion contracts, lack of choice in the housing market, conscripting moderate and even low income people into condos and townhomes, and so forth. But the perception is still there.

I think if owner activists tried to link their causes with those of other interest groups that have larger concerns and broader constituencies, such as consumers, seniors, affordable housing advocates, for example, it would make their activism more effective. It would help to dispel the spoiled rich suburbanite/gated community stereotype.

I also think that people need to give more thought to association finances. This is both micro and macro politics. How can you claim to be an advocate for owner interests if your burning passion is to see associations disintegrate financially from being unable to collect overdue assessments?  The owners you claim to care about are the ones who would get hurt. The issue is not whether they should be able to collect assessments from every owner. Of course they should, because the owners who pay end up carrying the burden of those who don't. And defunct associations hurt all the owners and the surrounding communities, with some level of local government left with the problems. The issues that need attention are about how and what associations should be able to collect--what practices are unfair or abusive, how should assessment levels be determined, what fees and charges should be permissible, etc.

Finally--this type of housing is not going away. It is here to stay. In fact, it has been spreading all over the world. Spending time and energy trying to abolish CID housing is unproductive and reveals a lack of understanding of why this is happening. Local governments are not going to go back to the days when they used taxing and bonding capability to build and maintain the infrastructure needed to support private residential development. They are too busy trying to find money to fill potholes and keep bridges from collapsing. Developers, state legislators, lenders, and federal bureaucrats have institutionalized CID housing and will continue to be the norm in new construction in the years to come.


9 comments:

Citizens for Constitutional Local Government said...

I agree with Evan's position stated here. Advocates do not understand that their quest for HOA reforms is a social movement, and they must act accordingly.

As an Arizona legislator said a few years ago, only the stakeholders -- the special interests -- speak intelligently about HOA legislation, while The legislators are flooded with personal agenda reforms from unknowledgeable people.

Deborah Goonan said...

Evan, I agree with your point about focusing more on macropolitics, and I cover many of these issues in articles on my blog. For one thing, I refer to owners and residents -- in recognition of the fact that some CIDs consist of far more than 30% tenants. Tenants have rights, too, and those are also being trampled on in Association Governed Residential Communities.

Affordable housing politics feeds into CID politics, and there is considerable overlap on the issues and concerns facing both chohorts, in my opinion. It seems to me that the vast majority of Association-Governed homes are in affordable or moderately-priced communities. (Of course, no one knows for sure, since the US Census doesn't track this information, and there's no hard data -- only extrapolated estimates.) A significant percentage of CID residents are seniors. In fact, Assisted Living and Active Adult communities cater entirely to seniors. And seniors are particularly vulnerable to the detrimental effects of HOA bullies, dysfunction, and chaos.

I agree that Associations need to collect money for essential services - but not all of the services provided by CIDs are essential. Perhaps the portion of assessments allocated for essential services needs to be collected on the property tax bill.

But the other option is to shift the burden of providing essential services back to the public realm, and perhaps to regionalize services to create better economies of scale. While intial construction of infrastructure may still have to be accomplished through private developers, ongoing administration and maintenance is another story. HOAs are notoriously inefficient and almost always under-funded to maintain infrastructure to acceptable standards over the long term. It just isn't prudent or responsible to dump this task onto volunteer homeowners who know nothing at all about "public works" or "public service administration."

When you consider the macropolitics of how CIDs are often market-segmented by socioeconomic status, the concept of trusting a volunteer board to manage millions of dollars worth of infrastructure assets is pure fantasy.

Therefore, I respectfully disagree that CID is here to stay - at least as currently structured - and that local governments will never again assume the role of creating and maintaining infrastructure. After all, many CIDs ARE, in effect, local governments or at least function as agencies of local government to some extent.

As more CIDs age and mature, we are seeing more degradation of infrastructure, not less. Like it or not, local governements and American taxpayers will be on the hook for cleaning up blight and crime, repairing roads, cleaning up after floods caused by poorly maintained storm drainage systems, etc.

The truth is, private developers and investors are not going to rescue the thousands of dilapidated condominium and townhouse projects across the country - once intended for affordable homeownership, but inevitably transformed into rental housing for the have-nots and the disadvantaged.

So the issue becomes this, in my opinion: How do we better divide responsibilities for maintaining housing and communities between PUBLIC and PRIVATE sectors, while minimizing the requirement (mandates) for COLLECTIVE management? And how do we turn HOAs back into voluntary organizations that enhance neighborhood cohesion and harmony, rather than mandatory associations that tend to tear people apart and polarize residents into perpetual Us vs. Them conflict?

robert @ colorado hoa . com said...

“I also think that people need to give more thought to association finances ... How can you claim to be an advocate for owner interests if your burning passion is to see associations disintegrate financially from being unable to collect overdue assessments? The owners you claim to care about are the ones who would get hurt. The issue is not whether they should be able to collect assessments from every owner. Of course they should”

I do not accept your premise.

Here in Colorado, home owners are obligated to pay assessments, even if the H.O.A. corporation does not own nor maintain common elements. The courts ruled argued that enforcement of the restrictive covenants was a “service” that justified the perpetuation of the H.O.A. corporation ("maintenance of the association") and the obligation of the home owners to pay assessments.

“the definition of a common-interest community ... includes communities with mandatory membership associations empowered to enforce the servitudes whether or not there is common property ... A ‘common-interest community’ is a real estate development or neighborhood in which individually owned lots or units are burdened by a servitude that imposes an obligation that cannot be avoided by nonuse or withdrawl ... To pay dues or assessments to an association that provides services or facilities to the common property or to the individually owned property, or that enforces other servitudes burdening the property in the development or neighborhood.” (Hiwan Homeowners Association v Knotts. Jefferson County Colorado District Court case # 2008 CV 1662. Aug. 06, 2008. See also the Court of Appeals ruling, July 09, 2009)

“In a decision issued Wednesday, Judge Berryhill provided great [sic] case law for communities in Colorado. The decision makes it clear that a community which, by its declaration, requires owners to pay for the 'maintenance' of real estate described in the declaration other than their own property is a common interest community and thus subject to CCIOA [the so-called “Colorado Common Interest Ownership Act” of 1991]. In the Hiwan Homeowners Association v. Knotts case, the community's declaration provided that the assessments were paid to the association. The association's purpose was 'maintenance of the association.' Judge Berryhill found this sufficient to satisfy the requirements of CCIOA even though the association owned no common elements. (“Jefferson County District Court defines Common Interest Community” Aug. 08, 2008. Emphasis added).

”The Colorado Court of appeals issued a ruling that essentially said that CCIOA does not require ownership of real property by the homeowners association. Rather, by the terms of CCIOA, if the owners in the homeowners association were bound to pay assessments, and the assessments were used in part to pay for enforcement of the restrictive covenants or provide services to the members, that was sufficient to make the community subject to CCIOA.” (“When Your Community Doesn't Own Anything, Is It Subject to CCIOA?” Aug. 16, 2013)

Contrary to your assertion, there are H.O.A. corporations could "disintegrate financially", and the home owners should suffer not one bit. The owners burdened by the existence of the H.O.A. corporation do not have a real "common interest", only a common liability.

robert @ colorado hoa . com said...

"legislators who may be unsympathetic. Why? Because they are thinking of these activists as over-privileged homeowners who have voluntarily isolated themselves from the rest of society in exclusive enclaves, and who now want to remake the deal they agreed to."

Colorado legislators are well aware that it is the state's policy to promote the existence of H.O.A. corporations. They even wrote it into law. The the Legislative Declaration of the so-called "Colorado Common Interest Ownership Act" of 1991 (C.C.I.O.A.) (H.B. 91-1292) (C.R.S. § 38-33.3-101 et seq) (see here) states that

38-33.3-102. Legislative declaration. (1) The general assembly hereby finds, determines, and declares, as follows:

(a) That it is in the best interests of the state and its citizens to establish a clear, comprehensive, and uniform framework for the creation and operation of common interest communities;

(b) That the continuation of the economic prosperity of Colorado is dependent upon the strengthening of homeowner associations in common interest communities financially through the setting of budget guidelines, the creation of statutory assessment liens, the granting of six months’ lien priority, the facilitation of borrowing, and more certain powers in the association to sue on behalf of the owners and through enhancing the financial stability of associations by increasing the association’s powers to collect delinquent assessments, late charges, fines, and enforcement costs;

(c) That it is the policy of this state to give developers flexible development rights with specific obligations within a uniform structure of development of a common interest community that extends through the transition to owner control;

(d) That it is the policy of this state to promote effective and efficient property management through defined operational requirements that preserve flexibility for such homeowner associations;

(e) That it is the policy of this state to promote the availability of funds for financing the development of such homeowner associations by enabling lenders to extend the financial services to a greater market on a safer, more predictable basis because of standardized practices and prudent insurance and risk management obligations.


Note that the Legislative Declaration of the C.C.I.O.A. does not say anything at all about the interests nor well-being of the individual home owners themselves. Legislators are definitely unsympathetic to the plight of the individual home owners. But it's not because they believe that the owners are some "over-privileged" class who have "voluntarily isolated themselves from the rest of society in exclusive enclaves". This isn't 1976, or even 1980-something. Legislators today don't give a **** about the home owners because they believe that the needs of the H.O.A. corporation outweigh the needs of the home owners, and have crafted policy to conform to that belief.

robert @ colorado hoa . com said...

"I think if owner activists tried to link their causes with those of other interest groups that have larger concerns and broader constituencies, such as consumers, seniors"

Speaking of seniors, wasn't the A.A.R.P. involved in H.O.A. issues about 10 years ago? See here. Whatever happened to that effort?

As I have noted elsewhere on this blog, the Madison Hill H.O.A. corporation (Colorado H.O.A. # 25,559) -- which governs a 183-townhouse complex in Westminster, Colorado -- is within months of becoming financially insolvent. The corporation's directors are currently working to eliminate the C.P.I. cap on assessments, so they can raise assessments without limit. One of the owners, an elderly woman living on a fixed income, wrote to her representatives.

- U.S. Senator Corey Gardner (Republican): "Senator Gardner's office said that HOAs aren't federally regulated so this matter isn't in his jurisdiction"
- U.S. Senator Michael Bennet (Democrat) : no response
- U.S. Congressman Ed Perlmutter (Democrat) : no response
- Colorado State Representative Tracy Kraft-Tharp (Democrat) : no response
- Colorado State Senator Laura J. Woods (Republican): see below

From: Laura Woods < senatorlaurawoods@gmail.com >
Date: Mon, Feb 8, 2016 at 3:56 PM
Subject: Re: Westminster Homeowners Association Facing Bankruptcy

I am forwarding your email on to Constituent Services here in the Capitol.

If they have any resources or information, I know they'll forward it to you and me.

This sounds somewhat fishy, but I'm not sure what to think at this point.

I will put the meeting on my calendar, but whether I can attend or not will be based on what else hits my calendar that evening and demands my attention.

Have you contacted a lawyer and asked for a legal opinion? Not a bankruptcy lawyer, but a business or a lawyer who specializes in HOAs?

It's shocking to me that an HOA can say, "Pay 85% more or file for bankruptcy."

THanks!

Senator Laura J. Woods
Senate District 19

Defending the vulnerable ... the unborn, the elderly, the abused and the exploited!

2016 Committees of Reference:
Senate Education Committee
Senate Business Committee - Vice Chair
Senate Appropriations Committee

720-588-0522, 303-866-4840
SenatorLauraWoods.com
Like Laura on Facebook
Twitter: @SenLauraWoods

P.O. Box 740388
Arvada, CO 80006



Having received no further response from Senator Woods to her follow-up queries, the owner wrote in an e-mail to me that "She states in her motto to be 'defending the vulnerable ... the unborn, the elderly, the abused and the exploited.' I guess I am not elderly and exploited enough" (emphasis added).

robert @ colorado hoa . com said...

"When people trot off to the state capitol to make impassioned pleas for the rights of CID unit owners, claiming oppression at the hands of BODs and professionals, they run into legislators who may be unsympathetic."

One way around unsympathetic legislators would be to put reform meaures on the ballot for a popular vote (in states that allow it, such as Colorado).

I'm not sure why whatever it is that calls itself an H.O.A. reform movement has not tried this. Of course, that takes resources and influence -- neither of which "our" side apparently has. It would also require an idea of what it is "we" actually want to accomplish. While platitudes are plentiful, ideas for actual policy proposals seem to be in short supply from the people who are the most active in pontificating about the problem.

I've been reading this blog, Ward Lucas's "Neighbors At War" blog (and book), and listening to Shu Bartholomew's "On the Commons" for several years now. But I still have no clue what it is that these people think should be done.

I think George Staropoli answered the question directly on his blog a couple of years ago -- something about "make H.O.A.s subject to the constitution" -- but I can't find it. Like everyone else, whatever signal he's generating is lost in his noise.

The only person who has repeatedly and clearly articulated concrete ideas for policy proposals is Stan Hrincevich. I'll give him credit for that. Unfortunately, his primary legislative goal -- alternative dispute resolution "to replace courts" -- is counter-productive and would be harmful to home owners.

If whatever it is that calls itself an H.O.A. reform movement hopes to accomplish anything substantive, at the micro- and/or macro- level, the first thing it needs to do is pull its collective head out of its collective ***. I don't see any sign of that happening any time soon.

robert @ colorado hoa . com said...

On the very macro level is the “structure of law” which favors corporate interests, keeping in mind that H.O.A.s are corporations and not “community associations”. The Community Environmental Legal Defense Fund explains this all very well in their “Democracy School Online” videos, available at celdf.org/how-we-work/education/democracy-school/democracy-school-online/ . At nearly 4 hours long (8 videos x 30 minutes each), I doubt anyone is going to watch the whole thing. But at least watch the first one.

See also “Help! I’ve Been Colonized And I Can’t Get Up” (1998) by Jane Anne Morris. Although written about environmental activism at the end of the last century, Ms. Morris accurately predicted the current behavior of whatever it is that passes for H.O.A. activism. “Our campaigns follow the gambling addiction model…We are stuck in a feedback loop where our failures are interpreted as signs that we should repeat our failed tactics, but try harder…The telltale sign is not that we’re failing, but that we’re fooling ourselves, and don’t see it as a feedback loop.”

Even if you don’t agree with their tree-hugging eco-hippie agenda or views on “corporate personhood”, the lessons of these environmental activists are extremely applicable to whatever it is that calls itself an H.O.A. reform movement. The most important being that H.O.A. regulations don’t regulate H.O.A. corporations, they regulate the home owners. That is, the law restricts what rights individual home owners can claim, and how individual owners can exercise the paltry rights they have. The rule of thumb seems to be: as long as something is not explicitly prohibited by law, an H.O.A. corporation is allowed to do it; conversely, if something is not explicitly allowed by law, a home owner is not allowed to do it.

When I first got involved in this issue about 7 years ago, I read through the archives of this blog. Around 2004 - 2007, Professor McKenzie was predicting a wave of H.O.A. reform legislation sweeping across the nation. Obviously, that did not happen. Oh, there were laws passed here and there that addressed (but not necessarily fixed) a few specific harms, and allowed legislators to pat themselves on the back for “doing something”. But there was nothing that really tipped the balance of power between individual home owners and H.O.A. corporations. And there still is nothing that protects individual home owners from the defective corporate structure of H.O.A. corporations (especially condominiums) that leaves owners financially vulnerable and personally liable as a result of mismanagement by an H.O.A corporation’s directors.

I would even argue that the H.O.A. industry emerged from the Great Recession and housing market collapse more powerful than before, and that home owners are worse off. State and federal legislators are more than content to let the predation of home owners by C.A.I.-affiliated managers and attorneys continue.

And whatever it is that calls itself an H.O.A. reform movement is committed to self-delusion, like a person running south on a northbound train celebrating every step taken as a step forward. Since nobody seems serious about (or is able to) effecting real substantive change, we should just admit defeat.

robert @ colorado hoa . com said...

Evan McKenzie wrote that “I think if owner activists tried to link their causes with those of other interest groups that have larger concerns and broader constituencies, such as consumers, seniors, affordable housing advocates, for example, it would make their activism more effective”.

See also this:

“In this Article, I suggest reasons why some owner-HOA disputes trigger political intervention, even though most such disputes attract little attention outside the CIC. I argue that homeowner-HOA conflicts are most likely to attract political attention where the owner is a sympathetic litigant able to attract political empathy, and where the rule at issue is intrusive and salient rather than relating to something perceived as of minimal importance. Finally, if the homeowner’s cause aligns with an interest group and does not trigger opposition from a different interest group, the owner’s chance of triggering political change is likely to be significantly increased.” (Ryan McCarl. “When Homeowners Associations Go Too Far: Political Responses to Unpopular Rules in Common Interest Communities”. 2014. SSRN 2539179).

robert @ colorado hoa . com said...

The percentage of the U.S. population that are members of the following groups are

02% ** unauthorized foreigner (low est.)
04% **** LGBT
06% ****** unauthorized foreigner (high est.)
12% ************ member of AARP
13% ************* black
14% ************** age 65 and over
15% *************** gun owner (low est.)
16% **************** Hispanic
20% ******************** governed by some type of H.O.A. corporation
25% ************************* (see below)
26% ************************** age 55 and over
30% ****************************** gun owner (high est.)

All of these groups except one have some type of representation in the public-policy and public-opinion arenas.

For example…

Less than 4% of Americans identify as LGBT (see also here). Yet Americans believe that about 25% of the population is gay or lesbian. Anyone who has been paying the slightest bit of attention over the past decade can’t help but be aware of the same-sex marriage debate and last year’s Obergefell v. Hodges decision by the Supreme Court.

Almost every day (if not every day) during my commute last week, NPR was reporting about a controversy in North Carolina over which public restrooms transgender persons should be required to use. This issue has been deemed to be of such national importance that the ACLU has filed a lawsuit, and the State of New York is boycotting travel to North Carolina. Even my congress-critter Jared Polis (Democrat), who won’t lift a finger — nor even a hash tag — to support consumers of H.O.A.-burdened housing (see my comments here), is supporting federal legislation on behalf LGBT persons (see here and here).

Why has LGBT community been able to receive such a disproportionate amount of attention, and achieve such success in influencing both public opinion and public policy, while whatever it is that calls itself an H.O.A. reform movement continues with its ongoing circle jerk of failure?

Disclaimer: Since Blogger limits these comments to 4,096 characters, there are a lot of caveats about the above I can’t and won’t go into here.