Friday, March 27, 2009

Assembly panel weighs bill limiting power of HOAs - Las Vegas Sun: "Chief among the bills was Assembly Bill 350, which sponsor Assemblyman Harvey Munford, D-Las Vegas, said would require homeowners associations to be more open and responsive to their homeowner constituents.

“The homeowners bill of rights,” as Munford called it, would help a growing number of Nevadans as homeowners associations become more common, he said.

“Particularly in Southern Nevada, it is nearly impossible to purchase a relatively new home that is not part of a homeowners association,” he said.

The bill would require any change to an association’s governing documents to be approved by 85 percent of residents, lower the cap on interest that associations can charge on past-due assessments from 18 percent to 5 percent — and 3 percent for special assessments — and forbid associations from foreclosing on homes with unpaid assessment liens.

It would also place limits of two, two-year terms on board members in communities with more than 50 residences, require associations to provide free copies of minutes and association documents to homeowners upon request and allow any homeowner to speak on any item on a board meeting agenda for at least five minutes."

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Note the rhetorical connection Munford makes between the lack of choice and the need for regulation. That is a powerful argument. You can't argue that people "chose" something if they didn't have a choice.

There is a comment on the article that cracked me up: "I think the easiest thing to do is require HOA officers to wear exploding collars that all the residents have remotes for. Then the rest of these proposals would be moot."

9 comments:

iBeth said...

I am very glad Munford attacks the specious "choice" argument. People are always saying, "You knew the rules and chose to live there anyway, therefore you have no business criticizing the rules." Yeah, you could have purchased that house right next to the dodo bird preserve in the alternate universe. What was wrong with you, anyway?

Anonymous said...

This points up the problem with describing local government privatization as a "housing" issue. It is not. It is a public policy decision to privatize local government and is not primarily a housing issue such as affordable housing, "green" housing, infill housing etc etc.

Framing this phenom as a housing issue also fuels the circular debate that starts out along the lines of "Well they bought the house knowing it was in a CID governed by an HOA, didn't they? So any problems they are having with the HOA are their own damn fault."

Evan McKenzie said...

Yes, indeed. Dodo bird eggs...yum. They go great with unicorn steaks. And we can eat them in our private, non-covenanted homes, in all those non-CID neighborhoods there are so many of.

I hope we are finally past the tipping point on this issue, so that people will soon have to stop making the "choice" argument to defend the things that go on in CIDs. Once you get past that argument, they have to defend such lunatic and offensive practices as banning political signs on the merit of the policy itself. That is nearly impossible to do.

Anonymous said...

Fred Pilot,
Move in knowing there was an HOA? Well, our DOCUMENTS give no power to ANY group that doesn't even own our property, maintain our building, pay, insure, etc.. the right to abuse, harass, terrorize, file fraudulent lawsuits, lie to courts, or foreclose for fabricated fees.
In fact, we had a problem in the early 1990's with an atty. who did horrible things to other business people in town! He left, no problem with this kind of activity until something crept in! Give you a guess what that was!

Anonymous said...

Alluding to Fred Pilot's comment about government privatization, another idea is to simply make the law such that when a local government mandates the creation of associations, those associations are also construed to be governments. With that, they assume the responsibilities of governments, and are thus subject to the constraints of the state and federal constitutions and subject as well to open records and open meetings laws. They would also be subject to FBI scrutiny when they engage in corruption.

Fred Pilot said...

Local governments are political subdivisions of state government and thus themselves aren't created by local governments. Also in some states, proposed new local governments must go through an extensive review and approval process.

Tom Skiba said...

I agree with Fred and Evan that this is public policy issue that deserves to be discussed. Unfortunately I think that it is also one that local governments have no desire to engage in: In good times they don't want to rock the boat that is fueling their burgeoning budgets and in bad times they don't want to do anything that might risk their revenue streams or increase their expense.

A couple of thoughts on the whole mini-local government vs. business model conversation. Even if you stipulate that associations should be elements of local government, and I do not, let's consider some of the implications for arguments sake.

1. There are 300,000 associations out there currently, with effectively about 50 million contractual relationships with owners. You can't just wave a magic wand and make all of those relationships, contracts, and financial obligations go away, despite the recent history of the Supreme Court taking a very anti-constructionist view of the right to contract. I am not even sure that you could get a majority of owners in many associations to agree to it, even without the additional costs it would probably create. So is it one massive taking ala Kehoe writ large?

2. The local governments around the country are generally broke or well on their way to getting there. I suppose that you could make them responsible for the associations they created, but they are less likely and less able to provide funding for management and maintenance than the associations themselves. And in fact if associations are a "branch" of local government it may hurt them as they will no longer have the "excuse" for the double taxation that they practice and thus will signficantly reduce their own revenue in the process, while increasing expense.

3. Local governments do have obligations under state constitutions, but they also have rights and protections as well, such as soverign immunity. Don't forget that you get the full package and can't just pick and choose. This could limit homeowners ability to pursue actions against their associations.

4. Running a business like an association under the same rules and restrictions as a local government would dramatically increase the costs to the individual homeowners. In some cases increase them with no improvement and potentially even a reduction in quality and service level. Just look at the additional costs CA homeowners have had to bear to implement their HOA election law. We frequently and convienantly forget that there is a cost to regulation and it is one that is passed on directly to the homeowners. In this economy I don't know of many owners/taxpayers who would willingly take on additional financial burdens.

5. We seem to have somehow made the judgement in our current economic crisis that government is the solution to all of our ills. It probably is important to remember that there is no evidence that government has ever been able to do something more efficiently or effectively than the private sector. There is a reason we read government procurement horror stories about $600 toilet seats and $250 hammers and $2 billion fighter jets.

Just some food for thought. None of these are quick and/or easy discussions and solutions.
Tom

Evan McKenzie said...

I will have to keep this response short because I am grading exams tonight--I will respond at greater length soon.

I agree that there is no way to just make community associations disappear. This is far too large an institution now for that sort of thing to work. Any replacement arrangements will have to prove themselves better. We don't want cities to go belly up or take on responsibilities they are not staffed or funded to handle.

The big picture as I see it is that regardless of what category we put CIDs in--government, business, voluntary organization--the real issue is what they do. They are doing governance, regardless of whether we call them governments. And in this society, I think we expect protections against those who do the governing.

We do not have to treat all CIDs exactly like governments in all respects. What we need to do is limit CIDs in the exercise of what is actually governing authority, consistent with (but maybe not exactly the same as) the way we limit local governments when they do the same things. This is a guiding principle. For example, we have open meetings acts and secret ballots for governments. We can do the same for CIDs. But public elections are very expensive for a variety of reasons. HOA elections don't need to use voting machines with optical scanners. They can, though, be free, fair, and open elections. Focus on the principles we are trying to live by, not every little jot and tittle of the limits on public governments.

And I agree that government is not the solution to all our ills. At some point, we ought to think in the long term about how local governments are even going to sustain themselves. But we can leave that for another discussion. I have to read more awful exams.

Fred Pilot said...

The issue isn't about HOAs magically disappearing. Rather, it's about reversing and unwinding the current public policy favoring the privatization of local government Evan first described in his 1994 book "Privatopia."

Certainly that cannot happen overnight considering it took four decades to bring us to where we stand today. And by private local government, I refer to larger detached unit CIDs that parallel in many respects constitutional public local government. For far too long, the discussion of the local government privatization policy has been muddled either unintentionally or purposefully by lumping in condominiums. Condos are are an entirely different animal that don't resemble local government but instead are like closely held, publicly traded real estate holding corporations. They are collectively owned by shareholders who merely buy a right to occupy and/or lease the airspace of one or more dwelling units rather than real property as most people know it, i.e. land and buildings.

As the recent posters suggest, the local government privatization policy choice is at its core about how we finance the cost of local government and local government services. I believe that fiscal issue can be more elegantly addressed and resolved without the formation of a separate and distinct private layer of local government in the form of local government mandated CIDs/HOAs and one whose property assessments aren't recognized as income tax deductible.