MSNBC - Why Housing Is About to Go "Pop!"
One view on the housing market, from Business Week Online's Mark Weisbrot:
"If you still need proof that a bubble is building in the housing market take a look at the findings of my economist colleague Dean Baker at the Center for Economic Policy & Research in Washington, D.C. He has tracked national housing prices going back to 1951. Prices pretty much track the rate of inflation up until 1995. But since then, average prices on new and existing homes have soared more than 35 percentage points beyond the overall rate of inflation. Is that unusual? You bet it is..."


...and he goes on from there. An interesting argument, but this has been predicted many times and so far hasn't happened. People are reluctant to sell at a loss so they hold onto their houses, and that keeps supply low, and that keeps prices up. At least, that's what they told me in Econ 101. And it's what happened in California in the early 1990s, and I hear that even the Hawaian market is coming back after the collapse caused by the Japanese eternal recession (a factor that figures into the Weisbrot article). Give it a read.

KPUA.net - KPUA Hawaii News - Kaneohe woman awarded $470,000 in condo mold lawsuit

These mold lawsuits against HOAs are becoming a cottage industry (no pun intended). The mold removal procedures are costly and scary looking, with people running around in hazmat suits like characters from an end-of-the-world movie--how about, "The Mold That Ate My Condo"?

fresnoBee.com: Metro: Small special districts fear state raid on their funds
"Gov. Schwarzenegger's proposed 2004-05 budget calls for taking away millions of dollars in property tax revenues paid to cities, counties and special districts. The money will help the state pay for public education at the kindergarten through high school level...Special districts, which are forms of local government created by a community to meet specific service needs, could face devastating losses if the governor's proposed budget is passed, said Catherine Smith, executive director of the California Special Districts Association. The budget proposal calls for special districts statewide to lose between $100 and $110 million or about 25% of their revenues."


Fred Pilot passed this link along. All levels of state and local government California are feeling the pinch, and next to the bottom rung are the special districts, with low visibility and no clear constituencies to object to measures like this. Special districts, such as mosquito abatement districts, will be hit harder than municipalities because of their lack of political clout. The bottom rung of the intergovernmental ladder is, of course, HOAs. They just get told what to do and have to raise private revenues to do it. They don't even get help from the tax collector, unlike business improvement districts (which don't have to threaten foreclosure to collect because government collects for them).

AB 2610 Assembly Bill - INTRODUCED
This is a link to the text of a bill being pushed by California attorney Jim Lingl, and introduced by Assembly Member Strickland, that would limit the liability of individual HOA unit owners for judgments against the incorporated association that exceed the limits or coverage of the association's liability insurance policies. I believe this text is a "spot" bill that will be rewritten. Jim is trying to avoid the "bottomless pit" liability of owners that raised its ugly head in bankruptcy court in the Le Parc and Oak Park Calabasas cases. I'm going to be watching this issue closely.

Los Angeles Times: Crazy for condos
CONDOMINIUMS, historically considered a purchase of last resort, increasingly are the most popular option on the block, resulting in sharply higher prices and attracting high-income move-up buyers seeking a simpler lifestyle...Condos currently account for nearly a quarter of all home resales in Southern California, up from 17% a decade ago. Part of that increase is attributable to major revitalizations underway in the downtown areas of San Diego and Los Angeles, which are attracting a new group of buyers interested in high-density housing."


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Thanks to Fred Pilot for this link. It seems to me that the real estate market is on a separate track from the press/public policy track. People buy condos for economic and lifestyle reasons, without thinking much about the challenges involved in living in them.

Contractors say lawsuits propel home prices
SACRAMENTO BEE — "New-home construction costs in California could go through the roof, say specialty contractors, if something isn't done to curb construction-defect lawsuits. They blame lawsuits for their escalating costs on general liability insurance. Some specialty contractors, who are the plumbers, roofers and others hired to build new houses, say their premiums have increased 300 percent to 500 percent in the past three years. They say increases wind up being passed to home buyers, adding tens of thousands of dollars to a new home's price. "


This is a familiar refrain from developers and construction contractors. It misses the point, which is, who should bear the financial risk of loss from latent (i.e., not apparent to the eye) defects in original construction? The candidates are: the building professionals who made all the mistakes in the first place; their liability insurance carriers; the buyers, who didn't know and had no way of knowing that the defects were there, and who weren't even around when the mistakes were being made; the buyers first party property insurance carriers.

OK, time's up. Answer, if I ran the world: the carriers for all the building professionals (developer, general contractor, subcontractors) who screwed up put together the money to pay the owners and/or their HOA. Then the carriers pursue their coverage issues and if they win, the insured construction professionals have to pay back their carriers. But it isn't fair to make the owners wait while complex coverage issues are litigated or arbitrated between the wrongdoers and their carriers.

...not to put too fine a point on it, but...
Fred Pilot has a comment regarding this paragraph in the Wasserman piece linked below:
"Amid more than 260,000 private communities nationally and 36,000 in California, at least one third have steadily put off raising necessary assessments for fear of political conflict, and now need repairs and facelifts for which they significantly lack money, say those who monitor homeowner association finances."

But according to Fred:
"I don't think Wasserman has it exactly right here since many HOA boards of directors as we know aren't all that politically responsive to the concerns of their constituents. In addition, boards can put assessment increases to a vote of the owners -- and in fact are required by law to do so in California if the increase exceeds 20 percent. I think the reluctance to increase regular assessments or levy special assessments is frequently because the directors themselves don't want to pay them. (You can quote me on your blog if you want)"

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But...but...but...I thought this was local democracy at its finest...the 21st century version of the New England town meeting...

Green Valley News & Sun "HOA 'reform' losing ground"
Are those scare quotes around the word "reform," and if so why? The article stresses opposition to HB2402 from an association of associations.

Private communities come apart
When homeowners associations run short of cash, maintenance falls by the wayside

By Jim Wasserman, Associated Press


...What started 35 years ago as a pleasant community run by a private homeowners association has become an object lesson in the worst that can happen when such a neighborhood starts to unravel. Its original owners moved out, new owners failed to maintain the property, neglect accelerated into falling property values, then crime and eventual collapse. Now, state and local taxpayers are paying $80 million to turn it into a nonprofit housing complex called Phoenix Park. While extreme, it could be the fate of thousands of privately run communities throughout the nation, which are flirting with declines by failing to spend adequately on upkeep, even as owning a home in private communities has become the nation's fastest-growing lifestyle. Amid more than 260,000 private communities nationally and 36,000 in California, at least one third have steadily put off raising necessary assessments for fear of political conflict, and now need repairs and facelifts for which they significantly lack money, say those who monitor homeowner association finances.

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I'd suggest you read the whole article. Jim Wasserman has been doing HOA stories for some time and knows his stuff. This is an issue I've been harping on for about fifteen years and I have yet to see much legislative interest in it. I guess they are waiting for a full blown meltdown. Can you say "savings and loan industry," boys and girls?

Here's the .pdf version of 4th DCA opinion in Villa De Las Palmas HOA v. Terifaj
One interesting aspect of the Terifaj case is that the "no pets" rule was not recorded at the time Terifaj bought her unit, but Terifaj knew the rule existed. In other words, she had actual notice of the covenant but not record notice. How important is that? If you look at most cases on HOA covenant enforcement they nearly always emphasize that the restrictions were recorded and that means the owner took the property subject to the restrictions. Here, if they weren't recorded at the time of her purchase, to put this in animal metaphor terms, is this a case of "sauce for the goose is sauce for the gander"?

Here's the 4th DCA opinion in Villa De Las Palmas HOA v. Terifaj

law.com - the Terifaj arguments
Here's a link to a summary of the Cal Supreme Court oral arguments in Villa De Las Palmas Homeowners Association v. Terifaj, held last Tuesday. Scroll down past the sex offender case to the bottom and you'll see it under the heading, "But Goldfish Don't Bark."

Paula Terifaj hugs her dog Rose

Why the Terifaj case?
The California Supreme Court is reviewing a lower court ruling in the Terifaj case, and I will link that opinion when I find it. But it is curious because Terifaj, which involves a "no pets" restriction, would seem to be governed by the Nahrsedt case that the Cal SC decided a few years back. That case said pet restrictions were reasonable and also established a pro-BOD standard for determining reasonableness (reasonable in the abstract rather than reasonable as applied in the instant case).

Anyway, why are they taking up such a similar issue? Does it mean they are going to reconsider Nahrstedt?

Here's some speculation from a person with some solid insider perspective, Marjorie Murray, Chief Legislative Advocate/CID Housing of the Congress of California Seniors:

Evan --

One ingredient which may be at work in the Supreme Court's willingness to review Paula Terifaj's case is AB 512 signed into California law last year. The law is obviously not retroactive.

However, it established the principles that (1) rulemaking is a joint function of boards and homeowners (2) rules must be in writing and promulgated (3) homeowners can exercise a referendum right in order to repeal rules. In other words, it establishes the principle -- without saying so -- that rulemaking is a political process and not the "rational" process that Nahrstedt presumes.

The sponsor of AB 512 was the California Law Revision Commission. You can come to your own conclusions about whether the court took this fact into consideration as well.

The Congress of California Seniors succeeded in getting AB 512 amended so that the original timetable for homeowners to respond to new rules proposed by the board was extended from 15 to 60 days. We also got it amended to make clear that boards could not deny homeowners access to membership records in order to organize a referendum, i.e. that access to records was a legitimate "member's interest" as defined in current California law.

Marjorie Murray
Chief Legislative Advocate/CID Housing
Congress of California Seniors

State: Bills threaten condo boards' sway: legislation in the works would change the way associations alter the existing rights of condo owners
"Florida lawmakers are considering changing state law to give Florida's 1.1-million condo owners a way to challenge rules about pets, rental rights or parking spaces. Two bills working their way through the Legislature would require condo boards to hold a public hearing on altering rights owners had when they moved in, such as renting their condo seasonally. Owners also could demand a poll of everyone; a right could not be changed unless a majority agreed. Sellers would be required to provide potential buyers a simplified disclosure form detailing the financial health of the condominium association, including liabilities, such as lawsuits or future assessments.To avoid lawsuits, the legislation would create a state ombudsman's office that could mitigate complaints between condo owners and their association boards, an idea that has drawn criticism from one of the state's leading condominium lawyers. A $4 annual state fee that condo owners already pay for regulatory oversight would fund the office. Much of that money now funds general state government. House sponsor Julio Robaina, R-Miami, also wants to create a state advisory council to propose future changes to state law or the ombudsman office."

The industry is not happy with this proposed legislation. To wit: "Meanwhile Gary Poliakoff of Fort Lauderdale, whose law firm, Becker & Poliakoff, represents more than 4,000 condo associations in the state, led the opposition. "Those bills deserved to be drowned," Poliakoff said last week. In early March, Poliakoff wrote his clients: "During the 31-plus years I have been an advocate for the rights of condominium owners ... I have never seen proposed legislation which is more destructive."

NBC 4 - House and Home - Houses Slip Further Out Of Californian's Reach
LOS ANGELES -- Slightly less than a quarter of Californians can afford to buy a median priced home, down from about 30 percent last year, a report released Thursday by the California Association of Realtors showed.

The minimum annual household income needed to buy a median-priced home at $394,300 in February was $91,690, based on a 30-year, fixed-rate mortgage at 5.74 percent and a 20 percent downpayment, according to CAR. In February 2003, when the median price was $326,640 and the prevailing interest rate was 5.93 percent, CAR calculated the minimum annual income needed to buy a home was $77,220. Southern California's high desert area was most affordable area, with 55 percent of families earning enough to buy a median priced home.

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And that is why people are spending four hours per day in their cars. Thanks to Fred Pilot for sending this link.

Southland's Census Story, in a Word: Boom!
Southern California picked up an estimated 1 million new residents over the last three years as the Bay Area — a population magnet during the dot-com boom — stagnated, according to U.S. Census Bureau estimates. The figures show Southern California's pace of growth accelerating from the late 1990s — a finding that has significant consequences for a region already confronting congestion in everything from freeways to classrooms. In a reversal of past trends, most of Southern California's recent growth came from births — particularly in older, immigrant-heavy cities in Los Angeles and Orange counties — rather than from resettlement of adults seeking work, demographers said.Still, Southern California continues to attract new families — particularly to inland communities from Antelope Valley to Temecula, where homes cost less than in crowded coastal counties. "Cheap dirt … cheap houses," said John Husing, a Redlands economist. "No matter what anyone says, people continue to want a single-family detached home, and they will crawl over the hills from Orange and Los Angeles counties on their hands and knees to get it."


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Indeed. So we have the Southern California population swelling by one million in three years, much of the growth being not in-migration of job seekers, as in the post-WWII years, but instead representing the high birthrate of immigrant families. That is very expensive growth because kids have to be educated, and that means pressure on the public schools and other public services. Note this from the article: "Andy McCue, director of the UC Riverside Center for Sustainable Suburban Development...predicted that swelling school-age populations in Riverside County alone over the next decade will require the construction of 36 elementary schools, 11 junior highs, and 10 high schools — costing an estimated $1.34 billion."

And the money to do that will come from...where, exactly? Homeowners? I don't think so.

As the article notes, traffic congestion is already beyond belief and getting worse. The cities, especially Los Angeles, are becoming unliveable for people who want the American Dream (as Husing notes above). So people are moving out to what was once the desert, where they end up in an HOA-run new development more often than not, that gives them at least the promise of suburban living--if you don't mind an ambient temperature that runs around 110 Fahrenheit in the summer and a four hour commute to work.

When I was a teenager I would ride my Yamaha 125 Enduro out in the desert around Palmdale and Lancaster. There was nothing anywhere to be seen but desert, and nobody complained about the howling of dozens of unmuffled two-stroke dirt bikes, because nobody could hear it. But now that whole area is full of houses, with the occupants driving two hours each way to LA and Orange County for work. The population explosion in Southern California is pushing people out to Pluto in search of a place to live a decent life. How long can this continue? What are the limits of this process? More to the point, is it the case that nobody in or out of government has the power to stop, slow, or even rationalize it?

Administrative agency to oversee Calif. HOAs?
Check out the latest from the California Law Revision Commission, where they are discussing the pros and cons of that very idea. It seems that it would be an agency with regulatory power, like the FCC or OSHA. This type of agency normally has rule-making authority, the ability to investigate alleged violations of those rules and bring charges, and some sort of administrative adjudication power. In other words, the HOA oversight agency would be...sort of like an HOA :-)

Neighbors howl about dog-park plan

Thanks to Mika Sadai for passing along this story. Here's a bit of it:

The pampered pooches of Birmingham have had their own bakery, water bowls
strategically placed throughout the shopping district and the kind of
fashionable attire any discriminating doggie would not be caught dead
without.

Now, they're getting their own park.

But the plan to designate a dog park on the border of Bloomfield Hills irks
some Bloomfield Estates subdivision residents, who are unleashing a lawsuit
on the City of Birmingham. Dog doo -- and the other issues associated with
cavorting canines -- doesn't belong in their neighborhood, they've argued to
Oakland County Circuit Judge Deborah Tyner. She has scheduled a motion for
summary disposition on April 21.

"Dogs bark and they make noise and they stink and they leave things behind
on property," said Raymond Morrow, the Troy-based Bloomfield Estates
Homeowners Association attorney. "The people that live across the street and
next to it, they're aghast at this."

-----------------------
Thanks to attorney Morrow for informing us that dogs bark AND make noise. I did not know this. Ours, a large rottweiler-descended mutt named Rocko, can only bark, so perhaps we should teach him to play the French horn so that he can keep up with the other dogs who are more versatile. He doesn't stink, although he does have a needle-sharp set of king-size choppers, one of which accidentally made an inch-long rip in my right palm a couple of months ago, requiring five stitches. It was entirely my fault. Poor Rocko didn't even know what happened and was very worried about me. I think.

Why 44% of New Hampshire voters should not be allowed to vote in November

44% of them think the US economy is still in recession

...a recession is defined as two or more quarters of negative growth in the Gross Domestic Product

and the economy has had positive economic growth for NINE consecutive quarters.

I think anybody who still believes the national economy is in recession should stay home on November 2, 2004, and watch reruns of The Dukes of Hazzard. Leave the voting to grown-ups, OK?

AZ foreclosure bill clears committee, but in radically reduced form
HB 2402, that would have made HOAs wait 3 years to foreclose and also require that the foreclosure sale be for fair market value, passed out of the Senate Government Committee today, but in a form that leaves its proponent unhappy. I hear from several people that the committee was set to vote a clear "no" on the bill, so a deal was struck that removed the three-year waiting period and fair market value provision, along with other language. What is left? No foreclosure for fines generated from rules violations. A massive disappointment for the bill's proponents, but on the other hand banning foreclosure for fines is something they certainly wanted, so it's a net gain on the reform front. The industry people, such as the CAI folks who strongly opposed the bill, can live with what passed and I hear they are ecstatic over the outcome.

CleanCondos.org --
The Service Employees International Union is endorsing the Florida bills numbered H1223 and S2498 that would create an ombudsman office, mandate disclosure of BOD conflicts of interest, require "buyer beware" notices, and other measures. It is unusual for these HOA consumer protection bills to get support from interest groups, so this is a noteworthy development.

Charlotte Observer: Trash gets unequal treatment at condos--Some townhomes get own rollout containers; others must share bins (warning: registration required)

A double taxation conflict rears its head: "It's unjust," Schultze said. "We pay our taxes and we should be provided with the services the rest of the city gets."

MSNBC - Private guards repel attack on headquarters--Blackwater Security sends helicopter to ferry out wounded Marine

An attack by hundreds of Iraqi militia members on the U.S. government's headquarters in Najaf on Sunday was repulsed not by the U.S. military, but by eight commandos from a private security firm, according to sources familiar with the incident.

-------------------
I have noticed the tenor of news coverage about the thousands of private security people in Iraq--overwhelmingly negative, often referring to them as "mercenaries." These are mostly ex-military from what I have read. The ones who were murdered and their bodies desecrated by maniacs in Fallujah were providing security for a food convoy. The ones in this story about Najaf performed heroically and saved the life of a wounded Marine, among others.

What exactly is the problem with this that has Dan Rather et al in a flat spin? First, it seems to me that plenty of people need protection in Iraq right now, and the military isn't mainly in the security guard business, so what exactly is the mainstream media's problem? Second, it is my understanding that these news agencies are some of the main employers of these folks for their own protection, so their surprise at the existence of "mercenaries" is obviously feigned and supremely hypocritical.

Maybe a security guard is a mercenary if hired by anybody other than a news agency. Is that the rule?

Mercury News: A police presence for gated homes--Silver Creek complex to get traffic patrols


To outsiders, the gated community surrounding the Silver Creek Valley Country Club has everything a neighborhood could want: million-dollar homes, security guards, well-groomed yards and scenic views. But residents say there's one thing they don't have: a way to stop drivers from speeding on the 30 miles of roads inside the 1,500-acre community. That will change in May, when San Jose traffic officers will begin to enforce the laws that apply to private property as well as public. It's the first time an upscale community, which maintains the private roads with homeowner fees, has received the city service.


----------------------
Well, that's a switch. Usually cities avoid responsibility for things like this. Some CIDs have private speed limits and private speeding tickets.

Voters in Inglewood Turn Away Wal-Mart
"A bid by the world's largest corporation to bypass uncooperative elected officials and take its aggressive expansion plans to voters failed Tuesday, as Inglewood residents overwhelmingly rejected Wal-Mart's proposal to build a colossal retail and grocery center without an environmental review or public hearings. "
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So there won't be a Walmartville after all. But note this comment from a local lawmaker: "They want to be the big gorilla and not even offer one banana," Assemblyman Jerome Horton (D-Inglewood) said Tuesday. "Clearly, this is a test site for Wal-Mart to determine if they can go from city to city to city, preempting state law and local building and safety codes…. I think everyone should prepare for a full frontal attack from Wal-Mart." That is an interesting prospect. Wal-Mart could go voter shopping until they find 40 places where the population is willing to give them the extremely one-sided arrangement they want--one no public official would ever agree to, but maybe some voters somewhere will. They could probably stretch the opposition pretty thin if they hit four or five towns at once...

Are the lights out? OK, the meeting is called to order...
Fred Pilot passes along a message that somebody sent to a newsgroup about a unique approach to parliamentary procedure that goes on in their HOA:
Sez Fred: "Memo to HOA directors: If the HOA is going broke and you don't want the bad news to get out and wreck your property values, hold board meetings in unlit rooms.: [anonymous post to newsgroup follows:]
'They have not announced it publicly, as they don't announce anything
publicly (except assessments and monthly fee increases). All secret and
hush-hush!! In fact they frequently hold secret meetings, (with the lights out) in the Rec room so that Homeowners won't know that they have been meeting. (all illegal of course).'"
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How come my department heads over the years never thought of this? We've been holding meetings with the lights on! Wow. A Homer Simpson moment.

A modest proposal
I'm following Fred Pilot's observation (see post below) to its logical conclusion. Let's end all the squabbling about assessment collection and the abuse of foreclosure power by having the other utilities follow the lead of the US Postal Service. Give the HOA the final responsibility for delivery of water, electricity, and gas, just as they are now getting the tail end of mail delivery. They get the final job of turning on and off the utilities, just like the Postal Service is giving them the keys to the mailbox. Then instead of foreclosing on those who don't pay assessments on time, the HOA can turn off all their utilities as well as shutting down their mail. Send them into the Middle Ages until they cough up the bread. Don't pay on time? Fine. No problem. See how you like living in 1365.

Las Vegas SUN: Postal proposal prompts concerns
Monica Caruso passed this story along to me.
Responsibility for keys would be shifted to homeowner groups
"Homeowners and renters who need keys or lock changes for their mailboxes soon will have to get them from their home builder or homeowners association instead of a post office, if the U.S. Postal Service has its way.The Postal Service says it is making that change to save money. But critics say it will lead to less privacy and security in an age where mail theft is an easy route to identity theft...

Julene Hayworth, a former aide to Sen. John Ensign, R-Nev., turned government affairs specialist for the Southern Nevada Home Builder Association, said that the ultimate impact of the postal policy will be to make postal officials out of homeowners association leaders or federal agents out of builders.

"They don't want to be responsible for the keys," she said. "But you are still under federal law. Mail tampering is a federal, criminal law. You are asking homeowners associations and builders to be liable under federal law."

Another concern among home builders is that homeowners associations often have come into conflict with their residents, creating a potentially troubling situation when an association could have access to the private correspondence of a resident."
...

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So now we are privatizing the ultimate responsibility for mail delivery and handing it over to our new level of amateur government? Who comes up with these ideas? As Fred Pilot observes, "Not going along with the program or paying your assessments? You can pick up your mailbox key at the HOA manager's office-- provided you bring a cashier's check for the full amount of your fines, late assessments and of course any late charges and attorneys fees." Indeed. But here's an interesting wrinkle. Many HOA disputes involve issues of notice, such as whether the HOA gave the owner notice of violation or delinquent payments, and often that notice is delivered by....US Mail. Which under this proposal will be in the ultimate control of the HOA.

Don't associations have enough to do already without turning them into the Pony Express?

Stymied by Politicians, Wal-Mart Turns to Voters--to create regulation-free city-within-a-city...per New York Times
INGLEWOOD, Calif., April 2 — As Wal-Mart continues its march across the American landscape, this Los Angeles suburb of 112,000 people is the latest testing ground for the company's exercise of political and marketing muscle. Inglewood voters go to the polls on Tuesday to decide whether to turn over 60 acres of barren concrete adjacent to the Hollywood Park racetrack to Wal-Mart to create a megastore and a collection of chain shops and restaurants. The ballot initiative is sponsored by Wal-Mart, which collected more than 10,000 signatures to put the question to voters after the Inglewood City Council blocked the proposed development last year, citing environmental, traffic, labor, public safety and economic concerns.

While Wal-Mart has turned to the ballot in a number of cities and towns to win the right to build its giant emporiums, the Inglewood initiative is significantly different. The proposal would essentially exempt Wal-Mart from all of Inglewood's planning, zoning and environmental regulations, creating a city-within-a-city subject only to its own rules. Wal-Mart has hired an advertising and public relations firm to market the initiative and is spending more than $1 million to support the measure, known as initiative 04-A.


--------------
The electoral aspects of this are fascinating. Inglewood is an old suburb located on the border of Los Angeles, right next to Los Angeles International Airport and including Hollywood Park, the gigantic horse racing track. The city, the story notes, is about half black and half latino and the unions and community groups are heavily opposed to the initiative. Now, tomorrow we will see how many voters of a liberal demographic slant will vote to create a private corporate city-within-a-city, overriding their own elected representatives to do so. As the story notes, if this effort succeeds Wal-Mart can be expected to do the same thing elsewhere (they want to build 40 more of these super-stores in California within the next 5 years!) As the song "New York, New York" goes, "if I can make it here, I'll make it anywhere, come through for me...INGLEWOOD?"

Here's the link for downloading the PPIC studyl
Finally their site is back up. The report, Planned Developments in California: Private Communities and Public Life, is by
Tracy M. Gordon and the pdf version is downloadable.

Chicago Tribune: Ill wind blows in California over feng shui idea
Lawmaker ignores snickers, proposes new building codes to accommodate earth energies
By Michael Martinez
Tribune national correspondent
Published April 5, 2004

LOS ANGELES -- What troubled California needs is some good chi.

So says Democratic Assemblyman Leland Yee of San Francisco, the speaker pro tempore in the Legislature's lower chamber, who is sponsoring a resolution urging the state architect and local municipalities to revise their building rules and regulations to better allow for feng shui.

Yes, the usual California jokes already have begun, Yee acknowledged.
...
Feng shui, which means "wind" and "water," considers location, land, building shape, neighboring structures and history of use in establishing spaces that make people feel at ease with their surroundings. Room arrangement, color, furniture placement and landscaping also are design factors.

For example, entry into a home shouldn't have a straight view to the outside because the chi rushes right out of the space, experts said. In offices, desks should face toward a door, and workers can use rock gardens, little fountains and plants to evoke a natural environment, experts said.
...

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Can you imagine some new feng shui CC&Rs? If you think banning solar panels is bad, imagine the association telling you which way you can point your desk.

Napless Daily News: Furor over solar panels
Solar storm
Homeowners wishing to install solar panels often find themselves in conflict with associations concerned with aesthetics
By LAURA LAYDEN, lllayden@naplesnews.com
April 3, 2004
"...many homeowner associations in Florida try to keep residents from putting solar panels on their rooftops, despite a state law that prohibits such restrictions."
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And according to the article, so do some municipalities. The issue seems to be that many people think solar panels are ugly.

sacbee.com -- News -- County explores new ways to combat flow of red ink

Thanks to Fred Pilot for sending me the link to this story about how Sacramento County, California, is in major financial trouble:
"Desperate to shrink a horrific budget deficit, Sacramento County economic development officials are pressing to reverse a longtime county policy and start chasing "big-box" stores...While many California counties are hurting, Sacramento County's penchant for heavy residential development has left it with a collection of aging bedroom communities that offer little in the way of sales tax growth."

So what happened is the county allowed lots of residential development in unincorporated county land, and then several of these large subdivision areas became municipalities that attracted retail. So now the unincorporated areas of the county lack retail, which means the county budget can't draw on much of a sales tax base. The problem is that 47% of the county's population lives in unincorporated areas. That adds up to a major imbalance between the cost of services the county provides to those people, and the revenue base.

The PPIC website is down...
...but thanks to Fred Pilot I have a copy of their California CID study and it is quite an interesting piece of work. It deseves serious consideration, but I'm on a publication deadline so I can't spend a couple of hours with it. Still, after a quick scan, I don't see how Weintraub could arrive at the interpretation of the study he presented in his article. I wonder if he lives in a gated community and doesn't want to feel guilty about it. :-)

I'd say the study pretty much supports the general trends Reich, Barton and Silverman, myself, and others anticipated years ago. Maybe it isn't as dramatic as Reich's "secession of the successful," but that was said for dramatic effect anyway, in a magazine. And the trends are blurred if you consider all CIDs as part of the same sector, because of low-end condos being lumped in with high-end developments--there are now CIDs at all parts of the price range.

And in any event, if you are trying to see whether the rich are seceding into Privatopia, the issue is not "what percentage of CID-dwellers are rich?" The issue is, "What percentage of the rich live in CIDs?" And if the answer is, "most of them," or "many of them, and the percentage is increasing," then the fact that there are trickle-down CIDs for the less affluent is beside the point (except that it bodes ill for the future financial health of such CIDs). This study doesn't go at the question this way. It asks questions about CID housing as a single sector and compares it with traditional housing as a sector. This is great, and I'm all for doing it, but it doesn't resolve the question of whether the successful are seceding. For that, you need to study the successful.

Also, it is clear that using voting as the measure of civic participation, as the PPIC study does, is a major mistake that leads to an erroneous theoretical conclusion. People often vote out of the most selfish, anti-community, motivations imaginable (in fact, most models of voting assume self-interested voters). Voter turnout is correlated with wealth, education, and age, not a desire to participate in community life. So yes, the residents of CIDs are voting, but no, that doesn't mean they are active participants in the life of the community outside their gates and walls. You need to know things that are harder to measure. It is easy to get voter turnout. It is hard to see how people are really living.

This sort of thing is common in social science. Remember the joke about the cop who approaches the drunk standing under a streetlight and asks him what he's doing? Drunk says, "Looking for my keys." Cop says, "Where did you lose them?" Drunk says, "Across the street." Cop says, "So why are you looking for them over here?" Drunk say, "Because the light is better over here."

Q&A with Mark Baldassare, Public Policy Institute of California
...in which he says the following:

"I think that if we don't close the achievement gap in this state, then we are creating a society in which we will have the rich and the poor, the well-off, the people who have advantages and the people who don't, the people who have good jobs and the people who don't, people who depend upon public institutions for their support, and people who can go to private institutions."

----------------
And of course that's why people who agree with Dr. Baldassare, head of research at the PPIC, voted against vouchers and for easier school bond funding. But CID owners disproportionately voted the other way, according to the PPIC study.

sacbee.com -- Opinion -- Daniel Weintraub: Life behind gates isn't so isolating
This is an article about a new study from the Public Policy Institute of California that I haven't read yet. Check out this, from the Weintraub article:
"The study found that voters in planned communities were almost evenly divided between Republicans and Democrats, with each around 40 percent, compared to a big advantage for Democrats in traditional neighborhoods. But at least in 2000, their voting behavior was not terribly different from the rest of the state.

"While 28 percent of voters outside planned communities supported a proposition authorizing state-funded school vouchers, for example, 31 percent of voters in planned communities voted for the measure. And while 56 percent of voters outside planned neighborhoods supported a measure making it easier for voters to approve local school bonds, 52 percent of residents inside planned communities supported the proposition. Results like this suggest a slight conservative tilt, but given the partisan trends already noted, it's surprising that the political differences aren't greater."
-------------------
So, CIDs are significantly more Republican and show more support for private schools and less support for public schools. And these are exactly the kinds of differences that I and other observers have suggested we would see. But according to Weintraub, the study is "casting doubt on old assumptions about gated communities, and the extent to which their residents wall themselves off not only from their neighbors but from the rest of society and its civic life as well."

Doesn't look that way from the evidence in the article. I'd say those differences may be statistically significant, but I'll suspend judgement until I see the study.

California Law Revision posts agenda for April 15 meeting
And there are quite a few topics on it. Financial privacy, state oversight of CIDs, civil discovery, equitable relief, several specific pieces of legislation...the CLRC mill grinds very, very, fine, and very, very sssllllloooowwwwlllyyyy...

Realty Times - "Runaway Housing Market Could Jump Track"
"If predictions about interest rates, housing prices, and foreclosures are accurate, then the United States is looking at a 'housing train wreck.' The housing train wreck will affect middle-class families as well as low- and moderate-income homeowners," said John H. Vogel, Jr., professor and faculty director at the Tuck School of Business at Dartmouth College, Hanover, NH. In "Reflections on the U.S. Mortgage Market," penned for the Urban Land Institute, Vogel says too many households are over extended, primarily because of easy money -- easy mortgage money."
-------------------
Point being that many of us are now house-poor, making house payments that far exceed recommended levels, facing increasing property taxes and other rising costs. Add to the mix that millions of people are also forced to pay increasing HOA assessments, something this article doesn't mention, and you have even more financial pressure. It works as long as you have two wage-earners, low interest rates, and no costly surprises like a $20,000 special assessment. But that leaves a lot of people on the high wire hoping they don't encounter a stiff breeze.

USATODAY.com - Brawl breaks out in anger management assembly

"WOODLAWN, Md. (AP) — A brawl broke out during an anger management assembly at a suburban high school. Two people were arrested and 11 students were suspended after a shoving match escalated into a melee during Thursday's assembly. Authorities said a confrontation between a student's mother and a group of girls who had been bothering her daughter turned into a shouting match, and led to pushing and hitting, before the crowd of 750 students erupted into "chaos," said C. Anthony Thompson, principal of Woodlawn High School. The melee began as students on stage acted out peaceful ways to resolve conflict during the assembly..."
------------
And here I was thinking that courses like this might be useful in HOAs. I was speaking with a newspaper reporter not long ago about this very idea. Back to the drawing board...

7 steps to survive life in a homeowners association
...and now Bankrate gives you the how-to skinny. But I thought there were supposed to be 12 steps...

Hate your homeowners association? - Mar. 15, 2004
CNN Money belatedly discovers HOAs and weighs in on the "disgruntled owners" front. Most publications did this generic story sometime before 1995. The angle is the usual "owner versus association" one, with the usual "informed consumer" resolution. No discussion of the social or political issues other than the HOA litigation explosion. But there's no harm in repeating the basics every now and then.

Michelle Malkin: A closer look at left-wing thuggery
So now Michelle Malkin has done a full run-down on the group I declined to name in the preceding post. She's not interested in the gated communities angle, but consider that the tactics of this groups could be copied by PETA or any number of other groups that have no political power through parties or interest groups, but who are so self-righteous and intolerant that they think they deserve to control the policy agenda regardless. I think terrorizing policy makers in their homes will become increasingly common, and the only recourse for the victims is to head for Security Acres. That's not a good thing in my book, but you can't blame them.

Demonstrators Swarm Around Rove's Home (washingtonpost.com)
"Memo to self: Move to gated community"

At least that's what I imagine Karl Rove is thinking this morning, after this happened:

"Several hundred people stormed the small yard of President Bush's chief political strategist, Karl Rove, yesterday afternoon, pounding on his windows, shoving signs at others and challenging Rove to talk to them about a bill that deals with educational opportunities for immigrants."

---------------------
The demonstrators were from a Chicago-based coalition of various groups whose name I will not reproduce because I don't want to give them any publicity. They have been around since the early 1970s and have done this exact thing many times. Here's a paragraph from their web page, although I won't link to it:

"Direct action is a way to be heard. NPA does not employ professional lobbyists, nor does it have access to the halls of power. NPA has people power. When someone in a position of power refuses to meet with NPA leaders, NPA responds with an action. An action means dozens of busloads of neighborhood people showing up at someone's office or front lawn with a bullhorn and a demand for the target to meet with NPA. Previous direct action events include bringing over a thousand people to the homes of Andrew Cuomo, Secretary of Housing and Urban Development; Sen. Phil Gramm(R-TX); Federal Reserve Chairman Alan Greenspan."

Faced with tactics like this, influential people think long and hard about living in gated communities. Arnold Schwarzenegger, Rush Limbaugh, and many other celebrities and politicians live in them already. Here's an object lesson in why. You have three choices. One is to put up with this kind of thing until the police arrive and chase them off. The second is to move someplace where it can't happen. The third is to solve it yourself by appearing on the front steps with a big dog and a shotgun. Rove chose #1 and probably wishes he had chosen #2. I would have chosen #3, but I think in DC that would make me the criminal.

This sort of activism encourages, and practically requires, the powerful to secede from society and head for a fortified compound. These are airhead tactics, in my book. Short-sighted, offensive, narcissistic, and destructive.

Here's the opinion in U.S. v. Gould
...which is the case I referred to below. Seems the police had a tip that Gould was going to kill two judges. They went to his trailer and were admitted by a roommate named Cabral. They do a "protective sweep" of the trailer for Gould, including his bedroom. No Gould. But they search under the bed and in the closets, and in one closet they find...three rifles. Eventually they find Gould outside in the woods. He says the guns belong to somebody else, but that's beside the point.
Which is...Cabral had no authority to consent to a search of Cabral's room, so did the police have the right to search it anyway under the "protective sweep" exception to the warrant requirement? Note that it wasn't incident to arrest, because they seached the room before they found him. Normally the "protective sweep" exception applies to search incident to arrest. So that's why this case is so unusual.

I think this case will draw some commentary from legal beagle types. Will the USSC get involved? Who knows...

TheNewOrleansChannel.com - News - Court Opens Door To Searches Without Warrants
"NEW ORLEANS -- It's a groundbreaking court decision that legal experts say will affect everyone: Police officers in Louisiana no longer need a search or arrest warrant to conduct a brief search of your home or business. Leaders in law enforcement say it will provide safety to officers, but others argue it's a privilege that could [editorial note: COULD???] be abused. The decision was made by the New Orleans-based 5th Circuit Court of Appeals. Two dissenting judges called it the "road to Hell."
--------------------
Well, look on the bright side. At least now the rest of the nation is catching up with Privatopia and getting rid of those antiquated 18th century notions of "civil liberties."

Sun-Sentinel: South Florida news: "Legislators propose appointing ombudsman to protect condo residents"
"A bill creating an ombudsman with the power to fine condominium directors, remove them from association boards and resolve disputes has cleared its first hurdle in the state Legislature.

"The ombudsman provision is one of several that, if adopted, would be the most significant change to condominium law since 1991. The bill is designed to protect millions of condo residents by reining in the power of boards."

Read it all...

Text of CBS foreclosure story
Dream Home Lost Over $120 Bill

COPPEROPOLIS, Calif., March 26, 2004
Dream Home Nightmare

(CBS) Last year was a bad one for the Radcliffs.

"My pain was so horrific," says Tom Radcliff. "My shoulders, my knees."

First his arthritis kicked up, then, as CBS News Correspondent Jerry Bowen reports, his wife Anita forgot about the homeowners dues.

"They were in the back of my mind," she says.

And then they lost their dream home. They were given three days notice to get off the property.

The $300,000 house they'd built in northern California was auctioned off to recover the dues they'd owed the Copper Cove Homeowners Association for almost a year. The debt? $120.

"I agree with you, it's only $120," says Copper Cove attorney Deon Stein.
"Why isn't the owner paying that? All of his neighbors are paying that to fund the operations."

There are a quarter-million homeowners associations in America. With dues that pay for everything from road maintenance to lakeside clubhouses, and they're powerful. A Florida couple may lose their home over a forbidden flagpole. And now, the Radcliffs.

"All my life savings is in this house," says Tom Radcliff.

One thing the Radcliffs don't understand is why the homeowner's association just didn't come by and tell them they had a problem. The association office is just two minutes down the road, but nobody said a word.

Legally the association didn't have to, and foreclosure is a proven tool. So the debt was turned over to a collection agency. And though the Radcliffs say they had a verbal agreement to pay off the delinquent annual dues, their house went on the auction block.

"It did not occur to me that they would foreclose," says Anita Radcliff. "I just thought people don't do things like that."

The Radcliff's case has prompted several proposed laws in California to prevent homeowners associations from doing it so quickly for such small amounts in the future.

"In many instances, seniors are targeted," says Marjorie Murray, of the Congress of California Seniors. "Seniors are seen as the golden goose sitting on the golden egg - valuable California real estate."

Copper Cove's attorney says the Radcliff's wound is self-inflicted.

"I certainly would not say they are victims, and if they are victims, they are victims of their own making," says Stein.

The Radcliff's $300,000 house went for just $70,000 to a speculator. They get most of the selling price after their debt is settled and get to stay put for now. And they're mad.

"If this were the Old West trying to get my property, there'd be a bunch of dead people out there on the ground," says Tom Radcliff.

But it's the New West, and the Radcliff's have a hired gun attorney who is suing, arguing the other side was just to quick on the trigger.


© MMIV The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

Yahoo! News - U.N. Projects Historic City Populations by 2007

By Grant McCool

"UNITED NATIONS (Reuters) - For the first time in history, most of the world's population will live in cities by 2007, U.N. demographers said on Wednesday.
They said that 48 per cent of the world's population lived in urban areas in 2003 and this was "expected to exceed the 50 percent mark by 2007, thus marking the first time in history that the world will have more urban residents than rural residents."They projected that the world's urban population would rise to 5 billion by 2030 from an estimated 3 billion in 2003. Conversely, demographers expect the rural population to decline to 3.2 billion from 3.3 billion in 2003 by that year.
Global urban populations would grow at an annual average rate of 1.8 percent and double at that rate in 38 years, according to the U.N. Population Division report, "World Urbanization Prospects: The 2003 Revision." Tokyo, the world's most populous city with 35 million, was projected to still be the largest in 2015 with 36 million people, followed by the Indian cities of Bombay at 22.6 million and New Delhi at 20.9 million. Next on the list were Mexico City at 20.6 million and Sao Paulo at 20 million."
--------------------
And this raises some interesting questions. How is all this urbanization to be accomplished? How will the new housing be constructed and how will services be provided? If recent experience in other nations is any guide, the answer is: through privatization and the creation of housing that resembles American common interest developments.

Slimewatch
As usual, some of the owner activists have gone off the deep end over my comments concerning foreclosure. I don't mind being disagreed with, and I welcome reasoned debate because I always learn from it. I received some good questions and criticisms from people, and thanks for that.

However, the problem once again is that there are these people who think the purpose of the internet is to make it easy for them to insult people who have the temerity to hold an opinion they don't like. Their idea of debate is just name-calling. I guess this makes them feel powerful or something, as if they had actually accomplished something for the first time in their lives.

I just don't have the time or the inclination to be engaged with these folks in any way or at any level, even to point out how wrong they are. Somebody--maybe it was Churchill--said that you should never fight in the mud with a pig because you both get dirty and the pig enjoys it.

Anyway, what kind of conversation is it where you spent an hour crafting and writing an argument with facts and inferences and conclusions, and the response is basically, "YOU ROTTEN *&(^%$()(_)(*&&^^^^%%$$!!@@#!!!"

My solution is simple. I just set up filters that automatically trash all e-mail that could possibly be from or about people who behave like that, and I don't read the message boards where they post, ever again. If group moderators won't keep things civil by weeding out the slander and profanity, then bye-bye. That's my policy.

So, the bad thing about the internet is that it has too many people who abuse it. The good thing is you can make them disappear.

Legislative update
I checked Lexis yesterday and I noted that the Arizona anti-foreclosure bill passed the House, where it originated, and is now in the Senate having been refered to a couple of committees. This is H.B. 2402. It passed the house with a three year waiting period rather than the original seven years, and it requires that the home be sold for "fair market value." There are lots of questions about how this bill would work in practice and perhaps the Senate committees will get into that.

In California, I see two foreclosure-related bills. One is AB 1527, having to do with "actual notice" before foreclosure, and the other is AB 1682, that would make a number of changes in foreclosure and would require that non-judicial foreclosure be for the assessed value of the property.

In Florida, there are two competing bills. One is SB 2984, emanating from the Jeb Bush-appointed HOA Task Force, and the other is H.B. 1223, from Rep. Robaina, chair of the House Select Committee on Condominium Governance. The Task Force bill would require mediation for election and recall disputes and make other procedural changes. The Robaina bill is the ombudsman proposal. It will be interesting to see how these things play out.

Memo to Scotland: Here is how we do it in the USA.Gun toters halt robbery attempts
Note that these are two separate self-defense situations in the Detroit area. The piece is from the Detroit Free Press.
-------------------------
"Farmington Hills police said a 32-year-old Novi woman, who had a permit to carry a small-caliber pistol in her purse, stopped a man armed with a 9mm semiautomatic handgun from taking her $40,000 diamond ring and Rolex watch.

"Police Chief William Dwyer said the woman, whose name was not released, was in the parking lot of a business at 12 Mile and Drake, where she worked in the accounting department, when a man confronted her Friday morning.

"When he came within about 10 feet, Dwyer said, the woman calmly pulled the gun out of her purse and pointed it at the man -- identified as Carl Walker, 21, of Detroit.

"Walker did not draw his weapon, police said. Instead, he ran to a nearby car and the woman called 911. Police later arrested Walker and recovered a pistol. Two companions, Monique Bell, 26, of Detroit and Daphne Patterson, 28, of Southfield, also were arrested."
...
" Two other men -- a father-son team accused of trying to rob a 65-year-old retiree -- are expected to be arraigned this morning in St. Clair County.

"The men already had robbed one woman before being stopped by the home owner's bullet on Friday, police said.

"The Ft. Gratiot Township home owner answered his door on Keewahdin Road about 8 p.m. and was accosted by a 20-year-old Worth Township man armed with a handgun. When the young man's attention was diverted, police said the home owner grabbed his own .38-caliber handgun and fired.

"'The round ended up coming out of his buttocks, so I'm sure he'll be thinking about that old man every time he sits down for a while,' said Detective Lt. Mike Bloomfield of the St. Clair County Sheriff's Department."
--------------------
See, this is what I call privatization. You take the law enforcement function and you break it down to the individual level, where the individual citizen is trusted with having enough good sense to use force only when and to the extent that it is warranted. Contrast that with the Scottish/British approach, where you have to depend entirely on the government. In other words, self-defense is fully socialized. If they aren't around when you need them, and of course they hardly ever are because crooks don't generally commit robberies in front of police officers, you are supposed to...do what, exactly? Curl up in the fetal position and beg the criminals for mercy?

Man Who Killed Armed Intruder Jailed Eight Years

This amazing article is from The Daily Scotsman:

"Carl Lindsay, 25, answered a knock at his door in Salford, Greater Manchester, to find four men armed with a gun. When the gang tried to rob him he grabbed a samurai sword and stabbed one of them, 37-year-old Stephen Swindells, four times. Mr Swindells, of Salford, was later found collapsed in an alley and died in hospital.

"Lindsay, of Walkden, was found guilty of manslaughter following a three-week trial at Manchester Crown Court. He was sentenced to eight years’ imprisonment."
------------
Riiiiiiiiiiiiight...I guess those hoary notions of "self-defense" have gone the way of the old home-is-your-castle thing...at least, in Scotland. I'd say William Wallace must be spinning like a top. Maybe if Mr. Lindsay had used a Claymore instead of a samurai sword it would have been a lesser sentence.

My ears are burning...somebody must be talking about me.
Over at "HOAs", Mika Sadai's Yahoo group that owner activists frequent, a min-debate about me popped up amid the serious discussions they are having on the legislative front--(and by the way, if you haven't checked out that group, along with George Staropoli's "hoanet" you ought to).

The issue was that I practiced law for ten years, including six years in civil litigation when I did mostly HOA representation. Does that mean that my views on the subject--in this case my opinion that HOAs need to have some recourse to foreclose--are suspect?

This is an interesting predicament when you think about it. If you have never worked in the industry you are morally pure, but on the other hand you don't really know what's going on behind the curtain. If you have done legal work for associations, you are tainted forever, but you have a body of knowledge that can only be acquired by experience. This is similar to the issue that broke up the friendship between Sartre and Camus. Sartre believed philosophers should get their hands dirty by being involved in practical politics (which in that case meant revolution), and Camus said he would stick to writing. So--which is better--the knowledge you gain from actual involvement with an imperfect system, or the moral purity you keep by never doing the work? Hard to say.

As for me, I think I was lucky to have the best of both worlds. I stumbled into HOA practice from the construction defect side, and I never did any covenant enforcement or collections work, and never wanted to. I was a litigator, better known as a trial attorney. My job was representing the association against the developer or against an insurance company, or some variation on that theme.

But of course from doing this, I learned a lot about how associations work and how lawyers do covenant drafting and enforcement along with association general counsel work. I certainly began to see very quickly how the cards are stacked against the owners. I noticed among other things how the lawyer works with the BOD, and how the owners are shut out of the loop most of the time, and how a great deal depends on how the lawyer views the owners. Some attorneys want to keep the owners informed and supportive, but others think the mushroom theory is the way to go (keep them in the dark and give them just enough BS to keep them alive). It became obvious to me that the best lawyers understand that it is much better in the long run to keep the owners involved.

So I'd say that I had the best of both worlds in that I learned about this industry without having to go up against individual owners. I saw good board members and control-freak nut cases, and saw the same kind of variation with the owners--some were terrific, others were...not. Good and bad lawyers, board members, and owners. Kind of like people in general. The problem is an unbalanced system that has little or no protection for owners against the misbehavior of lawyers and board members, while there are all kinds of checks against owners getting away with anything improper.

I think this experience did influence my views on many things. As for foreclosure, to me it is an extremely harsh remedy that should only be available as a last resort and with greatly increased limitations and protections for the owner. I want to stop these foreclosures for $250 and $2500 in attorney fees, and I think nonjudicial foreclosure should be legally prohibited.

But to take away the foreclosure power completely is the wrong way to go, it seems to me. Banning HOA foreclosure is premised on the illusion that there is somebody else to pay the bills, some pocketbook or cash trove somewhere that will pay the pool cleaning company and resurface the streets. But there isn't. There is no getting around the fact that when you buy into an HOA you take on a major financial responsibility. If the association doesn't pay its bills, then IT will become the debtor, and IT will be getting attacked by collection agencies.

The way things are shaping up I think even with foreclosure power many more associations are going to be in wobbly shape in the near future. If associations can't keep the flow of assessments coming in because people feel they have no teeth, it will be that much harder.

And if you are pro-owner, if you want owners to be happy, you don't want their association to be in financial trouble. I just can't see how increasing the financial fragility of HOAs is good for owners, and if somebody can, please explain it to me. The biggest problem potentially facing owners--one I think the owner groups should think about fixing legislatively--is what I call the "bottomless pit" liability of individual owners for corporate debts and liabilities. The law is shaping up so that the owners are going to be stuck with the bills for BOD-generated liabilities, non-dischargable in corporate bankruptcy--(see Le Parc and Oak Park Calabasas). That would include debts and tort judgements. This is a frightening prospect indeed. Jim Lingl, an attorney who does a lot of legislative work in California, is trying to get a bill passed that would protect owners against this sort of thing. If you have a story to tell him about such an incident, send him an e-mail at lingllaw@aol.com

Big push for 'reform' sidesteps real issues

Here is attorney Scott Carpenter's counterpoint to the issues Pat Haruff addresses in the article linked below. Carpenter is a big supporter of HOA foreclosure powers.

Time to rein in folks who prey and profit

This is an article by Arizona's CHORE activist Pat Haruff about HB 2402, a bill in the state legislature that would restrict HOA ability to foreclose on liens.

baltimoresun.com - Barking loudly as CA watchdog is alliance's goal

Columbia is one of the largest planned communities in America and has had a lot of good press over the years, but it was recently the subject of a series of newspaper articles that mainly focused on problems.

Another Case of Guilt by Association
More HOA violence, this time with a 78 year old woman as the victim. Here's a passage from the article by columnist Dana Parsons"

"When people sense that the person lording power over them is being unreasonable, the resentments and frustrations build. Sometimes, they explode with disastrous consequences. Homeowners association board members can satisfy themselves simply by saying that violence is the fault of the perpetrator. It is, to be sure. But if only for their own preservation, why not take a moment and ask why that violence sometimes comes looking for them."

That's a surprisingly unsympathetic take on a man allegedly thumping an elderly woman, I'd say. Sounds a bit like the old "She had it coming" philosophy on rape. I wonder how the victim feels, reading that in the Los Angeles Times. Similar sentiments are popping up in owner activist newsgroups, with some people calling her vulgar names. They don't know her, of course--they are just slandering her because she is an HOA director and that's enough.

So, do some people want an open season on BOD members?

Interlude...Night of the Living Lobsters...
Frozen Lobsters Brought Back To Life

Jay Lindsay, Associated Press
Thursday, March 18, 2004

BOSTON -- Call it cryonics for crustaceans. A Connecticut company says its frozen lobsters sometimes come back to life when thawed.

Trufresh began freezing lobsters with a technique it used for years on salmon after an offhand suggestion by some workers. It found that some lobsters revived after their subzero sojourns.

Now, Trufresh is looking for partners to begin selling the lobsters commercially. The company was scheduled to attend the International Boston Seafood Show, which began Sunday, armed with video showing two undead lobsters squirming around after being frozen stiff in a minus-40 degree chemical brine for several minutes.

Read it for yourself...and fear the lobster tank...

Oh, and in the story below, did you notice where they were meeting?
"...in the community room at Queen of Peace Catholic Church."

Way to go, folks.

"Meeting turns violent; two arrested"--down in sunny Florida, where people retire to enjoy a life of serenity...I have highlighted a couple of the juicy details and taken out people's names, replacing them with letters. Kafka-like of me, don't you think?

By Lee Helscel © South Marion Citizen
03/19/2004
(what follows is the first few graphs of the story--link to the whole thing follows)
A meeting of approximately 135 homeowners to discuss issues they have with the developer of Cherrywood Estates and to explore forming a homeowners association ended abruptly March 11. Before it ended tempers flared, a man was given the bum's rush and two men were arrested by Marion County Sheriff's deputies.
About 35 minutes into the 6 p.m. meeting, one of the organizers, C, spotted the developer's field superintendent, H, in the audience. At the time, C had finished speaking, and co-organizer of the meeting, B, was at the podium in the community room at Queen of Peace Catholic Church.

C walked to the back of the room and asked H to leave. When the non-Cherrywood resident declined to go, C and the crowd gathering around them began demanding that he leave, with shouts of, "You don't belong here."

When residents discovered C's tape recorder on the table, the men around the 41-year-old man began to get angry and demanding that he leave. At least one man placed his hands briefly around H's neck.

H, who remained passive during the incident, later said two men, at different times, grabbed him around the neck with their hands. A Sheriff's report notes a one-and-a-half-inch abrasion on the left side of H's neck was consistent with being grabbed around the neck.

During the scuffle a man identified as T allegedly picked up a chair, as if to hit H with it, the report charged. There were two or three persons between H and the man with the chair, and did it didn't appear as if the man was able to swing the impromptu weapon. He set it was set aside.

H's tape recorder was taken from him and the half-dozen men around him were becoming more vocal and adamant about getting the perceived intruder out the meeting. Collectively they got him out of his chair as a woman, identified as K, positioned herself between H and the crowd as he made his way to the door.
The Cyber Citizens for Justice web site has the whole story--things definitely got out of hand.

...and still more on foreclosure...
I have received numerous e-mails from people about my foreclosure posts. Here's an answer I drafted this morning to one of them, from an Arizona resident who informed me that the legislative proposal for a 7 year waiting period to foreclose has been cut to 3 years. She is against it and she's right--it's still a bad idea. Here's why:

---as I said this morning to my correspondent from AZ...

There certainly need to be limits on the power of foreclosure, but they should not be arbitrary or overly burdensome. This three year time limit is both. This time limit proposal puts the burden for correction on the homeowners who pay their assessments. That is just plain ridiculous, because they are not the problem. The highly-publicized disastrous examples that spawned this legislative reaction are the result of procedures that allow for abuse. The problem is not that HOAs foreclose too soon--the problem is that there are lawyers who abuse the process. I would prefer a monetary limit rather than a time limit, along with other procedural reforms (see below).

This 3 year limit would be very hard on the conscientious owners who pay, and especially in the small developments (fewer than 100 units) that form the bulk of recent development. For small associations with few members, waiting three years means that for the entire term, those who pay are carrying on their backs those who don't. That is a lot to ask of people who are, after all, usually of the same general economic status as the non-payer.

And if there is an emergency that requires a special assessment, the burden gets much worse--not only do they have to come up with a big lump sum for their own unit, but they have to pay a share of their neighbor's as well. The "snowballing" or "tipping" or "critical mass" nature of this is obvious--it will increase the likelihood that more and more people will go into arrears, increasing the burden on those who remain, etc., until the whole financial capacity of the association collapses.

The timing of these proposals couldn't be worse. This is absolutely the worst possible time to start limiting the powers of associations to meet their financial obligations. Here's why.

As association property ages, the need for major repairs becomes a certainty--it is literally just a matter of time, and the clock is ticking on an enormous amount of common interest housing constructed in the 1980s and 1990s. There are usually insufficient reserves to pay for these major repairs. That means special assessments and borrowing become necessary. The biggest "sleeper" issue facing common interest housing is unlimited "bottomless pit" financial liability for major repairs that would fall ultimately on the individual owner--I repeat: on the individual owner.

The Le Parc case and the Oak Park Calabasas case in California are great examples of this, where association boards incurred multi-million dollar liabilities (in the form of contract and tort judgments) in disputes with contractors over major repairs, and then the HOA corporation files for bankruptcy because they can't pay. The bankruptcy judges said that the creditors can proceed directly against the assets of the individual owners for the liabilities of the corporation.

This is potentially a huge problem. If associations can't foreclose for three years on those who don't pay, the ultimate burden falls on those who are paying--without any limit, because these massive association liabilities can't be discharged in bankruptcy.

Who would want to buy a unit of common interest housing knowing all this? Knowing that you are not only agreeing to limits on the use of your property, and to pay your share of assessments--but to pay a share of your neighbor's as well, and that it could end up costing you everything you have? Of all the times to impair associations' financial capabilities, this is absolutely the worst. What next? A law mandating that all these possible financial obligations--for neighbors who don't pay, and for association culpability--be disclosed to prospective purchasers? Is the intent to kill the market completely? I know that's what many HOA activists want, but does the legislature want that, too?

The other main reason legislative blocking of foreclosures is a bad idea has to do with the banking and mortgage insurance businesses. These proposals would make common interest housing a riskier investment for mortage lenders and mortgage insurers, because the association's ability to maintain the common property (which is of course part of the value of the mortgage) would be greatly reduced. Most associations run on a shoestring as it is. Increased risk means increased costs for the owners.

The real problem is not the existence of the foreclosure power--it is abuse of the process by some unscrupulous attorneys who can't get people into foreclosure fast enough.

I think a better set of reforms would include:
1. Eliminating nonjudicial foreclosure, leaving only judicial procedures; it is in the NJF process that most of the abuses have been uncovered. Judicial supervision would prevent most of this. Taking people's homes away is serious business, and it should be approved by a judge before it happens.
2. Limit attorney fees, especially for trivial, automated tasks like sending a computer generated letter
3. Allow foreclosure for the amount of the assessments and late charges only, not the attorney fees. Let the attorney go after personal assets. The justification for allowing foreclosure is to keep the association solvent, not to make the lawyer rich.
4. Monetary limits, rather than time limits, to prevent foreclosure for tiny amounts of assessments and thousands in attorney fees. What should the amount be? I would think at least $1000 in assessments should be at stake, but that would need to be talked about.
5. Procedural restrictions to guarantee that this is a real, good-faith, non-payment situation and not a ripoff, such as requiring the HOA to prove up due diligence in offering a payment plan before foreclosing, and proving that it is not one of these cases where the delinquent owner was turned away when he/she tried to pay because the check was off by fifty cents or some such nonsense.

I could go on, but the point is that foreclosure should be reformed--just not with this time limit approach. The problem is a small number of predatory lawyers who abuse the process, and sleepwalking boards of directors who do whatever the lawyer tells them to do. Fix that problem. Change the procedures to make them fair.

Beware Dihydrogen Monoxide!
City falls victim to Internet hoax, considers banning items made with water
The Associated Press
Last Updated 3:40 a.m. PST Sunday, March 14, 2004
ALISO VIEJO, Calif. (AP) - City officials were so concerned about the potentially dangerous properties of dihydrogen monoxide that they considered banning foam cups after they learned the chemical was used in their production.
Then they learned that dihydrogen monoxide - H2O for short - is the scientific term for water.

Isn't Aliso Viejo in Orange County, CA, ground zero for CID housing?

More on foreclosure
Some people in the anti-HOA activist ranks are angry because I said yesterday that, although I think nonjudicial foreclosure should be banned, associations need to have recourse to foreclosure to collect unpaid assessments (but not fines--that's a different issue). That means judicial foreclosure, where the association has to file a lawsuit and a judge makes the final decision after hearing from both sides. I'm talking about a last resort, with procedural protections against abuse and with limits on attorney fees.

Some of these anti-HOA activist comments make good points about issues like homestead protection, how long should statutes mandate before foreclosure is allowed, and so forth. All good points. They have answers, and in many states such protections and time limits already exist. The problem with NJF is that there is no lawsuit and no judge and no protections--it is a draconian practice that should be banned because it can't be fixed to make it fair.

But the loudest complainers, as usual, show the same characteristics. One is the typical tone--uncivil rage, peppered with insults and vulgarity. Another is the refusal to deal with inconvenient facts or arguments, better known as "reality." A third is the lack of any alternative that would allow HOAs to continue functioning, and advocating instead for positions that would almost certainly destroy common interest housing and leave millions of people in major financial trouble. That, of course, is the hidden agenda of some of these folks.

Here are some of the inconvenient facts: (1) The vast majority of associations are under-reserved already. (2) As housing built during the 1980s and 1990s ages, the need to maintain, repair, and replace commonly owned property is increasing every day, leading to major special assessments (see below) all over the nation. (3) People typically spend as much on a house as they can possibly qualify for, which means more house than they can really afford, so they are often house-poor. (4) We are in a soft employment market that could last for years, in which white collar workers are losing jobs and staying unemployed longer than before. (5) When money gets tight, the first homeowner expense people try to shirk is their HOA assessments. If push comes to shove, they will make their house payment and their property tax payment and their homeowner insurance payment (both of the latter often escrowed into their house payment anyway), and not pay their HOA assessment. (6) When people don't pay their assessments, the rest of the owners get stuck paying in their stead. That makes the non-payers "free riders" on the backs of those who are paying. (7) Real property deteriorates quickly if it isn't maintained--the cost of necessary repair snowballs fast when water starts coming in.

All the above is basically simple math and common sense, and everybody who knows anything about common interest housing knows it is all true. Property and debt collection laws vary from state to state, but all I can say is I don't think associations can remain solvent if all they can do is go after people's wages and personal assets--cars, boats, bank accounts, and so forth. Like it or not, there are people who get very good at not owning things that can be attached by judgment creditors. HOAs would end up competing with all the other creditors--credit card companies, tax collectors, etc.--for the money they need to fix the roof this month. Net result: the existing owners bear the burden for the non-payers.

That is a completely unsustainable situation. The owners who pay would go deeper in the hole covering for those who didn't, and then more of them would stop paying the increased assessments, increasing the burden on those who still do, who would then stop. This is what we call a "tipping" or "critical mass" phenomenon, and you can cound on it happening.

So, knowing all this, why do people say that associations should not be allowed to foreclose, no matter how far in arrears an owner goes?

Simple. The obvious intent some people have is to create a legal environment in which HOA owners can ignore all the obligations that are contained in their governing documents, tell their board to sod off, and live exactly as they would if they had bought conventional single family housing. No assessments to pay, no rules to follow. They would make association obligations voluntary instead of mandatory. If you have no commonly owned property to maintain, that might be just fine with most owners and that's why some associations with no common property have just sort of disappeared. But if you do have common property, it's not fine at all.

That situation would, of course, leave the entire burden of paying assessments and following rules and maintaining commonly owned property to those who voluntarily chose to do so. They would carry the burden--in this case, the assessment burden--for all the unit owners. That would never work, for the reasons described above. Soon nobody would pay or obey because it would be economically irrational to do so.

I've always been against associations having dictatorial power. I'm also against going to the opposite extreme and leaving them powerless. If we go from banana republics to failed states, most people won't like the latter any better than the former, and somebody will have to pick up the pieces of failed CIDs. Who will that be?

But maybe that is exactly what will happen. Maybe this will be the year when associations take their biggest hit in state legislatures. It is an election year, and legislators have proven themselves to be capable of most anything at such times. There have been so many outrageous and highly publicized abuses of the foreclosure power by unscrupulous lawyers that there may well be a kind of legislative over-reaction. I have been warning the industry about this sort of reaction for years, with very limited success, but it's not something I want to be right about at long last, because a lot of ordinary HOA residents may be the ones to suffer.

I don't want to be right about assocation abuses leading to bad reforms. I also don't want to be right about what those reforms will bring about.

How about "Lexusville"?
L.A. Considers Selling Its Name
Friday, March 12, 2004

LOS ANGELES — It’s home to fun, sun and Hollywood glamour -- and now the city of Los Angeles may be lending its name and image to the highest bidder.

Leaders of the cash-strapped city are considering selling the naming rights for Los Angeles to a variety of products. Coke or Pepsi could be the city’s official soft drink, for instance, and Lexus or BMW the official automobile.

Lawmakers say the choice for a budget-crunched city like Los Angeles comes down to raising taxes or finding other ways of raising necessary funds. New York and San Diego are already in the sponsorship game and are making millions.
.......
Read the rest so you won't think I'm making this up.

The plain truth about HOA foreclosures...
Homeowner Association Foreclosures: California Senate Housing Committee HOMEOWNER ASSOCIATION FORECLOSURE HEARINGS


(My comments on foreclosure follow this is except from a BACKGROUND PAPER on
"HOMEOWNER ASSOCIATION FORECLOSURE: DOES THE PUNISHMENT FIT THE OFFENSE?"
by Mark Stivers - Chief Consultant - California Senate Housing & Community Development
-----------------excerpt begins----------
...
Statistics show that homeowner associations foreclose on members homes for relatively small amounts of delinquent assessments in comparison to non-CID creditors. A 2001 study done by Sentinel Fair Housing conducted an evaluation of foreclosures in Alameda, Contra Costa, San Mateo, Santa Clara and Sacramento counties. The analysis reported that median amount owed in homeowner association foreclosures was $2,557; the median amount in all other cases was $190,000. The recent example of the Copperopolis family who lost their home for $120 could be seen as a extreme example but it demonstrates the legal authority that associations posses to foreclose for negligible amounts.

Associations primarily use non-judicial foreclosure which does not require review by a court. The California Civil Code stipulates that non-judicial foreclosure must be afforded basic due process and must be conducted "with fairness, openness and scrupulous integrity and the trustee must exercise sound discretion to protect the rights of all interested parties and obtain the best possible price." Several legal cases have asserted that the courts will scrutinize all non-judicial foreclosure sales for fairness and for a gross inadequacy of price . Although there are existing legal protections for the homeowner, in reality it is difficult for individual property owners to challenge the actions of the homeowner associations through the legal process after the fact.

Individuals who lose their home via the CID non-judicial foreclosure process often lose a significant amount of their equity due to the small amounts at which the homes are sold in auction. The minimum bid at sale is the amount owed to the homeowners association, regardless of how much the home is worth. In contrast, the judicial foreclosure process mandates that the minimum bid at foreclosure sale cover the amount owed, any junior liens, and the homestead amount which ranges from $50,000 to $150,000.

Alternatives to Non-Judicial Foreclosure

CID non-judicial foreclosures are unique in comparison to the process that most creditors must follow to collect on debts. Most creditors must go through the judicial process in a attempt to garner a judgement; once a judgement is obtained the court has the sole authority to stipulate the appropriate recourse to collect. Claims that are less than $5,000 could be handled in small claims courts which alleviates many of the legal and monetary obstacles to using the judicial process. Judgements can then be enforced through wage garnishments, liens on property and, ultimately, by judicial foreclosure.

In a judicial foreclosure the lender must file a lawsuit in the superior court of the county in which the property is located. The property owner must be served with a copy of the summons and complaint for foreclosure; a judicial foreclosure can take up to three years to complete. Foreclosure on a property under these provisions is subject to the homestead exemption, which protects the homeowner's equity in the property. The homestead exemption equals $50,000 for an individual, $75,000 for a family, or $150,000 for a person who is a senior or disabled.
...
----------------excerpt ends--------------
My comments:
So, what should be done? In my opinions, HOAs should not be allowed to use nonjudicial foreclosure. The practice is being abused by a small number of collections attorneys who have invaded the field of community association law but who in reality wouldn't recognize "community" if it walked up and bit them on the butt. These folks are community destroyers--the HOA version of divorce lawyers. Their goal is foreclosure, not collection of delinquent assessments.

But I do believe that HOAs need to have recourse to judicial foreclosure as a last resort. Associations need to get paid. They must be able to defend themselves against chronic deadbeats, or disaster will result for those who are paying their assessments as they are forced to carry the load for the free riders. Associations don't have the resources to cushion them for years of non-payment by a significant number of residents.

Leaving associations only with recourse to debtors' personal assets--garnishment, attachment, and so forth--will crush many innocent, dues-paying members, and eventually lead to association insolvency. At least, that's the way it looks to me.

Bad day in Druid Woods...
Condo residents get sticker shock
Druid Woods board assesses owners $7,650

By CHRISTOPHER QUINN
The Atlanta Journal-Constitution
Published on: 02/29/04

Connie Hansard Perry stopped to pick up her mail Christmas Eve and saw a 77-year-old neighbor in Druid Woods condominiums, open letter in hand, sobbing.

Though Perry had a houseful of Christmas guests to attend to, she took time to try to comfort her friend.

Perry herself soon would need comforting. The letter was from the condo association board.

It said the 140owners in the Decatur complex owed the association $7,650 each. The association needed the money to repair water damage to one of five buildings, and owners had until the end of January to pay.

(Thanks to Shu Bartholomew for sending this along)

Disneyland becomes a gated community? Say it ain't so, Mickey!
Security Gates Going Up at Disneyland

By Associated Press

March 10, 2004, 6:29 PM EST

ANAHEIM, Calif. -- Reality is coming to Disneyland's fantasy world, in the form of permanent security gates. Bowing to terrorism fears, the Walt Disney Co. plans to build the gates at the Disneyland Resort next fall. The company had resisted security gates around Disneyland and the California Adventure theme park next door, believing the sense of fantasy would be spoiled.
Read the rest.