Pay to Prey: Report on privatization

http://www.prwatch.org/news/2014/10/12620/pay-to-prey-governors-facilitate-the-predatory-outsourcing-of-americas-public-services

This is a report on the way Republican governors  have allowed corporations to profit from privatization deals at the expense of the public and the people who are supposed to be receiving the services.  Some of the stories are pretty lurid.  From  the report:

"Outsourcing of public services is a big business. Some experts estimate that $1 trillion out of the $6 trillion the federal government, together with state and local governments, spend annually are handed over to private contractors. In 2010, an electoral landslide ushered in a new breed of governors. Aided and abetted by corporate-funded legislative and lobbying groups, such as the American Legislative Exchange Counsel (ALEC), these governors pushed the envelope of outsourcing and privatization, selling public services to for-profit firms with their powerful political lobbies and related campaign contributions. In this process, transparency and accountability are lost and the public loses its ability to influence decision makers through normal democratic channels. Shared prosperity also suffers when good middle class jobs are lost to low-road, low-wage employers. In states across the country, schools, health care, prisons, prison food, water services, road services, state liquor sales, state economic development authorities, legal services, and even child support services were outsourced to private, for-profit companies. While the governors spoke of tight budgets and cost savings, a pattern emerged of influential corporate lobbyists and deep-pocketed campaign contributors In this effort to shrink government and sell off the prosperous parts to private interests, the winners are large corporations with a phalanx of lobbyists and campaign coffers big enough to buy political influence. All too often, taxpayers find themselves on the losing side."

The Making of Ferguson, MO

http://www.epi.org/publication/making-ferguson/


"In August 2014, a Ferguson, Missouri, policeman shot and killed an unarmed black teenager. Michael Brown’s death and the resulting protests and racial tension brought considerable attention to that town. Observers who had not been looking closely at our evolving demographic patterns were surprised to see ghetto conditions we had come to associate with inner cities now duplicated in a formerly white suburban community: racially segregated neighborhoods with high poverty and unemployment, poor student achievement in overwhelmingly black schools, oppressive policing, abandoned homes, and community powerlessness."

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This is a detailed and balanced account of how Ferguson became what it is today. Public  policies, real estate industry practices, and other institutional factors contributed to the situation.  My colleague Dennis Judd's article about segregative practices  is cited. 

SFR Investments v. US Bank

The Nevada Supreme court has ruled that:

"NRS 116.3116 gives a homeowners' association (HOA) a 
superpriority lien on an individual homeowner's property for up to nine 
months of unpaid HOA dues. With limited exceptions, this lien is "prior to 
all other liens and encumbrances" on the homeowner's property, even a 
first deed of trust recorded before the dues became delinquent. NRS 
116.3116(2). We must decide whether this is a true priority lien such that 
its foreclosure extinguishes a first deed of trust on the property and, if so, 
whether it can be foreclosed nonjudicially. We answer both questions in 
the affirmative and therefore reverse."

The result is that an investment company bought a house for peanuts at an HOA foreclosure sale, and the sale wiped out the first mortgage on a house worth hundreds of thousands of dollars.  Wow.  I have placed the full opinion on mckenzie-law.wikispaces.com for anybody to download.

Construction company builds dream home--on the wrong lot

http://www.dailymail.co.uk/news/article-2793069/couple-outraged-construction-company-built-680-000-oceanside-dream-home-wrong-lot.html

I've heard of banks foreclosing on the wrong house, but this  is a first.

Bad news for builders?

http://finance.yahoo.com/blogs/talking-numbers/this-chart-spells-trouble-for-home-builders-215720049.html

Thanks to Fred Pilot for this link to a financial story about an exhange traded fund (ETF) that includes the home building industry.  Bad news for builders?
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'They may be called home builders,but this year their stocks are portfolio wreckers.Those who had the misfortune of buying the ETF that tracks the home builders (trading under the ticker symbol XHB) at the beginning of the year are in the red by 14 percent.The XHB is now trading at its lowest levels this year and according to the charts, it could get a lot worse."

New city policy in Whitefish prohibits gated communities | Missoula Local News - NBCMontana.com

New city policy in Whitefish prohibits gated communities | Missoula Local News - NBCMontana.com: City leaders say gated communities just don’t match the city’s vision for growth.

There are currently two gated communities. One of them, Grouse Mountain Estates, wants to add more gates. They currently have two gates inside the subdivision and want to expand with more gates at the front. It would eliminate public traffic to the roads.
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Gates are for ranches, not communities.

Out of control federal deficit? Not so much.

Here are the facts from the Congressional Budget Office on the federal budget deficit that every Republican in America says is spiraling out of control: 

"Relative to the size of the economy, that deficit—at an estimated 2.8 percent of gross domestic product (GDP)—was slightly below the average experienced over the past 40 years, and 2014 was the fifth consecutive year in which the deficit declined as a percentage of GDP since peaking at 9.8 percent in 2009."
https://www.cbo.gov/publication/49450

Fired doorman shoots property manager

http://www.palmbeachdailynews.com/news/news/local/va-hospital-called-police-on-condominium-shooting-/nhcRf/?__federated=1

Seems that the property manager fired him as doorman.

"Police apprehended the man who allegedly shot a Palm Beach property manager in the head Friday morning after the suspect went to the VA Medical Center Hospital in Riviera Beach for medical treatment, Public Safety Director Kirk Blouin said Sunday."

Florida Couple Keeps Statues of Jesus, Virgin Mary on Property Despite Threat of Legal Action by HOA

Florida Couple Keeps Statues of Jesus, Virgin Mary on Property Despite Threat of Legal Action by HOA: A couple in Florida will be allowed to keep statues of Jesus Christ and the Virgin Mary on their property after initially being told by a homeowners' association that they could not.

Enock and Ines Berluche of Kissimmee will not have to remove the statues, after being told by the Shingle Creek Reserve at the Oaks Homeowners' Association that they had to do so.

The Berluches were given legal help by the Orlando-based conservative law firm the Liberty Counsel, which was founded by Mat Staver.

Why the shocking growth of economic inequality in the US is not a big political issue

http://www.truthdig.com/report/item/why_economic_inequality_is_not_a_bigger_political_issue_20141003


Because, says David Sirota, Americans have no idea how huge the gap really is, and that makes the Democratic Party  afraid to use this as an issue in the 2014 election.  But the way I see it, this timidity is what leaves the Democratic base dispirited, and that leads to low turnout, and that means a repeat of 2010. Republicans aren't afraid to rally their base, but Democrats are.

"If critics of income inequality are wondering why the growing gap between rich and poor hasn’t been a more potent political issue in the upcoming elections, a new study offers some answers: Americans grossly underestimate this inequality. That’s one of the key findings of a survey showing the gap between CEO and average worker pay in America is more than 10 times larger than the typical American perceives. In the report, Harvard University and Chulalongkorn University researchers analyzed survey data from 40 countries about perceptions of pay gaps between rich and poor. In every country, respondents underestimated the size of the gap between CEO and average worker pay. In the United States, for example, the researchers found the median American respondent estimated that the ratio of CEO to worker income is about 30-to-1. In reality, the gap is more than 350-to-1."

"The country simply can't go on like this"

http://www.esquire.com/blogs/politics/The_Man_With_The_Disease

From Charles Pierce, writing about the ebola fear-mongering by right wingers, in which science and medical opinion are simply ignored:

"The country simply cannot go on this way, with one of our two political parties completely insane, and with a counter-cultural universe that claims the right to promulgate its own science as equal to the science produced by actual scientists, and with this dangerous lunacy treated as legitimate by powerful people who ought to know better. As I once wrote, it doesn't matter how many people vote for the anti-gravity party, you still can't flap your arms and fly to the moon. A dangerous disease is not a matter of debate. Your profitable fantasy and the reality of the disease do not deserve an equal place in the discussion of what we as a society will do about the disease. The response is going to have to be precise and empirical. It is going to have to be impatient with cant, and immune to the delusions on which demented ideology feeds. And, most important of all, we are going to have to trust each other, and we are going to have to trust our government, which is the political manifestation of all of us, no matter what 30 years of Reaganite heresy has taught us. We are going to have to trust ourselves as individual citizens, and we are going to have to trust ourselves as partners in the creative act of self-government. I am afraid we will not, because there is one side of our politics who will stand in the way, and another side of our politics that is too frightened or too polite to call dangerous nonsense to account, and to shun the people who are promoting it. And that is what scares me the most about the man in Texas with the disease."

Nevada high court makes key ruling on HOA liens | WashingtonExaminer.com

Nevada high court makes key ruling on HOA liens | WashingtonExaminer.com: LAS VEGAS (AP) — The Nevada Supreme Court has ruled that a lien held by a homeowners association can override a deed of trust involving a first mortgage on the property.

Real estate investors in Las Vegas who have been buying foreclosed property at bargain prices claimed a victory in the ruling on Thursday.

The state Supreme Court overturned an earlier Clark County District Court decision and ruled in favor of SFR Investments Pool 1, the Las Vegas Review-Journal reported (http://tinyurl.com/pupczsg).

Homeowners associations can place liens on properties within their communities for unpaid fees. Unpaid association dues land in a super-priority lien that must be paid off first when a foreclosed home is sold.

Ayn Rand-style libertarian paradise fails to produce bliss

http://www.salon.com/2014/09/16/ayn_rands_capitalist_paradise_lost_the_inside_story_of_a_libertarian_scam_partner/

Well, I'm just shocked--shocked, I tell you--to hear that Galt's Gulch didn't pan out.
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"In Rand’s novel the great, throbbing “motor of the world” (it’s made of executives, remember?) retreats to an Atlantis-like idyll known as “Galt’s Gulch.” Without their ingenuity and drive the nation descends into chaos, leading many long pages later to their triumphant return and anointment as leaders of a new libertarian order. Which gets us to the fraud charges now swirling around a venture called “Galt’s Gulch of Chile.” Its website is currently down, but it’s still being promoted as a real-world retreat for the world’s movers and shakers. “Yes, you read that right,” the organizer chirps cheerily. “Those who become one of GGC’s Founders will be paid back … within three years of the consummation of their Founders Club participation (please contact GGC for the fine print and T&Cs). In what should be an unsurprising outcome, it didn’t turn out very well.  That news comes (via Metafilter and Gawker) from a blogger named Wendy McElroy, who writes that she bought some property in Galt’s Gulch with her husband and then learned that it never had legal rights to the property in the first place. A visit to Chile revealed that many of the area’s local vendors had also been defrauded by the Galtians."

Illinois Supreme Court: Contract? What contract?

Spanish Court Two Condominium Association v. Carlson:  Spanish Two sued a unit owner for failure to pay assessments. In Illinois, condo associations can do that in landlord-tenant court, and evict the owner without needing to foreclose. The owner alleged an affirmative defense of failure to maintain and repair the common elements and asked for a set-off, something that tenants do in landlord-tenant disputes over rent. The trial court struck the defense, but the Appellate Court reversed, saying unit owners could avail themselves of the same failure to maintain defense against condo associations, just as tenants do against landlords.  The Illinois Supreme Court reversed the Appellate Court, saying the trial court was right--

"Where a condominium association brought a forcible entry and detainer action against a unit owner for failure to pay assessments, the affirmative defense of alleged failure to repair and maintain common areas was properly stricken as not germane to that summary statutory proceeding."

http://www.state.il.us/court/Opinions/SupremeCourt/2014/115342.pdf

It is interesting to read the language where the Supreme Court dances around the claim that the association-unit owner relationship is based on contract, something we hear all the time from advocates of strictly enforcing the DD&RS:  It's a contract, they say, and if you didn't like it you shouldn't have entered into it.  But now the shoe is on the other foot--an owner wants the rights that go with a contract:  the party claiming back assessments hasn't lived up to its part of the bargain, so the owner, like a tenant, should have the benefit of that breach.  But no, the court says, now that contract language isn't to be taken so literally.  You see, it's more accurate to say that it is largely based on statute.  From the IL SC opinion:

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Spanish Court maintains that the appellate court’s recognition of a nullification defense rests on an ill-fitting analogy, namely, that the association-unit owner relationship is, for purposes of the forcible statute, analogous to the landlord-tenant relationship. See 2012 IL App (2d) 110473, ¶¶ 16, 26, 46. We agree with Spanish Court. 

¶ 20 The relationship between a landlord and tenant is contractual. See generally 24 Ill. L. and Prac. Landlord and Tenant § 1, at 157 (2009). Although aspects of that relationship may be governed by state and local landlord-tenant laws, the relationship is created through the agreement of the parties. When a landlord breaches the terms of the agreement (the lease) by failing, for example, to comply with the implied warranty of habitability, cases have traditionally applied contract remedies, including damages, rescission, reformation, or abatement of rent. Glasoe v. Trinkle, 107 Ill. 2d 1, 15-17 (1985). Cf. Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52, 70 (2006) (“Under general contract principles, a material breach of a contract provision by one party may be grounds for releasing the other party from his contractual obligations.”). 

¶ 21 Although contract principles have sometimes been applied to the relationship between a condominium association and its unit owners based on the condominium’s declaration, bylaws, and rules and regulations (1 Gary A. Poliakoff, The Law of Condominium Operations § 1:23 (1988 and Supp. 2012-13)), the relationship is largely a creature of statute, defined by the provisions of the Condominium Act (765 ILCS 605/1 et seq. (West 2008)). Under that Act, the board of managers, through whom the association of unit owners acts (765 ILCS 605/2(o) (West 2008)), has the duty “[t]o provide for the operation, care, upkeep, maintenance, replacement and improvement of the common elements.” 765 ILCS 605/18.4(a) (West 2008). The Condominium Act also addresses the “[s]haring of expenses” among unit owners, and establishes that: “It shall be the duty of each unit owner *** to pay his proportionate share of the common expenses.” 765 ILCS 605/9(a) (West 2008).2 Although these duties may also be reflected in the condominium declaration and bylaws, as they are in this case, they are imposed by statute and exist independent of the association’s governing documents. Accordingly, a unit owner’s obligation to pay assessments is not akin to a tenant’s purely contractual obligation to pay rent, which may be excused or nullified because the other party failed to perform. 

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More details revealed in Las Vegas HOA fraud case

http://m.reviewjournal.com/news/las-vegas/new-details-revealed-hoa-fraud-case

What this massive fraud reveals is how vulnerable HOAs and condo associations are to being taken over or manipulated into becoming ATMs for fraudsters. Insurance companies were taken to the cleaners. I haven't even tried to list all the embezzlement cases. I have a notebook three inches thick of press clippings reporting them. Then there were the developer and converter frauds.  Here in Chicago at least 200 fraudulent condo conversions shoveled millions of dollars from banks into the pockets of crooks, cost investors a fortune, and victimized  hundreds of tenants who were paying rent to somebody who didn't own the building.  

And all that criminality is in addition to the non-criminal practices of underfunding reserves that  exposes owners to enormous risk, and vendors charging ridiculous fees for doing nothing and locking  associations into terrible adhesion contracts.

Why is it so hard to put all this together and reach the obvious conclusion that the money side of CIDs is not working?  The media have a frame for reporting on the social control conflicts that happen in associations--flags, pets, political signs, religious symbols--but they can't seem to see the pattern when it comes to the enormous financial problems that leave millions of Americans vulnerable to major economic loss.

It makes no sense to put untrained, uncompensated, and often unqualified volunteers in charge of billions of dollars, based on a bogus ideology of privatism.

DURHAM: City threatens to cut off water to apartment complex - WNCN: News, Weather

DURHAM: City threatens to cut off water to apartment complex - WNCN: News, Weather: The president of the homeowners group, Greg Jones, said he learned of the possible disconnection from the city via email. From there, he said, he spoke with the tenants association, which prompted the letter left on doors.

Jones said Bentwood Park started getting behind on payments in December because some of the units' 90 different owners began falling behind in paying their dues, in particular one who owns multiple units.

"I have two small kids in here that go to school every day, and we need water to bathe and to drink," said renter Latoyia Edwards. "They need to find the man that created this problem and make him pay for it, or somebody just has to deal with it."

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Conflicts of interest abound when the HOA becomes a super landlord but doesn't pay the water bill.

Condo president buys car, pays himself, with association funds

http://www.local10.com/news/community-president-buys-car-pays-self-salary-with-neighborhood-money/27853208
"Ed Ryan, a long-time condominium president in Fort Lauderdale, has been violating the law for years by paying himself tens of thousands of dollars -- and even buying himself a car -- out of neighborhood funds, according to state records. In September, the Department of Business and Professional Regulation alleged Ryan was illegally managing the association without a license and issued a cease and desist order to stop him from paying himself after he'd received $45,000 in the first nine months of the year alone. But Ryan, president of Georgian Court North Apartments, hasn't missed a beat, admitting to Local 10 News that he's still paying himself. "
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One of the cool parts about volunteer private government:  having access to all that money!

Bill addresses watering in homeowner associations - SFGate

Bill addresses watering in homeowner associations - SFGate: SACRAMENTO, Calif. (AP) — Homeowner associations would be prohibited from requiring residents to pressure-wash their driveways or other areas when droughts are declared locally or across California, under a bill sent to Gov. Jerry Brown.

Republican Sen. Jim Nielsen of Gerber says some homeowners are caught in bind. They face fines under state regulations that prohibit washing driveways, as well as fines from their associations if they don't follow its rules.
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Government already regulates many private sector industries. The community association industry fine machine is now getting a greater degree of regulation.

Drought debate: Homeowner fined for replacing grass with drought-tolerant plants - Inside Bay Area

Drought debate: Homeowner fined for replacing grass with drought-tolerant plants - Inside Bay Area: SAN RAMON -- Fran Paxson figured to get a little credit and admiration when she replaced the old lawn around her suburban San Ramon home with drought-resistant plants.

Her public water supplier is even rewarding her with a rebate.

But her homeowners association -- drought and a new state law be darned -- is punishing her with a fine.

Paxson's plight is turning up the heat in the conflict between the aesthetics and the thirst of water-hungry green lawns as California struggles through a third year of drought.
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Another perennial story in the litany of bad press for Privatopia: enforcement actions over flying flags, holiday lights and this recurring story of HOAs at odds with local governments over watering restrictions.

Fox sets up plan to create utopia

http://variety.com/2014/tv/news/fox-gambles-on-big-bold-and-expensive-vision-of-utopia-1201288541/

Well, if anybody can create utopia it would be Fox. Rupert Murdoch has it all figured out.