|From Governing’s April 2001 issue
Boss Thy Neighbor
Homeowner associations are an increasingly
prevalent — and troubled — form of local government.
BY CHRISTOPHER CONTE
With its finely landscaped and opulent
master-planned communities, Southern Nevada may seem like the epitome of
the easy-going life. But if you tune into KLAV radio on Tuesday afternoons,
you’ll come away with a sense that there is trouble in paradise.
“You can come to Nevada to drink and gamble,
but don’t even think about buying a home here,” warns Bobbie Feldman, an
announcer for the “Homeowners’ Voice.” She says homeowner associations
— private corporations with government-like powers — are trampling individual
liberties with invasive regulations and iron-fisted enforcement. Amidst
calls for a boycott on home-buying in Nevada, the program fades to its
country-western theme song, “The Silver Bullet:”
Those petty rules and regulations,
It’s enough to make you cry.
No statues, ponds or Christmas trees,
And no one knows just why.
Slick managers and lawyers
Slither close but they won’t tell.
If your condo’s in Las Vegas,
You’ve bought a one-way ticket to hell.
Feldman and co-host Phil Testa are part
of a backlash against a 40-year experiment in neighborhood government.
Their organization, Justice for Home and Condo Owners, has counterparts
in about a dozen states — mostly in the Sun Belt, where new homes and homeowner
associations are emerging at a rapid pace but where traditional beliefs
in property rights and personal liberties are fervently held, too. Although
advocates of association living dismiss these renegades as a fringe band
of malcontents, state and local officials would be wise to take heed: The
battle in America’s neighborhoods raises important questions about the
role of government and the challenges cities face creating healthy communities
in a nation where new subdivisions spring up almost overnight.
The campaign against homeowner associations
faces a powerful array of interests. Many developers see associations as
a tool for maintaining parks, swimming pools, clubhouses and other amenities
that increase property values. Many homebuyers see them as protection from
obnoxious neighbors who let their property deteriorate, paint their homes
offensive colors or keep rusty old cars on blocks in the front yard. And
city officials across the country compel builders to set them up in an
effort to make new developments pay more of their own way.
As a result, the number of associations
has soared from just 10,000 in 1970 to 230,000 today. The number of housing
units — condominiums, cooperatives, townhouses and detached homes — in
associations has almost doubled since 1990 to more than 20 million. Each
year, around 8,000 more households become part of associations, meaning
they pay dues as well as taxes, elect directors as well as city council
members, and are subject to “covenant, conditions and restrictions” as
well as city codes and ordinances defining what they can and can’t do with
If controversy over homeowner associations
proves anything, though, it’s that clubhouses and rules alone don’t turn
a neighborhood into a true community. Critics say the emphasis on restrictions
drives neighbors apart, and that government this close to the people increases
conflict and makes impartial decision-making all but impossible. “The very
existence of a homeowner association tends to polarize a community,” says
Shu Bartholomew, host of “On the Commons,” a Fairfax County, Virginia,
radio talk show dealing with association issues. “You can’t get an unbiased
judgment because everybody has a vested interest in the outcome of every
That’s certainly turned out to be the case
in Nevada. A state ombudsman, appointed to help reduce tensions, receives
1,000 calls a month, mostly from homeowners who complain about rules and
draconian penalties that make federal and state governments look like hotbeds
of libertarianism. An elderly gentleman is fined for leaving his lawn half-mowed
while seeking a brief respite from the desert sun. An association board
decrees that children can’t play on the grass in front of their homes.
Another association forecloses on a woman’s $170,000 house because she
refuses to pay $1,800 in dues in a dispute over parking tickets.
It isn’t happening just in the Silver State,
either. And while the bickering often seems petty, the stakes can get high:
In Harris County, Texas, an activist says, homeowner associations have
foreclosed on more than 4,000 property owners since 1995 — many for minor
infractions. Moreover, dissidents complain that directors in an unknown
number of associations steer lucrative contracts to friends or relatives,
give themselves or their friends preferential access to community facilities,
and stifle democratic participation by withholding access to records, closing
their meetings and denying homeowners the right to vote by secret ballot.
Even some former proponents of associations
say the system isn’t working. “In the beginning, when we wanted to provide
a common amenity, we thought homeowner associations would be a good mechanism,
but what we have created is a forum for people to fight with one another,”
says Robert Lewis, president of Lewis Homes Management Corp.’s Nevada division,
a major developer operating in several Southwestern states. According to
Lewis, people who would be most qualified to lead associations often don’t
want to spend their free time mediating disputes between neighbors. That
leaves the job to people who don’t make good leaders. In many associations,
Lewis says, “people just want to serve if they can control their neighbors.”
Advocates of association-living brush aside
such complaints. Dissenters are a “vocal minority with personal agendas,”
suggests Frank Pancratz, vice president of the Del Webb Corp., a leading
builder throughout the Southwest. He argues that associations give neighborhoods
aesthetic purity, high property values, recreational facilities and grassroots
democracy, too. “We’re allowing residents, rather than elected officials
and parties from the greater community, to determine what kinds of services
they are going to have, what kind of structures and what level of maintenance,”
If associations seem heavy-handed, he thinks
it may be because they are more vulnerable to dissent than traditional
governments. “In the city at large, you also can see a vocal minority at
work with their personal agendas, but they’re operating in a large environment,”
Pancratz notes. “Homeowner associations aren’t as big, so the vocal minority
sometimes are able to exert more influence or more disturbance.”
Still, even staunch advocates of homeowner
associations concede that privatized neighborhood government has its problems.
In 1998, the Community Associations Institute, which serves as a champion
for the homeowner-association system, published “Be Reasonable,” a book
designed to encourage associations to stop micromanaging the lives of homeowners.
“It’s time for associations to write responsible rules and review existing
regulations,” the book said. “To eliminate restrictions that are outdated
and illogical, and to address specific problems with clear, specific solutions.
To realize that overzealous, unreasonable boards of directors can be more
damaging to property owners than the violations they so vigorously try
Wayne Hyatt, an Atlanta attorney and leader
in the community-association movement, says the “command-and control” mentality
among associations is giving way to an emphasis on “empowerment and community-building.”
Instead of focusing on rigid rules and unbending enforcement, he says,
associations today are putting more emphasis on volunteer activities, homework
clubs, babysitting coops, and community-wide sports and social events.
Some associations employ “community extension agents” to help build community
life, mediate disputes and promote events and sports leagues. “You shouldn’t
generalize that there is a national problem based on the most inflammatory
rhetoric and examples that come from pockets of intensity,” Hyatt insists.
By his own admission, however, the pockets
of intensity include a pretty large swath of the nation, including Texas
and California. What’s more, it’s unclear how deeply Hyatt’s ideas have
penetrated the rank and file. The CAI tries to teach community-building
ideas to association managers, but its course offerings are modest: It
covers association governance in a two-day class, for instance, and deals
with community leadership in just a day and a half. Overall, just 11,000
people have earned the institute’s highest degree, the PCAM (for Professional
Community Association Manager), in an industry that consists of 230,000
associations. “It’s a low percentage,” concedes CAI President Barbara Byrd
Keenan. “We’d like to have greater market penetration for this program.”
If it weren’t worrisome, the lack of professionalism
in the industry might be funny. Last year, the association board for Las
Vegas’ Canyon Gate community asked its security force to do something about
people who put their trash out earlier than allowed under the neighborhood’s
rules. The officers sprang into action, slapping more than a hundred households
with fines in a matter of days. But many offending property owners never
learned about their infractions: The guards attached their summons to the
offending trash bags, which were whisked away before anybody noticed them.
That seemed to confirm the suspicions of many homeowners, who earlier had
rejected a proposal to allow the guards to carry guns.
Homeowners’ pocketbooks, as well as their
peace of mind, may be at risk in some associations. Nationwide, associations
collect around $34 billion in dues each year to manage billions of dollars
in communal assets — everything from the walls and roofs of condominiums
and townhouses to streets, sidewalks, swimming pools, playgrounds, parks,
clubhouses, roads and more. But Robert Nordlund, a California-based specialist
on association finance, estimates that one-third of all associations are
financially weak, meaning they have set aside reserves adequate to fund
no more than 30 percent of their capital needs. Another 50 percent are
marginally funded, and only 20 percent are fully funded.
“Half of the people in associations have
no idea what they’re doing,” says Nordlund. He predicts it will take “another
generation” before community association boards and homebuyers learn the
financial ins and outs of this new form of organization.
If the association world can’t raise its
own standards, states may decide to step in. Responding to calls from aggrieved
homeowners and trying to reform state laws covering associations has become
almost a full-time occupation for part-time state Senator Mike Schneider
of Nevada. A Democrat whose district includes parts of Las Vegas, Schneider
has won legislative approval for bills making it easier for homeowners
to initiate special meetings, limiting the power of boards to hold executive
sessions, capping fines and prohibiting foreclosure on homeowners who fail
to pay fines. After learning a few years back that boards routinely were
denying members the right to vote by secret ballot — some were sending
homeowners proxies rather than letting them elect their leaders directly
— he sponsored legislation that required associations to conduct elections
by secret, written ballot.
Because many people don’t understand what
they are getting into when they buy homes in association-run neighborhoods,
lawmakers also created a simplified disclosure statement informing prospective
homebuyers of the implications of association living. To address financial
concerns, they ordered associations to conduct periodic studies into the
adequacy of their reserves. And they required a majority vote of homeowners
before their associations can initiate lawsuits — a step designed to reduce
what Schneider believes is the undue influence of attorneys over many association
State regulation has had mixed success,
however. According to Schneider, many boards and their lawyers are hell-bent
on finding loopholes. And the new position of state ombudsman, which was
established to iron out difficulties between associations and homeowners,
has been a flop. Appointed in 1998, the ombudsman didn’t receive funds
to hire staff until July 2000, and she was fired at the beginning of this
year. Schneider says the state named the wrong person to the job, but others
argue that a coalition of association boards, lawyers and vendors successfully
lobbied to ensure that she had no power to take action against runaway
“Boards are still in denial that they can’t
do whatever they want to do,” says Schneider. “Managers are overworked,
underpaid and haven’t taken the time to learn the law. Attorneys just want
to collect fees — they have no interest in making things go smoothly. And
the ombudsman was weak.”
Another approach to straightening out neighborhood
affairs, some suggest, is to let city governments do it. They are closer
to the people than state government, yet perhaps remote enough to avoid
the personal rancor that characterizes so much of neighborhood government.
Don’t hold your breath, however: Cities aren’t interested. “We’re tapped
out,” says James Gibson, mayor of Henderson, Nevada. “We don’t care to
displace homeowner associations — we don’t want their money, and we don’t
want their jobs.”
Henderson clearly has problems of its own.
In the past decade, its population has tripled, from 67,000 to almost 200,000,
making it the fastest-growing city in America. Local leaders such as Gibson
pride themselves on making growth pay for itself. Henderson requires developers
to pay for fire stations, parks and other public amenities, for instance,
and it forces them to put in landscaping around new neighborhoods and create
homeowner associations to maintain it.
Although Gibson can boast that Henderson
has the lowest taxes in the Las Vegas valley, voters aren’t eager to foot
the bill for a higher level of city services. Last year, they rejected
a bond issue to raise funds for more police. The city currently has about
one officer for every 1,000 residents, a figure that seemed adequate when
Henderson was a quiet bedroom community but is well below the norm for
cities with the kind of bustling commercial areas that have sprung up in
Henderson. The national average is 2.5 officers per 1,000 residents; the
failed bond issue would have paid for 1.5 officers per 1,000 residents.
Only one organized interest group is actively
working to return homeowner-association responsibilities to city government.
Members of the Southern Nevada Homebuilders Association would like cities
to require them to build fewer neighborhood amenities and, hence, to avoid
creating homeowner associations in the first place. “Right now, we’re compelled
to create amenities that the majority of homeowners don’t want,” complains
Robert Plaster, president of Signature homes, a major developer in Henderson.
Plaster estimates that only about 20 percent of his customers want to pay
developers for swimming pools and other “active,” recreational amenities.
Developers have an ulterior motive, though:
In recent years, many have gotten burned by a spate of construction-defect
lawsuits initiated by homeowner associations. Senator Schneider believes
many of these cases were illegitimate, foisted on associations by attorneys.
Nevertheless, the chances that developers will join forces en masse with
unhappy homeowners to seek policy changes reining in associations are extremely
slim. As a result, city officials seem to feel little pressure to rethink
their commitment to private, neighborhood governments.
Gibson is convinced that government couldn’t
do as good a job at the neighborhood level as homeowner associations anyway.
That’s certainly true if you measure performance according to cost. Unlike
the city, homeowner associations can tap a substantial pool of volunteer
labor, the mayor notes. While some of that labor is spent aggressively
policing private homeowners, some is put to more constructive use, including
fixing parks, maintaining landscaping, and providing a range of services.
If you measure performance by customer
satisfaction, however, the advantages of homeowner associations over city
government appear to diminish. While it’s common for homeowner associations
to issue harsh letters or even impose fines at the first sign their codes
are being violated, city code enforcers generally take a more measured
approach. When officials learn about an infraction, they contact a violator
in person, instead of in writing. Rather than immediately issuing a fine,
they try to resolve problems informally. And even if a case drags on until
the day a violator is scheduled to go before a judge, the city is willing
to talk compromise. “Our goal is to get compliance, not to be punitive,”
says Michael Bouse, Henderson’s director of building and safety.
This greater level of tolerance extends
to many other areas as well. Some neighborhood associations, for instance,
ban or restrict basketball hoops; the city sees no problem. Some have a
policy of zero tolerance toward any infractions; Henderson, which has just
two code-enforcement inspectors to cover the entire city, acts only when
it receives a complaint. And while some associations fine members for using
the wrong color paint or having grass that isn’t green enough, city inspectors
couldn’t care less about aesthetics. “We don’t have a ‘pretty code’ or
an ‘ugly code,’ ” says Dan Parrott, the city’s senior code-enforcement
That, of course, leaves many local residents
dissatisfied. Some think the city is too slow to enforce its code. Others
think the code itself is too lax. At the same time, however, Parrott notes
that his office frequently gets calls from people whose neighborhood associations
have fallen apart. “The beg us to come in and enforce their [codes and
restrictions] for them,” he says.
As long as taxpayers are united in their
resistance to higher taxes, none of these groups will be satisfied. And
so, for the moment, it appears the number of Americans living in homeowner
associations is likely to keep growing. Critics such as Bobbie Feldman
and Phil Testa, the Las Vegas valley talk-show hosts and self-proclaimed
“Voice of the Homeowner,” see little hope they’ll get relief from city
governments, and they expect only modest reforms, at most, from state government.
Their call for a boycott on home-buying in Nevada is a measure both of
their despair at working from within the political system and their conclusion
that nothing will change until market forces shift — that is, until homebuyers
start telling both developers and policy makers that they don’t want to
live in neighborhoods run by associations.
But what DO homeowners want? The city of
Henderson, while determined not to become a forum for neighbor-to-neighbor
disputes, believes it needs to get a better sense of the answer to that
question. This year, it created a new Office of Neighborhood Services to
build better lines of communication between city government and neighborhoods.
The office is still working to define what that entails, but code enforcer
Parrott knows what he would like to see. Right now, he notes, many of Henderson’s
neighborhoods are so new that they lack the bonds of friendship and personal
relationships that tie people together and help them forge a common destiny.
In short, they lack that elusive thing called community.
Parrott isn’t sure how to create it, whether
with block parties, hayrides, sports events, or what. But he knows Henderson
needs it. “If neighbors just knew each other better, they’d get along,”
he says. “And if they get along, they wouldn’t complain so much about each
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