- HOA News Watch -

2005-11-26T10:29:00.000-08:00

On My Mind
Privatizing the Inner City
Robert Nelson, 12.12.05

Forget condemnations. Here's how to bring housing, Costco and Ikea to urban areas.

In June the Supreme Court said that New London, Conn. could force Susette Kelo and a small group of homeowners to sell out to private developers. It was not a popular decision. Already the U.S. House of Representatives has passed a bill to deny federal funds to state or local governments that use eminent domain powers for economic development. Many state legislatures are considering similar laws. (See related commentary, p. 33.)

But older cities face serious land-use problems. How can a dense urban area like New London or Hartford revitalize itself if developers have to build one lot at a time? Should residents of failing cities insist that shopping centers be built only in the far suburbs, displacing farms and increasing suburban sprawl? Must all large housing developments be relegated to the exurbs?

There is a better way to give developers access to sizable plots of land in the city: allow homeowners to privatize their neighborhoods and sell en masse directly to developers.

A recent example of how this would work can be found at a housing cooperative in Washington, D.C. known as Sursum Corda ("lift up your hearts"). Sursum started out in the late 1960s as a rental project sponsored by the Department of Housing & Urban Development. In 1992 it was converted to a cooperative, privately owned by the former tenants. Six months ago developer KSI came knocking. It wanted to put up a 500-unit development on Sursum's 6-acre site. In late October the 167 low-income families in Sursum Corda agreed to sell their neighborhood to KSI. The families will receive $80,000 per unit, a future share in KSI's profits from the site and an option to purchase a discount-priced home in the development. The transaction was approved by a board vote--no solo holdout could stop the bulldozers.

This is a good deal for all sides. Under competitive pressure from other developers, KSI raised its initial offer by $30,000. Because the families bargained together as a single unit, they got a better deal than they could have gotten as individuals. The land, which lies close to a new Metro stop, will be converted to more valuable use.

Many other nations have long had laws that make it easier for property owners to pool their resources. In Japan these laws played a significant role in reconstruction after World War II. Japanese property associations consolidate land, install infrastructure and lay out new development plans. A two-thirds majority is empowered to make decisions.

Community associations are spreading rapidly in America's suburbs. From 1980 to 2000 half of new U.S. housing was built within a community association. It's time that the benefits of associations become available in older cities as well.

A new state law would work like this: If a group of urban owners wished to consolidate their properties, they would petition the city. A transfer agreement for streets, parks and other public services would get worked out. Then if a supermajority of 70% or 80% voted to approve, a new private community association, including all the property owners, would be established.

There would be no cram-down eminent domain; the property owners themselves, through a supermajority vote within their association, would approve any sale. And they'd get a price set not by judicial decree but by private negotiation. Proceeds would be divided according to the association's rules. If the owners preferred to stay in the neighborhood, rather than sell out, their new association would then function much like a residential version of a business improvement district. They could collect assessments, for instance, to sweep the sidewalk.

In the 1930s the Wagner Act provided for collective bargaining between newly organized workers and businesses. Today we need an urban Wagner Act that will enable collective bargaining between neighborhood property owners and developers.

2005-11-04T01:39:00.000-08:00

Thoughts on Community Associations Institute

2005 November 1

POA legislation is in turmoil with many amendments proposed in the state legislatures. Lobbying appears to be intense in some states, particularly by the community associations industry and some local chapters of CAI.

The changes in legislation for property owners associations (POAs) is moving in a consistent direction — incorporating more and more democratic principles. While CAI claims to be the voice of the 54,000,000 residents living in community associations, they are not at the forefront in advocating democratic principles and members' rights. In fact, it appears that CAI in some states is actively opposing the democratic reform.

The continuation of this post discusses these interrelated issues. I am interested in your thoughts on this important issue.

Don Nordeen
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Thoughts on Community Associations Institute (continued)

CAI's Contributions

While this post is critical of CAI's claim to be the voice of individual people who live in community associations, I don't want in any way to disparage other work of CAI which has served the community associations industry (management companies, developers, real estate companies, attorneys, accountants, reserve specialists, mortgage companies, maintenance companies, and others who/that provides services to community associations) very well. With good services from this community association industry (I use the abbreviation, lower case "cai" to distinguish "industry" from "Institute"), community associations have also been well served. I use the term "property owners associations" (POAs) rather than community associations. See definitions/glossary.

I became familiar with CAI when I was president of a property owners association (POA) in the late 1990s. At my recommendation, the board voted to join CAI as a POA member. Many CAI publications were of value in improving the organizational systems and processes. I now associate those publications as those serving the cai.

In subsequent research, I was disappointed with the omission of information on rights of individual POA members and the omission of information on democratic principles for governance of POAs. I found that much of the information on these issues was general and seemed to say the right things, but in fact are equivocal and lacked the specificity to define and protect the rights of individual members and the use of democratic principles in the governance of the POA.

More recently, I have concluded that the above observations can be explained by CAI's support of the Developer's Model for governance of the POA. The developer, or the developer's attorney, crafts and records the initial governing document consistent with the developer's interests. This includes establishing a POA in which the developer can exert substantial control. A corporation governance model in which the board has almost total authority over POA affairs is consistent with the developer's interests — particularly since the governing documents can permit the developer to appoint the members of the board during the development phase of the project. When the transition to member control is completed, the POA is stuck with this model of governance, which is basically an oligarchy — prone to all of the abuses inherent therein.

The problems and complaints from individual POA members, which are based on the Developer's Model, are driving legislative changes to make the governance more democratic (open meetings with proper notice, no abuse of closed sessions, members have right to address the board on any agenda item, members' access to all records, better voting procedures, etc) — more toward the municipal or democratic model of governance. Hopefully, we are close to getting out of the "black hole" of the Developer's Model to adopt a Democratic Model of governance of the POA members, by the POA members and for the POA members.

Unfortunately, there seems to be a reluctance of the community associations industry to embrace a Democratic Model. There really shouldn't be a conflict between a model based members' rights and democracy for POA members and the interests of the cai. It is in the interest of the cai for POAs to function well and create model communities for the developers. The Democratic Model for governance should serve all interests.

The legislative pressure in many states is moving the legislative activities away from CAI's stated policies. CAI's recent change in membership structure (also the Q&A) may be CAI's first step in responding to these changes, but that hasn't been clearly stated.

CAI's Claim to be the Voice of People who live in Community Associations is Not Supported.

Their most recent document on Public Policies [URL is .] dated 2004 October states on page 3 of the pdf file, "Founded in 1973, Community Associations Institute (CAI) is the national voice for an estimated 54 million people who live in more than 270,000 community associations of all sizes and architectural types throughout the United States." No facts are given to support this claim.

Most of CAI's members are likely professionals and companies who/that provide services to POAs. Paragraph 3 on the same page of the Public Policies document states,

"In addition to individual homeowners, CAI's multidisciplinary membership encompasses community association managers and management firms, attorneys, accountants, engineers, builders/developers, and other providers of professional products and services for homeowners and their associations." (emphasis mine)

I have written to CAI through their website requesting a breakdown of the membership, but have not received a reply. Specifically, the number of individual homeowners who are members of CAI, should be known and published by CAI to support their claim to be the voice of individual members.

The arithmetic basically refutes the claim to be the national voice of individual POA members. Paragraph 3 of the same page states there are 17,000 members in CAI. Even if all of CAI's members are individual members of property owners associations (POAs) with (say) four residents per home, the representation as CAI members of the 54 million people would be only 0.13%. Since probably only a fraction of the 17,000 members of CAI are individual POA members (say one-tenth), CAI's membership of individual POA members would be only 0.013% of the 54,000,000 people.

I am unable to locate any surveys at the CAI website that deal with the substantive issues and concerns of individual POA members. The issues that have driven recent legislation in Virginia, Florida, Arizona, Nevada, Colorado, California and elsewhere are not identified at the CAI website.

Others have questioned CAI's claim to be the voice of individual POA members. Dr. Evan McKenzie, author of Privatopia: Homeowner Association and the Rise of Residential Private Government writes in his weblog [URL is .],

"This reinforces what I (and others) have been saying for many years. CAI is a 501 (c) (6) trade association that represents the interests of lawyers, property managers, and other providers of services to HOAs. It doesn't represent homeowner associations or the owners who live in them. I don't mean that as a negative comment. I think it is a good thing that such a trade association exists, because professionals need specialized training to do this work, and they should seek to represent their interests in the policy process. It is a basic constitutional liberty (freedom of association) guaranteed by the First Amendment. Owners and associations should organize on their own and not expect CAI to serve their needs. However, I have been critical of CAI representatives, such as lobbyists, for claiming to represent owners and associations, which they have done on many occasions while pushing legislation. They don't, they never really did, and it is an impossible conflict of interests for a trade association to also seek to represent consumers of their services."

I am skeptical that CAI's new membership structure is part of a change in emphasis and focus at CAI. CAI does not identify itself as a trade association in their membership information. It is not clear why the "board member" category was created and the "community association" category was eliminated. They have excluded POAs from membership (which is really the boards of POAs), but are extending membership to individual board members at a discount, presumably to be paid for from POA funds. What really changed? Will these now be counted as individual POA members and used to substantiate their claim to be the voice of individual POA members? The membership change to exclude POAs but allow POA board members to be "individual" members is not explained.

CAI's Documents do not Support a Democratic Model of Governance.

In addition to CAI's claim to be the voice for individual people living in community associations, I have concern about the recommendations in CAI's "recommended practice" and "policy" documents. The content in these CAI documents is not supportive of POA members' rights and use of democratic principles. Three examples:

Members' Access to Records (equivalent to Freedom of Information Act in government) — CAI's Public Policies document states at page 28 of the pdf file,

Members have a Right to "Have access to association records as specified in governing documents and state law."

Obviously, compliance with state law is required. But, what is specified in the governing documents is determined initially by the developer and developer's attorney (part of cai). This is what I call the Developer's Model for governance. CAI does not define their recommended policy regarding access to records for good governance. Is CAI pandering to the cai? But CAI is also inconsistent.

The same document at page 29 states,

The Association is Responsible for "Providing members with access to corporate records (excluding those which infringe upon the privacy of other owners)."

This implies access to all information, presumably including advice from attorneys and accountants, except for the stated exclusion. CAI states in another major 2003 document Introduction to Community Association Living [URL is .] at page 31,

"Access to Association Records —All records of a homeowners’ association should be available to the association members."

CAI states in their Rights and Responsibilities document [URL is .] document,

"Homeowners Have the Right To: Access appropriate association books and records."

Note that the statement contains the equivocal word "appropriate" which basically makes the statement meaningless. The statement therefore does not reflect any CAI policy recommendation for good governance. Likely, the developer gives meaning to "appropriate" in the initial developer-drafted governing documents — the Developer's Model.

The standard defined in municipal law is the Freedom of Information Acts which makes virtually all government information available upon request.

Alternative Dispute Resolution — CAI's Public Policies document states at page 16,

"It is also understood that ADR may not be the ideal option for resolving a dispute but if possible should be used if it does not compromise the rights of the community association."

Note that the rights of individual POA members are included. It is apparently okay to use ADR if the rights of the individual POA member are compromised.

Also, CAI does not address the question of costs. For a level playing field, I believe the costs for ADR should be paid by the POA. The individual POA member still has to spend the time and effort to prepare for the ADR. In municipal government, a citation is issued which is typically heard by a magistrate. The citizen must prepare, but the costs for the magistrate are typically paid by the municipality — part of separation of powers and cost of government.

The larger issue for ADR is enforcement, which cuts both ways: enforcement of a restriction by the board on an individual POA member, and enforcement of board's obligation to adhere to the governing documents in the management of the affairs of the POA by individual POA member(s). Again, CAI does not define a recommended policy for good governance. Is CAI pandering to the cai?

Democracy in Community Association Living — CAI's principal document on this subject appears to be Introduction to Community Association Living [URL is .]. Read Section 8 — HOMEOWNER RIGHTS AND RESPONSIBILITIES. Note the use of the phrase "A form of democracy" which implies that democacy doesn't exist in a POA. Further, the section describes that members really only have the authority to elect a board of directors which then makes all the decisions — an oligarchy. This is confirmed by the statement on page 27 of the booklet (page 32 of the pdf file):

"But all other decisions are usually left to the board. As a result, if owners are unsatisfied with a board decision, they usually do not have the direct authority to “veto” or “undo” its action. Under such conditions, their only remedy is to elect a new board to represent them."

Put another way, no rights are reserved to the members except the election and recall of board members. It is not clear whether CAI is advocating the description in Section 8 as their recommended policy for good governance or is describing what typically exists in POA governance defined by the initial developer-drafted governing documents — the Developer's Model.

My observation is that the "waffling" — the equivocality — is pervasive in CAI documents on defining the provisions for good governance for POAs, POA members' rights, and democratic principles. Many places, the words/statements are equivocal upon critical reading. For example, read the two principal CAI documents cited above in full with regard to members' rights and democratic principles. Also read their Rights and Responsibilities document with the same perspective. The latter doesn't even recommend that members should have an exclusive vote on amendments to governing documents. Contrast the members' rights described in the CAI document with the recommendation of a California "CID Homeowner Bill of Rights Coalition" for a "CID Homeowner Bill of Rights at pp 7-8 of a CLRC Memo [URL is .]. One of the members of this group is Retired Judge Charles Egan Goff who has written several times to the California Law Revision Commission advocating democracy for homeowners associations. Those letters are available on the internet with a search on ""Charles Egan Goff".

My broad definition of good governance is protecting members' rights and using democratic principles. My broad definition for the roles and responsibilities for the board of directors is to provide good stewardship for the management of the common interests and to protect the rights of each property owner (member). The standard for both is municipal law, in my view, and is the basis of a Democratic Model of governance. This recognizes that POAs are private government. The principles in municipal law should be adapted into POA law.

CAI, and more broadly, POA Legislation are at a Crossroads.

It seems to me that CAI and POA legislation are both at a crossroads. CAI apparently wants to claim to be the voice of all the individual POA members, yet they are a trade association for the community associations industry. I have no expectation that any organization can be the voice of all the individual POA members. Individual POA members are going to respond in an organized fashion only through common grievances. This is/was what is/was driving the legislative amendments in Florida, Virginia, Nevada, Arizona, Colorado, California, and in other states.

Most of the original CID (common interest development)/POA law appears to be based on the Developer's Model including the existing Uniform Common Ownership Interest Act (UCIOA). The amendments are incorporating democratic principles. I have studied Florida HOA and Virginia POA laws as amended through 2004. Some aspects of a Democratic Model have been adopted. The same appears to be happening in California with a Davis-Stirling Act that obviously has many problems. Johnston and Johnston-Dodds report in a California Research Library study "Common Interest Developments: Housing at Risk?" at page 12 [URL is .] on the number and kind of amendments made to California's Davis-Stirling Act:

"The Act has been amended more than 40 times since its passage. The changes that have been made to Davis-Stirling over the years have moved CIDs away from a purely corporate model and closer to a municipal model. These changes mostly relate to due process issues such as notification and participation, and are aimed at providing homeowners with greater access to information about their CID management and governance."

Note the change toward the municipal model which is based on democratic principles.

The conclusion is that the reactive changes in POA legislation are moving the legislation toward a municipal or democratic model. There are also a number of papers dealing with homeowners bills of rights and democratic models directly. Now is the time to start over with a Democratic Model of governance, perhaps based on adapting the municipal model or maybe even starting all over.

If CAI acknowledges that CAI is not the voice of all POA members, they lose effectiveness in their lobbying efforts and in their amicus briefs. Is CAI prepared to make such an acknowledgment? Who can deliver such a message and have it accepted by CAI's board of trustees for serious debate? Hopefully, the trustees will be enlightened to understand the pressures for democratic reform of POA legislation.

There really shouldn't be a conflict between POA members' interests in members' rights and democracy and the interests of the community association industry (cai). It is in the interest of the cai for POAs to function well and create model communities for the developers. The Democratic Model for governance should serve all interests.

That is my thinking at this time, but I would like to hear from others. Please add your comments or send me an email by clicking on "Email Me" at the top of the left column. Your emails will be posted.

http://swagman.typepad.com/poa_governance/2005/11/thoughts_on_com.html#more

2005-09-04T09:09:00.000-07:00

washingtonpost.com
Homeowners Groups Fight to Stay Afloat
Costs, Responsibilities Overwhelm Volunteers

By Michelle Boorstein
Washington Post Staff Writer
Sunday, September 4, 2005; C05

From the volunteer-made wooden pavilion in the center of Hidden Lake, it's easy to see all the work residents do to maintain this little Stafford County community: One man spreads and grades the gravel on the roads; another resident uses her paddle boat to inspect the dam; others spread herbicide on the lily pads so they don't take over the lake.

Volunteering "makes your life rich," Nancy Gravely, treasurer of the association that runs the 40-year-old community, said as she looked contentedly at the lake and the water birds. The warm and fuzzy moment passed as Gravely talked about all her duties, which include negotiating paving contracts.

"I've been a secretary most of my life, and this is a bit ridiculous," she said. "We're trying to handle things it seems to me that someone with a lot more knowledge should be handling."

When communities such as Hidden Lake were built, a homeowners association seemed like a great idea: Residents would chip in for the upkeep of what then was a summer community. Today, however, Hidden Lake is a full-fledged Washington suburb, with residents too busy to volunteer and facing problems beyond their expertise. The community's governing documents have expired -- jeopardizing its authority -- and the neighborhood is at war over what could be a $500,000 bill to repair the community dam.

Hidden Lake's problems mirror those cropping up at first-generation, association-run communities across the country as they deal with aging infrastructure and outdated or poorly written covenants that make it impossible to enforce rules, increase dues to cover rising costs or resolve disputes.

Today, with 80 percent of homes being built in such communities -- a percentage an industry group estimates to be even higher in the Washington area -- an entire body of law and expertise has sprung up to deal with such problems. Governing documents have grown from three pages to the size of telephone books, states have passed laws giving homeowners associations power to collect dues and place liens on homes, and real estate agents in many places are required to inform buyers about what they're getting into.

Experts say scenarios such as the one at Hidden Lake are a warning of what might lie ahead in a world that is redefining the role of government and the responsibilities -- and costs -- of homeownership. Essentially unregulated, volunteer-run associations are taking on jobs once thought of as requiring municipal expertise: assessing infrastructure, putting out bids for road projects, monitoring stormwater ponds.

Some local officials are questioning whether residents are qualified for such tasks. Others wonder whether the fees and assessments levied against homeowners in these communities amount to residents being taxed twice -- once by the association and again by the local government. And some are asking whether the association system lives up to advocates' contention that it makes communities closer -- or if it drives them apart.

Robin Stone, president of the Lake Arrowhead Civic Association in Stafford, is disillusioned. He said he believes associations establish a strict framework and rules that busy commuters can hide behind instead of connecting in a more personal way.

"In the '70s, a homeowners association was getting together at the [Joneses]," he said. "If your neighbor needed help, you sent your kids over. I think people today aren't paying for community -- they are paying for convenience."

Stone said that when he and his wife decided to move recently, "the first thing I checked was whether there was a homeowners association within 100 miles."

Like Hidden Lake, Lake Arrowhead was also opened in the 1970s as a summer community. Under its founding document, it is allowed to collect only $20 a year in dues from each homeowner. Today, with nearly 500 lots of full-time residents, the community needs as much as $300,000 to repair dams to prevent lakes from flooding roads and homes. But disagreement among residents about how community money was spent and the fact that Lake Arrowhead's covenant has expired has started a "civil war" in the community, Stone said.

At this point, only half the residents pay dues, and the association can't afford the cost of filing liens against homes of those who don't comply. The lakes' beaches were shut down this summer because there was no money to operate them.

The group, along with Hidden Lake's, wants the county to establish a "service district" that would increase real estate taxes in the neighborhood to pay for necessary repairs.

Some experts and supporters of homeowners associations say many of the problems faced by older communities won't be repeated because people have learned from the mistakes. The association structure typically is created by the developer -- usually as a requirement by the local government, happy to be free of responsibility for infrastructure costs. And developers now have staff, publications and conferences devoted to helping associations function.

"I think in communities that have done the appropriate planning, [the association system] works pretty well," said Frank Rathbun, a spokesman for the Community Associations Institute, an industry group for association-related businesses. The group estimates that 55 million Americans live in association-run communities, up from 2 million in 1970. Rathbun said the key to an association's success is having a reserve fund and periodically hiring experts to evaluate big-ticket items and the group's savings plan.

"If you didn't save, you're stuck borrowing and paying interest or levying a special assessment, and that comes as quite a shock to people. A lot of people don't read all the paperwork," he said.

In addition, many older association-run communities have failed to file the proper paperwork with the state and therefore lack the authority to enforce their rules.

Stafford County Supervisor Robert Gibbons (R-Rock Hill), whose district includes Lake Arrowhead and Hidden Lake, said the system is "a mess."

"Everything is dumped on the homeowner," he said.

More and more of these communities are turning to their governments for help. Stafford County requires a petition showing that a majority of a community's residents support the creation of a special taxing district before supervisors will vote to do so. Such a petition is circulating in Lake Arrowhead, and Gibbons will meet Thursday with Hidden Lake residents to explain how they can do the same.

Gravely said many of Hidden Lake's newer residents come to the quiet spot near the Fauquier County line from cities or communities where they were used to having services taken care of for them. "They see this as a refuge -- not what it takes to maintain that refuge," she said.

Housing bubble, bankruptcy reform looks like a huge ticking time bomb.

2005-08-28T00:47:00.000-07:00

A fresh calamity?

First a landslide, now a safety net rips. New bankruptcy laws won't let owners walk.

By Evan Halper, Times Staff Writer

WHEN the drafters of the new federal bankruptcy law set out to crack down on America's deadbeats, they probably didn't have folks like Todd MacCullum in mind.

The Laguna Beach resident hasn't maxed out his credit cards on lavish purchases. Nor has he made some outrageously irresponsible investment decision. Yet he finds himself caught in the crosshairs of the new regulations, which take effect Oct. 17.

MacCullum's offense: His home happened to sit in the path of a June 1 landslide.

Now, as he juggles a million-dollar mortgage on a house that will be unlivable for at least a year, paying rent on temporary shelter for his family and working with the city to rebuild the hillside that collapsed onto his residence, MacCullum is left wondering if what he sees as the worst possible outcome of all — a bankruptcy — is going to get even worse come October.

"Everybody who has been affected by this is aware of the new law," MacCullum said. "It is on everybody's mind."

Under the new bankruptcy regulations, homeowners will no longer necessarily be able to hand the keys to the bank and move on. Lenders will, in many cases, have the option of coming after them for virtually everything else they've got — income, money in bank accounts and other assets.

Homeowners who have refinanced may have unwittingly put themselves at the greatest risk. State regulations will still offer financial protections for buyers who have their original mortgages.

"There is no doubt this law will make it harder for some people to walk away," said Gary Painter, a professor at the USC School of Policy, Planning and Development. "It definitely could hurt homeowners."

Congress changed the law to discourage Americans from piling up debt, filing for bankruptcy and leaving banks holding the bag. But there are no exemptions for a small group that was never the intended target of the legislation: those who have been displaced by extraordinary circumstances.

In extreme cases, homeowners could find themselves fighting to keep the bank from seeking a court order to garnish their wages as a result of something they'd never considered and are not insured against — such as a landslide, flood or earthquake.

"There are no special exceptions for these people," said L.A. bankruptcy attorney Howard M. Ehrenberg. "Homeowners who have their finances in order and generally do not think about bankruptcy may find that after this kind of natural disaster they won't be eligible for relief."

The reason homeowners who have refinanced are at risk is because state law does not allow banks to go after the assets or income of the holder of an original mortgage following a foreclosure. But borrowers are often asked to waive those protections when they refinance — and many do so without even knowing it.

"Most people think that if they buy a house in California and lose it, they have no exposure," said Orange County bankruptcy attorney Marc J. Winthrop. "But there are new wrinkles for people who have refinanced."

Consider a home that is washed away in a flood and has a $1-million mortgage left on it.

If the borrower has never refinanced, even under the new law he or she could default, and the bank could then seize the property — but nothing else.

But homeowners who have refinanced and waived the state protections will no longer be able to protect their paychecks, savings or personal property when filing a Chapter 7 bankruptcy. In the past, such a filing could wreak havoc on a person's credit, but it would keep their assets from being taken.

Chapter 7, which allows discharge of debts and a fresh start, will only be available to families of four living on less than $68,000 per year. Others could find themselves on the hook for the remaining balance of their mortgage.

As Oct. 17 approaches, insurers are urging homeowners to make sure they are adequately covered. But insurance isn't available for every conceivable disaster — coverage rarely includes landslides, for example. And only 13% of Californians carry earthquake insurance.

The scenario that played out many times after the 1994 Northridge earthquake will not be an option.

"It's not like it used to be," said Pete Moraga, spokesman for the Insurance Information Network of California. "A lot of people who had just purchased homes were able to throw their keys at the mortgage companies and say, 'You deal with this.' The new law is such that you can't automatically walk away anymore."

But what about relief from the Federal Emergency Management Agency? It won't help the Laguna Beach slide victims; FEMA said last week that the June landslide wasn't linked to the winter rains and, as such, rejected the city's request for emergency aid to repair the hillside.

Moraga warns homeowners not to assume the government will always come around to bail them out. In cases where FEMA does step in, it is usually in the form of low-interest loans that must be repaid, and the loans aren't always available after an earthquake. In some cases, homes and businesses are destroyed, but the damage is not widespread enough for an area to qualify as a federal disaster area. Such was the case in a recent earthquake off Central California.

Not all protections are lost for homeowners affected by the new law. The law doesn't go so far as to give lenders carte blanche to take whatever assets they choose. Far from it. Seizing assets will continue to be a complicated, drawn-out legal process.

The procedure must go through a bankruptcy court and can drag on for months. All the while, payments aren't being made to the lender and the sale of the property is being delayed.

Raymond Eshaghian, president of TMSF Holdings, a residential mortgage lender, predicts banks will continue to try to avoid the bankruptcy process altogether. Getting the borrowers back on their feet and working out a payment plan is always going to be preferable to driving them into poverty.

"Lenders are not in the business of pursuing lawsuits," Eshaghian said. "There is no money to be made off of that. We are looking for the least amount of trouble."

Back in Laguna Beach, MacCullum and other landslide victims are trying to hammer out agreements with their lenders that will at least allow them to postpone their mortgage payments several months. But the families have been surprised by how little other help is available to them. "There is a perception out there that we are all wealthy and can afford this disaster," said MacCullum, who had refinanced and learned only after the landslides that he could lose more than just his house should he declare bankruptcy after Oct. 17.

"Bankruptcy may well become an issue for all of us if things don't start moving," he said.

"You will have a bunch of families whose financial future is destroyed."

New Web Site Gives Consumers Independent Information About FirstService Property Management Companies

2005-08-15T12:23:00.000-07:00

Press Release Source: Service Employees International Union

New Web Site Gives Consumers Independent Information About FirstService Property Management Companies
Monday August 15, 12:44 pm ET

TORONTO, Aug. 15 /PRNewswire/ -- Consumers gained an important new tool today, as the Service Employees International Union Local 11 launched http://firstservicemismanagement.com, a new Web site that provides information about FirstService Corp., North America's largest property manager. FirstService MISmanagement provides homeowners, homeowner associations, and others in the market for a property manager an information source totally independent of FirstService Corp.

Consumers who click on the site can visit pages devoted to each of FirstService's eight major residential property management subsidiaries, which operate in the following markets: New York City, Philadelphia, Washington D.C., Chicago, Las Vegas, Phoenix, Miami, and Boca Raton, Fla. The site raises concerns about the performance and business practices of some of these FirstService subsidiaries. Issues include:

* Client Dissatisfaction. The Web site invites consumers interested in learning more about FirstService companies to submit their contact information in order to receive information collected from dissatisfied clients of FirstService subsidiaries.

* Questionable Business Practices. A major FirstService business strategy is cross-selling: marketing ancillary products and services provided by other FirstService companies to existing property management clients. This may result in higher fees for homeowners, according to the Web site.

* Lawsuits. Since March 2000, FirstService subsidiary Continental Group has filed six different suits against condo boards and unit owners who have spoken out against the company. FirstService claims that Continental took these actions to "defend its reputation."

* Labor Strife. The U.S. National Labor Relations Board, an arm of the federal government, has charged that FirstService subsidiary Continental Group broke federal labor law in more than a dozen different ways, including firing a worker for exercising his legal right to support the formation of a union. Continental's top two executives lead FirstService's entire residential property management division.

FirstService MISmanagement also provides a utility by which existing clients of FirstService companies can fill out a survey evaluating their property manager's performance.

Source: Service Employees International Union

2005-08-11T08:17:00.000-07:00

Rockin' the suburbs
Homeowners associations have the power of government--but what about the accountability?

By Jeffrey M. Barker

Photo By Larry Dalton

Ken Beer, left, and Don Chaney don’t spend much time on this golf course--one of two in their Roseville retirement community.

Senator Denise Ducheny's Senate Bill 137 is scheduled for a hearing in the Assembly's Appropriations Committee next Wednesday, August 17.

www.leginfo.ca.gov/bilinfo.html

Don Chaney just wants to know where his money is going.

But to find out, he’s had to take his Roseville homeowners association to court. And in doing so, his fight for information has become much bigger than the $126 he pays in annual fees. It’s now a fight on behalf of the one in four Californians who live within a common-interest residential development, and against the state’s 36,000 homeowners associations and the massive amounts of power and cash they control, largely out of their members’ view.

Chaney’s court case may help redefine how the bulk of California’s ticky-tacky suburbs are run.

At the same time, two proposed laws making their way to floor votes in the Legislature would do much the same thing. An Assembly bill, sponsored by Dave Jones, D-Sacramento, outlines more clearly what kinds of financial documents homeowners associations would be required to cough up if a member requests them, and also specifies that a homeowner can take an association to small-claims court rather than the more costly Superior Court. A second effort, by Senator Denise Ducheny, D-San Diego, seeks to restrict how homeowners associations are able to foreclose on a home.

The proposed changes to state law, which would affect some 9 million Californians, were spearheaded by an unlikely group: retirees.

“It’s seniors who are making all the racket ... because they have so much to lose,” said Majorie Murray, a lobbyist for the California Alliance for Retired Americans. “Seniors and the disabled. ... If they lose their home, they can’t go back into the workforce and get a job and buy another home.”

Also, seniors have the time to pay attention to their community boards.

Take Chaney, a 75-year-old retiree, and his neighbor Ken Beer, 72, who have been trying for years--to little avail--to get their homeowners board to show them financial documents such as accounting books, canceled checks and purchase orders. They want to know how their money is being spent.

“The only oversight to the board are members. There is no other oversight,” said Chaney, who spent 40 years working as a procurement manager.

The two men live in Sun City Roseville, a retirement community of 3,110 homes for residents age 55 or older that offers two golf courses, a community center with a swimming pool, a computer cafe and a full-service restaurant.

“It’s a beautiful place to live--you can see that it is,” Chaney said.

The neighborhood is governed by a group of seven elected homeowners, who, like association boards throughout the state, have substantial power--to assess fees, increase homeowners’ dues by up to 20 percent a year and even foreclose on a home in order to collect on unpaid bills. The Sun City Roseville board currently collects $126 annually from each homeowner, which it uses to run and maintain the community’s common areas.

Homeowners throughout the state live in similar communities, in which they elect their neighbors to govern their neighborhoods, writing rules about everything from the color of exterior house paint to the level of noise allowed at a given hour or the way trash is collected.

Association boards tread the line between operating like local governments and operating like corporations. They perform many functions similar to a city council, but they operate, financially, more like private companies--which means largely in secret. Statewide they control an estimated $6 billion in cash, Murray said.

“The question is whether we treat them like little governments or we treat them like private clubs,” said Chris Shultz, a spokesman for Assemblyman Jones.

Beer, a self-described liberal New Yorker, began asking about Sun City Roseville’s finances out of simple curiosity. In 1998, just months after he moved in, he saw three new computers delivered to the association. Beer works with computers, knows a thing or two about how much they should cost and wanted to know if his association had gotten a good deal.

Beer couldn’t get a straight answer. That set off a now seven-year-long struggle to look at a variety of the association’s purchasing orders and other financial documents. During that time, Beer, Chaney and other residents have gathered bits of information that make them more suspicious: out-of-date and refurbished two-way radios they believe were purchased at more than four times what they should have cost, air-conditioning thermostats they say were bought at a 200-percent markup, and an unnecessary mosquito-abatement program for which the association was paying $18,000 a year.

Chaney believes someone is pocketing money and that the board is looking the other way.

“Look, I have been ripped off by the greatest. I know the ways to steal,” Chaney said. “We have a situation here that is ripe for kickbacks.”

So, in May 2004, Chaney requested to review a year’s worth of invoices submitted by the association’s purchasing agent. The idea was to take a sample of the equipment and supplies purchased by the agent and see if the association could have gotten better deals. Chaney got nowhere with his request, so in February he took it to court.

Sun City Roseville Community Association Board President Jim Viele did not return a phone call from SN&R seeking comment for this article.

Murray compared the association to a city council, which by law is accountable to its constituents and must be transparent about its dealings.

“It’s like another form of local government, but without the openness we’ve come to expect from local government,” Murray said.

But Oliver Burford cautions not to compare a homeowner association with government.

“Don’t get into the government thing--that’s a whole different set of rules,” said Burford, executive director of ECHO--the Executive Council of Homeowners--a Bay Area organization that lobbies on behalf of homeowners associations. Burford acknowledged that oftentimes an association performs functions similar to those of a city council, “but that doesn’t make it a government,” he said.

Shultz counters that if associations have government-like authority, then they should have government-like accountability.

“They have the power to foreclose on your home--we’re giving them a governmental power,” Shultz said. “If you don’t pay your SBC bill or your Comcast bill, those companies can’t come take your home.”

Ducheny’s Senate bill attempts to make the foreclosure process stricter.

In a handful of cases, homeowners associations have sold homes out from under their owners in order to force payment of small amounts of money. In one widely publicized case from Calaveras County, Thomas and Anita Radcliff failed to pay a $120 annual assessment. Their $285,000 home was then auctioned off for $70,000 in order to collect.

“That you can lose your home because you owe 120 bucks--this is obviously wrong,” Murray said. “Nobody needs to debate this. It’s wrong.”

But lobbyists for homeowners associations argue that foreclosure is a tool that associations need, in a rare cases, to force payment of fees.

Jill Van Zeebroeck, chairwoman of the national Community Associations Institute’s California lobbying arm, questions the way Ducheny’s bill prescribes that the value for a home up for foreclosure should be appraised. Currently, an association can auction off a home for a minimum bid that is equal to the fees owed to the association and collection agency. The minimum bid on the Radcliffs’ home, for example, was $2,020.

“If nothing else, we need checks and balances in place,” said Mick Macomber, an attorney who represents the Radcliffs.

Macomber said a law like the one Ducheny has proposed would have prevented the foreclosure of the Radcliffs’ home.

“A simple phone call would have prevented the Radcliffs’ situation,” he said.

The same can be said for Willard Harrington, a Magalia man whose $68,000 home was auctioned off and sold late last year for $3,134 after he neglected to pay a $123 annual assessment to his homeowners association.

“He can’t read,” said Satsie Veith, an attorney with Legal Services of Northern California, which sued the Paradise Pines homeowners association and a collection agency on Harrington’s behalf. “If he had simply received personal notice, he would have paid it.”

Harrington didn’t realize what had happened until he was served with an eviction notice--which, as required by law, was delivered to him by a live person--and took it to friends who could read it for him, Veith said.

Joe Earley, another attorney assisting Harrington, complained that foreclosure laws allow collection agencies to charge huge fees for their services.

“Then, if the homeowner couldn’t pay 100 bucks or 200 bucks, they certainly can’t afford the $1,500 or $1,700 or $2,000 fees they charge,” he said.

Edgar Zazueta, an aide to Ducheny, said the senator expects the foreclosure bill to pass. Governor Arnold Schwarzenegger vetoed a similar bill last year, calling it “overly broad” but acknowledging that the existing laws on common-interest-development foreclosures need clarification.

An indication of the support for Jones’ bill, Assembly Bill 1098: It passed an Assembly floor vote 70 to 3. But it is currently parked on the Senate floor while Jones amends its language to mollify opponents.

Meanwhile, Sun City Roseville resident Chaney has a date in Placer County small-claims court later this month, during which he will address a legal issue that A.B. 1098 would clear up. His association is arguing that Superior Court, not small-claims court, is the proper venue for this kind of document-seeking suit.

But filing there, Chaney said, requires money for attorneys and allows the association’s lawyers to enter the fray. “They don’t want it in small claims because then they would have to answer, in court, as laymen, like you and me, 'How come you won’t give him the records?’ And they don’t want that.”

http://www.newsreview.com/issues/sacto/2005-08-11/News.asp

2005-08-09T00:32:00.000-07:00

The Silver Bullet for Liberty

From Magic City Morning Star

By Tom DeWeese
Aug 9, 2005, 01:05

Justice John Paul Stevens. Justice Anthony Kennedy. Justice David Souter. Justice Ruth Bader Ginsburg. Justice Stephen Breyer.

These four men and one woman have ruled that the United States Constitution truly is a meaningless document. Their ruling in the Kelo case declared that Americans own nothing.

After declaring that all property is subject to the whim of a government official, it's just a short trip to declaring that government can now confiscate anything we own; anything we create; anything we believe. They said our purpose in this country is to simply "serve the greater good." Our own hopes and dreams mean nothing. The state now decides.

Without the right to own and control private property, there are no other rights. Freedom of speech can't survive if we have no property on which to stand as we express our ideas. Guns are property and can now be confiscated. Protection against unreasonable searches and seizures was lost with the Patriot Act. And the right to a fair trial? Fair by whose standards - the same government that can now simply take your home because it wants to line its pockets with the building of a new shopping mall?

Our government just ruled that there are no natural rights - only rights it cares to grant us. Rights that will flow with the ebb and tow of daily change. There is no foundation. No root of liberty. For property rights are gone.

FOUNDING PRINCIPLES

Our Founding Fathers left no doubt in their writings, their deeds or their governing documents as to where they stood on the vital importance of private property in a free society.

John Locke (one of the major influences on the Founding Fathers as they created this nation) said: "Government has no other end than the preservation of property."

The great French economist, Frederic Bastiat said: "Life, liberty and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty and property existed beforehand that caused men to make laws in the first place."

John Adams said it best when he wrote: "The moment the idea is admitted into society that property is not as sacred as the laws of God; and there is not a force of law and public justice to protect it, anarchy and tyranny commence."

Adams would be shocked to learn that the Supreme Court of the nation he helped create would agree to empower government to take private land to enrich the pockets of private profiteers.

229 years of American ideals of liberty have come to an end. In one crash of the gavel, Stevens, Kennedy, Souter, Ginsburg and Breyer have declared themselves above the ideals of Jefferson, Adams, Washington, Madison and Henry. It is the end of the Enlightenment. The end of the Shining City on a Hill.

It is no longer a warning of what might happen. It is reality. It wasn't black helicopters we needed to fear. It was the black robes of the Supreme Court.

IS TYRANNY OUR FATE?

The question now becomes, what do we do? Obviously we have one of two choices. We accept our fate, or we fight. Are we finished? Do we quit? Do we surrender?

It would be easy to do that. No one would blame us. We gave it the good fight. We could hide behind the idea that ancient conspiracies set our fate long before we were born. Members of secret societies somehow trumped every ideal we hold - and overpowered every move we made.

We could pat ourselves on the back and say, well, they were just too strong. What could we do? Tyranny is our destiny. Is that what you want to tell your grand children when they ask you what you did to preserve the ideal of America?

In another era, we could have loaded up boats and sailed to a new world to live by the ideals we hold. But that was already done. People ran from tyranny. They came here - to America.

Now tyranny has caught us. And there's nowhere else to run. We either accept our pre-ordained "fate" or make a stand. This is it, my friends. This is the moment when we decide the future of our ideals.

You know the ideals I'm talking about. That you are born with liberty. That it is your natural right to speak your mind; start a business; own and control property; build your dream home - and expect it to be there for as long as you like; practice your religion exactly as you believe; and, above all, expect that the government will protect those rights at all costs.

We know by witnessing history that totalitarianism does not work. Government control of the actions of the people only leads to poverty and misery. We know that people pinned under the heavy hand of government do not produce for their masters. We know that that there is no such thing as faceless, nameless masses in some undefined "common good." We know that the United States was the first nation ever created that recognized the natural rights of individuals - and America's history has proven that such a system is the only one that produces prosperity and happiness.

And, so too, America's history is providing text book proof of what happens to a society when those freedoms are slowly taken away. We know we are right in our visions of the ideals of liberty and we know what our future is without them.

So, again, I say - this is it. This is the moment when we decide the future for our nation. And the future of liberty. The Supreme Court put the decision on our door step. There is no middle ground. And they are forcing us to make that decision today.

Do we fight for those ideals of liberty? Or will we allow them to be lost forever under some global village? Do nothing, and they have made the decision for us. What can be easier than that?

FIGHTING BACK

But if we decide to fight, then we truly must know what we are doing. Half hearted attempts at rallies and letter writing, like we've done in the past, won't get the job done. No short cuts. No silly rhetoric.

I've got to tell you, I get some pretty strange stuff in my office. Letters, e-mails, phone calls. People write to me with ideas they think will put us on the road to victory. Everybody's looking for that one quick fix. The right slogan. The silver bullet - that will defeat our enemies and restore freedom to America. Almost daily, I receive someone's solution - the great plan that no one else has thought of.

A good friend of mine, for example, wrote a huge book that carried all of the facts and figures to prove his position against a certain government program. He called me to say all we had to do to turn things around was to get a copy of the book into the hands of every single member of congress.

I tried to explain that Congressmen can't read. In fact, they now have the votes in Congress operating exactly like a fast food restaurant. You know the ones where they have so many illegal aliens operating the front counter who don't speak English. So they have everything set up by numbers. "I'll have a number one, please."

Well, now they do the same thing in Congress. No one reads the bill before voting. Congressmen have handlers now to tell them how to vote. It's all by numbers so they will understand. H.R. 1 - yes. H.R.1146 - no. In fact, about the only question they ask now is "Do you want to super size that?"

I've received buttons, bumper stickers and tee shirts - all created to provide "the message" that will turn everything around. I've receive phone calls resulting in long discussions about how to come up with just the right sound bite that will capture the nation's imagination and send the scoundrels to the tall grass.

And my personal favorite - we'll use words that will be so innocent sounding that the other side won't know what we are really up to.

THE ESA

On that subject, let me just say, I will not be a part of the current ridiculous campaign to "update and strengthen" the Endangered Species Act. I don't want the worst piece of legislation of all time to be "updated and strengthened." I want it repealed.

If you want something then you must demand it. It may be that, in the end, you don't get your way, but what you have to settle for is a whole lot better than if you had never tried. Do you want this monster off your back? Then start today to demand what you want.

Instead of standing there with your head down, following orders of people with suspected motives, who tell us to "never say repeal," stand up for what you want.

Here's a modest suggestion. Hold rallies on state house lawns to demand repeal of the ESA. Burn it in effigy. Tar and feather it and run it out of town on a rail. Make a quilt with the names of all of the ESA victims depicted. Name the towns that have disappeared; The businesses that have been destroyed; show the brands of the ranches that no longer exist. Spread it out on all of the state capital lawns while someone reads the names out loud.

And if you do this, state lawn by state lawn - back in Washington, those cowards hiding behind the marble columns of the Capitol Building will hear you. If your rallies are strong enough you may hear them say, "My people don't even want this thing - so we had better do something to give them some property rights protections."

I guarantee that the result will be much more to your liking than you're ever going to get with the current scared little whisper of a request - "can we have some property rights protections, please?" If we had done that ten years ago, instead of standing down, afraid to say repeal, we wouldn't be reduced to silly games today.

Why are our so-called champions on the Hill so afraid to do what is right and start a campaign to repeal the ESA so we can stop destroying American dreams with the most destructive law ever to get on the books?

Because of the Kelo ruling, shocked Americans are more ready now than ever before to listen. But still we're told, it can't be done. Perhaps it's because some of our "champions" don't really want it gone.

Update and strengthen. You see, update means - no compensation until you've already lost half of your land. Strengthen means - add the Invasive Species language that we've been fighting for more than ten years.

Add that language, as, I'm sorry to report Congressman Pombo is apparently doing in his new ESA reauthorization bill, and you'll wish you had the old one back.

This is an industry bill, and will serve no purpose other than to help one industry hurt another one. Property rights protection is an afterthought that will be sacrificed first in negotiations.

I believe that the proposed ESA authorization bill is nothing more than Kelo 2. The bill doesn't deserve our support. It needs to be declared "dead on arrival." The fact is, doing the right thing has become the hardest part of political life. But, in this late hour, as liberty is crashing down around us, it's time we start.

THE SILVER BULLET

So what is the silver bullet to save our liberty? I'm going to give it to you.

My friends, I often hear it lamented that the Republic is dead. That we are now controlled by Washington. You know what - I have found that isn't true. The Republic is still there buried under the weight of un-elected planning commissions, visioning statements and review boards.

Squeezed under all of that is the Republic of our Founding Fathers, rusting from lack of use. But it's still there and still armed with the silver bullet the founders provided. The one to guarantee that no one could take it away.

You see, our founders created this Republic to be self protected by making government at the local level the most powerful force.

The Silver Bullet is the "precinct captain." You scoff? You were hoping for something much more exciting! Well, that's probably the very reason we've ignored it.

We would much rather turn our attention to Washington, Congress, or the President. Why then, are these government entities so powerful today? Because we've let them become powerful by placing all of our attention on them - while ignoring involvement in local government.

But the power still lies in the precinct captain. Our opponents know it. They have left no lowly office untouched.

Check it out. Go to your local government and check out the policies being implemented by the game warden and the dog catcher - Sustainable Development and animal rights, most likely.

City treasurer. City clerk. The people who collect the taxes and issue permits. What are their policies? How about the development department and its policy for building permits? Sustainable Development? Now move on up to City Council and Mayor.

Just one month ago, the United Nations held a major conference in San Francisco on Sustainable Development. The main target for the conference were the mayors. Those who attended were asked to sign two documents - the Green Cities Declaration and the Urban Environmental Accords in which the Mayors pledged to undertake 21 action items over the next few years to implement Sustainable Development.

These action items included water policy, energy policy, transportation and health. They were provided sample legislation and pledged to enact it. The policies called for the implementation of the Kyoto Global Warming treaty and Agenda 21.

One week later, in Chicago, the U.S. Conference of Mayors called for the very same policies. Go to its web site and you will see that Sustainable Development and Kyoto are the two priorities of the nation's mayors.

Our enemies know that the power to impose this tyranny on us is now at the local level. It will do little good to spend time trying to stop it through Congress or the White House. In fact, President Bush already said we weren't going to participate as a nation in the Kyoto Treaty.

What does the UN understand that you and I don't? That it doesn't matter what Washington's policy is. They will just get the local cities and towns to do it anyway - because the towns and cities have the power to decide for themselves.

The Mexican government understands that fact. That's why, even though the federal government has never officially recognized acceptance of the Consular ID cards, Mexico is going straight to local government to get it accepted.

THINK GLOBALLY - ACT LOCALLY

Think globally - act locally is not just a slogan. It's an agenda. Now, to save our Republic and way of life, we need to make it our agenda. The Founding Fathers did.

Now that the UN meeting in San Francisco is over, watch as more and more local communities begin to organize non elected planning boards to control your lives.

Do you want to stop it? Then follow this plan. But be warned - it's a lot of hard work. It's hard - because we've neglected it for so long.

Make a chart of every single position available in your county. Break it down to the precinct level and then the ward level. List every office. Every board position. Now you will begin to see how large a task it is. But take it one step at a time. Start to fill those spots.

Work quietly. Please don't hold a press conference to announce to the community that you plan to take it over. Work through what ever party you want - even the Democrats. The goal here is to get our people, who understand the Sustainablist agenda, into places of decision making. It would be a dream come true to have candidates from every party running on the same issue. It's a goal to shoot for. The other side seems to have achieved it.

But make sure those candidates are people who understand the entire picture of Sustainable Development and Agenda 21. It will do you no good to help elect candidates that are, perhaps, good on one issue, like gun control or abortion, but fail to see the whole picture. Those are the very people who will fail you later.

Take over a precinct. Just one. You will control the election of every candidate at every level - at least in your little part of the city. Then take two.

You will need precinct workers to make sure our people get to the polls. You will need poll workers to make sure our votes are counted. Make sure they are people you can trust.

Run a candidate for the lowest office in town. Control it. No position is without power. And do it again. Go up the ladder. Get more precincts. Grow, neighborhood by neighborhood.

Step by step. Control enough precincts and even presidential candidates will seek you out for help in getting elected. You will control the candidates. You can stop the bad ones from even being able to run. Again, I warn you, only help elect local officials who oppose Sustainable Development. Refuse to support the lessor of two evils.

Pay attention to the non-elected review boards, policy committees and planning commissions. Can you get one of your people on it? Who is doing the appointing? Can you imagine the damage we could do to Sustainablist goals by getting one person on the local architectural review board? Don't forget those hated homeowners associations. Get on the board and control policy. And don't stop there.

You need to have the ability to create controversy against policies by current office holders. This will help you find like minded folks to join you. And it will help create issues so your candidates can win. Remember, most people would oppose them if they knew the truth. Tell them. Spread out.

A NEW CHAMBER OF COMMERCE?

Consider this idea. If your local farm bureau or Chamber of Commerce isn't representing you - start a new one. Understand this - you don't have to just take their double dealing. Go around them. Show up at council meetings, or at the meetings of any agency or board that purports to make policy that affects you.

As a new group representing business interests, homeowners or farmers, demand your say. Back up your demands by issuing news releases and doing interviews on local radio and television - representing your new group. Start saying over and over again that the governing body isn't representing the interests of your constituents.

If you make enough noise as the group which is truly standing up for farmers or businesses or homeowners, those individuals will follow you. You will pull the power structure right out from under the established organizations that have been taken over by our enemies.

LEGISLATURES, COURTS, AND THE BALLOT BOX

The Supreme Court hit us with a crushing blow. But it is not the final one - by any means. In fact, it may well be the spark we've needed to, not only get ourselves geared up - but to bring others to our cause.

People are starting to fight back across the nation. You've already heard of the successful ballot measure 37 in Oregon. In one of the greenest states in the nation, they demanded and got 100% compensation - retroactive! Measure 37 was won at the ballot box in a campaign that was run on a shoestring against the entrenched green behemoth we are all told to fear.

The State of Utah has stood up to the Federal Department of Education and tossed out No Child Left Behind; that was the state legislature. The State of Wisconsin has passed legislation against Smart Growth policy; that was the state legislature. The State of Georgia has said no to mental health screening; that was the state legislature. And I keep hearing that state legislatures are nothing but puppets for Washington.

More than 100 communities across the nation have said no to the Patriot Act. That was in city councils. The Michigan Supreme Court overturned the most offensive Eminent Domain ruling - the very one most communities have been using as their excuse to grab private property for private development. Michigan may now have the strongest property rights protections in the nation. That was in the courts.

We can build on these successes by organizing state by state, town by town - to force legislation to safeguard property rights. That train has obviously already left the station.

Rather than despair, consider this: The Supreme Court may have done us a huge favor. For the first time in many decades, property rights are on the front pages. People who have rarely entertained a political thought in their lives are now talking about the Supreme Court decision and understanding that it is very bad.

Congress has rushed to produce bills in both the House and the Senate to effectively overturn Kelo. Each bill is called the Property Rights Protection Act. State legislatures are now the major focus of campaigns to pass strong property rights language. Did you ever think you would see such efforts nationwide?

Those who are pushing Sustainable Development and globalism are now, frankly, out of step - old fashioned - out of date. And so are those who are telling you that it's just too dangerous to ask for property rights protection in a new ESA.

Sure we are way behind. Sure, we have a massive job ahead of us and we would be fools to delude ourselves otherwise. But, after all of our hard work over the years, after being a lone voice in the wilderness, something has started here. Thank the Supreme Court for jarring a lot of sleeping Americans awake. Our job now is to keep fanning the flames.

Now is not the time to circle the wagons or give up. Now is the time to move out, get involved, and turn the tables. Stop being polite to your oppressors. Tell them their time is through. Tell those who pretend to speak for you in Washington to either get on board with our agenda - or get out of the way. We are no longer going to go quietly into the night.

If you want to get rid of the ESA - then say so. Tell them to repeal it. Organize those rallies on State House lawns instead of letting someone else tell you to stand down while they speak for you in Washington.

If you want to defeat Sustainable Development - then expose it for what it is - a soviet collective that has no business in the United States of America.

Demand an end to the use of eminent domain. Tell them no more private homes will be taken so Wal Mart can get richer. Americans are ready to listen.

Get mad. But get busy. And do what it takes to win. Organize at the local level - use the power the Founding Fathers gave us to preserve the Republic - and throw off the yoke of tyranny.

Write this down and take it home with you: "The right of the individual to own and control private property is the foundation of liberty." And now write this: "Precinct Captain is the root to victory." That's the silver bullet that leads to sustained liberty. Put the two together and restore and preserve this Republic.

Now that's something to tell your grandchildren when they ask what you did in the great war to preserve American liberty.

Salute, and tell them "I was a Precinct Captain."

Copywrite 2005 Tom DeWeese

2005-07-17T15:16:00.000-07:00

Are HOAs a threat to freedom?
By Slim Smith, Tribune Columnist

July 17, 2005

The recent U.S. Supreme Court ruling on eminent domain has created a firestorm of criticism. Many folks simply do not believe that it’s right that a person’s property can be taken away and given to a commercial developer.

"I have great concerns about the rulings,’’ said Cynthia Dunham of The Leadership Centre in Gilbert. "I think the present property rights are somewhat sacred. I don’t like this business where you take private property and give it to another private entity.’’
This is an interesting observation from Dunham, whose group is an advocate of homeowners associations (HOAs).

Interesting because, when you get right down to it, HOAs have long used a de facto form of eminent domain.

Eminent domain is the practice of seizing private property for the greater good of the general public. For example, eminent domain could be imposed to clear the path for a new highway or hospital, etc. The HOA version of that practice would be seizing a home that has been neglected in order to preserve the value of surrounding homes. Foreclosing on that home protects the greater good of the community.

"When you become a member of an HOA, you have entered voluntarily into a contract,’’ Dunham said. "That’s vastly different.’’

The result isn’t much different, though. Ask Shelece Yoakum.

Yoakum lives in The Provinces neighborhood in Chandler. Monday night, she’ll face her HOA board and expects the board to inform her it is beginning foreclosure proceedings.
Basically, Yoakum faces foreclosure because she painted her house the wrong shade — a brownish gray.

Dunham says it is unfair to compare the Supreme Court ruling to what’s happening in HOAs. She says it’s a horse of a different color. In Yoakum’s case, it is, rather, a house of a different color and a clear example of how a good idea can be corrupted.

In its genesis, HOAs were formed so that cities would not have the burden of taking care of things like neighborhood pools, parks and open spaces. Now HOAs can dictate what sort of flag you can fly on your flagpole, where you can park your car and what color you can paint your house.

HOA supporters say it’s not as though home buyers don’t have a choice. "If you don’t want to live in an HOA, then you can select a home somewhere else,’’ Dunham said. But even she admits that’s becoming easier said than done.

Budget-strapped cities are demanding that developers form HOAs in their new communities in order to bear the burden of maintaining the neighborhoods, which means folks like Shelece Yoakum have fewer choices.

For all the uproar over things like the Patriot Act or eminent domain, a greater threat to personal freedom may be the neighbor who serves on your HOA board.

http://www.eastvalleytribune.com/index.php?sty=44710

2005-07-12T22:27:00.000-07:00

Sustainable development, smart growth and Kelo: Organized theft by any name

By Tom DeWeese
web posted July 4, 2005

Put yourself in the homeowner's shoes. You buy a home for your family. Perhaps it's even handed down from your father or grandfather. It's a place you can afford in a neighborhood you like. The children have made friends. You intend to stay for the rest of your life.

As you plant your garden, landscape the yard, put up a swing set for the kids, and mold your land into a home, unknown to you, certain city officials are meeting around a table with developers. In front of them are maps, plats and photographs – of your home. They talk of dollars – big dollars. Tax revenues for the city, huge profits for the developer. A shopping center with all the trimmings begins to take shape. You're not asked for input or permission. You're not even notified until the whole project is finalized and the only minor detail is to get rid of you.

Then the pressure begins. A notice comes in the mail telling you that the city intends to take your land. An offer of compensation is made, usually below the market price you could get if you sold it yourself. The explanation given is that, since the government is going to take the land, it's not worth the old market price. Some neighbors begin to sell and move away. With the loss of each one, the pressure mounts on you to sell. Visits from government agents become routine. Newspaper articles depict you as unreasonably holding up community progress. They call you greedy. Finally, the bulldozers move in on the properties already sold. The neighborhood becomes unlivable. It looks like a war zone.

Like being attacked by a conquering army, you are finally surrounded, with no place to run, but the courts. However, you're certain of victory. The United States was built on the very premise of the protection of private property rights. How can a government possibly be allowed to take anyone's home for private gain?

Under any circumstances this should be considered criminal behavior. It used to be. If city officials were caught padding their own pockets or those of their friends it was considered graft. That's why RICO laws were created.

Finally, five black robes named Stevens, Souter, Ginsburg, Kennedy, and Breyer shock the nation by ruling that officials who have behaved like Tony Soprano are in the right and you have to vacate your property.

These four men and one woman have ruled that the United States Constitution is truly meaningless. Their ruling in the Kelo case declared that Americans own nothing. After declaring that all property is subject to the whim of a government official, it's just a short trip to declaring that government can now confiscate anything we own; anything we create; anything we believe.

Astonishing. The members of the Supreme Court have nothing to do but defend the Constitution and keep it the pure document the Founding Fathers created to recognize and protect the rights with which we were born. They sit in their lofty ivory tower, never worrying about job security with their life-time appointments. And yet, they have obviously missed finding a copy of the Federalist Papers, which were written by many of the Founders to explain to the American people how they envisioned the new government would work. They have missed the collected writings of James Madison, Thomas Jefferson, John Adams and George Washington, just to mention a very few. It's obvious because otherwise, there is simply no way they could have reached this decision – unless implementing another agenda was their purpose.

I don't have the benefit of the Justices' grand staffs or unending salaries. But just a little research has turned up pretty much everything Stevens, Souter, Ginsburg, Kennedy, and Breyer would have needed to reach a logical conclusion that protection of private property rights are the most important rights, vital to the very foundation of a free society.

Our Founding Fathers left no doubt in their writings, their deeds, or their governing documents as to where they stood on the vital importance of private property. John Locke, the man whom the Founders followed as they created this nation said, "Government has no other end than the preservation of property." John Adams said, "The moment the idea is admitted into society that property is not as sacred as the laws of God; and there is not a force of law and public justice to protect it, anarchy and tyranny commence."

One would be hard pressed to find a single word in the writings of the Founding Fathers to support the premise that it's okay to take private property for economic development. To the contrary, they believed that the root of economic prosperity is the protection of private property.

So how did Stevens, Souter, Ginsburg, Kennedy, and Breyer miss such a rock solid foundation of American law? Perhaps they didn't. Perhaps they chose to ignore it in favor of another agenda. Specifically, Agenda 21.

For several years, certain members of the Supreme Court have been discussing the need to review international law and foreign court decisions to determine U.S. Supreme Court rulings. Justice Breyer has been the most outspoken for this policy, saying, "We face an increasing number of domestic legal questions that directly implicate foreign or international law."

What international laws are these? In general, the most pervasive are a series of UN international treaties, including several that address issues of climate, resource use, biological diversity, and community development. Specifically, Agenda 21, signed by the United States at the UN's Earth Summit in 1992, calls for implementing what former Vice President Al Gore called a "wrenching transformation" of our nation, through a policy called Sustainable Development. Sustainable Development is the official policy of the United States and almost every single city and small burg in the nation.

Sustainable Development is top-down control, a ruling principle that affects nearly every aspect of our lives, including; the kind of homes we may live in; water policy that dictates the amount each American may use in a day; drastic reductions of energy use; the imposition of public transportation; even the number of inhabitants that may be allowed inside city borders. Most Americans have heard of a small part of this policy operating under the name Smart Growth. Agenda 21 outlines specific goals and a tight timetable for implementation. In June, 2005, the UN held a major gathering in San Francisco where the mayors of cities from across the nation and around the world gathered to pledge to impose Sustainable polices.

In order to meet such goals, federal, state and local governments are scrambling to impose strict policies on development and land use. The use of Eminent Domain has become a favorite tool. Sustainable Development calls for partnerships between the public sector (your local government) and private businesses.

Now, as the public/private partnerships move to enforce Sustainable Development in local communities, an unholy alliance is also forming, allowing corrupt politicians to line their pockets and gain power as they partner with select businesses and developers to build personal wealth and power. They plot to take land that isn't theirs for personal gain, while claiming it's for the "public good." That's all the excuse they've needed to hide their true intent.

However, things have been changing as such brutal, organized theft has spread across the nation in the name of community development and environmental protections. American have started to fight back to protect their property. In Oregon, people went to the ballot box and shocked lawmakers by passing Measure 37, which says the government must either pay full price for any land taken, or waive the regulation and leave the property owner alone. In Wisconsin, the state legislature passed a bill to stop Smart Growth policies that are destroying property owners. In Michigan, the state Supreme Court overturned the precedent-setting ruling it made more than 20 years ago that allowed the use of Eminent Domain in taking property for private use. In fact, it was that original ruling that had been used by communities across the nation to justify their own Eminent Domain takings.

Clearly, the nation has started to rise up to stop this assault on private property. Without the power to grab property at will, the ability for communities to implement Sustainable Development has come into question.

Those who support Sustainable Development and Agenda 21 needed something big to put things back on track. The Supreme Court, which has already stated that it must look to international laws and treaties to decide American law, provided the answer. Stevens, Souter, Ginsburg, Kennedy, and Breyer chose Sustainable Development and Agenda 21 over the Constitution of the United States.

However, the effort may well be backfiring on the Sustainablists as the nation is reacted in force to protect property rights. Now, state legislatures and the U.S. Congress are rushing to produce legislation to restore property rights protections. Even Americans who have rarely uttered a political thought are suddenly becoming feverish with zeal for the Fifth Amendment. Americans may be learning all over again what the Founding Fathers knew – that the right to own and control private property is the most important right

That is all well and good, of course, but Americans must do much more than just get upset. They need to get behind those legislative efforts at every level of government to assure passage. They must dig in at the local level to foil efforts by their mayors and city councils to impose Eminent Domain against their neighbors. We must run this organized theft (now masquerading as the "common good") out of town on a rail. And don't forget to leave room on that rail for Stevens, Souter, Ginsburg, Kennedy, and Breyer.

Tom DeWeese is president of the American Policy Center, a grassroots think tank located in Warrenton, VA. The Center maintains a website at www.americanpolicy.org.

http://www.enterstageright.com/archive/articles/0705/0705susdev.htm

To download :

-Agenda 21-
Understanding Sustainable Development
A Guide for Public Officials
http://hoawatch.org/Agenda21guide.pdf

Deck brouhaha is latest headache at Woodmont

2005-06-26T08:14:00.000-07:00

Bulls Head development has been beset in recent months by missing money, infighting and lawsuits

Sunday, June 26, 2005

By KAREN O'SHEA

ADVANCE STAFF WRITER

When 112 homeowners in the Woodmont townhouse development in Bulls Head received violations for illegal decks, the blitz represented just the latest headache for a development beset in recent months by missing money, infighting and lawsuits.

The Woodmont experience offers a glimpse into the more complicated side of living in a community governed by a homeowners association and the homeowners themselves.

The Woodmont Homeowners Association filed a civil complaint against its former president, Patricia Messana, seeking restitution of more than $300,000 for common charges the association alleges were misappropriated under her watch. The district attorney is investigating the allegations, which Ms. Messana strongly denies.

But a struggle has also ensued over who will lead the Woodmont Homeowners Association in the wake of the scandal.

The troubles are no surprise to Councilman James Oddo (R-Mid-Island/Brooklyn), who said he's tried to negotiate with the Buildings Department and the city's Environmental Control Board to mitigate fines 112 residents recently received for illegal decks.

He's also reached out to the state attorney general's office about the missing Woodmont funds.

MANY HORROR STORIES

"We've had so many horror stories in this office," said Oddo. "I don't think people realize what they are entering into when they become part of these communities, and it's been problematic from day one."

Since the time homeowner associations (HOAs) first came into existence in the 1970s, their numbers have soared on Staten Island to more than 300, far surpassing the rest of the city. HOAs govern private communities and often times the HOA owns common property or shares private sewers and private roads. Staten Island has more private roads than the four other boroughs combined.

Jose (Joe) Valentin is a longtime Woodmont resident and community activist who was one of a few ousted Woodmont board members who filed a lawsuit earlier this month to take back the board leadership. The suit calls the current board a "rogue" organization that hijacked the HOA and illegally ousted past board members after the alleged scandal with the past president.

Newly-appointed board member Jim Wilson, who circulated petitions in the development to oust Valentin, called the lawsuit "frivolous."

"It's going to cost the community more money," said Wilson.

He's said Valentin was vice president of the board during the past president's leadership and should have known about the missing funds.

PLAYED LESS OF A ROLE

But Valentin argues that the problems only surfaced during a year when he was recovering from surgery and playing less of a role in the association. The lawsuit filed June 9 also says it was another ousted board member, Eugene Smith, a certified public accountant, who first discovered the accounting problems with the help of Valentin.

Valentin and Smith argue in the suit that the new board members are not qualified to handle the fragile finances of the association.

The suit, filed in the name of the Woodmont Homeowners Association, says the new board members are behind in association payments and one person recently filed for bankruptcy.

Wilson also recently filed for bankruptcy, public records show. He said last week that he experienced financial problems after a battle with cancer and another board member filed for bankruptcy because of a failed business.

"We are not handling the finances. We have a management company now," said Wilson. "We are just looking out for the best interests for the homeowners."

Valentin disagrees.

"They have no clue or no experience on how to run an organization," Valentin, who serves on several other community organizations, said of the new board. "We are going to court because I've got to protect the rest of the homeowners in this community," he added.

Ms. Messana, who served as the Woodmont Homeowners Association president for a decade, has denied any wrongdoing, saying she often paid cash to contractors to keep costs down and has few receipts to document that work.

"It's not missing," she said of the money.

"I would give (vendors) cash. That's my screw-up," she added.

Still, she said work got done in the development.

"If I took all that money, who paid for all those repairs?" added Ms. Messana, who was one of the 112 who received a violation for her deck.

THE LATEST AFFRONT

Barbara Barbaria, secretary of the Woodmont HOA, said the deck violations are the latest affront to the community.

She said the HOA increased its monthly dues from $125 to $185 after the accounting problems were discovered. They also placed a lien on Ms. Messana's home and hired an outside company to manage its affairs.

"The bottom line is this community is hurting already from a $300,000 loss," she said recently. "Now to be hit with these additional fines is really killing us."

Karen O'Shea covers real estate news for the Advance. She may be reached at oshea@siadvance.com.

http://www.silive.com/printer/printer.ssf?/base/news/11197917936042.xml

2005-06-09T01:44:00.000-07:00

Law firm to settle debt suit

Homeowners say collection letters faulty

By Joe Kollin
Staff Writer
Posted June 9 2005

An estimated 2,500 South Florida homeowners threatened with foreclosure by a Lauderhill law firm for not paying alleged debts soon could get a $30 check in the mail.

Some of the debts the firm tried to collect were for as little as $25.

Katzman & Korr, which represents 400 homeowner and condo associations in Broward, Miami-Dade, Palm Beach and Monroe counties, has agreed to settle a federal class-action lawsuit that accused it of violating the federal Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act.

If a deal is approved by U.S. District Judge William P. Dimitrouleas, the firm would settle the 2003 suit for $250,000 and promise not to continue using the type of letter it sent to thousands of owners.

The settlement agreement calls for four residents of Plaza East in Fort Lauderdale -- Ramsey Agan, Grace Agan, Sherry Ann Spies and Nancy J. Bochicchio -- to get $5,000 each. Their attorneys, J. Blane Carneal of Fort Lauderdale and O. Randolph Bragg of Chicago, would get $135,000. Another $20,000 would be used for expenses.

The remaining $75,000 would to go to the estimated 2,500 members of the class, for about $30 each. Owners considered part of the class will be notified by mail and will have the right to opt out and deal with the firm individually.

The two sides filed their settlement agreement this week. Dimitrouleas hasn't yet set a date to consider it.

The larger issue in the case -- foreclosure threats by attorneys for small or nonexistent debts -- affects everyone who owns a residence in an association-controlled community.

The problem has drawn increased scrutiny from state officials. State legislators failed to come up with measures this year to address the issue but are expected to try again next year.

The lawsuit hinged on the legal issue of the form of collection letters. It alleged the Katzman & Korr letters were illegal because they didn't give owners specifics about the debts, such as when a payment was due and how much. Rather, the letters gave total amounts. Consumer protection laws require complete information.

In its settlement, Katzman & Korr said members of its firm "do not admit or concede (but, to the contrary, expressly deny) any wrongdoing, liability or improper conduct of any nature" in connection to the allegation in the lawsuit.

The attorney for the firm, James M. Kaplan of Miami, said he is pleased to end the "potentially costly" lawsuit.

The settlement, if approved, "would clarify the acceptable way to collect from those who don't pay" their bills, he said, and "there could be no dispute that the letters Katzman & Korr will be using comply with the letter of the law in every respect."

Dimitrouleas last year declared the case a class-action lawsuit representing all unit owners who received collection letters similar to those received by the four Plaza East unit owners. The settlement says owners must have received the collection letters between December 2001 and Jan. 12, 2005.

Joe Kollin can be reached at jkollin@sun-sentinel.com or 954-385-7913.

http://www.sun-sentinel.com/news/local/broward/sfl-settle09jun09,
0,6290636.story?coll=sfla-news-broward

Neighborhood group gets ugly

2005-06-04T04:45:00.000-07:00

Feud among board members leads to criminal charges for one

BY ALEX FRIEDRICH

Pioneer Press

Lots of homeowners association veterans have horror stories — the crank who won't shut up at meetings, the guy whose dog poops everywhere, the dictator who insists houses be the same shade of eggshell white.

But dysfunction at the Chamberlain Homeowners Association in Woodbury apparently has led to two residents' windows getting shot repeatedly with a slingshot and another resident being charged with a felony.

A feud between board members turned the community of two-story town homes and spacious manicured lawns into a scene of late-night drive-bys, broken windows and police surveillance early this year.

Former board member Daniel Lee Tri, 46, has been charged with repeatedly shooting out his rivals' front windows with a slingshot over a three-month period this winter. He faces a count of first-degree criminal damage to property and will face court June 29.

"There's road rage, and then there's homeowners association rage," prosecutor John Fristik said. Tri "just tripped over the line," he said.

Tri could not be reached for comment.

Chamberlain Homeowners Association governs more than 35 town homes near Carver Lake Park and the Woodbury Golf Course. Such an association usually manages such matters as landscaping and upkeep and collects money from homeowners to do it.

Tri is a member even though he lives elsewhere in Woodbury, police say. He rents out the house he owns in the Chamberlain neighborhood.

He was on the board at one time with neighbors Grayce Hartman and Mary McNally, and they didn't get along. The criminal complaint said he and the two women "had several disagreements and verbal altercations" while serving on the board.

It's unclear what caused the bad blood, because none of the homeowners involved wanted to discuss it in detail.

But law enforcement officials say it appears Tri stepped on some toes during his time in office and that some neighbors thought he was circumventing the board on some decisions.

"I don't think it was one thing," Fristik said. "They were kind of at each other's throats from the beginning."

Hartman did say Tri "was obsessed with making the board look like they weren't doing their work" and that he had said the management company hired by the association was mismanaging its money.

Tension came to a head, law enforcement officials said, after a board election last spring in which Tri lost his seat. Hartman and another woman were elected instead, and McNally had helped Tri's opponent, Hartman said.

After Tri's defeat, Hartman told police, he began sending antagonistic letters to the homeowners "to undermine the work of the board."

In mid-December, the vandalism started. In more than 20 instances from Dec. 12 to Feb. 27, the complaint states, someone shot marbles and metal nuts at Hartman's and McNally's Falstaff Road houses — sometimes after midnight.

They usually hit the same double-paned window in each house — not shattering it, but leaving holes in the front pane.

At the end of the attacks, prosecutor Fristik said, the windows looked "like Swiss cheese."

Sometimes the vandal's marble struck a shingle and tore away part of it. Sometimes it missed and put a hole in the siding.

"This has just shook this group of people out here," Hartman said.

In late December and early January, investigators set up surveillance cameras in the women's houses. On several occasions, the complaint states, police noticed that Tri drove cars similar to the ones used in the late-night attacks.

About 11:30 p.m. March 3, Woodbury Officer Fran Schmitz pulled Tri over after seeing him shoot at Hartman's house, according to the complaint.

He found a slingshot on the floor of the white sport utility vehicle Tri was driving, the complaint said, as well as metal nuts and a marble like those that had damaged the houses. Police also found evidence of marijuana paraphernalia, Fristik said.

Tri was arrested, and if convicted, faces a maximum sentence of 5 years in prison and a $10,000 fine.

Homeowners associations "bring out the worst in people," said Fristik, who said he also has been a member of one. "It just gets goofy."

Alex Friedrich can be reached at afriedrich@pioneerpress.com or 651-228-2109.

http://www.twincities.com/mld/pioneerpress/news/local/11812143.htm

Trashed home puzzles officials

2005-06-02T11:53:00.000-07:00

By Gwendolyn Crump -- Bee Staff Writer
Published 2:15 am PDT Thursday, June 2, 2005

It began with a homeowners association's request for a Mills Ranch resident to cut his grass and trim his brush.

However, the owner's response - vandalizing his own house and property - has been a puzzler for the neighborhood and Rancho Cordova code enforcement officials.

Edward Bohanan, who allegedly spray-painted his house at 2300 Pecan Grove Way, chopped down trees and filled his yard with appliances, mattresses and other junk, faces a hearing this month for failing to clean up the mess by May 25.

"We've seen messy yards," said Yvonne DeHaan, the city code compliance manager, "(but) not deliberate vandalism like this."

Bohanan was unavailable for comment last week.

DeHaan said when officials returned to the neighborhood to see if the property had been cleaned up last week, they noticed more damage at Bohanan's other house, across the street on the 10400 block of Woodbridge Way.

She said Bohanan used a baseball bat to damage a late-model Mercedes-Benz parked in the driveway of the Woodbridge Way house. The car also is covered in graffiti referencing the milestone concert Woodstock.

"He is severely damaging expensive things," DeHaan said. "He's not threatening, but he's not cooperative."

DeHaan said the initial fine for failing to clean up the property was $240, and subsequent inspections will cost $335 each.

The city, fearing a fire hazard, began clearing brush from the yard. DeHaan said that last week the city boarded up the property, painted over the graffiti and concealed the junk. She said inspection will cost thousands of dollars, which the city will recover by placing a lien on the property.

The tension began May 7 when an architectural committee from the Mills Ranch Homeowners Association toured the neighborhood and issued 42 citations for upkeep violations.

The neighborhood is made up of 149 single-and two-story homes, many of which have well-manicured lawns.

"(Bohanan)was the only one who had a problem," association President Randy Housewright said. "He didn't care for the notice. He cut down mature trees and spray-painted his house. That was his answer.

"Some people have a problem with any type of authority."

Among other sayings spray-painted on the house in black paint is: "Ty said, take care of your own house."

DeHaan said some neighbors have conjectured that Ty is a reference to Ty Pennington, star of the reality show "Extreme Makeover: Home Edition," in which homes are revamped.

Neighbors are only guessing why Bohanan would vandalize his own property.

Russ Bishop, who has lived in the Mills Ranch neighborhood for 11 years, said that before the homeowner trashed his house, it looked nicer than most of the others.

Now, the house has become a magnet for onlookers.

"It's quite the tourist trap," Bishop said. "There's constant traffic to see the freak show."

DeHaan hopes to have the matter resolved soon.

"We want to give this neighborhood some peace," DeHaan said. "This neighborhood has not seen anything near this magnitude."

About the writer:

The Bee's Gwendolyn Crump can be reached at (916) 608-7453 or gcrump@sacbee.com.

http://www.sacbee.com/content/community_news/el_dorado/story/12989114p-13835822c.html#more_images

Hand in the HOA's Cookie Jar

2005-05-10T12:13:00.000-07:00

by Richard Thompson

An excerpt from a recent news story read: "Bridgett Freeman of Sheboygan stole more than $11,000 from the Westridge Homeowner's Association in West Bend. Thursday, she was sentenced to six months in jail and three years probation, and was ordered to pay back $11,617.41. She said she was sorry."

From time to time, these stories hit the local rag with the really big ones making national news. While embezzlers can be found in virtually every type of business, homeowner associations are not immune. In fact, because of the volunteer nature of HOAs, business practices tend to be somewhat lax and HOAs are even more vulnerable than traditional businesses.

In the past, big time embezzlement was less likely because most HOAs had little money to steal. It was like mugging a panhandler. What was more likely to happen, is something, like board members buying themselves dinner or other perks on the HOA's dime. Those so engaged, view it as a legitimate expense for a volunteer position. Trouble is, since directors usually serve for no compensation (see your governing documents) and there is rarely a budget line item called "Board Perks," this is just another form of petty embezzlement. Like Enron, this kind takes collusion of the board members to keep the practice alive.

With reserve planning for homeowners on the rise (thankfully) comes increased amounts of cash which can add up to hundreds of thousands of dollars. With larger amounts of cash comes the unfortunate temptation to dip into the HOA's cookie jar. Embezzlement can happen by either a board member or management company that has access to the funds. Usually, managers are restricted (or should be) from reserve accounts where most of the HOA's money is. This leaves the HOA cookie jar under the control of the Board President and Treasurer.

When it comes to protecting against embezzlement and other forms of fraud, it's best to have a number of controls in place that are designed to preempt the act. In other words, if there is a good chance an embezzler is going to get caught, the temptation is much less than if stealing is a piece of cake. Some of the basic controls include:

Two Signatures Required Checks. Get checks that require two signatures. Of course, a forger would simply sign both lines and, frankly, the banks rarely check signatures for authenticity unless a substantial cash withdrawal is being requested, so no guarantee here.
Duplicate Bank Statements. Getting two sets of bank statements, each mailed to a different party, reduces the likelihood of embezzlement. Of course, the two recipients could collude to embezzle, but the odds are greater against collusion.
Rotate Check Authority. Don't always have the same person write, sign and issue checks. Rotate that authority so that several sets of eyes are looking at the checkbook.
Bank Account Reconciliation. Having an outside entity that has no check writing authority, like a bookkeeping service, balance the checkbook each month places the check function at arms length.
Secure Check Storage. All blank and canceled checks should be stored in a locked and secure location. A favorite ploy is to steal blank checks from the back of the stack so the theft won't be immediately apparent. Canceled checks can be used to assist in forgery.
Fidelity or Employee Dishonesty Insurance. While it won't prevent theft, this kind of coverage will reimburse the HOA up to its limit for theft.

Getting caught with a hand in a cookie jar is no big thing if you're five years old and the goal is a macaroon. But when the prize is the HOA's cash, the Board needs to place aggressive measures in place to help keep those "certain someones" from helping themselves.

Published: May 4, 2005

http://realtytimes.com/rtcpages/20050504_protectinghoafunds.htm

Houston Woman Loses $270,000 House Over $420 Bill

2005-05-04T17:29:00.000-07:00

State Senator Wants To Outlaw Non-Judicial Foreclosures

POSTED: 5:06 pm CDT May 4, 2005

UPDATED: 5:35 pm CDT May 4, 2005

HOUSTON -- A Houston woman lost a $270,000 home she owned free and clear because of a $420 debt to a homeowner's association, Local 2 reported Wednesday.

Pamela Bernhardt owned a two-story, four-bedroom rental home with a swimming pool in the 14200 block of Swallowfield in southwest Houston.

She just spent $48,000 renovating it. "It has hardwood floors, granite countertops, stainless appliances and all new tile in the bathroom," Bernhardt said. The Briarhills Homeowner's Association sold it after Bernhardt did not pay a $420 assessment fee. "I was just sick about the whole thing," Bernhardt said.

"I learned that the sale of the house was $1,600 and I had the house listed -- at the time that I found out it was not mine anymore -- it was listed for $269,900, and we had two full-priced offers coming in that day."

The homeowner's association said it mailed several foreclosure notices to Bernhardt who owned the property clear of any liens.

The Swallowfield house is one of three rental properties Bernhardt owns with her husband.

"None of it should happen because a phone call, a knock on a door, there's many ways to get in touch with someone if you can't find them, and it's not strictly by one or two or three letters," Bernhardt said.

By the time she found a note on the door that the house had been sold, she had missed the 180-day grace period that the state Legislature enacted for homeowners to buy back their property.

"The auction (for my house) consisted of one person," Bernhardt said.

The Briarhills Homeowners Association said it followed state property code, which did not require a judge or court action. State Sen. Jon Lindsay wants to outlaw non-judicial foreclosures by homeowner associations. He wants to ensure all foreclosures go before a judge.

http://www.click2houston.com/money/4450692/detail.html?rss=hou&psp=news

Barred From the Website Forum: But Can the Association Do That?

2005-05-04T11:20:00.000-07:00

Homeowners groups tread a fine line to keep postings civil, as a south O.C. resident found.

By Daniel Yi
Times Staff Writer

May 4, 2005

Bo Kelleher admits that on some subjects, he minces no words. Same-sex marriage is "garbage," he says. Abortion-rights activists are "morally bereft," and child molesters are "subhuman."

But when he expressed similar opinions on LaderaLife.com, his community's private website, he was told to play nice or be banned.

He was banned.

"They want to run it like it is a kindergarten," said Kelleher, 32, a website designer who lives with his wife and young son in Ladera Ranch, a subdivision in south Orange County. "We are all adults here…. I wasn't very nice in my postings — that's what I might be guilty of."

Kelleher's story illustrates the challenges that homeowners associations face in governing residents on issues ranging from regulating lawn ornaments to matters of open records and free speech.

Across the country, residents are challenging their associations, arguing they should act more like governments and respect constitutional rights such as freedom of speech.

"These are quasi-public entities, and they must respect the state Constitution," said Frank Askin, the national counsel for the American Civil Liberties Union who is representing a group of New Jersey residents against their homeowners association over similar issues.

In California, such arguments have led to laws that force homeowners associations to act more like governments. Residents now can scrutinize association finances and fly flags or political banners in front of their homes — actions once prohibited in many private communities. .

Community managers say restrictive covenants help ensure quality of life and protect property values. In Ladera Ranch and other communities, the rules also apply to the websites.

The Ladera Ranch website was designed to foster a sense of community, and for the most part, LaderaLife.com is used by its 7,300 registered members to exchange things such as wine suggestions, recipes and pet-grooming tips.

Some residents also exchange ideas. Anything and everything is discussed — as long as the discussion remains civil, said Paul Johnson, a vice president at Rancho Mission Viejo, Ladera's developer. Kelleher was far from civil, Johnson said.

Kelleher said he was unfairly targeted.

"I think it is OK to disagree in public, and they obviously don't," he said.

The disagreement began last fall. Kelleher said he spotted a posting announcing that a Unitarian Universalist Church pastor who had just returned from a "marriage equality caravan" in support of same-sex marriage was going to speak at a local event.

Kelleher, who refers to himself as a "Bible-believing Christian," took issue with the posting and fired back, he said. "How does this garbage creep onto out [sic] message boards?!," he wrote. He said he suggested the posting about the pastor's visit be purged. Instead, Kelleher's message was yanked.

Weeks later, another resident posted a message urging people to vote for President Bush in the November election. Another resident took issue with Bush's position on abortion, and the discussion quickly devolved into a graphic argument.

The dispute culminated in December when Kelleher posted the address of a convicted child molester in the neighborhood after getting the information from the state's Megan's Law website. That posting also got pulled because he violated LaderaLife rules that prohibit posting a resident's personal information.

In revolt, Kelleher created his own website. As a parting shot, he e-mailed LaderaLife members listing his grievances and inviting people to visit his site.

For that, he was banned from LaderaLife for six months.

As private communities with resident websites become more prevalent, observers say, flare-ups will become more common. The forums, like town hall gatherings, inevitably invite people to sound off, they say.

Most homeowners associations avoid the problem by simply not offering message boards.

Evan McKenzie, a professor of political science at the University of Illinois in Chicago, said courts would eventually be forced to consider how much homeowners associations are like governments.

In free-speech issues, the courts so far have ruled that individuals shouldn't have any expectation of free speech when they join voluntary organizations.

http://www.latimes.com/news/local/state/la-me-ladera5may04,1,4678544.story?coll=la-news-state&ctrack=1&cset=true

Homeowners association sells woman's house

2005-04-28T21:59:00.000-07:00

Group says she failed to pay fee; critics say incident is an example of excessive power

By ZEKE MINAYA
Copyright 2005 Houston Chronicle

Pamela Bernhardt was close to completing renovations on a house she owned and hoped to sell. She had installed a new roof, new granite tops in the kitchen and new tiles in the bathroom.

Earlier this month, she arrived at the house on the 14200 block of Swallowfield in southwest Houston and found a small, yellow note stuck to the front door.

The handwritten note said that the house had been sold at a foreclosure sale seven months earlier. The local homeowners association had sold the house, valued at about $250,000, saying Bernhardt failed to pay a $420 assessment fee.

"It was so devastating," Bernhardt said. "I was just stunned."

Bernhardt's situation was another example of the excessive power of homeowners associations and the need to reform the use of foreclosure sales to collect fees, state leaders and activists said Wednesday.

Suing to get house back

A lawyer for the Briarhills Homeowners Association, which foreclosed on the house, said sufficient protection is on the books for homeowners and that Bernhardt was given ample opportunities to pay the debt.

Bernhardt has filed suit, claiming she never received notices alerting her to the delinquent fees. She is asking for her house back.

"I was never sent any notices," the 52-year-old real estate agent said. "I would have paid the $420, before spending about $48,000 on renovations."

Terry Sears, a lawyer for Briarhills, said notices were sent to Bernhardt by certified mail and that after the sale she had 180 days to buy her home back.

"She could have bought her home back for the amount of the past due assessment," he said. "It's unfortunate she did not respond to any of the notices."

Had the dispute been mediated in court, Bernhardt would not have lost her home, said state Sen. Jon Lindsay. Some foreclosures can be enacted without going before a judge, Lindsay said.

"I want to see judicial foreclosures," said Lindsay, R-Houston. "A judge should be looking over the shoulder of this process."

Lindsay said he would address the concern during the current session. The deadline for introducing new bills has passed, but he could still amend a pre-existing proposal, Lindsay said.

Practice is common

The push to curtail homeowners associations gained momentum after 83-year-old widow Wenonah Blevins lost her Houston home in 2001 when she failed to pay $814.50 in association dues.

Blevins eventually got her home back, and public outrage galvanized state leaders to install protections that included the 180-day period in which a property owner could repurchase their home after a foreclosure.

But more needs to be done, according to Robert A. Axelrad, Bernhardt's lawyer.

"There are no safeguards with non-judicial foreclosures," he said. "You are talking about such a relatively small amount of money. The question is whether people should be allowed to take away people's homes without the safeguard associated with the judicial process."

The practice of homeowners associations threatening foreclosure has become much too common, said David Kahne, a lawyer who has represented homeowners against foreclosure. He estimates that 1,000 lawsuits are filed each year in Harris County by homeowners associations seeking foreclosures.

zeke.minaya@chron.com

http://www.chron.com/cs/CDA/printstory.mpl/metropolitan/3158104

FL State Rep. Robaina fights for condo owners' rights

2005-04-24T21:48:00.000-07:00

Condo Confidential / Ms. Management

Robaina fights for condo owners' rights

BY MS. MANAGEMENT
condoconf@aol.com

Not many people have the guts or stamina to joust with developers, property-management companies, condo associations and the law firms that represent them.

Meet State Rep. Julio Robaina, who is not tilting at windmills as his deep-pocket opponents might have you think, but at a very real enemy: greed.

''The existing legislation strongly favors condo associations, not the condo owner, and change hasn't been a priority because the system makes money for those who give money to politicians,'' he said. ``It's no surprise that the laws were written by attorneys and developers over 20 years ago who have used them to their advantage ever since.''

Lest you think that Robaina is just another disillusioned condo owner like me, think again.

He doesn't live in a condo nor does he own one. In fact, his district 117 -- which includes Miami, Coral Gables, Pinecrest, Palmetto Bay, Cutler Ridge and unincorporated Miami-Dade -- doesn't even have a majority of condos in it.

So why doesn't he mind his own business?

''Housing is as important an issue as education and healthcare,'' he said. ``We are talking about the roof over your head. Old laws need to be tweaked and new ones need to be created to provide protection for unit owners when boards go astray.''

The former South Miami mayor has a sense of urgency about his mission.

''It's a crisis with 25 percent of the state's population in an association environment,'' he says. ``By 2010, it is projected that 40 percent of the population will live in a condo or planned communities with homeowners associations, which is why we have to resolve the problems now.''

Last year several of Robaina's proposals survived in a bill that passed into law.

Grandfathered Rental Rights; the creation of a condominium ombudsman; Q & A sheets at time of contract to purchase; and a Condominium Advisory Council became effective July 1, 2004.

''The reason things are so bad in Florida,'' he said, ``is that a majority of our condos are not primary residences, and so there's no one around to watch what's going on.''

He says the case of a recently arrested property manager on Brickell Key is a good example of corruption and abuse.

As monthly condo maintenance fees skyrocketed, the property manager is accused of supplementing his income by subleasing the condo owners' parking spots.

Property managers or supers on the take -- or those who are simply lazy but still get paid -- are the least of it.

Other problems Robaina points out include developers who hand pick boards so that they'll avoid being accountable for poor construction.

Then there are board members who receive kickbacks or use their positions to take vindictive action against their critics or receive special services from management, or simply break the condo rules that apply to everyone else.

''Conflict of interest is rampant,'' Robaina said. ``Big money is to be made if you are an unethical person sitting on the board, and, even if it's not about money but power, it's still not right.''

Educating condo owners and the local police departments on economic crimes is a priority for Robaina.

Next year, he -- along with colleagues Rep. Gus Borreiro (District 107) and Rep. Juan Zapata (District 119) -- will be focusing their efforts on stricter regulations and enforcement by overhauling the department that oversees condos and Condo Association Management (or CAMs).

Their wish list includes mandatory audits; background checks and financial disclosures for board members; board eligibility for full-time residents only; and a legal method of pursuing economic crimes by board members, CAMs, property-management companies, developers or other parties involved.

Consequences! Accountability! What a concept.

''Change starts with one person,'' says Robaina. ``It's nice to be known in Tallahassee as the condo man.''

Ms. Management is a huge fan of Robaina and hopes you are, too. You can reach him at Julio.robaina@myflorida house.gov.

Condo Confidential, an insider's look at condo life, is written by 'Ms. Management.' She can be reached at condoconf@aol.com.

Homeowners test the power of their own association

2005-04-24T20:32:00.000-07:00

Sunday, April 24, 2005

BY ROBERT SCHWANEBERG

Star-Ledger Staff

Twin Rivers, a community of 10,000 people in Mercer County, features four pool complexes, 14 tennis courts, a softball field, basketball and handball courts and a playground.

Though its population is greater than nearly 60 percent of New Jersey's towns and cities, Twin Rivers isn't a municipality. It is a planned community run by a homeowners association, complete with its own set of rules.

Residents who put a sign in the wrong spot on their own lawns face a $50 fine. Voting is tied to property values: Owners of the most expensive houses have four times as many votes as those in the most modest units. One resident lost his right to vote for refusing to pay a $3-a-month cable television fee.

Such communities -- and their rules -- are becoming more common across the nation.

In New Jersey, more than 1.2 million people live in an estimated 5,800 communities governed by homeowners associations or condo and co-op boards. About 40 percent of new housing units in the state are expected to be in a community governed by an association. Nationwide, one in six Americans, 51.8 million people, live under the rule of a community association.

"This is the new wave," said Frank Askin, founder of the constitutional litigation clinic at Rutgers School of Law in Newark. "They have become the equivalent of the old town square or village green."

These associations provide many of the same basic services as towns, including collecting garbage, plowing snow and fixing roads. Much like governments that collect property taxes, they pay for their services with fees collected from homeowners. They can also fine homeowners and put liens on homes.

"These privatized mini-governments are just that: They function as de facto governments, assuming many of the responsibilities that would be provided by municipalities," said Seton Hall law professor Paula Franzese.

But residents are often rankled by association rules. Now some homeowners at Twin Rivers say they have had enough. They have filed a lawsuit claiming the association rules violate their constitutional rights. The case, argued last week in state appeals court, could determine whether associations will continue to hold an iron grip over homeowners.

"You leave your constitutional rights outside the gate," said Haim Bar-Akiva, one of the residents who filed the suit. If the court agrees, he said "it will set a precedent in New Jersey for democratic government in homeowners associations."

But to Ed McConnell, president of the Crestwood Commons Association, the governing board for an 18-unit condominium development in Scotch Plains, the prospect of judges striking down rules residents adopted is a threat to his lifestyle.

"It's a different way of living," McConnell said. "Some people come in and they don't understand that; they think they can do whatever you want."

William Connolly, a Department of Community Affairs official who heads the division that enforces municipal codes and standards, said one reason for the spread of homeowners associations is that developers can offer more amenities -- from clubhouses to golf courses -- by creating communally owned property governed by an association.

"You get your swimming pool as part of owning in the community," Connolly said. "Municipalities are very encouraging of associations because the association will take on some of the responsibilities the town might have to otherwise."

DIFFERENT RULES

But associations don't have to play by the same rules as local governments. Connelly said municipalities "have a whole system of checks and balances, which by and large isn't there" with associations. Local governments, for example, have to provide more records of their actions to constituents.

The lawsuit filed by a handful of Twin Rivers residents seeks to subject community associations to one of the biggest checks on the power of municipalities: the risk that a court can declare its actions unconstitutional.

It is the latest in a long line of cases to pit the rights of property owners against those of individuals. When fundamental rights are at stake -- particularly rights of free speech -- courts have required the property interests of company towns, farm owners, private universities and regional shopping malls to yield. So far, however, no court has protected homebuyers against restrictions imposed by associations.

A major issue in the Twin Rivers case is whether homeowners voluntarily accepted restrictions by purchasing their homes. They are required to sign contracts agreeing to pay their association fees and abide by association rules.

"They clearly have a choice," Barry Goodman, a lawyer for the Twin Rivers Homeowners Association, told a panel of three judges last Tuesday. "If they chose to live in a homeowners association community, the courts have held they are bound by that contract."

Haim Bar-Akiva said when he bought his townhouse in Twin Rivers in 1984, "it was the only housing that I could afford."

"I had no knowledge about homeowners association rules and regulations," he said. "Nobody told us about that."

His wife Margaret said she thought Twin Rivers was simply the name for a section of East Windsor. "I didn't think it was an enclave that had its own rules," she said.

Still, they found it a good community in which to raise their children until they discovered how those rules could be enforced.

They were fined for having a door of the wrong color and later forced to remove a screen door the association considered to be the wrong style, even though some residents had the same kind, Margaret Bar-Akiva said. She said the experience "opened our eyes to the lack of democracy in living under homeowners associations."

She became president of a group pushing for "democratic reform" through legislation. Haim became a plaintiff in the lawsuit.

McConnell said affordability was a major factor in his decision to purchase his Scotch Plains condominium in Union County, but he also likes the lifestyle.

"For me, a single guy, I don't have to keep up with the Joneses. Everything's the same; that's fine with me," McConnell said. "You can be an individual inside your home, but outside, it's collective living."

The state gets more complaints from homeowners against community associations -- roughly 400 a year -- than it gets from tenants against their landlords, Connolly said. He said complaints against community associations run the gamut from "use of the association's attorney to suppress dissent" to "heavy-handed enforcement of minor rules" to "allegations of conflict and self-dealing."

And while his department can force association boards to meet in public and can sometimes help residents get access to records or a fair hearing, he said most of the time "we have no jurisdiction; there is no way we can help them."

Sen. Shirley Turner (D-Mercer) hopes to change that.

She has sponsored legislation (S2016) to expand the state's oversight of community associations and rein in their powers. Turner said it is needed to bring "some semblance of democracy" to a few community associations that operate like "little fiefdoms." She acknowledged passing the bill is "going to be a battle."

Robert Schwaneberg covers legal issues. He can be reached at rschwaneberg@starledger.com or (609) 989-0324.

http://www.nj.com/news/ledger/jersey/index.ssf?/base/news-9/1114318471315320.xml

Housing's 800-Pound Gorilla

2005-04-23T10:13:00.000-07:00

April 2005

Homeowners associations are growing in numbers and power.

By James B. Goodno

Nevada state senator Michael Schneider was on his way to an important floor session a couple of years ago when his secretary insisted he take a phone call. An angry constituent was on the line. She wasn't mad at Schneider, but she was mad at the president of her homeowners association, whom she was holding at gunpoint on her front stoop.

Schneider managed to diffuse the situation, but it was emblematic. While many residents are happy in their common-interest communities or developments — the condominiums, cooperatives, town houses, and planned communities governed by homeowners associations and their covenants, codes, and restrictions — angry disputes and perceived violations of residents' rights often spur legislative and legal action.

Beyond the highly charged and personal nature of these disputes is a set of philosophical and practical questions about the nature and future of local governance, particularly in the fast-growing Sun Belt.

"Homeowners associations enable places to govern lighter," argues Robert Lang, director of Virginia Tech's Metropolitan Institute. "When developers put in the infrastructure and homeowners or community associations maintain it and when associations are responsible for trash pickup, code enforcement, and security, local government can provide minimal services — or turn its attention elsewhere. They can have cities of 200,000 with tiny governments," Lang says.

Others have different takes on the power of homeowners associations. Evan McKenzie, a lawyer and political scientist who teaches at the University of Illinois at Chicago, describes homeowners associations as private governments. He argues that they should be held to traditional government standards.

Clifford Treese, a past president of the Community Associations Institute, whose members include homeowners association leaders and related professionals (property managers, attorneys, developers), takes the opposite tack. He says that community associations (as homeowners associations are also called) carry out privatized government functions and need not conform to government standards.

For planners and local decision makers, a common-interest approach to development has its merits, primarily because it reduces the costs of new development to the municipality. But there can be problems. Short-term issues revolve around the rights of individual homeowners, "double taxation" (association fees and local taxes), and contradictions between municipal or county codes and the homeowners associations' covenants, codes, and restrictions. And over the long haul, local governments may have to face the fact that poorly capitalized or managed associations cannot maintain aging developments.

These issues are sure to grow in importance, if only because some parts of the U.S. have come to rely on (or require) common-interest developments. According to a recent paper by Treese, the number of homeowners associations leapt from 10,000 in 1970 to 260,000 in 2004. By his estimate, common-interest communities contained 20.8 million units last year.

Some jurisdictions, particularly in the Sun Belt, push developers to provide common elements. In southern Nevada, Clark County and the cities of Las Vegas, Henderson, and North Las Vegas require developers to landscape around the communal walls that characterize the region.

Some planners and developers believe private communities can offer a higher quality of life. "I think [these communities] give some people a stronger sense of home and security," says Jon Wardlaw, AICP, assistant planning manager in Clark County's comprehensive planning unit.

Some residents disagree. Monica Caruso, a longtime homeowner activist and the communications director of the Southern Nevada Home Builders Association, says that it's unfair for local governments to push homeowners into private communities — if only because they make so few housing options available. "Government and planners say they want to create quality homes in livable communities, but not everyone wants to live like this," she says.

Rooted in utopia

Arguably, the roots of planned communities can be traced back to the utopian communities established by the Shakers and other religious groups in the 18th century. One could argue that some of the earliest European settlements in North America — Plymouth, Massachusetts, and Jamestown, Virginia — were prototypes of the common-interest communities.

Other common-interest communities focused on practical concerns. In Manhattan, housing cooperatives were established by socialist trade unionists to house their members, particularly immigrant workers in the textile and garment factories. (The flip side is that in other locales, covenants in privately controlled communities were long used to prevent African Americans, Latinos, Jews, and others from moving into particular neighborhoods — a practice the U.S. Supreme Court deemed unconstitutional in 1948.)

Modern common-interest communities draw their inspiration mainly from Radburn, New Jersey, Sunnyside Gardens in Queens, and the Country Club District in Kansas City. "Homeowners associations as we know them fully evolved at Radburn in the 1920s. City managers, the covenant form of private government, and master planning were all in place," says Evan McKenzie of the University of Illinois.

Cooperatives, which today are the least common form of common-interest housing, were the first to gain popularity. They were first established as working-class housing in the 1880s, according to Treese. The first luxury coops were built in the 1920s in New York and were soon copied in Chicago and Washington, D.C. Condominiums were first created in the 1950s and gained favor in the 1960s. They became the most popular form of common-interest housing in the early 1980s and remain so today.

By 1990, planned communities had taken the lead. In 1998, there were 16.4 million units in common-interest developments: 748,840 were cooperative units, 5.1 million were condominium units, and 10.5 million were in planned communities. From 1970 to 1998, common-interest units as a percentage of total U.S. housing units leapt from less than one percent to 14.6 percent.

Planned communities bear the closest resemblance to local governments, and raise the most ticklish questions about the future of metropolitan America. These communities include standard subdivisions, townhouse developments, gated communities, and larger master planned communities. New urbanist communities are typically common-interest developments (and they have some of the strictest covenants, codes, and restrictions). "New urbanist developments are so hyper regulated, it's unbelievable," says Chris Armstrong, AICP, senior planner with Carter & Burgess in Las Vegas.

Government or governance?

Planned community development blossomed during the 1970s, just when taxpayer revolts, including California's Proposition 13, signaled the beginning of privatized public services. In the most extreme cases, developers took responsibility for putting in and maintaining infrastructure and common facilities and delivering trash collection, security, and other traditionally public services. Rather than providing the services themselves, developers created homeowners associations to do so. Today, homeowners associations are typically governed by a volunteer board of directors. Property management is carried out by a mixture of management companies, HOA-employed managers, and volunteers.

"The arrangement made sense to municipalities," says McKenzie. "They didn't want to ask the existing taxpayer for more money to finance development, so they adopted a system allowing them to tax new residents while delivering minimal services."

"We don't let anyone build without a homeowners association," a North Carolina city manager told members of a recent American Bar Association tour. "They're cash cows."

In some cases, HOAs have taken on a decision-making role that makes them resemble local governments. "Effective local authority in the city and county of Honolulu has devolved to homeowners associations," says David Callies, FAICP, a University of Hawaii law professor and specialist in land-use law. "Homeowners associations have become the vehicle for local governance in Hawaii almost by default. That's where you go for variances, that's where you go for provision of services, that's where you go for security."

This situation is ripe for controversy. The battles fit into four broad categories:

Financial: Homeowners complain about double taxation. They pay fees to their association and taxes to their municipal government. Although their tax rates are similar to or even higher than those of homeowners living in other types of developments, they do not receive the same public services.

Rights: The covenants, codes, and restrictions are frequently more restrictive than city ordinances, and, because they are private contracts that are considered voluntary, they can prohibit acts that would otherwise be constitutionally protected; for example, flying a flag or posting a political sign in the front yard.

Governance: The quality and nature of governance varies from association to association. Some homeowners associations are well run, others verge on bankruptcy; many HOA officers take their fiduciary responsibilities very seriously and respect their members; others don't. Although Nevada has a commission overseeing homeowners associations and Florida recently appointed an ombudsman, most states have limited oversight.

Procedures: Approving changes to covenants, codes, and restrictions (CC&Rs) often requires a super-majority, and sometimes can be stymied by mortgage agreements. On the other hand, increasing fees, levying special assessments, fining residents for violations of the rules, entering litigation, and starting foreclosure proceedings for failure to pay fines can be instigated by a simple board majority.

Treese believes these problems are frequently overstated, and he argues that the structure of community associations allows for the democratic resolution of conflicts. "Everything that was lauded about New England town meetings is present in community associations," he says. "Boards like praise, presidents like praise, so they tend to reflect the wishes of their members. People who show up tend to have complaints, but when it comes to elections, there is a high level of participation."

Without checks and balances and professional guidance (few HOAs retain planning consultants or public works advisers), problems can arise. Homeowners complain when boards raise fees or levy special assessments, but an association can get in deeper trouble if its reserves fall short of meeting the cost of maintaining roads or roofs.

"A new homeowner may look at a common area — a clubhouse, or a pool, or a tennis court — and say, 'I get to use that; isn't it cool,'" McKenzie notes. "But you have to pay for it, and what happens when the HOA board concludes it doesn't have enough money for repairs and decides it needs a special assessment and starts sending out bills for $10,000 or $20,000?"

Homeowners may grumble when an HOA blocks an addition or a new paint scheme, but they also protest when an HOA signs off on projects that may violate the rules, especially when there are no requirements for a public hearing. This situation generates calls for reform.

"Since common-interest communities are acting more like local governments, we should hold them to different standards [than we have in the past]," argues Callies. "To receive a variance from a local government, a homeowner must typically demonstrate hardship and that there is no obvious adverse impact on neighbors. Homeowners associations do not operate by the same standards. They should, particularly in settings where associations act as local planning commissions."

He also says that in some places home buyers have no choice but to join a homeowners association — and that undermines the notion of voluntary participation. "Can neighbors set limits on what a person can do with his property beyond what ordinances restrict?" asks David Callies. "In a noncovenant community, the answer is generally no. In a gated or covenant community, the answer is yes. In Hawaii it has become very difficult over the last five years to move into a new home in a noncovenant community. Your only option might be an older home in Honolulu, but those have become very expensive. This might require a rethinking of our philosophy over what limits homeowners associations can set."

"I think associations face the same dilemmas township governments do," concedes Treese. "Some people want their community to remain the same, some want it to change." He says that homeowners associations can adapt.

Nevada sets the pace

These challenges are a fact of life for planners, developers, officials, and residents of Southern Nevada, particularly those in Clark County or the cities of Henderson, Las Vegas, and North Las Vegas.

"We see a lot of different product types here," says Chris Armstrong, whose company, Carter & Burgess, provides planning and engineering services to several major developers in Las Vegas, including KB Homes, America West, and Ryland. "Most that we see now, a very high percentage, have either a homeowner association or a landscape maintenance association. Generally, they're driven by city or county requirements."

Most new development in Las Vegas is of the common-interest variety, and public policy is an important engine of this type of development. Local landscaping requirements do lead to the creation of landscaping or homeowners associations. But there are other factors at work as well.

The Bureau of Land Management controls most of the desert surrounding the built-up areas of Las Vegas. When the federal government releases land for development, local jurisdictions and private developers tend to favor master planned communities.

"To try to make development cohesive, it makes sense to have master planned communities that have HOAs," says Denna Woodbury, AICP, principal planner in the city of Henderson's current planning division. "A lot of development is occurring within master planned communities," adds Chris Armstrong. "Otherwise, there are not a lot of contiguous parcels. A lot of land released by the BLM is purchased by a consortium or a single buyer for master planned development."

Much of the high-end real estate development in Southern Nevada is taking place in master planned communities, Summerlin being the best known. Developers say they can offer an attractive product, and jurisdictions can look at land use in a rational fashion. Less charitable observers suggest that local governments also encourage the development of pricey — and thus revenue-generating — enclaves.

In North Las Vegas, the city's south side is largely Latino and low- to moderate-income. However, most of the city's growth is taking place in master planned communities on formerly federal land to the north. "They think that they can build swanky stuff," says Robert Lang, "and that they can keep it swanky for a long time to come."

State senator Michael Schneider seems to agree. "After the mayor [of Las Vegas] was elected, I told him, 'Your staff only approves homeowners associations.' He asked, 'Why do we do that?' I told him: 'Because you get to raise taxes without letting the public know you're increasing taxes. You bring in X thousand dollars without increasing services.' It's a taxing scheme," Schneider adds.

Schneider has led efforts to reform Nevada's homeowners association laws, creating what some observers view as a model package for statewide policy. Passed in three acts in 1997, 1999, and 2003, Nevada's legislation did the following:

Capped fines HOAs could levy at $50 (now up to $100).
Required HOA boards to receive approval from their residents before starting litigation.
Required board elections every two years and prohibited proxy votes during board elections.
Banned foreclosure based on nonpayment of fines.
Required education for property managers.
Mandated annual meetings with announced agendas.
Created a mechanism for recalling HOA board members.
Created first an ombudsman's office and later a state commission to hear complaints and enforce regulations.
Required that new home buyers be informed of CC&Rs and sign off on surrender of rights before closing.

"It was like writing a section of law creating a new type of government," says Schneider.

For the common good

All homeowners associations serve property owners within a specific common-interest development rather than an entire municipality. But homeowners associations and common-interest communities have a broader impact on local finances and land use.

"If there is new commercial development after a walled community is built, we will ask for a pedestrian link, but in many cases the residents don't want it; they don't want to invite outsiders into their community," says Greg Toth, AICP, a member of Henderson's current planning team.

As common-interest communities and their cities and counties move into the future, fiscal demands and conditions will change, and land-use demands and fashions will evolve. Will HOAs limit the ability of cities and towns to meet the changing desires and needs of residents?

"It will be interesting to see what happens in the next 15 years," says Armstrong. "There will be social consequences when communities start to decay and need rehabilitation or redevelopment."

"Highest and best use might become retail," adds Schneider, the Nevada state legislator, referring to land currently occupied by a residential community. "How are you going to do that when an HOA and CC&Rs stand in the way?"

The same question can be asked if a broader community wants to build a school, park, transportation hub, or affordable housing on land governed in part by a homeowners association. "When an association is bankrupt, can't repair the infrastructure or common facilities, and the value in land is more than the value of buildings, then the city would be better off if a developer would buy the whole thing and bulldoze it to smithereens," says Schneider. "The thing is, how are you going to get 200 homeowners to sell?"

David Callies believes this is a moot point. "The courts will always come down on the side of the local or state government when a public good is involved," he says, pointing to Hawaiian housing law as an example: "If infrastructure can support it and the lot is large enough, a property owner is allowed to build a second free-standing unit, something that might be called a granny flat on the mainland. Even if covenants prevented it, you'd be able to build it on public policy grounds."

Treese argues that community associations and public entities can work together to address issues of social concern without going to court. "I believe there are things you can do with community associations to make them more affordable," he says. "You can give qualified residents a tax credit that can be sold to the community."

In extremis

There are times when legislative or legal action seems inevitable. In Southern Nevada, water is often at issue. "Some people in Summerlin wanted to put in artificial turf to save water, and the HOA said no. It's going through a bitter battle," says Susan Johnston, principal planner with Stanley Consultants in Las Vegas.

Then there are fiscal and social issues. "Those who pay private fees won't be interested in increasing taxes to pay for county or municipal services," says Callies. "The argument seems equitable, but, on the other hand, it can be very anti-community. Instead of focusing on communal or public responsibility, homeowners end up looking for quid pro quo; their perspective becomes one of impact fees and special assessments, not public financial health." Callies adds: "Common-interest development promotes neighborhoods; it doesn't promote larger communities."

Mike Schneider draws a similar conclusion: "HOAs were a great social experiment that failed in many ways," he says. "I'm not so sure if we as policymakers had to do it all over again, we would allow them."

But HOAs are here for the foreseeable future. More oversight from the states is likely, as is more professional management. Weaker associations face the danger of bankruptcy, particularly as their communities age. Schneider suggests that these associations ultimately may have to be absorbed by their surrounding jurisdictions.

Treese is optimistic that community associations can correct their shortcomings and contribute to stronger communities in the future. Somewhat surprisingly, some of their sharpest critics agree.

"I'm still optimistic this form of living can work," says Monica Caruso. "Let's be reasonable. Let's really think about the common good."

Jim Goodno is Planning's contributing editor.

Resources

Images: Top — The pool area at Tripoli, Henderson, Nevada. Photo by Greg Toth. Middle — Picnic tables at Vista Ridge, Henderson, Nevada. Photo by Greg Toth. Bottom — The gates at Shadowbrook Falls, Clark County, Nevada. Photo by James B. Goodno.

Organizations. American Homeowners Resource Center: www.ahrc.com

Community Associations Institute: www.caionline.org

Foundation for Community Association Research: www.cairf.org

Metropolitan Institute, Virginia Tech: www.mi.vt.edu

Nevada Real Estate Division: http://red.state.nevada.us

The Privatopia Papers (a blog focusing on homeowners associations) are at www.privatopia.blogspot.com

http://www.planning.org/planning/nonmember/default2.htm?project=Print

Associations are too quick on the trigger, critics claim

2005-04-16T19:22:00.000-07:00

By Emmet Pierce
STAFF WRITER

April 10, 2005

Former public prosecutor Evan McKenzie holds that predatory attorneys largely are to blame for foreclosure abuses within homeowner associations.

McKenzie, who teaches political science at the University of Illinois at Chicago, is an expert on the growth of residential associations in America. Elected by members who often pay little attention to association activities, homeowner boards throughout the United States function as local governments, making land-use decisions that once were left to city councils and planning commissions, McKenzie said. With little legal expertise, they often rely on the advice of attorneys who specialize in housing law.

"The problem is there are a small number of law firms that are really aggressive about this," the educator said. "There are many lawyers who are reasonable. They will talk to people and work out payment plans. But there are a number of law firms that specialize in collecting assessments and they will force you into foreclosure as quickly as they can. They charge tremendous fees. All fees are paid by the delinquent homeowner."

It's a case of the punishment not fitting the crime, said McKenzie, who once worked for the San Diego County District Attorney's Office.

"I understand that people who are foreclosed on typically don't pay their assessments. I am saying foreclosure procedures do not need to be initiated to get them to pay."

Critics say associations are too willing to pull the trigger on their biggest debt-collection weapon. A survey conducted in 2001 by Oakland-based Sentinel Fair Housing examined Alameda, Contra Costa, San Mateo, Santa Clara and Sacramento counties. It found that $2,557 was the median amount of back assessments due on foreclosures conducted in private communities. In contrast, the subjects of more than 4,000 foreclosures outside such communities owed a median of $190,000.

San Diego attorney John Epsten, a longtime legal representative tohomeowner associations, dismissed the notion that lawyers are pushing for moreforeclosures.

"Anybody who tells you that an assessment collection is a profitable and rewarding part of their legal experience simply has not done enough of them," Epsten said. "Our firm offers that as a service to our clients. It is not a profitable business to be in. The only thing we typically are doing is processing paperwork."

McKenzie says the problem goes beyond foreclosures, however. Boards and their legal representatives sometimes interpret rules too rigidly, he contends.

Public awareness of association governance issues began building after the Sept. 11 attacks on the World Trade Center, he recalled. Around the country, many residents came into conflict with their governing boards over decisions to display the American flag in violation of association rules.

"That was, in fact, a watershed event, because it happened all over the country."

With Americans united in their anger over terrorism, demands to remove the flags seemed unreasonable, the educator said. "In political science we call this a policy window. Something happens that focuses attention on a problem."

While association laws vary from state to state, using foreclosure to collect homeowner association debts is a common practice, McKenzie said. Because of growing public awareness, reform "is going to happen. There's no doubt about it."

Emmet Pierce: (619) 293-1372; emmet.pierce@uniontrib.com

http://www.signonsandiego.com/uniontrib/20050410/news_1h10mckenzie.html

Burden of debt

2005-04-12T22:53:00.000-07:00

Power of homeowner groups to foreclose over small sums targeted

By Emmet Pierce
STAFF WRITER

April 10, 2005

When Melissa Colburn told her friends she had been asked to vacate her Chula Vista town home for failing to pay a $990 debt she'd never heard of, they refused to believe her.

"They thought I was crazy," she recalled. "When I talked to my neighbors they didn't believe it was going on. I was just in shock."

Although she said she never received a bill, in late 2002 Colburn was given just three days to vacate the home she had purchased in the late 1990s. It had been sold through nonjudicial foreclosure for about $5,000 despite a market value she estimated at more than $250,000.

When she contacted the county Assessor's Office, Colburn learned the home had been sold to pay off delinquent homeowner association fees. Alleging that she had not received proper notification, Colburn successfully sued to halt the foreclosure. In mid-2003 she signed a confidential settlement with the Villas at East Lake Shores Owners Association and the town home's purchaser.

Since then, Colburn has become a vocal activist in a legislative drive to prevent California's more than 37,000 homeowner associations from foreclosing on members to recover small debts. She recently met in Sacramento with homeowners and community management representatives in an attempt to find common ground. The issue is being monitored by consumer and homeowner association (HOA) groups nationwide.

"The industry is petrified that this bill is going to pass because they are making millions by using foreclosure to collect small amounts of money," said Marjorie Murray, a lobbyist for the Congress of California Seniors. "They don't want to lose their golden goose. If it passes here, it is going to send shock waves across the country."

The political momentum is with those who would limit the foreclosure powers of community groups, said Evan McKenzie, a national housing-law expert. A decade ago he correctly predicted that a rapid growth in common-interest housing developments would reshape American lifestyles.

Concern about foreclosure abuses has made homeowner associations "a soft target" for critics, said McKenzie, who teaches political science at the University of Illinois at Chicago. "Associations need the power to foreclose. The problem is, in many cases foreclosures are unnecessary."

Introduced by state Sen. Denise Ducheny, D-San Diego, Senate Bill 137 seeks to prohibit associations from using foreclosure to collect debts of $2,500 or less. It also would prevent a home from being sold for less than 65 percent of its assessed valuation.

Under the bill, homeowners would have the option of repurchasing the foreclosed home within 90 days. The measure cleared its first hurdle on March 29, when it passed through the Senate Judiciary Committee in a 4-to-1 vote.

Ducheny, a past chair of the Senate Committee on Housing and Community Development, revived the bill after it was vetoed by Gov. Arnold Schwarzenegger. He blocked it last year, despite broad bipartisan support. His action came at the urging of management industry groups such as the Community Associations Institute.

The case of Tom and Anita Radcliff, an elderly couple from rural Calaveras County, helped rally support for last year's version of the measure. The retirees continue to live in their home, despite efforts by their association to foreclose over a $120 debt. They recently reached a settlement with the association and its collection agency, but a legal conflict with the home's would-be purchaser continues.

According to the American Homeowners Resource Center, between 7 million and 8 million Californians live in homeowner association communities. Veteran association attorney David M. Peters says cases in which foreclosures are imposed unfairly are highly unusual.

"The Radcliffs are extraordinarily rare," he said.

Financial necessity

Associations hold that Ducheny's revised measure would limit their authority to collect the delinquent dues and assessments. Assessments "are the lifeblood of the organizations," said Jill Van Zeebroeck, a member of the Community Associations Institute's legislative action committee for California.

"If some people don't pay, it does place a burden on the people who do," she said. "While we agree nonjudicial foreclosure is not the first step, should be the last step, it is a viable remedy."

Van Zeebroeck said associations are seeking to reshape the bill into something that protects homeowners from unfair foreclosures without stripping them of an important tool for collecting debts.

McKenzie is the author of "Privatopia," a 1995 book that warned of the potential for homeowner associations to be misgoverned. Wielding powers normally reserved for courts and local governments, associations are home to an estimated 52 million Americans, the former San Diego County deputy district attorney said.

The Community Associations Institute estimates that more than four in five housing developments have been built as part of association-governed communities in recent years. In San Diego County, it has become difficult to buy a new or affordable home that is not governed by such an association, McKenzie said.

Like death and taxes, living under the authority of a homeowner board is becoming a fact of life for Californians. Ducheny considers such panels to be an added layer of government.

"What you have in effect is little city councils," she said. "They are elected. They are volunteers. They farm out a lot to management contracts. Then they have lawyers."

When foreclosures take place, there is little outside scrutiny to make sure the rights of homeowners are protected, she asserted. That increases the potential for misconduct among buyers and sellers.

Shifting costs

"It appears there were some abuses going on in this universe of people, finding out about foreclosures and going in at really low sale prices," Ducheny said.

While there are no definitive figures on homeowner association foreclosure actions nationwide, "there clearly are hundreds of thousands" of such proceedings each year, said McKenzie. Most debts are paid before the homes actually are sold.

The widespread growth of homeowner associations was no accident, McKenzie insists. In California and many other states, property taxes no longer cover the cost of expanding public services when new homes are built. Homeowner associations often take up the slack, making sure that residents pick up the added costs for street maintenance, security and open-space development that otherwise would be borne by cities. "Municipalities are virtually requiring this all across the Sunbelt."

In California, even critics of Ducheny's bill acknowledge that some associations abuse their foreclosure rights, Van Zeebroeck said.

"We absolutely recognize that there are problems, and situations where people have lost their homes for small sums of money should not happen," she said. "Even one person who loses their home for a small amount of money is not right."

San Diego homeowner association attorney John Epsten says the Ducheny bill goes too far, however. He considers the $2,500 threshold to be much too high. Not all foreclosure subjects are innocent victims, he stressed.

"There are homeowners who will ask for payment plans to give them enough time to file for bankruptcy," Epsten said. "There are homeowners who say they have mailed checks and later we find out the checks were never sent. When we send a warning letter, the majority of people pay their homeowner assessment. ... Most of the homeowners we are dealing with are fairly sophisticated individuals."

The good and the bad

Colburn said her own experience has made her sophisticated in the ways of homeowner associations. Now working part-time as a consultant on foreclosure cases, she says she has seen the good side and the bad side of life in a self-governed community.

"I have stepped into situations where you have a rogue board, people on a power trip who try to get rid of a neighbor they don't like," she said. "Then there are communities where they make it a nicer place to live. I would say its fifty-fifty. In order to have a good one, you have to have a good board and a good management company."

Colburn, a hazardous materials expert by profession, continues to live in the town home she saved from foreclosure. Eventually, she plans to move to a neighborhood that is not governed by an association. For now, she says her goal is to change the foreclosure law.

"I will never buy in an HOA, never ever, as long as I live, because of the things that can go bad," Colburn said. "But there are some things I want to change before I leave."

Do your homework

When buying a house or condominium within a homeowner association, consumers might do well to consider the words of Groucho Marx, the comic curmudgeon who said he wouldn't belong to any club that would have someone like himself for a member.

Groucho may have been kidding, but experts say you should carefully consider whether you're cut out for membership in a homeowner association. Unlike the Elks or the local YMCA, this isn't an organization you can simply walk away from.

The decisions an association's governing board makes can affect your pocketbook. Home equity, the principal source of wealth-building for Americans, can be enhanced or diminished by the actions of the board. Boards are responsible for the maintenance of building exteriors and common areas, such as swimming pools, parking lots, greenbelts and laundry rooms. Boards may weigh into neighborhood disputes.

Residents are legally obligated to abide by their organization's rules and regulations. And they must pay monthly fees if they don't want to expose their homes to possible foreclosure.

Here are some tips to consider before you join the club

Required reading. Before purchasing, Ray Brown, co-author of the "Home Buying for Dummies" real estate primer, recommends careful reading of the association's declaration of covenants, conditions and restrictions (CC&Rs). Also on his reading list is the association's bylaws and the annual budget report. These documents may be boring but understanding them can save you money and aggravation.

Potential lawsuits. If your association is involved in extensive litigation, it could end up costing you money. Ask your real estate agent and the association board if there is any litigation, current or pending.

How fast are homeowner fees rising? A review of several years of operational budgets may tip you off to poor management practices or rising costs.

People skills. Many association boards that govern large communities enlist property management companies to oversee day-to-day operations. A good company does its job unobtrusively. Ask current residents how they feel about the board and its management firm.

Is parking adequate? One of the most common sources of disputes in homeowner associations is parking, says Brown. Make sure you know where you have a right to park and if there is adequate guest parking.

Other sources of information. For different perspectives on associations, contact the consumer-oriented American Homeowners Resource Center at www.ahrc.com and the industry-focused Community Associations Institute at www.caionline.org.

Emmet Pierce: (619) 293-1372; emmet.pierce@uniontrib.com

http://www.signonsandiego.com/uniontrib/20050410/news_mz1h10owners.html

Organizing A Mass-Based Community Constituency | NEFAC

2005-04-10T08:38:00.000-07:00

Organizing A Mass-Based Community Constituency | NEFAC

"I've helped bring a busload of children and parents about to lose their library to the gated community where the library trustees lived. Members that I recruited have taken over vacant lots and blocked traffic for campaigns. It all pays off when the neighborhood leader you recruited shouts down the Director of Public Works or the retired grandmother you literally begged to come to a meeting stands up mid-discussion to say, "If that bastard won't clean up his lot, then we'll take it ourselves!" Once turned on to the idea of unity, activism and the power that lies in the hands of community, people will surprise you and can often become very radical."

The Farce of Community Associations Institute

2005-04-04T19:01:00.000-07:00

By Willow Dean Vance

It's time to realize, CAI (Community Associations Institute) was created in 1973 with the misuse of taxpayer’s money from HUD & VA, by special interest National Association of Home Builders, NAHB in a fraudulent attempt to preserve their unconstitutional de facto government housing monopoly to enrich bankers, brokers and builders! The five traitors to the American Constitution, who created a monster housing monopoly portrayed on the March 17 X Files, to steal lives and destroy property rights without due process or remorse, were: Lincoln Cummings, John Gunther, May Russell, David Stahl and David P. Rhame...who knew their social housing experiment was such a failure…HUD had a crisis on its hands in unfair housing complaints.

It didn't take long for managers and lawyers to realize CAI offered more gold than the west coast gold strike to line deep pockets with non-judicial foreclosures, that opened the door to a new-mafia racketeering disguised as legal liens, fine-and fees enriching CAI lawyers who made hidden nonprofit-mutual benefit corporations for their own mutual cash benefit, promoted in CAI sponsored seminars, lucrative donations, power trips to out lobby lobbyists and corrupt tax collectors gleefully discriminating against millions of taxpayers to rob HOA residents of unfair property tax.

They will be recorded in American History as the band who stole property rights and opened the door to the destruction of the judicial system, flooded the streets of America with a new band of middle income refugees left homeless, sleeping in their cars, and the first outbreak of murder and suicide by licensed professionals who make the mafia look like a child's game by the most sophisticated, de facto government designed to steal rights and property.

The headline grabbing shoot-out in Gilbert, Arizona 2000, is the climax of this cancer to liberty and freedom of all...a middle aged man half crazed by a corrupt law controlled board who foreclosed on his modest condo, wiped out his entire savings, forced to see his wife live out of his truck; lose a lifetime of hard work and savings retirement dream without hope of recovery in foreclosure. Three dead in the new Tombstone mass murder and two in the hospital fighting bullet wounds from a good citizen, turned into a crazed killer by HOA harassment, fines, fees and finally the 1934 prediction from Civil Servants published in the yearbook called, The Organizer, which warned us "When through a process of law the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law by the central power of the leading financiers..."

Florida hung it's head in shame to see the widow Ann Grove, of Ocala, Florida dragged out of her homeowner association home by Sheriff Dean in handcuffs with a black eye from trying to resist taking her home in non-judicial foreclosure. No one cared that this widow over seventy had not recovered from the death of her husband or the loss of her truck in a car accident that injured her. No one cared her life's belongings were dumped on her lawn for strangers to help themselves as they took her to jail on orders of the Dean law firm. Guilty of being emotionally and physically ill when the dues were collected...the one sin that can imprison you, steal your home, above all others....homeowner association DUES. The words “homeowner association dues” should be illustrated with a skull and cross bones because it is death to people and death to all the name America stands for.

The police should charge CAI and trade interests that keep it alive with murder and theft because their actions push the trigger behind the scenes, driving distraught homeowners brainwashed with fear and hate

Experts could have seen Gilbert, AZ coming by watching Orange County, CA in 1993. Disabled veteran, Al Gray--was singled out, tortured and ridiculed, overcharged illegal monthly fees and denied the right for his 53 year old bride, Mary, to share the clubhouse, pool or any amenity in their HUD financed Seal Beach, CA Senior Retired Housing. HUD officials protected CAI by pretending they could not enforce HUD rules on retirement homes which only require 80% of the seniors housed to be 55 years of age or older. When veteran Al Gray brought his happy bride Mary there, over 99 % of the residents met that requirement, but this disabled heart patient was ordered to pay $20 a month extra because he was lucky enough to have a bride just 53--then was denied the right to let her share in the recreation he paid for with him.

His heart medicine cost so much, his legal bills from the lawsuit ate up the only chance he had to stay alive because he loved his wife too much to watch her be the victim of ugly discrimination. Al died in his Seal Beach bed, waiting for the court to force Seal Beach to honor the HUD rule. The older members were simply jealous - Al had such a vital young wife and she would care and provide for him...lawyers and directors know how to exploit every human emotion to divide and conquer.

Congress should have held HUD responsible for fraud and leading to Al's death...little did Congress realized HUD sold out because HUD officials had too much dirty laundry to air, by allowing the public to know $50,000 of HUD dollars helped set up CAI in 1973. David Rhame, a founder, was a federal employee in Urban Planning and Development and no HUD official wanted to blow the whistle on this freeloading housing scheme of the century...cooked up with special interests.

Check the nightmare of San Juan Capistrano...easy going, Jim Troutman, devoted husband, father, grandfather...gentle state employee who enjoyed baseball, walking in the park, fishing and caring for his neighbors. He was elected to the Board of Directors...discovered a horror story robbery operated by wealthy Marquis Management, who was later sued for fraud, then under CAI Lawyers and trained managers programs, milking the cash cow by holding current payments long enough to add fraudulent-unearned fines and legal fees to escalate the non judicial house stealing game. One lawyer in Santa Ana boasted he foreclosed on 250 homes a month... exposed by the American Resource Center of San Clemente, CA.

Jim discovered a home liened for foreclosure in his HOA actually did not owe any money and later his wife used her auditing experience to prove the family was falsely foreclosed. The angry manager had 300 HOA’s enriching her scheme, misled other frightened directors into thinking he would bankrupt them with lawsuits not protected by D&O policy…so they smeared him in newspapers handed out so vile --his own neighbors fell for the story and made him a villain under such attack that he could not walk out the door. This gentle whistleblower was too honest to see an honest family lose a home the HOA had no right or claim to.

In early September, my hero's haunting message to me said, "I can no longer walk in the park, watch a ball game, go fishing, enjoy my family. Every dime I worked for now goes to lawyers and every day of leave is spent in Santa Ana, CA courtrooms being framed by CAI lawyers...I have nothing to leave the family I love but stacks of fraudulent transcripts...". On the evening of Sept. 17, 1993, I phoned his home to ask him when he and his wife Pat would join me for dinner in San Diego. Pat said “Let me ask Jim..." the sharp, loud bang, piercing my ear through the receiver told me, before Pat's horrified scream... "My God, Jim has shot himself."

An American veteran who could have served with the founding fathers died by his own numb hand, half crazed by the spider web maze CAI created to catch a house-starved public by appealing to ego promoted sales of heated pools, private clubs and green greens. America, the beautiful, fell for the oldest sales pitch in the world...appeal to pride and ego and fear that no one will read the fine print.

And somewhere in Vietnam's steamy jungles or Cambodia...the hurt and haunted soul of Air Force Colonel Frank Armstrong, walks unable to rest because his widow, Vera Armstong Cherry, was a POW/MIA widow seized by four white ambulance men in her own Tustin Home (Rocking Horse Homeowner Association) spring of 1993, while cleaning her carpet and singing away. Blue eyed, blonde, Vera, spoke with a sultry voice and dressed her slim, sexy body in a style that made it plain why handsome Colonel Frank Armstrong married her on duty in Germany and took her home for safe keeping in California's protective housing (?) to go to Vietnam, content she was safe and sound and out of danger. When the AF sent his personal effects to Vera in a box marked, POW/MIA she had nightmares, he was waiting for her to find him. Ross Perot calmed her fears with his efforts through United We Stand and his personal POW/MIA organization effort to locate missing POWS.

Vera survived the Nazi's that invaded her home in Europe during World War Two, forced her parents to hide her with them in the back of a cold storage warehouse, sleeping on cold cement floors when the Nazi soldiers evicted her family in the street to use their home for occupying soldiers. But Vera and her two teenage sons did not survive the kidnapping arranged with help from her HOA to discredit her questions about special assessments and failure to comply with the state mutual benefit corporation statutes that required boards to grant access to all financial records. She was entitled to examine these under state statutes, but the attorney general did not enforce this because his greed was bought off by the cottage industry.

The white-coated men who seized her, chained her hand and foot to the gurney, and rolled her into the waiting ambulance they brought through the gate with the lie. "She is having a heart attack and we must rush her to the hospital." No phone call to notify her family, no note to her young sons with no father, no help...

A misled head-shrink doctor, misusing the 51-50 mental health law, who claimed the single, United We Stand pin on her neat gym suit was evidence she was mentally unbalanced and her patriotic act of flying the POW/MIA flag in the homeowner association sold to her as 'Mutual interest share", was a criminal act, not patriotic. Three days and nights of medics trying to inject her with mind altering drugs under the happy eyes of HOA officials advised by a CAI lawyer, Mark Hopkins, trained to hop at every call to keep the gravy train rolling...

The dazed, beaten, terrified, scarecrow of a mother, was released too frightened to enter the home that became her doorway to a mental prison people once feared by Hitler or Stalin...never in America. I held her numb hands and watched her tears splash with my own in disbelief; heard her tales of hope from nightly dreams when she saw her beloved Colonel Armstrong walking toward her smiling...the reunion she dreamed and prayed for destroyed in the country where her husband told her, "Every man's home is his castle." I flew to Washington to appeal to a shocked Ross Perot and POW/MIA reunion, why search Vietnam for missing POWS in Vietnam, when the homeowner associations of America now hold 42 million POWS? What senate legislation or member of congress will waken to save our country, save our constitution, stop discrimination, and charge the CAI with operating a housing monopoly in the most unfair business operation every investigated by the Federal Trade Commission, which it did in 1994?

If you need more evidence, visit http://ahrc.com and read 17 years of hate crimes against Arnold and Elizabeth McMahon in San Clemente, CA....Palacio Del Mar, Homeowner Association. The CC&R's never warned McMahon that her brown skin from a Malaysian birth was a violation, not acceptable in the all white HOA. They woke up in the morning to find the Spanish Villa they bought spray painted MOVE in huge black letters on every wall, door and window. Arnold entered his driveway and found his car covered with raw eggs. The years brought new tricks and new attacks financed with HOA insurance by bigot directors paying CAI lawyers. The police sneered, “The McMahon’s brought this on themselves." The District Attorney was too busy to investigate...after all, if you report hate crimes are down, you collect free grant money from Uncle Sam.

McMahon was admitted to the emergency room with chest pains. Her case is tied up in the only man-made landslide in the country. An HOA so twisted with hate they took HOA money to sue her and force her to keep water running on her landslide active lot after the soil engineer warned them that her home sat on a landslide active lot so unstable any more water could collapse it. Judge David Chaffee, chaffing under the very idea a couple expected him to honor their property rights to save their home, awarded the rogue HOA $92,000 in court fees for the fight to stop the water fed landslide. Chaffee gave us a clue to this biased ruling when he revealed, “I was president of my homeowner association because board members are brainwashed into being tyrants once they volunteer to serve as ordinary neighbors.”

Rick Happ bought a tract of beautiful land in Creek Pointe, North Carolina sold with an ironclad contract that stated he could protect his estate privacy with a gate by one of the largest, real estate agencies in the area...Weyerhaeuser Real Estate Company, who was then on the board of the homeowner association and served on the architect committee...how could Rick go wrong? He had an experienced realtor who not only knew HOA law, but also had authority to grant the gate permit as a HOA director in charge of CC&R rules.

Today, he is in court, sued by this HOA; and Weyerhaeuser Real Estate Co., who later sold a lot to another buyer, declares an HOA contract is not worth the paper it is written on because you can change the rules before the ink is dry. The state of North Carolina believes that a contract is a contract and Weyerhaeuser Real Estate Co. is guilty of a breach of contract and misrepresentation because they had the experience to know what Rich Happ did not know. All HOA contracts are a risk. Weyerhaeuser should have told him anyone buying a home in a homeowner association can lose their home, their sanity, health and life savings in a corrupt, unconstitutional, double dealing, tax discrimination, frame and blame social housing experiment operated by a monopoly mob who bribe officials to close their eyes to public trust violations with free property tax.

My fellow Americans, we have been had, by apathy, indifference and greed. Unless we take a stand now, the souls of the founding fathers shall walk without rest beside Colonel Frank Armstrong, Jim Troutman, Al Gray and all those souls in Gilbert, AZ too naive to know they walked into a death trap. The good book warns us it does a man no good to own the world if he loses his soul...but we now risk losing the greatest liberty in the world because no one will stop this run-away-monster, stealing our liberty and land...the homeowner association that steals your soul as it steals your home...for bankers, brokers, builders and the tribe chief, the CAI. They are co-sponsored by Chubb Insurance, the giant using President George Bush to sell insurance to the Chinese. Friends of a feather flock together and Chubb backs CAI because no official has been honest enough to blow the whistle...even to save America. Do you know one in your home state? I hope so.

Willow Vance, personal witness to a mass murder of American Democracy and the best friends I ever had...and if called upon to testify to this real life horror, I could do so. Phone Number (863) 291-6420.

Inside a Condo, a Not-So-Civil War

2005-03-25T20:42:00.000-08:00

March 27, 2005
By JOSH BARBANEL

COMPLEX DISPUTE Avital Shimshowitz, a resident of the Future, a condo on 32nd Street, was prevented from running for the building’s board.

EVER since the Future Condominium, a modern glass and aluminum tower on East 32nd Street, opened in 1993, Avital Shimshowitz and her neighbors have lived in simple peace and harmony, at least most of the time, in this vertical Manhattan village.

So Ms. Shimshowitz, who is the manager for the Sean John men's clothing store on Fifth Avenue, was surprised at what happened when she decided to run for the board of managers at the annual meeting last June.

First, she was told that she couldn't run because there were already enough candidates and that she had missed a deadline. When she insisted, she said, the meeting was postponed a month, until the middle of the summer.

Then the day before the rescheduled meeting, the condo board president quietly filed a lien against Ms. Shimshowitz, after she had missed a single $100 installment payment on an assessment the month before.

The lien, filed without a telephone call or any notice, or even a vote of the entire board, caught Ms. Shimshowitz by surprise, she said, and she did not notice until the balloting was over that the footnote next to her name on the ballot indicated that she was "in arrears." Under the bylaws of many condominiums, owners with unpaid liens cannot serve on the board.

As many of New York's condominiums and co-ops head toward the rush of annual spring meetings, with the usual blur of financial statements, amendments and board elections, the events at the Future may be a textbook example of what can go wrong in an otherwise pleasant building.

Neighbors thrown together by financial happenstance or the luck of the real estate market are sometimes shocked to find themselves acting out childhood angst and rivalries at the condo or co-op board. In the worst cases some yearn for the clinical detachment of a rental building.

Many at the Future bought their apartments at a deep discount, at the end of a real estate recession, and have seen their values nearly quadruple. Most have come to love the unusual angled facade on their 35-story building, designed by Paul Rudolph, with balconies that jut out at a rakish angle and give the appearance of tilting downward toward the street.

But as the condo's management passes from the hands of some of the early buyers to a new generation of owners, there has been anguish and pain on all sides, and open warfare carried out in a barrage of angry e-mail messages and memos slipped under the doors of the 165 apartments in the building.

The conflict over Ms. Shimshowitz is just one of many; there have been disputes over the audited financial statements, complaints that old-timers had more than one storage locker downstairs, and accusations that a former board president absconded with thousands of dollars of granite paving stones.

"I'm thunderstruck," said Stuart M. Saft, a longtime condo and co-op lawyer who is chairman of the Council of New York Cooperatives and Condominiums and who was not involved in the case.

"I have never heard of a civil war like this. This is horrendous."

Current board members, who support the lien against Ms. Shimshowitz, talk about their rage at special treatment given to some apartment owners by previous boards, and their confusion and pain over their efforts to simply try to do some good for their building community.

"It makes being on the board a punishment," said Al Urbont, who owns a printing and design business and who is in charge of the landscaping in the large plaza next to the building. "We have to watch our backs for fear of getting knifed all the time."

The Future Condominium was conceived as a grand building, even bigger than its current disputes. Rudolph, the modernist architect who was the dean of Yale's architecture school from 1958 to 1965, was a design consultant who gave the building its distinctive sculptural shape and its skin of glass and aluminum, uncommon then in residential buildings.

The apartments, laid out by Costas Kondylis, the architect of record and current dean of New York condominium design, had high-end kitchens and in some cases, dining rooms that seemed to float over the city in a wall of glass.

But the project focused on the future was completed just as the best days of New York City real estate appeared to be in the past. The market for condos collapsed in a rash of foreclosures and bankruptcies. By 1993, prices were $350 a square foot.

Many of the first round of buyers were doctors and professionals working at and around New York University Medical Center by the East River, and board members say this group formed the backbone of the condominium's culture in its first years of independence. It is one of the few buildings in Manhattan where a transplant surgeon was placed in charge of the gym.

Larry Simms, who is married to an obstetrician who works at the hospital, was the board's first president after the owners gained control of the building from the sponsor. Both his supporters and detractors say that Mr. Simms, who manufactured and marketed construction materials but has since sold his business, seemed to have plenty of time to delve into the minute details of almost all aspects of running the building, and he almost always seemed to know more than anyone else.

After serving as president off and on for many years, he left the board only to run for election to a two-year term again in 2003. He won a seat and later took over as president for a while. And that was when the trouble began.

When it came time for the board president to send an annual letter to the building's accountant, representing to the accountant that the board was unaware of any fraud, Mr. Simms reviewed the financial records and said he could not sign the letter without some qualifications. He said he had found four instances of possible fraud involving the former managing agent, including an unauthorized $15,000 bonus to the superintendent, $61,000 of unauthorized overtime and an insurance settlement paid without board approval.

But other board members thought the accusations were overblown. Julio Marquez, an investment banker with an M.B.A. from Harvard, was the treasurer then and he was outraged by the suggestion that he had mismanaged the building's finances. "It was the most ridiculous accusation I have ever heard," he said.

At a board meeting last May, Mr. Simms was removed as president and replaced by Mr. Marquez. Toward the end of the stormy meeting, accusations about the missing bricks were brought up for the first time, participants said, and over the next few months several longtime board members, troubled by the personal attacks and the tenor of the meetings, resigned.

The mystery of the stones, as chronicled in angry correspondence over many months, began when the granite pavers were pulled up from the plaza outside the building to make room for landscaping some years before, and had been stored ever since. Mr. Simms said that the Fire Department had objected to the way the stones were stored, but that when the building staff tried to put them out as trash, the Sanitation Department refused to take them away.

Then with permission from the building staff, he said, he removed some of the stored stones, a few bricks at a time, and drove them to his summer house on eastern Long Island and put them down in his garden. At the time he was not on the board, he said.

After several heated exchanges, the new board president and two other board members went to the 17th Precinct station to file a grand larceny complaint against Mr. Simms, but the police took no action.

The board then proposed a new ethics policy that would have allowed a simple majority of board members to suspend any member. Mr. Simms said the proposal was targeted at him, and it was never adopted by the unit owners.

Eventually, because the board said the redesign of the lobby required matching granite stone, Mr. Simms brought the granite stones back, but he is still furious. He filed a libel and slander suit last July, dismissed on a technicality but expected to be refiled, based on the various e-mail messages and memos distributed to his neighbors. Mr. Marquez, on the other hand, said he believed that the stones were returned because of the threat of police action.

After the suit was filed, the board voted to accept Mr. Simms's resignation as a board member and appointed a new member to replace him - even though he said he had never actually submitted a written resignation letter to the board. Mr. Simms said he was so disgusted with the board that he had intended to resign but then changed his mind.

Lisa Lazarus, a board member elected last June who is a labor lawyer with the National Football League, said that on the new condo board every member has a special area of interest, from the garden to the lobby renovation to finance, and that Mr. Simms didn't fit in because, in her view at least, he knew a little about everything.

"It is a very small minority of people who are involved," she said. "The vast majority are very happy."

But despite the libel and slander suit, Mr. Marquez and several of his fellow board members still stand by their complaints that Mr. Simms absconded with building property and say they are angry about it. "There are still bricks missing," Mr. Urbont said.

They are also still angry with Ms. Shimshowitz, who they said received special favors from the condominium board and then attacked it in public.

Ms. Shimshowitz had approached the board several years ago, when it adopted a $250,000 assessment, and asked for help because she was in the middle of a divorce, under financial stress and unable to pay her $1,700 share of it.

The board agreed to let her pay $100 a month toward the assessment. Ms. Shimshowitz said that she had inadvertently missed a single $100 payment due by June 15, because the building had changed billing systems the month before and the new condo bills were inaccurate and confusing.

But by then she had already decided to run for the board. One evening Mr. Urbont and another board member, Yolanda Pessina, an architect who is overseeing the lobby renovation, confronted Ms. Shimshowitz in her apartment about some comments she had made in an elevator, defending Mr. Simms and disparaging the rest of the board. She said they told her that since she was the only one in the building to get an installment plan, she should stop complaining.

After the angry confrontation, in front of her 9-year-old daughter, Ms. Shimshowitz decided to fight back by running for the board. She had no complaint with the conduct of the former president. "Larry Simms is the straightest, most honest guy in the world," she said. Ms. Shimshowitz paid the $100 installment on the assessment due in July on schedule, but by then Mr. Marquez and the treasurer, Andrew Brint, said they had decided that since she had violated her agreement, she owed the entire $800 still due on the assessment, and with late charges the lien totaled more than $1,300.

They described the process in detail to a reporter who was invited to attend a board meeting on a recent Saturday afternoon. As they discussed the issues, some members became angry all over again.

Mr. Brint, a forensic accountant who had feuded with Mr. Simms over lockers in the basement, said that he and Mr. Marquez had the lien papers prepared in advance, waited day after day to see if Ms. Shimshowitz had paid the $100 that was due in June, and then filed the papers only the day before the meeting. He explained that the delay gave her as much time as possible to pay before the annual meeting.

Mr. Marquez said the board had no special obligation to tell Ms. Shimshowitz that she was in arrears, because the money owed for June would appear on her July bill, and that was sufficient notice. In a deposition he said that during the argument in her apartment, she said she would not pay another penny in protest, but she disputed this, and noted that she had paid her July assessment on time.

When the date of the big vote finally came and a stormy meeting was called to order at a church down the street, Ms. Shimshowitz finished last of five candidates for three board seats. The meeting ended with a loud altercation in the audience immediately after the voting, according to the minutes.

It was only after a neighbor approached her and said, "I'm so sorry I couldn't vote for you," that Ms. Shimshowitz realized one reason why. The ballot had a star next to her name and the star pointed to a note saying "owner in arrears with the Condominium as of 7-27."

A lien is a formal legal claim against a property, and is the first step in a process that can lead to foreclosure. Most buildings do not file liens until a debt is significant. In the history of the Future, a lien had been filed only once before, against an owner who now owes about $30,000. At the time of the new lien, five apartments in the building owed $1,300 to $3,300 but had not had liens placed on their units, Mr. Simms said.

Last month, after Ms. Shimshowitz had paid off the entire balance of the assessment in $100 installments, she and Mr. Simms filed suit against the board. He asked the judge, Justice Edward H. Lehner of State Supreme Court, to reinstate him to the board, and Ms. Shimshowitz asked the judge to order the removal of the lien.

As the lawyers were preparing for the hearing, the board decided to remove the lien, even though the late charges and legal fees had not been paid. At the hearing Judge Lehner appeared to agree that Mr. Simms had not resigned and fashioned a compromise in which the board's lawyer, Mark N. Axinn, agreed to hold its annual elections early, by mid-May rather than in late June.

At the end of the hearing in Judge Lehner's courtroom on March 17, after the stenographer had stopped taking notes and the lawyers for both sides were packing up their briefs, the judge leaned forward and said, "Just remember, you have to live together."

http://www.nytimes.com/2005/03/27/realestate/27cov.html?ei=5070&en=3afb7fbe17841c1b&ex=1112418000&pagewanted=print&position=

Gated communities tagged as 'cash cows'

2005-03-25T16:45:00.000-08:00

March 25, 2005
By PHILLIP GOMEZ
PVT

Gated communities leave a lot of unanswered questions behind their walls about the hidden costs to a community, according to at least one expert on the subject.

Fulbright scholar Renaud Le Goix, Ph.D., describes gated communities as a development of post-industrial societal changes marked by increasing social fragmentation, individualism and the modification of urban public spaces. Goix, who calls gated communities "an urban pathology," explains the phenomenon as one involving the collusion of government, developers, the homebuilding industry and security businesses.

The trend toward gated communities represents "a shift from a city with public spaces towards an urbanization built of private enclaves ... opposed to the welfare redistribution system," Goix writes in a 2003 article found on the University of California at Los Angeles' Web site www.international.ucla.edu/article.

In recent years sci-fi novels have portrayed urban fears of crime with themes of quasi-civil war existing between rich, gated neighborhoods and the rest of the city. Movies such as "The Truman Show" (1999) have developed themes of social paranoia and segregation.

Other films have depicted buzzing surveillance helicopters employed by the homeowners' association and paramilitary squadrons patrolling upper-scale neighborhoods ensconced behind concrete walls topped with barbed wire and broken glass.

"Gated communities represent a form of urbanism where public space is privatized," Goix says. "They differ from condominiums and secured apartment complexes because they include public infrastructures and spaces behind the gates, which can otherwise be used by everyone, such as streets, parks, sidewalks and beaches."

The promotion of these real estate communities highlights their exclusiveness, their vaunted protection of families in secluded environments and leisure amenities, such as golf courses, private parks and horseback riding trails.

These benefits come at a cost to the up-scale homeowner able to afford to live there, and public authorities like having wealthy taxpayers who maintain their neighborhood infrastructures at their own expense. Local governments consider gated communities as "cash cows," Goix says. Gating favors property values and increases the property tax base of the community.

But as a consequence gating does not address the common interest development lost behind the gate.

"The gating, acting as a territorial boundary, can ... be analyzed as a border between two systems: the public realm of the city as a whole versus the territory of the gated enclave," he writes.

The real downside of gated communities is their "social spillover effect." In what Goix calls "minimal cities," where towns contract for most of their services with different public entities, the town can become an extension of the private homeowners' association.

As a legal corporation, the association partners with local government playing "a local game where the gated community has a utility for the public authority, whilst the property owners' association is granted a certain autonomy in local governance, and especially in financing the maintenance of the urban infrastructure."

More sinister, the public-private partnership of many gated communities has detrimental effects on the immediate neighbors. According to Goix, empirical data has demonstrated that "gating leads to a relocation of crime outside the gates and within adjacent non-gated communities."

Goix adds that the most well known effect of gating is its negative impact on property values in non-gated adjacent neighborhoods. The presence of a gated community may lead to "a preventative proliferation of gating in the neighborhood, and former non-gated communities may have to retrofit with gates if they wish to maintain their property values and avoid crime redistributions."

In the case of Southern California, the most important economic "externality," or socially borne cost of the gated community, was in "the net increase of social segregation. ... When gated communities are present, local socio-economic segregation is globally multiplied by 1.4 times the average socio-economic segregation level evaluated in the Los Angeles area. Age-based segregation created by gated communities is 2.7 times higher than its average level in the area."

http://www.pahrumpvalleytimes.com/2005/03/25/news/gated.html

Fulbright Scholar Examines Gated Communities in Southern California

2005-03-25T16:30:00.000-08:00

Renaud Le Goix of the Sorbonne looks at gated communities as an urban pathology during his stay at UCLA.

Renaud Le Goix

* * *

The Suburban Paradise or the Parceling of Cities? -- An analysis of discourses, fears and facts about the sprawl of gated communities in Southern California [i] .

Renaud LE GOIX

Ph.D., Lecturer, University Paris 1 Panthéon-Sorbonne -- Department of Geography, and Fulbright Visiting Scholar (2003) at the Department of Geography, UCLA.. Permanent address: UMR Géographie-cités 8504 - 13 rue du Four 75006 PARIS (FRANCE). phone: +33/ 1 40 46 40 00 - email: rlg@parisgeo.cnrs.fr - http://perso.wanadoo.fr/renaud.legoix

[Version: July 2003]

A first glance at the picture catches an ordinary depiction of a normal Saturday afternoon in the suburban America. Kids are playing baseball. Parents have fun too, gathering for a community event and taking pride of their children. On the background, one might even notice the nice houses. On the right side of the picture nevertheless, the fence with barbed wires and the surrounding patrol pathway catch the eye. A no-man's land seems to separate the neighborhood from. . . the desert.

The picture was not shot in South Africa where the townships were fenced during the Apartheid, but in Southern California, almost 70 miles east of Los Angeles. "A bit of Paradise" is the official slogan of Canyon Lake, a private community created in 1968, housing 9,500 inhabitants and scenically nested along a lakeshore. It is protected 24 hours-7 days a week by a gated access control and patrolled by a private police. Incorporated in 1990 as a municipality of its own, it hence created a multi-layered local governance made of intricate public and private responsibilities. In Southern California like everywhere else in the southern and western metropolitan areas, gated communities are developing very fast and have become an important trend for both the real-estate industry and the prospective homebuyer. But the question recurs: in this security-oriented development, what are really the residents trying to escape behind their fences? And which kind of community are they willing to build.

Gated communities as an urban pathology.

Because security systems and around-the-clock gates prevent public access, gated communities represent a form of urbanism where public space is privatized. They differ from condominiums and secured apartment complexes because they include public infrastructures and spaces behind the gates, which can otherwise be used by everyone, such as streets, parks, sidewalks and beaches. Gated neighborhoods have greatly developed since the 1970s, thus becoming one of the symbols of the metropolitan fragmentation and of the increase of social segregation (Blakely & Snyder, 1997). Although such developments can be found in every large metropolitan area in the world (i.e. Latin America, South Africa, Europe and Asia), they represent in the U.S. an average of 10% of the new homes market, and more than 30% in the sprawling urban areas. Because they are managed as private corporations, and push for political autonomy and an implicit selection of residents, the outcome is increased segregation.

This urban and mostly suburban pattern -- though now quite common -- is nevertheless perceived as deleterious for the social fabric. The media and fiction writing described them as seeds of a seceding elite in a not so far future, and gated communities have become more than a kind of urban neighborhood: they are now part of a whole discourse on urban fear and urban secession. Some Sci-Fi novels (Butler, 1993; Stephenson, 1992), inspired by themes connected to urban crime and secession, set the narration within a quasi-civil war between rich gated neighborhoods and the rest of the city:

Most Sundays, Dad holds church services in our front rooms. He's a Baptist minister, and even though not all of the people who live within our neighborhood walls are Baptists, those who feel the need to go to church are glad to come to us. That way they don't have to risk going outside where things are so dangerous and crazy. It's bad enough that some people -- my father for one -- have to go out to work at least once a week. None of us goes out to school any more. Adults get nervous about kids going outside (. . .) A lot of our ride was along one neighborhood wall after another; some a block long, some two blocks, some five. . . (. . .) In fact we passed a couple of neighborhoods so poor that their walls were made up of unmortared rocks, chunks of concrete, and trash. Then there were the pitiful, unwalled residential areas. (Butler, 1993, p. 7-9)

Stephenson's vision even encompasses the broader question of the production of Southern California urban space:

Southern California doesn't know whether to bustle or just strangle itself on the spot. Not enough roads for the number of people. Fairlane, Inc. is laying new ones all the time. Have to bulldoze lots of neighborhoods to do it. But the seventies and eighties developments exist to be bulldozed, right? No sidewalks, no schools, no nothing. Don't have their own police force -- no immigration control--, undesirables can walk right in without being frisked or even harassed. Now a burb' clave that's the place to live. A city-state with its own constitution, and borders, laws, cops, everything. (Stephenson, 1992, p.6)

Movies (The Truman Show, 1998; The Sect, 1999) and TV shows (X-Files episode Arcardia, 1999) were also inspired by the gates, thus developing the argument of a social paranoia due to the security-oriented life-style. Meanwhile, the social sciences literature has focused on depicting gated communities as a new trend, and three types of arguments are now part of a general theoretical discourse inspired by postmodern urban studies. First, gated communities are described both as a physical and obvious expression of the post-industrial societal changes (fragmentation, individualism, rise of communities), as part of commoditization trend of urban public space (Dear & Flusty, 1998; Sorkin, 1992), and as a penetration of ideologies of fear and security developed by economic and political actors: municipalities, homebuilding industry, and security businesses (Davis, 1990, 1998; Flusty, 1994; Marcuse, 1997). A second type of argument presents the gated communities as a symptom of urban pathologies, among them social exclusion is considered to be preeminent. The decline of public spaces in the cities is addressed as detrimental for the poorest social classes: the voluntary gating is thus associated with an increased social segregation (Blakely & Snyder, 1997; Caldeira, 2000; Glasze, Frantz, & Webster, 2002). This shift from a city with public spaces towards an urbanization built of private enclaves is argued to be a "secession" by an elite opposed to the welfare redistribution system (Reich, 1991), given the assumption that public provision of services is inefficient (Foldvary, 1994). The debate was brought to Europe (Donzelot & Mongin, 1999; Jaillet, 1999), where gated communities are also developing, and both journalist and social scientist push the argument in a quite dramatic way, as demonstrated by the following quotation from a French newspaper (Le Monde Diplomatique). Preoccupied by the development of gated residential neighborhoods in Europe, the journalist describes the urbanism of fear in Los Angeles:

Surveillance helicopters are humming above one's heads. Concrete walls dissimulate malls as gigantic as some cities may be. Paramilitary squadrons patrol in upper-scale neighborhoods. Buildings' roofs have been super-elevated in order to protect them from being targeted by a Molotov cocktail. Los Angeles is a city haunted by the fear of crime (. . .) Future architecture uses some gadgets that could refer to James Bond movies. Cause the people loudly claim for more and more order and security. (Lopez, 1994) -- Translation: Le Goix.

The debate about gated enclaves has been lively, despite a lack of empirical arguments to sustain it caused by the difficulties to gather a highly representative sample of gated communities at a local scale. So far, empirical studies have focused on a nation-wide phenomenon (Blakely and Snyder, 1997), or on a narrow municipal scale and a few cases (Bjarnason, 2000; Lacour-Little & Malpezzi, 2001).

My research derivates from the above outline of arguments. Because of a growing interest of the consumers, the developers and the media for gated communities and private urban governance in Europe, and because of the lack of a comprehensive geographical study at a regional scale, the goal of the thesis was to provide an empirical study on a field where gated communities are numerous and old enough to build a coherent sample. It aims to provide some evidences of the impact of the enclosures within the metropolitan region of Los Angeles, based on interviews with public officials, along with a survey of 219 gated communities in Southern California integrated within a geographical information system with 2000 Census results. The question is not to describe the kind of neighborhoods inside the walls, which are just a regular Common Interest Developments ruled by a regular POA (Property Owners Associations), but to assess the impact of actually gating a neighborhood.

The sprawl of gated communities as a public-private partnership

The gated community's life-style is mainly inspired by the historical golden-ghettos found in industrial-era cities, in New York, London or Paris (such as Saint-Cloud's 1832 Montretout gated enclave in Paris or 1854 Llewellyn Park a New Jersey). Nevertheless, those enclaves are now mainly suburban neighborhoods emphasizing on a "community life-style" and security features. The promotion of these real-estate industry standardized commodities often focuses on exclusiveness, protection of families in a secluded environment, and leisure facilities and amenities, such as golf courses, private beaches, private parks and horse-riding trails (and even in one case in Nevada a private shooting-range).

In the U.S., the percentage of people living in gated communities is now estimated, according to the latest 2001 American Housing Survey up to 11.1% in the west, 6.8 in the south, and less than 3% in other regions (Sanchez, Lang, & Dhavale, 2003). In Los Angeles, the first gated developments were built in 1935 in Rolling Hills and in 1938 in Bradbury, but most of them were developed after World War II: the upper-scale Hidden Hills (1950), Leisure World, a 19,500 inhabitants retirement gated community (1964), Canyon Lake (1968)... After a fast increase of gated development in the 1970s and 1980s, this market represented a 12% average of the new homes market in Southern California, but 21% in Orange county, 31% in San Fernando Valley and 50% in the desert resort area of Palm Springs. As real-estate commodities, they are tailored to fit to specific prospective buyers. Gated communities are located within every kind of middle class and upper-class neighborhoods, and are now available for every market segment: half of them are located within the rich, upper-scale and mostly white neighborhoods, and one third are located within the middle-class, average income and white suburban neighborhoods. As an evidence of the social diffusion of the phenomenon, 20% of the gated communities surveyed are located within average and lower income Asian or Hispanic neighborhoods, especially in the northern part of Orange County and in the North of San Fernando Valley (Le Goix, 2002, 2003).

In this context, the only specificity of gated communities compared to regular Common Interest Developments (CIDs) and Master Planned Communities lies in its gating. On one hand, access control and security features represent a substantial cost for the homeowner, not only for building the infrastructures, but also for the maintenance of private infrastructures and amenities that otherwise would be public (streets, sidewalks. . .). The homeowner is granted as compensation with a private and exclusive access to sites and former public spaces. Such exclusivity favors the location rent, and can positively affect the property value. (Le Goix, 2002). For example, the lake in Canyon Lake is a public property leased to the homeowner association. Access to the lake is nevertheless granted to the sole residents, and this exclusiveness acts as a major premium of the property values. Similar predation of public resources occurs where a gated community bars the access to the beach. On the other hand, it provides the public authorities with wealthy taxpayers, at no cost, thus considering gated communities as property taxes "cash cows." As a consequence, the question does not address the CID that lies behind the gate, but the effects of gating. The gating, acting as a territorial boundary, can then be analyzed as a border between two systems: the public realm of the city as a whole versus the territory of the gated enclave.

A first consequence of the sprawl of gated communities is to blur the limit between the public realm and the private realm of homeowner association management and private space. In fact, the status of a CID allows to transfer the cost of urban sprawl from the public authority to the private developer and the final homeowner (Mckenzie, 1994), the enclosure presents many interests in regards with the financial situation of the public governments: gating, as it is assumed to favor property values, increases the property tax basis. And the erection of gates transfers the cost of maintaining the urban infrastructure to the association and the homeowner, not because they are private streets, but because they are gated [ii] . The situation remains so until the gates are taken down, which rarely happens for the moment.

The relationships between the gated enclaves and the public authorities can be thus summarized: because of the fiscal basis they produce, at almost no cost except general infrastructures (freeways and other major infrastructures), gated communities are particularly desirable for every local government, especially in the unincorporated areas in connection with a context where budget are tied to a low-resource paradigm after 1978 tax payers revolt and Proposition 13. When developing private neighborhoods, the homeowner pays the provision of public services. The sprawl of gated communities is not to be understood as a "secession" from the public authority, but as a public-private partnership, a local game where the gated community has a utility for the public authority, whilst the Property Owners Association is granted a certain autonomy in local governance, and especially in financing the maintenance of the urban infrastructure. But this user-payer paradigm represents a cost for the homeowner, charged with the property taxes, the district assessment, and the homeowners' fees, thus guarantying the social selection and the protection of property values.

Gated communities as public actors, using public resources

Nevertheless, the consequences of the exclusiveness and the user-payer paradigm in urban development are not really a secession in the plain significance of the word. It would be more accurate to qualify gated communities as predators of public resources. This can be exemplified in the municipal incorporation processes of Canyon Lake and a few others. It reveals both their political involvement, and a trend towards the use of public resources for the profit of exclusive and enclosed neighborhoods. Gated communities have incorporated as a city of their own, like Bradbury and Rolling Hills in 1957, Hidden Hills in 1961, Canyon Lake in 1991, Leisure World in 1999, or as a part of a new city. For example Dana Point incorporated in 1989, Calabasas in 1991, where a substantial part of single-family housing developments is gated. Dove Canyon incorporated with Rancho Santa Margarita in 2000.

Local affairs are shared between a private homeowners association, in charge of road maintenance, security and compliance of buildings with land use and restrictive covenants, and a minimal city, which contracts for its public services (water and Fire Department) with different public agencies, according to the system of minimal cities (Miller, 1981). Indeed, the municipality mostly acts as an extension of the Property Owners Associations. At first glance, these incorporations are motivated by two kinds of reasons, consistent with the global trend towards municipal autonomies in Los Angeles.

They intend to prevent a potential annexation by another and less affluent community looking for of an extended tax base (Rolling Hills, Hidden Hills, Rancho Mirage, Indian Wells), or they aim to promote the protection of a life style and local values, along with the local control of affairs and planning (Leisure World, Canyon Lake, Dana Point, Calabasas). But it also reveals the tendency of gated enclaves to act as predators of public resources and a shift of the use of the city services (paid by the local taxpayers, along with other public grants) to the exclusive use of gated enclaves' residents. When infrastructures are getting old, when streets need maintenance, costs are rising, and it seems increasingly difficult to raise new funding and new assessments of the property owners fees (because a 2/3 vote of the owners is required). In the elderly gated community of Leisure World/Laguna Woods for example, the incorporation was planned in order to transfer some responsibilities from the association to the city, as far it is possible to organize such a transfer without having to turn down the walls, such as sewers, trash collection and public transportations. This case is not isolated: the City of Calabasas refinanced in 2001 a $30 millions bond designed to improve and landscape the areas where Calabasas Park gated communities were built; the California Highway Patrol has been checking speed on the private streets of Coto de Caza since 2001 (Kirwan, 2001); and the City of Newport Beach offered a $18 millions improvement to the Pelican Hills/Newport Coast gated communities area in order to favor their annexation (Willon, 2001). But on the other hand, the incorporation might also be aimed to build a public entity that would be the voice and advocate of the gated community, as Leisure World did in order to fight against a project of an International Airport in El Toro. Not only gated communities find in incorporation a public funding to private issues that were previously the responsibility of the POA when unincorporated, but they also build through these incorporations there own respectability as public actors.

The spillover effects of gated communities

This public-private partnership, though financing the urban sprawl, has a social spillover and it creates more segregation.

The direct effects of gating are detrimental to their immediate neighbors. As the motivations for living in a gated community are mostly driven by the fear of crime and fear of differences (Low, 2003), scholars have closely evaluated the impact of gating on crime, although limited by the lack of empirical data, and they theoretically demonstrated that gating leads to a relocation of crime outside the gates and within adjacent non-gated communities (Helsley & Strange, 1999).

According to the data available (census data and real-estate data), I mainly focused on the socio-economic impacts of gated communities. A first kind of spillover effects of gating clearly affects property values. Gated enclaves contribute to protect the real-instate investment from market fluctuations. Property values in large gated communities have shown a better resistance during the 1992-1996 real market crisis than in regular residential ungated master-planned community in their neighborhood. It was also possible to evaluation a light though significant increase of property values within the walls compared to the immediate neighborhood in a majority of cases, and even a strong price premium for the gated community in one quarter of the cases (Le Goix, 2003). Gating a neighborhood actually helps protecting a lifetime investment (or mortgage) against urban decay. Herein lies the most well known effect of gating: its negative impact on property values in non-gated adjacent neighborhoods, and the theoretical crime redistributions. Such diseconomies may lead to a preventive proliferation of gating in the neighborhood, and former non-gated communities may have to retrofit with gates if they wish to maintain their property values, and avoid crime redistributions, thus explaining the clustered diffusion pattern (Figure 2 [not available is this version]).

In the case of Southern California, the most important externalities lies in the net increase of social segregation associated with gated communities. Socio-economic differences between the residents of gated communities and the residents of the adjacent neighborhoods were compared to all other inequalities between every neighborhood within the Los Angeles region. Where gated communities are present, local socio-economic segregation is globally multiplied by 1.4 times the average socio-economic segregation level evaluated in the Los Angeles area [iii] . Age-based segregation created by gated communities is 2.7 times higher than its average level in the area. Nevertheless, ethnic-based segregation are 2 times less important where gated communities are present than in the remainder of the urban region. Here, racial status is studied everything considered equal regarding the social-status. Beyond the empirical evidences of a local increase of segregation spatially associated with the gating of neighborhoods, another interesting fact is that gated communities are a based on status and age differentiations, while locating within very homogeneous ethnic neighborhoods. Location is yet another way to maintain the property values.

The picture of few hundred feet of barbed wires on a Saturday afternoon in Canyon Lake are meant a lot regarding the issues of the privatization of public urban spaces and segregations. In a global context where gated communities are sprawling not only in the U.S., but also in Latin America and in Europe, it seems that this diffusion process is not only supported by developers and home-building industry, but also by public authorities earning their share in the process. The consequences of this sprawl are, among others, an increase of segregation, which is finally consistent with the long involvement of public policies with segregation processes, as Massey and Denton pointed it out in the case of the United Sates (Massey & Denton, 1993).

References.

BJARNASON, S. J. (2000). Lawn and Order: Gated Communities and Social Interaction in Dana Point. Unpublished Ph. D. dissertation, University of Oregon (Ph.D. Dissertation).

BLAKELY, E. J., & SNYDER, M. G. (1997). Fortress America, Gated Communities In The United States. Washington D.C., Cambridge, M.A.: Brookings Institution Press & Lincoln Institute of Land Policy.

BUTLER, O. E. (1993). Parable of the sower (A Four Walls Eight Windows 1st ed.). New York: Four Walls Eight Windows.

CALDEIRA, T. P. R. (2000). City of Walls: Crime, Segregation, and Citizenship in Sao Paulo. Berkeley, CA: University of California Press.

CIOTTI, P. (1992, February 9, 1992). Forbidden city. Los Angeles Times, p. B3.

DAVIS, M. (1990). City of Quartz, Excavating the Future of Los Angeles. London: Verso (coll. The Haymarket Series).

DAVIS, M. (1998). Ecology of Fear: Los Angeles and the imagination of disaster. New York: H. Holt.

DEAR, M., & FLUSTY, S. (1998). Postmodern urbanism. Annals of the Association of American geographers, 88(January 1998), 50-72.

DONZELOT, J., & MONGIN, O. (1999). De la question sociale à la question urbaine. Esprit(258), 83-86.

FLUSTY, S. (1994). Building Paranoia: The Proliferation of Interdictory Space and the Erosion of Spatial Justice. West Hollywood, CA: Los Angeles Forum for Architecture and Urban Design.

FOLDVARY, F. (1994). Public Goods and Private Communities: the Market Provision of Social Services. Aldershot: Edward Elgar.

GLASZE, G., FRANTZ, K., & WEBSTER, C. J. (2002). The global spread of gated communities. Environment and Planning B: Planning and Design, 29(3), 315-320.

HELSLEY, R. W., & STRANGE, W. C. (1999). Gated Communities and the Economic Geography of Crime. Journal of Urban Economics(46), 80-105.

JAILLET, M.-C. (1999). Peut-on parler de sécession urbaine à propos des villes européennes ? Esprit, 11(258, Novembre 1999), 145 - 167.

KENNEDY, D. J. (1995). Residential Associations as State Actors : Regulating the Impact of Gated Communities on Nonmembers. Yale Law Journal, 105(3), décembre 1995.

KIRWAN, S. (2001, January 17, 2001). Coto de Caza, CHP begins to check speeding. Los Angeles Times, p. 7.

LACOUR-LITTLE, M., & MALPEZZI, S. (2001). Gated Communities and Property Values (Research Report). Madison, WI: Wells Fargo Home Mortgage and Department of Real Estate and Urban Land Economics - University of Wisconsin.

LE GOIX, R. (2002). Les gated communities en Californie du Sud, un produit immobilier pas tout à fait comme les autres. L'Espace Géographique, 31(4), 328-344.

LE GOIX, R. (2003). Les gated communities aux Etats-Unis. Morceaux de villes ou territoires à part entière [Gated communities within the city in the US: Urban neighborhoods, or territories apart?]. Unpublished Doctorate Thesis, Université Paris 1 Panthéon - Sorbonne, Paris.

LOPEZ, R. (1994, mai 1994). Les nouvelles armes du contrôle social : Délires d'autodéfense à Los Angeles. Le Monde Diplomatique, p. 18.

LOW, S. M. (2003). Behind the gates : life, security, and the pursuit of happiness in fortress America. New York: Routledge.

MARCUSE, P. (1997). The Ghetto of Exclusion and the Fortified Enclave: New Patterns in the United States. The American Behavioral Scientist(41), 311-326.

MASSEY, D. S., & DENTON, N. A. (1993). American apartheid : segregation and the making of the underclass. Cambridge, Mass.: Harvard University Press.

MCKENZIE, E. (1994). Privatopia: Homeowner Associations and the Rise of Residential Private Government. New Haven (Conn.) ; London: Yale University Press.

MILLER, G. J. (1981). Cities by Contract. Cambridge, Ma.: The MIT Press.

NGUYEN, T. (1999, March 4, 1999). Coto de Caza Residents Say No to School Within Gates. Los Angeles Times, p. 1.

REICH, R. B. (1991). Secession of the Successfull. New-York Times Magazine, 16.

SANCHEZ, T., LANG, R. E., & DHAVALE, D. (2003). Security versus Status? A First look at the Census's Gated Communities data. Alexandria, VA: Metropolitan Institute, Virginia Tech.

SORKIN, M. (1992). Variations on a Theme Park: The New American City and the End of Public Space. New York: Hill and Wang.

STARK, A. (1998). America, the Gated ? (Impact of Gated Communities in Political Life). Wilson Quaterly, 22(1), pp.50-58.

STEPHENSON, N. (1992). Snow crash. New York: Bantam Books.

WILLON, P. (2001, November 22, 2001). Petition to stop Newport Coast Annexation Fails. Los Angeles Times, p. 3.

[i] The doctoral researches for this paper were founded by the CNRS (UMR Géographie-cités 8504, Paris), the French-American Foundation (Tocqueville Fellowship, 2000-01), and the French-American Commission (Fulbright Research Scholarship, 2002-03), which is gratefully acknowledged.

[ii] Such issues are documented by the 1992 decision of Hidden Hills to build its city hall outside its gates in order to allow public access to the facility without opening the gates (Ciotti, 1992; Stark, 1998). The 1994 Citizen?s Against Gated Enclaves (CAGE) vs. Whitley Heights Civic Association case banned the gating of public streets (Kennedy, 1995). In 1999 Coto de Caza rejected a project to build a public school within its gates because it would have allowed public inside the gated community (Nguyen, 1999). As a consequence, no public money can be spent for the maintenance of the private roads since they are gated; which is not the case in other CIDs where streets are private but remain open to the general public.

[iii] These figures are the average of dissimilarity indexes computed between each 2000 census block groups of the Los Angeles urban region. Three characteristics of the socio-economic differentiation are analyzed: socio-economic status, ethnicity and age (Le Goix, 2003).

http://www.international.ucla.edu/article.asp?parentid=4664

Appeals court: Marine can't be forced to sell Jupiter home in flag flap

2005-03-23T17:10:00.000-08:00

The Associated Press
Posted March 23 2005, 6:45 PM EST

WEST PALM BEACH -- A retired Marine who has waged a five-year fight with his homeowners association over a flag pole won a battle Wednesday when an appeals court ruled his home can't be sold for lawyer fees.

Foreclosure on George Andres' home in Jupiter had been scheduled for October 2003, but a trial judge delayed the action to give Andres time to appeal to the 4th District Court of Appeal.

In Wednesday's 3-0 decision, the appeals court agreed with Andres, and his wife, Anna, that the Florida Constitution protects homes from forced sales except in very limited circumstances.

And attorney fees are not on the list, Judge Fred Hazouri wrote.

``I'm glad to see we were able to get the laws to do what they were supposed to,'' Andres said.

A trial judge had scheduled a foreclosure sale to allow the homeowners' association to collect more than $20,000 in legal fees that have been accruing in the case.

The Indian Creek Phase 3B Homeowners Association permits flags flown only from brackets attached to house walls; Andres objected because the flag would have touched bushes in his yard. So he put up a 13-foot flagpole.

Attorney General Charlie Crist, who helped in the case, called the ruling a ``tremendous victory, not only for George and Anna Andres, but for the concept of property rights in Florida.''

Andres' attorney, Barry Silver, said the ruling should encourage homeowners who are afraid to challenge their homeowners' associations because of the belief they could lose their homes.

West Palm Beach attorney Steven Selz, who represents the homeowners association, did not return a phone call seeking comment.

Andres' difficulties attracted attention in Tallahassee, where the Legislature passed a law allowing people to fly the American flag regardless of homeowner association rules.

On Flag Day in 2002, Gov. Jeb Bush presented Andres a flag that had flown over the state Capitol and helped him raise it on the flagpole. But the new law did not help Andres in the foreclosure case because it was passed long after the lien was placed on his house.

The underlying dispute over the flagpole is still in trial court but Andres, 68, has been flying his flag for the last three years under a temporary injunction.

And he's got a bigger flagpole now than when he began --- 20 feet instead of 13. ``My flag still flies and it will never come down,'' Andres said.

http://www.sun-sentinel.com/news/local/southflorida/sfl-0323marineflagflap,0,1985007,print.story?coll=sfla-home-headlines

2005-03-16T11:27:00.000-08:00

Not-so-perfect life

Steven Ferguson says his experience at Southern Highlands has been anything but sweet

BY CATHY SCOTT

PHOTOS BY BILL HUGHES

"Southern Highlands. The perfect life."

That's the statement posted on billboards and on the golf community's Website. But this pocket of luxury and estate homes in the southwest Las Vegas Valley has been a not-so-perfect life for at least three families living there, despite Southern Highlands' motto. That's because, they say, they've been targets of racial discrimination. All three families are black. And they are three of the four African-American families who either own homes or live in the upscale community.

Southern Highlands, just off of Interstate 15 near West Lake Mead Drive, is a 2,300-acre master-planned community of high-end homes. The south end of Southern Highlands is where Steven Ferguson and three other black families live.

Ferguson's house -- which, according to Clark County assessment records, was purchased for him by his company -- is on a street just past the guard gate, while the other homes are a few blocks away on what an official with the Las Vegas chapter of the National Association for the Advancement of Colored People called "the black persons' street."

Ferguson, 50, said he chose the $1-million home in Southern Highlands in December 2001 because of the golf course. At the same time he purchased his home, he joined the club -- which charges a $90,000 membership fee and is limited to 360 invitation-only members. He was the first black man to move into the community.

"Only a privileged few can claim membership in such a prestigious and exclusive golf club," the club's Website says. "Admired by many. Experienced by a privileged few."

The 18-hole course was named the Best New Private Golf Club in the Western United States by Golf Digest shortly after it opened in 2000. Ferguson -- whose business attorney is Johnnie Cochran -- has teed off at the best of golf courses. His top three choices, he said, are Pebble Beach, Pinehurst in North Carolina and the Plantation Course on Maui. He enjoys those resorts, he said, because they're secluded and private. That's also the thing he said that attracted him to the Southern Highlands Golf Club.

"I can walk out my back door and be on the golf course," Ferguson said, as he sat in his dining room overlooking the 9th fairway behind a fence in his back yard. "It's quiet."

But by late 2002, Ferguson said, trouble began for him at Southern Highlands. That's when someone tacked to his front door a historical photo of a black man being lynched -- along with a note that read, "THE ONLY GOOD NIGGER IS A DEAD NIGGER! GET YOUR BLACK ASS OUT OF SOUTHERN HIGHLANDS!"

Ferguson said the homeowner association didn't do anything after the discovery of the racially derogatory poster -- which, he further said, is a violation of his association's rules to protect him. Ferguson said that he wasn't looking for a fight and that the discrimination came out of nowhere.

"When you're an African-American in this world, you learn how to deal with discrimination," he said. "I don't have a chip on my shoulder looking for someone to discriminate against me. But the case here -- it's so blatant it's difficult to ignore."

In April 2003, Ferguson was told by the golf course manager at Southern Highlands that he was no longer a club member. A hand-delivered letter from the club said he had resigned and that his resignation had been accepted. Ferguson, in turn, sent a letter back saying he had not, in fact, resigned and asked to be reinstated. He was reinstated, but was kicked out of the club again in September 2004.

So Ferguson filed a temporary restraining order and preliminary injunction.

In an affidavit filed with the court, Ferguson said he feels a campaign has been launched "to force me out of the club by any means necessary and has personally created an atmosphere for me to be harassed and disrespected by employees and certain members of the club." He said he has never broken any rules or regulations.

Southern Highlands Golf Club attorney Mark Ferario said the first time he learned of any racial discrimination allegations was in federal court. "At the earlier state hearing, in front of the judge, Mr. Ferguson made no mention of discrimination," Ferario said in a telephone interview. "The judge didn't grant the claim and dismissed the case. Four months later, [Ferguson] filed the federal case and everything hereafter is about race."

In February of this year, U.S. District Judge James Mahan granted Ferguson the injunction, pending the outcome of his racial discrimination case, reinstating his membership and allowing him to play golf and use the 42,000-square-foot clubhouse's amenities. Southern Highlands has appealed the rulings.

However, when Ferguson was recently out on the practice course on a Sunday, he was told that his dues were not up to date, that his credit card was invalid, and he was ordered off the course. Since then, Ferguson said he has paid a court-ordered fee and posted a current credit card with the club, so his dues can be charged each month and he can be reinstated once again.

Until the decision about Ferguson's membership standing is sorted out, he has filed a federal lawsuit accusing the club and its president, Garry Goett, of violating the federal Fair Housing Act.

When reached by telephone, Goett said an employee "very discreetly" approached Ferguson that day to ask him about his membership. "[Ferguson] came out and tried to play before his rights had been reinstated," Goett said. "He knew that. He had not put up the money that was required by the court."

Goett said that Ferguson, as of March 15, still had not paid his fees nor posted a current credit card -- and, therefore, according to the judge's order, could not use the club. Once Ferguson complies with the court's request, Goett said, his membership will be reinstated.

"We think Mr. Ferguson is trying to embarrass and intimidate us with these false claims," Goett added. "We're just not going to yield to this kind of pressure."

Since the court filings, Ferguson's house has had eggs thrown at it, glue put in his front-door lock and a rock with the words "Fuck You" written on it thrown at the back of his house. Also, he said, someone has been leaving phone messages at his house, saying: "You're going to die, nigger."

"The very day after I informed the attorneys on the other side that I had filed the complaint, eggs were thrown at his house," said Reno-based attorney Ian Silverberg, who represents Ferguson.

Each time there's been vandalism, Ferguson said, he's called Southern Highlands security and Metro Police to file reports and make them a matter of record. No arrests, however, have been made.

"The rock came from the golf course behind his house," Silverberg said. "It's somebody who's allowed on the golf course. That narrows the universe pretty much as someone who's a member or an employee and someone who knows his house."

Southern Highlands executives told the court, in their answer to the lawsuit, that Ferguson's club membership was terminated because he's an ex-felon. Ferguson, according to Silverberg, pleaded no contest in 1994 to a theft. The charge, as a result, was reduced to a misdemeanor, Silverberg said.

"It was arising out of a divorce over property left at his home," Silverberg said. "There's no felony there. It's a misdemeanor. He's able to vote and have guns."

Silverberg said he ran a background check on his client and did not come up with the conviction because the case has been sealed. Club officials, however, discovered a desist-and-refrain order out of California having to do with investments Ferguson, a former CEO of an

investment company, promised to make on behalf of clients. A reference to a felony conviction for "three charges of grand theft" is made in the order, which is dated April 2003.

Attorney Ferario said he told the court, "The straw that broke the camel's back was when the California Corporation's order was discovered, [and] that's when we discovered the felony."

According to the court record, Ferario told the judge: "[The California order] recites in there a number of factual allegations ... that [Ferguson] engaged in fraudulent business practices."

After learning of the California order, Ferario said, the club terminated Ferguson's membership.

The California order was issued against Ferguson because of corporate code violations in California, according to the state's Website, and for not paying back investors hundreds of thousands of dollars. It prevents both Ferguson and his former company -- Global Venture Group, a Nevada company of which he was CEO -- from doing business in California.

"Ferguson has offered a variety of different investment contracts," the order, which was signed by California Corporations Commissioner Demetrios A. Boutris, reads. "In some cases he provided no written instrument to evidence the investment. In other cases he provided promissory notes to investors, issued either by himself in his individual capacity or by Global Venture Group.

"The Department of Corporations," the order continues, "has not issued a permit or other form of qualification authorizing the offer and sale of securities issued by Steven Michael Ferguson and/or Global Venture Group in this state. ..."

Silverberg defended Ferguson, saying the background check by Southern Highlands executives was done after his client was removed as a club member.

"I think it was done way after the fact, when they were forced to articulate a reason, and they came up with this [felony] claim," Silverberg said.

Whatever the reason for the membership termination and vandalism at Southern Highlands -- whether it's because of discrimination or because of Ferguson's background -- living at the golf community has not been what he expected. Before joining Southern Highlands, Ferguson -- who describes himself as "a retired businessman" -- was a member of Mountain Gate Country Club in Bel Air, Calif., a tony suburb of Los Angeles.

"I never had a problem there," Ferguson said about his two-year membership. "It was very nice, but the course itself was relatively small. That's one reason I left. Southern Highlands' club manager called to find out what kind of member I was, and Mountain Gate gave me a great recommendation."

Ferguson isn't the only black homeowner at Southern Highlands who says he's been discriminated against. One family, which asked not to be identified, has been trying to do improvements to its home and have sought approval from the homeowner association -- only to be denied. Also, a daughter had gone to the country club to eat and been told her attire was improper and to go home and change, she said -- even though she was dressed the same as everyone else.

Goett said the club doesn't practice discrimination and that he was sorry to hear members felt it had. "We treat all our members the same way," he said. "[But] we have a dress code that has to be complied with."

A third homeowner, who also did not want to be identified for fear of retaliation, has faced similar situations, including visitors being turned away at the gate because the guards said no resident by that name was in the computer system. That homeowner, who lives out of state, was planning to move to Southern Highlands full time -- but has since decided against it.

Ferguson said a fourth homeowner, baseball Hall-of-Famer Reggie Jackson -- one of five

black club members -- complained to management about Ferguson being kicked out of the club.

"I can't comment on that right now," said Jackson, when asked about racism at Southern Highlands. "I don't like to get involved in things like this."

Jackson owns three houses at Southern Highlands, according to the Clark County assessor's office. He rents out two, Ferguson said, and stays in the third home when he visits Las Vegas -- which is about every two months.

"He's a friend," Ferguson said of Jackson.

Other members of the club have approached Ferguson, he said, apologizing for what's been happening.

"I thought I was all alone when this thing hit the press," he said. "But people came out to wish me well. There are a number of members who support me. They've come up to my door and said they're deeply sorry."

Not everyone, however, appears to readily acknowledge Ferguson's presence at Southern Highlands. When a reporter recently drove to the entrance gate and asked permission to go to Ferguson's home, a uniformed guard asked: "Who?"

"Steven Ferguson."

"Scott Ferguson?" the guard asked.

"No, Steve Ferguson."

The guard looked confused, and then asked again: "Ferguson?"

"Yes."

"There's no Ferguson here," she said.

"Yes, a Steven Ferguson lives in Southern Highlands."

"Oh, OK," she responded. She then called Ferguson's home to confirm he was expecting a visitor.

Later, when asked what employees with TSI -- the company that handles security for Southern Highlands -- were doing to prevent vandalism at Ferguson's home, the same guard said: "I'm not allowed to comment."

Rick McGinnis, security director for TSI, did not return a phone call for comment. In cases involving litigation, it is common for parties not to talk to the media.

However, in a recent letter to Ferguson, Goett wrote: "As president of the club and as an owner, the club documents grant me considerable authority to deal with membership and member issues which includes, but is not limited to, recalling a membership at anytime 'for any or no reason whatsoever.'

"While this is a power not to be exercised lightly, I will not hesitate to recall a membership if in my opinion I feel it is in the best interest for the membership and for the Southern Highlands Golf Club."

Ferguson said he took the letter as a threat.

Supporting Ferguson in his battle against Southern Highlands is the local chapter of the National Association for the Advancement of Colored People. Peggy Maze Johnson, publicity chairwoman of the NAACP, who helped write a news release for Ferguson, said Ferguson has complied with all of the membership rules -- but Southern Highlands still refuses to allow him to play golf on its course.

"He can't even go to the club's restaurant," Johnson said. "The three black families, who aren't members, live on 'black people's street.'"

Until 2003, Ferguson appeared to be a respected member of the club. A photo hanging on a wall of his family room shows Ferguson standing next to a smiling Gov. Kenny Guinn, who is an honorary club member (according to Southern Highlands' roster). The photo was taken after Ferguson had made a $10,000 donation to Guinn's election campaign at Southern Highlands Golf

Club's invitation-only fundraiser.

And Ferguson's attorney said he is confident his client will win his fight with Southern Highlands.

"When you go to federal court and you get an injunction when everybody's telling you you're crazy and you won't win, you feel confident," Silverberg said. "A lot of people have come out on Steve's behalf, and that makes me feel even more confident we'll prevail."

Ferguson, too, said he feels he'll win the court case and plans to take it all the way to trial if he has to.

"I don't want this to happen to anyone else," said Ferguson, who plans to continue living and playing golf at Southern Highlands. "My father before me went through this sort of thing in the South, you know, riding at the back of the bus. He said to me once, 'It's like a wild dog. If you take off running, they'll keep chasing you.'"

Cathy Scott is a Las Vegas-based crime writer and author of Murder of a Mafia Daughter and Death in the Desert. Her column Crime & Punishment (see Page 14) appears weekly in CityLife. Contact her at 702-243-2923 or by e-mail at cathy@cathyscott.com.

http://www.lvcitylife.com/articles/2005/03/15/cover_story/cover.txt

Condo embezzler sentenced

2005-03-05T16:00:00.000-08:00

Woman to spend 6 months in jail, pay back $11,000

By MITCH MAERSCH - GM Today Staff

March 4, 2005

Bridgett Freeman won't be spending time in prison, and Washington County Circuit Judge Patrick Faragher made sure she knew it was a rarity for her crime.

Freeman, 40, of Sheboygan, stole more than $11,000 from the Westridge Homeowner's Association in West Bend.

Thursday, she was sentenced to six months in jail and three years probation, and was ordered to pay back $11,617.41. The sentence came on a joint recommendation from the district attorney and defense.

"I feel very strongly about employee theft. Employee theft oftentimes destroys a business," Faragher said.

"Accepting of responsibility is the difference between you going to prison and jail," he said. Faragher said he thinks he sentenced every other employee theft case to a prison term.

After Freeman was fired as bookkeeper from the association, the new bookkeeper noticed Freeman had frequently written checks to herself in the association's name, according to the criminal complaint.

Freeman was originally charged with two counts felony theft. Those were amended to misdemeanors in exchange for guilty pleas on both. Her maximum jail time was nine months on each count.

"As with any employee theft, it involves an abuse of trust," said Washington County District Attorney Todd Martens. "Particularly in the case of a condo association, people have an expectation that the bookkeeper is going to be honest."

"This was a really a brazen series of thefts," he said.

Defense attorney Deb Strigenz said Freeman took responsibility for her crime right away.

Freeman lives with her mother, who totally relies on her for care, Strigenz said. Freeman's husband lives in Mexico with her 6-year-old daughter. The husband, who is Mexican, is having trouble getting back to the United States since 9-11 due to tightened security, she said.

Freeman's 15-year-old son lives with her father in West Bend, she said.

"Miss Freeman was trying to support five people," Strigenz said. She supported more people than her income did.

"Every money she took she anticipated to pay back," she said.

Freeman took two jobs to help prepare her to pay restitution. One is at Comfort Keepers, a non-medical in-home care service for the elderly, and a factory job at Rockline Industries, both in Sheboygan.

Comfort Keepers wrote a letter supporting Freeman, saying she is one of the most-requested caregivers.

"I'd like the court and the association to know I'm sorry for what I did," Freeman said.

She was going through a difficult part of her life, she said.

Faragher said Strigenz is "probably" correct Freeman planned on paying back the money.

But she needed jail simply to punish her, not to protect the public, he said, as in the case of a fifth drunken-driving case.

Freeman is to report to Sheboygan County Jail April 24.

This story appeared in the West Bend Daily News on March 4, 2005.

http://www.gmtoday.com/news/local_stories/2005/March_05/03042005_06.asp

Condo owner says inquiries to board led to vandalism

2005-03-04T22:34:00.000-08:00

Videotape leads to arrest of neighbor

By Joe Kollin
Staff Writer

March 2, 2005

All condo owner Jallele Praschnik did was ask to look at her condo association's records, as allowed by state law.

As a result, she says, her screen was cut, pesticide was thrown into her apartment, and eggs were thrown at her car. In addition, someone would periodically stand outside her window, looking in and listening to her conversations.

After 15 months of such intimidation, she said, she borrowed surveillance equipment and taped a neighbor committing the alleged crimes.

Police last week arrested John Losada, 59, a leader of the condo association at the South Grove Plaza, at 2690 SW 22nd Ave. in Miami. He is scheduled to appear in court on March 15 to answer charges of criminal mischief and stalking.

He faces five years on the vandalism charge and one year on the stalking charge if convicted. He is free on $6,000 bail.

State Rep. Julio Robaina, R-Miami, on Tuesday hailed the arrest as a victory for condo owners everywhere in the state.

"This will send shock waves throughout Florida," he said. "This sends a message to board members who use intimidation to stop owners from doing what they are allowed to do. It won't be the same old same old any more.''

After hearing what he called "horror stories" about the way boards treat owners, Robaina last year was responsible for several state laws designed to alleviate the problem. He plans to seek more reforms at the legislative session that begins Tuesday.

Praschnik, an owner in the 43-unit building for 15 years, said that in November 2003 she sent a certified letter requesting to see the association's books. She suspected irregularities in the handling of money by the officers who had been in control since the building opened 25 years ago.

Within a day, she said, eggs were thrown at her car. Other incidents followed. Her screen was torn with a knife or just removed, a liquid substance was thrown into her apartment and someone would stand at her window looking inside and listening, according to court records. Nine times, court records state, she saw the suspect drive by and throw eggs at her car.

Unable to get police to do anything, she said she borrowed surveillance equipment and, according to the police report, caught the suspect on video "as he was throwing the liquid through the [kitchen] window."

She said she also has video of him "putting his ear to my apartment and listening to my conversations."

Losada wouldn't discuss the charges. "We're going to court on that," he said.

But he maintains the dispute stems from Praschnik's dislike of his lifestyle. He is gay and has lived with his partner of 25 years in the apartment. His partner is the association president and he is a "supervisor," a position that he says puts him in charge of such jobs as lawn maintenance. The two have been in leadership positions for 25 years.

"This woman is harassing my partner and me because we're active in the association," he said.

Joe Kollin can be reached at jkollin@sun-sentinel.com or 954-385-7913.

http://www.sun-sentinel.com/news/local/broward/sfl-sintimidate02mar02,0,7227822,print.story?coll=sfla-news-broward

Missing Money: A News 3 Homeowner's Association Investigation

2005-02-06T13:00:00.000-08:00

May 19th, 2004

More than a million people in the Las Vegas valley live in homeowner's associations ... mini-governments who handle millions of dollars. But as News 3 Investigator Darcy Spears found, some associations' money is missing, and one man may be to blame. We've all heard horror stories of associations run amok, foreclosing on homes for petty fines and the like, but how often do you hear about an entire association, including the board, being victims?

Most every month under most every one of these roofs, homeowners cut their checks for dues to homeowner's associations. They're run by elected volunteers who are typically concerned with things like keeping pigeons out of pools, having block parties, and making sure trash cans aren't out for too long.

For the more complicated stuff, like managing money and running the community's business, HOA's often hire professional property managers. Senator Mike Schneider: "Homeowners pay their monthly dues and they expect everything to be handled for them, and they don't want to be involved in it and they just expect everything to be run on the up and up."

But things are not always run that way, as Aimee Pantea found when she joined the board of Mariposa, a community association involved in construction defect litigation. "There's so much money involved in these construction defect cases, that all this money tends to make people a little greedy."

When looking over association records, Aimee's contractor husband, Romy, first noticed this red flag. "He had signed a management contract that offered him a 2% fee for the construction defect reconstruction fund."

Sen. Schneider: "That's blatantly against the law in the State of Nevada." The contractor's board sent Wrath a violation letter, but the Panteas found more serious problems. "We discovered that there was approximately $100,000 in funds that were reported to the board on their financial statement from A & A Management that were not there.

Tom Wrath runs A & A Management. He currently manages Spanish Villas and Duncan Court HOA's. He's also been in charge of Paradise Springs, Casa Vegas, Starfire Condo, Cheyenne Park Villas, Fairway Villas and Mariposa. Mariposa had to hire Attorney Jay Hampton to get at their own records. "Mr. Wrath had refused to provide the records, refused to provide access to the records, he wasn't letting board members go take a look at financial records, and he wouldn't provide information about the association's money, like where it was."

"So they went to the bank to start finding out whether it was there and I think that day was a shock for all of us to find out that five certificates of deposit did not exist." The Panteas say Wrath made up fake financial statements to cover his embezzlement of Mariposa's funds. When they threatened to sue, most of the missing money magically reappeared. Attorney Jay Hampton: "He finally turned over close to $100,000, but interestingly, it came from a personal account. It was money that he had apparently taken out of the Association's bank account."

Under Nevada law, he's not allowed to do that, and he may still be breaking the law by keeping some of the money. His answer to Mariposa's legal complaint states, "many of the funds in question have been returned." What about the rest? The Panteas said they met with brick walls trying to get help. "We went to the Real Estate Division, Attorney General's Office, Police Department and nobody was helping."

Metro says their review of the records shows a crime was committed. Fraud detectives say Wrath did steal the money, but since he returned most ot it, the case would get little or no priority from the district attorney for prosecution. "I think that if you stole something and they catch you and you go, oh, here it is back, you still stole it and you still should pay for it."

Sen. Schneider: "It seems like, in this town, embezzlement is a bigger issue than we all had known in the past. And embezzlement cases seem to be treated very lightly unless it hits a great amount of money, one million dollars or more." So if Metro couldn't help, what about the Real Estate Division? That state agency is charged with overseeing homeowner's associations and property managers. And it's not like this is the first time they've heard allegations of missing money under Tom Wrath's management.

In part two of this story, Darcy takes a look at what the government knows about Wrath, and what they haven't done to protect the public.

HOA Fraudit Standards

2005-01-03T18:55:00.000-08:00

Homeowners associations use CPAs to conduct audits of the HOA's financial statements. Audit procedures have changed dramatically as a result of many highly publicized accounting scandals in the past few years. Although the types of fraud seen in those well-known cases typically do not occur in HOAs, the changes in audit procedures apply to all businesses, large and small.

The biggest changes result from the American Institute of Certified Public Accountants' (AICPA) Statement on Auditing Standards No. 99. SAS 99 became effective on December 15, 2002. Its purpose is to improve audit quality and the ability of auditors to respond effectively to the potential for fraud. SAS 99 covers such new topics as:

Characteristics of fraud
Exercising professional skepticis
Assessing and responding to fraud
Examining journal entries for fraud
Evaluating significant unusual transactions
Communicating fraud to the client

The effect of SAS 99 is that the auditor will perform procedures to determine unusual relationships between accounts and increase inquiries of management. The auditor will also assess the risks associated with management override of internal controls and journal entries. The auditor will inquire of the board of directors, bookkeepers, property managers, and others to determine if any has knowledge of fraud or suspected fraud. The auditor will also examine programs and controls in place at the HOA or the management company to prevent, detect, and deter fraud. At the conclusion of the audit, the Board, manager and bookkeeper will be asked to sign a letter of representations which vouches for the correctness of the financial statements.

HOAs are corporate entities which should maintain professional and honest books. SAS 99 will help auditors ferret out those that have ill motives.

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Written by Richard Thompson