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| San Diego, California - The party line for the past 40 years in America for homeowner associations is that they provide maintenance-free living, protect property values, and promote community. That is the party line.
The real reasons why homeowner associations have come to encompass 55 million Americans are not romantic. They are developers' desires for a bigger bang for the buck and their unholy alliance with cities and counties to increase tax revenue when the law set limits to the amount of taxes. As a result, it is not that Americans wanted homeowner associations. It is that the alliance between developers and government really gave Americans no other choice.
How did this come about? In broad strokes, the story is as follows.
After World War II, when the U.S. began to experience unprecedented prosperity and the returning G.I.s started families, the demand for housing soared. Developers then hit upon a brilliant idea. They saw that mass production generated untold wealth in many other areas of the economy, such as the making of cars, tootpaste, bread. Why not mass produce houses?
As the mass production of houses required large tracts of land, the suburbs of the cities were the logical locales. To entice people to live in these carbon-copy homes, developers packaged them with a few swaying palm trees and some green lawns, and some common facilities such as swimming pools. Glossy brochures presented pictures of the good life extending into eternity.
At the same time, as property taxes were rising astronomically on conventional property, tax reform proposals surfaced around the country. The most notable was Proposition 13 in California that put a cap on the annual increase in property taxes.
Cities and counties immediately realized that their insatiable appetite for tax revenues was in danger. Solution? Require that all new housing developments be in homeowner associations, where the residents would have to take care of their own streets and lighting. In one fell swoop, cities and counties achieved a tax increase by cutting back their area of responsibilities.
This marriage of developers and government is strikingly present in the case of John Carona, who is simultaneously a Texas state legislator and the owner of the biggest management company for homeowner associations in the country. It is no coincidence that he has been a big proponent of legislation that is pro-association vendors and anti-homeowner.
The political influence even reaches all the way to the White House. George Bush when he was governor of Texas, signed a bill that had been passed in the waning minutes of the Texas legislative session without any of the usual procedural mechanisms being followed. The bill authorized foreclosures in Harris County, Texas. (Mr. Bush is also famous for calling Ken Lay of Enron, "Kenny boy". Lay gave an estimated $2 million to Bush.)
Hence, if anybody is thinking of buying a home in a homeowner association, they need to think long and hard before doing so. Of course, nobody ever thinks that they will run into a problem with their homeowner association, but there is a whole group of lawyers out there who are working and praying that homeowners do run into problems. That is how they make their money.
Enron beckoned investors with visions of limitless wealth. Homeowner associations beckon with visions of palm trees and lawns and carefree living. The history of the last 30 years has shown that this is largely a mirage. If you too are tempted by the mirage, take a careful, dispassionate look at the realities before you commit to something that might cost you a lot of money - and grief. |
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