HOA Residents Attempting to Become a Municipality

By Deborah Goonan

The HOA, Association of Poinciana Villages (FL), wants to become a city. In fact, a group of residents have been attempting to become a municipal corporation for several years. Poinciana Incorporate Now Citizens Home Organization (PINCHOS) has completed a feasibility study submitted to Florida Legislature in August.

It seems as though the large subdivision of Poinciana is tired of being underfunded and getting no services from Osceola and Polk Counties, despite the fact that 47,000 residents pay taxes to both Counties and the state of Florida. Their mature HOA cannot provide the same level of service to its residents that is typical of nearby cities of similar size. Apparently the residents pay assessments, while the developer does not. PINCHOS feasibility study concludes that incorporation would give Poinciana access to millions of dollars in revenues from County, utility, gas, and sales taxes.

PINCHOS residents are tired of Developer Avatar retaining majority control since 1971 and want each resident to have voting rights, instead of a 9 member Board of Directors voting on behalf of each of Poinciana’s Villages.

Why would a large group of HOAs want to become its own municipality?

Compare PUBLIC local government (municipal or county level) to PRIVATE governance in HOAs.

More sources of revenue and financing

  • A municipality has access to property and sales tax revenues, low interest loans, issuance of municipal bonds, state and federal grants.
  • The HOA is limited to collection of assessments that are not necessarily based on assessed property values. (often the $50K home pays the same assessment as the $500K home and even commercial property owners) The HOA has very limited access to financing through loans.

Ability to collaborate to obtain needed services

  • A municipality can take advantage of economies of scale, and can cooperate with nearby towns and cities, or enter into local agreements to provide needed services.
  • The HOA has few options to collaborate with neighboring communities or public entities to provide needed services. In fact, its governing documents (the so-called CC&Rs contract) often state that the local governing entity will not provide such services, because the Developer has given away owner rights to these services as part of the development agreement at the time permits were issued.

More qualified, accountable representation

  • Local government elected officials are compensated, are publicly vetted, and they generally possess experience relevant to their respective roles. They often have term limits. Should these officials fail in their work, they are usually voted out of office in the next election. If they engage in unethical or illegal conduct, they will eventually be investigated, and held personally liable, without constituents having to bring legal suit.
  • The HOA Board is comprised of volunteers who are practically immune from personal liability and oversight. They and the managers they hire often lack necessary personal and professional skills to do the job. The burden is placed upon owners and residents to investigate wrong-doing or spend personal funds in filing civil suit.

Democratic elections with equitable voting rights

  • Voting and elections in a city – one vote per registered adult voter vs. one vote per unit (dwelling) owned. That means tenants vote, and each adult in the household gets to vote. No one in the community gets more than one vote.
  •  The HOA Developer is granted weighted voting rights and appoints the Board as long as he controls most of the votes. After turnover, Boards are often elected by representative voting members, proxies, and other dubious means. Of course, allocation of voting rights is inequitable: the more property one owns, the more votes one has.

Limitations on legal liability

  • The city has sovereign immunity, limiting its legal liability.
  • The HOA is a corporation that must insure itself against potentially high legal liability.

This is one evolving story to monitor closely.

****************************

For more information:

News 13, August 2013, Should the growing community of Poinciana become a city?

WFTV news report, April 2013, Poinciana could have own government in 2014

Around Osceola, May 2014, New study may put Poinciana incorporation on the 2016 ballot

From PINCHOS website, Why Poinciana Incorporation?


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