By Deborah Goonan
Yesterday I featured a blog by Ward Lucas highlighting a documentary by the Annenberg Foundation. Here’s the link to the documentary again:
In this documentary, Justices Sandra Day O’Connor and Stephen G. Breyer and other experts discuss how the principle of one person, one vote emerged from a series of landmark decisions in the 1960s, including Baker v. Carr and Reynolds v. Sims. They examine the political environment that led to the decisions and the Court’s application of the 14th Amendment’s equal protection clause in deciding reapportionment cases. (26 min)
The issue of equality encompassed in the Democratic policy of One Person, One Vote is so fundamentally important to transformation of our Association-Governed Residential Communities that I feel it deserves special emphasis.
For roughly 5 decades, the status quo for allocation of voting rights in Associations has been to tie voting interests to the property owned, rather than the person residing in that property. But why?
Early days of private Associations
Back before 1970, most early Condo Associations were multifamily condominiums, and mainly in vacation and resort destinations. Most condo owners considered their units as vacation homes that they could rent to other tourists to defray the costs of maintenance. Early suburban subdivisions in Homeowners’ Associations were voluntary in nature, often with shared ownership or use of a recreational lake, clubhouse, or pool. They were formed mainly as “club” communities rather than planned developments. The thinking at the time was that voting “interests” must be proportional to one’s share of dues (assessments) payable. Owners were viewed as co-investors in real estate or a private club.
At the time, exclusive private communities and resort condos and villas were only affordable to buyers of considerable financial means. For these homeowners, at this time in history, the idea of One Person, One Vote was a relatively new legal precedent.
The memory of the Supreme Court cutting through the “political thicket” in 1962 with the decision in Baker v. Carr was undoubtedly fresh in the minds of many landowners, especially from rural counties. In 1964, Reynolds v. Sims set the standard for equal representation, for the concept of One Person, One Vote. States were ordered to reapportion voting districts by the 1966 election.
As the documentary points out, immediately following the Supreme Court’s direction to reapportion state voting districts, there was some push back by a minority of citizens and some members of Congress, even calling for a Constitutional amendment to reverse the court’s decision. It was short-lived, because the vast majority of Americans understood and favored voting equality.
Proliferation of Association-Governed Residential Communities
By the late 1980s and early 1990s, local governments across the US began to strongly favor or even require the establishment of mandatory Associations for new development. That’s because private communities with their own Association Governance require fewer government services than homes in traditional neighborhoods within the public jurisdiction of a municipality or county. At the same time, new construction also generates additional tax revenue for local governments.
Tax assessments for Association-Governed homes are generally not offset by the value of the services provided by the homeowners or condo association (or cooperative). In other words, even if the Association provides services such as maintenance of roads, storm water systems, trash collection, snow and leaf removal, private security, and other traditionally public functions, owners will likely pay property taxes that are comparable to those of owners of homes that are not located in an Association-Governed Residential Community. In effect, owners of property in private Associations are double taxed, and subsidizing the cost of services for non-HOA portions of the local jurisdiction.
In exchange for setting up an Association to handle maintenance and governance, developers were and still are often permitted to cluster a greater number of homes onto smaller lots. Tall condominium towers have become popular in cities looking to increase the number of taxable units in each city block by taking advantage of vertical space where land space is limited. Those policies increased profits for builders.
This is good Land Use policy for local governments and developers, but not necessarily for consumers and homeowners.
Evolution of private Associations as corporate governments
As the real estate industry continued to develop hundreds of thousands more Common Interest Community Associations over the next 5 decades, the corporate governance system persisted, and along with it, non-Democratic voting allocation. And over the past 50 years, the vast majority of these were established as Residential Communities with Mandatory Associations, rather than vacation resorts or subdivisions with private clubs and voluntary membership.
Over the years, the vast majority of Residential Associations have evolved into a type of corporate mini-government or quasi-government, with each state now conferring powers to enforce covenants and restrictions by issuing fines or even foreclosure of private homes.
Despite those realities, HOA industry stakeholders, led by professional trade groups, have successfully argued that Association-Governed Communities are private corporations rather than public governing bodies.
Buyers and homeowners need to be aware that HOAs are not subject to the Voting Rights Act. Furthermore, large master planned communities are not bound by Baker v Carr and Reynolds v. Sims reapportionment cases with regard to equal apportionment of its voting districts or sub-associations.
My next blog will discuss the significance of unequal allocation of voting rights in Association-Governed Residential Communities.
2 thoughts on “More on One Person, One Vote”
Shelly, you just made a great argument for dissolving the corporate structure and transforming the homeowners’ association to a publicly-governed entity. For instance, annexing to a local municipality, creating a regional tax district, or even creating an entirely new municipality if the HOA is large enough to stand on its own. Many are.
As for condominium associations, it would be a case-by-case basis. If the Association is a vacation resort with absentee owners, then it makes sense to keep the business structure. Likewise for condo towers in destination cities where the majority of owners buy purely for investment. But in both cases, then, disclose these purchases up front as what they are: business investments.
For Residential condominiums, where most people buy with the intent to live as their primary or seasonal residence — in other words, this is their HOME — then corporate governance and structuring as a business making owners liable for a myriad of unknown future costs and risks is highly inappropriate.
Transition either to a traditional rental community OR consider tweaking the cooperative and social housing models widely used in Europe.
Many of the internal conflicts and risks in condominium-style associations arise from inherent conflicting interests of homestead owners vs. real estate investors.
It’s great to start thinking about how we can allow homeowners to return to what Shu Bartholomew calls the “American Zone.”
Well, I would have to think about this. Since these associations are organized as businesses–we are subject and bound by contracts to these businesses–I can not see how it if is “fair” to say you own 10 houses here, you are 10 times more liable, you pay ten times more, but you voice only counts once. If it is a government, then yes, but its not. Until an associaiton is subject to the same restrictions as any government entity, then you can’t strip the rights of the ones paying 10 times more. While the courts rule on contract law and believe owners did this voluntarily, they cannot take away their business interests but still make court decisions based on business interests.
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