By Deborah Goonan, Independent American Communities
Arizona Senator David Farnsworth (R) has been meeting with a group of concerned citizens to discuss regulation of Association Governed Housing (Homeowners’, Condominium, and Cooperative Associations) in the state. The group includes several professionals seeking to rein what they call excessive power of HOAs, among them Attorney Steve Cheifetz (Iannitelli & Marcolinni) and Scottsdale resident and Realtor Jill Schweitzer.
Two of the dozen or so proposals being discussed:
- Restoration of Homestead Protection of up to $150,000 in home equity in the event of HOA foreclosure or financial judgment
- Legal requirement for Community Association Management companies to disclose gifts or monetary compensation from vendors it refers to HOA Boards
In the past, the HOA “mastermind” group has struggled to find consensus on legislative reform measures. Farnsworth says this is because special interest groups tend to infiltrate the meetings, advocating for their own political agendas.
One obstacle to change is resistance from those who lead what they claim are trouble-free HOAs.
For example, HOA Board member and Vice Mayor of Paradise Valley, David Sherf, does not seem to think legislative change is necessary. He claims his Association has experienced little conflict and operates without difficulty.
Sherf is quoted in the following article.
Arizona citizens band together to address legislative powers of HOAs
By Terence Thornton
Vice Mayor Sherf says in his four years serving on his HOA board he hasn’t seen much in the way of dissent from the local homeowners.
“A validation of this statement is that our annual meeting only attracts about seven to 10 residents at most and our four to five meetings each year typically attract less people than that,” he said. “As a board, we think we must be doing the right things as we have such few people attend the meetings.”
In other words, according to Sherf, non-participation of residents in their HOA meetings is a sign of success. The insinuation is that, if members were to attend, it would only be to complain or present their problems to the HOA Board.
Unfortunately, this stance is typical of politicians and corporate business leaders such as Sherf, a CPA and former Senior VP of Hilton Hotels Corporation, who has led a highly successful career in hotel development and asset management.
But let’s face it. The vast majority of HOAs do not have residents with David Sherf’s depth and breadth of financial and business management experience. And only a fortunate few have a political “in” with their municipality.
The fact is, a great many HOA Boards are led by members with no financial or management experience – the kind who might not even manage their personal finances effectively. In reality, many thousands of HOAs are handing over control of 5- or 6-figure annual budgets to volunteers who don’t even know how to balance their checkbooks.
Other HOAs may remain under the control of a developer or investor group for many years while a community is still under construction. Quite often, developer interests do not coincide with consumer (homeowner) interests.
And regardless of the quality of leadership, owners and residents of Association Governed Housing are entitled to equal protection of their rights, including the right to transparent and democratic governance. Those are two qualities many residents find lacking in their HOAs.
These are all very good reasons to rein in the power of HOA Boards and to regulate community association developers and management companies – regardless of the fact that some prominent HOAs appear to function as intended.
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Grassroots group meets monthly to discuss HOA issues