In search of equality: are HOAs businesses or not?

By Deborah Goonan, Independent American Communities

HOA Industry’s point of view is inconsistent, in light of its legislative quest for equal access to FEMA disaster relief.

Once again, the industry is exposing its tendency to promote a double standard with regard to homeowner, condominium, and cooperative associations.

Community Associations Institute (CAI) is notorious for being unable to make up its mind whether association-governed communities are private businesses or mini-governments.

In a recent blog about proposed FEMA Disaster Assistance for association-governed communities, CAI declares the following:

Former Congressman Steve Israel (NY-3) first introduced the Disaster Assistance Equity Act in 2012 after Hurricane Sandy’s ravaging effects on his district revealed to him the glaring discrepancies and inequity in FEMA’s policy. FEMA classifies community associations as businesses, making associations ineligible for federal recovery assistance. The Disaster Assistance Equity Act specifically qualifies community associations for assistance and relief services when impacted by a major disaster.

FEMA’s classification of community associations as businesses is particularly unfair because like other homeowners, community association residents protect their homes by purchasing insurance and support disaster response and recovery assistance through local, state and federal taxes, yet are continually denied help.

Source:

CONGRESS TAKES STEPS TOWARD DISASTER RELIEF EQUALITY

Colleen Willard, Esq. – 4/4/2017

https://www.caionline.org/Advocacy/GovernmentAffairsBlog/Pages/Hr1684.aspx

 

Not long ago, a prominent CAI-member management company executive went on record insisting that Associations are private entities that should be operated as businesses, with an eye toward marketing communities, and always promoting good public relations. Remember?

HOA – COA Manager’s column bashes use of social media

(See this page for a profile of Jack Hanson of Melrose Corporation)

 

But when it comes to an Association’s legal right to receive federal disaster assistance, CAI prefers to promote HOAs as providers of “essential services” of a “governmental nature.” Note the careful wording crafted by the industry, as it does not declare that HOAs are governments, per se, because, in reality, community associations are still private organizations, most of them corporations.

What, exactly, is CAI’s legislative strategy to include Association-Governing organizations (for the most part, nonprofit, not-for-profit, or mutual benefit corporations) as eligible parties for FEMA disaster assistance?

There are two key amendments proposed:

1. Current federal law does not include association-governed, common interest communities as eligible private non-profit facilities. Such a facility is eligible for FEMA disaster assistance only if it “provides essential services of a governmental nature to the general public.” The Act would be amended to include “facilities (including roads, walkways, bridges, culverts, canals, sewer and wastewater systems, hazard mitigation systems, power, and other critical community infrastructure) owned or operated by a common interest community that provide essential services of a governmental nature.” In short, collectively owned “facilities” of the private corporate association (business) would be included as eligible “private non-profit facilities” even though the infrastructure components of an association-governed community are otherwise considered to benefit a private organization, not the general public. 

 

2. Current federal policy provides assistance to an “individual” and “household.” The Act would expand the definitions of “individual” and “household” to include the associations for condominiums and cooperatives. In other words, the Act would deem a condominium or cooperative corporation to be a person or group of persons residing together.

Opponents of Citizens United will recognize the second proposed amendment as a similar Red Flag threat to democracy.

Double standards?

This is yet another case of the HOA industry seeking special exceptions and preferential treatment, allowing the industry to create special corporations that are granted more and more power and privilege, historically limited to governments that truly serve the public interest.

Common interest communities must stop straddling the line between public and private entities. If all residents of common interest communities are to enjoy the same level of disaster relief assistance as residents of other communities, then the industry must be required to serve the public interest by operating under the same Constitutional constraints.

Currently, governance by private or collective homeowner, condominium, and cooperative corporations is not equivalent to governance by Constitutional Republic, the official government model of the United State of America.

American taxpaying constituents deserve equal treatment under the law, no matter where they choose live – but that equal treatment applies in general, not merely to eligibility for FEMA disaster assistance.

 

REFERENCE: Two Federal bills supported by Community Associations Institute (CAI)

HR 1684 Disaster Assistance Support for Communities and Homeowners Act of 2017

To direct the Administrator of the Federal Emergency Management Agency to provide technical assistance to common interest communities regarding eligibility for disaster assistance, and for other purposes.

 

H.R.3863 – Disaster Assistance Equity Act of 2015
114th Congress (2015-2016)

NOTE: emphasis added in bold

114th CONGRESS
1st Session
H. R. 3863

To amend the Robert T. Stafford Disaster Relief and Emergency Assistance Act to provide assistance for common interest communities, condominiums, and housing cooperatives damaged by a major disaster, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES
October 29, 2015
Mr. Israel (for himself, Mr. DeSaulnier, Mr. Pallone, Mr. Fattah, Mr. King of New York, Mr. Connolly, Mr. Nadler, Mr. Rangel, Mr. Sires, Mrs. Carolyn B. Maloney of New York, Mr. Pascrell, Ms. Meng, Mr. Capuano, and Mr. Engel) introduced the following bill; which was referred to the Committee on Transportation and Infrastructure

A BILL
To amend the Robert T. Stafford Disaster Relief and Emergency Assistance Act to provide assistance for common interest communities, condominiums, and housing cooperatives damaged by a major disaster, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.

This Act may be cited as the “Disaster Assistance Equity Act of 2015”.

SEC. 2. DEFINITIONS.

(a) Definition Of Private Nonprofit Facility.—Section 102(11)(B) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122(11)(B)) is amended by adding at the end the following: “The term also includes any facilities (including roads, walkways, bridges, culverts, canals, sewer and wastewater systems, hazard mitigation systems, power, and other critical community infrastructure) owned or operated by a common interest community that provide essential services of a governmental nature.”.

(b) Additional Definitions.—Section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122) is amended by adding at the end the following:
“(13) COMMON INTEREST COMMUNITY.—The term ‘common interest community’ means—

“(A) any nonprofit mandatory membership organization comprised of owners of real estate (other than a condominium or housing cooperative) described in a declaration or created pursuant to a covenant or other applicable law with respect to which a person, by virtue of the person’s ownership of a unit, is obligated to pay for a share of real estate taxes, insurance premiums, maintenance, or improvement of, or services or other expenses related to, common elements, other units, or any other real estate other than that unit described in the declaration; and

“(B) a condominium project—

“(i) comprised entirely of detached single family units; or

“(ii) comprised of 4 or more multi-unit housing structures, that owns or operates facilities (including roads, walkways, bridges, culverts, canals, sewer and wastewater systems, hazard mitigation systems, power, or other critical community infrastructure) that provide essential services of a governmental nature.

“(14) CONDOMINIUM.—The term ‘condominium’ means a multi-unit housing project in which each dwelling unit is separately owned, and the remaining portions of the real estate are designated for common ownership solely by the owners of those units, each owner having an undivided interest in the common elements, and which is represented by a condominium association consisting exclusively of all the unit owners in the project, which is, or will be responsible for the operation, administration, and management of the project.

“(15) HOUSING COOPERATIVE.—The term ‘housing cooperative’ means a multi-unit housing project in which each dwelling unit is subject to separate use and possession by one or more cooperative members whose interest in such unit, and in any undivided assets of the cooperative association that are appurtenant to such unit, is evidenced by a membership or share interest in a cooperative association and a lease or other document of title or possession granted by such cooperative as the owner of all cooperative property.”.

SEC. 3. CONDOMINIUMS AND HOUSING COOPERATIVES DAMAGED BY A MAJOR DISASTER.

(a) Individuals And Households Program.—Section 408(b)(1) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5174(b)(1)) is amended—

(1) by striking “The President” and inserting the following:
“(A) IN GENERAL.—The President”; and

(2) by adding at the end the following:
“(B) CONDOMINIUMS AND HOUSING COOPERATIVES.—For purposes of providing financial assistance under subsections (c)(2) and (c)(3) with respect to residential elements that are the legal responsibility of an association for a condominium or housing cooperative, the terms ‘individual’ and ‘household’ include the association for the condominium or housing cooperative.”.

(b) Maximum Amount Of Assistance.—Section 408(h) of such Act (42 U.S.C. 5174(h)) is amended by adding at the end the following:
“(3) SPECIAL RULE FOR CONDOMINIUMS AND HOUSING COOPERATIVES.—

“(A) IN GENERAL.—In lieu of the limit established under paragraph (1), the maximum amount of assistance that an association for a condominium or housing cooperative may receive under this section with respect to a single disaster shall be an amount to be determined by the President by regulation.

“(B) ADJUSTMENT OF LIMIT.—The amount determined by the President under subparagraph (A) shall be adjusted annually in accordance with paragraph (2).”.

SEC. 4. APPLICABILITY.

The amendments made by this Act shall apply to a major disaster or emergency declared by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.) after the date of enactment of this Act.

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