By Deborah Goonan, Independent American Communities
In response to reader concerns and curiosity about various special tax districts, IAC will be exploring the pros and cons of public or quasi-public funding and taxing entities.
I don’t know why local governments are getting involved in the business of neighborhood beautification. In my opinion, neighborhood beautification is an appropriate role for a voluntary-membership neighborhood or civic association.
Local governments should be focusing on important infrastructure projects such as safe roadways and flood control. They also play an important role in controlling crime and promoting general public health and welfare.
Lovely tree-line streets and sidewalks are certainly desirable improvements, but, with limited financial resources, they aren’t absolutely necessary.
Nevertheless, some elected officials believe that a majority of your neighbors should have the right to force everyone in the neighborhood to pay for a non-essential project, even if the proposed improvements obviously benefit some homeowners more than others.
State law and local government enables this “majority rules” mentality, especially as it pertains to property owners.
Let’s face it. If you go out of your way to buy a home with no HOA, you do not expect to be roped into community landscaping projects, even if the cost per homeowner seems relatively low to some of your neighbors.
Neighborhood Improvment District
Henderson, Nevada (not far from Las Vegas) is the site of yet another controversy over a proposed Neighborhood Improvement District (NID).
In this case, the Meridian Estates neighborhood is not under the purview of a homeowners’ association. According to the referenced articles in the Las Vegas Review-Journal, the developer never established an HOA to manage and care for street-side landscaping surrounding the neighborhood.
There appears to be a controversy as to who owns the strip of land that forms the perimeter of Meridian Estates. Some owners say that private homeowners own the land, and should be responsible for maintaining it. Others say it’s common land without an official owner.
But, following a recent vote organized by homeowners in conjunction with the city of Henderson, the Neighborhood Improvement District is now a done deal. The cost: $537, assessed as “service fees” on individual properties in the District.
The money will reportedly be used to plant new trees and shrubbery, and to install a new irrigation system along the street side borders of Meridian Estates.
Henderson beautification project puts neighbors at odds
By Sandy Lopez Las Vegas Review-Journal
January 31, 2018 – 5:46 pmUpdated January 31, 2018 – 7:00 pm
A beautification project in Henderson is pitting neighbors against one another in a move that critics call a backhanded attempt to create a homeowners association.Robert Herr, the city’s public works director, parks and recreation department, said the project is meant to bring the community together to maintain the landscape in the perimeter of the Meridian Estates near Robindale Road and Pecos Road.
The project will replace trees, plant new shrubbery and remove toxic material. It will add grading and install an irrigation system, accent boulders and rock mulch, Herr said. He said the city has “no intention of creating an HOA” in the 166-home neighborhood.
“We simply want to bring the community together, so that everyone can share equally in the cost,” Herr said.
The estimated total is $537 per home, and the payment would be divided over two years into semi-annual installments of $134.25.Long-term maintenance is estimated to be approximately $52 per year per home. An additional service fee related to the Neighborhood Improvement District will include a cost of about $36 the first year and $19.27 in subsequent
Read more (Video):
Henderson will assess neighborhood for beautification project
By Sandy Lopez / Las Vegas Review-Journal
March 21, 2018 – 11:15 amResidents in the Meridian Estates in Henderson soon will have another bill to pay, this time for the price of beauty.
The Henderson City Council unanimously approved an ordinance Tuesday to create a beautification project that will charge homeowners to maintain the landscape in the perimeter of the neighborhood near Robindale and Pecos roads.
Read more:
Henderson will assess neighborhood for beautification project
What caught my eye on this report is the homeowners’ comparison of the NID to a “backhanded HOA.”
Time to clear up confusion as to the differences between the HOA and the NID.
A Neighborhood Improvement District is NOT an HOA
Unlike homeowners, condominium, or cooperative association, which are private organizations or corporations, a special district, such as the Meridian Estates NID, is unit of government. That makes the NID fundamentally different from an HOA in several ways.
Taxing some, but not all, without regard to boundaries of HOA
All special districts, including NIDs, are creative funding schemes created to tax some, but not all, of the property owners within a municipality or county. In some cases, a special district might also include property owners in more than one municipality or county. As Meridian Estates illustrates, a special district can exist with or without an HOA.
Bound by the U.S. and State Constitutions
As a public unit of government, the NID is legally bound by Constitutional constraints, including principles of open government. Meetings and official records (with rare exceptions) are open to the general public, including media and non-residents of the district.
That’s an important distinction, because citizen and consumer watchdogs provide valuable public scrutiny over those who govern our properties and communities. That puts more pressure on government leaders — be they from City Council or the NID — to behave in a way that is fiscally and socially responsible.
How does that compare to many HOAs? Typically, local press and media are banned from attending meetings, and even members of the association have difficulty obtaining full access to official records, without getting the courts involved.
Additionally, as government entities, the focus of improvements and code violations is maintaining public health and safety, and curtailing public nuisances. A city or county governed district would be on Constitutionally shaky ground if it began to enforce codes on the basis of aesthetics only.
Thus, it’s far easier to find attorneys willing to sue the government vs. an HOA. For example, check out the Institute for Justice or the American Civil Liberties Union.
So far, both IJ and ACLU have not taken a serious interest in protecting the property rights and civil liberties of residents in association-governed communities, except on rare occasion, when the court has ruled limited state action on the part of the association.
Another difference: the government is required to solicit competitive bids. If they don’t, citizens and the media can call them out and the AG could investigate conflicts of interest and even arrest the rogue board member(s).
By contrast, HOA conflicts of interest are not illegal in most states, as long as the conflicted board member or manager discloses a potential conflict of interest prior to a board vote on a contract award.
Governed by elected officials, or appointees of elected officials
The NID, in Nevada, is governed by the municipal council, not volunteer homeowners. City Council is elected democratically. Modern HOA boards are typically elected by a corporate scheme based upon shares of property owned. Thus, it is possible for a few people to wield a supermajority of voting interests in the corporation, making a democratic vote impossible. The end result is that an association-governed community can more closely resemble an oligarchy or dictatorship, rather than a democratic community.
NID is easier to dissolve than an HOA
As opposed to dissolution of a homeowners’ association, property owners have the opportunity to dissolve the NID each year:
NRS 271.296 Neighborhood improvement projects: Dissolution of improvement district.
1. The governing body may, by resolution, dissolve an improvement district that is created for the purposes of a neighborhood improvement project if property owners whose property is assessed for a combined total of more than 50 percent of the total amount of the assessments of all the property in the improvement district submit a written petition to the governing body that requests the dissolution of the district within the period prescribed in subsection 2.
2. The dissolution of an improvement district pursuant to this section may be requested within 30 days after:
(a) The first anniversary of the date the improvement district was created; and
(b) Each subsequent anniversary thereafter.
3. As soon as practicable after the receipt of the written petition of the property owners submitted pursuant to subsection 1, the governing body shall pass a resolution of intention to dissolve the improvement district. The governing body shall give notice of a hearing on the dissolution. The notice must be provided and the hearing must be held pursuant to the requirements set forth in NRS 271.377. If the governing body determines that dissolution of the improvement district is appropriate, it shall dissolve the improvement district by resolution, effective not earlier than the 30th day after the hearing.
4. If there is indebtedness, outstanding and unpaid, incurred to accomplish any of the purposes of the improvement district, the portion of the assessment necessary to pay the indebtedness remains effective and must be continued in the following years until the debt is paid.
(Added to NRS by 1999, 2864; A 2015, 148)
Given the close vote on the NID for Meridian Estates, it’s possible that property owners could have another petition next year, and get enough signatures to force City Council to dissolve the NID. If owners like the improvements installed in the next year, this issue may blow over, and the NID will remain. But if owners are disappointed with improvements or the progress of improvement, the NID could be gone within a year or two.
Unfortunately, even if the owners dissolve the NID next year, they would still be on the hook for repaying any bond debt that is outstanding. Dissolution just stops further bleeding of taxpayers.
Owners can also challenge the procedure of establishing the NID in civil court, if they wish. They can also protest being included in the designated area to be taxed.
See the statute for full details:
https://www.leg.state.nv.us/NRS/NRS-271.html#NRS271Sec296
As onerous as the process may seem, it’s far easier than dissolving an HOA, which would involve obtaining a supermajority vote of affected owners to agree on amending the underlying Covenants, Conditions, and Restrictions (CC&Rs), as well as finding acceptable ways to liquidate or transfer ownership of all of the common areas.
Not all Special Tax Districts are created equal
Not all tax districts are created in the same way, or for the same purpose. Some special districts apply only to property owners, while some pertain to all residents, or a subset of residents, such as all water or sewer utility customers.
Some are governed directly by elected officials of the local government. Others are governed by a committee appointed by elected officials of a municipality, county, or state.
Some are public-private partnerships with developers in charge until the project is built out. (See Community Development Districts)
Others are governed by a board that is democratically elected by registered voters in public elections. (As opposed to private HOA, condo, or co-op elections)
But all special districts intend to collect taxes and/or raise money, often by issuing bonds for some limited purpose(s), and/or by assessing mandatory fees (taxes) upon some subset of residents in the city or county.
As illustrated by Meridian Estates NID, the most controversial issue with special districts is that, very often, a majority of property owners can essentially force the dissenting minority of owners to pay for an improvement district that they don’t want or don’t think they need.
Still other civic-minded voters believe that, if the greater public will benefit from community improvements, then everyone in the City or County ought to pay their fair share — not just few dozen, a few hundred, or a few thousand people from certain neighborhoods.
In conclusion, there’s no single “correct” way to share costs of community improvements or services. Each proposal for a special district needs to be evaluated on its own merits, given the specific circumstances facing the community and the general public.
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