HOA’s Harm Institutionalizing “Fraud” HOA-Style
How It Works 20-25% of Americans live in Homeowners’ Associations (HOA’s). One recent source claimed there are 351,000 HOA’s in the USA with 70 Million residents; 14-15 Million people in CA alone (35% of Californians). HOA’s exist to benefit those who want to live in exclusive communities where they have more control over everything. HOA’s started as a way to create “exclusive”, self-governing communities that wanted to control who got in (and who was kept out). The prime motive of HOA developers is profit. In their apparent lack of understanding of human-nature, they chose the “corporation” as the foundation for HOA organization. But, corporations are inherently non-democratic and largely devoid of personal accountability or responsibility. Today, HOA’s are part of a “Housing-Industrial-Complex”, comprised of the building-construction industry, land and real estate developers, real estate agents, insurance industry, local politicians, investors and RE-attorneys. The latest addition to the “HOA-Industry” has been companies providing hoa- management, training-certification, consultants, hoa-law and accounting, etc. These groups have become as big and powerful as the others aforementioned. Where Are HOA Homeowners in This? Not Part of the “PROFIT” Circle! Left-in-the-dust! 1. HOA laws - Davis-Stirling Act (CA) gives most power to Boards. 2. State Governments - Regulate minimally, intervene only with heinous, huge violations and require owners to “prove” a violation has occurred! 3. HOA Governance - Unmistakable set-up for greed and opportunism *Most Power to Boards *Boards poorly educated (HOA law, Parliamentary Rules) *Boards - no Ongoing training *Board candidates unscreened (No background checks) *HOA members not organized, or educated (HOA law) *Large HOA’s with No Comprehension of Large-Population Needs *Insider-Dealing Is Rampant, e.g., vendor-contracts, staff hiring *No “Checks-or-Balances” in HOA Laws 4. HOA buyers - No resources for objective, critical analysis of an HOA. 5. HOA homeowners - NO VIABLE MEANS to correct Board power-overreach or financial impropriety. 6. HOA-Board “Dynasties” develop. Opportunistically seize control of Assns. and run them for their personal-desires. ONE EXAMPLE - From 1970 to 1990 one No. CA HOA was run by closely-knit member-groups. By 1986 their “Business” incompetence led to court receivership. Finally, in 1992, they hired “Professional” staff. To retain control, those same initial groups consolidated power, developing strong influence over most successive Boards, staff hiring/firing and over the local “water agency.” This HOA started with nice amenities: 18-Hole Golf Course, boating-fishing Lake, equestrian center, parks, hiking trails and a community center with pool. Golf course expenses rose in the 90’s, but golf-memberships couldn’t keep up. The Course was Opened-To- The-Public with hopes of increasing income. Into the 2000’s added public use was not enough. Homeowner assessments (dues) were tapped. The “Justifications”: (1) It benefits all members - attractiveness and enhancing property values; (2) It is an “Amenity”, i.e., legally a permanent fixture; (3) It’s the “most outstanding” amenity; and, (4) It’s use of reclaimed water supports the water district (i.e., higher water bills without it!). The small-power-groups held such sway over Assn. functioning, there was no opposition. “Golf subsidies” became an unquestioned fiscal item. As the 2000’s waxed-on, course expenses outstripped income by $500- 700,000/year. The course was losing an average of over half-a-million a year. This has continued to the present. How These HOA Members Were Duped (De-Frauded): 1. Boards had opportunities since the 90’s to increase income and/or decrease expenses or re-configure the course. Instead, power-groups chose to tap the easiest, most readily available source: Association Member Assessments. 2. The above list of dubious rationalizations suppressed most member resistence due to the power-groups’ pervasive control. Bully-groups helped maintain suppression. 3. Power-groups continued to control Boards/Staff; continued to publish justifications. 4. 2001-2019 - course losses avg. $560,000/year. 19 year total = $10 Million!
HOA’s Harm Institutionalizing “Fraud” HOA-Style
How It Works 20-25% of Americans live in Homeowners’ Associations (HOA’s). One recent source claimed there are 351,000 HOA’s in the USA with 70 Million residents; 14-15 Million people in CA alone (35% of Californians). HOA’s exist to benefit those who want to live in exclusive communities where they have more control over everything. HOA’s started as a way to create “exclusive”, self-governing communities that wanted to control who got in (and who was kept out). The prime motive of HOA developers is profit. In their apparent lack of understanding of human-nature, they chose the “corporation” as the foundation for HOA organization. But, corporations are inherently non-democratic and largely devoid of personal accountability or responsibility. Today, HOA’s are part of a “Housing-Industrial-Complex”, comprised of the building-construction industry, land and real estate developers, real estate agents, insurance industry, local politicians, investors and RE-attorneys. The latest addition to the “HOA-Industry” has been companies providing hoa- management, training-certification, consultants, hoa-law and accounting, etc. These groups have become as big and powerful as the others aforementioned. Where Are HOA Homeowners in This? Not Part of the “PROFIT” Circle! Left-in-the-dust! 1. HOA laws - Davis-Stirling Act (CA) gives most power to Boards. 2. State Governments - Regulate minimally, intervene only with heinous, huge violations and require owners to “prove” a violation has occurred! 3. HOA Governance - Unmistakable set-up for greed and opportunism *Most Power to Boards *Boards poorly educated (HOA law, Parliamentary Rules) *Boards - no Ongoing training *Board candidates unscreened (No background checks) *HOA members not organized, or educated (HOA law) *Large HOA’s with No Comprehension of Large-Population Needs *Insider-Dealing Is Rampant, e.g., vendor-contracts, staff hiring *No “Checks-or-Balances” in HOA Laws 4. HOA buyers - No resources for objective, critical analysis of an HOA. 5. HOA homeowners - NO VIABLE MEANS to correct Board power-overreach or financial impropriety. 6. HOA-Board “Dynasties” develop. Opportunistically seize control of Assns. and run them for their personal-desires. ONE EXAMPLE - From 1970 to 1990 one No. CA HOA was run by closely-knit member-groups. By 1986 their “Business” incompetence led to court receivership. Finally, in 1992, they hired “Professional” staff. To retain control, those same initial groups consolidated power, developing strong influence over most successive Boards, staff hiring/firing and over the local “water agency.” This HOA started with nice amenities: 18-Hole Golf Course, boating-fishing Lake, equestrian center, parks, hiking trails and a community center with pool. Golf course expenses rose in the 90’s, but golf-memberships couldn’t keep up. The Course was Opened-To- The-Public with hopes of increasing income. Into the 2000’s added public use was not enough. Homeowner assessments (dues) were tapped. The “Justifications”: (1) It benefits all members - attractiveness and enhancing property values; (2) It is an “Amenity”, i.e., legally a permanent fixture; (3) It’s the “most outstanding” amenity; and, (4) It’s use of reclaimed water supports the water district (i.e., higher water bills without it!). The small-power-groups held such sway over Assn. functioning, there was no opposition. “Golf subsidies” became an unquestioned fiscal item. As the 2000’s waxed-on, course expenses outstripped income by $500- 700,000/year. The course was losing an average of over half-a-million a year. This has continued to the present. How These HOA Members Were Duped (De-Frauded): 1. Boards had opportunities since the 90’s to increase income and/or decrease expenses or re-configure the course. Instead, power-groups chose to tap the easiest, most readily available source: Association Member Assessments. 2. The above list of dubious rationalizations suppressed most member resistence due to the power-groups’ pervasive control. Bully-groups helped maintain suppression. 3. Power-groups continued to control Boards/Staff; continued to publish justifications. 4. 2001-2019 - course losses avg. $560,000/year. 19 year total = $10 Million! 5. Two professional golf consults in 2015, both concluded Course mismanagement. One recommendation - “Business Plan.” Still not done! Other recommendations ignored as well. 6. 2000-2019 - Golf and Food/Bev. Ops. funded copiously. 7. Non-golf amenities received tokenism. The Community Center (with the “Teen Center”) was so neglected it required demolition; with no plans to rebuild! 8. Lake De-Siltation, proposed many times, never done in the Lake’s 50+ year history. 9. The Equestrian Center deteriorated to a deplorable state before repairs. 10. Requests for upgrades/repairs to kids’ play equipment - Unheeded. 11. Yet, a Multi-Million-Dollar plan to rebuild the Club House (“Event Center”) was put-forth 3 times; most recently 2019! 12. Golf Course Memberships and course usage have fallen. Course management has resisted issuing ongoing, long-term details of rounds- played, solid evidence of marketing results, and solid evidence of cost- reduction strategies. Today, between just 5-10% of Assn. members play golf. “Fraud” has become a way-of-life at this HOA. back to Contents