Now comes HOA taxes or assessments

In Biggs v. Betlach[1] instead of an issue of public or private agency we have the question of what’s a tax and what’s an assessment. The pro – con briefs are very instructive as relating to the HOA question of: Are HOA assessments like public taxes or like fees and assessments? If HOA assessments are clearly a tax, if public, then we have one more argument that HOAs function as public entities.

The case involves a group of AZ legislators seeking to have a federal Medicaid expansion bill declared unconstitutional, because the bill deals with tax increases and requires a 2/3 vote, which did not happen. (Why it was sent to the Governor is a guess, except they probably thought Governor Brewer would veto it, but she didn’t). Skipping the other issues in this case, I deal with what’s a tax and what’s an assessment as argued in the Goldwater filings.[2]

Note the clear statement of what’s a tax and what’s an assessment. Goldwater cites several references (not provide here) in its brief presentation of the law regarding taxes:

“In Arizona, taxes are defined as levies that are mandatory and not calculated based on the service received, whereas fees are voluntary and related to the benefit received by the paying entity, and assessments are levied against property that is specially benefitted by the improvement they fund.”

For example, “[O]ne key difference between university tuition and the [Medicaid] tax – university tuition is a fee, not a tax, because it is collected in direct exchange for a service provided and benefit received – specifically, education.” Similarly, we have various license fees, registration fees, etc. that are paid for a service of personal benefit. To help make it clearer, although the term “property assessment” is used quite often, it does not refer to the valid property tax but to the monetary valuation of the property, which is used to determine the amount of tax. It is a tax.

Goldwater goes on to argue that the purpose of a law cannot trump and supersede the constitution, nor can the legislature interpret what is constitutional. The position that a law serves “To promote effective government administration and pragmatic problem solving” is viewed as “Defendant’s preferred ‘public policy’ cannot trump voter intent or supersede constitutional provisions.”  Does that sound familiar?  HOAs provide benefits and, implicitly, therefore the laws and Constitution can be ignored?

Particularly relevant to HOAs is the argument that,

“Constitutional restrictions on legislative authority cannot be waived by the legislature itself, especially in collusion with special interests who benefit from the unconstitutional act. . . . The legislature cannot delegate to another branch of government—least of all an unelected administrator—the quintessential legislative power: the power to tax.”

So, forgetting about under what laws HOAs are created, what say you about HOA assessments as taxes and hiding behind a corporation structure[3] whose constitutionality is defended by the legislature and not the courts. In HOA-Land, while the names have been changed to protect the guilty, their functions are basically the same. The HOA assessment is a tax hiding behind a corporation shield.

Notes

[1] CV2013-011699, Maricopa County Superior Court, yet to be decided. Biggs is the Senate President with numerous legislators as co-plaintiffs. Betlach is an agency director. Prominent constitutional lawyers from The Goldwater Institute (for plaintiffs), the Arizona Center for Law in the Public Interest, and The William E. Morris Institute for Justice (for defendants, the state) are involved,

[2] PLAINTIFFS’ REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT; PLAINTIFFS’ COMBINED RESPONSE TO DEFENDANT’S AND INTERVENORS’ MOTIONS FOR SUMMARY JUDGMENT.

[3] See corporations cannot be used to evade Constitution and CC&Rs are a devise for de facto HOA governments to escape constitutional government

Published in: on July 22, 2015 at 5:21 pm  Comments (1)  
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Blog information access — RSS feeds

In addition to the Search link to query keyword posts, viewers also have an Email update ability for new posts.

Newly added is a long time capability to automatically receive ‘news’ feeds under RSS — Really SImple Syndication.  Just click on the appropriate RSS image on the website.  RSS image

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For more info on RSS, see

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Published in: on July 22, 2015 at 8:01 am  Leave a Comment  

NJ bill A469 a step toward regulatory agency oversight of HOAs?

NJ bill, A469 (former A1730), sponsored by NJ Speaker Pro Temp, Jerry Green, attempts to detail certain state protections for owner-members of HOAs.  Detailed protection is needed as a result of the vague and broad language of the statutes and governing documents that cause 1) unknowledgeable owners who complain to be “blown away” by HOA “officials,” including attorneys, and 2) unnecessary law suits just to clarify language that the HOA attorneys know misrepresent legal doctrine.

For example, “attorney-client privilege” is abused to apply to legitimate corporate records that are not attorney work products; and the misleading, contractual “after notice and opportunity to be heard” phrase regarding complaint hearings that short circuits the legitimate due process protections specifying confrontation of witnesses, providing evidence and the questioning of witnesses by an independent tribunal.

Among other things, the bill addresses due process by DCA (Department of Community Affairs) and fair election procedures, another vague and unspecified process in the governing documents.  It further takes the proactive step, as I’ve alluded to in my writings on HOAs as a government entity, with the pronouncement that, “Any governing documents of an association not in compliance with this section . . .  shall be deemed amended to be in compliance” (C.45:22A-43.c); and “Notwithstanding the provisions of any law to the contrary, a homeowners’ association shall be deemed to have amended its governing documents, including its bylaws” (45:22A-46.e.) (my emphasis).

In addition, additional regulatory powers are granted to DCA, “The Commissioner of Community Affairs shall promulgate any rules and regulations that may be necessary to effectuate the provisions of [this bill]” (C.45:22A-48.b).

Relevant excerpts from this bill can be read at Excerpts.

Some call it government interference in a democratic society.  Others, including yours truly, see it as legitimate police powers of the government to protect its citizens. As stated in this bill in its closing “Statement” (“legislative intent” statement), “This bill clarifies the intent of the Legislature that P.L.1993, c.30 (C.45:22A-43 et seq.) be viewed as an enabling act for homeowners’ associations of non-condominium types of planned real estate developments . . . .” (My emphasis).

In fact, the Planned Community Act states,

 “45:22A-22. Public policy

“The Legislature in recognition of the increased popularity of various forms of real estate development in which owners share common facilities . . .  deems it necessary in the interest of the public health, safety, and welfare . . . that dispositions in these developments be regulated by the State pursuant to the provisions of this act.

“45:22A-24. Administration of act. 4.

“This act shall be administered by the Division of Housing and Development in the State Department of Community Affairs, hereinafter referred to as the “agency.”

Does NJ law make HOAs an arm of the state, state actors, or an unconstitutional delegation of legislative powers to a private entity? 

In short NJ law has created a state regulatory agency and is now proposing to grant it further legitimate authority under its police powers in the “interest of the public health, safety, and welfare.”  An “enabling act,” as the statutes are clearly being designated, is required to grant powers and authority to state agencies.  State agencies are “arms of the state” subject to the 14th Amendment.

If deemed not, then do the NJ statutes provide sufficient control and oversight of private entities by the legislature?  I believe a resoundingly not!  A469 attempts to move in this direction, but more is needed.

I argued this issue in regard to HOAs in general in Supreme Court says corporations cannot be used to evade Constitution and Regulatory agency enforcement of HOA violations.

Supreme Court activism makes new law, just like in HOA cases

The following is relevant to many, many decisions, views and mindsets of the courts in HOA cases. I have encountered such “howevers” and “not applicables” in many HOA decisions. Here is a relevant excerpt of Chief Justice Roberts’ justification for the Court’s Obamacare decision.  My comments are in square brackets “[]”.

“Petitioners’ arguments about the plain meaning of Section 36B are strong. But while the meaning of the phrase “an Exchange established by the State under may seem plain “when viewed in isola­tion,’ such a reading turns out to be ‘untenable in light of the statute as a whole.  In this instance, the context and structure of the Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.

“Reliance on context and structure in statutory interpre­tation is a ‘subtle business, calling for great wariness lest what professes to be mere rendering becomes creation and attempted interpretation of legislation becomes legislation itself.’  For the reasons we have given, however, such reliance is appropriate in this case, and leads us to conclude that Section 36B allows tax credits for insurance purchased on any Exchange created under the Act. [Regardless of federal or state]. Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid.  [The end justifies the means].

“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is con­sistent with the former, and avoids the latter. Section 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.”

The dissenter Justices wrote:

“The Court holds that when the Patient Protection and Affordable Care Act says ‘Exchange established by the State’ it means ‘Exchange established by the State or the Federal Government.’ That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”

What we have here is the making of new law by the majority of Justices, people, choosing to ignore long held legal doctrine on interpreting laws.  We are no longer under the rule of law, but under the rule of man.

I recall Justice Jackson’s analysis of the finality of Supreme Court decisions.

In the 1953 Supreme Court case, Brown v. Allen (334 US 443), Justice Robert Jackson commented,

“We are not final because we are infallible, but we are infallible because we are final.”  

(Jackson was the head of the US delegation to the Nuremburg Trials of Nazi war crimes).

 

Published in: on June 25, 2015 at 7:24 pm  Comments (1)  

Regulatory agency enforcement of HOA violations

There has always been a secondary mechanism for enforcing civil law violations that homeowners have been told very little about. In fact, the national ‘educational’ business trade organization has fought against this method from time immoral.

The enforcement of civil law can be found in such state (and federal) regulatory agencies as real estate, banking, medical, registers of contractors, bars, hair salons, etc. Except for HOAs.  Why not?

While state legislatures have intentionally avoided explicit delegation of authority to HOAs, their abdication of their constitutional responsibilities by a do nothing, hands-off attitude is an implicit delegation of authority. This failure to protect HOA members has caused much harm and injury to   individual homeowners, and has caused much divisiveness and disharmony within HOA communities. The various state HOA acts are devoid of any effective supervision, control, or oversight and should be declared unconstitutional.  A regulatory HOA agency solves both the constitutional and civil enforcement defects.

Read the complete paper at HOA regulatory enforcement.

Published in: on June 16, 2015 at 7:52 am  Comments (6)  
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