Validity of AZ HOA Fee Questioned

Pursuant to statute, a request was made for an agency review of the fee to file a complaint against HOAs.  Last year, a new law allowed complaints to be filed against HOAs and  heard by the Arizona Office of Administrative Hearings (OAH). This was an effort to level the playing field so homeowners can have complaints heard without having the HOA attorney utilize the Rules of Court against the less informed homeowner.

The basis for the request to the Director of the AZ Dept. of Fire, Building and Life Safety (DFBLS) (that receives the complaint filing), included,

There have been no amendments by the legislature to alter this amount, nor bills passed into law. In fact, on November 15, 2006, pursuant to Sec. 12 of Sess. L. ch. 324 (2006) a review was held by JLBC whereby it was decided not to change the fee amount,

While 2198.01(B) allows DFBLS to charge a fee, the specific amount is not set in the statute: “The petitioner shall file a petition with the department and pay a nonrefundable filing fee in an amount to be established by the director.” It is unreasonable to believe that it was the intention of the legislature to allow the director of DFBLS an open-ended freedom to “pick any amount” he may so decide.

Setting a fee is considered a Rule under ARS §41-1001, paragraph 17, and consequently, is subject to the rulemaking procedures of APA under ARS §41-1030(A). A review of the Administrative Registers from November 15th to date shows no notice or preamble filings for a change in this fee amount.

In short, the statute permits the Director to set fees, but the APA rulemaking statutes tells him how to do it – public notice and hearings.

Statements made by the Director refer to a few cases taking longer than anticipated, raising the cost of the administration of justice. This position has no bearing on the authority of the Director to set a fee, since the statutes were established to permit public notice and input to the setting of any agency rule or fee.

OAH heard some 7,360 cases last year with a budget of $1,165,900, or $158.41 per case, far below the original fee of  $550 and making the new $2,000 fee outlandish – a “poll tax”.  There were only 22 HOA cases, all filed by homeowners seeking justice, when this fee increase was put into effect.  Agencies that account for 78% of OAH adjudications pay no fees!

Advocates see this increase as another effort to silence the problems with HOA private governments.  Advocates continue to hope that the HOA mess would be cleaned up by legislators at the insistence of public interest organizations demanding a return to good government.

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Published in: on March 2, 2007 at 9:20 am  Leave a Comment  

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