Goldwater Institute ignores HOA unconstitutionality

Reading through the highly respected Christina Sandefur’s paper in the Harvard Law Journal,[1] I was deeply disturbed by the absence of any discussion of similar conduct by homeowners associations (HOAs). Her paper criticized city ordinance prohibitions on short-term home rentals. “These cities treat home sharing itself as the crime.” It is a dangerous proposition that government . . . [to] be able to criminalize violations of that judgment” [“on how to use their properties”].

Yet, in her one single sentence, Sanderfur holds HOAs harmless that, by means of the governing documents, use their “police powers” to prohibit short-term rentals and from criminalizing such acts by their members. While that may be the role of a homeowner association when people contract to determine to how to use their properties, a city government should not have that power.”

Sanderfur’s arguments against government statutory prohibitions, include in part,

  • “Cities look at this as a way to increase revenues” by imposition of fines,
  • “They get to outlaw the activity,”
  • Intimidate residents [of the city] into giving up their property rights”,
  • “This is not only abhorrent public policy, and
  • “It is also unconstitutional”.

It seems that these arguments apply to HOAs also, but it appears that nobody is listening. I do not understand and cannot understand this blindness to the constitutional issues surrounding HOAs, especially from the prestigious, defending the Constitution, public interest Goldwater Institute.

What is the rationale behind this blindness when there is substantial legal authority in support of unconstitutionality, from the basic outlaw government of independent principalities that reject the US Constitution,[2] to placing the doctrine of equitable servitudes property law over constitutional law and contract law;[3] to gross misrepresentation in the selling and marketing of HOAs that invalidate and thought of a bona fide consent to be bound.[4]

When will Goldwater question the constitutionality of the HOA model of government? Why is Goldwater viewing an HOA just as a real estate subdivision package of amenities, landscaping, homes and not as a distinct form of local government[5] functioning outside the laws of the land as an outlaw government.

The policy makers have failed to understand that the HOA CC&Rs have crossed over the line between purely property restrictions to establishing unregulated and authoritarian private governments.” (George K. Staropoli).

 CIDS [HOAs] currently engage in many activities that would be prohibited  if they were viewed  by the courts as the equivalent of local governments.[6]

There is no compelling and necessary justification for HOA special treatment. It’s time to end these outlaw private governments that violate even the most liberal home rule, self-governing provisions of state laws and constitutions.[7]

I do not see Goldwater’s name on the list of Arizona’s Request to Speak positions on SB 1412,[8] a bill prohibiting HOAs from restricting the political free speech rights of homeowners in regard to political issues within the HOA community. California just passed SB 323, a progressive bill supporting homeowner rights, and Florida has SB 623 in the works also seeking homeowner rights and freedoms within the HOA legal structure.[9] This a very good time for Goldwater to speak out on this bill and HOA member rights, freedoms and privileges and immunities as US citizens.

 

The Goldwater Institute, including Sanderfur, has been on my distribution list for some time as well as Victor Riches, President & CEO, whom I met and discussed HOA problems as far back as the early 2000s when he was an Arizona legislative staff analyst. I also met with and discussed HOAs with Clint Bolick, now AZ Supreme Court Justice, who in 2013 accepted my request for legal assistance to sue the State of Arizona. He was preempted by Tim Hogan of ACLPI.[10] It was with Nick Dranias that I had a pleasant Arizona Capital Times exchange on HOA issues.[11] He offered, privately, some advice that I have incorporated into my Truth In HOAs position and Homeowner Declaration.

 

Notes

[1] Christina Sandefur, “Turning Entrepreneurs into Outlaws,” p. 45 et seq., Harv. J.L. & Policy, Winter 2020. Sanderfur is an Exec. VP, Goldwater Institute.

[2] See The HOA Principality (2005); HOA-Land: the product of the decline in democratic institutions in America. (2018).

[3] The Restatement advises judges — and is regarded as precedent — that its collection of laws known as HOA law dominates all others.   Section 6.13, comment a, states: “The question whether a servitude unreasonably burdens a fundamental constitutional right is determined as a matter of property law, and not constitutional law”. Section 3.1, comment h, states: “in the event of a conflict between servitudes law and the law applicable to the association form, servitudes law should control.” See CC&Rs are a devise for de facto HOA governments to escape constitutional government (2015).

[4] See HOA consent to agree vs. “the will of the majority”. (2019).

[5] The four recognized types of local government are : commission, and council-manager, the most prevalent. See in general, Roger L. Kemp, “Forms of Governance,” Managing America’s Cities: A Handbook for Local Government Productivity, McFarland & Co., (2007).

[6] Evan McKenzie, Privatopia: Homeowners Associations and the Rise of Residential Private Governments, Yale Univ. Press, 1994.

[7] See in general, HOAs violate local home rule doctrine and are outlaw governments, concluding paragraph. (2014).

[8] AZ RTS positions as of today, March 4, 2020.

[9] See Toward a democratic HOA subject to the Constitution (2020).

[10] See AZ Attorney General admits SB 1454 HOA to be invalid and without effect (2013).

[11] See Goldwater Institute: regulating HOAs “stands Constitution on its head” (2008).

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

The HOA contribution to the decline in civic virtue

Jeb Bush and Clint Bolick, VP of Litigation at the Goldwater Institute in Phoenix and nationally recognized constitutional law scholar, expressed their concern for the loss of “basic American values.”  Although presenting their solution to the dysfunctional US immigration policy[i], their concern is well suited to the impact that the defective HOA legal scheme has had on civic virtue.

New US ConstitutionA good part of the failure to provide for education in civic awareness lies in the rapidly growing residential housing industry that requires a governmental body over developers’ subdivisions that contain common elements.  Some entity, if not the local municipality, must govern these common elements and that has fallen to the homeowners association (HOA) legal scheme. . . . There is no civic virtue or civil servants in HOAs, because the HOA legal structure for governance is a corporation.  The equivalent of civics or civil virtue is HOA virtue, which amounts to two simple attitudes:  pay your assessments on time and follow the rules. (See High Noon in HOA-Land: members who permit lawless boards to function).  

Read the complete paper here . . .

 


[i] Immigration Wars: Forging an American Solution, Jeb Bush and Clint Bolick (Threshold Editions Div. of Simon & Schuster 2013).

A free speech ‘puzzlement’: tattooing vs. HOAs

Echoing the thoughts of Yul Brynner in the 1956 King and I movie (Anna and the King of Siam), I’ve encountered a “puzzlement.”  In the just released 27 page opinion of the Arizona Supreme Court in Coleman v. The City of Mesa, No. CV-11-0351-PR, the Supreme Court ruled that the lower court must allow the tattoo artists to show that tattooing was a protected expression of free speech.  The City of Mesa had a discretionary zoning ordinance against tattooing establishments.  The higher court held that the trial court could not summarily dismiss the complaint as not having a questionable issue of law.

The complaint sufficiently sets forth claims for relief for alleged violations of the Colemans’ rights to free speech, equal protection, and due process. Whether they can prove those claims will depend on the course of proceedings in the trial court.

I will not go into the legal details of the court’s analysis, but allow me to make some comparisons with HOA free speech issues from the point of view of “consent to be governed” (not discussed in the opinion).  I refer to the pro-HOA arguments that continuing to live in your HOA is an implicit agreement to be bound by the ruling private HOA government under its pseudo-constitution and pseudo-laws. That argument, alone, the courts have repeatedly held, controls the homeowner’s consent to agree.

BUT, as we have in this case, shouldn’t operating a tattoo parlor in the City of Mesa be likewise viewed as an implicit consent to agree to city zoning ordinances, among other public laws?  And as such, haven’t the artists waived and/or surrendered their constitutional rights that they are now arguing that they still retain?  Like it is argued against HOA members? Apparently not, for the supreme court there are sufficient grounds to make such a legal argument (helped by the Goldwater Institute).

It’s a puzzlement.  Why two sets of legal doctrines?  One for the public and one for a class of citizens who live in HOAs?  A real puzzlement.

Why has pubic policy favored HOAs with their denial of member rights and freedoms??

Could it be the effect of a corporate – legislator alliance?  Last year, ALEC, the American Legislative Executive Council, proposed model legislation that promoted local government by means of restrictive covenants. Yes, that’s right! And supported by none other than The Goldwater Institute.

A model law authorizing a transition from government-controlled local zoning and planning regulations to private restrictive covenants.

(See the 2011 report, Model Legislation, Decentralized Land Use Regulation Act).

The following quotes are from the Arizona Capitol Times article by Jeremy Duda,

ALEC, a conservative state lawmakers’ organization known for drafting model legislation for members to sponsor in their respective states.

“John Loredo, a former Democratic legislator, said ALEC woos lawmakers with trips, fancy meals and expensive gifts to promote its ‘extremist agenda.’

With many of the 56 Arizona legislators – all Republicans – who are ALEC members” [That’s 56 out of 90 legislators!]

See APS ending ALEC membership; SRP considers doing same.

Read more about ALEC here

ALEC, the American Legislative Exchange Council, is a one-stop shop for corporations looking to identify and cultivate friendly state legislators and then work with them to get special-interest legislation introduced and passed.”

Shades of corporatocracy and fascism!

Find out just what Arizona legislators are ALEC members. See the above ALEC report.

NOTE the reference “in their respective states” above. See if ALEC is active in your state.