How legislative Rules committees abort democratic HOA reform bills

In the interest of public education on the functioning of state legislatures, this paper presents information on the rules governing state legislatures — using Arizona as a representative example — that affect passing bills into law.  I focus on the Rules committee’s powers to obstruct the voice of the people, and how it can prevent — kill — HOA reform bills by the actions of the political party leaders.

The powers of the Rules committee are undemocratic and authoritarian  in nature designed to thwart, apparently, the folly of the voice of the people.  We see the same undemocratic, authoritarian powers granted to HOA boards to an even greater extent,  The national lobbying group’s promotion of the “business judgment rule,” and acceptance by the courts, is a prime example.[1]

Exhibit 1 details the Rules powers that can prevent HOA reform bills, and any other bill not liked by the powers that be, from a hearing and vote by the full chamber — by the people’s representatives. As I wrote earlier[2], Arizona’s HB 2052, a bill that has in reality been killed in the Rules committee after unanimous approval by the House and Senate government committees, is a prime example of this misuse of authority.

The Senate Fact Sheet “intro” paragraph misrepresents the content of the bill:

“Expands statutory restrictions on condominium unit owners’ association and planned community association (HOA) regulation of political signs to include signs related to certain community activity. Prohibits an HOA from prohibiting door-to-door community activity”.

Of the 8 listed “Provisions,” 2 are technical, 2 relate to political signs, and 4 — given a short sentence in the “intro” —  expand on HOA restrictions and prohibition’s protecting free political speech and expression, in the HOA public forum,[3] as curtained in my earlier “Senate Protects” posting.[4]

. . . .

The Arizona Legislature, and each and every state legislature, is  not a sovereign that can do no wrong, but has duties and obligations sworn to under oath “to establish justice . . . and secure the blessings of liberty” for the people of its state. It cannot demand respect but must earn it through good deeds.  Passing HB 2052 into law would be a sign of good faith that would earn the respect of the people.

Exhibit 1.  Arizona Legislative Council publications

“In the Senate, bills are usually not “held” in the Rules Committee for partisan or political purposes; bills which go into the Rules Committee are almost always reported out. In the House, the Chairman of the Rules Committee can “hold” (read “kill”) a bill simply by not giving it a hearing. (p. 52).

“The options of the committee chairman are a) Hear the bill and vote on it, b) Hear the bill but take no action, c) Assign the bill to subcommittee, d) Not hear the bill.  (p. 39-40).”

“The Role of the Rules Committee,”  State Senator Randall Gnant, From Idea to Bill to Law (2000). (As of April 2021).

“Each measure is assigned to the Rules Committee of the house through which it is progressing . . . . The Rules Committees assess the constitutionality of the proposed legislation. Unless they are withdrawn or discharged, all bills must pass the Rules Committee before they are heard on the floor. (p.41-42).

“An Active Calendar of the Committee of the Whole (so called in both houses) consisting of bills the Speaker or President selects for consideration by the respective Committee of the Whole (COW).

“A calendar consisting of all bills and other measures that have been reported from the committees. In the House this is called the “House Calendar.”  In the Senate it is called the “Calendar of the Committee of the Whole.” These calendars are simply a list of bills and other measures that are ready for further action by the full chamber.” (p.42-43).

Arizona Legislative Manual 2003 Edition, Arizona Legislative Council (2003). (As of April 2021).

Notes


[1] See, Reorienting the HOA board: business judgment rule (2020).

[2] See, AZ Senate protects HOA misconduct rejecting HB 2052; Arizona HB 2052 restores homeowner constitutional speech protections.

[3] See court holdings: Calif. holds HOA elections as protected free speech public elections (2019); NV supreme court upholds HOAs as public forums (2021).

[4] Supra n. 2, AZ Senate Protects.

AZ Senate protects HOA misconduct rejecting HB 2052

The Arizona Senate is still sitting on HB 2052 since a month ago, March 1st,  a bill providing for member participation in HOA governance.  The bill  explicitly states, since the CC&Rs is seen as a contract, what the HOA cannot do and must allow for fair elections and meaningful  participation in HOA governance.

In the past I’ve addressed this constitutional question of fair elections in the HOA model of an authoritarian,  business form of governance.  I’ve provided examples of incidents and court cases reflecting this denial of fair elections, which exist in the public domain, as if the HOA is afraid of the democratic voice of its members.

In this writing I will call to your attention how an upscale, over 1,000 member HOA board — as a representative example of such HOAs — refuses to accept the facts laid before it that provide valid cause to conduct a due diligence examination; and to validate its positions in regard to its fiduciary obligations of good faith conduct and obedience to the governing documents.

Below I’ve copied parts of its application package provided to all candidates for  a director’s position. The package material clearly shows the BOD’s awareness of its fiduciary obligations and its required treatment with respect to the membership.

Obligations  and liabilities of directors

“Directors have a fiduciary duty to the Association and to each member.

“The duty of loyalty requires that:   Directors act in good faith  pursuant to a free, honest exercise of judgment not influenced by considerations other than the best interest of the Association.

“Failure to discharge the fiduciary duty can subject the Association to liability and subject the Director to personal liability. A Director can also be liable for illegal or tortuous acts of the Board of the Association if he/she participates in the decision to authorize the acts or knowingly fails to take steps to avoid the action. “[Emphasis added].

HOA control of the candidate process and campaigning

Getting down to the specific application of HB 2052, the relevant HOA’s candidacy procedures follow, with the opening line stating: “The Campaign and Election Policies have been carefully developed to provide a fair and clean process for candidates and all members.

While the specific policies are not clearly stated as whether prohibited or permitted, the overall tone is definitely of a prohibitive nature. The 14 points are shown as Exhibit 1 below. In sum, they include not using email listings; association facilities or agencies, clubs, etc. websites; no right to hold Q & A sessions independent of HOA;  no right to campaign through social media —  Facebook, Instagram, etc.; all advertising must be HOA approved; distributing flyers outside restaurants, presumably those within the HOA, or on common areas.

The policies of this HOA, and many other large-scale HOA are similar but not so detailed, demonstrate the failure of the board directors to act in good faith and as a fiduciary for the members.  For the HOA to argue that “The ends justify the means and we determine what’s good for the members, but the HOA entity comes first” is unsatisfactory and irrelevant. These policies reflect an authoritarian government that accepts the rejection of fundamental member democratic rights and privileges because they can hide behind the questionable legality of the CC&Rs.

There can be no excuse for HOA directors not being aware of the voluminous materials available for conducting their due diligence with respect to democratic, fair elections and member participation in HOA governance. They have been given plenty of notice, which subjects them to personal liabilities and prevents them from hiding behind “my attorney said it was OK,” or from acts of omission – doing nothing. 

This representative HOA’s policy so informs them of their liability. Yet, nothing is done to correct these violations of good faith. And still the directors, officers, and managers all demand respect! It’s shameless!

What is going on, you may ask?  Well, the board is setting policy for the acceptance of candidates without a vote of the membership. In other words, unless the proposed candidates are accepted by the BOD, the members have lost a candidate of their choosing. They have lost a meaningful participation in the governing of the HOA; they cannot disagree with the establishment!  So, if you thought your HOA was democratic, forget about it! 

Also, the BOD controls how candidates acceptable to them can campaign, placing severe restrictions not found in the fair public elections procedures.  See Exhibit 1 below. Again, members have lost their right to fair and free elections in HOA matters.

AZ Senate’s rejection of HB 2052

It is easily seen that  the AZ Senate supports these undemocratic polices as represented by this HOA’s practices. 

I have maintained that,

“Public policy today rejects constitutional government for HOAs allowing them to operate outside the law of the land. 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.”

See, CC&Rs are a devise for de facto HOA governments to escape Constitutional government; Reorienting the HOA board – fair elections; HOA Common Sense, No. 6: Fair and just hearings

And furthermore, “CIDS [HOAs] currently engage in many activities that would be prohibited  if they were viewed  by the courts as the equivalent of local federal amd Arizona governments.”  … Privatopia (1994), Evan McKenzie.

It is not too late for the Senators to meet their obligations to uphold the federal and Arizona Constitutions by passing HB 2052 into law.

Exhibit 1. HOA BOD campaign policies.

  1. Using email listings, electronic or websites of Neighborhood Representatives and Alternates, Charter Clubs, Interest Groups, community and specialty groups.
  2. Addressing a formal . . . Group (e.g., Neighborhood Representative, Charter Club, Interest Group, specialty group meetings, sports venues, etc.). However, a person’s right to free speech in casual conversations shall not be restrained.
  3. Participating in formal Q&A sessions and programs other than those sponsored by the . . . Election Team.
  4. Using Association facilities for campaign events for individual candidates.
  5. Removing other candidates’ campaign flyers from approved locations.
  6. Using the official . . . website, Facebook or Instagram social media accounts to promote your campaign or to use your personal social media accounts to defame or incite defamation of candidates, engaging in unkind innuendoes / slander / harassment at any time or in any setting.
  7. Posting campaign flyers on street signs, trees, light poles, motor vehicles, golf cars, lawns, windows, auto windshields, or in commercial buildings.
  8. Defacing approved campaign flyers.
  9. Using balloons, buttons, t-shirts, marked-up election ballot, etc. as campaign tools.
  10. Using advertising of any type (other than approved campaign statement and/or approved personal correspondence).
  11. Using multiple versions of campaign flyers at the same time.
  12. Placing flyers in mailboxes (against the law).
  13. Distributing campaign flyers outside the entrance of or in the restaurants.
  14. Distributing campaign flyers in common areas except as noted.

Why isn’t your HOA board supporting AZ HB 2052?

HB 2052 is a big step forward for HOA homeowners in AZ as it restores lost constitutional rights. Why then, isn’t your board supporting this important bill that is unquestionably in the best interests of the members?  If you read your CC&Rs, almost all but not everyone contain a statement of intent and purpose directed toward the members, you will find wording similar to: “shall inure [take effect] to the benefit of the member and be mutually beneficial.” 

Upholding constitutional protections provided by the US Constitution would seem to fit a board’s obligation. However,

“The political and social changes in our society brought about by the adoption and acceptance of the HOA legal scheme has created a new America of authoritarian, private governments known as HOAs. They function as independent principalities.  The values, beliefs, principles, ethics, and morality of today’s America would shock the Founding Fathers.”[1] 

HB 2052 follows in the footsteps of California’s SB 323 and several court opinions upholding HOAs as public forums that provide for protective free public speech on HOA governing matters.[2]  

AZ Senate Rules committee must place  HB 2052 on the COW agenda. This important bill extends constitutional protections to HOA members.  It is awaiting a hearing by the Senate Rules Committee; time is running out! It was not heard on the 15th and today, the 17th. Bills have been killed by being held by Rules, which is a mandatory committee for all bills.

The public in general does not understand the functioning of their state legislature when it comes to its lawmaking powers under our democracy.  Our Declaration of Independence, our ‘social contract’ between the government and the people,  states quite clearly

That to secure these rights [‘among these are life, liberty and the pursuit of happiness] governments are instituted among men, deriving their just powers from the consent of the governed.”

However, in many ways your legislature operates as the sovereign that can do no wrong. Take, for instance, the question of passing laws that are of questioned constitutionality.  Long standing legal doctrine holds that all laws passed by Congress or your state legislature are presumed constitutional.  This doctrine makes the primary function of legislative Rules Committees for checking constitutionality, among a minor formality issue, perfunctory and meaningless.

With the assistance of the Rules attorneys, the committees review the proposed legislation’s consistency with the United States and Arizona Constitutions and Arizona and federal law”[3]

In all my 20+ years I cannot recall any HOA bill being found unconstitutional by a Rules committee, even for one in 2013— by the same sponsor of HB 2052 — that was challenged in court and found unconstitutional.[4]

Members should be urging their boards to speak out.  Members would be protected and enjoy such constitutional freedoms to openly discuss issues of public HOA governance with their fellow members if  HB 2052  becomes law.  Make it a law – write the rules Committee and demand passing on the bill for a debate and a final vote by all Senators.

References


[1] George K. Staropoli, HOA Common Sense: rejecting private government, StarMan Press, 2013.

[2] See Substantive HOA member rights advances in Arizona.

[3] As an example, from the Arizona Legislative Manual.

[4] See AZ Attorney General admits SB 1454 HOA to be invalid and without effect.

Substantive HOA member rights advances in Arizona

A big step forward for HOA homeowners in AZ, that restores lost constitutional rights, as the Senate GOV committee passed the bill, HB 2052, in a 7-0 vote with 1 no-vote.  On its way to a full Senate vote and then Final vote.

It should also be seen by HOA BODs as treating their members as first-class citizens.  It follows in the footsteps of California’s SB 323 —  passed into law in 2019 — and several court opinions upholding HOAs are public forums that provide free public speech on governing matters.

Read the summary carefully for it spells out your rights to be heard on an equal basis to the BOD’s actions and views. FACT SHEET FOR H.B. 2052.  Here are some important excerpts:

“Prohibits an HOA from prohibiting door-to-door community activity on property normally open to visitors within an HOA.

Prohibits an HOA from prohibiting or unreasonably restricting an owner’s ability to peacefully assemble and use private or common elements of the community, if done in compliance with reasonable restrictions for the property adopted by the HOA’s board of directors.

“Allows an owner or group of owners to organize to discuss or address condominium or planned community business, including a) HOA board of directors elections or recalls; b) potential or actual ballot issues or revisions to the HOA documents . . .  or d) any other community business or action.  

“Allows an owner to invite a political candidate or other non-owner guest to speak to an assembly of owners.”

Now of course, your BOD will turn to its legal advisors to get an opinion.  If you’ve read my commentaries here you got a good idea of what many of the national lobbying member attorneys will probably telling your BOD.  Under the bill, when it becomes law, members will have a better chance to challenge BOD decisions and get to the facts of who really runs your BOD.  You might say, the bill will Make HOAs Great Again!

NV supreme court upholds HOAs as public forums

Last week the Nevada Supreme Court, in Kosor,[i] citing California Davis-Stirling law and Damon[ii] and Kite Hill[iii] opinions, affirmed HOAs as public forums. Issues relating to HOA governance are matters of public interest protected by free political speech.

SPOTIFY Audio PODCAST of post

In short, legitimate and valid criticisms of your HOA and its president and board are protected from HOA lawsuits of defamation and libel. At heart: Are the statements made in good faith and truthful?

Kosor filed an anti-slapp motion in defense that argues that the statements at issue were protected under free public speech —  statements that were of general interest to the public.  In summary, here’s what the Court upheld, following California’s rulings and law.

Accordingly, we conclude that Kosor met his prima facie burden to demonstrate that the statements in question were all made in public forums on a matter of public interest.

“Nextdoor.com post qualifies as a public forum for the purposes of anti-SLAPP protections. . . .these steps [Kosor’s statements] do not seem to differ significantly from that which might be required to view posts on Facebook; that is, a post on Nextdoor.com is as compatible with expressive activity as one on the other platform, which we have already held can support a public forum.

“The HOA here is no less of ‘a quasi-government entity’ than that in Damon, ‘paralleling in almost every case the powers, duties, and responsibilities of a municipal government.’”

“it appears that Kosor’s post, like his HOA meeting commentary, campaign flyer, and printed letter, sought to open conversation among Southern Highlands community members and enlist their participation in the community’s decision-making process.

Does your state protect your right to dissent in an HOA?  Why not?

References


[i] Kosor v. Olympia Companies, NV No, 75669 (Dec. 31, 2020).

[ii] Damon v. Ocean Hills Journalism Club, 102 Cal. Rptr. 2d 205 (Ct. App. 2000).

[iii] Cohen v. Kite Hill Cmty. Ass’n, 191 Cal. Rptr. 209 (Ct. App. 1983).