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February 10, 2004
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ARCHIVE: Homeowners Associations

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Sunbelt states, with high demand for development, have given rise to a new level of government. Homeowners associations control 2 trillion dollars worth of property in the U-S and have 30 billion dollars in annual operating revenue. But they are also lightly regulated and headed by average homeowners. They are small neighborhood democracies that control community standards, often regardless of federal and state law, and can seize the property of those who don't follow rules. They are also a tool for local government to raise tax revenue.

PLASKON: Near the bustling streets of Downtown is Bonanza Village established in 1946. It's one of the first homeowners associations in the city. Like all associations it was once governed by Covenants, Conditions and Restrictions or CC and Rs - rules every homeowner must abide by or else face the consequences such as fines and potentially loosing their home. The law says the rules must be disclosed to potential purchasers. The rules can determine the color of houses, how many cars can be parked in the driveway, and how much loud noise is allowed and when. Every association has different rules. Bonanza Village's CC and R's in the 40's were created to keep out blacks and Asians.

FULLER: I live in here.

PLASKON: Do you like it?

FULLER: I like it in here, it reminds me of the south, no street lights no sidewalks. I like it.

PLASKON: J.C. Fuller couldn't even walk through the front door of his own home under the old CC and Rs. He says that the association was abolished for financial reasons in the early 90s. But there were efforts to revive the association in the late 90s when a few residents of this 159-home village got together and told the City of Las Vegas they represented everyone who lived here. They asked the city to build the big pink wall around the village. They didn't have enough money to pay for the wall so resident Dan Contreras remembers the favor the city did for those residents.

CONTRERAS: So what they did is that the city went around without anyone's notice and they recorded that agreement on each one of our properties without letting us know. And so now it is a public wall, the city owns it, we don't own it but these individuals signed agreement to maintain it.

Now he says that the city won't release the homeowner's responsibility to pay for the wall around their houses. Each homeowner must pay 600 dollars a year and if they are a day late, they are fined 125 dollars. Contreras says it's a payment the elderly can't afford - especially when the city wants thousands of dollars.

CONTRERAS: I know of a couple of other of the senior citizens who have moved out because they can't afford the payment, and once you get behind 60 days it accelerates and they want the full balance so you know you are talking about 600 dollars a year, social security is 600 dollars a month for most of the people who live in here. That is like me asking you to take a pay check away and live on 11 months worth of salary . . . city of Las Vegas didn't care. Friends of the city always come by and look at these foreclosures and get the notice of who is late on a payment. I guess it is their way of taking these properties.''

PLASKON: He says greedy homeowners wanted to raise the value of these large lots and houses that are also zoned for horses. Senator Mike Schneider who calls himself the father of homeowner's legislation said the city also wanted to raise property values there. But raising property values isn't the only reason why local governments like homeowners associations. They create more tax revenue. Homeowners Associations take over maintenance of roads, lights and other amenities traditionally handled by the city. Homeowners still pay property taxes and the city can use that revenue instead for other social services. Schneider says local governments like the extra money so much, they pressure developers to create communities with HOA's

SCHNEIDER: Many developers in this town tell the story of, you know: They take their project in and they can't get it approved unless it is a homeowner's association. So they are really over a barrel, I mean they have to build homeowners associations and I mean a lot of the developers don't want to build them, but they have to.''

PLASKON: Today more than half the people in the county live in 1,500 homeowners associations. Despite the supposed tax revenue benefits these associations provide to local government, Schneider says social services in Nevada remain some of the weakest in the nation. Another reason for city government to push associations is that property tax revenues are too low to provide city infrastructure for rapidly growing developments. Schneider says like elected government officials; homeowner's association board members also suffer the same problems in trying to raise revenue from homeowners for maintaining the common property.

SCHNEIDER: The board of directors are just like little politicians and they run for the board and it is like: 'No new taxes. I will not up your association dues.' And so they do the same thing to keep the association dues down so they can keep being elected to the board and homeowners say I don't want association dues to go up so I will vote joe back in and slowly Joe is just running the association out of money, and they can't do the repairs which affects the association values.

PLASKON: Just like government, associations can go bankrupt. They sometimes rely on fines to supplement their budgets and write their own laws. But unlike local government there's been little regulation of Associations - Nevada was one of the first to try - Texas has copied some of the law. Nevada lawmakers are continuing to think up legislation to govern these new governments. One idea is property rights consistency between associations. Draft legislation released yesterday by Congress member Jon Porter of Nevada starts out by asking association board members to ''play nice.''

Ky Plaskon, News 88-9, KNPR

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