Customer Reviews

Privatopia: Homeowner Associations and the Rise of Residential Private Government

5 star:		(10)
4 star:		(3)
3 star:		(0)
2 star:		(3)
1 star:		(4)

 

 

This well-written and thoroughly researched book outlines the history of CID's (Common Interest Developments, often known as Homeowner's Associations in one of their various forms) and shows why they exist and continue to proliferate. Touted as a selling point to potential buyers by realtors and builders, CID's exist--as McKenzie cogently points out--primarily as a means for developers to mitigate the rising cost of property by squeezing more dwellings on to less land and bypassing local zoning restrictions and ordinances. The author not only examines the resultant effect upon the individual homeowner, but the long-term sociological and political ramifications as well. Like many who buy a home located in a CID, I was largely naive regarding the freedoms ceded by the purchaser as well as the broad and unfettered authority wielded by the "association". "Privatopia" contains some of the horror stories experienced within the CID scenario. Some of the issues causing disputes are so trivial as to be laughable, except for the severe penalties incurred by violators, including huge fines and legal fees, or even loss of one's home in certain situations. (My own "horror" story includes being assessed thousands of dollars in fines and legal fees over an orginal debt of $500.00 in association dues) As McKenzie points out, all too often the amateurs (who are typically homeowners within the subdivision) comprising the "board of directors" that administers the bylaws of the association, take a rigid stance when it comes to enforcement, or--worse yet--simply turn everything over to professional management companies and/or lawyers. Ostensibly, of course, the reason for all of the bylaws is the maintenance of property values. (Many of the trivial rules go way beyond that premise, and most CID's require a 3/4 majority of owners to unseat board members or amend bylaws, thus virtually ensuring a de facto dictatorship) Additionally, as the author explains, the real motivation for keeping property values high is so that the lenders courted by the developers will be confident that their investment is secure. (Again, the HOMEOWNER'S interests are irrelevant) Of course, not everyone living in a CID has a negative experience, but I think it's safe to say that most buyers have little idea of what they're getting into when they purchase a dwelling in a development run by an association. This book should be required reading for anyone currently living in or considering the purchase of a home located within a CID, and will be a real eye-opener to many.

Professor McKenzie was one of the first to see the dangers of the new trend of private contractual pseudo-government in common-interest developments (a/k/a mandatory homeowners' associations) and his treatment remains one of the most thoughtful available. Especially useful is his history of the development of the industry's powerhouse trade organization, the Community Associations Institute. CAI started long ago as a balanced entity serving the interests of homeowners as well as others, but it has turned into a lobbying arm for professionals who make their livings off of mandatory assessments and the associated legal machinery of collection and foreclosure.

In the county in which Houston, Texas, is located, over 11,000 foreclosure lawsuits have been filed by mandatory homeowners associations in recent years, the vast majority of them since 1995, when Texas law was amended (with the help of the CAI lobby) to favor the rights of mandatory homeowners associations. A standard pattern is the experience cited by a reviewer below: a few hundred dollars in assessments or fines in dispute, and thousands of dollars of legal fees -- all secured by a homestead. McKenzie's book is a good tool to use in trying to understand the trend and the alternatives.

This is a fascinating book for a narrowly targeted audience. If you are engaged in any way in the governance of a homeowner association either as property manager, lawyer, or board member, this book is most interesting.

The author outlines in detail the history of the advent of common interest developments (CIDs) in the U.S. He explains why this form of residential ownership has taken on like wildfire in the past four decades. And, what this imply for society at large and local governments in particular.

The author indicates that there were only 500 homeowner associations in 1964; but, there were more than 150,000 in 1992. Nowadays, a significant percentage of the middle class and upper middle class lives in such associations. The factors that drove this explosion in the number of CIDs are:

1) Land economics. Developers were able to significantly increase the unit and population density within their housing developments. This increased the supply of private housing, and lowered their costs, making them affordable to a much larger segment of the population.
2) Lower municipalities costs. As CIDs maintain a good part of their infrastructure and also finance some of their municipal services, municipalities' revenues went up due to rising property taxes. But, their costs did not grow as much.

The author makes an eloquent case that the local governments' acceptance of CIDs to boost their revenues more than their cost was a Faustian deal. This is because the middle and upper middle class is becoming increasingly disenfranchised from the remainder of the community. If they are well taken care off by the private services they pay for through monthly assessments within their gated communities or condominium, they will become increasingly resentful of paying regular property taxes, and voting for parcel taxes, and local bonds to finance public services they don't use. The author mentioned that a few CIDs have already successfully obtained the right to tax rebates on a proportion of their property taxes to avoid "double taxation" for the same services. The liberal economist, Robert Reich, has depicted this phenomenon as the "secession of the successful."

The author is also deeply troubled with the governance of CIDs. He feels like Boards have way too much power on the private lives of homeowners. He thinks that developers have way too much influence on the shape of U.S. communities.

The author also depicts the shameful history of CIDs as being racists. They did it through their implementation of restrictive covenants forbidding ownership by any racial minorities to supposedly maintain property values. This went on until the Supreme Court deemed such covenants unenforceable in 1948.

For my part, I find some dissonance in some of the author's arguments. Are the CIDs such a dark development within U.S. society. I don't think so. First, the level of racial discrimination implemented within CIDs prior to 1948 was not specific to just CIDs. Such racial discrimination clause must have been frequent within apartments' lease agreements, and other forms of housing. In other words, there is a reason why the Judiciary passed a body of laws to forbid racial discrimination within housing, employment, and other aspects of our private or public lives. The author sees a cause and effect here. I don't. I see it as a simultaneous development. We all shared the same sins at the same time, whether we lived in CIDs or not.

The argument of the "secession of the successful" is open to contradictory facts. There is no doubt that CIDs by increasing population density on developed land, lowered the cost of private housing, and significantly boosted the homeownership rate over the past decades. Thus, CIDs have not become housing for the few but for the many. If it was not for CIDs, the homeownership rate in the U.S. would be far lower. Additionally, the author's prophecy that an increasing number of CIDs would lobby and obtain property tax rebates has not occurred a full decade later. There is a simple reason for that. The majority of CIDs do not come even close to fully substituting local municipal services with their own privatized services. As treasurer of a condominium, I know that the only true municipal service we pay for through our monthly assessment is garbage removal. And, this cost accounts for only 6% of our budget. This is not significant enough for us to petition City Hall for a proportional tax rebate of our property taxes.

Despite my differing views, I found this book very informative and interesting. Thus, I strongly recommend it. If you are interested in such issues, I also strongly recommend another book, with a broader scope: "Paradise Lost: California's Experience, America's Future" by Peter Schrag. It raises many common issues with this book. It is a study of the long-standing tax revolt in California since the passing of Prop 13 back in the seventies, and its impact on the deterioration of municipal services.

"Privatopia" is the definitive history of common interest development-based housing in the United States, chronicling its rise from a modest number of exclusive developments at the turn of the century to what has become the fastest growing form of housing development and local government in the U.S. today, serving as the new town hall for some 40 million Americans in 200,000+ communities.

Privatopia puts in perspective the rapid growth of mass market CID housing, beginning as "homes associations" in the 1960s under the tutelage of the Federal Housing Administration and the Urban Land Institute. A professor of political science, McKenzie ably outlines the political and economic factors behind this trend and explains how policies adopted by state legislatures and local governments have quietly fostered the privatization of residential government into a multi-billion dollar industry.

This book is a must read for anyone who wants to understand this quiet revolution in local government and a controversial subject that could be tomorrow's headlines.

Kudos to Evan McKenzie for tackling a subject long neglected. The first five chapters are excellent, offering a brief history of CIDs and Homeowners associations, sans legalese. Unfortunately, McKenzie does little to hide his contempt for so-called private government, causing, in my opinion, his work suffer. Otherwise, though, this is an insightful treatment of a topic that should concern every American who does (or plans to) own a home.

This books reflects the legal, social and political ramifications of homeowner associations. It is an accurate and intelligent analysis of one of the least reported aspects of American society and yet is a fairly easy read. The writer obviously has conducted considerable research and, from my understanding, the book has recieved critical and scholarly kudos.

This books reveals the dangers and pitfalls of buying homes in homeowners associations. "Privatopia" is recommended reading by leading California authorities in homeowner associations.

Outstanding book for anyone who happens to be passionate about government, American history and association management at the same time. I can't remember the last time I read a book in three days, and haven't had my intellect stimulated at this level since college. To say that McKenzie doesn't hide his bias, or to suggest that this book was written primarily to warn us of the dangers or CID's is to miss the point. Privatopia is an outstanding, scholarly work that should be required reading for students of urban planning, local government, or anyone who aspires to become a real estate developer. I could go on but I need to start my online search for the sequel. Evan? (and no I am not his son, or one his lucky students) Mike Walker, Seattle, WA

Too few condo buyers and owners understand the problems of condominium living. A book that all condo associations should have available as a resource guide.

Read this book while doing research on how to amend our covenants in my HOA. It is an extremely interesting history of Covenants and CID's and what their job in the housing market truly is. I wish that he had not written it in such a stilted, scholarly fashion because more people should know the things in this book. There are very obscure quotes from very obscure historical figures (I assume) galore. I didn't know who a lot of those people were and often they were never explained. I found it very irritating because I felt the author was talking over my head for no good reason.