Follow the Money Trail

….an Admin contemporary perspective

“I feel confident in asserting that one of the greatest threats to individual liberty endured by our citizens on an ongoing basis is from the unchecked powers of local ‘quasi-governments’, which are otherwise known as homeowner associations”. Steve Cheiftez, managing partner of the Phoenix based law firm Cheifetz, Lannitelli Marcoini, P.C.

To understand how these ‘quasi-governments’ and their ‘outside operatives’ fund their agenda in the legislatures, it is important to identify the various sources of money and how it flows to the legislative statute making process. The central ‘command and control’ organization for the collection and disbursement of money for this purpose is the Community Association Institute (CAI). Nationally, their financial accounts are in the millions of dollars.

The Contributors…….

It is the outside operatives whose financial contributions support the mission and operations of the CAI. Those individuals and companies, as noted in legislative reports, include:

(1) General Managers and Property Managers

• Dues paying members who are recruited by the CAI.
• They also consider the CAI their ‘professional organization’.
• They depend on the CAI for their ‘job training’.
• There is no governmental oversight of the CAI organization.
• They support the mission of the CAI which is counterproductive to the property and individual rights of homeowners.

(2) Business and professional sponsors

• Corporate HOA attorneys are a major source of funding for the CAI. Their individual contributions are in the thousands of dollars per year, depending on their level of sponsorship.
• The corporate attorneys singularly represent the interests of the corporation, not the homeowners.
• Recruited sponsors (vendors to HOAs) are a second major source of funding. Their individual contributions are in the thousands of dollars per year, depending on their level of sponsorship. In return, they look to the HOA management for favors.

(3) Board of Directors – Are your directors members, OR are you a member by proxy without your knowledge and consent because your HOA is also a member?

(4) Real Estate Companies

(5) Home Builders

Command & Control – The CAI…….

The CAI is the command and control organization for the receipt and distribution of the funds received from its members. The CAI is described by most legislative observers as a powerful, well financed lobby representing the special interests of institute members and intent on restricting the property and individual rights of the homeowners through their legislative lobbying efforts. The trade organization, the CAI lobbyists and their corporate sponsors wield vast influence and authority over our community associations, often without association members realizing their clandestine involvement. Two covert examples:

In 1989, California homeowners discovered an advertisement put out the CAI headlined ‘Strike It Rich’ – an invitation to other vendors and politicians to come to their trade meetings to learn about financial opportunities available to them in planned (HOA) communities. A similar ad appeared again in 2007 in Illinois, with an invitation to ‘Hit the Jackpot with Community Living’.

Were you aware that the CAI was inviting vendors and politicians to ‘ Strike it Rich’ and ‘Hit the Jackpot with Community Living’ at the expense of the homeowners in associations?

In 2008 the CAI printed the following statements in an advertisement touting their benefits:

“CAI is your link to legislatures, regulatory bodies and the courts”.

FACT CHECK: In Arizona the CAI successfully lobbied against and defeated (a) The ‘Homestead Exemption’ bill denying homeowners living in associations a homestead exemption and (b) The ‘Fair Market Value’ bill that would have required the sale of a property to satisfy a judgment of an association to be sold for at least fair market value.

FACT CHECK: There is NO governmental agency that regulates homeowner associations.

CAI’s Government & Public Affairs Department promotes the organizations’ public policies and represents the interests of community association residents…

FACT CHECK: The CAI DOES NOT represent the interests of homeowners and in fact, will not support any legislation that gives residents greater individual and property rights.

The CAI’s government and public affairs program is vital to preserve the legal rights of community associations and their residents.

FACT CHECK: The CAI does ABSOLUTELY NOTHING to preserve residents’ legal individual or property rights.

Today in Arizona, conservative estimates have the CAI influencing and exerting some degree of control over more than 12,000 homeowner associations, more than 1.4 million homes and more than 178 billion dollars in real estate. And the numbers continue to grow as municipalities mandate that approval of any new subdivision plats contain covenant provisions for the maintenance of common areas. Concurrent with this phenomenon, has been a dramatic rise in the number of association lawsuits and the number of reported incidents of fiduciary abuse and embezzlement.

The Beneficiaries…….

The primary beneficiaries of the millions of dollars collected nationally by the CAI are their paid lobbyists and the legislators who are cajoled to defeat bills favorable to the interests of homeowners in associations.

The Losers…….

In the final analysis, it is the homeowners in associations who stand to lose. Association governance lacks a system of checks and balances necessary to provide oversight and accountability. Boards, politicians and lobbyists know this and use it to their advantage.

We have been led far beyond the original concept of association governance – that of common area maintenance. The apathy of homeowners has allowed this to happen. First, it will take an organizational effort at the grass roots level to reestablish member control over governance. That needs to happen. Individual comments to Board members and management are ineffective. A group voice will have a greater impact. Secondly, homeowners need to be more active in communicating with their legislators. The outside operatives and lobbyists have been able to raise their voices above the association members.

There is no end game in sight.