Beyond Privatopia: Rethinking Residential Private Government describes the rise of such community interest housing developments as homeowners and condominium associations—home to over 60 million people (or a fifth of the U.S. population). Political scientist, lawyer, and real estate expert Evan McKenzie evaluates the developments' philosophical and political underpinnings, explains how they converge with local governments, reviews recent state reforms, and proposes solutions to the problems created by private government's limits.
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Washington, D.C., May 16, 2011—Homeowners associations must be more transparent and accountable to residents, argues political scientist, lawyer, and real estate expert Evan McKenzie in his new Urban Institute Press book. To date, too many have not delivered on their promise of efficient self-governance, are subject to onerous rules imposed by developers, and sometimes saddle local governments with cleaning up their failed finances.
Beyond Privatopia: Rethinking Residential Private Government describes the rise of community interest housing developments (CIDs) —home to over 60 million people (or a fifth of the U.S. population) amid a dizzying array of single-family, condominium, and townhouse arrangements. The author evaluates CIDs’ philosophical and political underpinnings, explains how they converge with local governments, reviews recent state reforms, and proposes solutions to the problems created by private government’s limits.
“These private governments have considerable power but little government oversight, and they often intrude into areas that many, if not most, Americans believe fall within a homeowner’s sphere of privacy. They represent an increase in the total amount of local governance rather than its replacement by private governance,” says McKenzie, an associate professor of political science at the University of Illinois at Chicago.
McKenzie identifies problems stemming from the CIDs’ imperfect integration with local governments. On the one hand, many homeowner and condominium associations use residential fees to cover services traditional government handles, such as maintaining streets, removing snow and leaves, taking care of ponds and playgrounds, and operating private water systems. On the other, the residents must still pay full property taxes. As a result, some local governments view CIDs as cash cows and have started to force all new residential developments into private communities. McKenzie contends that this move limits residents’ choices in two important ways: their membership in community associations is mandatory and they are bound by nonnegotiable governing documents on which they had no influence.
Scanning theoretical views of common interest housing, McKenzie critiques the neoclassical economics paradigm, contending that mandatory participation in associations runs counter to the neoclassical view that they are free markets in which individuals make voluntary choices about how and where to live. Another contradiction is that CIDs can intrude into areas otherwise protected from government interference by the Constitution, such as banning political signs.
CIDs rely heavily on homeowners’ economic resources, McKenzie points out, and are run by unpaid, untrained, and often unqualified directors who have no institutional support from government at any level. However, when funds are mismanaged or an association’s obligations for major repairs or damage payments are unmet, often local governments are expected to step in and use their own limited revenue to fix the problem. Moreover, the only dispute-resolution mechanism for aggrieved owners is civil litigation, a costly and uncertain way to solve problems.
The author contends that, as the burdens of private governance become heavier than private resources alone can bear, CIDs will seek closer involvement with local governments. State legislatures are shifting away from their laissez-faire approach toward CIDs and starting to increase regulation of these associations, their boards, and the professionals who serve them.
McKenzie proposes that CIDs have only limited government powers and that they adopt owners’ bills of rights guaranteeing the equal treatment of owners, freedom of speech on political and religious matters, and other issues of private concern.
Beyond Privatopia: Rethinking Residential Private Government, by Evan McKenzie, is available from the Urban Institute Press (ISBN 978-0-87766-769-8, paperback, 164 pages, $26.50). Order online at http://www.uipress.org, call 410-516-6956, or dial 1-800-537-5487 toll free. Read more, including the introductory chapter, at http://www.urban.org/books/beyond-privatopia/.
The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance challenges facing the nation. It provides information, analyses, and perspectives to public and private decisionmakers to help them address these problems and strives to deepen citizens’ understanding of the issues and trade-offs that policymakers face.