Conflicts and Interests
To limit the power of the Legislature, the state constitution calls for its members to be part-time lawmakers who can hold full-time jobs in their districts. So what happens to the world of ethics when public policy collides with private ambition and legislators write bills that affect their own pocketbooks? Let’s ask Senator John Carona.
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The Brookfield subdivision in Pflugerville, north of Austin, lies two miles from Interstate 35 in a bland patch of suburban sprawl, the kind that sprouts like clover on the edge of cities. Cookie-cutter homes line winding streets with tea-themed names like Earl Grey Lane and Darjeeling Drive. Two playgrounds, erected in the middle of circular intersections, fill with children when school lets out. In the summer a fenced-in swimming pool—for Brookfield residents only—provides a break from the punishing Texas heat.
Shawn Riggs lives on Sally Lunn Way in a beige two-story house that he bought for $137,559 in 2003. Like all his neighbors—and a growing number of people across the state—Riggs belongs to a homeowners’ association, which charges monthly or annual fees to care for common areas, enforce deed restrictions, and, at least in theory, maintain property values. One day this past February, Riggs went to the post office to retrieve a certified letter. He had been in a long-running spat with the Brookfield Owners Association over some mistaken fines levied against him for not taking care of his lawn. Riggs believed the letter would contain good news. For almost two years he’d been waiting for the property managers to acknowledge what he’d been saying since he’d received a nasty little notice warning him to cut his grass or else: they had gotten the wrong yard.
As Riggs had explained, it was his neighbor’s house that had been pictured in the notice he had received in June 2011. So he printed out images from Google Maps to prove it. He had emails documenting his increasingly vociferous objections. He had even received a response from the property managers saying his protests had been “noted” in his file.
None of that was in the letter, though. Instead, typed in capital letters across the top of the page were the words “CITATION—FORECLOSURE.” Riggs, a trim 39-year-old technician at a semiconductor equipment plant, felt like his chest was going to pop open. Over time, $50 in disputed fines had ballooned into more than $2,000. Now they were coming after his house.
I first met Riggs in mid-March, a few weeks after he received the foreclosure letter. By then he had decided to fight back, even if it meant it would cost him more to sue than to settle. He wasn’t going to let the Brookfield Owners Association shake him down. “Your HOA should not have that much power,” he told me.
And yet, in many cases, an HOA does have that much power. According to estimates by the Community Associations Institute, the industry’s chief lobbying group, almost a fifth of the U.S. population—including 3.4 million Texans—now live in a residence that is managed by some type of property owners’ association. These associations, ostensibly created by and for the people in a neighborhood, usually operate more like mini-government agencies, assuming responsibility for duties that cities and counties typically perform: maintaining the parks and pools, providing utilities, repairing streets, and in some cases enforcing the speed limit. Which is exactly why there are so many of them; nowadays, cities and counties often require new developments to create property owners’ associations. In a booming state like Texas—and especially in suburbs like Pflugerville, which is one of the fastest-growing places in the country—outsourcing these services to an HOA management company may be the only option for a cash-strapped municipality.
Not surprisingly, HOAs have become a big business. They generate $40 billion in annual assessment revenue (the dues collected from individual homeowners) and $35 billion in reserves, representing a huge government-like contracting opportunity—only without all the procurement safeguards and transparency guarantees expected of taxpayer-supported entities. The largest HOA management company in the country is Dallas-based Associations Inc., better known as Associa. It oversees Riggs’s HOA, along with 9,000 others in 31 states, as well as Mexico and Canada. Over the past 34 years, the company has been transformed from a small business into an industry behemoth by its founder, John Carona.
But the Dallas millionaire isn’t just the president and CEO of Associa. He’s also a powerful state senator who chairs the Committee on Business and Commerce and who, back in 2001, authored the law that enshrined pro-industry HOA foreclosure practices in statute, ensuring that associations like Brookfield’s could continue to aggressively collect fees and dues from homeowners. And if you’re flabbergasted by that fact, well, you don’t know much about Texas politics.
Texas, as any seventh grader can tell you, has a part-time Legislature whose members typically have full-time jobs in the private sector. The framers of the state constitution wanted it this way because they were suspicious of centralized government and saw a citizen legislature as a chief antidote. That belief still holds strong. Successive generations of Texans have insisted that their legislators, now paid $7,200 a year in salary, meet in regular session for only 140 days every other year and then return home to work in the communities they represent. But while that may limit the power of the state government, it also blurs the line between public responsibilities and private interests. And thanks to weak disclosure rules, voters are often clueless about the conflicts of interest that result.
At the Capitol, lawmakers rarely recuse themselves from legislation that has an impact on their livelihoods for one simple reason: they don’t have to. They are asked to step away from the action only if it directly affects their own company. So insurance agents can pass bills for the whole industry, and pharmacists can carry drug bills that cover other pharmacists. But when it comes to a lawmaker being so closely tied to his industry, perhaps no one is as prominent as John Carona.
Mandatory HOAs took off in the early seventies as entire neighborhoods sprang up from old cotton fields and pastures in suburban areas. Today, an incredible four out of every five new homes in metropolitan areas are built in association-ruled communities. In Texas, whose population is growing at about 3 percent a year, people buying new homes are more and more likely to settle in places like Las Colinas, New Territory, or Circle C Ranch than in urban Dallas, Houston, or Austin.
Typically homeowners have very little interaction with their HOAs: they pay their annual fee (Riggs’s is $336, though other associations’ can reach far beyond that), and they don’t give much thought to the work that goes on behind the scenes to maintain the neighborhood. Unless HOAs are ruled by power-drunk board members or nickel-and-diming management companies, most residents are pleased with them—and don’t have to worry that their neighbor will paint his house pink or leave a rusty car on blocks out in the front yard.
From time to time, however, abuses by HOAs grab the spotlight. Like when Jim Greenwood, of Frisco, was told in 2009 that he could park a Cadillac Escalade but not his Ford F-150 pickup in his driveway. Or when Michael Clauer, also from Frisco, had his home foreclosed on by his HOA in 2008 while serving in Iraq. Then there was the case of 82-year-old Wenonah Blevins, a Houston widow whose home got auctioned off for $5,000 in 2001 to satisfy an HOA assessment debt of $814.50.
HOA executives like Carona often say people choose where to live, and if they don’t like HOAs, they can move to a neighborhood that doesn’t have one. The fact is, HOAs are getting harder and harder to avoid. In developments like Brookfield, everyone has to join and pay their dues. That’s the norm these days. Moreover, a homeowner with an HOA may find himself locked into a web of services he has little choice but to accept.
What Carona figured out with his first association is still true today: HOAs are a low-margin business—the grocery stores of property management. The real money comes with volume, economies of scale, and add-on services. That’s why Associa sits atop an ever-expanding pyramid of companies that Carona has created to cash in on all the ancillary services his HOA clients need: an insurance agency selling liability and property casualty policies, a document-production company that provides the records needed when homes are bought or sold, a 24-hour maintenance service for house repairs and upgrades, and a collections company that targets delinquent homeowners.
Technically speaking, only residents are allowed to run neighborhood associations, by serving on volunteer boards of directors, but that’s true only in the purest of legal terms. As a practical matter, management companies run the day-to-day operations for the boards. They enforce the deed restrictions, interact with the homeowners, operate the websites, hire the contractors (which may be a subsidiary of the management company), and, most important, control the money.
“Everybody always professes that the board of directors is responsible for all affairs, but the reality is, the management company has tremendous influence,” said Mike Parades, a former HOA management company owner who teaches best HOA practices at the Community Associations Institute. “If they have the management contract, for all intents and purposes they are the ones who are calling the shots.”
If there’s any confusion about who the gatekeeper is at Brookfield, Associa clears it up for homeowners on the association website: “Your Board of Directors can only be reached through your Community Manager.” I tried to get answers about Riggs’s foreclosure case from Associa, which is known in Central Texas as Alliance Association Management. But it deferred to the Brookfield board. When I got Brookfield president Brooks Rowell on the phone, he called himself a “volunteer” and then hung up on me. In a subsequent call, he told me that if I had any questions about Riggs’s case or Associa, I should contact his attorney in San Antonio. So I tried that too. The answer? No comment.
Riggs didn’t have anything against HOAs when he moved into Brookfield. He had had a good experience with a tiny one in San Antonio, where he knew his neighbors and the management company didn’t send people out in golf carts looking for violations or mail out computer-generated notices.
It’s these types of violations that lead to most of the grievances against HOAs. Taking down a tree without approval, even a dead one, can get you in serious trouble in some association-ruled neighborhoods. So can staining your fence the wrong color. One Associa-managed HOA in California even fines its residents for the transgressions of others. If a pizza delivery boy gets caught speeding on his way to your home in Sun City Shadow Hills, he doesn’t get the $50 ticket—you do.
There’s also the “priority of payments” scheme, which allows HOAs to take the dues they collect from homeowners and redirect them to pay any outstanding fines, attorneys’ fees, and “administrative” charges that the HOAs tack on for themselves. In that situation, dues generally come dead last, and homeowners inevitably fall further and further behind in their accounts. That, in turn, triggers another round of penalties, which results in additional fees. This is precisely what happened to Riggs: he continued to pay his dues, but they were being directed to his fines instead of his principal balance. In short order, a measly little fine became a financial headache, and he was faced with two bad choices: fork over the money or face expensive legal bills and uncertain odds in court.
How is any of this legal, you might ask? Start with Senate Bill 507, Carona’s bill from the 2001 session. It guaranteed that the HOA industry could keep wielding its foreclosure powers over homeowners—with no oversight from any state agency or elected official.
Texas has a long and colorful history of lopsided special-interest influence. LBJ biographer Robert Caro, writing about the legislatures of the early 1900’s in his book Path to Power, found that lobbyists “dispensed ‘beefsteak, bourbon and blondes’ so liberally that some descriptions of turn-of-the-century legislative sessions read like descriptions of one long orgy.” In some cases, lobbyists could even be found casting votes on the floor in the place of absent lawmakers.
Occasionally the behavior has gotten the attention of law enforcement, as it did during the Sharpstown scandal of the early seventies, when politicians were accused of passing favorable banking regulations in exchange for quick stock profits. Twenty years later House Speaker Gib Lewis, a Democrat from Fort Worth who was constantly hounded for his cozy ties with special-interest lobbyists, pleaded no contest to two misdemeanor violations after being accused of accepting an illegal gift. He left office at the next available opportunity.
The Texas Ethics Commission was created in the early nineties to fix that culture. But it’s been called a paper tiger because lawmakers intentionally restricted it from biting them too hard—and the ethics laws were weak to begin with anyway. Despite Lewis’s problems, no one accused him of doing anything illegal when he stocked his ranches with wild game and fish at state expense, courtesy of Texas Parks and Wildlife. That’s because it wasn’t.
In the current Legislature, those kinds of breaches have become increasingly rare, but there are still gray areas. In the 2011 legislative session, Houston Republican Gary Elkins earned infamy for his objections on the House floor to new legislation that would regulate the payday lending industry. His occupation? Payday lender.
Today the longest-serving member of the Texas Senate, Democrat John Whitmire, of Houston, works for the government affairs section of a law firm that represents special interests seeking favors from the Legislature. The senator says his paycheck, which, incidentally, he doesn’t have to disclose, has nothing to do with his senatorial duties. With the blessing of the Ethics Commission, the senator, known as Boogie, is also tapping his fat campaign account—the largest among legislators—to enjoy perks such as nearly $300,000 worth of tickets to sporting events in the name of “constituent entertainment” and an $80,000 BMW 650i.
Stick around long enough and the ridiculously low state salaries for lawmakers don’t seem so unreasonable. Longtime senator Rodney Ellis, a Democrat from Houston who has made a lot of money (and faced some criticism) underwriting bonds for local government agencies, loves to tell people why he will never trade his Texas gig for one in Washington, D.C., where the elected representatives make $174,000 a year but are heavily restricted on outside work. “I can’t afford the pay cut,” he says.
When one of the most basic elements of transparency—a legislator’s income—often remains cloaked in secrecy, how can voters have faith in the process? For example, Senator Judith Zaffirini, a Democrat from Laredo, simply checks the “self-employed” box and lists her occupation as “communications consultant” on her annual personal financial statement. Nowhere does it say that one of her clients is John Carona’s very own Associa. Neither Zaffirini nor Carona will say how much she’s being paid or for how long. The beauty for them is that they don’t have to—and probably never will, since proposals for even the barest improvements, such as publishing the personal financial statements online, are about as popular as special sessions in the Legislature.
But even among these lawmakers, Carona stands out. By his own estimation, Associa employs 8,800 people and remains the largest and most active business operated by a member of the Legislature. Given the nature of his business, Carona has an impact on the lives of people far outside his Senate district because he sits at the top of the food chain for the two million people or more living under the rules of the privatized governments Associa helps operate. No other state legislator has that kind of power. He is a senator and a special-interest group rolled into one.
“He’s got to be number one in that category,” said former state senator Jon Lindsay, a Houston Republican. “I can’t think of anybody who serves in the Senate who has so much vested interest.”
Carona was born on the Gulf Coast, near the town of Dickinson, and raised in East Dallas. By the age of twelve he was making $100 a day mowing lawns every summer—more than his stepdad, a hard-drinking butcher, made cutting meat. Democrats dominated the state the whole time he was growing up, but in 1978, the year he graduated from the University of Texas business school with a double major in real estate and insurance, a Dallas oilman named Bill Clements broke the stranglehold and became the first Republican to get elected governor since Reconstruction. Two years later, Ronald Reagan was elected president of the United States.
By then, a Dallas developer had hired Carona to manage HOAs, which were just beginning to multiply around Texas. As business took off, Carona, a free-market-loving entrepreneur, threw himself into the conservative political movement, first on behalf of others and then with his own successful candidacy for the state House of Representatives, in 1990, when he was 34 years old. Six years later he ran for the Texas Senate, and he’s been there ever since.
Politically, he has the qualities you’d expect from a tough, ambitious self-made man. At a time when most politicians live in fear of their party’s activist fringe, Carona seems to gleefully confront it. On issue after issue, he’s proved himself to be a maverick willing to buck his own party on everything from gay rights to higher gas taxes. But he also has a reputation for jealously protecting his company’s bottom line and the interests of the big-business lobby in general.
He’s known to have a volcanic temper too. Just ask Senator Royce West, a Democrat from Dallas who was the recipient of a notorious finger jab from Carona on the floor of the Senate in 2001. Or Senator Dan Patrick, a Republican from Houston who found himself on the business end of a Carona tirade over a minor legislative disagreement. Carona, who is proud of his Italian heritage and has been known to make Godfather references, later wrapped a toy horse head in a blanket and put it on Patrick’s desk on the floor of the Senate. (In a bitter email exchange in May 2012 Carona suggested that there were rumors that Patrick is gay. The religious conservative and radio talk show host called the attack a false and “repulsive” smear and demanded an apology, which was not provided.)
These qualities were in evidence during the fight over SB 507 in 2001. The legislation didn’t just tweak existing laws. It created a brand-new section of the Texas Property Code that dealt with HOA powers and duties, everything from the way foreclosures and liens are handled to record-keeping and management. Carona says his carrying the bill did not violate any ethical rules pertaining to conflicts of interest—rules he acknowledges are “loose.” To the contrary, he insists that SB 507 was a pro-consumer bill, thanks to provisions that gave homeowners the right to redeem foreclosed homes, to review certain HOA records, and to receive notice when a fine has been levied against them.
“That bill was all about protecting homeowners,” Carona told me. “It truly provided all sorts of transparency and individual rights to homeowners who had been largely shut out of the process by some of these runaway boards of directors.”
Talk to the many homeowner activists and attorneys who have spent the past decade suing HOAs on behalf of people like Shawn Riggs, however, and you’ll get a different view. (Lawsuits against HOAs are common, in part because, with no state agency overseeing HOAs and no licensing requirements, homeowners have little option but to sue when they get into a dispute.) According to its critics, the law seemed to stack the deck—in the name of consumer protection—in favor of HOAs and their for-profit partners. Look no further than the language concerning the priority-of-payments practice. The bill said HOAs could not foreclose “solely” to collect fines and attorneys’ fees, but it enabled managers to redirect dues payments to cover them. So the effect was the same: diversions technically left the dues unpaid, allowing the HOA to foreclose—even after tacking on thousands of dollars in arbitrary administrative penalties, handling charges, and attorneys’ fees.
Lawmakers generally pretend their colleagues have no personal ties to the bills they sponsor, but on the night SB 507 came up for a final vote, Senator Lindsay departed from tradition by pressing Carona to discuss how management companies like Associa operate.
“That’s not anything we’re gonna discuss on the Senate floor,” Carona replied. “We’re talking about a homeowners’ protection act here, the obligations that a homeowner has to their homeowners’ association. We’re not talking about anything else.”
Lindsay scoffed. “If this bill doesn’t have anything to do with management [companies], I’m kind of blown away by some of the correspondence I got, all from management companies,” he said. In fact, Carona’s bill referred to HOA managers repeatedly, giving them joint control over an association’s bank account, among other things.
Lindsay was so incensed about the lack of consumer protections in the bill that he vowed to stage a filibuster to kill it. Since only a few hours remained before a midnight deadline on the last day to pass substantive bills, this was not an idle threat. As the night wore on, Lindsay kept talking and talking and Carona kept getting more and more agitated. Carona implored his GOP colleague to recognize that SB 507 was at least marginally better than the messy patchwork of laws that had prompted so many complaints at the Capitol. Lindsay acknowledged that homeowners were thrown a couple of bones, but he complained about his exclusion from a hand-picked team of legislative negotiators, which naturally included the bill’s author, who had stripped off homeowner-friendly amendments in the waning days of the session.
More important, Lindsay said he was worried—prophetically, as it turned out—that the industry would use the “property rights” bill as a fig leaf to cover up the need for deep consumer protections, actual remedies, and oversight. “What I’m fearful of is that taking that small step in that direction now will prevent us in two years from taking a major step in the right direction to rein them in,” Lindsay said. “Because everybody will say in two years, ‘Oh, we took care of that last session.’ ”
With the clock inching toward the midnight deadline, Carona fell into a charitable mood. He offered to advocate for new reforms if the ones he was on the verge of passing proved inadequate and in need of some amending. Finally, at about 10:20 p.m., Lindsay relented. In the aftermath, Carona looked like a new father in a maternity waiting room. “Thank you very much,” he said. Carona then pledged to work with Lindsay on HOA issues in the next legislative session, presumably as an agent of reform.
Lindsay’s response wasn’t meant for broadcast, as a review of the old videotapes makes clear. But if you crank up the volume, you can hear it. “I don’t want you carrying the goddamn bill,” he said. Carona promised he wouldn’t. Then he sent SB 507 on its way.
True to his word, Carona didn’t carry the 2003 HOA bill. In fact, because of all the conflict-of-interest criticisms he faced—unwarranted, he still believes—the Dallas senator decided he shouldn’t be directly sponsoring HOA bills anymore. But that doesn’t mean he stopped advocating for his company’s interests at the Capitol. When Lindsay fulfilled his promise in 2003 to spearhead sweeping HOA reforms—including government oversight of HOAs in big counties and a limit on management company fees, none of which the management companies liked—Associa dispatched droves of employees to Austin to testify against it, recalls Gary Stone, a former property manager for a Dallas-based Associa subsidiary.
Stone says he and other employees were told to use the names of their nonprofit neighborhood associations when they registered in opposition to Lindsay’s bill, though some did disclose their management company’s affiliation, according to committee witness records. “We went down in a big van. We were told this was very important and that if we could get away we needed to go, because Carona was against it,” said Stone.
Some of Carona’s methods were more direct. On the day Lindsay was scheduled to lay out his bill before the committee, Carona dropped by the hearing room. On a scratchy audio recording of the proceedings, an audible stir can be detected following his entrance, and an unidentified lawmaker says, “Mr. Chairman, I want it noted that Senator Carona is in the house, so all amendments and all amendments to amendments and committee substitutes, beware.” They all had a good chuckle. It was no secret that Carona didn’t like the bill and was working to scuttle it. Ultimately, he prevailed. Lindsay’s legislation died without a vote.
Over the ensuing years, Carona has continued to expand his HOA advocacy network, adapting and innovating just like he has with his business empire. In 2006, for example, the Associa brass helped create the now-defunct Communities for Fair Legislation, an innocuous-sounding group formed to lobby at the Capitol on behalf of HOA management companies, according to those who helped create it.
After that, Carona took it in-house by lining up a team of his own registered lobbyists. There are now eight in all, including several from the influential Graydon Group, whom Associa pays to watch its back and promote its agenda in Austin. A senator hiring lobbyists to influence his own colleagues? Even in a Capitol accustomed to cozy legislator-lobbyist ties, that’s a new twist.
There are also simpler methods. In 2011 Senator West, then the chairman of the Committee on Intergovernmental Relations, carried the most significant HOA overhaul since SB 507. West also happens to be the recipient of $73,500 in campaign cash donated since 2008 by Carona, his wife, and Associa general counsel Paul Reyes. The most amazing thing about this may be Carona’s forthrightness in discussing it.
“Just as any lobbyist or any special interest would approach a legislator, our company’s interests are protected in that fashion,” Carona told me. “As a company, we have to be able to know that Senator West is somebody who will at least listen.”
It’s a little jarring to hear a senator liken himself to a special interest. Then again, it’s hard to argue with his cold-eyed calculation. One can only imagine that $70,000 endears one senator to another better than a chest-poking tirade on the Senate floor.
Carona has been described as a man in constant motion, and on the March day that I interviewed him, I discovered he has a Capitol office to match. When I walked inside, one lobbyist was dropping off a bag full of snacks and three others were waiting to talk to the senator. While staffers answered phones and made small talk, a visibly antsy Gary Elkins, the payday lender and Houston state representative, stormed in and joined us. Carona was carrying a hotly disputed bill to restrict high-interest payday lenders, and Elkins was upset about a draft of the legislation. There were no seats left, so he had to lean against the wall next to me.
When my turn came, Carona welcomed me in and hurriedly returned to the chair behind his desk. Wearing a charcoal suit and a starched monogrammed shirt, he seemed unreasonably relaxed amid the chaos. He asked me how much time I needed. A half hour? Forty-five minutes? I took the longer option, but he ended up giving me two hours.
He was unfailingly courteous, generally talkative, and often surprisingly blunt. When I asked him why he once turned to Democratic trial lawyers like the late Fred Baron or John Eddie Williams for investment capital at Associa, he stated matter-of-factly, “I’m looking for people with money.”
He was less forthcoming, though, when pressed about the inner workings of his vast business empire. On that very day, a major cog in his HOA machine—Dallas-based First Associations Bank—had gotten state approval to complete its merger agreement with the publicly traded Pacific Premier Bancorp Inc., of California. The transaction provided a rare glimpse into an important piece of the senator’s otherwise privately held conglomerate. As the largest shareholder in First Associations Bank, Carona was entitled to receive approximately $8 million in cash and stock for the transaction, plus a $2,750-a-month spot on Pacific Premier’s board, according to federal disclosures. (Democratic fund-raiser and lawyer Lisa Blue Baron, Fred Baron’s widow, was also listed as a major shareholder.) Carona, who has oversight authority over the Texas Department of Banking in the Legislature, insisted the deal got approved without his input or influence, but he declined to talk about what he got out of it.
Only once during our interview did Carona show any sign of his trademark anger. It happened when I asked him about reports from former Associa company employees that he sometimes treats company assets as if they were his own, whether it’s the corporate jet he uses to ferry himself between Austin and Dallas, often multiple times per week, or the leased warehouse near Love Field where he keeps his cherished vintage-car collection. “Those are issues that pertain to my business interests and my personal interests, and frankly, I think it’s out of line for a political reporter to be digging into any issue of that nature,” he said.
What Carona did reveal were his views on HOA power and the effort to dial it back, including the 2011 reforms that finally gave homeowners some of what they’d been fighting for: the elimination of quickie “non-judicial” foreclosures in single-family HOAs (though not those for condos), an enhanced right to inspect association records, and better disclosure of fees.
The 2011 law, to Carona’s chagrin, also closed the priority-of-payments loophole for single-family HOAs for all transactions as of January 1, 2012. Now dues have to be applied to the annual HOA fee. No more diverting to fines and other charges.
While Carona thought the reforms struck a fair balance overall, he felt pretty strongly that the ban on reapplying assessment payments eliminated a reasonable tool to force “irresponsible” homeowners to pay their tab.
“I think what we did in that one regard was not best for the associations,” he said. “The public opinion just overrode any other consideration.”
But he’s not pouting about it. Carona looks at the legislative process kind of the way he looks at business. You don’t get everything you want; you cut deals and move on. In the case of the 2011 legislation, Carona had his lobbyists on it. He made contributions to the Senate author. And on the rare occasions when West asked him what he thought about a tweak here and there, Carona said he made his opinions known. What more can a senator and CEO do?
“The only real time you ever hear us complain is if we simply didn’t get an opportunity to at least be heard,” Carona said.
Given Associa’s national reach, I asked Carona how he approaches other state legislatures, where he doesn’t have a fancy title, about HOA issues. In addition to hiring A-list lobbyists, his company runs Associa PAC, a Texas-based political action committee that doles out bipartisan campaign contributions to sympathetic lawmakers all over the nation. It shouldn’t come as a shock that legislators with influence over HOA issues, in Texas and beyond, are on the distribution list.
“We have certainly impacted the laws around the country. There’s no question we have impacted them,” Carona said. “We actually work to help pass good legislation.”
What stood out the most to me was that Carona, unlike so many of his colleagues, doesn’t pretend as though his public and professional lives never intersect. He says he hasn’t ever abused his position or violated ethics laws, but he’s up front about how he works the system for his own benefit within those very forgiving restraints.
“I feel like I have a right to protect my business interests,” he told me. “Part of my job for my clients, which are the associations and their members, is to come down here and try to stand in the way of legislation, some of which is rather impulsive.” You might call that refreshingly candid. Or fantastically tone-deaf.
In Texas, as the Godfather might say, it’s just business.
Right about the time the Legislature was putting the finishing touches on those heavily negotiated HOA reforms, Shawn Riggs, who lives 23 miles from the Capitol, was getting the notices about his lawn from Carona’s management company.
Unfortunately for Riggs, the hard-fought deal on the diversions of dues came too late. His case falls under the old law, so the fees kept piling up, and the pressure to resolve it kept mounting as the stakes increased. I didn’t expect Carona to know the details of the Riggs case, of course. Riggs is but one of at least two million Associa homeowners. A number. But wasn’t there something the senator could do? “I would be happy to track it down and get it fixed,” he told me.
It seemed promising. Though Riggs was technically suing Brookfield and not Associa, if anyone could just make this mess go away, it was Carona. But after our interview, the Riggs case started grinding its way through the court system. Soon the Brookfield insurance company’s lawyer got involved. A settlement offer from Riggs came and went. And still no word from Associa. Pretrial sparring was just around the corner.
Then, in early May—out of the blue, it seemed to Riggs—Associa intervened and started openly pushing for closure. Riggs’s lawyer, J. Patrick Sutton, had never seen a settlement deal brought to a client by a company he had not sued, but it was an offer they couldn’t refuse.
Riggs was not able to discuss the terms of the settlement, but it gives him a fresh start with a neighborhood association he had come to loathe. For a while he was so disgusted with Brookfield that he couldn’t wait to move out. Not anymore. “Now I feel like I have a responsibility to take action,” he said. “I feel committed to my neighbors to make things better—instead of just running.” The fear of losing his home woke him up to the power of HOAs. The outcome of his lawsuit made him feel empowered to do something about it. For that, at least, he has John Carona to thank.
Jay Root, the author of Oops! A Diary From the 2012 Campaign Trail, is a reporter at the Texas Tribune. He lives in Austin. This story was produced in partnership with the Texas Tribune.