Growing Disillusioned With HOAs

In certain neighborhoods, residents must join homeowners associations, and pay them high dues and abide by strict rules. Breaking these rules can result in severe consequences, and in some extreme cases, foreclosure. How did it get like this?
Tue May 21, 2013 8:00 am
graphic by: Marjorie Kamys Cotera / Todd Wiseman

This is the second part of a series produced with the Texas Tribune about state senator John Carona, the founder and CEO of  Associa, the largest HOA management company in the United States. The first story can be read here

The slick brochure advertising homes in the  Sun City Shadow Hills neighborhood near Palm Springs has escapist senior fantasy written all over it. 

On the cover, a lush green expanse of golf course fairway cuts through two shimmering lakes and ends at what looks like a Spanish village, where uniform clay roofs sit on top of white building facades, offering a perfect color transition between the Bermuda grass in the foreground and the desert mountain landscape behind it. 

But there is trouble beneath the utopic veneer: Many of the 55-and-up “active adults” who live here have become disillusioned with the homeowners association and the property managers who run it. They worry about how their nearly $9 million in annual dues money is being spent, complain about financial conflicts of interest, and say they collectively are getting gouged by fees and fines without the kind of transparency or due process one would expect from a government agency with similar responsibilities. 

Like most new developments in U.S. metropolitan areas, Shadow Hills is governed by a private homeowners association, and membership is not optional. To live here, you must become a member, pay $237 a month in dues and abide by a lengthy and sometimes onerous set of rules. One that has been generating controversy of late is the “Conduct Code” section of the sssociation’s rules and regulations. It says homeowners are responsible for the actions of friends, visitors and even vendors.

That was the policy the HOA cited to Carolyn Little when she was issued a $50 speeding ticket, even though it wasn’t her car and she wasn’t driving. It was a Home Depot carpet installer who got caught by the association’s private police force for driving seven miles over the 35 mph speed limit down Sun City Blvd. Little, 71, said she just happened to be the first homeowner expecting a visit from Home Depot that day—and it was her address that the driver gave the guard when he checked in at the front gate.

“They want their money and they don’t care if it’s at the resident’s expense,” she said. “We like it here. It’s just that these rules are crazy.”

The dissidents say complaints about heavy-handed rules fall on deaf ears in Shadow Hills: the association recently authorized the purchase of another radar gun—evidence, as they see it, that the property managers are looking out for their bottom line and not the best interests of the homeowners.

While the Sun City Shadow Hills Community Association was organized as a nonprofit dedicated to the protection of the neighborhood and its residents, it is run by a for-profit management company. With a budget of about $10 million a year, it’s not unlike running a medium-sized business. 

In this case the task falls to Professional Community Management, or PCM, a subsidiary of Associa, the largest HOA management company in the United States. The company’s founder and CEO is state Sen.  John Carona, R-Dallas, chairman of the powerful Senate Committee on Business and Commerce and architect of Chapter 209 of the Texas Property Code—the section dealing with single-family HOAs.

Associa bought PCM, one of the largest property management firms in Southern California, in 2010, marking a decade of acquisitions by the privately held company. In 2000, Carona listed just five companies in which he reported ownership or executive oversight on financial disclosures Texas elected officials must provide. By 2011, the figure had ballooned to more than 120 companies.

A dizzying number of acquisitions and spinoffs has turned Associa into an HOA management behemoth. The company now operates in 31 states, plus several locations in Canada and Mexico. It also has created numerous subsidiary businesses to cash in on the growing HOA market and to become what Carona calls “a one stop service opportunity” benefitting both his company and his customers.  

Carona was not familiar with the specific concerns from Shadow Hills, one of more than 9,000 associations Associa manages, but he said complaints from homeowners generally come from a vocal minority: “In the service business you’re only going to hear from the people with problems,” he said. Associa spokeswoman Carol Piering referred questions about dealings with homeowners to the volunteer board that is legally charged with overseeing the affairs of the estimated 5,400 residents living in Shadow Hills. 

“With a community this large, it is not uncommon to have a variety of viewpoints that create a dialogue that would contribute to the board making informed decisions for the common interest of all of the residents,” she said.

Repeated requests from the  Texas Tribune for interviews or answers to specific questions from board members were either ignored or turned down.

Carved from the picturesque Coachella Valley, Shadow Hills offers all the amenities one might expect in an upscale retirement community: two eighteen-hole golf courses, tennis courts, indoor and outdoor pools, a bar, a restaurant and even an amphitheatre. On a recent visit to the massive Montecito clubhouse and recreation center, sixty- and seventy-somethings could be seen playing bridge and mahjong (a card game), lifting weights, loosening up with water aerobics and, in one pulsating room, taking a Zumba dance class.

“Baila! Baila! Sabor!” the music blared.

Only senior citizens are allowed to live in Shadow Hills, so most people came here to retire or to spend their winter months in the warm desert climate. Tangling with the HOA board, generally speaking, wasn’t on the to-do list.

“I don’t think any of us were doing anything more than buying a house and in some cases buying into a lifestyle,” said Martin Stone, 63, a former bankruptcy lawyer who moved here two years ago after a heart attack sidelined his career. “I don’t think any of us thought we were

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