The real problem with community associations

Beyond Privatopia: Rethinking Residential Private Government. A book by EvanMcKenzie. Urban Institute Press, 2011, 164 pp., $26.50 paperback. 

In 1994, Evan McKenzie, an attorney turned academic, wrote the book Privatopia — a word he coined to describe the privatization of America’s communities through the use of Common Interest Developments, or CIDs. In that book, he traced the history of private covenants and bemoaned the loss of personal freedoms by those who buy property in such a community.

“Residents in CIDs,” he wrote then, “commonly fail to understand the difference between a regime based formally on rights, such as American civil governments, and the CID regime, which is based on restrictions.”

In the recently published follow-up, Beyond Privatopia, McKenzie revisits the world of CIDs (both condominiums and homeowners associations), now estimated to be home to 20 percent of the US population; this is the default mode for virtually all new construction. In dense and often repetitious prose — McKenzie wrote more crisply in the first book, before he sojourned 20 years in academia — the author states that buyers who want a new home now have almost no choice but to buy into such a community.

McKenzie attributes the original development of CIDs to rising land costs, and says repeatedly that such planned communities are a way to increase density, which he appears to view negatively. Rarely does McKenzie recognize that CIDs vary tremendously in size and responsibility, nor does he acknowledge that as the institution spread, CIDs encompassed large-lot communities —gated or not — that exacerbated the problem of sprawl.

Though initially created to maximize land use, McKenzie says such communities have now proliferated because local governments — originally skeptical — saw that private communities could save them a lot of money. CIDs relieve local government of much of the responsibility for maintaining streets and parks and providing other services, while the homeowners continue to pay a full load of taxes. Residents within these communities thus pay twice: once to the community association and once to the local government.

As local governments refused to provide services to new communities (while often requiring the developer to include features that necessitated common maintenance), McKenzie says, the formation of a homeowners’ association became a de facto requirement for new development. Along the way, CIDs evolved from being primarily upper-class enclaves to comprising virtually all new development, at every price point.

McKenzie sets up, and knocks down, several academic arguments for the proliferation of private governments, including neoclassical economics and libertarianism, both of which rely on consumers’ free choice. Because governmental arm-twisting caused CIDs to become so ubiquitous, McKenzie argues, such communities cannot be said to represent the market’s free or rational choice.

He also considers, and ultimately discards, the notion that CIDs may be replacing municipalities. He states, however, that the private governance structures of CIDs appear to be converging with public government. By this, he means that private and public government are becoming more like each other — that homeowners’ associations must increasingly comply with government-type procedural safeguards while municipalities become more entrepreneurial, consumer-oriented, and market-driven.

The increasing regulation of CIDs (particularly in California, Florida, and Nevada, whose laws are discussed in some depth) results from one of their defining characteristics. CIDs depend on homeowners to serve on boards of directors, McKenzie says, where they must devote large amounts of volunteer time doing jobs beyond their capabilities. Responding to their inevitable missteps, states impose stiff regulations and procedural requirements on boards, but without giving these volunteer boards support to learn how to do their jobs better. Predictably, the process spirals downward, with competent homeowners more and more reluctant to serve on the boards.

After the collapse

The biggest crisis facing homeowners’ associations since the publication of the first Privatopia is the collapse of the housing market and the financial crisis facing many communities. McKenzie is concerned mostly with the question of whether local governments will need to step in — as they have in a few cases — to restore facilities that have fallen into extreme disrepair.

Perhaps because the extent of the crisis was just beginning to emerge when McKenzie was working on the book, this aspect gets less space than it deserves. Whatever difficulties such communities face in normal times are trivial when compared to what happens when most of the homeowners owe more on their mortgages than the properties are worth — a situation facing almost all projects built in the closing years of the housing bubble. Whether due to language in the documents or to a statute, a bank foreclosing on property usually has only limited liability for overdue assessments. The remaining homeowners, themselves underwater, must pick up the slack or watch the level of care decline precipitously. In extreme cases, even critical expenses such as building insurance for a condominium might go unpaid.

Particularly troublesome are those projects that were under construction when the housing bubble burst, leaving homeowners to deal with communities that were abandoned half-built, their recreational facilities sometimes left unusable, and loaded with liens. At the other end of the spectrum are aging, antiquated communities, particularly condominiums, that are so outdated and need so many repairs that the cost exceeds the value of the units.

In the face of such concerns, many of the issues raised in the rest of the book seem, well, academic. McKenzie touches on several well-documented problems of CIDs, including revisiting the loss of personal freedoms that was the theme of much of the first Privatopia. For instance, private communities can prohibit political signs, while municipalities cannot. Such disparity exists because courts have viewed ownership in a community with private covenants as a voluntary act, even though the proliferation of such communities makes it harder to consider it a real choice. This is an ongoing problem that may, he suggests, ultimately be solved legislatively, much as federal laws have nullified covenants that discriminate against racial or other minorities or families with children.

The New Urbanist connection

McKenzie gives the briefest of nods to New Urbanism, with a quick reference to it in conjunction with the HOPE VI program, plus the following paragraph:

There are those who believe that CIDs can be a vehicle for advancing communal values or social capital. The alleged decline of communal values in the United States, and its relationship to political organization, is a major issue in political sociology. (Putnam, 1992, 2000). The New Urbanist school of architecture emphasizes the notion that the physical design of suburbia is antithetical to a sense of community. When they decry sprawl, they are denouncing not just the way suburbia looks, but also the alleged lack of social connections among the people who live there. They promote the notion that community associations can be used to enforce limits on design and development that are conducive to a stronger sense of community in planned developments (Duany et al. 2000).

Here, I think, we need to parse out the separate roles of design and community associations. New Urbanists can, perhaps, change the way people address each other by changing the way their houses address the street, or, at the least, encourage a healthier lifestyle where walking replaces some of the soul-numbing, derriere-spreading time spent in the automobile. Community associations have a role to play in enforcing the architectural covenants that create such places, although, in truth, the urban fabric is set in the development stage, when the developer, not the association, should control design review. The association’s role properly comes later, once the community is mostly built out, and the effect of its oversight, whether done poorly or well, is far less dramatic.

It’s a futile exercise, however, to expect to find civic fulfillment in the homeowners’ association itself. In our enthusiasm for improving the quality of life in our communities, we often slip into the belief that our homeowners’ associations will necessarily be better as well — more rational, more civil, more far-sighted — and then we are disappointed when that doesn’t happen.

Stripped of idealism, the homeowners’ association is simply a property maintenance organization. When it works well, it collects money from its members and makes sure the streets and parks and other commonly shared facilities are properly maintained. Not much excitement there. For building good community feeling, look elsewhere: to the coffee shop, to special events in town center, to 501(c)(3) or (c)(4) programming, to churches and schools and gyms and book groups and people who walk their dogs.

Academics like McKenzie get excited about homeowners’ associations because they are almost always overlaid with restrictive covenants — regulating noise, political signs, what color you can paint your house. None of that is critical to a successful community — even, believe it or not, the color you can paint your house. One can imagine a New Urban community that, once built, is allowed to evolve organically, with the homeowners’ association maintaining, and regulating, only those common areas that the local government refuses to accept for maintenance.

We New Urbanists have ourselves lingered in the world of Privatopia. The first projects were, of necessity, private developments, with private covenants and homeowners’ associations. In those projects we developed the principles that later were applied to public planning and zoning. The early, privately-enforced design codes became the basis for form-based coding. But by starting out in the private realm, the projects retained a certain gated subdivision mentality, even a certain prissiness, that we must now struggle to overcome. It’s time to put the homeowners’ association in its proper place.

Doris S. Goldstein is an attorney who works toward the creation and effective management of new urban communities. She is co-author, with Dan Slone, of A Legal Guide to Urban and Sustainable Development for Planners, Developers, and Architects. Her website is


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