Welcome to Ungated

Thanks for tuning back in to our long-running show Twin Rivers, Twin Rivers.  After a more than six-year run, we have reached our final episode with today’s ruling from the New Jersey Supreme Court.

 

Anyone with an interest in community associations is familiar with the Twin Rivers saga.  But in case you missed it, our story begins with a handful of residents in this NJ community of 10,000.  They claimed Twin Rivers was not a community association, but a government, and that a variety of community rules were infringing on their rights of free speech and assembly as guaranteed by the New Jersey Constitution.  They enlisted the help of the American Civil Liberties Union, along with Professor Frank Askin and his students at Rutgers University’s Constitutional Litigation Clinic, to have the courts, rather than the residents, determine the rules for their community. 

 

It has been an up and down story throughout.  First the Trial Court found for the defendants.  Then the Court of Appeals issued a partial reversal, finding for the plaintiffs on three issues.  But you can read more about the history of the case and the various court decisions in my previous blog post and on the CAI Twin Rivers page .

 

So let's cut right to the chase.  After a very long and very winding legal road, including an amicus brief filed by CAI on behalf of the Twin Rivers Homeowners Association, the New Jersey Supreme Court unanimously reversed the Court of Appeals, reinstated the Trial Court decision, and ruled today that:

 

• Residents of community associations in New Jersey not only have the right to express themselves, but also enjoy the freedom to set reasonable restrictions governing that expression within their communities
• Associations are not governments for constitutional or operational purposes
• The relationship between homeowners and their association is based on a contractual agreement that is fundamental to the nature of communities like Twin Rivers
• And as is always the case, effective governance is the art of weighing the rights and obligations of the individuals with the interests and responsibilities of the organization as a whole

The Court concluded, "... in balancing plaintiffs' expressional rights against the Association’s private property interest, the Association’s policies do not violate the free speech and right of assembly clauses of the New Jersey Constitution.”  The full text of the Supreme Court decision can be read here. 

 

This is an important victory for homeowners and associations across the country.  It validates and supports almost four decades of legislative history and judicial precedent regarding the status of community associations, it further defines and protects the rights of all homeowners, and it supports the traditional concept that government (whether it be the executive, legislative or judicial branches) should not interfere with private contracts and associations freely entered into.

 

So as the curtain finally comes down on our story, CAI thanks all those involved for the time and energy brought to this important precedent setting case.  We hope that association boards, as well as individual homeowners, will look to the NJ Court’s opinion for guidance and inspiration in developing, implementing, and administering reasonable rules in their communities.

 

 

As a matter of law, a federal agency only has the specific authority granted to it by Congress. That’s why CAI looked skeptically at the latest attempt by the Federal Communications Commission (FCC) to claim authority to regulate an association’s ability to enter into exclusive agreements with video service providers.

 

You see, the FCC looked at this issue several times in the past, but quickly determined that they didn’t have the authority to regulate services in this area.  But this time they suddenly ‘discovered’ an existing statute that they were not previously aware of that grants them this power. After this amazing revelation, the FCC issued a call for comments on what effected parties think about this claim. CAI made sure the voice of community associations was heard.

 

In short it’s about market power and access. Associations and developers use exclusive contracts to obtain an expanded set of services for their residents.  Such agreements are a strong incentive for service providers to invest the thousands and even millions of dollars required to extend their networks to serve new communities on the growing edge of an urban area. Limiting an association’s right to enter into such contracts diminishes an association’s ability to negotiate with providers to obtain bulk rates, quality service commitments, facility upgrades and new services for their members. 

 

But even if you disagree, the FCC, like all federal agencies is required to obtain a legislative mandate before it can extend its regulatory authority. The ‘discovery’ of a provision in existing law that the Commission previously overlooked shortchanges the democratic process. If there exists a growing problem with such contracts (a subject certainly open to debate), then the FCC is required to petition Congress to expand its powers accordingly. That way the debate will be open and transparent, rather than taking place in the less visible and more opaque world of regulation drafting.

 

Traditionally an agency or commission can take anywhere from several months to several years to review comments and follow up with either a determination, a call for additional comments or a proposed rule. We will be watching.

 

A copy of CAI’s comments can be found here. It’s just another example of our work to protect associations from over-regulation.

 

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Well, it has been a while since I posted:  Blame a West Coast trip for the CEO-MC Retreat, some early summer vacation days with my family, and an unplanned altercation with my appendix.  Today's post is about leadership, or more properly an opportunity for our members to participate in the leadership of our organization.

CAI's governance consists of a Board of Trustees supported by three Membership Representation Groups (MRGs), who are elected to represent our three core constituencies, community volunteer leaders, professional community managers, and business partners.  In addition to representing their particular groups, MRGs provide policy input to the Board, assist staff in reviewing and designing programming, and help set the organizations direction through our annual planning and review process.  Most importantly, each MRG selects from among its membership individuals to serve on the Board of Trustees.

MRGs typically meet in person twice a year, at a planning retreat in January/February and at CAI's National Conference in April/May.  In addition, each MRG meets via conference call throughout the year.

MRGs are composed of CAI members elected by their peers to serve for a two-year term.  The key requirements for participation on the MRG are a membership in good standing in the organization and a willingness to serve.  You can learn more about each MRG and how to nominate yourself for an open MRG post by submitting an on-line application no later than July 19th.  An electronic election open to all members will be held in August to select new MRG members for service beginning January 1, 2008.  Watch your email for an alert when the election opens.

I invite you to consider nominating yourself for one of these open positions.  CAI's continued growth and success is dependent on the leadership, vision, and participation of our members.

Last week, Nevada Community Associations had a noteworthy victory. After a groundswell of homeowner complaints, industry concerns and some furious grassroots lobbying, Nevada Governor Jim Gibbons took a bold move and vetoed a sweeping bill that would have greatly expanded the state’s regulation of community associations.

 

The legislation, which passed both chambers nearly unanimously, would have:

 

• Allowed unit owners to alter the facade of their unit, even if it was a common element of the association.
• Regulated association newsletters, requiring them to print opposing views without limitation or ability to edit out inappropriate content.  
• Prohibited transfer fees assessed when a unit or home is sold. 
• Banned association from enforcing speed limits and other moving violations on association roads, endangering public safety.  
• Limited a board’s ability to protect and build association reserve accounts by only allowing reserve assessments in a limited set of circumstances.

 

In the end, the effective efforts of all parts of the CAI team were able to convince the governor to veto the bill. The Nevada Chapter, the Nevada LAC and CAI’s national staff stepped up with alerts and talking points on the bill’s substantial negatives. Association volunteer leaders also worked diligently to get the word out to homeowners. It made a difference. On Friday, June 15, the governor vetoed the bill. 

 

Of course the challenge is just beginning. The bill sponsors have vowed to overturn the governor’s veto when they reconvene in 2009. CAI’s Nevada members will be working hard to build bridges between sessions. In the meantime, I congratulate them on the success of their efforts.

 

 

 

One of the frequent criticisms we face is that CAI does not support homeowners and is beholden to and run by the some small cabal of attorneys, community managers, demonic board members, or (insert your favorite group to hate here) for their personal benefit. 

Of course this couldn't be further from the truth, but as the Soviets proved for over 70 years, the "big lie" actually works better than the small and inconsequential lie.  They demonstrated that if you say something often enough and powerfully enough, and don't allow any deviation from the message or alternative viewpoints, eventually people will come to accept it as truth or "pravda".  That is the tactic we face with some of the folks who would abolish every association tomorrow and destroy trillions of dollars of equity in the process just because they don't like the idea of community associations and/or how their particular association is run.

The truth (which is much more prosaic and boring) is that CAI's governance, public policies, and programs are set by a broad-based group of volunteers including homeowners, managers, and a wide variety of business partners.  Each of these groups contributes to and participates in the leadership of CAI.  In fact, one of our most frequent challenges is finding consensus among this very diverse group of members, particularly on critical and controversial public policies.  But when we do, it can be a very powerful statement, because it brings together many voices in a strong message. 

A quick example: Recently the Colorado Legislative Action Committee was successful in supporting the "Homeowner Protection Act of 2007".  This important bill not only protects and maintains the rights of every association in Colorado, but it also protects every single individual homeowner in the state as regards construction defects in their home and their ability to have problems corrected in a timely manner.  So how is it that we don't care about homeowners?  And this is just one example in one state.

The reality is that CAI's legislative activities, educational programs, and books and other reference materials support strong, effectively managed, and fiscally efficient associations.  By making associations better and stronger we help make communities better places to live, ensure boards are responsive to all their residents, and help preserve community value and values. 

Our annual CEO-MC Retreat is coming up in just over 2 weeks.  If you haven't registered yet you probably should hurry as there are only 30 slots remaining. 

Not sure what to make of this story in the context of the overall housing market, but new home sales were up over 16% in April, versus expectations of 0.2%.  It looks like a sharp decline in prices has jumpstarted the market at least for the short term.  Also, it is important to remember that new homes are only about 15% of overall real estate activity.

New homes sales rise 16.2 percent in April

Reuters
Thursday, May 24, 2007; 10:30 AM

WASHINGTON (Reuters) - Sales of new homes rose 16.2 percent in April, the sharpest climb in fourteen years, while prices fell a record 11 percent, according to a government report on Thursday that showed home builders taking extraordinary steps to move houses.

New single-family home sales rose to an annual rate of 981,000 units from a revised rate of 844,000 in March, the Commerce Department said.

Analysts polled by Reuters were expecting April sales to rise to an 860,000 unit pace from a previously reported rate of 858,000 units in March.

In April, the median sales price of a new home fell $28,500 to $229,100 from $257,600 in March.

There were 538,000 new homes for sale in April, a fall from the 546,000 reported in March. It would take 6.5 months to clear that inventory at the current sales pace, less than the 8.1 months recorded in March.

Thursday's data comes a day ahead of another key report that measures the pace of existing home sales -- which represent 85 percent of the housing market. Analysts polled by Reuters are expecting April existing home sales to rise to 6.14 million unit pace from the 6.12 million in March when that data is released Friday.

Sales were mostly up across the regions, with the South recording the largest gain at 27.8 percent. The Midwest saw a decline of 4.0 percent while the Northeast was up 3.8 percent and the West was up 8.5 percent.