Residential community associations: their impact on local government finance and politics.

• Author: Dilger, Robert Jay

As the number of residential community associations has increased, so has their impact on local government decisions and politics. Fueling the confrontational atmosphere are the issues of property tax reimbursement and the provision of municipal services.

There has been relatively little research conducted on residential community associations (RCAs) by the academic community; however, RCAs deserve much greater attention because they are playing an increasingly important role in determining the outcome of state and local government decisions. In recent years, RCAs have emerged as one of the most potent political forces affecting local government land-use decisions in the United States. Moreover, RCAs also have expanded their lobbying efforts at the state government level. Their primary goal has been to convince state legislators to adopt legislation to require local governments to provide RCA members with property tax rebates for local government services that they already have paid for and provided themselves. If successful in all 50 states, these efforts could require local governments to provide RCA members with property tax rebates in excess of $5 billion annually.

As the number of RCAs in the United States continues to increase and their lobbying efforts at both the state and local government levels continue to expand, interest in research concerning RCAs is certain to increase both among the academic community and state and local government officials.

RCAs and What They Do

RCAs are nonprofit corporations created by real estate developers with local government approval. The three general types--homeowners' associations, condominium associations and cooperatives--can exist by themselves or can be grouped together into what are referred to as master associations, umbrella associations and master planned communities.

Areas with homeowners' associations (HOAs) typically consist of detached houses or townhouses with common areas. The homeowners own and maintain their individual residences; the association owns and manages their commonly held property, such as swimming pools, tennis courts and streets. Condominium associations (COAs) are usually located in multifamily, multistory buildings. The owners hold title to the interior space of their residences and own the rest of the property, such as hallways, elevators, exterior walls and parking lots, in common. The association manages the commonly owned property. Cooperative associations usually are located in multifamily, high-rise buildings in major metropolitan areas. The association's members do not own any real property. Instead, they acquire a long-term, renewable leasehold interest in their residence plus a share, or proportionate shares, in a corporation that owns the building and grounds. Approximately 51 percent of all RCAs are homeowners' associations, 42 percent are condominium associations and 7 percent are cooperatives.

RCAs serve four basic functions. First, they provide homeowners a governing mechanism to manage commonly owned property, such as streets, parking lots, tennis courts and swimming pools. Second, they provide services, such as lawn care, street maintenance, trash collection and snow removal. Third, they determine and collect assessment fees to pay for these services. Fourth, they create and enforce commonly held covenants, rules and regulations (CR&Rs) that regulate the behavior of the development's residents. The CR&Rs can, among other things, determine whether and under what conditions a homeowner can own a dog or a cat, build an addition onto their home, run a business out of their home or place a basketball hoop over the family garage.

RCAs also have a fifth function that is seldom, if ever, mentioned in their articles of incorporation: lobbying. Because local governments affect the welfare of RCA members through their taxing, zoning and service delivery functions, RCA members often lobby their local government officials in an attempt to protect or promote their neighborhood's interests. Recent surveys of RCA board members indicate that they regularly monitor local government decisions and attempt to establish personal relationships with leading local government officials. Often using what is referred to as the insider's lobbying strategy, their goal is to...