Thursday, August 18, 2016

Imminent Bankruptcy of The Crossings at Willow Creek Prescott + HOA Historical Perspective

See email sent to 592 Arizona state, county and municipal public officials
As public officials, we want to draw your attention to the role of regular government, state, county or municipal, in Arizona HOA’s who seem to feel they bear no responsibility for them, as if they were abandoned orphans.
We are part of an exciting group of truly motivated citizens working with State Senator Farnsworth to clean out the HOA mess that has been created over the years.
Whatever you may believe, this is now going to be tested in the imminent bankruptcy of one of the supposedly premier subdivisions in Prescott – The Crossings at Willow Creek – at least according to the HOA’s now ex attorney and supposedly the largest HOA Attorney firm on the planet - Carpenter Hazlewood. Click HERE to see their letter of August 8.
For more details on that go to our blog at which also has a link to a separate blog focused exclusively around The Crossings
For background, we’d like to draw your attention to an excellent summary to be found below, written by AZHCI, members of the Farnsworth group, putting HOA’s into historical perspective:
Questions for you:
1. Do you have a position on this, particularly if you are up for election?

2. Can you point us to a precedent for this in Arizona where an HOA has fallen completely off the cliff, as we are not aware of any?

We know Prescott Valley faced similar difficulties with Stoneridge but they are generally viewed as somewhat gifted at walking towards problems and looking to the future rather than the past. As for Prescott – you be the Judge.
We’d like to hear from you via the blog or otherwise, urgently, as according to Carpenter Hazlewood, it’s only a matter of days.
Arizona Homeowners Forum
Background on HOA’s
The laws on Condominiums and Common Interest residential associations were written in the late 1960’s by developers, the FHA, and Banker-lenders. They treated HOAs as property issues, not as homes that people live in. These outdated laws gave extensive powers to the Boards who would run the Associations with their hired surrogates - attorneys and management firms.
The problem with this is that human beings are not meant to live in corporations. This is where elderly people spend their retirement years, especially in Arizona, and it’s not meant to be devoid of a democratic process. At the moment, there is no solution to the problem because every time people try to introduce more of a community philosophy on their own, they run into the wall of Oh, well this is a private corporation and if you don’t like the rules you can just move.
SB1482 signed by the Governor in 2014 provided only a partial remedy for this but it’s ineffective because the language cannot also restrict or dictate the terms of a sub divider or Developer’s contract. This mandates CC&Rs and Rules that go way beyond just the maintenance of the community owned property. These land use restrictions grant the developer, and after turnover the Association, total control over the member’s lot. That was extremely convenient for municipalities allowing them substantial cost shifting but without them taking ANY responsibility for the beast they created. Practically, municipalities have to be given a copy of the CC&R’s but have no responsibility to read them. It’s effectively a form of taxation without representation. To change this, local government must once again offer an alternative CHOICE without mandating the use of a contractual scheme such as HOAs use.
The alternatives include Improvement Districts for the COMMON AREAS ONLY with no CC&R’s for individual homes.
This brings consumer CHOICE back into the equation without the ability of local governments depriving the public and developers of the right to own and maintain open spaces and subdivision improvements without the use of property tax funds.
Specifically, AZHCI proposes amending ARS 9-461.15 and 11-810. to allow a Single Family Housing zoning class that can be managed under “Improvement District” control for the common facilities only.
Source: The Arizona Common Interest Development Homeowner Institute (AZCHI) which provide education, training, research and legislative advocacy to all seeking to change the outdated public policy that privatizes housing, to once again allow Developers to build single family housing under Public Management control.