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Privatizing Public Functions. In California, local municipalities have discovered they can "privatize" public functions by forcing developers to create common interest developments, knowing that associations will provide services normally provided by the city or county (see chart below).  This allows local governments to collect taxes from association members without providing public services, thereby subsidizing services to non-association housing.

Quasi-Governmental Entity. Homeowner associations today function in many respects as small municipal governments regulating many aspects of the daily lives of their members. (Chantiles v. Lake Forest II Master Homeowners Assn. (1995) 37 Cal.App.4th 914, 922.) Associations are in effect "a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government." (Cohen v. Kite Hill Community Association (1983) 142 Cal.App.3d 642, 651.)

  City               Association
  City Charter   CC&Rs
  City Council
     ·Brown Act
  Board of Directors
   ·Open Meeting Act    
  Mayor   President
  City Manager   Community Manager
  Citizens   Members
  Elections   Elections
     ·tax liens
   ·assessment liens
  Rules & Regulations
   ·suspend privileges
  Police   Security
  Public Works   Maintenance Dept.
Parks & Recreation
  Recreational Facilities

Services Provided. "They play an important role ... in public-service functions such as maintenance and repair of public areas and utilities, street and common area lighting, sanitation and the regulation and enforcement of zoning ordinances.... In almost every case, the association provides its members with utility services, road maintenance, street and common area lighting, and refuse removal.... All of these functions are financed through assessments or taxes levied upon the members of the community, with powers vested in the board of directors ... or other similar body clearly analogous to the governing body of a municipality. This delegation extends not only to the common areas, but also within the confines of the home itself.” (Damon v. Ocean Hills Journalism Club (2000) 85 Cal.App.4th 468, 475; internal cites and quotation marks omitted).

Mini-Government. "Indeed, the homeowners associations function almost as a second municipal government, regulating many aspects of [the homeowners'] daily lives. [U]pon analysis of the association's functions, one clearly sees the association as a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government. As a mini-government, the association provides to its members, in almost every case, utility services, road maintenance, street and common area lighting, and refuse removal. In many cases, it also provides security services and various forms of communication within the community. There is, moreover, a clear analogy to the municipal police and public safety functions.... In short, homeowners associations, via their enforcement of the CC&Rs, provide many beneficial and desirable services that permit a common interest development to flourish." (Villa Milano Homeowners Ass'n v. Il Davorge (2000) 84 Cal. App.4th 819, 836; internal cites and quotation marks omitted).

Problems With The Analogy: While community associations are most often structured as private nonprofit mutual benefit corporations which are private self-governing organizations, courts and the legislature view them variously as a landlord, private business, or a quasi-government, depending on the issue. The problem with treating them as a quasi-government is that they lack the immunities enjoyed by governments. Moreover, boards are made up entirely of volunteers and only a small number of associations have paid staff to support their volunteers. Smaller, self-managed associations often operate without a management company. Many who employ a management company, use them for financial services only. Yet, all are burdened with increasingly costly regulation.

Not Official Proceedings. In an unpublished decision, the California Court of Appeals noted that association meetings are not official proceedings:

[H]omeowners association meetings fall outside the scope of official proceedings” for purposes of the anti-SLAPP statute. (Id. at p. 732.) Talega reasoned that “nongovernmental proceedings must have a strong connection to governmental proceedings to qualify as ‘official.’ ” (Ibid.) “[A]lthough courts have recognized the similarities between a homeowners association and a local government, even going so far as to describe a homeowners association as a ‘quasi-governmental entity, paralleling the powers and duties of a municipal government’ [citation], a homeowners association is not performing or assisting in the performance of the actual government’s duties” and their decisions “are not reviewable by administrative mandate”—characteristics of other entities found to hold “official proceedings” for purposes of the anti-SLAPP law. (Ibid.) We agree with Talega that homeowners association board meetings are not “official proceedings” within the meaning of the anti-SLAPP law. (Cootes v. Wyman.)

Primary Duty of Boards. Even though associations are similar to governments, they are not. Their authority is contractual in nature via recorded CC&Rs and Bylaws.The governing documents create a corporation with a board of directors whose primary task is to manage the common areas. Association members frequently have the misconception that boards exist for the welfare of members. That is not accurate. Boards must maintain the assest of the corporation--that means maintaining, repairing and replacing the common areas. Maintaining the common areas and funding the reserves so monies are available for that purpose protects the property values of members. Secondarily, the board adopts operating rules to protect members' quiet enjoyment of the common areas and their separate interests.

Limited Transparency. Because a board's primary duty is to protect the corporation and its assets, complete and total transparency is not possible. There is some information that must be kept confidential, which is why the Davis-Stirling Act provides for executive session meetings that allow boards to review matters in confidence. Minutes are kept of executive session meetings but are not subject to review by members.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

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