Blogs > Liberty and Power > Ministates An American Problem

Jul 19, 2006 1:56 am

Ministates An American Problem

Michelle Boorstein's article in the Washington Post, "Homeowners Groups Fight to Stay Afloat," brings up an ongoing problem with the federally-encouraged quasi-municipalities commonly known as homeowner associations: liability
Hidden Lake's problems mirror those cropping up at first-generation, association-run communities across the country as they deal with aging infrastructure and outdated or poorly written covenants that make it impossible to enforce rules, increase dues to cover rising costs or resolve disputes. Today, with 80 percent of homes being built in such communities -- a percentage an industry group estimates to be even higher in the Washington area -- an entire body of law and expertise has sprung up to deal with such problems. Governing documents have grown from three pages to the size of telephone books, states have passed laws giving homeowners associations power to collect dues and place liens on homes, and real estate agents in many places are required to inform buyers about what they're getting into.
While I realize that HOAs are a popular idea with some libertarians, they are statist to the core, there are far better social mechanisms. There are many problems with HOAs which I find are of great concern and this article illustrates the short-term orientation of the bulk of HOAs: that of under-capitalization (one which most HOAs are dealing with now) which leaves them with a multigenerational transfer problem. HOAs have little capacity to evolve over time to allow second generation ownership without a significant loss of value and opportunity to maintain the capital to keep their homes, roads and parks going and allow change for the next generation of owners. Same problem as other municipalities. The only difference is that the others are recognized as state creations. As Dr. Allan Carlson says in ""Baily Park" or"Greater Pottersville"?":
Even worse, it turns out, are the Neighborhood or Homeowner Associations, a new kind of informal governance that has recorded rapid growth at the same time as suburban family life has declined. A product of the 1960's, Homeowner Associations now embrace 50 million Americans. Using restrictive covenants and liens-on-homes to enforce their wills, these Associations are--in analyst Spencer MacCallum's words--far more"arbitrary, unresponsive, and dictatorial" than Zoning Boards in their control over the lives of residents. Commonly prohibiting everything from home offices to swing sets and picket fences, Homeowner Associations--in one critic's words--provide neither liberty, nor justice, nor domestic tranquility.
Thanks to Evan McKenzie for his mention of the Washington Post article in his blog, The Privatopia Papers.
Just a thought.
Just Ken
CLASSical Liberalism

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kgregglv - 9/13/2005

As I recall, the St. Louis experiment predates the HOA procedure. I don't believe that there was any connection between the two. The similarities are, I think, coincidental.

On the more positive side, you might be interested in Spencer MacCallum's essay, "The Entrepreneurial Community in Light of Advancing Business Practices and Technologies," that was printed in the Cato book edited by Foldvary and Klein, "Half-Life of Policy Rationales":

Just a thought.
Just Ken

common sense - 9/13/2005

In large cities like St. Louis, HOAs probably work well compared to non-HOA areas, especially given the breakdown of neighborhood life driven in part by the Federal Bulldozer, mandated bussing, and other factors. Anything that helps maintain a humane scale and foster community pride tends to be a good thing.

David T. Beito - 9/13/2005

Perhaps. In St. Louis, the subdivider turned over the streets and common areas owned and controlled by the residents. These would be regulated by an "indenture" which could only by modified by a super majority.

I will say that that St. Louis covenants seeme to be a lot less restrictive that typical HOA rules. Generally, they had set-back requirements, limited occupancy to single family homes, and provided for dues to pay for waters, sewers, medians, a gate, and other common property. As I recall, they had very general some rules on architecture. Still, on the face of it, the organizational principle seems similar. Let me also note that while many public streets suffered severe decay and crime beginning in the 1950s, the private streets (actually "places") survived and ultimately thrived. There are a couple of all-black private places, for example, which are islands of neighborhoor solidarity and stability surrounded by severely decayed neighborhoods on the public streets. In any case, I would be interested to know how the St. Louis private places specifically differed from modern HOA's. I have an extensive discussion of private places in The Voluntary City, published by the Independent Institute and University of Michigan Press.

Harry - 9/13/2005

can the ministates make a better dewelling place for the people finding some tranquality in their lives fro from the hustle bustle of the major cities?

kgregglv - 9/12/2005

I have not investigated the St.Louis experiment, David, but I recall that Spencer MacCallum has, and he concluded that there are significant differences between the two. I would hope that this is the case.

It may be something worth looking into more carefully.

Thanks for the thought!
Just Ken

kgregglv - 9/12/2005

Quite agree with you. Small cities, while not particularly better than many social institutions, are, in many ways, superior to the bulk of HOAs.
Just a thought.
Just Ken

kgregglv - 9/12/2005

Yes, I quite agree. And I find it so surprising the libertarians are jumping up and down in support of these quasi-municipalities. In many respects, they are worse than the municipalities that they are supplanting. The reports daily on incredible abuses which HOAs promote. I consider them a "training ground" for future little fascists.

Just a thought.
Just Ken

David T. Beito - 9/12/2005

I am not sure I agree with the theory that they are state created. I wrote an article for the Journal of Urban History on the private streets of St. Louis. The streets, which are very much like HOA's, have been existence in St. Louis and its suburbs since the 1860s.

In many cases, they have meant the difference between survival and death of many neighborhoods in the city.

- 9/12/2005

I do not know if I like the term "ministates," but I agree with the thrust of the post. I respectfully disagree with libertarians who see a huge difference between a town of 5000 ("incorporated 1763") administered by an elected board and funded by taxes and a community of 5000 administered by an HOA and funded by mandatory fees. (At least you can deduct real estate taxes on you 1040!) These HOAs can be more restrictive on individual liberty than towns, sometimes right down to the color of ones shutters and door (which you best keep closed should one of your HOA officials drop by to discuss the verboten "Don't Tread on Me" flag over your porch.) Both try to deal with the ancient question of politics--"How should we organize our lives with each other?"--and one is not necessarily better than the other. Let a thousand flowers bloom--be they towns or associations--and take care to find a lily pad organized to your liking.

In my town we pay a measly 8 mils of property tax for fire, police, and roads, among other sevices, and I have yet to feel oppressed by its government in the least. And I could fly a DTOM flag if I wanted to--but it would be to protest the federal warfare-welfare state, not my local government.

wmarina - 9/12/2005

Many years ago, before I started my Const. Co., I remember commenting to some libertarians blathering on about how Houston, TX, had no zoning laws, that the homeowners covenants there had an even greatr potential for abuse of property rights.
I also commented about that in the context of strict liability in the 3rd ed. of A History of Florida. 1999, based upon my by-then experiences as a builder.
These covenants are, as Th. Jefferson would recognize, a new form of Feudalism.