Chapter SixIIIChapter Eight
From the moment of its creation, the CID housing scheme went horribly wrong and has been on artificial life support ever since.
stop them before it’s too late!
Developers began pushing Common Interest Developments (CID) in the mid 60s, but as early as 1973, the CID system of governance (the very same one used today) had basically failed. As anyone with the least little bit of intelligence might expect, the system of unregulated neighborhood governance led to so much gross mismanagement and fraud that consumer demand for CID housing was in serious danger of collapsing. Too many stories began showing up in the media describing neighborhoods floundering in a sea of pettiness, hostility, theft, and litigation.
In just a few years, the out of control HOA boards that began to thrive in most CID communities had developers worried that they were about to kill the “golden goose.” Something had to be done and done fast.
a good idea gone bad
To reverse this negative trend, the National Association of Home builders and the Urban Land Institute organized the Community Associations Institute (CAI). Like many other unsavory institutions, the CAI started out with noble intentions, but eventually degenerated into a nationwide organization representing the special interests of property management companies and lawyer's groups.
The original purpose of the CAI was to instruct homeowner board members in the proper ways to run a HOA. The hope was that, with the help of the CAI, HOA board members could be taught how to contain their personal demons and learn how to present an image of professionalism in management. To repair the damage already done, the CAI would renew efforts to convince the public that CIDs were a better way to live.
equal representation for some
The CAI was originally composed of five constituencies: developers, property managers, homeowner association directors, association lawyers, and other professionals. But right from the very beginning, member groups strived to gain dominance of the organization.
Developers, who were concerned that homeowner members might present them with a likely source of opposition, convinced the organizers to limit the influence of the homeowners. This basically made the homeowners second class members, which led to a weakening of homeowner support for the organization. Being the least well funded of the five constituencies, homeowner members also found it difficult to justify the time and expense necessary to attend local and national meetings. Within a few years homeowner presence within the CAI was practically nonexistent - exit homeowners.
one down, one to go
So now, support and funding for the CAI was left up to the developers. They realized, if they were to continue selling CID housing, they would need to support education programs for HOA board members whose actions could compromise the developer’s ability to sell the public on CID housing if stories of lawsuits from disgruntled homeowners continued to circulate through the media.
give the public what we want
But, as time passed, and local municipalities became more and more receptive to the CID housing scheme, many developers began to produce nothing but CID housing leaving homebuyers in some parts of the country with little choice in housing. Once developers began to feel confident of the public’s willingness to acceptance CID housing, they began to contribute less and less of their time and money to the CAI - exit developers.
two down, two to reorganize
This left the management companies and their associated lawyers as the most active members of the CAI at both the local and national level; their own economic interest in the ongoing success of the CID industry encouraged them to take over CAI affairs.
In 1992, the CAI was completely restructured. Property managers took control of the decision making process. Emphasis was shifted to legislative advocacy through paid lobbyists and grass roots mobilization of thousands of CAI members.
the fears of the founders
The creators of the CAI, Byron Hanke and Lincoln Cummings, in a letter to then CAI president David Gibbons, expressed dismay at the new direction the CAI was taking; it wasn’t what they had in mind.
“CAI was in part a social experiment to see if disparate interest groups could work together for the common good. It worked well in the beginning as each of the founders worked diligently for its success. Everyone benefited from the pooling of knowledge and discipline. We broke new ground for the industry and set new standards, which are still being followed. I still believe in the original purpose: to help the homeowner association succeed.
There was, and still is, little incentive, however, for the homeowner him/herself to be more than a passive observer. CAI quickly became dominated by those in the business, principally managers and colleagues.
I believe our success to date was in large measure because we tried to balance our policy-making and leadership among the five interest groups. It was the balance of thought, not the numbers that counted.
Even so, I readily acknowledge that we have not succeeded in maintaining the active leadership involvement of homeowners, public officials, and builder/developers. It is therefore time to change.
As I read your recommendations, I sense that the Institute is headed even more surely towards a manager and colleague trade association. While this is the easiest way to continue, it disturbs me. I think there is an alternative.”
fix it in the spin
Today, the CAI is viewed by most outside the industry as nothing more than a trade organization for management companies and association lawyers. If you go visit the CAI’s website you will find that the story they tell of the organization’s history mentions absolutely nothing about the 1992 restructuring of the organization. As ludicrous as this spin is to anyone who has any knowledge of this organization, they still try to convince the public that the CAI represents the interests of homeowners.
no protection under the law
The CAI is funded through contributions from its members: property management companies and association lawyers. The purpose of the CAI is to see to it that the steady flow of cash from the pockets of CID homeowners into the coffers of their members continues unencumbered by any regulatory entanglements. Their job is to ensure that homeowners in CIDs always remain soft targets for their membership. I’ll let one of their representatives explain it to you:
“The CAI successfully amended bills or worked toward killing bills that could have been harmful to our industry.” Connie Heyer, lead CAI lobbyist
law for sale
Through their legislative action committees, the CAI makes campaign contributions to judges and legislators and lobbies hard to defeat any legislation that would limit the powers of their members groups by providing some rights and safeguards for homeowners.
And what is the CAI against? They’re against anything that might protect you from their members. Here are a few of the recommendations that have floated through the Texas legislature that were defeated through the lobbying efforts of the CAI:
Recommendation 1.12 would repeal property code 202.004, which provides that a court may assess civil damages up to $200 a day for deed restriction violations. This is one of the industries favorite weapons against homeowners. Attorneys slap these $200.00 a day fines on a homeowner without oversight and the homeowner has no legal defense against them.
Recommendation 1.14 would authorize the Office of the County Attorney and/or the Attorney General to investigate complaints and bring suit against HOAs in certain instances. If this recommendation were to pass, if homeowners could take their grievances to a state attorney general and management companies and association lawyers had to defend their actions, it would almost eliminate their involvement in the CID housing scheme. These two entities couldn’t possibly stand up to the legal scrutiny.
Recommendation 1.16 would subject HOAs with mandatory dues, to the Open Meetings and Public Information Acts. The reasoning was that since most HOAs carry out the duties and responsibilities of small governments, they should be recognized as quasi-governments and therefore required to make comparable public disclosures.
Recommendation 1.6 would permit a homeowner, in a case brought against the homeowner, to recover reasonable legal fees from the HOA if the HOA is found to have no reasonable basis to sue the homeowner. This was supposed to protect homeowner from “nuisance lawsuits.” There is no provision for owners to recoup their legal defense fees in cases where HOAs unreasonably bring suit.
Senate Bill 949 would have given homeowners unlimited access to HOA records. If they are acting lawfully, what are they so afraid of?
If you live in a CID, you are probably in some way associated with this organization. The CAI is very influential in my old neighborhood. Our management company was a “platinum” member of the CAI, and the company’s owner was a CAI lobbyist. Both the current association attorney and the previous attorney were CAI “gold” members.
are you a CAI contributor?
If you carefully check the annual budget of your association at your next general meeting, you just might find that your association dues are being used by your board of directors to support the CAIs efforts to suppress your property rights. Our board of directors made such contributions to the CAIs legislative action committee and many other boards do as well.
for their eyes only
The CAI raises money from its members to fight legislation that protects homeowners. They also must mobilize their membership when a legislative threat appears. To do this they have to publish information about their lobbying activities on their website, but that delicate information is available to members only. What is it they don’t want homeowners to know?
two faces: one for fiction one for fact
The CAI publishes many articles, pamphlets, and books on the subject of responsible governance of homeowners associations, and most of what is said is very rational and makes a great deal of sense. Unfortunately, all this literature is just public relations propaganda.
The CAI knows their HOA boards. They know there is no real danger of an HOA board actually taking any rational advice no matter the source. They know these people did not get involved only to defer to the homeowners. Industry operatives routinely ignore the advice given.
As another of my many integrity traps, I recommended many of the CAI’s publications to our board, but they refused to read them; and why should they? After all who is paying any attention to what they do anyway - the homeowners?
If you want to know what the CAI is really all about, just follow the exploits of their legislative action committees. It’s these activities, the ones they’re trying to hide, that reveal the true face of the CAI.
I do think I see a bit of a bright spot though, and I found it on their website. I was surprised to see how many testimonial type stories they were running on their home page about how much they were loved by CID homeowners. The topic dominated the home page offerings and seemed to be a very serious effort at damage control.
who says we like you?
All the information I have been able to gather over the years, with regard to homeowner approval of the CID housing industry, clearly shows the vast majority of CID homeowners are not at all happy with this industry. These tales of trust and devotion appear to originate from only one source: the CAI and its membership. I have never been able to find an independent, outside source that had anything kind to say about the CAI.
Chapter SixIIIChapter Eight