Condo Media - October 2011 - 34

OPERATIONS

by Clifford J. Treese, CPCU, ARM, CIRMS

Why Community Associations Work
Four Primary Reasons Driving Continued Growth of Associations
t’s little surprise that the number of community associations in the United States has increased from just 10,000 in 1970 to almost 310,000 today. Associations accommodate growth in ways that are consistent with smart-growth initiatives. They are predicated on density, require attractive design for marketability and are organized to meet the financial sustainability necessary to support the privatization of services and infrastructure. There are four primary reasons driving the continued growth of associationgoverned communities, which include homeowners associations, condominiums, cooperatives and other planned communities. associations are created with the stipulation that the community will assume many responsibilities that traditionally belonged to local and state government. These obligations can include road maintenance, snow removal, trash pickup and storm water management. Many local jurisdictions delegate (or privatize) some of these functions by requiring that developers of residential properties create community associations that will take responsibility for these services. Privatization allows local jurisdictions to permit the continued development of needed housing with out having to pay directly for that infrastructure through the tax base. The developer is now required to build the infrastructure and then create an association to maintain it after development and sales are complete. This type of privatization is consistent with smart-growth practices that stress collaboration, density, efficiency and design. Expanding Affordable Homeownership. There has been a persistent effort to increase the percentage of homeowners in America, especially in underserved groups and in underserved locations such as in urban centers. Almost from their inception in the 1960s, condominiums have tended to serve as lower-cost housing, especially true of early condominium conversions, in which apartment buildings were refurbished into condominiums. Today, achieving affordability is a major challenge. Without the construction and operating efficiencies inherent in association development and operations, affordability would be an even greater problem. Minimizing Social Costs and Fostering Market Efficiencies. Community associations not only maintain home values, but also reduce the need for government oversight. Associations avoid: the “tragedy of the commons” (where no one is responsible) through mandatory membership and collective management; and the “free rider” problem (where not all beneficiaries pay their share) through mandatory covenants and agreements between associations and homeowners. These factors are consistent with trends toward privatization of public services and smart growth. Disputes and Conflict.Community association critics often ignore these four factors, focusing their attention on issues that garner media attention, such as disputes over fences, bird feeders, landscaping, flagpoles and yard signs. The reasons for the continued growth of associations and the value and benefits of these homeowner-governed communities are either ignored or misunderstood. Of course, there are disputes in associations, but they are relatively few in number and tangential to the actual operation and performance of community associations. In fact, the majority of Americans who live in community associations say they are satisfied with their associations. The community association concept works for municipalities, the U.S. housing market and the 62 million Americans who make their homes in common-interest communities. CM Clifford J. Treese, CPCU, ARM, CIRMS, is a past president of CAI and the Foundation for Community Association Research.

I

The Value of Collective Management. Americans have largely accepted the collective management structure of community association living. The private covenants and rules that are characteristic of associations are not novel in residential living. Similar restrictions often exist in rental apartment lease agreements and in zoning laws and building codes that govern traditional single-family, detached housing. In traditional housing, however, such restrictions are adopted and administered by public bodies rather than by the private governing boards composed of homeowners elected to lead associations and serve the best interest of communities. Privatizing Public Functions. Local jurisdictions often require builders and developers to create community associations if they want to construct new housing. Because of the fiscal challenges faced by many local municipalities,

34

CONDO MEDIA • OCTOBER 2011



Condo Media - October 2011

Table of Contents for the Digital Edition of Condo Media - October 2011

Condo Media - October 2011
Contents
From the CED’s Desk
President’s Message
CAI News
CAI Regional News
Asked & Answered
Homeowner’s Corner
Maintenance
Legal
Operations
2011 CAI-NE Annual Condo Conference & Expo
Vendor Spotlight
Legislative Update
Meetings
Board Member Insight
Advertisers Index
Classified Service Directory
Condo Media - October 2011 - Tip1
Condo Media - October 2011 - Tip2
Condo Media - October 2011 - Condo Media - October 2011
Condo Media - October 2011 - Cover2
Condo Media - October 2011 - BB1
Condo Media - October 2011 - BB2
Condo Media - October 2011 - Contents
Condo Media - October 2011 - From the CED’s Desk
Condo Media - October 2011 - 3
Condo Media - October 2011 - President’s Message
Condo Media - October 2011 - 5
Condo Media - October 2011 - CAI News
Condo Media - October 2011 - 7
Condo Media - October 2011 - 8
Condo Media - October 2011 - 9
Condo Media - October 2011 - 10
Condo Media - October 2011 - 11
Condo Media - October 2011 - 12
Condo Media - October 2011 - 13
Condo Media - October 2011 - CAI Regional News
Condo Media - October 2011 - 15
Condo Media - October 2011 - 16
Condo Media - October 2011 - 17
Condo Media - October 2011 - 18
Condo Media - October 2011 - 19
Condo Media - October 2011 - 20
Condo Media - October 2011 - 21
Condo Media - October 2011 - Asked & Answered
Condo Media - October 2011 - 23
Condo Media - October 2011 - Homeowner’s Corner
Condo Media - October 2011 - 25
Condo Media - October 2011 - Maintenance
Condo Media - October 2011 - 27
Condo Media - October 2011 - 28
Condo Media - October 2011 - 29
Condo Media - October 2011 - Legal
Condo Media - October 2011 - 31
Condo Media - October 2011 - 32
Condo Media - October 2011 - 33
Condo Media - October 2011 - Operations
Condo Media - October 2011 - 2011 CAI-NE Annual Condo Conference & Expo
Condo Media - October 2011 - 36
Condo Media - October 2011 - 37
Condo Media - October 2011 - 38
Condo Media - October 2011 - 39
Condo Media - October 2011 - 40
Condo Media - October 2011 - 41
Condo Media - October 2011 - 42
Condo Media - October 2011 - 43
Condo Media - October 2011 - 44
Condo Media - October 2011 - 45
Condo Media - October 2011 - 46
Condo Media - October 2011 - 47
Condo Media - October 2011 - Vendor Spotlight
Condo Media - October 2011 - 49
Condo Media - October 2011 - Legislative Update
Condo Media - October 2011 - 51
Condo Media - October 2011 - 52
Condo Media - October 2011 - 53
Condo Media - October 2011 - Meetings
Condo Media - October 2011 - 55
Condo Media - October 2011 - 56
Condo Media - October 2011 - 57
Condo Media - October 2011 - 58
Condo Media - October 2011 - 59
Condo Media - October 2011 - Board Member Insight
Condo Media - October 2011 - 61
Condo Media - October 2011 - 62
Condo Media - October 2011 - 63
Condo Media - October 2011 - 64
Condo Media - October 2011 - 65
Condo Media - October 2011 - Classified Service Directory
Condo Media - October 2011 - 67
Condo Media - October 2011 - 68
Condo Media - October 2011 - 69
Condo Media - October 2011 - 70
Condo Media - October 2011 - 71
Condo Media - October 2011 - 72
Condo Media - October 2011 - Cover3
Condo Media - October 2011 - Cover4
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