The Graduate School

Research And Opinion

Vol. 9, No. 1a
May 1995

Residential Community Associations:
The First Level of Territorial Democracy in America

by Brett W. Hawkins, Stephen L. Percy and Eric Magistad
University of Wisconsin-Milwaukee

Associations that govern condominiums and residential subdivisions are little recognized and often not understood, even by specialists in local government. If they were, no one speaking of public services in the United States would refer to the services provided by 83,000 local governments and overlook the fact that many of the same services are provided by 150,000 quasi-governments.

"Residential community associations" (RCAs) are private bodies that govern communities of homeowners. RCA communities range in size from one apartment-like building to a cluster of buildings or detached single-family houses and, typically, are organized in one of three forms: condominium associations, homeowner associations, and cooperative associations.

RCAs are worthy of attention for reasons that go beyond their provision of government-like services. They "tax" members to pay for services through a system of mandatory fees and they regulate member behaviors (e.g., changes to outside building facades). Virtually all of them operate through elective institutions (ACIR, 1987: p.10), albeit on the basis of one-unit-one-vote (or the value of the unit) rather than one-person-one-vote. Because they function in many ways like local governments, RCAs may be viewed as enlarging the right of Americans to govern themselves within units of territory (De Tocqueville, 1900 {written in the 1830's}; Syed, 1966; Elazar, 1972). Just as an assortment of local governments amplifies the opportunities that citizens have to locate and relocate in communities that match their life styles and service preferences -- and to exercise a meaningful voice in local affairs -- associations that govern residential communities also amplify citizen options for exit, entry, and voice (Hirschman, 1970). RCAs reflect the fact that in urban regions human needs, interests, and policy preferences cluster together spatially; that is in neighborhoods.

While resembling governments, RCAs are not legally governments. They are private entities. RCAs are created through covenants attached to deeds for private property. Clauses in deeds compel people who buy some lots, condos, or cooperatives to become association members, pay fees, and abide by association rules.

In other words, community associations are not created by government fiat but instead by citizens buying property from developers. They are established, however, with local government approval of subdivision or condominium "plats" (plans of buildings or lots, access roads, and utilities) on which RCAs form (for details see Dilger, 1992, Chapter Two). State laws govern RCA mortgages, incorporation, and the enforcement of rules. An RCA may be characterized as a common interest organization with shared property rights that serve as the foundation of local self-governance (Oakerson, 1992; Barton and Silverman, eds., 1994: Preface). Because RCAs are communities of people with shared interests, they are sometimes called "common interest communities" and "common interest developments." The interest that is shared may be as simple as that of young families wanting the benefits of home ownership but unable to afford a single-family detached house, or elderly people wanting to be free of yard work (Dilger, 1992: p. 51). Beyond that, some RCAs offer a measure of small town America in which one can live, shop, play, and perhaps work with others who value the same kind of community (Louv, 1983: p. 91). RCAs also attract people with an interest in special amenities such as health care, golf, adults only, or security arrangements (Louv, 1983: 108-120).

To critics, these features of RCAs smack of withdrawal from the wider community, escapism, exclusionary facilities, and -- because many RCAs are home to the well-off -- segregation by class (Louv, 1983 and Barton and Silverman, 1994). But to supporters, RCAs represent a basic right to act in concert with people like themselves to address common interests, a right that all kinds of Americans want and actually exercise through a variety of institutional arrangements (Ostrom, 1983). RCAs are not restricted to a wealthy elite; instead contemporary RCAs contain "almost all income groups" (Barton and Silverman, 1994: Preface).

For thirty years, RCAs have assumed a rising importance in the arrangements that Americans make to organize and govern themselves. In order to better understand the contemporary status, purposes, and operations of RCAs, the Urban Research Center at the University of Wisconsin-Milwaukee, and the Research Foundation of the Community Associations Institute (CAI) of Alexandria, Virginia, collaborated during 1994 in conducting a study of RCAs across the country.

Research Plan and Methodology

The UWM Urban Research Center and the CAI Research Foundation designed and administered a seven-page mail questionnaire which included questions on the form of the association, size, financial arrangements, intergovernmental relationships, types of services provided, and arrangements for service delivery.

The mail survey was sent to 1,650 randomly selected RCAs which are among the 7,298 members of the Community Associations Institute as of December 1994. The survey was initially mailed out in mid-April, 1994; a second mailing to those who had not returned their survey was sent out in June to enhance response rate. Through these two mailings, 627 responses were received for a response rate of 38%.

Basic Characteristics of RCA's

Association Type

Of the three forms of RCAs, condominium associations dominate the field; of 627 survey respondents, 60% of the RCAs identify themselves as condominium associations. Thirty six percent of surveyed RCAs identified themselves as homeowner associations and 4% as cooperative associations. In condominium associations, a homeowner holds title to an individual residence and common title with other members to the common spaces of the condominium. The association manages but does not own the common property. In a homeowner's association the member owns the interior and exterior of an individual home, and a plot of land around it. The association owns and manages common properties, which may include streets, opens spaces, and recreation facilities. A cooperative is an apartment building owned by an organization of tenants, with each tenant's share determined by the value of the unit he or she occupies (ACIR, 1989).

Table 1 - Form of RCA

Type of Association     Percent  
Condominium Association	60.2%
Homeowner Association	35.8%
Cooperative Association	3.7%
Other 	                0.3%
Source: National Mail Survey of Residential Community Associations, 1994.

Structural Type

In addition to the three basic forms of community associations, RCAs vary with respect to building numbers and structures. Of all RCAs surveyed, 28% report that their association is composed of some arrangement of mid- or high-rise buildings, while 53% are made up of one or two story multiple family dwellings (see table 2). Nineteen percent of our respondents represent associations of detached single-family homes located in a residential subdivision.

Table 2 - Structural Type of RCAs

Association Description                                Percent
One 'mid-rise' building with many units	               9.3%
One 'high-rise' building with many units               8.4%
Several mid or high-rise buildings with many units     10.5%
Several one or two story buildings in a compact space  21.3%
Multiple family homes or townhouses in an area like a 
residential subdivision with streets 	               31.7%
Detached single-family homes in an area like a 
residential subdivision with street                    18.5%
Other                                                  0.3%
Source: National Mail Survey of Residential Community Associations, 1994.

Organizational Size

Table 3 draws attention to the diversity of RCAs and reveals that they can differ enormously in size. While the number of units in an RCA ranges from 1 to 7,500, the mean number of units is 240, and the median is 106. Nearly half of all associations include fewer than 100 residential units. Similarly, nearly 75% of all RCAs have fewer than 200 members.

Table 3 - RCA Size

Size of Association   Percent
1-99 units            47.5%
100-199               25.0%
200-299               11.5%
300-399                5.5%
400-499                2.7%
500 and above          7.8%
Source: National Mail Survey of Residential Community Associations, 1994.


RCAs charge fees ("assessments") to support their operations. During fiscal year 1992, 28 percent of RCAs assessed by size of the residential unit, with a mean assessment of $309 while 388 of them (62 percent) assessed every unit the same, with a mean of $167. Thirty-one use some other assessment method. The more the assessment income, of course, the greater the RCA ability to function as a service provider.

To gauge the value of the units in our sample of RCAs, respondents were asked about the average resale value of the units. The mean resale value was $152, 217, with 23 percent of the units valued at $80,000 or less and 18 percent at $200,000 or more.

With regard to expenditure patterns, the range of RCA spending was enormous and in some ways surprising. One RCA spent a total of $800, while at the other end of the spectrum, one spent $7,500,000. The mean of annual RCA spending for 1992 was $354,747.

Table 4 reports information on the sources of RCA revenue including membership assessments, special assessments, user fees for association facilities, earnings on investments, intergovernmental grants, and other sources. Unsurprisingly, the biggest share of total revenue sources comes from membership assessments. Nearly 88% of all RCA revenue came from mandatory monthly assessments on each unit. An additional 3.4 percent of revenue came from special assessments to finance needed repairs of common area elements (Kennedy, 1991) and 2.5 percent came from earnings on reserve funds.

Many RCAs have sizable reserve funds to pay for unexpected repairs and replacements. The average RCA had $161,025 in reserve, an amount about $9,000 more than the value of the average residential unit.

Table 4 - Sources of RCA Revenue

Revenue Source 	                               Revenue (dollars)  Percent of Total
Membership Assessments	                         $176,407,655.90    87.7%
Special Assessments                                 6,883,589.09     3.4
Earnings from investments or savings accounts	    5,079,953.94     2.5
User or rental fees for association facilities	    3,187,381.86     1.6
Money Borrowed	                                    2,415,975.14     1.2
Vending/laundry machine	                              868,511.91     0.4
State and Federal government grants                      9000.00     0.01
Grants from private sources                               736.00     0.01
Other	                                            6,271,435.91     3.1
Total Revenue 	                                  201,124,239.80 	
Source: National Mail Survey of Residential Community Associations, 1994.

Management Relations

The majority of RCAs are governed by an elected board of directors. Virtually all RCAs are "self-governed" - operating independently of other associations and governed by a single board (ACIR, 1989). The survey data show, however, that RCAs tend to be managed by very few individuals. The majority of RCAs employ no one at all. Table 5 reveals that 62% of all RCAs claim to have no full-time workers, while 58% have no one employed part-time. Clearly, RCAs tend to operate with small-scale management.

Table 5 - RCA Full and Part-time employees

Number of Employees     paid full-time staff  paid part-time staff
none                    61.5%                 57.6%
1-10 employees          31.3%                 38.1%
more than 10 employees   7.2%                  4.3%
Source: National Mail Survey of Residential Community Associations, 1994.

In addition to size, RCAs vary in administrative composition. Table 6 specifies at least three different methods by which RCAs manage themselves. Professional management companies are the most popular method of managing an RCA. Nearly 40% of all RCAs say that they employ an outside company to attend to the managerial and administrative functions. Nearly 30% utilized unpaid volunteers of the association to oversee RCA matters, and 14% use paid residents of the association to perform management functions.

Table 6 - Method of Association Management

Management Method                                   total
By a professional management company                38.8%
By volunteers (self-managed)                        28.8%
By on site management employees of the association  14.3%
Other	                                            18.1%
Source: National Mail Survey of Residential Community Associations, 1994.

RCAs and Intergovernmental Relations

RCAs resemble formal governments in that they are nested within, and sometimes interact with, other governing bodies. The most-local units of government -- cities, villages, townships, and school districts -- are overlapped by counties, metropolitan districts, and states. People in the most-local units sometimes turn to the overlapping ones to meet their particular needs, or the needs they share with people living in other jurisdictions. For example, several nearby municipalities may share an interest in the clean water provided by a water authority, in the bus services of a county, or in the state's method of allocating intergovernmental aid. In addition, jurisdictions at the same level may cooperate with one another to address common problems, such as the maintenance of a border street.

RCAs are nested at the bottom of this complex arrangement. Seventy-nine percent of surveyed RCAs are located within a city or village, and all of them are located within a county, town, or parish. Like formal governments, RCAs may cooperate with, make demands of, or seek services from a variety of jurisdictions, and occasionally from other residential community associations or regional planning bodies. (The latter are government agencies but not units of government.) RCAs occupy the first level of local self-government for many Americans.

RCAs in this study were asked about eighteen kinds of connections between their association and local governments and other RCAs. Fifteen percent of our RCAs have had a connection to a regional planning body during the previous two years. Such a contact may mean an informal meeting with a regional planning body that might enable an RCA to make recommendations regarding RCA zoning issues or ordinances. Similarly, 40 percent of RCAs surveyed have had a relationship with another RCA. Such a relationship could also include an informal meeting, although it may consist of something as simple as sharing recreational facilities or holding a picnic with another RCA.

One of the more interesting RCA connections to formal government is an agreement that permits a nearby jurisdiction to enforce local ordinances -- animal, traffic, and parking control for example -- on association property. Twenty percent of RCAs have such an agreement. Twenty six percent of them have an agreement with a nearby government that permits the jurisdiction to provide a "public service," such as trash pick-up, on association property. Five percent of them have an agreement permitting a nearby local government to step in and provide services in case of a financial emergency by the RCA.

About 10 percent of surveyed associations have lobbied a nearby local government for favorable treatment, either not to locate some facility (such as a housing project) nearby or to provide tax relief for services that the jurisdiction does not provide to taxpaying members but the association does. On the other hand, only 3 percent of our RCA's have been lobbied by a state or local government to take some action that affects the association's property, such as removing speed bumps or allowing public parking on RCA streets.

RCAs and Service Delivery

As recent history suggests, RCAs have typically functioned as service providers where local government has passed on the responsibility of certain services to the developer (Barton and Silverman, 1994; McKenzie, 1994). While data is scant on the extent to which RCAs effectively "substitute private for public expenditures", the fact that RCAs competently relieve local government of some of the burden associated with providing service is indisputable. Looked at another way, RCA services supplement governmental ones in ways that RCA members specifically choose.

Data presented in Table 7 specify services most commonly offered by Residential Community Associations. The values of this table range from 96% of all RCAs surveyed offering some type of landscaping to 1.2% of them providing some type of day care service. After landscaping , garbage collection (79%), water (77%), and sewer (75%) are the most frequently provided RCA services. Just less than two thirds of RCAs provide street lights, 64 percent offer street maintenance, 62 percent provide sidewalks, and 60 percent provide and maintain swimming pools. Other services provided by RCAs include security and crime prevention, snow removal, alternative dispute resolution, tennis courts, golf courses, and elder care.

Table 7 - Types of Service Provision by Residential Community Associations

Service       Percent of RCAs Providing Service 
Landscaping	                    95.9%
Garbage pick-up	                78.7%
Water	                        77.2%
Sewer	                        75.2%
Street lights	                65.0%
Street maintenance              63.9%
Sidewalks                       61.9%
Swim pool                       60.3%
Security/crime prevention       48.1%
Snow removal                    43.0%
Alternative dispute resolution	27.1%
Tennis                          26.1%
Golf                             3.8%
Elder care services              2.4%
Day care services                1.2%
Source: Mail Survey of Residential Community Associations, 1994.

While RCAs may provide a wide-range of services, the manner in which they provide it may differ substantially from one association to the next. Table 8 describes the different methods by which RCAs provide services. The table shows that RCAs often contract with private firms when providing services to their members. For example, 70% of all RCAs that furnish landscaping services do so through a contract with a private firm. The most important observation to be made is that when RCAs do function as service providers, an overwhelming number of them choose private firms to provide everything from landscaping and sanitation services (55%) to recreational facilities (e.g., swim pool (34%)). Even among services offered less often, the small percentage of RCAs that do provide eldercare and day care services to residents employ private firms to do so as often as any other method of service delivery.

While private firms unquestionably remain the most popular method of service provision, the contribution of paid association employees and resident volunteers should not be overlooked. Most prominently, employees/volunteers account for 21% of all landscaping services, 18% of all street lights, 14 % of all alternative dispute resolutions, and 12% of all sidewalks furnished by the RCA. In addition, Association employees/volunteers provide 24% of all swimming pools and 17% of all tennis courts.

Nearby municipalities also provide a number of services to RCAs. Of all RCAs that provide water and sewer service, 45% do so through a contract with a nearby municipality. Governments other than municipalities are also used to supply water and sewers. Of the 59% of RCAs that offer water, 5% do so through a special district, and 9% through the county encompassing the RCA. Seventy-five percent of all RCAs provide a sewer system including 4% by a special district, and 9% by the county.


Residential Community Associations come in all shapes and sizes and are more than mere neighborhoods; they represent a community of citizens and decision makers who, like governments, make choices in pursuit of the community interest. While RCAs are not local governments, they have power - power to provide services, make property assessments, and compel members to follow association rules. Given the enormous growth of RCAs in the United States over the last forty years and their broadening role in local affairs, there can be little doubt that the residential community associations' impact upon America's local polity warrants further investigation.


Advisory Commission on Intergovernmental Relations. 1987. The Organization of Local Public Economies: A Commission Report. Washington D.C.

Advisory Commission on Intergovernmental Relations. 1989. Residential Community Associations: Private Governments in the Intergovernmental System? Washington D.C.

Barton, Stephen, and Carol Silverman eds. 1994. Common Interest Communities. Berkeley, CA: Institute of Governmental Studies Press.

DeTocqueville, Alexis. 1900. Democracy in America. Vol. 1. New York: P.F. Collier and Son.

Dilger. Robert Jay. 1992. Residential Community Associations in American Governance. New York: New York University Press.

Elazar, Daniel. 1972. "Federalism." in International Encyclopedia of the Social Sciences. Vol. 5. Ed. David Sills. New York: Macmillan Company and the Free Press.

Hirschman, Albert O. 1970. Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Cambridge: Harvard University Press.

Kennedy, Michael. 1991. "Borrowing for Major Repairs," Association Bank Services, Bank of San Francisco. Louv, Richard. 1983. America II. Boston: Houghton Mifflin.

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McKenzie, Evan. 1994. Privatopia. New Haven: Yale University Press.

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Ostrom, Elinor. 1983. "The Social Stratification - Government Inequality Thesis Explored." Urban Affairs Quarterly. 19: 91-112.

Syed, Anwar. 1966. The Political Theory of American Local Government. New York: Random House.


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