Hidden Hills May Ask Its Homeowners Group for a Bailout

It is difficult to imagine a city humbling itself to ask a homeowners association to bail it out of financial trouble.

Yet that is precisely what may happen in the affluent gated community of Hidden Hills, where the local homeowners association’s annual budget is twice that of the city government.

Obligated to pay a $1-million judgment over the next five years to a developer who successfully sued it, the Hidden Hills City Council has considered asking the Hidden Hills Community Assn. to buy some city property, including the building that houses City Hall.

The arrangement, which could provide the cash for the legal settlement while keeping the property from falling into the hands of outsiders, demonstrates the strange--sometimes strained--relationship that exists between the city and the quasi-governmental homeowners group.

It isn’t that the two bodies necessarily get along so much better than their counterparts elsewhere. It’s just that in Hidden Hills, the homeowners association and city officials represent the same constituency--the 2,000 residents of this entirely residential city--and band together to protect their rural haven in times of trouble.

But observers say that within the confines of the city gates, the two groups often bicker--over issues such as office space and whether each is carrying out its responsibilities.

“They are like sisters,” longtime resident and unofficial historian Bill Wilkinson said of the two bodies. “There are times when they could kill each other, but when they go to the prom, they will always look out for each other.”

The two institutions share the space in the small City Hall building, and the responsibilities of running the community are divided about equally between them.

Both entities are governed by elected boards: The city’s five City Council members are elected on a one-person, one-vote basis, and the community association’s seven directors are elected under a one-property, one-vote system.

The association is the older of the two institutions. It derives its powers from the covenants, codes and restrictions written when developer A. E. Hanson--who was landscape architect to stars such as Mary Pickford and Douglas Fairbanks--founded the community in the late 1950s. Hanson also established the community of Rolling Hills on Palos Verdes Peninsula, where the homeowners group operates under similar rules.

The CC&Rs;, which every property owner must agree to, give the association responsibility for such tasks as maintaining the roads and trails within the gates, trimming the trees and enforcing the community’s aesthetic standards--in other words, making sure that no properties are allowed to become eyesores.

If, for example, a house has a broken fence or mailbox, the community association can order the property owner to fix the problem. If the repair is not made quickly enough, the association will send its own workers and assess the property owners for the cost.

The community association, which also pays for operation of the two security gates that are the only entrances to Hidden Hills, employs a full-time professional staff of three and a maintenance crew of seven.

The city, which was incorporated in 1961 and is governed by a council that meets every two weeks, is responsible for fire and police protection, and for making sure that new buildings are structurally safe. The city has only a three-member staff and contracts with Los Angeles County for fire and police services and with private firms to run its planning department.

The city also handles all negotiations with county, state and federal government agencies.

The balance of power between the two groups was definitively tipped in favor of the community association by Proposition 13, approved by California voters in 1976.

The proposition strictly limited the ability of cities, including Hidden Hills, to increase revenue by raising taxes. The homeowners association was not subject to those restrictions and could raise additional money by increasing dues.

As a result, the community association has an annual operating budget of $1.5 million, as opposed to $700,000 for the city.

Because of the disparity, the City Council often looks to the homeowners association for assistance.

“The homeowners association has the clout that comes with money,” Wilkinson said.

For example, former association President Paul Gilbert said, when the city needed new furniture for the city swimming complex, the community association sprung for half the cost.

Mayor H. Brian Herdeg said recently that city officials have talked of selling City Hall and one of three public riding rings to the homeowners group to raise funds to pay a $1-million settlement to developer Danny Lasher--who sued the city for breach of contract over a failed project. Herdeg said no price tag had been put on the properties.

Association officials say they want to assist the city, although they said they do not think that they can afford to buy City Hall without increasing homeowners’ membership dues.

Monty Fisher, one of the association’s directors, said Hidden Hills residents would probably resist such an increase since the community association gave the building to the city as a gift several years ago.

Instead, Fisher said, the association may give the city money to cover an unrelated expansion of a storage building. That would free up city money to pay off the settlement with Lasher, he said.

“If we can help them, we will,” Fisher said. “We are all elected by the same people and I don’t think there is a member of this board that doesn’t feel that we are all in this together.”

But, as in any family, relations are sometimes less than amicable and break down into quibbling, particularly when one group believes that the other is stepping on its turf. They are “looking at similar problems through two different glasses,” Gilbert said.

Several years ago, city officials and community association members had intense discussions over operations of the Hidden Hills guard booths.

But the city finally relented on the issue--whether to hire professional security guards or local teen-agers to staff the gates--because the money for running the guard booths came from the community association, Fisher said.