Chapter 6: Phoenix – Shadow Government

DOROTHY KRUEGER, sixty-one, stood squarely amid the rust-golden grit of the Sonoran desert. She wore orange-red lipstick, bright yellow earrings, blue sweat pants, new white Reeboks, two gold chains, and a matte black semiautomatic Glock 17. There were seventeen bullets in the grip of the pistol. On the webbed black belt around Krueger's waist hung two more clips—for a total of fifty-one rounds—inside the tooled leather cases that matched her holster.

Krueger fired at a human silhouette target first with her strong hand, then her weak hand, then with both hands. She shot quickly, three rounds in four seconds, timed with a stop watch. From three yards, seven yards, fifteen yards, twenty-two, she blazed professionally. Five points for a chest shot. Only two for the head. On order, she reloaded from the belt. "You never want to holster an empty weapon" came the fierce scold of the instructor over the loudspeaker. Up and down the line, the thirteen senior citizens—most of them noticeably older than Krueger—quickly complied.

Jack Goodrich and Dick Schiefelbein wore the brown shirts of their uniforms crisply creased; their badges shone brightly in the Arizona sun. They watched Krueger, a candidate for promotion, critically. These two commanding officers of the Sun City Posse, seventy-one and fifty-eight respectively, had always preferred the .357 Magnums hanging on their belts. But as the cacophony of firepower erupted and slugs volleyed in bursts of dust into the backstop of a flood-control canal, they could see why Krueger liked her Glock. With plastic parts, it was lighter and easier to draw and aim than their enormous six-guns. It was also much quicker to reload. No wonder the "bad guys," as they put it, had come to favor that handgun—causing many police forces to switch to the new 9mm standard. And no way was the Posse going to be behind the times.

After all, the Posse had an image to uphold. The uniforms of its members—which included everyone on the Posse-owned firing range—were virtually identical with those of the county's deputy sheriffs, right down to the handcuffs and the Mace. The Posse's full-sized Chevrolets, with the flashing lights on the roof and the star painted on the doors, were also practically indistinguishable from the real police. The Posse's equipment, of course, tended to be newer than that of the police. And their headquarters featuring a color portrait of John Wayne was bigger than the nearby substation. Their big brown beaver Stetsons were more beautiful. For that matter, their shooting range Was nicer.

But then again, there were 183 members of the Sun City Posse—far more than there were police officers in the area. That was why this partnership between the privately funded, privately organized Posse and the Maricopa County Sheriff's Department was formed, Goodrich explained.

"In the days of the Wild West, the sheriff would go into a bar and pick out four or five people and deputize them and go out and catch the bad guy," Commander Goodrich said. "Now bring it up to modern status, why, we are on a continuing posse status. They don't let us go when the job is done. we just keep doing it. We're a permanent crime-control posse."

Sun City, Arizona, on the west side of metropolitan Phoenix, bills itself as the largest "adult" community in the world. It has ten shopping centers and forty-six thousand residents. It is a privately owned development that has fervently resisted incorporation into any municipality in order to avoid a new level of taxation. But, though private, it has taken on many trappings of a city. It runs everything from libraries to parks to swimming pools to an art museum to a crisis-counseling hotline to a fire department to a symphony orchestra. The squad cars of its legally franchised, armed, unpaid private posse routinely patrol the public streets. Its innocuously named Recreation Association, meanwhile, has the power to assess fees that are functionally indistinguishable from taxes. If a homeowner does not pay the fees, the association has the legal right—so far unexercised—to slap a lien on that person's house and sell it at auction.

Sun City is by no means an aberration. It represents several forms of private-enterprise governments—shadow governments, if you will—of which there are more than 150,000 in the United States. These shadow governments have become the most numerous, ubiquitous, and largest form of local government in America today, studies show. In their various guises shadow governments levy taxes, adjudicate disputes, provide police protection, run fire departments, provide health care, channel development, plan regionally, enforce esthetic standards, run buses, run railroads, run airports, build roads, fill potholes, publish newspapers, pump water, generate electricity, clean streets, landscape grounds, pick up garbage, cut grass, rake leaves, remove snow, offer recreation, and provide the hottest social service in the United States today: day care. They are central to the Edge City society we are building, in which office parks are in the childrearing business, parking-lot officials run police forces, private enterprise builds public freeways, and sub-divisions have a say in who lives where.

These shadow governments have powers far beyond those ever granted rulers in this country before. Not only can they prohibit the organization of everything from a synagogue to a Boy Scout troop; they can regulate the color of a person's living room curtains. Nonetheless, the general public almost never gets the opportunity to vote its leaders out of office, and rarely is protected from them by the United States Constitution.

"The privatization of government in America is the most important thing that's happening, but we're not focused on it. We haven't thought of it as government yet," notes Gerald Frug, professor of local government law at Harvard.

These governments are highly original, locally invented attempts to bring some kind of order to Edge Cities in the absence of more conventional institutions. Edge Cities, after all, seldom match political boundaries. Sometimes they do not even appear on road maps. Few have mayors or city councils. They beg the question of who's in charge. Are these places exercises in anarchy? Or are they governed by other means?

The answer is—government by other means. Nowhere was that more clear than in Phoenix in the early 1990s.

Objectively, metropolitan Phoenix should have been writhing in anarchy by 1991. It seemed as if the entire leadership class had been decapitated. Arizona had been functionally without a governor since the mid-1980s, when the former Pontiac dealer Evan Mecham squeaked into office with a minority of the vote and then disgraced himself so badly that the ensuing impeachment proceedings were launched by his fellow Republicans. The relentlessly pro-growth old-boy elite called the Phoenix Forty had lost control of events when Terry Goddard, a political outsider who championed neighborhood power, became mayor. Then Goddard quit the mayor's job to run for governor—an election he lost. In Phoenix, his void was filled by a new mayor who meant well, but he was a thirty-one-year-old contractor who hadn't finished college.

Meanwhile, the majority and minority leadership of the state legislature had almost completely turned over. High-rolling developers who had overbuilt Phoenix's commercial real estate market by 30 percent dropped like citrus after a heavy frost. The region's most prominent bankers disappeared as their institutions were gobbled up by Los Angeles and New York giants like Security Pacific and Citibank. The area's savings and loans were devastated by the federal clean-up of the industry. The very symbol of that scandal nationwide became Charles H. Keating, Jr., once the most visible man in Phoenix. Keating's campaign contributions and influence peddling tarnished most of the state's congressional delegation, not to mention senators from California, Michigan, and Ohio.

Paradoxically, in the middle of all this the number of jobs in Phoenix continued to grow. So did the number of immigrants. Phoenix even became recognized as a national model for ways to bring life and civilization and esthetic appeal to downtown and Edge Cities.

How could this be?

At least partially, the answer was shadow governments. While highly visible institutions took a beating, thousands of low-profile, small—and sometimes not so small—regimes filled the vacuum, taking on power and the responsibility for running daily life. To the extent that means for getting things done became highly dispersed, localized, and privatized, they were shielded from the damage to public institutions.

Edge Cities nationwide display an ingenious array of' such shadow governments. These shadow governments are usually organized like corporations and given names that do not begin to hint at their power. But they can be broadly grouped into three categories:

• Shadow governments that are privately owned and operated, such as homeowners' associations that can rigidly control immense residential areas. Typical of those in the Phoenix area are the Arrowhead Ranch Homeowners Association in Glendale and Leisure World in Mesa.
• Shadow governments that are quasi-public institutions but have accrued power and influence far beyond their original charter. Typical of those in the Phoenix area is the Salt River Project.
• Shadow governments that occupy a murky area between these private and public sectors. They are often referred to as public-private partnerships. Typical is the Downtown Management Partnership of the Phoenix Community Alliance.

• They can assess mandatory fees to support themselves: the power to tax.
• They can create rules and regulations: the power to legislate.
• They have the power to coerce, to force people to change their behavior: the police power.

• The leaders of shadow governments are rarely if ever directly accountable to all the people in a general election.
• When and if these leaders are picked in a private election, the vote is rarely counted in the manner of Jeffersonian democracy, with each citizen having a voice. Instead, it is usually one dollar, one vote.
• These leaders are frequently not subject to the constraints on power that the Constitution imposes on conventional governments.

Take Don Smith, for example. In the press, he has been labeled The Enforcer. He rather fancies that designation. Smith was an FBI agent for twenty-five years. But now he is the "field supervisor" of Arrowhead Ranch, not far from Metro Center, the emerging Edge City in northwest Phoenix. Arrowhead Ranch is a subdivision of almost two thousand homes run by a homeowners' association. That shadow government reaches farther into the lives of its more than three thousand members than any ordinary government has ever been allowed to in America.

The Arrowhead Ranch homeowners' association, for example, passed a law that dictates what residents in its subdivision may or may not park in their own driveway—on their own land. This shadow government does not like the looks of campers, commercial vehicles, motorboats, motorcycles, buses, travel trailers, and motor homes. In fact, it will not put up with an unstacked pile of firewood. And what the Arrowhead Ranch homeowners' association says, goes.

Recently, Smith relates, a homeowner at Arrowhead Ranch parked a Winnebago-like motor home on his private property, beside his house. The shadow government sicced Smith on the perpetrator, and Smith sent the homeowner what he calls a "gig letter," pointing out the offense. When the homeowner did not shape up, the association responded with lawyers. They filed suit in Maricopa County Superior Court—"the same court where you try a homicide case," Smith observes pointedly—demanding a permanent injunction against the offender. When the homeowner resisted, the judge not only backed the association, but demanded that the winnebago owner pay almost $2000 in the association's attorneys fees, in addition to his own. There is no reason to think the homeowner has not learned his lesson. But if he ever parks that Winnebago next to his house again, it could mean jail. Contempt of court. "You bought yourself a definitive ruling," the judge told him from the bench. In other words, this Maricopa County court may plop a citizen in a public jail if he fails to obey a privately owned and operated shadow government.

Another homeowners' association Smith works for is that of Pinnacle Peak Estates in swanky Scottsdale, the Edge City to the northeast. There, the average home is worth perhaps $400,000. Yet the shadow government has decided it will not permit anyone to grow a lawn on his own property. In fact, it has "plant police," who control what homeowners are allowed to grow in their ground, because this shadow government has decided that the only horticulture it chooses to allow is that native to the desert. One man with the silly idea that his home was his castle planted a hedgerow of eucalyptus trees in his back yard without the approval of the architectural committee. It ended up costing him over $20,000, Smith estimates. That would be the cost of the trees, plus the lawyers he had to hire to defend himself against the shadow government, plus—when he lost—the court costs of the shadow government's lawyers. Then, of course, he incurred the cost of cutting down the trees.

These are hardly isolated cases. "If you want a new home, it is increasingly difficult to get one that doesn't come with a homeowners' association," said Douglas Kleine, a consultant and former research director for the Community Associations Institute (CAI), the national trade group for private-enterprise shadow governments that includes condominium, co-op, and townhouse associations as well as planned urban developments. The CAI estimates there are at least 130,000 of these shadow governments nationwide.

The powers of the shadow governments derive from the idea that subjecting oneself to them is a voluntary act. When a family chooses to buy a particular home, it is legally presumed that. they fully understand what such an association really means to their lives.

However, once that house is chosen, membership in the community association is not voluntary. Neither is compliance with the association's rules. Embedded in the deed are "covenants, conditions, and restrictions"—invariably pronounced cee-cee-en-ares—that make obedience mandatory. And the enforcement powers are awesome. "Your peers, the community association, have the power to take your house away from you," Kleine explains. "They also have the power to go into small claims court and have the sheriff go after the TV set. And they have the power, usually, to suspend certain privileges—or rights, depending on your definition—including the right to vote. It's like the old poll tax. If you didn't pay your tax, you can't vote." They can regulate how many pets you may have, what size those pets can be, and where you may walk them. They can regulate whether or not you may live with your children. Charles Keating buried C C & Rs in the deeds of one of his most ambitious Phoenix developments, Estrella, that banned "pornographic" films, books, magazines, and devices from a homeowner's bedroom.

In Mesa, where another Edge City is growing southeast of central Phoenix, John Lafferty once found himself facing two problems. Lafferty is the administrator of the community association of Leisure World, a walled development with almost five thousand residents. He is a paid professional who reports to a board of directors elected by homeowners grouped in districts; he is in effect the city manager of a shadow government with a budget of over $5 million.

The first problem was an illegal immigrant—a physician, forty-two. The doctor had had a nervous breakdown and become incapable of working or taking care of himself, so his parents had brought him into their home.

The problem was that Leisure World has a law that no one may live there who is under forty-five. If the parents wished to continue to care for their broken son, they had to move. They were very understanding, Lafferty said. They were going quietly. But they were going. They were leaving their home. They understood the association would enforce its rules if it had to There was no doubt about that.

The second problem Lafferty faced was the newspaper. It seems that the developer of Leisure World, Western Savings and Loan, had long published one that was circulated for free, available for the taking from racks placed in the common areas. Western also made the paper widely available outside the walls, since a publication trumpeting all of Leisure World's activities was thought to boost real estate sales. Every supermarket and drugstore within sight of the Superstition Mountains carried copies, and Leisure World News became quite an institution, with a full-time editor and a circulation of fifteen thousand. Because it delivered an affluent market, it attracted a healthy ad base, which swelled the size of the paper to as many as ninety-six pages.

Then Western was taken over by the wrathful federales of the Resolution Trust Corporation, who could not imagine why they should be in the newspaper business. So they stopped paying for the publication. This created a void for the management of Leisure World, which had always used the publication as its house organ. It also created a void for Doris Mathews, the paper's editor, who was going to be without a job. Mathews, like a good Arizona capitalist, decided to take over the paper and keep it going as an independent voice.

But here was the hitch: the First Amendment does not force shadow governments to allow freedom of the press. Less than eager to encourage a Leisure World newspaper over which he had no control, Lafferty prohibited the distribution of Mathews' paper from its traditional racks in the common areas. Mathews retaliated by getting friends to distribute the paper. But Lafferty was holding the aces.

Lafferty's shadow government is a private corporation. The common grounds of Leisure World are private property that the shadow government controls. Therefore, Lafferty can start up his own newspaper and, with rare effectiveness, suppress competing voices. A conventional government would never be allowed to force all of a newspaper's vending machines off the public sidewalks. But Lafferty legally may pull the distribution boxes of any newspaper he doesn't like—even the Arizona Republic, the state's foremost daily—if he chooses. If his action squelches Mathews' paper—if she finds it prohibitively expensive to distribute her newspaper by mail, or if she loses advertisers because of her distribution problems and is run out of business—those are the breaks.

Mathews—who describes herself, accurately, as looking like Aunt Bee in The Andy Griffith Show—acknowledges Lafferty is completely within his rights. The Constitution says only that regular, aboveground governments "shall make no law . . . abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble."

But that is the key distinction about a shadow government. It is not a regular government, even if the association does hold elections for its board of directors. Private corporations have broad powers over private property.

"They are setting up internal courts," Kleine points out. "Due process may be desirable, but it is not required. The Fourteenth Amendment does not apply." The Fourteenth Amendment guarantees equal protection for all. "The application of the Fourteenth Amendment would cause all kinds of things. It would subject the board of directors to the Voting Rights Act. If you're elected by district, and you wanted to redraw those lines, you'd have to go to the Justice Department. You couldn't have one dollar, one vote, or one house, one vote.

"The First Amendment? The association newspaper is a house organ. It's just like a company newsletter. It's there for us to communicate with you, not for you to communicate with each other." That is why the Leisure World paper—on purpose—never had a letters-to-the-editor page.

Defenders point out that homeowners readily obey and encourage shadow governments. And indeed, such units are very successful at what they do They control nuisances and unpleasantness and keep the community swimming pool clean. Thus, property values rise. These disciples further observe that if the larger society finds the actions of these private governments objectionable, it is not without recourse. The power of homeowners' associations is based on the covenants written into the deeds. In decades past, offensive covenants—such as those prohibiting house sales to blacks and Jews—have been thrown out when challenged in court.

These supporters also point out that shadow governments devise new solutions to the new problems that Edge City faces every day. If conventional governments had been doing such a great job, people would not have felt obliged to invent new forms, taking governance into their own hands, this argument goes. Perhaps. But such opportunities as arise, these shadow governments certainly seize. Take the quasi-public shadow government called the Salt River Project.

The land around Phoenix is martini-dry. The only reason a city exists there at all is that as long ago as the time of Christ, humans of the Hohokam tribe recognized that by the standards of the Sonoran desert, the Valley of the Sun can be made water rich. These native Americans built a 250-mile canal system that permitted an advanced civilization to support twenty thousand people. For reasons that remain a mystery, the Hohokam disappeared from the valley just before Columbus sailed. A century and a half later, the Spanish showed up and gave the name Rio Salado—Salt River—to the broad gravel bed from which the canals radiated. A miner, scout, and Confederate cavalry veteran named Jack Swilling reintroduced canal building to the area in the late 1800s. Then, in 1902, President Teddy Roosevelt championed the National Reclamation Act, which provided government loans to "reclaim" western lands with irrigation projects. Metropolitan Phoenix rose around the bed of the Salt River because, in 1903, the shadow government called the Salt River Project was born.

Jack Pfister (pronounced Feester) is the general manager of the Salt River Project. His chaste reaction to my initial questions was "I would not describe the Salt River Project as a form of regional government—because of our limited functions, basically only delivering water,vith the power business being supplementary to that."

Nonetheless, this shadow government has vastly more influence over the lives of the people of Phoenix than do most conventional governments.

In the dry Southwest, water is the linchpin of the universe. With water you can create charming cities, fields of agricultural plenty, thriving industry, or wild rivers that charge the spirit. But there's not enough water to have all four. Who gets what is determined in a highly expensive, complex, and politicized fashion. And in central Arizona, that means the Salt River Project. An entity like the Salt River Project, which determines the price and availability of electricity, has the power of life and death. In Arizona in the summer, people without air conditioning die, just as surely as do people in Montana without winter heat. When the Salt River Project decides to encourage water conservation—or, conversely, subsidizes water use by making it artificially cheap—or decides to share the cost of a nuclear reactor forty miles upwind of Phoenix or builds a coal-fired generator whose pollution is accused of obscuring the Grand Canyon, it exercises more control over the Arizona environment than virtually any other player.

With powers like that, it seems but the tiniest and most inconsequential leap for a quasi-public shadow government like the Salt River Project to get involved with such social services as day care. Or with transforming central Arizona into a boating and fishing center by offering recreation on its reservoirs. Or with determining the quality of Edge City life by controlling development along urban canals in a fashion that might transform metropolitan Phoenix into a series of River walks echoing the one in San Antonio.

Nor are such quasi-public shadow governments with vast influence unusual in America. They range from airport authorities to regional transportation commands to water conservation districts. One reason they have been so eagerly seized on as the means to run Edge Cities is their abundant history. One such shadow government, the Los Angeles Department of Water and Power, had a movie made about it. It was called Chinatown. The potential of these quasi-public shadow governments was dramatized by Robert A. Caro in The Power Broker, his biography of Robert Moses.

Moses "had glimpsed in the institution called 'public authority' a potential for power . . . that was exciting and frightening and immense . . . adding a whole new layer to urban government in America," Caro wrote. Through the use of public authorities, Moses tore down vast swatches of old city to build bridges, roads, parks, and public housing, making him a person whose "influence on the cities of America was greater than that of any other person." Indeed, Moses changed the physical shape—the actual outline—of Manhattan Island.

No one I interviewed suggested that either the Salt River Project or its general manager, Jack Pfister, suffered from that kind of megalomania. In fact, Pfister's rule was so benevolent that as he approached retirement, even Phoenix's "alternative" tabloid, New Times, eulogized him. It is startling in what used to be called the underground press to find a headline about an Establishment figure that asks: IF THE HEAD OF THE SALT RIVER PROJECT DOESN'T KEEP PHOENIX SAFE FROM THE STORM, WHO WILL? Such power is typically grounded in how elusive a shadow government's authority can be. The Salt River Project presents itself to the public in any of four different guises, depending on what purpose suits the board of directors. Over the years it has taken on the rights and privileges of a private, for-profit, dividend-paying, stockholder-owned corporation; an unregulated investor-owned utility; an agent of the federal government; and a municipality-like political subdivision of the state—which is where it gets its right to issue tax-free bonds. It mixes, matches, and retains all these identities to its own ends. The closest it comes to public oversight is an election in which voting power goes to owners of irrigated land in a one-acre, one-vote fashion. Thus, the owner of a two-square-mile cotton operation has exactly 5120 times as many votes as someone with a home on a quarter-acre lot. As a result, although this shadow government is highly urban, with tremendous powers to shape Edge Cities, it is still run by a board of directors on which you see a lot of bolo ties.

As Pfister got talking, he acknowledged that he and his organization had more of an impact on metropolitan Phoenix than he initially had been willing to admit.

Yes, he did discourage people from having lawns in their own front yards. He did encourage desert landscaping called xeriscaping. Yes, he does have a tree specialist on his staff for that.

Yes, he does have five thousand employees and a financial intake of $1 billion a year, and a double-A bond rating, tax free, and a governmental-affairs staff of thirteen people (read lobbyists) with their own political action committee handing out campaign contributions. Yes, his real estate does spread out over hundreds of miles. Yes, he did first begin to get his shadow government involved in public affairs in 1979 when he discovered, during massive floods, that regular governments had no idea what they were doing. It was at that point he discovered, as he put it, that the Salt River Project had "resources and expertise they could contribute to water and environmental management. These are public resources. And we will contribute them."

This is how it always works. Edge City is a place where the game is not yet set up. Shadow governments "move into vacuums," one long-time observer says. "They get into one issue and they've got a professional here and a technician there. And then they'll give you an opinion on what you're ordering for lunch. And before you know it, they've named two of your children. They eat up power, like the science-fiction movies. They eat living things, derive power from what they've ingested, and develop an independent power base."

Pfister acknowledges that "because of the expertise of Salt River Project people, we have an impact disproportionate to other organizations." Indeed, before he finished his term, he or his outfit had helped shape the legal framework for groundwater management in Arizona, helped determine whether state projects should be required to make environmental impact statements, pushed for rail links to Phoenix's Edge Cities, and encouraged building at increased densities in those Edge Cities. Not only do dense nodes have social benefits, Pfister points out. But they are more efficiently supplied electricity.

"I'm a believer in filling vacuums," he admits. "Vacuums don't work well. That's a theory that I understand well. I look for vacuums to fill. Hopefully not in a mercurial way, but one that supports the overall community good. People would debate about that, I'm sure."

One well-connected local attorney says, "It is amazing that a lawyer-engineer as uncharismatic as Jack has risen to something of a cultural institution in Phoenix." Because of his role as head of the Salt River Project, Pfister was asked to help create a strategic plan for state economic development. He acknowledges that when water policies and energy policies are formed statewide, "We are always at the table." His outfit has taken an active role in dam safety, Indian affairs, regional planning, and strip-mining regulation. The SRP has its own security division. Because of his prominence with the Salt River Project, Pfister was asked to facilitate a business group charged with reforming the school system. He became chairman of the state board of regents just in time to defend the state college and university system against attacks from the governor. He helped raise $4 million for disadvantaged students in the Maricopa community college system. He chaired the Arizona Humanities Council. When asked whether he was ranging a little far afield, Pfister replied, "I have a belief that the arts and cultural amenities really add to the vitality of a community, so it is in the best interests of the Salt River Project to support the arts."

It was not enough that, because of the Salt River Project, Phoenix probably has the most carefully managed watershed in the world. Pfister decided that to "restore economic competitiveness," he had to start thinking about providing day care. "Without doubt that is in the cards for the future." Then he got involved with repackaging benefits to deal with "untraditional family environments." I asked him whether this meant medical care for gay couples and he said, "Again, it's only a matter of time. Ten years ago I probably did not know any for-sure gay people. Now I know a great number of gay people. That's just part of what's happening in Phoenix and



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