The problem is that municipalities absolutely love HOAs. They get all the tax revenue and get to wash their hands of most responsibilities involved with them. From their perspective, they get to found little vassal townships where they can say “it’s your problem” to little people problems like “there’s too many potholes in the road” and “that sewer lift station is making weird smells.”
Oh, but if you want to do anything, you still need to pay those permit and inspection fees! No, we won’t help you find a paver at a reasonable rate even though putting those contracts out to bid is what we do all day long.
What is really bullshit is that HOAs aren’t granted a property tax abatement for absorbing many municipal functions.