It Takes a Private Neighborhood to Make a Local Revolution

WASHINGTON, D.C., July 18, 2005—To the three traditional levels of government—federal, state, and local—add private neighborhoods, home to nearly one in five Americans. In the last 40 years, the number of private communities—homeowners' associations, condominiums, and cooperatives, some of them gated—has grown from less than 1,000 to more than 250,000.

In his new Urban Institute Press book, Private Neighborhoods and the Transformation of Local Government, Robert Nelson details how private community associations have increasingly eclipsed local government in providing public services and regulating land use. Nelson, a professor of public policy at the University of Maryland and former Forbes magazine columnist and economic analyst at the U.S. Department of the Interior, argues that private associations can foster more secure neighborhoods and create market incentives for redeveloping deteriorated areas in cities and inner suburbs.

The private neighborhood association has much greater flexibility to experiment with new governing forms, he says, while legal precedents, public expectations, and ideological commitments often inhibit local governments in the public sector. Nelson cites private neighborhood associations' ability to calibrate voting rights to property ownership, choose neighborhood residents, sell entry rights into a neighborhood, develop and enforce trespassing rules, and engage in commercial activity, such as publishing a neighborhood newspaper.

Neighborhood associations, the author maintains, represent traditional principles of "pluralism and choice in America life and governance—qualities that are increasingly being identified as essential elements of successful communities."

In Private Neighborhoods, Nelson proposes a legal mechanism enabling existing neighborhoods, especially those in urban areas where conventional revitalization policies have not worked, to become private neighborhood associations similar to incorporated municipalities. These new entities would function as private institutions under different regulations than traditional local governments.

"In a postmodern era, it will be up to each neighborhood to decide its own fate," says Nelson. "It will be a world of greater individual and small-group freedom, a greater role for market forces, wider use of pricing, and more private planning."

Commenting on Private Neighborhoods, Evan McKenzie, author of Privatopia: Homeowner Associations and the Rise of Residential Private Government, says, "Rarely does so ambitious an intellectual project succeed so dramatically or engage the reader so thoroughly. Nelson shows that the private neighborhood is an institution with the potential to transform governance, and even society, from the bottom up."

McKenzie, a professor of urban politics at the University of Illinois at Chicago, asserts that even those who do not share Nelson's views will find the book fascinating. "This is a lasting contribution that will frame the debate about private neighborhoods for years to come," he says.

Nelson acknowledges formidable challenges to privatization in established neighborhoods, such as determining boundaries and battles over local zoning. Even in newly developing areas, "some people will find the burdens of collective private living greater than the gains and should avoid neighborhood associations."

For state lawmakers who are open to wider use of collective private controls in established neighborhoods, Nelson puts forth a six-step process to consider:

• Petition request—A group of property owners petitions the state to form a private neighborhood association.
• State review—The state certifies that the proposed area meets certain standard requirements and verifies that its proposed constitution meets state standards for neighborhood associations.
• Municipal-neighborhood negotiations—A neighborhood committee negotiates a service- transfer agreement with the municipal government.
• Neighborhood vote—A neighborhood election occurs no less than a year after a complete description of the neighborhood proposal is submitted.
• Voter approval—The creation of a new private neighborhood association requires both an affirmative vote of unit owners representing 80 percent or more of the total property value within the proposed neighborhood, and an affirmative vote by 70 percent or more of the unit owners.
• A new private right— Once the neighborhood association is established, the municipal government transfers legal responsibility for regulating land to the unit owners in the association. The municipal zoning authority within the neighborhood is abolished.

Nelson tackles the concerns of those who might oppose such a prescription, challenging the current structure of urban and low-income neighborhoods and giving examples of how citizens in these areas could benefit from a neighborhood association.

"Robert Nelson has written two powerful books in one. The first documents the amazing revolution in neighborhood governance that has gone almost unnoticed over the past 40 years. The second is a bold proposal for extending this revolution to inner cities and suburban fringes, where it could do even more good," says Robert W. Poole, Jr., founder of the Reason Foundation.

Private Neighborhoods and the Transformation of Local Government is available from the Urban Institute Press for $32.50 (494 pages, ISBN 0-87766-751-9). Order online at www.uipress.org, call 202-261-5687, or dial 1-877-847-7377 toll-free.

The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance challenges facing the nation.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Usage, posting and reprint of materials on the UI web site:

Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required.

Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact paffairs@urban.org.

If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.