REPLACING ZONING WITH PRIVATE COMMUNITY ASSOCIATIONS IN OLDER NEIGHBORHOODS

Protecting a Neighborhood EnvironmentSince 19th Century -- Individual Home Covenants in DeedsSince 1916 Public ZoningSince 1960s Private Community Associations in New Neighborhoods2010? New Private Community Associations in Older Neighborhoods

Types of Community AssociationsHomeowners Associations (about 55%)Condominiums (about 40%)Cooperatives (about 5%)

Rise of Private Government at Neighborhood Scale10,000 Community Associations in 1970, 300,000 in 2008 in United States2 million residents in 1970, 60 million in 2008 (20% of USA) From 1980 to 2000, About 50% of New Housing Built in a Community Association

Transforming Local GovernmentLarge County, Municipal Governments Small Suburban Municipality an Endangered Species in Rapidly Growing Areas of South and WestAt Neighborhood Level, Collective Private Rights In Place of Public ZoningRobert H. Nelson, Private Neighborhoods and the Transformation of Local Government (2005)

The Older America Being Left BehindLarge Central City20th Century Resistance to AnnexationLarge Number of Small Suburban MunicipalitiesChicago Metropolitan Area Has 569 General Purpose Local Public Governments; Cleveland 243; Detroit 335

The Tiebout Model of Urban GovernanceHome Buyers Have Wide Choice in Public MunicipalitiesChose Small Public Municipality with Services, Taxes to Suit Individual Homeowner PreferencesAt Collective Level, Simulates a Market ResultSmall Suburban Municipalities Are De Facto Private

Zoning as a De Facto Collective Property RightPrivate Municipalities Need Power to Exclude i.e. Effectively a Property Right Zoning Provides the Exclusionary PowerZoning Plays the Role of a Property RightZoning Makes the Tiebout System WorkSee Robert H. Nelson, Zoning and Property Rights (1977).

Trends in Metropolitan Governance1916-1960s, Zoning Is the Dominant Collective Property Right (In Northeast and Midwest)Since 1960s, Private Community Associations Dominate In Rapidly Growing South and WestCommunity Associations Replace Small Municipality Zoning

Houston the ForerunnerOnly Large City Without ZoningLong History of Private Community Associations at Neighborhood LevelWidespread Annexation of Suburbs, Large City/Suburban Governments in Public SectorRest of United States Is Now Following Houstons Lead

A Policy Proposal Replace Zoning with Community Associations in Older Areas

Extend New Urban Governance Model (the Houston Model) from the South and West to the Northeast and Midwest Would Need to Retrofit Private Community Associations in Older NeighborhoodsMust Be Voluntary By NeighborhoodRequire Super-Majority Approval (But Not Unanimous Consent)

The Libertarian ObjectionNot 100 Percent Voluntary But Zoning Not Voluntary (No Vote at All in Most Cases)Reducing Scope for Public Zoning Adds to Private FreedomsZoning Is Also Rigid, InefficientSo, On Balance, Retrofitting Community Associations Supports Liberty and Efficiency

Tension of Individual versus Collective FreedomsCollective Right of Free AssociationThe Right to Exclude is EssentialWhen Group is Geographically Based, Exclusion Must Be Geographically BasedIf Full Recontracting in Original State, Forming New Communities is No ProblemIn Real World, One New Community Replaces One Old Community But How?

Advantages of Private Collective Rights Over ZoningBoth Protect Neighborhood EnvironmentBut A Private Governance Mechanism Has Much Greater FlexibilityA System Based on Private Rights Is Much Better Suited to Accommodating Major Land Use Change

Flexible Private Governance (A Private Constitution)Many Options for Voting Rights (No Requirement for One Person/One Vote, Vote in Multiple Jurisdictions)More Private Contracting for ServicesGreater Regulatory Flexibility (Can Have Tighter or Looser -- in Concept -- Land Use Regulations than Traditional ZoningNeighborhood Governance Matches Neighborhood Scale of Concern

More Private Flexibility, cont. Easier to Create Community Association (Developer Action in Conjunction with Designing the Community) Superior Transition Mechanisms from Developer to Resident Collective ControlDesigning the Best Neighborhood Government Is a Competitive Market Process Developers Compete on Governance as Well as Physical Design

Private Advantages in Accommodating Basic ChangePublic Zoning Is Rigid Sale of Zoning Occurs Frequently, But Is Nominally Illegal (And Courts May Limit)But A Private Rights Holder Can Sell Rights (e.g., Right of Entry into Private Community)And Private Community Can Dissolve Itself (i.e. Sell Whole Community as One Package to a Bidder/Developer)

Need for State Legislative ActionNeed New Law to Provide for After-the Fact Creation of Private Community Associations In Older NeighborhoodsShould Set Out Legal Procedures to be FollowedOne Key Will Be Required Size of Supermajority Approval

A Proposal for HoustonRadically Decentralize Neighborhood GovernanceBuild on Past Houston Strength Pioneered Private Neighborhood Governance Now, Extend Much of Governing Authority to Older Neighborhoods as WellNeighborhood Initiated Must Be A Choice Made By Each Neighborhood

An Incremental Proposal From BIDs to RIDSNew Mercatus Center Policy PaperBusiness Improvement Districts (BIDs) Are a SuccessCities Should Enact Legislation for Creation of Residential Improvement Districts (RIDs)If Good Enough for Businessmen, Then Good Enough for Poor Residential Neighborhoods As Well