1. REPLACING ZONING WITH PRIVATE COMMUNITY ASSOCIATIONS IN OLDER NEIGHBORHOODS

2. Protecting a Neighborhood Environment Since 19 th Century -- Individual Home Covenants in Deeds Since 1916 – Public Zoning Since 1960s – Private Community Associations in New Neighborhoods 2010? – New Private Community Associations in Older Neighborhoods

3. Types of Community Associations Homeowners Associations (about 55%) Condominiums (about 40%) Cooperatives (about 5%)

4. Rise of Private Government at Neighborhood Scale 10,000 Community Associations in 1970, 300,000 in 2008 in United States 2 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

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

6. The Older America Being Left Behind Large Central City 20 th Century Resistance to Annexation Large Number of Small Suburban Municipalities Chicago Metropolitan Area Has 569 General Purpose Local Public Governments; Cleveland – 243; Detroit – 335

7. The “Tiebout Model” of Urban Governance Home Buyers Have Wide Choice in Public Municipalities Chose Small Public Municipality with Services, Taxes to Suit Individual Homeowner Preferences At Collective Level, Simulates a Market Result Small Suburban Municipalities Are De Facto Private

8. Zoning as a De Facto Collective Property Right “Private” Municipalities Need Power to Exclude – i.e. Effectively a Property Right Zoning Provides the Exclusionary Power Zoning Plays the Role of a Property Right Zoning Makes the Tiebout System Work See Robert H. Nelson, Zoning and Property Rights (1977).

9. Trends in Metropolitan Governance 1916-1960s, Zoning Is the Dominant Collective Property Right (In Northeast and Midwest) Since 1960s, Private Community Associations Dominate In Rapidly Growing South and West Community Associations Replace Small Municipality Zoning

10. Houston the Forerunner Only Large City Without Zoning Long History of Private Community Associations at Neighborhood Level Widespread Annexation of Suburbs, Large City/Suburban Governments in Public Sector Rest of United States Is Now Following Houston’s Lead

11. 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 Neighborhoods Must Be Voluntary By Neighborhood Require Super-Majority Approval (But Not Unanimous Consent)

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

13. Tension of Individual versus Collective Freedoms Collective Right of Free Association The Right to Exclude is Essential When Group is Geographically Based, Exclusion Must Be Geographically Based If Full Recontracting in Original State, Forming New Communities is No Problem In Real World, One New Community Replaces One Old Community – But How?

14. Advantages of Private Collective Rights Over Zoning Both Protect Neighborhood Environment But A Private Governance Mechanism Has Much Greater Flexibility A System Based on Private Rights Is Much Better Suited to Accommodating Major Land Use Change

15. 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 Services Greater Regulatory Flexibility (Can Have Tighter or Looser -- in Concept -- Land Use Regulations than Traditional Zoning Neighborhood Governance Matches Neighborhood Scale of Concern

16. 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 Control Designing the Best Neighborhood Government Is a Competitive Market Process – Developers Compete on Governance as Well as Physical Design

17. Private Advantages in Accommodating Basic Change Public 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)

18. Need for State Legislative Action Need New Law to Provide for After-the Fact Creation of Private Community Associations In Older Neighborhoods Should Set Out Legal Procedures to be Followed One Key Will Be Required Size of Supermajority Approval

19. A Proposal for Houston Radically Decentralize Neighborhood Governance Build on Past Houston Strength – Pioneered Private Neighborhood Governance Now, Extend Much of Governing Authority to Older Neighborhoods as Well Neighborhood Initiated – Must Be A Choice Made By Each Neighborhood

20. An Incremental Proposal – “From BIDs to RIDS” New Mercatus Center Policy Paper Business Improvement Districts (BIDs) Are a Success Cities Should Enact Legislation for Creation of “Residential Improvement Districts” (RIDs) If Good Enough for Businessmen, Then Good Enough for Poor Residential Neighborhoods As Well