Privatisation of neighbourhoods

In the United States the prevalence of private neighbourhood associations has been on the increase. Private neighbourhood associations are organisations that seek to serve the interests of the neighbourhood by providing group services (such as garbage collection, landscaping, private policing, and bus transportation), maintaining cleanliness and restricting entry to new residents.

In many respects, these organisations are replacing the responsibilities of the municipality, becoming quasi-government bodies themselves, says the Cato Institute.

Their popularity is on the rise:

  • In 1970, about one percent of all Americans belonged to private community associations; by 2004 this numbers has grown to more than 17 percent.

  • Since 1970, about one-third of new housing units constructed in the United States have been included within a private community association.

    The neighbourhood association represents just another form of institutional response to the "tragedy of the commons," says Cato. In other words, neighbourhoods (particularly high quality ones) want the ability to exclude the entry of homeowners or control the actions of existing homeowners that may take actions to reduce the value of neighbouring properties.

    Though generally the courts have deferred to the private autonomy of neighbourhood associations, they have sometimes nullified certain regulations. For example: Restricting the entry of new residents based on race has been declared unconstitutional, although discrimination based on age has been generally accepted.

    Source: Robert Nelson, The Private Neighbourhood, Cato Institute, Summer 2004.

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    For more on Privatisation

    FMF Policy Bulletin/19 October 2004
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