NCPA - National Center for Policy Analysis


December 2, 2005

Older cities face serious land-use problems. How can a dense urban area like New London or Hartford revitalize itself if developers have to build one lot at a time? Should residents of failing cities insist that shopping centers be built only in the far suburbs, displacing farms and increasing suburban sprawl? Must all large housing developments be relegated to the exurbs?

There is a better way to give developers access to sizable plots of land in the city: allow homeowners to privatize their neighborhoods and sell en masse directly to developers, says the Competitive Enterprise Institute (CEI).

A new state law would work like this:

  • If a group of urban owners wished to consolidate their properties, they would petition the city.
  • A transfer agreement for streets, parks and other public services would get worked out.
  • Then if a supermajority of 70 or 80 percent voted to approve, a new private community association, including all the property owners, would be established.

There would be no cram-down eminent domain; the property owners themselves, through a supermajority vote within their association, would approve any sale. And they'd get a price set not by judicial decree but by private negotiation. Proceeds would be divided according to the association's rules. If the owners preferred to stay in the neighborhood, rather than sell out, their new association would then function much like a residential version of a business improvement district. They could collect assessments, for instance, to sweep the sidewalk.

In the 1930s the Wagner Act provided for collective bargaining between newly organized workers and businesses. Today we need an urban Wagner Act that will enable collective bargaining between neighborhood property owners and developers, says CEI.

Source: Robert H. Nelson, "Privatizing the Inner City," December 1, 2005.

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