NCPA - National Center for Policy Analysis


October 4, 2004

Private neighborhood associations are organizations that seek to serve the interests of the neighborhood 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 organizations 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 neighborhood association represents just another form of institutional response to the "tragedy of the commons," says Cato. In other words, neighborhoods (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 neighboring properties.

Though generally the courts have deferred to the private autonomy of neighborhood 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 Neighborhood," Cato Institute, Summer 2004.


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