Privatized communities and the "secession of the successful": democracy and fairness beyond the gate.

• Author: Cashin, Sheryll D.
• Position: Common interest developments

The fabric of civitas, communal commitment to civic and public life, has begun to rip. (1)

[A] house divided against itself cannot stand. (2)

I am trying to envision what happens when 10 or 20 percent of the population has enough income to bypass the social institutions it doesn't like in ways that only the top fraction of 1 percent used to be able to do.... The Left has been complaining for years that the rich have too much power. They ain't seen nothing yet. (3)

INTRODUCTION

In the twentieth century we became a nation of homeowners. Thanks to a phalanx of federal policies that facilitated broad availability of credit for buying a home and stimulated housing production targeted to the middle class, by the dawn of the New Millennium an historic high of sixty-seven percent of the American population were homeowners. (4) Among this vast majority of American property owners is a significant and growing subset who live in common interest developments ("CIDs"). Emanating from Ebenezer Howard's seminal conception of the garden city, (5) CIDs typically require owners who buy units in the development to pay monthly or annual fees to a residential association that manages common areas, provides desired services, and enforces rules or covenants that apply to all who live in the development. CIDs include planned unit developments of single-family homes, condominiums, and cooperative apartments. (6)

As of 1998, about forty-two million Americans were living in CIDs, representing approximately fifteen percent of the U.S. population. (7) At least eight million members of this CID population reside in gated communities. (8) The explosive growth of CIDs is evidenced by the upward trajectory of the homeowners associations that govern them. Between 1964 and 1992, the number of homeowners associations grew from a mere 500 to 150,000. (9) By 1998, that number had reached 205,000. (10) The Community Associations Institute ("CAI") once estimated that by the year 2000, 225,000 such private governance organizations would be formed, (11) representing about twenty percent of all U.S. homeowners. (12) This privatized governance "may soon rival the 39,000 elected local governments in numbers and power over individuals." (13)

Among the services that homeowners associations typically provide, in exchange for mandatory fees paid by CID residents, are trash and snow removal, road maintenance, and recreational facilities. (14) These private contractual arrangements for the provision of formerly "public" services have put the nation on a course toward civic secession. The wedge begins with the creation of a large class of property owners the members of which increasingly feel that they are paying twice--in the form of property taxes and residential association fees for privately administered services. This attitude threatens to predominate in the twenty-first century because in areas of rapid growth, most new residential developments now take the form of a CID. (15)

The schism widens when one considers the quality of response to community membership cultivated by CIDs. Residents of CIDs tend to view themselves as taxpayers rather than citizens, and they often perceive local property taxes as a fee for services they should receive rather than their contribution to services local government must provide to the community as a whole. (16) Several states, including Maryland, Missouri, New Jersey, and Texas, already allow for adjustments in local taxes for residents of CIDs to reflect services provided by their residential associations. (17) At first blush, this may seem fair. According to the theory supporting such tax adjustments, CIDs are providing services that are public in nature, for example, by maintaining roads and park-like spaces that are open to the public. Hence, proponents of such adjustments argue that the tax code should be used to allow deductions or abatements to private citizens who pay assessments for such public goods or benefits. (18)

This conception of the CID's contribution toward public goods belies reality. Although most CIDs are not physically gated, by design they are privatized spaces. Frequently, the streets and recreational amenities in CIDs are restricted to residents and their guests. (19) CIDs offer their residents a private utopia--a "privatopia" as one scholar labeled it (20)--in which they "can set their own taxes in the form of assessments, use them for services they choose, and restrict those benefits to themselves and their immediate neighbors." (21) Outsiders who cannot afford properties in a CID cannot participate in its homeowners association. Outsiders, moreover, are not likely to benefit directly from the services most commonly provided by CIDs, such as landscaping, snow removal, garbage collection, swimming pools, street lights, and street cleaning. (22)

But the potential schism between CID residents and those who do not live in CIDs goes much farther. The secessionist mindset cultivated by CIDs has crossed an intellectual firewall. In a few jurisdictions, the previously accepted understanding that public tax support should not be available for facilities that are wholly private or exclusive has given way. In 1996, for example, the private gated community of Panther Valley near Hackettstown, New Jersey was allowed to set up a special taxing district for the maintenance of roads that are wholly closed to the general public. As a result, the residents of Panther Valley are able to deduct what they spend for private road maintenance from their federal and state income tax returns. (23) Several nearly identical arrangements reportedly have been created in Florida. (24)

This and other forms of "civic secession" have been occurring across the country. At the extreme, a CID formally secedes from the surrounding city or county, forming its own incorporated municipal government. With such formal secession, the common interest community gains the regulatory powers, particularly zoning powers, that enable it to attract desired entrants and wall out populations deemed undesirable. This practice of exclusion is the familiar, unfortunate way of the American suburb. (25) In this essay, I will reflect on how CIDs, and their privatized spaces, are contributing to a broader phenomenon of civic secession, primarily by affluent property owners. In particular, I will analyze the way in which CIDs may affect electoral politics and the allocation of public resources by federal and state government. The chief threat of CIDs is that they exacerbate inequality in America while also exacerbating the challenges of governing. By giving the private property owner a formal context in which to feel justified in her view that she is "doing her part" simply by paying her way for services, it will be increasingly difficult in the twenty-first century to establish a mandate for governmental policy, whether federal, state, or local, that requires shared sacrifice. Because most CIDs are extremely homogenous in terms of race and class, it will be particularly difficult to build a consensus for public policies that are perceived as benefiting racial and economic groups that are underrepresented in the CID, property-holding class. (26)

1. SECESSION OF THE SUCCESSFUL--How CIDs ATTENUATE THE SOCIAL CONTRACT

   Robert B. Reich, former Secretary of Labor, first coined the phrase "secession of the successful" and drew attention to the risks to the social fabric wrought by the so-called new economy and suburbanization. (27) CIDs are part of this larger phenomenon. In this Part, I offer several theories as to how CIDs attenuate the social contract: (1) they cultivate property owners rather than citizens; (2) they harness economic and racial homogeneity; and (3) they predominate in new, outer-ring suburban developments, thereby contributing to an existing phenomenon of regional polarization.

   1. Property Owner Consciousness

      A governance mechanism constructed primarily to protect and preserve private property rights does not build a sense of community. Instead, it cultivates an attitude that is a driving force animating property rights. As some have argued, private property ownership enables the individual owner, acting autonomously, to internalize most of the costs and benefits associated with the property owned. (28) In other words, the quality of relationship between the individual and the state that is cultivated by CIDs is one of a private property owner rather than a citizen. The essence of private property ownership is that the property owner will be secure in the expectation that the state will support her right to exclude others from her property as well as derive exclusive benefits in the use of that property. (29) Private property rights are necessarily premised upon rational maximization of self-interest.

      Citizenship, on the other hand, is premised on the idea of owing allegiance to a state or government in which sovereign power is retained by the people and political rights are shared by all members of the polity. A citizen thus owes allegiance to a larger community and, in turn, expects to be protected by her sovereign government. It is questionable whether CIDs even do a good job of promoting a sense of community among their residents. As Edward J. Blakely and Mary Gail Snyder note:

      Studies of homeowner associations have found little evidence that they breed higher levels of participation and self-governance. Robert Dilger attributes this effect to flaws in the structure of [homeowner associations] and to the free-rider problem--because participation is voluntary, a few individuals do most of the work, and as long as there are no glaring problems, the majority feel safe leaving those few to bear the burden of running the association. (30) Others attribute the lack of participation in homeowner associations to the fact that the association is premised upon individual member goals of protecting private property. The payment of...