New York City
New York City originally was established and operated under the same private legal terms as a business corporation. As the historian Hendrik Hartog explains in Public Property and Private Power, the same generally was true of America’s other “incorporated municipalities” until the mid-19th century. New court interpretations shifted the legal status of the municipality to a “public” category. The result: New York’s legal authority “changed from one of [private] autonomy and distinction to one of general powerlessness before the authority” of the state government in Albany.
From its beginnings in the 1960s, the private city of Reston, Virginia, has grown to almost 60,000 residents. Its government reflects a private form of federalism: Besides the citywide Reston Association, there are more than 130 neighborhood “clusters,” ranging in size from 11 to 231 housing units, each with its own private governing association.
Since the 1970s, thousands of small, street-level governing arrangements called woonerven have been created in the Netherlands. To create one on an existing street, more than 60 percent of the residents must vote their approval. The woonerven provide redesigned streets to create a safe area for the enjoyment of adults and children; the residents might, for example, plant flowers and install benches and speed bumps and other traffic calming devices.
There are more than 400 private streets in St. Louis, the first of which was created in 1867. The streets are deeded to the surrounding residents, who maintain and operate them, in some cases tightly limiting public access. In the 1970s, while much of the rest of St. Louis was in crisis, the urban planner Oscar Newman found that the private streets were an oasis of stability in which the “residents have been able to create and maintain for themselves what their city was no longer able to provide: low crime rates, stable property values, and a sense of community.” In 1997, following a similar model, the city of Richmond gave private ownership of the streets to the local public housing authority, which restricted access. The U.S. Supreme Court upheld this street privatization in Virginia v. Hicks (2003).
In 1954 Lakewood, California, became a newly incorporated city within the boundaries of Los Angeles County. Rather than provide its own services directly, Lakewood contracted with the county and other public and private parties. The Dell-style “Lakewood Plan” became the model for more than 30 other California “contract cities.” Outside California, in Broward County, Florida, the contract city of Weston today has 65,000 residents, an annual budget of $100 million, and three city employees. The newest contract city: Sandy Springs, a suburb of Atlanta.
In 1992 the Sursum Corda housing project in Washington, D.C., was turned over to the tenants as a private cooperative. In October 2005, after a Metro stop opened nearby and as property values rose rapidly, the board of directors voted to sell the whole project to KSI, a leading developer in the Washington area. The 167 low-income families in Sursum Corda received $80,000 per unit, a future share in KSI’s development profits at the site, and an option to buy a discount-price home in the new 500-unit project planned there. It was a private form of urban renewal—established, unlike the traditional sort of urban renewal, by a transaction between willing buyers and sellers.
Selling Whole Neighborhoods
Where a neighborhood faces rapidly rising values and a transition to a brand-new use, speculators often capture much of the financial windfalls. In Fairfax County, Virginia, hoping to avoid this outcome, the owners of 70 homes near the Vienna Metro stop banded together in 2004 to sell their whole neighborhood as a single package. Their new private association signed an agreement to receive more than $760,000 per unit for redevelopment of the neighborhood as an apartment complex, compared with housing values of about $400,000 in current single-family use.