Privatized Communities and the "Secession of the Successful": Democracy and Fairness Beyond the Gate

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. …