Wednesday, June 11, 2003

What is the trend line of privatization? Should we expect the number of private communities, for example, to continue to increase, and for how long? And what about the rate of increase? Should we expect CID housing to constitute an increasing share of the new housing stock, and for how long? I'd say both the number and the rate will increase for the forseeable future. If I'm right about the reasons for the CID revolution, there are three incentives: 1.) Rising land costs lead developers to seek ways to make high density palatable to middle class consumers; 2.) Fiscal problems affecting local governments lead them to permit high levels of CID construction as a "cash cow," because CIDs generate high property tax revenues without demanding much from those revenues in return; 3.) Some consumers like the idea of private government and local control. You can read about this in my article that appeared in Urban Affairs Reveiw. It is located at this link.
I see all of these incentives becoming more powerful. Sprawl, the budget crises affecting many states, and the popularity of gated communities seem to be driving this form of privatization to unprecedented levels.

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