While a complete change in the structure of local government is unlikely in the near future, the trend toward private neighborhood ownership is becoming increasingly evident.

Consider this: In 1970, only one percent of all American housing units were part of a community association. Now, that figure has risen to close to 20 percent. Between 1980 and 2000, half of all new housing developments encompassed a private community association.

In 1970, only one percent of all American housing units were part of a community association. Now, that figure has risen to close to 20 percent.

"The trend toward privatization of local government represents one of the most interesting areas of social change impacting the housing market, with the potential to transform local government as we know it,” says Robert H. Nelson, Professor of Environmental Policy at the University of Maryland School of Public Policy.

In his book Private Neighborhoods and the Transformation of Local Government, Dr. Nelson takes a closer look at the background and history of community associations, as well as their potential to impact the structure of local government.

Dr. Nelson recently shared his insights on the growing trend of private neighborhood associations with MuniNetGuide.com.

MuniNet: Let’s start with the basics …. What exactly is a community association?

Nelson: Community associations allow for collective private ownership of housing, where the regulation of land and provision of common services is handled privately at the neighborhood – rather than county or municipal – level. Community associations fall into three main categories: homeowners associations, condominium associations, and cooperatives.

MuniNet: Are we seeing more growth in any of these types in particular?

Nelson: The largest increase in prevalence has been in the area of homeowners associations, which now comprise about 55 percent of all community associations. Most of these are springing up in new housing developments in the fastest-growing areas of the country, including Phoenix, Las Vegas, Orlando, and Northern Virginia.

MuniNet: How is a community association different than a small municipal government?

Nelson: Private neighborhoods operate under their own set of “constitutional” ground rules. The private enforcement of covenants has the same practical effect as municipal zoning laws, but a private homeowners association allows for greater control of the quality and integrity of the community. Also, allocation of voting rights is based on property ownership rather than number of adult residents. Therefore, an individual who owns a winter home in Arizona and a summer home in Wisconsin can vote for boards of directors in both places.

MuniNet: Can residents create a private community association in an existing neighborhood?

Nelson: While it is possible in concept, establishing a homeowners association after the fact rarely occurs. In almost every case, the developer creates a community association in advance, and then every buyer must agree to it as a condition of purchase. Creating a private association would require a unanimous vote –a tall order even in a very small community or neighborhood – and would entail state legislation.

MuniNet: Is the increasing prevalence of private community associations changing the pattern of local government in the U.S.?

Nelson: Traditional local government in this country has typically taken the form of one larger central city, usually surrounded by hundreds of smaller municipalities. Such is the case in Chicago, a city encircled by more than 500 local governments.

Now contrast that with what we’re seeing taking place today in Las Vegas – an area marked by rapid growth in its housing market. The government structure in that area is centered around one large county (Clark County), a few very large municipalities, and hundreds of community associations.

Local government – whether by a large municipal or county level organization – will always have its place in providing larger-scale services, and unless there is an easier way for older neighborhoods to create their own association, these communities will continue to rely on municipal regulatory and service authorities to meet their needs.

But the shift to management by community associations is clearly and undeniably changing the face of local government as we know it.

MuniNet: What are the advantages of this type of governance?

Nelson: Perhaps the greatest advantage of a community association – particularly one that is incorporated as part of a new development – is that it allows its residents to develop a covenant for the future character of the neighborhood. The outlook for the community becomes more predictable, with collective management in place to oversee its progress.

Community associations also allow for the delivery of collective services (e.g., supplemental security, garbage collection, snow removal) and maintenance of common property (swimming pools, community centers, landscaping, golf courses).

MuniNet: On the other side of the coin, why is there sometimes resistance to living in an area managed by a homeowners association?

Nelson: The perception of double taxation is an issue in the minds of some homeowners. Double taxation occurs if residents are paying for the same service (i.e., garbage collection, snow removal, etc.) twice – in their private community for themselves and publicly for others in the local area. In areas where community associations predominate, however, assessments paid to the community association cover private services for collective property (tennis courts, community center, golf course, etc.), while local property taxes are limited to more “macro” services that are publicly provided, like highway maintenance, water supply, sewer systems, etc.

The inevitable tensions associated with living in close proximity to neighbors, collective self-governance, and the perception of micro-management –“too many rules” – dissuade some homeowners from living in an area managed by a homeowners association.

MuniNet: But as an advocate for privatization of neighborhoods, would you say that the benefits outweigh the resistance factors associated with this type of government structure?

Nelson: For most people, yes. Whether you call it local independence, neighborhood privatization, or micro-level government, it makes sense for the responsibility of management to fall closest to those living in a specific community. Because they are private and less constrained by government rules, community associations offer wider choices – the opportunity to live in a community of senior citizens, for example – that would not be available publicly.

The shift to community associations is really becoming the new local pattern in the U.S., with private homeowners associations already taking the place of small suburban government in the case of new residential developments – a trend that will likely gain momentum with the passage of time.NEW_SECTIONBy the Numbers:END_SUPP_HDR

Community Associations Represent Growing Trend in Urban Development


According to the Community Associations Institute, homeowners associations and other planned communities account for 52-55% of association-governed communities, while condominium associations represent 38-42%, and cooperatives make up the remaining 5-7%.

Based on a variety of sources, the CAI provides the following statistics showing the increase in the number of community associations over the past several decades:

  • In 1970, there were an estimated 10,000 association-governed communities in the U.S., encompassing 701,000 individual housing units and 2.1 million residents.
  • By 1980, the number of community associations had risen to 36,000, with 3.6 million housing units and 9.6 million residents.
  • Fast forward to 2006 … Figures have increased to 286,000 association-governed communities, covering 23.1 million housing units and 57.0 million residents.

The CAI web site also includes data derived from a 2005 study conducted by Zogby International, who reported a high level of satisfaction among homeowners with their community associations and their respective management.