In any given metropolitan region, there are scores of municipalities locked in a zero-sum struggle for mobile sources of jobs and tax revenue. This competition appears to advantage small, homogenous suburbs over large, diverse cities because the former can directly enact the uniform will of the electorate rather than becoming ensnarled in conflict between competing interest groups. Cities can level the playing field with suburbs, however, by devolving municipal power to smaller, more homogenous subgroups within the city, such as neighborhoods. Indeed, one such effort at neighborhood empowerment, the “business improvement district,” (BID) has been widely identified as a key factor in the recent revitalization of many central cities. The BID, and the related “special assessment district,” essentially devolve the financing of infrastructure and services to landowners within a territorially designated area. Courts have widely upheld special assessment districts and BIDs against constitutional challenges.
Cities remain hamstrung in competing with suburbs, however, because courts prohibit cities from delegating perhaps the most coveted power of all to neighborhood groups: zoning. Since an unusual series of Supreme Court cases in the early twentieth century, it has been largely settled that cities may not constitutionally delegate the zoning power to sub-municipal groups, at least where the power is delegated specifically to landowners in a certain proximity to a proposed land use change (a scheme I designate a “neighborhood zoning district”).
This article argues that there is a serious inconsistency in a jurisprudence that treats BIDs and special assessment districts as unproblematic while prohibiting neighborhood zoning districts. As I demonstrate, these devices are in fact conceptually identical. Both the neighborhood zoning district and the special assessment/BID are designed to enable large, diverse cities to capture some of the governance advantages of small, homogenous suburbs by providing landowners with the direct ability to manage local externalities. This article attempts to make sense of the disparate treatment accorded these devices by examining several grounds upon which they could potentially be distinguished. I find, however, that special assessment districts/BIDs actually raise far more troubling public policy concerns than neighborhood zoning districts. I conclude that courts should broadly defer to municipal delegations of power to sublocal groups, so that cities can work out their own strategies for surviving in an era of intense inter-local competition.
- Neighborhood Empowerment,
- Local Government,
- Public Choice