The Sub-Districting of Cities:
Applying the
Polycentric Model
(Urban Affairs Review, May 2001)
Susan E. Baer
Vincent L. Marando
The authors would like to thank Brett Hawkins, Michael McGinnis, Elinor
Ostrom, Vincent Ostrom, and Roger Parks for their careful reading of earlier
drafts of this manuscript and helpful comments.
responsibility of the authors.
Of course, any errors are the
Abstract
Applying the polycentric model to the urban core, the authors first examine
how the polycentric model may be applied to an increasing number of large
cities that are utilizing sub-districts to provide supplemental public
services that district residents desire such as security, sanitation (garbage
collection), and economic development.
They next analyze the recent creation
of the Charles Village Community Benefits District in Baltimore, Maryland as
an empirical example and briefly discuss this sub-district’s positive impacts.
The article concludes with some observations on the implications of subdistricts for equitable and efficient service delivery.
The Sub-Districting of Cities:
Applying the Polycentric Model
Cities are often adumbrated in the literature as offering the same
services throughout their territory.
In fact, however, central cities have
never displayed a monolithic distribution system in delivering public goods
and services.
As a result, all areas of cities do not receive the same level
of services, even if the same tax rate is assessed against all property owners
(Lineberry 1977).
And large cities are becoming increasingly reliant on the
use of sub-district governmental units to provide tax and service
differentiation and to provide choice that is qualitatively different from
informal approaches.
However, the pursuit of policies that target city
services to residents and businesses in selected sub-districts through an
additional property tax assessment is rarely examined even though a plethora
of sub-city structures with less than full autonomy exists
(Briffault 1997).1
Examples of city sub-districts that levy an additional property tax in
return for supplemental services include Business Improvement Districts (BIDs)
and Community Benefits Districts (CBDs).
The CBD is the focus of this inquiry
and is defined as a city sub-district whose property owners, both residential
and commercial, pay property taxes in addition to what the city levies in
order to receive supplemental services such as security, sanitation (garbage
collection), and economic development.
In this article, we first examine the classic polycentric model and how
city sub-districts are theoretically part of the model.
Then, the formation
of the Charles Village Community Benefits District (CVCBD) in Baltimore,
Maryland is examined as an empirical example, and a brief assessment of the
sub-district’s impact is provided.
We conclude with some observations on the
politics of creating CBDs and their implications for equitable and efficient
service delivery.
The term polycentric connotes, “many centers of decision-making which
are formally independent of each other.
1
In addition, whether these centers
actually function independently, or instead constitute an interdependent
system of relations, is an empirical question in particular cases” (Ostrom,
Tiebout and Warren 1961).
To the extent that the various political
jurisdictions in a metropolitan area take each other into account in
competitive relationships, enter into various contractual and cooperative
undertakings, or have recourse to mediating mechanisms to resolve conflicts,
they function in a coherent manner with consistent and predictable patterns of
interacting behavior (V. Ostrom 1994).
Two major components of the polycentric model are articulated in the
classic articles, Charles M. Tiebout’s 1956 “A Pure Theory of Local
Expenditures” and Vincent Ostrom, Charles M. Tiebout and Robert Warren’s 1961
“The Organization of Government in Metropolitan Areas: A Theoretical Inquiry.”
The two components are:
1) that residents and businesses will locate to
those local units that best meet their public goods preferences (Tiebout
1956); and 2) that local government in metropolitan areas can be organized and
reorganized to meet service preferences (Ostrom, Tiebout and Warren 1961).
The first component of the polycentric model suggests that residents and
businesses will maximize their public goods (tax and service) preferences by
“voting with their feet.”
Thus, they locate or relocate to those local
jurisdictions that best meet their public goods and services preferences
(Stein 1987).
There is also evidence to support the contention that those who
move do so in part because of services and taxes in the new jurisdiction
(Teske, Schneider, Mintrom, and Best 1993).
The model further posits that the
greater the number of local governments in metropolitan areas, the more likely
residents and businesses’ public goods preferences will be realized.
The second component of the model suggests that a decentralized
governance system may provide services efficiently in response to a variety of
demands.
The explosion of suburban jurisdictions over the past four decades
has been taken as evidence of the efficiency of these jurisdictions in meeting
the public goods and services needs of many metropolitan residents and
2
businesses (Stein 1987; Dowling, John and Biggs 1994).
This explosion also
shows people’s natural desire to have governing units tailored to their
particular needs and preferences.
However, rarely has the polycentric model
been applied to explain intra-city decentralization.
This article contends
that the model has empirical application for explaining the creation and
organization of city sub-districts.
The creation of sub-districts formalizes
service level differences among residents and businesses within cities,
because in order to receive supplemental services property owners in city subdistricts are taxed at higher rates than non-district property owners
(Briffault 1997, 1998).
Also, while a large number of neighborhoods have lost population and
businesses in part because they did not have adequate discretion or authority
to meet property owner and renter service preferences, many city residents do
not desire or cannot move to another neighborhood or jurisdiction.
polycentric model does not fully articulate this fact.
The
Sub-district creation
within cities is instead a response to residents and businesses staying in
“place” for the purpose of obtaining particularized goods and services
(Briffault 1996).
In other words, the creation of local sub-districts within
cities may be a feasible and effective option for obtaining public goods
without these groups having to move to another jurisdiction.
In effect, it is
an exercise of “voice” rather than “exit” (Hirschman 1970; Orbell and Uno
1972; Parks and Oakerson 1989; Williams 1971).
Community Benefits Districts (CBDs)
In the nation generally, CBDs are preceded by and share a common legal
heritage with the Business Improvement District (BID), a structure that
normally taxes and provides supplemental services exclusively to commercial
property owners.
The success of BIDs in meeting the service needs of city
merchants stimulated their widespread adoption, and there are now 15,000 BIDs
estimated to be in existence in North American cities (International Downtown
3
Association 1996).
The existing literature tends not to recognize that new
BID-type arrangements such as CBDs have extended to communities with diverse
residential and commercial properties (Oakerson 1999).
However, at least
twelve cities have in fact established sub-districts that are similar to
CBDs.2
CBDs’ specific institutional arrangements vary from city to city and at
times within a city.
Using a Baltimore CBD as a model, the following serve as
common institutional arrangements in these sub-districts:
·
CBDs have the authority from a state legislature and city government
to mandate an additional tax assessment levy above city-wide rates,
which the city administers on all property owners, commercial and
residential, within the sub-district.3
·
CBDs are created only after the service preferences of sub-district
property owners (and renters in the case of Baltimore) are identified
and taken into account.
A referendum is required to assess property
owner and renter support in Baltimore.
In other cities, a specified
number of signatures meeting a public petition requirement or
attendance and participation at city-community sponsored public
hearings may be used to assess support for creating CBDs.
·
CBDs are governed by an elected or appointed board whose
qualifications are specified by city charter ordinance and in some
cases state statute.
·
CBDs have full- and/or part-time professional and non-professional
staff to manage the day-to-day operations of the sub-district.
Commonly, CBDs are created to provide primarily “traditional”
municipal services such as security and trash removal but might also
provide neighborhood organizing and economic revitalization services.
In terms of sub-district institutional arrangements, Hawkins, Percy, and
Montreal offer findings that support the assumption that decentralized,
4
specialized, and nested governance organizations are part of the
“intergovernmental” system of sharing authority and delivering services (1996,
1997).
Clearly neighborhood property owners and renters in a city cannot
create a sub-unit by themselves.
A “higher” level local government is
necessary for creating sub-district government.
In other words, neighborhood
interests for creating sub-districts need to be “negotiated” with officials
representing city interests (Thomas and Hawes 1999).
And the creation of a
city sub-district such as a CBD is the result of a “compact” or officially
sanctioned intergovernmental agreement involving state government as well
(Briffault 1997).
Thus, CBD creation reflects the results of a negotiated
process between property owners and renters on the one hand and city and state
officials on the other.
Efficiency and Equity
Provision-side efficiency calls for CBD boundaries to be large enough to
include the affected group of people and, at the same time, to not be so large
as to include groups of individuals with very heterogeneous preferences
(Oakerson 1999).
In terms of production-side efficiency, one finds that sub-
district residents desire and receive those labor intensive public services
exhibiting diseconomies of scale such as safety, garbage collection, and
neighborhood revitalization.
most efficiently.
And small production units supply these services
In contrast, larger production units with economies of
scale supply capital intensive public goods most efficiently.
This concept of
production-side efficiency informs the discussion of city sub-districts and
helps to explore how efficiency is related to the size of local organization
(Tullock 1994).
As a result, a mixed system that includes both smaller units
like city sub-districts and larger overlapping units may possibly increase
service delivery efficiency.
In other words, the diversity of life requires
complex organizational arrangements that are neither exclusively gargantua nor
the land of lilliputs (Ostrom and Parks 1999).
5
Considering equity, one finds that the initiation of a Baltimore CBD
involved a struggle between two approaches to distributional equity.
The
first approach, one advocated by traditional reformers, calls for sub-district
consolidation followed by redistribution while the second polycentric approach
relies on larger overlapping provision units to provide intergovernmental aid
and equalizing services to the smaller sub-district (Oakerson 1999).
Baltimore’s Charles Village Community Benefits District (CVCBD)
Informed by interviews with area business persons, neighborhood
activists, past or current sub-district employees, Baltimore City officials,
and State of Maryland officials, we examine and describe the formation of
Baltimore’s CVCBD in order to open up a new set of research questions related
to polycentricity within the city.
Specifically, how do issues related to
efficiency and equity affect the processes and outcomes of sub-district
formation?
It is important to note that polycentrism does not offer clear
guidelines concerning the appropriate size of sub-districts other than general
ones relating to provision- and production-side efficiency and equity.
One
can always argue for larger or smaller units based on either efficiency or
equity grounds in general or related to a specific service.
While these
questions can be addressed by rigorous research, policy makers may hold deepseated beliefs that affect their view of this question.
And as the case study
shows, determining the size of the CVCBD was the source of considerable
conflict.
The section concludes with a brief discussion of the sub-district’s
impact.
The CVCBD was initiated at the grassroots level by a neighborhood
business.
Unfortunately, the district’s genesis began as a result of a deadly
act of violence in the South Charles Village community.
According to a
prominent member of the South Charles Village business community who made a
strong contribution toward the formation of the CVCBD, the district’s creation
began on December 30, 1990 when two fifteen year old youths robbed and
6
murdered an employee of the engineering and architectural firm, Whitman,
Requardt and Associates, LLP, in the firm’s parking lot.
lingered in the neighborhood and attacked another person.
The two teens then
After the murder,
management at Whitman, Requardt questioned whether its 250-employee firm
should “exit”, leaving South Charles Village and the city of Baltimore.
It is
natural for a company to consider whether to flee to a safer suburban location
after one of its employees falls prey to murdering predators in the inner city
as happened to the Whitman, Requardt employee.
In opposition to such
violence, the foundation of a successful city district is that a person must
feel personally safe and secure on the street among strangers.
A city
district that fails to make persons feel secure creates huge troubles for
itself and the city at large.
And according to many researchers, the problem
of crime hinges on the inability of communities to come together in joint
action (Jacobs 1961; Newman 1972).
As a member of the South Charles Village community and a public
entrepreneur, Whitman, Requardt decided to exercise “voice” and attempt to
combat further crime in its community.
Company executives met with Baltimore
City Mayor Kurt L. Schmoke who assigned a city planner to help them organize a
community effort to address the problem of neighborhood violence.
The
grassroots initiated organizational meetings of this private corporation,
community, and city administration led to the creation of the 25th Street Task
Force that studied a 30 block section in the South Charles Village
neighborhood between 20th and 26th Streets, a lower-income area.
See Figure
1.
[PLACE FIGURE 1 ABOUT HERE]
In a 1992 meeting of the Task Force, the president of the Baltimore City
Council first suggested the creation of the CVCBD.
And the Task Force
identified and publicized a driving concept of equity, fiscal equivalence, for
creating this city sub-district: if everyone benefits, everyone pays for it.
It was decided that CVCBD supplemental services would include safety, garbage
7
collection, and economic development.
The Task Force believed that taxing both residential and commercial
property owners was necessary to acquire an adequate and constant source of
revenues.
However, Maryland statutes required that a Community Benefits
District first receive state enabling legislation in order to tax property
owners.
Legally, the state’s role was to pass legislation to enable Community
Benefits Districts to be established in communities in which the city gave its
authorization.
With state enabling legislation, the Baltimore City Council
could enact the necessary local ordinances for allowing a community to
establish a sub-district.4
The Task Force lobbied city and state officials
for the creation of the benefits district.
Given Maryland legislative norms, the city delegation to the State
General Assembly needed community and city administration support, especially
that of the mayor, in order to favor a state bill to create benefits districts
in Baltimore.
This caused a problem, because the mayor was concerned that
state legislation creating CBDs might not be in the interest of the city’s
entire population.
Although the proposed benefits district was located in a
lower-income area, the Mayor, the city delegation to the General Assembly, and
several Baltimore City Council-persons rather paradoxically expressed concern
that by creating sub-districts the city would be balkanized with white middleincome neighborhoods engaged in an elitist movement to obtain services that
exclude lower-income neighborhoods.
Several legislators were further
concerned that such balkanized sub-districts aimed to promote lifestyle
homogeneity through subtle forms of “gating” by placing an additional tax levy
on property owners.
These concerns motivated city officials to enact an ordinance requiring
city oversight to the local Task Force in drawing-up the sub-district
boundaries.
This city ordinance mandated that the sub-districts be both
8
larger in geographic scope and more diverse economically and racially than the
30 block sub-district originally proposed by the Charles Village Task Force,
although the CVCBD’s boundaries were not enlarged before the 1993 Maryland
legislative session.5
This mandate, it should be noted, embodies and represents adoption of
one of the two well-known strategies for promoting inter-community
distributional equity; that of traditional metropolitan reformers.
In classic
reformist style, it required enlarging the boundaries of the sub-district from
30 to 100 blocks in order to include a more heterogeneous community with
respect to income and race.
However, this mandate also meant that the
provision unit would be less tailored or specialized and, thus, less able to
satisfy particularized constituent needs.
It might also prove more
conflictual due to including more heterogeneous populations.
The proponents
of this approach did not support the other strategy for achieving intercommunity equity, that embraced by polycentrist theory.
The bill authorizing a CBD was killed during the 1993 Maryland
legislative session when it did not receive the Baltimore City delegation’s
support.
The reported reason was that the community did not provide
assurances of inclusiveness and diversity.
To gain the city’s support and follow the general terms of its mandate,
the proposed benefits district was then enlarged to encompass a 100 block area
containing a total of four other neighborhoods besides South Charles Village.
This consolidation increased the sub-district population from 3,000 to 14,000
residents.
The city of Baltimore then chose to support creating a CBD.
With
city administration support, the CVCBD was successful in obtaining the
necessary local delegation support for passing the enabling legislation in the
Maryland State Assembly during the 1994 legislative session.
The statute
authorized the mayor and city council to establish by local ordinance not more
than six Community Benefits Districts, including the Charles Village Community
9
Benefits District, within the city of Baltimore.6
The local ordinance creating the CVCBD also required a referendum in the
proposed area as a prerequisite for sub-district adoption.
The city ordinance
required an extra-large majority of fifty-eight percent of property owners and
renters in the 100-block benefits district to support adoption of the subdistrict and its additional taxes of thirty cents per $100 of assessed
valuation through a referendum.
The 1994 referendum was successful with
sixty-seven percent of property owners and renters voting in favor of creating
a district.
The result was a landmark decision with the CVCBD becoming one of
the first in the nation to form a mixed-use district that combined residential
and commercial areas.7
The city ordinance authorizing the CVCBD also required a “sunset clause”
that mandated that the District would have to be re-authorized every three
years.
This “sunset” provision gave city officials an opportunity to abolish
the district if political conflict arose or if residential or commercial
support diminished.
In essence, the provision served as a city administration
“escape hatch” and not a precedent for a permanent city commitment to subdistricts.
Reading the above analysis, one sees that the creation of the CVCBD
depended on the particular circumstances of time and place.
The original
decision to initiate the sub-district was left to the actors who were familiar
with local circumstances such as the local public entrepreneurial firm of
Whitman, Requardt.
In other words, the initial process of creating the sub-
district was decentralized and grassroots in nature.
Local actors knew the
particularities, local conditions, and special circumstances that were
relevant to the Charles Village area, and they were highly organized in
pursuit of their goal of sub-district creation.
As a result, they were best
suited to lead the sub-district formation process (Hayek 1945).
Eventually,
however, the Baltimore City government and Maryland State legislature became
10
highly influential in determining the composition of the sub-district.
Thus,
the creation of the sub-district became more centralized.
Impact of the CVCBD
Although this article focuses on the creation of the CVCBD, this section
briefly provides a perspective on its impact.
While the short-term impact of
the CVCBD has been positive, future research will need to evaluate the subdistrict’s longer-term impact.
A key means to assess the CVCBD’s short-term
performance is re-authorization.
The fact that the Baltimore City Council
unanimously re-authorized the CVCBD in 1998 with strong community support
shows that the sub-district so far has been perceived successful in providing
its three supplemental services of safety, garbage collection, and economic
development equitably and efficiently.
The CVCBD will again come up for re-
authorization in 2001.
One might also look directly at the three supplemental services provided
by the CVCBD to gauge its impact.
First, in terms of safety, statistics show
that over the past several years crime is down in the entire city of Baltimore
by 35 percent and down by a larger 56 percent in the CVCBD.
While the sub-
district’s safety team may not explain the entire drop in CVCBD crime, it is
thought to account for at least some of the decline.
is cleaner since its inception.
Second, the sub-district
The CVCBD’s clean team removes an extra ton
to a ton and a half of trash each week from the sub-district in addition to
what the city normally removes.
also on the upswing.
Finally, economic development in the CVCBD is
A new grocery store, pharmacy, and various restaurants
have located in the area since the sub-district’s creation.
Also, the
desirability of owning a home in the sub-district has recently increased.
Home purchases have grown by 40 percent in the last few years with selling
prices equaling a sizable 97.3 percent of asking prices.8
11
Discussion and Implications
We conclude by discussing the politics of creating sub-districts and
their potential equity and efficiency implications for district and nondistrict residents alike.
As throughout the article, the polycentric model
guides this discussion.
It is not surprising that the seminal polycentric model as presented in
the 1956 and 1961 articles is largely silent on how intra-city sub-districts
are created.
research.
These articles served as theoretical models, not empirical
And while the two articles had a profound impact on the study of
metropolitan governance, the authors recognized the need for empirical inquiry
into how local circumstances and conditions affected the provision of public
goods and services.
The CVCBD case illustrates that population homogeneity may not be
permissible for creating a sub-district.
From a citywide perspective,
allowing the creation of a sub-district may potentially lead to balkanization,
therefore, separating the city by class and race.
To minimize this possible
outcome in the case of the CVCBD, city-community negotiations led to the subdistrict being enlarged and made more economically and racially diverse,
meeting a necessary objective of city and state officials.
For example, the
enlarged sub-district’s residential population was 55 percent white and 45
percent African American in 1998.
Expanding the sub-district from 30 to 100 blocks added to its political
base and potential influence with city and state officials.
But sub-district
expansion also implies that city residents and businesses may not be allowed
to do what suburbanites have long done and continue to do – create their own
homogeneous governance formations – because of a city government’s ideology.
Allowing the sub-district to remain its original 30 block size is a
polycentric alternative to expanding the area that the city council and
administration did not permit.
Under this alternative, other smaller sub-districts, including low12
income ones, may also be able to form and achieve equity with the help of
intergovernmental equalizing aid or services from higher level overlapping
governments.
City officials were aware of this alternative but instead
selected the reformist option of consolidation followed by redistribution.
The original smaller sub-district that includes 3,000 residents may also have
been more efficient than the larger, more heterogeneous 14,000 resident subdistrict.
The smaller district may have been better able to meet more
homogeneous citizen preferences in its provision of labor intensive public
services, and it is less costly to meet homogeneous needs than heterogeneous
ones, other things being equal.
However, although the originally proposed
smaller CVCBD might have proven more efficient than the current larger subdistrict, the case study shows that the larger district seems to be efficient
enough, at least in terms of achieving re-authorization, reducing crime, and
enhancing sanitation and economic development.
In the end, an efficient metropolitan governance arrangement may be a
mixed system that includes both larger overlapping provision units and smaller
overlapped provision units.
Again, provision should not consist solely of
gargantua or the land of lilliputs.
As an illustration, all areas of a city
may be able to form sub-districts if the lower-income ones receive aid or
equalizing service allocations from overlapping city, county, state, or
national governments as polycentrists desire.
If all areas of the city are able to form sub-districts, a CBD’s
benefits may outweigh its potential abuses.
If city property owners and
renters do not form CBDs and, therefore, do not receive needed supplemental
services, they may find themselves living and working in neighborhoods that
are becoming more and more unstable.
city for the suburbs.
Or they may simply decide to “exit” the
Alternatively, through “voice” city property owners and
renters may create CBDs that have the potential to help stabilize and prevent
population decline and business closures in inner city neighborhoods, and the
CBD may even attract new residents and businesses from outside the city.
13
Because inner cities continue to experience instability, population loss, and
business closures, CBDs may serve as a structural policy option to aid in
stemming these trends.
14
NOTES
1
There is no official national count of city sub-districts.
The Census of
Government documents does not tally or report dependent districts of general
purpose local governments.
The Census of Government documents reports
independent districts, not administrative units of cities.
Estimates of some
types of sub-districts do exist.
2
We conducted a telephone survey with officials of 36 large cities concerning
the existence of Community Benefits Districts (CBDs).
The National League of
Cities also conducted a survey of sub-district organizations.
The assessment
from both sources was that sub-district organizations similar to CBDs exist in
at least twelve U. S. cities including Baltimore, Chicago, Cincinnati,
Detroit, Great Falls, Houston, Louisville, Minneapolis, New York,
Philadelphia, San Jose, and Seattle.
The sub-districts were similar to CBDs,
because both residential and commercial property owners paid an additional
property tax in order to receive supplemental services.
3
This taxing authority distinguishes CBDs from more traditional neighborhood
associations.
CBDs also differ from residential community associations
(RCAs), because residence or property ownership in the sub-district is a
criterion of membership in a CBD while property ownership only is a criterion
of membership in an RCA.
4
Interview with City of Baltimore Administrator (March 1999)
5
Interview with City of Baltimore Council-person (April 1999)
6
Interview with state of Maryland official (March 1999)
7
Interview with a member of the Mayor’s Staff (April 1999)
8Interview
with Dan Klocke, current CVCBD Executive Director (May 4, 2000)
15
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Figure 1