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Neighborhood Empowerment and the Future of the City

In any given metropolitan region, scores of municipalities are locked in a zero-sum
struggle for mobile sources of jobs and tax revenue. This competition appears to
benefit small, homogeneous suburbs that can directly enact the uniform will of the
electorate over large, diverse cities that are often ensnarled in conflict between
competing interest groups. Cities can level the playing field with suburbs, however,
by devolving municipal power to smaller, more homogeneous subgroups, such as
neighborhoods. Indeed, many commentators have identified one such effort at
neighborhood empowerment, the “business improvement district” (BID), as a key
factor in the recent revitalization of many cities. The BID and the related “special
assessment district” devolve the financing of infrastructure and services to landowners
within a territorially designated area. Courts have widely upheld BIDs and special
assessment districts against constitutional challenges.

Cities remain hamstrung in competing with suburbs, however, because courts
prohibit cities from delegating what is 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 within a certain distance from a proposed land
use change (a scheme I designate a “neighborhood zoning district”).

This Article argues that the judicial prohibition on neighborhood zoning districts
is inconsistent with the judiciary’s permissive attitude toward BIDs and special
assessment districts. As I demonstrate, the neighborhood zoning district is conceptually
identical to the special assessment district/BID. Both devices are designed to
enable large, diverse cities to capture some of the governance advantages of small,
homogeneous 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, and have been, distinguished. I find, however, that the only meaningful
distinction between these mechanisms is that special assessment districts/BIDs
actually raise far more troubling public policy concerns than neighborhood zoning
districts, thus calling into question why the judiciary has been so much more
deferential toward the former than the latter. I conclude that courts should broadly
defer to municipal delegations of power to sub-local groups, so that cities can work
out their own strategies for surviving in an era of intense interlocal competition.