<p>Well, there used to be more privately owned cities in America and Europe (and their foreign colonies), these were the company towns. Owners of factories, mines and mills would sometimes create these towns to house their workers, every company town had a store that was owned and operated by the same firm that operated the local factory or mine, housing mainly consisted of row houses that each had one or two rooms upstairs and one or two downstairs, and there was also usually a church and sometimes a school, all owned and run by the single firm that owned the entire settlement, some company towns even issued their own non-official &quot;currencies&quot; usable only within the town! Like many other aspects of the economic system in the 19th century industrial revolution, the downfall of company towns can largely be traced to two main things. First, the rise of the middle class in the latter half of the industrial revolution meant that more non-agrarian families began to own homes instead of renting apartments or row houses from a slumlord. The second reason is that progressivism put an end to the economic order that was around during the 19th century.</p>
<p>Also, the American system of tiered government means that once a community is officially a city or town, it doesn't stay in private hands for long, instead, the settlement forms its own public government, which enacts laws and levies taxes. Just about the only way a development can remain private property is if it's a master planned community. A master planned community is a giant subdivision (usually covering hundreds or thousands of acres with thousands or tens of thousands of dwelling units), which is all built by a single developer and construction company. Like cities, these subdivisions often have commercial businesses within them. Even though these developments are privately owned, unless all the dwellings are rentals that the developer retains full ownership of (as is the case with the country's largest rental apartment complexes), no single entity owns the whole thing and the community gains its own private pseudo &quot;government&quot;, known as the subdivision's homeowners association (HOA), property owners association, condo board, or similar organization. These communities usually provide similar services to what cities do, like security, trash pick up and maybe private utilities, they also tend to offer recreational facilities for residents to enjoy, like swimming pools, golf courses, fitness suites, and bowling alleys.</p>

CC BY-SA 4.0
2024-06-16T08:09:27.450Z
2024-06-16T08:09:27.450Z
Costillo
<p>Fundamentally, most cities tend to provide public goods, e.g. roads. These leads to a positive externality. That means, the good is under-provided. That means there is a role for government to provide them, instead of private companies.</p>
<p>It’s likely that the Irvine company cannot appropriate all the returns from its investment, because of the externalities.</p>
<p>But maybe it can appropriate enough, although that seems inefficient. So, to me, the real question is not why don’t others do this, but rather, why does Irvine conduct such an inefficient investment. That probably explains why its rare.</p>

CC BY-SA 4.0
2024-06-14T05:12:08.560Z
2024-06-14T05:12:08.560Z
BB King
<p>There is a city in Southern California called Irvine, perhaps one of the only few &quot;private&quot; cities in the US. That doesn't mean it doesn't have an elected body or government. It's still functions as a regular city; however almost all property (malls, business centers, townhomes, parks) are owned and leased by the Irvine Company, a diversified real estate company. They make sure that the city is safe, clean, and attractive for all of its residents. The roads are new, the parks are green, there are palm trees everywhere. It's home to many innovative companies, and has become an economic hub.</p>
<p>By providing a safe and clean city for people to work, live, and shop, the company directly benefits from higher demand for homes in Irvine and all of the economic activity that goes on there.</p>
<p>Why can't more cities in the US work like this? I feel like this structure provides an incentive for a company to work with the government and directly advocate/invest for education, infrastructure, and policies for reduced crime. All of this benefits the residents of the city.</p>
<p>I get that Irvine is very expensive for this very reason, but if more cities like Irvine pop up, perhaps due to more competition, housing prices can adjust and come down just like with any other business.</p>

CC BY-SA 4.0
2024-06-12T06:09:38.330Z
The title is confusing; Irvine was not privatized.
Michael Greinecker
CC BY-SA 4.0
2024-06-12T07:10:03.937Z
>>
*The roads are new, the parks are green, there are palm trees everywhere. It's home to many innovative companies, and has become an economic hub.
 [...]
Irvine is very expensive for this very reason,*
<< Have you tried looking at similar (population, per capita income, density, etc.) cities which are not  owned by a company? That could tell you if the secret is in company ownership or just wealth.
Giskard
CC BY-SA 4.0
2024-06-12T07:11:58.930Z
There is also quite some history of company owned mining towns in the US. They were...not so green.
Giskard
CC BY-SA 4.0
2024-06-13T22:20:59.910Z
@MichaelGreinecker I explained it in my question summary. Irvine is not a private city per se, but most of its private property is managed by a single real estate company.
ARJ
CC BY-SA 4.0
2024-06-13T22:22:23.230Z
@Giskard I mean there are other nice places like Costa Mesa and Newport, but it can't beat Irvine's urban planning.
ARJ
CC BY-SA 4.0
2024-06-14T05:55:53.963Z
@ARJ I wrote privatized, not private. Privatizing means something publicly owned becomes privately owned.
Michael Greinecker
<united-states><housing><urban-economics><infrastructure>
Why aren't more cities privately owned by a single company
ARJ
# Why aren't more cities privately owned by a single company

(Asked by: username_0 on 2024-06-12)

There is a city in Southern California called Irvine, perhaps one of the only few "private" cities in the US. That doesn't mean it doesn't have an elected body or government. It's still functions as a regular city; however almost all property (malls, business centers, townhomes, parks) are owned and leased by the Irvine Company, a diversified real estate company. They make sure that the city is safe, clean, and attractive for all of its residents. The roads are new, the parks are green, there are palm trees everywhere. It's home to many innovative companies, and has become an economic hub.

By providing a safe and clean city for people to work, live, and shop, the company directly benefits from higher demand for homes in Irvine and all of the economic activity that goes on there.

Why can't more cities in the US work like this? I feel like this structure provides an incentive for a company to work with the government and directly advocate/invest for education, infrastructure, and policies for reduced crime. All of this benefits the residents of the city.

I get that Irvine is very expensive for this very reason, but if more cities like Irvine pop up, perhaps due to more competition, housing prices can adjust and come down just like with any other business.

**Tags:** united-states, housing, urban-economics, infrastructure
> **Comments:**
> **username_1**: The title is confusing; Irvine was not privatized.  
> **username_2**: >> *The roads are new, the parks are green, there are palm trees everywhere. It's home to many innovative companies, and has become an economic hub.  [...] Irvine is very expensive for this very reason,* << Have you tried looking at similar (population, per capita income, density, etc.) cities which are not  owned by a company? That could tell you if the secret is in company ownership or just wealth.  
> **username_2**: There is also quite some history of company owned mining towns in the US. They were...not so green.  
> **username_0**: @MichaelGreinecker I explained it in my question summary. Irvine is not a private city per se, but most of its private property is managed by a single real estate company.  
> **username_0**: @Giskard I mean there are other nice places like Costa Mesa and Newport, but it can't beat Irvine's urban planning.  
> **username_1**: @ARJ I wrote privatized, not private. Privatizing means something publicly owned becomes privately owned.  

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## 2 answers

### Answer by username_3 on 2024-06-16. Score: 1

Well, there used to be more privately owned cities in America and Europe (and their foreign colonies), these were the company towns. Owners of factories, mines and mills would sometimes create these towns to house their workers, every company town had a store that was owned and operated by the same firm that operated the local factory or mine, housing mainly consisted of row houses that each had one or two rooms upstairs and one or two downstairs, and there was also usually a church and sometimes a school, all owned and run by the single firm that owned the entire settlement, some company towns even issued their own non-official "currencies" usable only within the town! Like many other aspects of the economic system in the 19th century industrial revolution, the downfall of company towns can largely be traced to two main things. First, the rise of the middle class in the latter half of the industrial revolution meant that more non-agrarian families began to own homes instead of renting apartments or row houses from a slumlord. The second reason is that progressivism put an end to the economic order that was around during the 19th century.

Also, the American system of tiered government means that once a community is officially a city or town, it doesn't stay in private hands for long, instead, the settlement forms its own public government, which enacts laws and levies taxes. Just about the only way a development can remain private property is if it's a master planned community. A master planned community is a giant subdivision (usually covering hundreds or thousands of acres with thousands or tens of thousands of dwelling units), which is all built by a single developer and construction company. Like cities, these subdivisions often have commercial businesses within them. Even though these developments are privately owned, unless all the dwellings are rentals that the developer retains full ownership of (as is the case with the country's largest rental apartment complexes), no single entity owns the whole thing and the community gains its own private pseudo "government", known as the subdivision's homeowners association (HOA), property owners association, condo board, or similar organization. These communities usually provide similar services to what cities do, like security, trash pick up and maybe private utilities, they also tend to offer recreational facilities for residents to enjoy, like swimming pools, golf courses, fitness suites, and bowling alleys.


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### Answer by username_4 on 2024-06-14. Score: 0

Fundamentally, most cities tend to provide public goods, e.g. roads. These leads to a positive externality. That means, the good is under-provided. That means there is a role for government to provide them, instead of private companies.

It’s likely that the Irvine company cannot appropriate all the returns from its investment, because of the externalities.

But maybe it can appropriate enough, although that seems inefficient. So, to me, the real question is not why don’t others do this, but rather, why does Irvine conduct such an inefficient investment. That probably explains why its rare.


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