IntroductionIIIChapter Two

1. The Birth of the CID: Evolution of the American Gulag

innocent beginnings⎯almost
In 1826 Boston, an exclusive sub-division was built. This elegant neighborhood consisted of a centrally located private park surrounded by large, up-scale homes. The development was known as Louisburg Square and was complete in every detail but one: it seems the builder neglected to make arrangements for the maintenance of the private park.

In response to this oversight, some of the owners organized themselves into a “Committee of Proprietors” and undertook the responsibility of maintaining the park. They also drew up a document binding themselves, and any future property owners, to the maintenance of the park. Today, this voluntary group of Louisburg Square homeowners is considered to be the founding fathers of our contemporary, residential homeowners associations. And the document they created is thought to be a precursor to our modern restrictive covenants.

So what is so terrible about that? Somebody ought to sweep up every now and again. It’s actually very civic minded, in a private sort of way. But, of course, there was more to it than that.

In addition to providing proper maintenance of their private spaces, these people also wanted to preserve their exclusivity. They wanted total isolation from all those ethnic, religious, and economic “others.” They wrote it into the covenants and they didn’t bother to bury it in the fine print. Until 1948, clauses barring racial and religious minorities from owning property in a community were a prime feature of nearly all restrictive covenants.

As the years passed, these private enclaves for the affluent became more commonplace, and most adopted the same governing structure established at Louisburg Square.

zoning departments: who needs em?
In 1869, a Chicago developer hired Frederick Olmsted and Calvert Vaux, the designers of New York’s Central Park, to create the exclusive suburb of Riverside. The idea was to create the illusion of a rural paradise within just a few minutes train ride of the city. The designers of Riverside intended to use restrictive covenants for all the reasons mentioned above but they also found two new ways to apply them.

Olmsted and Vaux were the first to use restrictive covenants to circumvent municipal zoning ordinances. Their plan called for impractical but picturesque winding streets, minimum lot sizes, and setbacks from the street as well as minimum home prices. They were able to avoid interference from the city planning department and create their own detailed zoning regulations by writing them into the restrictive covenants.

this land is mine, no matter who owns it!
The second way in which they expanded to use of restrictive covenants was to apply limitations on the rights of the homeowners. In order to maintain the illusion of wide-open spaces, the covenants prohibited the building of fences, and also, to keep out the riff-raff, prohibited owners from leasing their property.

the masters of planing
The beginning of the twentieth century saw the emergence of the “community developers.” These builders specialized in constructing entire communities for the very rich. Often, these large-scale developers would build a small town with its own shopping and business district. It was the dawn of the master-planned community.

you’ll join the HOA and like it…see!
One of these early community builders was Kansas developer Jesse Clyde Nichols. In 1906, he created a series of master planned communities called the Country Club District. Like the builders of the previous century, Nichols used restrictive covenants to provide maintenance of common areas, restrict ownership, control planning, and to have some control over the homeowner’s freedom of choice.

As a means of enforcing his deed restrictions, he organized the usual homeowners association. But up until this time, membership in these organizations was voluntary and their activities confined to maintenance and beautification.

Nichols, whose ego required that his developments always remain just as he had envisioned them, became dissatisfied with this arraignment when homeowners began to exercise what he considered to be too much independence in the maintenance of their property.

For his next project, Mission Hills, Nichols created the “mandatory-membership” homeowners association to ensure that he would maintain complete control over the development as well as those who dwelled within it. When a buyer signed the deed, they automatically became members of the homeowners association and subject to the restrictive covenants. In this way, deed restrictions were used to sidestep many constitutional and civil laws.

democracy by absolute monarch?
Nichols incorporated Mission Hills, and by doing this, he created his own private government with power to enforce his restrictions, maintain property, build infrastructure, contract for utilities, and collect taxes from homeowners for upkeep of the common areas.

begin the spin
Nichols was also responsible for one other first in CID development. Realizing that the public may begin to view his private residential governments as something akin to a monarchy, Nichols began vigorously promoting his developments as “town hall” style democracies. A very common spin heard even today.

imperial style democracy for the masses…almost
In 1926, New York City developer Alexander Bing set up a corporation called the City Housing Corporation (CHC). Bing was the first developer to try to use the CID model to provide low cost housing for the working class.

His development, called Rayburn, was located in New Jersey. Bing expanded the use of restrictive covenants as a means of limiting the rights of the owners to alter their properties. He did this not as a means of protecting property values or preserving his own vision indefinitely, but to prevent owners from enhancing their homes to the point that property values rose beyond the reach of his target market.

He created a mandatory-membership homeowners association with its own private government based on the council-manager plan. Like Nichols before him, he created a government by contract, not consent. The association was incorporated and given the usual powers to provide municipal services, tax owners, and dictate architectural standards.

Bing’s corporation, CHC, appointed the council and the council hired a manager. Unlike today’s homeowners associations, all of Bing’s council members were chosen for their abilities. "Boy, those were the good old days." Aside from this marked difference in the recruitment of management personnel, this is the model for today’s private HOA governments.

In spite of Bing’s success creating the management model for today’s CID, his dream of bringing planned, communal living to the masses would have to wait about thirty years. The depression reduced the number of qualified buyers and created cost overruns, which drove up housing prices. Rayburn ended up being one-fourth its intended size and upper-middle class in demographic makeup.

give me land…lots of land!
Throughout the depression and continuing through the war years housing starts fell off sharply, but the war’s end set in motion an economic recovery that, by the early fifties, was running at full throttle. The public was willing to buy big, and big houses were the first item on the national wish list. During the building boom of the 1950s, the master-planned communities of the past were all but forgotten, but it was only a temporary lapse.

The big-lot home had become the recognized symbol of the American dream, but as early as 1960, developers were beginning to notice a growing scarcity of suitable building sites. Consequently, land prices began rising at the same time inflation was driving up the price of building materials. Within a just a few years the building industry was openly worrying that, to keep rising home prices from drying up the market for middle-class homes, they would either have to reduce their profit levels or reduce the publics expectations concerning home ownership. They chose the latter.

CIDs are what the people want…honest
Since land was the problem, the public was going to have to learn to live with a lot less land. Homes were going to get smaller and much more densely packed, and the amenities, if there were to be any, were going to have to be shared. Shared amenities meant jointly owned property, and that meant that this new, scaled-down version of suburbia would include deed restrictions and be governed by a homeowners association. Homeowners were going to be paying more for less.

The builders knew that the notion of CID living would be a tough sell. Most people moved to the suburbs to get away from high-density urban environments. Who would warm to the idea of smaller homes with much smaller yards and sharing amenities with neighbors of unknown character while at the same time, turning over control of one’s own property to a bunch of unaccountable amateurs enforcing rules created by a developer.

The public had to be convinced that high-density CID living was the way to go, and the industries public relations people drove a relentless campaign to convince them that what clearly appeared to be negatives, were actually positives.

Both the Federal Housing Administration and the Urban Land Institute published numerous pamphlets and books on the joys of life in a CID. Again, the most common theme used to convince perspective homebuyers of these dubious virtues was the fiction that they would be buying into a democratic, “town meeting” style community.

they did the math
The high-density housing being pushed by developers violated most local zoning regulations, which stipulated a maximum number of occupants that can be housed on an acre of land. However, developers easily got around these regulations by including the common areas and amenities (pool areas, playgrounds, clubhouses, etc.) in their calculations of population density. After that, it was an easy matter for developers to convince legislators to write new regulations favorable to CID development.

And CIDs have been proliferating ever since. The reason we live with so many of them today is not the result of consumer demand as some industry insiders insist, it is purely the result of the economic benefits they provide to developers and local municipalities.

developer wins, city wins, public …hey two out of three
CIDs make economic sense to developers because they can squeeze more homes on to less land at less cost. The open spaces and recreational amenities associated with CIDs are less costly to build than homes and represent huge savings to the developer. Building codes are less stringent within the confines of a CID, which reduces the cost of providing infrastructure (roads, sewer, lighting, trash disposal, etc.). All these cost reductions mean higher profits for the developer.

Municipalities did not resist the spread of CIDs with their private governments, because CIDs relieved local municipalities of the responsibility of providing expensive infrastructure, yet the CID residents continued to pay the same taxes to the city. This situation made it relatively easy for developers to get city approval for CIDs.

Today, due to the enormous financial benefits afforded to both developer and municipality, the concept of CID housing has generally gained acceptance nationwide. It’s now become an industry of predatory developers, legislators, lobbyists, lawyers, and management companies who feed upon the vulnerability of the homeowners who live within these private, residential governments, these “American Gulags.”


IntroductionIIIChapter Two