McKenzie Paper on Special Development Districts as “Phantom Governments”

By Deborah Goonan, Independent American Communities


On IAC, the focus is on Association-Governed Residential Communities – homeowners’, condo, and cooperative associations. But some of my readers may not be aware of another way that developers and state governments have devised to create and manage large subdivisions: Special Districts.

Special Districts go by alternate names: Community Development Districts, Community Services Districts, Utility Districts, and so on. The following report by Evan McKenzie focuses on Multi-Functional Special Districts (MFSDs)in Florida and California (Ave Maria, Celebration, and The Villages in FL and Rossmoor in CA), and compares and contrast MFSDs to democratic city government.


Phantom Governments: Multiple Function Special Districts as Substitutes for Municipalities By Evan McKenzie Political Science Department University of Illinois at Chicago


I found this paper very informative, and I learned something new. I did not realize the differences between Multi Function Special Districts in FL vs. CA. I was previously aware that a developer controls the MFSD for the first several years, and that, after turnover, there are supposed to be publicly held elections for the Board of Supervisors. I have always considered MFSDs, therefore, to be a hybrid between public and private governance. Not quite the same as an HOA, but also not a true city.

Some advocates seeking alternatives to Association Governance have suggested formation of a Special District instead. At one time, I, too, thought that MFSDs would be a superior alternative to an HOA. But after reading up on the subject, including this paper, I am now highly skeptical. While MFSDs are theoretically chartered as public entities, the fact that a developer or self-interested landowners get to call all the shots while building their empire makes this alternative just as onerous as any HOA.

In fact, I would argue that HOAs, especially large-scale HOAs with multiple smaller associations under the umbrella of a master association, operate in essentially the same way. In these HOAs, just as in Ave Maria, Celebration, and The Villages, and Rossmoor, there will never be a true turnover of the Association to the homeowners. And even if there were, there will never be One Person One Vote as long as HOAs remain corporate entities, unless the federal legislature or judiciary – or both – take proactive action to mandate One Person One Vote as applicable to both MFSDs and Association-Governed Residential Communities.

It should be noted that it appears the trend in HOA Land is to build large scale developments in phases, probably intentionally to ensure developer control in perpetuity. This trend coincides with the fact that many small homebuilders have been driven out of the market since the last real estate bust. New home construction is now dominated by national and multi-national development corporations.

Looking again at the Big Picture, we see that our local governments need to stop treating developers as some sort of demi-gods or privileged kings of their self-created empires. It’s time to return voting control back to the individual and make public service an honorable and admirable duty.

In closing, the last paragraph of “Phantom Governments sums it up nicely:

All these entities—cities, counties, and special districts– are creatures of the state legislature and state constitutions. We need to understand why some legislatures see so much value in government by special district instead of by municipality. We need to ask whether state and local government have arrived at a place where it is necessary to give developers their own local governments in order to build infrastructure. And if we are going to create what are, for all practical purposes, city governments in which people cannot vote to choose their own community leadership, then we need to ask whether it is possible to have cities without citizens.

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