Public Versus Private Neighborhood: Who Pays for Upkeep?
If you have never lived in a neighborhood that the residents privately own, you may be confused as to who is responsible for maintaining the neighborhood’s streets, lights, amenities, and common areas. Let’s break down who is responsible for what in public and private neighborhoods.
Public versus private
A neighborhood’s streets, streetlights and road signs may be publicly owned by the city or privately owned by the residents. Whether a neighborhood is public or private, its residents own the houses.
In a public neighborhood, the city pays to maintain its roads, streetlights and road signs. In a private neighborhood, residents pool their funds for neighborhood upkeep. In either scenario, amenities that are exclusively for neighborhood use, such as a pool or tennis courts, are owned and maintained by the residents as a group.
As an example, suppose potholes appear in a neighborhood’s streets. The city will make the repairs if the neighborhood is public. In a private neighborhood, the funds for repair will come from the homeowners association (HOA) budget, which is funded by residents’ dues. The HOA board would contract with a repair company on behalf of the neighborhood.
Whether the neighborhood is public or private, local utility companies own and maintain utility lines for electricity, gas, water and sewer. A utility easement runs through the neighborhood under or over the streets. Each homeowner owns and is responsible for the utility lines on their property that connect their house to utility lines above or beneath the street.
The role of the HOA
An HOA may govern homes in either scenario. An HOA is a legally authorized organization of the homeowners that is formed for self-governing the maintenance and appearance of the neighborhood.
HOAs establish rules for how homes can be landscaped, remodeled and maintained. HOAs may also have rules regarding the placement of yard signs and flags. If a homeowner violates these rules, the HOA can sanction them with fines or even legal action.
In a publicly owned neighborhood, the HOA’s jurisdiction extends only to the homes, amenities and common areas that the residents own. The city establishes parking rules on the street. Residents of a private neighborhood set the rules for all aspects of the neighborhood, including parking, through the HOA. HOA dues maintain facilities for the exclusive use of the residents, such as a pool, tennis courts or a clubhouse for gatherings.
HOAs should allocate a portion of homeowner dues to a reserve fund to save for maintenance. Otherwise, the homeowners will need to pay a special assessment to raise the capital when a maintenance project is necessary. The amount could be an expensive shock to the owners.
Parking in private neighborhoods
Parking on private neighborhood streets can get contentious. Private neighborhoods can have streets as much as five feet narrower than public streets. This means that private neighborhood HOA rules often disallow street parking because it can make it difficult for cars or fire trucks to pass through the community. This can cause consternation among residents.
A gated neighborhood accessible only to residents is privately owned since the public cannot drive the streets at will. Police, fire and EMS personnel will have their own code or a special key to access the gate in emergencies, but police may not routinely patrol the neighborhood.