Mark Frazier
I am chair of the advisory board of the Startup Societies Network and president of Openworld, Inc, nonprofit research groups specializing in land value appreciation as a means of privately funding public goods. My projects help awaken real estate assets through policy reforms, learning innovations, and challenge offers for inclusive, self-funding growth.
Over the past 40 years, I've worked in more than 50 countries on free economic zones and technology-enabled development. Prime areas of interest have included pre-investment studies and business climate reforms to remove barriers to investment and entrepreneurship. Among the overseas initiatives I have assisted are Zonamerica (https://www.zonamerica.com) in Uruguay, the Montego Bay Free Zone (Jamaica), and dozens of free zones and business and technology park ventures in the Dominican Republic, Costa Rica, Israel, Bulgaria, Mauritius, and other emerging economies. For the World Bank, the Overseas Private Investment Corporation, and USAID, I have also advised on export competitiveness and workforce strategies in Vietnam, Thailand, Sri Lanka, Egypt, Eastern Europe, and the Caribbean.
I've had an abiding interest in strategies to include residents and community groups as beneficiaries of the rise in real estate values generated by market-based reforms. I'm coauthor of a recent book on bootstrapping these projects (https://is.gd/startupsocietiesbook). I have assisted enterprise zone, land trust, and self-help ventures at local, state, and federal levels in the United States. I served as principal investigator for a Sabre Foundation and Whitehead Foundation-funded research project on New Catalysts for Sustainability, identifying ways for donors to catalyze self-funding community land trusts through challenge grant offers (highlights at http://is.gd/seedsofchange). With support from the Paul F. Glenn Foundation, I have also mapped opportunities for creation of World Cities, Singapore- and Hong Kong style havens for economic migrants and refugees.
As part of a new Openworld project, I am now working on sustainable ways for students of all ages to access free lifelong learning resources, and to apply their skills in projects that help awaken assets in community land trusts. The essence of the opportunity is to integrate microscholarship, online work-study, and land grant experiences in a self-sustaining “Next College” package for personal and community growth. The venture draws upon my prior work to help entrepreneurial schools and telecenter operators in obtaining microvouchers and land grants (Kyrgyzstan), creating online work-study projects for students (Somaliland), and crowdfunding microscholarships and peer learning (Sri Lanka).
A key aspect of the Next College initiative will be to link certifications and credentials to the progress of actual or virtual work-study and service learning projects for the benefit of existing residents, as well as enterprise zones, community land trusts, and related “Endowment Zone” and World Cities ventures. Participants active in service learning projects may earn shares in land trusts/Endowment Zones in partnering communities. Highlights of digitally-recorded service learning projects are anticipated to enrich Next College’s online course offerings. An open source system for Next College’s student-generated content will draw upon my eLearning design work with Openworld Learning (a U.S.-Russian eLearning venture), the Center for Advanced Engineering Studies at MIT, and Digiperfect in India.
Earlier in my career, I was principal researcher and author of studies on targeted economic revitalization strategies for the Joint Economic Committee of the U.S. Congress, the Department of Housing and Urban Development, and the Advisory Commission on Intergovernmental Relations. I was an early publisher and managing editor of Reason magazine, and cofounder of the Local Government Center, springboard for Reason Foundation's consulting practice on infrastructure and local service delivery. As executive director of the Center, I specialized in education-related policy reforms and innovations. I've also had a long-standing interest in civil society and business roles in expanding access to space resources, including an extended effort during the late 1970s on behalf of the Earthport Project, a global venture to establish an international free port near the equator for commercial launch operations.
My articles on privatization, market-based learning alternatives, and global markets for telework and online learning have appeared in the Chapman Law Review, Policy Review, the Freeman, Reason Magazine, Reader’s Digest, and the IEA's Journal of Economic Affairs. I'm a graduate of Harvard University and a former Visiting Fellow of the Lehrman Institute, where I specialized in divestiture of municipal services to residential community associations. My personal interests include kayaking, flying, architectural design, and square foot gardening.
Phone: 202-257-2574
Address: 175 Main Street
Dayton, Virginia 22821
Over the past 40 years, I've worked in more than 50 countries on free economic zones and technology-enabled development. Prime areas of interest have included pre-investment studies and business climate reforms to remove barriers to investment and entrepreneurship. Among the overseas initiatives I have assisted are Zonamerica (https://www.zonamerica.com) in Uruguay, the Montego Bay Free Zone (Jamaica), and dozens of free zones and business and technology park ventures in the Dominican Republic, Costa Rica, Israel, Bulgaria, Mauritius, and other emerging economies. For the World Bank, the Overseas Private Investment Corporation, and USAID, I have also advised on export competitiveness and workforce strategies in Vietnam, Thailand, Sri Lanka, Egypt, Eastern Europe, and the Caribbean.
I've had an abiding interest in strategies to include residents and community groups as beneficiaries of the rise in real estate values generated by market-based reforms. I'm coauthor of a recent book on bootstrapping these projects (https://is.gd/startupsocietiesbook). I have assisted enterprise zone, land trust, and self-help ventures at local, state, and federal levels in the United States. I served as principal investigator for a Sabre Foundation and Whitehead Foundation-funded research project on New Catalysts for Sustainability, identifying ways for donors to catalyze self-funding community land trusts through challenge grant offers (highlights at http://is.gd/seedsofchange). With support from the Paul F. Glenn Foundation, I have also mapped opportunities for creation of World Cities, Singapore- and Hong Kong style havens for economic migrants and refugees.
As part of a new Openworld project, I am now working on sustainable ways for students of all ages to access free lifelong learning resources, and to apply their skills in projects that help awaken assets in community land trusts. The essence of the opportunity is to integrate microscholarship, online work-study, and land grant experiences in a self-sustaining “Next College” package for personal and community growth. The venture draws upon my prior work to help entrepreneurial schools and telecenter operators in obtaining microvouchers and land grants (Kyrgyzstan), creating online work-study projects for students (Somaliland), and crowdfunding microscholarships and peer learning (Sri Lanka).
A key aspect of the Next College initiative will be to link certifications and credentials to the progress of actual or virtual work-study and service learning projects for the benefit of existing residents, as well as enterprise zones, community land trusts, and related “Endowment Zone” and World Cities ventures. Participants active in service learning projects may earn shares in land trusts/Endowment Zones in partnering communities. Highlights of digitally-recorded service learning projects are anticipated to enrich Next College’s online course offerings. An open source system for Next College’s student-generated content will draw upon my eLearning design work with Openworld Learning (a U.S.-Russian eLearning venture), the Center for Advanced Engineering Studies at MIT, and Digiperfect in India.
Earlier in my career, I was principal researcher and author of studies on targeted economic revitalization strategies for the Joint Economic Committee of the U.S. Congress, the Department of Housing and Urban Development, and the Advisory Commission on Intergovernmental Relations. I was an early publisher and managing editor of Reason magazine, and cofounder of the Local Government Center, springboard for Reason Foundation's consulting practice on infrastructure and local service delivery. As executive director of the Center, I specialized in education-related policy reforms and innovations. I've also had a long-standing interest in civil society and business roles in expanding access to space resources, including an extended effort during the late 1970s on behalf of the Earthport Project, a global venture to establish an international free port near the equator for commercial launch operations.
My articles on privatization, market-based learning alternatives, and global markets for telework and online learning have appeared in the Chapman Law Review, Policy Review, the Freeman, Reason Magazine, Reader’s Digest, and the IEA's Journal of Economic Affairs. I'm a graduate of Harvard University and a former Visiting Fellow of the Lehrman Institute, where I specialized in divestiture of municipal services to residential community associations. My personal interests include kayaking, flying, architectural design, and square foot gardening.
Phone: 202-257-2574
Address: 175 Main Street
Dayton, Virginia 22821
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Papers by Mark Frazier
The most basic obstacle facing voluntary organizations seeking to provide public services is the problem of the "free rider." For many types of public goods, it is difficult to withhold the benefits of a service from those who refuse to share in its costs. Private groups typically have had to rely on the goodwill of donors and volunteers to sustain civic improvement efforts.
With surprising speed in recent decades, however, private sector organizations have been adopting a fundamentally different method of financing and providing public services. The new method–based upon private self-assessments–is most clearly embodied in homeowners' associations. All propertyowners in such associations regularly share, under a binding deed-based agreement, the costs of facilities and services that benefit all.
Homeowners associations today finance and provide streets, water and sewer systems, emergency services, daycare, and recreational services. In contrast to public sector bodies, the associations have strong internal incentives to meet service needs of residents, while avoiding featherbedding and other excessive costs in arranging for basic service delivery.
Associations have also proven highly effective in reducing crime, as a result of creating a social fabric strong enough to support block watches and other passive crime prevention measures. The deed agreements, moreover, usually require propertyowners to maintain their homes in good repair, thereby making neighbor hoods resistant to physical decline.
Beyond relieving governments of service responsibilities, home owners' associations have strengthened property values and improved property tax bases. Surveys undertaken for the Urban Land Institute, the Department of Housing and Urban Development, and the Institute for Community Design Analysis have found properties in homeowners' associations consistently to have higher values than properties in otherwise comparable neighborhoods elsewhere.
Yet the associations to date have achieved only a fraction of their potential. To strengthen community self-sufficiency, this study suggests that consideration be given to removing or reducing the following constraints:
1. Adverse tax policies. Federal tax policies discriminate against service delivery by private, self-assessing associations. At present, individuals may deduct tax payments for municipal services when calculating their federal income tax, but may not deduct any fee payments to their associations for identical services. This inequity is compounded at the local level. Members of self-assessing associations find that local governments continue to demand taxes for municipal services, regardless of the extent to which association members have arranged and paid for alternative services. Consequently, homeowners associations have no incentive to assume added public service responsibilities.
2. Problems with "holdouts." It is often difficult to mobilize homeowners to form a deed-based, automatic-membership association: holdouts know they can benefit from association efforts with out paying the self-assessments. Homeowners associations generally achieve universal membership only in new subdivisions and new communities, where private developers from the outset require homebuyers to join associations as a condition of sale.
3. Ineffectiveness in assisting the poor. Homeowners' associations at present are a limited vehicle for meeting the service needs of tenants in low income areas. The associations seldom if ever devote resources to provision of services for the disadvantaged. Moreover, homeowners' associations can dislodge low-income residents from their neighborhoods. As a result of association-generated improvements in neighborhood living conditions, property values often rise sharply, leading to displacement of those who rent rather than own their homes. Formation of propertyowners' associations in some economically distressed areas has been followed by a 200 to 300 percent appreciation in property values within three years, as neighborhood improvements took hold.
Under present circumstances, homeowners' associations seem to have few prospects of relieving the public sector of service responsibilities on a large scale.. New policy initiatives, however, may infuse powerful energies into community enterprise.
RECOMMENDED ACTIONS
Steps can be taken in the near term to resolve each of the fundamental problems cited previously, and to generate fiscal dividends for governments at all levels. These actions include:
1. Changing tax policy. Congress should extend deductibility to the portions of association fees that fund government-like services, to correct the systemic bias in favor of public rather than private service provision. Alternatively, Congress could achieve the same result by eliminating altogether the deductibility of local tax payments.
At the local level, cities should offer relief from "double payments" problems. Houston, Texas and Kansas City, Missouri have extended virtual tax rebates to existing propertyowners' associations that opt out of municipal refuse collection services and arrange for private alternatives. This approach has relieved the municipalities of costs for serving approximately 200 associations.
Such reforms can be readily implemented on a fiscally-sound basis. Governments can set the amount of tax deductions or rebates to be somewhat less than the savings that accrue to the public sector from transferring service responsibilities to homeowners' associations, thereby "profiting" whenever a neighborhood becomes more self-sufficient.
2. Inducing holdouts to join self-assessing associations. In areas where no homeowners' associations now exist, the provision of "challenge grants" can stimulate participation by homeowners who would otherwise stay on the sidelines. Governments can offer tax relief and/or other benefits to association members once a thresh old level of participation in a deed agreement (perhaps 50 percent of the homeowners on a block) is achieved. The size of "challenge grant" benefits to each member should increase to the degree that participation approaches 100 percent.
Opportunities also exist for insurance and realty firms to provide challenge grants for neighborhoods. Insurance companies are be ginning to offer low-cost group policies to entire homeowners' associations, as a way of expanding their client base. Some insurance brokers appear agreeable to offering challenge grants for home owners to form new associations capable of buying group policies. Under this approach, individuals could lower their homeowner insurance rates by up to 30 percent annually simply by joining the association. Similar deals might be struck with real estate brokers–realtors contacted by project researchers expressed a willingness to offer start-up challenge grants and to lower commission rates, provided that association members reciprocated with exclusive listing arrangements when they sold their properties.
3. Safeguarding the interests of the poor. Two basic approaches can be applied to ensure that homeowners' associations directly benefit the disadvantaged. First, governments can make their incentives to landlords within impoverished areas subject to approval by tenants. Such a policy would induce associations of propertyowners to share with tenants part of the benefits from appreciated property values, perhaps in return for cooperation by tenants in cleanup/fixup, crime prevention, or other initiatives to make the neighborhood more attractive. Deed covenants of propertyowners' associations thereby would become instruments of inclusion rather than exclusion.
Governments also can assist the disadvantaged by transfer ring idle public property to Neighborhood Development Organizations (NDOs), and then encouraging nearby landlords and home owners to form associations that reduce problems of crime and blight. NDOs today are delivering a range of community services of direct benefit to the poor, including low-income housing, job training, nutrition, health care, and social services. For revenue, many NDOs recently have begun undertaking inner city property development projects to support these services. Homeowners' associations can increase the financial return of NDO-sponsored property development projects by helping reduce crime and physical blight that greatly depress inner city property values. As homeowners' associations improve these conditions, NDOs can capture the benefit of windfall increases in land values.
The United States is at a crossroads. In response to present fiscal constraints, Americans may opt for increases in taxes and an attendant continued dependency upon their government. The alternative consists of mobilizing the private sector to assume greater responsibility for community well-being, an approach already adopted by more than 25,000 homeowners' associations. With appropriate incentives from the federal government, voluntary community enterprise can take the country further toward the goal of self-sufficiency for all.