City kingmakers
City kingmakers
Benoît Georges

PARIS — First there was the campus. Next up Facebook city. The size of the "Zee town" project Mark Zuckerberg announced in February surprised many: For an estimated $200 billion, the king of social networks plans to build what will essentialy be an entire town — a 200-acre development in California's Silicon Valley featuring supermarkets, hotels, villas and even dormitories for the company's trainees.

The site will be located just a stone's throw from the Facebook headquarters in Menlo Park. The campus, where the now-defunct Sun Microsystems used to be based, is already home to a few shops, restaurants and a medical clinic in a setting that is reminiscent of Disneyland or "The Village" in the TV series The Prisoner. Zuckerberg — with the help of world famous architect Frank Gehry — now wants to take things further still, by crossing the thin line between a closed village and a complete private city.

Seen from France, the idea of a private city can seem shocking given how the creation of our own towns, including those built after the war, always developed within a municipal framework. In France, only municipal governments are allowed to manage public services such as schools, roads, public transportation, water and land planning.

City privatization is less iconoclastic in the United States, where gated communities in places such as Sun City, Arizona, developed specifically for the elderly, have been sprining up over the last half-century. "Everywhere in the U.S., parts of cities have been organized as joint ownership property called common-interest development," says Julien Damon, a researcher in the urbanism department at the Paris Institute of Political Studies (Sciences Po).

Old cities can't cope

The U.S. may have gotten a jump on this new kind of urban trend, but it's in the development world where private cities are really starting to make inroads, in some cases on a scale that makes Zuckerberg's plans pale in comparison.

In India, the HCC consortium began work a decade ago on a 100-square-kilometer town called Lavasa, located approximately 200 kilometers southwest of Mumbai. The project, which saw Italian-inspired buildings rise from the Indian mountains, is eventually expected to host more than 200,000 people. In Saudi Arabia, King Abdullah Economic City (Kaec) hopes to have 2 million residents by 2035. And Honduras President Juan Orlando Hernandez, who was elected last year, has hailed the future creation of "model" private cities.

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Lavasa, a planned city in India. Photo: Yoursamrut

"The real needs are in developing countries," says John Rossant, chairman of the New Cities Foundation, which recently published a report on the topic. "That's where new cities must be built because the old ones aren't capable of absorbing the rural exodus."

Often because they aren't able to finance new cities or renovate old ones, more and more states are turning to private operators that not only construct the new cities but also operate almost every service normally considered "public."

"The public sector doesn't exactly disappear because there's always an initial agreement with the public authorities on the infrastructure program or the property management," Rossant says. "On the other hand, the private sector needs guarantees that its investments will last for decades."

No taxes, just "service fees"

In the case of Kaec, the Saudi government sealed a public-private partnership with an estate development group from Dubai called Emaar Properties. The city has no mayor. Instead it has a CEO, Fahd al-Rasheed, who staunchly defends the model. "The private sector must, by definition, create value," he explains. "Therefore I must sell for more than the production costs. Politicians, in contrast, often struggle to create added value with services. They know the cost, but the price they charge citizens depends on political factors."

In Kaec, residents aren't taxed per se. Instead they pay "service fees" for security, water and waste collection, which different companies are contracted to handle. "The people pay us for a service, not to finance an administration," al-Rasheed says. "And since they are our clients, they don't hesitate to complain if they find the service is poor. In that case, the city can easily change providers."

Franck Vallerugo, urban economy chair at ESSEC Business School, believes this approach raises a real governance problem. "This is business-oriented reasoning," he says. "They expect to buy public peace with services, luxury and security. The people who live in those sorts of cities don't even ask to be voters, by the way. They couldn't care less about that."

Indeed, to guarantee a return on investment, private cities often emulate American gated communities by targeting the wealthy. Lavasa is a case in point. It offers hotels, a conference center and a campus, which all appeal to the wealthy, but it is cut off from the rest of the Indian population. To this day, the project has attracted more investors than residents.

"To exclude themselves from ancient urban areas that have become impossible to live in, wealthy populations exit the system and build themselves protected worlds," Vallerugo says. "The developments look like cities, with local services such as schools, hospitals, universities, sports and cultural centers, but there's no functional diversity whatsoever, no social bonding."

Rossant also emphasizes the importance of diversity. "To be successful, cities need different groups living together," he says. "That's what makes them dynamic, creative. If a city only targets the well-off, it cannot achieve success."

No real city without diversity? Zuckerberg might disagree.

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