New Cities, Local Officials, and Municipal Incorporation Laws: A Supply-Side Model of City Formation

ABSTRACT:

This article develops a framework for analyzing when and why municipal incorporation laws impede or facilitate boundary changes that benefit special interests. This goal is achieved by shifting the attention from demand-side factors—such as wealth, race, and heterogeneity of tastes—behind the formation of municipalities to actors who supply them: city, county, and state officials. I develop a theoretical model that shows that there is an inverse relation between the number of jurisdictions and the size of the constituency of those public officials who review incorporation petitions. I also find that: (1) ceteris paribus, more new municipalities are formed in counties with a large volume of retail trade, and (2) neither state nor local officials can block fiscally motivated incorporations.

Notes

1 “[County] board shall … determine, by resolution, whether or not said proposed city may be incorporated” (Idaho Code section 50–102); “The petition for incorporation shall be denied if it is determined that … annexation … or special service district … would better serve the interest of the area” (Kansas Code section 15–123); “If the county governing board rejects the referendum [for incorporation] request, [it] … shall provide reasons for rejecting the referendum request” (Maryland Code article 23A, section 24); “If the board of county commissioners determines that the conditions for incorporation have not been met, the board … shall notify the petitioners of its determination … ” (New Mexico Code section 3–2-5); “the board [of county commissioners] shall have the authority to approve or disapprove, with or without amendment, the petition for incorporation” (North Dakota Code section 40–02-06); “the board of county commissioners shall enter an order … on incorporation if it finds that … the general good of the community, including both the proposed municipal corporation and the surrounding area, will be served if the incorporation petition is granted” (Ohio Code section 707.07); “No court proceedings [on incorporation] shall be instituted until the governing bodies of the town and county have failed … to reach an agreement with respect to the proposed city” (Virginia Code section 15.2–3803); “the county court [county commission] shall hear evidence for and against the proposed incorporation, and if it shall determine that [statutory standards are not met], … enter an order dismissing said petition” (West Virginia Code section 8–2-1).

2 “ … municipal services, such as police and fire protection, street construction and maintenance, sanitary and storm sewers, planning, zoning, and subdivision control, and parks and recreational facilities are capable of being financed by the proposed corporation with a reasonable local tax, using the current assessed valuation” (Ohio Code section 707.07); “likelihood of significant growth in area, … the present cost and adequacy of services and controls in the area and probable effect of proposed action … on the cost of adequacy of local governmental services and regulation in the areas and in adjacent areas” (Kansas Code section 15–121); “contain a sufficient assessed value of real property and a sufficient number of businesses so that the proposed municipality will contain a sufficient tax base to enable it to provide a clerk-treasurer, a police officer and office space … ” (New Mexico Code section 3–2-2); “all the qualities necessary to ensure continued viability as a functioning unit of municipal government (North Dakota Code section 40–02-01); “the creation of a new municipality is prohibited if: 1) the area to be incorporated is within close proximity to an existing municipality and the existing municipality is capable of more effectively and efficiently providing services to the area … ” (West Virginia Code section 8–2-1).

3 Available at http://www.census.gov/popest.geographic/boundary_changes/index.html (accessed January 10, 2006).

4 Available at http://www.oseda.missouri.edu/plue/ (accessed January 10, 2006).

5 The index is computed as

where race is a percentage of county population for each of the five categories used by the 1990 Census: white, non-Hispanic, black non-Hispanic, Asian and Pacific Islanders, Native American, and Hispanic.

6 The interpretation of coefficients for continuous variables is based on Wooldridge (2002, p. 648) who shows that coefficients in an event-count model with conditional expectation given by the exponential function can be interpreted as elasticities.