Municipalization

Municipalization is the transfer of corporations or other assets to municipal ownership. The transfer may be from private ownership (usually by purchase) or from other levels of government. It is the opposite of privatization and is different from nationalization.

There have been two main waves of municipalization in developed countries. The first took place in the late nineteenth and early twentieth century, when municipalities in many developed countries acquired local private providers of a range of public services. The driving reason in most cases was the failure of private providers to sufficiently expand service provision outside wealthy parts of urban areas.

The second wave took place in the early 1990s, when after the end of the communist states in eastern Europe state-owned companies in many public service sectors were broken up and transferred to municipal control. This was typical in sectors such as water, waste management, and public transport, although not in electricity and natural gas.

Such regional companies either remained under municipal control, or were privatized. Privatization was done variously: by selling them to investors, by giving a concession or a management contract. Examples include the water sector in the Czech Republic, over half of which has been privatized.

In the United States, municipalization often refers to incorporation of an entire county into its municipalities, leaving no unincorporated areas. This generally ends de facto the county's own home rule, which in most states allows it to act as the municipal service provider in those unincorporated areas. The county is left offering only those services of it by the state constitution, which are generally only extensions of state government like courts and sheriff departments. As with utilities, the county's assets usually end up being distributed among the cities, though this is less likely if the process is gradual rather than all at once.

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