**1. Introduction**

New Towns, or Planned Communities, are cities in which all aspects of development are determined before construction begins. Eichler and Kaplan (1967) and Griffin (1974) have defined "new community" as a large development, generally over 1000 hectares (2500 acres) that has a comprehensive and mixed-use design conforming to a single master plan and a socially diverse population. The most self-contained are also called "new towns". The related term, refers to a community that seeks to produce a range of valuable social, environmental, and economic benefits than more conventional, less comprehensively planned developments are likely to achieve. Such communities have been proposed as creative alternatives to conventional developments for many years and in many countries. New Towns are generally thought of as being of two types: 'independent', if they contain employment for their own residents and 'satellite1' if a substantial number of residents commute to another metropolis.

Development of New Towns is expensive, particularly the provision of their infrastructure. Despite a high level of subsidy from central government and often regional authorities as well, the new towns remain heavily in debt, a problem exacerbated by the currently much reduced rates of demographic and economic growth.

The slow pace at which land is being acquired and premises are being occupied increases the burden of repaying the loans contracted to finance development. Additional financial difficulties have arisen over the running of the new towns' services, due to the present relatively small local tax income, which is available to support them.

Similarly, certain of the amenities originally provided were designed in the expectation of much larger populations and reflected the government's expressed wish to create new communities, which were fully equipped from the outset, a policy that implicitly recognised that there might be initial operational difficulties. Thus, while the services may be desirable, they represent a particular problem to finance.

<sup>1</sup> Some authors use the term satellite for new towns that are self-contained but whose residents use some of the facilities of nearby cities.

Two Ways of New Towns Development: A Tale of Two Cities 221

health and leisure). Citizens have the opportunity to participate in city governance and

In recent years, the role of the State has been change. We pass from an old administration where government has the control of supply public services to a New Public Management (NPM) reform (Hood, 1991) where the public-private partnerships (PPP) have appear and developed. This reform has been grounded in institutional economic theory. Several studies have examined public-private partnerships involving concessions, leases or management contracts for the provision of utilities, education or health care from such differing theoretical perspectives as transaction cost economics (Crocker and Masten, 1996; Huet and Saussier, 2003), or agency theory (Guasch, Laffont and Straub, 2003). The development of partnerships with the private sector has emerged as a key element in implementing public

However, we have gone one-step ahead and citizens get involved in public decisions and manage some public services. Government may be seen as providing public goods and services as a result of market failure, but sometimes government do not deliver those goods either. Buchanan in 1979 has said that government failures occur when government is inefficient in the production of public goods. In such cases, private agents can provide services on their own or with the support of the public sector. In planned communities in

influence on political decisions during city creation.

Fig. 1. Howard's three magnets

policies and programs.

The idea of New Towns had begun in Europe, specifically in United Kingdom and afterwards in France and United States following more or less the direction of E. Howard in his book "Garden cities of tomorrow" (1902). There are cities that are created because of a political-administrative decision2. Those new cities are urban spaces where people can life, work and spare its free time. Howard town-planning conception is the planning of the city as a space assigned to houses, commerce, culture and industrial areas. All of this reconcile with the environment protection. Most of these new cities were understood as big city clearing, for that reason, the ideal of inhabitants is 250.000. But, one of the most frequent reasons for wanting new towns, as Alonso (1969) have said, is that they will be planned.

The development of New Towns in US differs from the European model. The main difference is the management and the financing. In United States, financing is private or public-private partnership and in Europe is public. In Europe central governments sponsored new town development but in US they were sponsored by private real-estate developers. Compare to Europe American new towns were less directed by national social policy. Distribution of the city is also different, in US in the heart of the city there is "the loop"3 where is located offices, shops and hotels and people lives in suburbs, in that case the car is part of the city. The administrative structure of New Towns in US varies, sometimes it is dependent of other cities and, other New Towns have their own government.

This chapter first outlines how New Towns were developed in Europe and in United States explaining the differences between the two ways of development. Later on, we show the case study of two cities. Those cities are The Woodlands (Texas, US) that belong to US model and Tres Cantos (Madrid, Spain) that fit in the European model of New Town development.
