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The term urban villagers is most commonly associated with the work of Herbert Gans, whose book of the same name examined the social lives of Italian American immigrants in the West End of Boston in 1957 and 1958. This anthropological and sociological work challenged the assumptions of planners about the nature or life within areas designated as slums. Gans defined the area as an urban village, as he found new groups of residents trying to adapt their “village like” institutions and cultures to the distinctly urban milieu.

Adopting a more idealistic position, A. Mag-naghi adopted the term in the translation of his “Il progetto locale,” which discusses the importance of very localized forms of governance in the delivery of more sustainable forms of urban development.

However, the term urban village was promoted most vigorously in the United Kingdom by the Urban Villages Group in the late 1980s and 1990s. This group used it to describe development that was guided by a set of principles that called for well-designed, mixed use, and sustainable urban areas that created a sense of place and community commitment. The concept was derived not only from the legitimacy established by the Urban Villages Group (later renamed the Urban Villages Forum) but also from its initial endorsement by the U.K. government in national planning policy guidance for the planning and design of housing. Subsequently, however, it was superseded in government discourse by different concepts, notably with regard to urban renaissance and millennium villages.

The context was one of increasing concern with the quality of modern urban development, especially when compared with older, more traditional areas. In addition, the property recession of the late 1980s and early 1990s also meant that development professionals were willing to reconsider their approaches. The promotion of the concept was achieved by a small group of developers, investors, architects, and planners brought together by the Prince of Wales to form the Urban Villages Group, a nonprofit advocacy group. In 1992 the group's manifesto was published, in the form of a book, titled Urban Villages: A Concept for Creating Mixed-Use Urban Developments on a Sustainable Scale. The Prince, driven by his widely publicized thinking on architecture, human values, and community, led the call for a return to more human scale and aesthetic development based on an analysis of how “good” places were designed.

In addition, legitimacy for the concept was derived through adoption of a variety of discourses that resonated with both old and new planning and design orthodoxies. Ideas such as proximity and locality, which were central to the urban village, reflected neighborhood planning ideals originating in the 1920s. Promoters emphasized the village-like characteristics found in certain parts of some cities which have been discussed for decades in urban geography and sociology. Particularly important to any proponents of the urban village has been the work of Jane Jacobs with her concerns for diversity and mixing uses. The concept drew attention to the need for community involvement so that communities are given a stake in their neighborhoods. This thinking was already popular in the fields of community architecture and urban design, and promoters of the urban village also therefore found a receptive audience for this aspect of their approach. A commitment to urban design also dovetailed with the U.K. government's contemporary agenda, which was being explored through its Quality in Town and Country Initiative and subsequent Urban Design Campaign. These were related initiatives to promote greater awareness of urban design and both interdisciplinary working and public and private sector partnerships in the development of significant sites within established urban areas. The work drew on the experiences of a number of specific case studies that were promoted in the United Kingdom. Similar development concepts were also being endorsed at the time in the United States; for example, transit-oriented development, pedestrian pockets, new urbanism, and traditional neighborhood development, and the international nature of the thinking, struck a cord within U.K. urban policy, planning, and development circles. Finally, during the late 1980s and early 1990s there emerged an increased interest in sustainable forms of development; the urban village concept drew on this, albeit within a relatively narrow definition. In the early 1990s, work to identify key principles and to refine the urban village development concept was on the model of new building schemes such as urban extensions on green field sites. Publications indicated that major new residential developments within the United Kingdom should take the form of urban villages with 3,000 to 5,000 people, a focal village square, everything within walking distance, a mix of house types and tenures, the provision of local retailing and a mix of other uses, a connected street network, a primary school, and good urban design. Early literature also indicated that designs should include such adjoining land as would be needed for the maximum protection of the community and to encourage the maximum possible self-sufficiency, although what this might mean was not really made clear.

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