Gated communities have usually been studied from the perspective of the residents-their proclivities, economic status, and social ambitions. Moreover, these communities have also been associated with weakening states and market-led urbanization. What role do public institutions play in the development of gated communities? This article examines the case of Buenos Aires, Argentina, where impoverished suburban municipalities have relied on gated communities as a local development strategy. Taking advantage of the decentralization of land use planning, municipalities with a high percentage of poor households have facilitated the development of gated communities as a way to increase local employment and real estate investment. As a consequence, these communities have been clustered in the poorest suburban municipalities, thus increasing social polarization within municipal boundaries and calling into question the effect of decentralization reforms on the formation of an inclusive, participatory polity.