Unfortunately, I don't think it's possible to have a neighborhood-based social network that's any different. Even before the internet, this is how HOAs and small town governments behaved.
The Internet and platforms like Nextdoor not only reduced that cost to near-zero but actually encourage and reward that behavior since they profit off this "engagement". Middle-class paranoid (and sometimes racist) dumbasses with too much time on their hands are the perfect target for a "growth & engagement" company; they're dumb but far from broke and thus a perfect target market for advertisers.
I agree. HN is heavily moderated (using both automation and human intervention). The site pays for itself by being a honeypot for tech talent, which only Y Combinator companies can access.
Neighborhood social networks have no similar way to monetize themselves and pay for talented moderators.