I forsee a small problem with a government elected by the people- that is, who would be canidates most likely to be chosen? Those leading the most powerful faction. In this way, whichever faction has the most persistant followers woul win out over whomever is actually more capable. This would simply grant this faction more power. No, I propose a coetocracy- a government controlled by a group of people, representing the different neighborhoods of the city.
[edit] OOC: oh, sorry grimm, didn't mean to step ob your toes there. I started this before your post. Too tired to edit now.