Arrested Development

Instead of putting people under house arrest – where they'd stay at home all day, unable to leave their own property for weeks or months at a time – you instead send them out to some perfect suburb in the middle of, say, Nebraska or Utah, a remote development where each house is fully furnished and tastefully maintained, but each also has only one inhabitant: a minor criminal of some sort, dwelling on the immorality of shoplifting or tax fraud and serving-out a short period of house arrest. They can even get their mail redirected there, and watch Netflix.
But out on the far periphery are watchtowers, and the streets are lined with cameras.