Don't Believe the Hysterical Preservationists
Successful Historic Preservation Does Occur Voluntarily
JULY 01, 1995 by JAMES D. SALTZMAN
Filed Under : Property Rights
Mr. Saltzman teaches American Literature at St. John’s School in Houston, Texas. He also volunteers as a Policy Analyst for the Houston Property Rights Association.
Should it be illegal to hang shutters on your old house without your city’s permission? Or to add vinyl siding to your home without first checking with a local panel of political appointees? Or to adorn your own land with a fence made of wood instead of a more costly fence made of stone?
Believe it or not, approximately 2,000 city and county governments across America have acquired this much clout over changes to private property by adopting historic preservation ordinances. These statutes allow a local government to regulate the appearance or possible demolition of a property by declaring it a historic landmark or by mapping it into a historic conservation district, all without the permission of the owner.
Instead, the owner cannot alter the took of his property without the permission of his local government. For Dennis Foley that meant being told by the Arlington County, Virginia, Historic Review Board in 1993 that he could not hang wood-grain vinyl shutters on his home. Because he lives in a historically protected community, only the more expensive kind made from genuine wood will do.
Even with this much say-so over changes to private property at the local level, preservationists want even more control. In 1993, the National Trust for Historic Preservation placed the entire state of Vermont on the Trust’s annual list of the 11 most endangered places in America and followed in 1994 by putting Cape Cod on the same list. In some cases, state and federal agencies can already direct changes to “historic” buildings and sites.
And preservationists have no qualms about annihilating owners’ freedom of choice when it conflicts with preservationists’ wishes for the appearance of properties. For example, a recently proposed historical preservation ordinance for Houston called for fines of up to $500 per day for violating any article of the ordinance, a penalty the local Preservation Alliance criticized as too weak to “provide an effective deterrent” against unacceptable changes to “historic” buildings. Meanwhile, the National Trust for Historic Preservation advises: “The stiffness of the penalty varies with each community depending on the likelihood of non-compliance.”
According to this thinking, local police powers are needed to protect a “historic” property from the whims of its owner. As the Houston Preservation Alliance claims, “historic landmarks are landmarks no matter what an owner might think and should be designated and protected accordingly.” In other words, successful preservation cannot occur unless the owner of a “historic” building or site can be forced to let others manage changes to the appearance of his property.
Preservation Without Coercion
But the coercive preservationists are wrong. Successful preservation does occur voluntarily. In Great Britain, for example, private and voluntary conservation societies—including the National Trust and National Trust for Scotland, the Historic Houses Association, and the Landmark Trust—use private donations and some government grants to acquire, restore, and maintain over 1,800 historic properties, almost all in the British Isles. Recently, the Landmark Trust has purchased sites in Italy and the United States. And the Trust gets one third of its annual budget from leasing its properties for holidays or vacations.
Uncoerced preservation is also common in America. For example, Kykuit, the Rockefeller family estate near Tarrytown, New York, was given over in 1992 to the (American) National Trust for Historic Preservation, so that the Trust could display the estate’s house, gardens, and art collection to the public. Just last February, the Heritage Society of Houston received the circa-1870 house of the Reverend Jack Yates, a nineteenth-century African-American civic leader. The Society will spend $300,000 renovating the building, turning it into a museum. In 1989, the National Trust for Historic Preservation and Successful Farming magazine teamed up in a project called “Barn Again!” to advise farmers on how to restore old barns and gave prizes of up to $1,000 for the best results.
Offering prizes can encourage preservation, but even better urging comes from market incentives. According to Time, “Barn Again!” prizewinners “spent an average of $11,000 on their projects, compared with a $25,000-to-$35,000 cost for a new metal building.” In general, rehabilitating an old structure is cheaper than building a comparable new one, especially when the cost of tearing down the existing building is included.
Thus, common sense leads investors to restore old buildings conveniently located in or near a downtown. A comprehensive review of modern economic research on historic preservation appeared in the Summer 1991 issue of the Journal of the American Planning Association and concluded that “gentrification rarely proceeds by central direction, but rather, through the individual investment decisions of hundreds of thousands of people.” Preservation rules usually arrive only after an area has achieved fashionability and stirred investor interest.
For example, renewal preceded local district rules in the Woodland in Waverly neighborhood of Nashville. This locale was first developed between the 1890s and the 1930s. After declining through the 1950s and 1960s, the area revived in the 1970s. Local historic district controls on demolitions and design arrived in 1985 once a petition was signed by 80 percent of neighborhood property owners. So before the controls, Woodland in Waverly had already become a magnet for buyers serious about fixing up old buildings.
Restoration has also preceded regulation in Houston, which adopted its first preservation ordinance in 1995. Prior to that, some of the city’s oldest neighborhoods have enjoyed a spontaneous revival since the 1970s. Perhaps the best example is the Houston Heights, a neighborhood of four square miles first developed before the turn of the century.
Formerly one of Houston’s most desirable locations, the Heights deteriorated in the early sixties. Crime soared. Nevertheless, a surplus of Victorian homes and quaint bungalows, available at bargain prices, began attracting buyers in the early 1970s who sought to settle only minutes from downtown and from the city’s other major employment centers.
What began as a trickle of new investment in the Heights soon became a deluge. Between 1970 and 1980, the price per square foot of single family homes in the Heights increased 17.5 percent, equal to or better than the increases in the more fashionable Houston neighborhoods of Bellaire and West University Place. Between 1990 and 1994, average prices rose 25 percent in the Heights while dropping slightly in Bellaire and moving up slowly in West University.
Preservationists argue that controls are necessary to draw investors by offering them assurance that a neighbor won’t do something distasteful with his property. But investment has flooded the Heights even while the area has lacked the “protection” of preservation mandates. Most good homes are restored, not torn down for gaudy replacements, and much of the new construction is architecturally compatible with the old, all without a nudge from the heavy hand of government.
The Real Enemy of Preservation
In fact, when the hand of government gets involved with old buildings, it usually pushes them down or blocks their recovery. For example, in his 1966 report, “The Federal Bulldozer,” Martin Anderson decried federal urban-renewal schemes of the 1950s and 1960s for leveling tens of thousands of sturdy inner-city homes. No doubt, this scheme destroyed many structures that would now be cherished as “historic” buildings.
Today government interference in preservation continues. Stringent building codes discourage the restoration of older properties. In addition, zoning laws requiring excessive parking and setbacks while restricting mixed uses complicate efforts to revive older areas. Transportation policies favoring street and highway construction in the suburbs subsidize the flight of people and their money from inner-cities. Furthermore, when taxes in the central city are higher than those in surrounding jurisdictions, people move from the former to the latter, reducing investment in older buildings at the urban core.
And don’t forget obstacles created by the preservation rules themselves. As a 1991 federal report found:
Regulations governing the preservation of buildings can also block rehabilitation of older structures. A project may be slowed while a determination is made as to whether an old elementary school or hotel is of historic significance. If the building is labeled as historic, then the planned rehabilitation is sometimes subject to lengthy and costly approval processes to ensure authenticity of appearance. In other cases, where a building is in a historic district or has been individually designated as historic, energy-efficient enhancements such as replacement of windows and doors or drilling of holes into side walls for the injection of insulation may be blocked on the basis of strict adherence to preservation standards.
As one developer testified in the report, a dispute between local and state landmark groups over his plans to renovate three older homes in Louisville “consumed about $20,000 more than I originally planned, in increased carrying costs and lost time, and added considerably to the price of the finished product.” Not surprisingly, the 1991 report in the Journal of the American Planning Association offers the speculation that preservation rules shift small-scale investment to areas with comparable properties not covered by the rules.
Correlation Is Not Causation
But coercive preservationists maintain that their rules encourage investment. For proof, they point to thriving conservation districts. A favorite example is the Lower Downtown (Lo-Do) area of Denver. There, say the preservationists, restrictions enacted in 1988 on demolitions and design in Lo-Do transformed the 20-block area in little more than five years from a run-down warehouse district into a trendy locale for restaurants, bars, shops, small offices, and condos. Historic rules, boast the preservationists, are good for business.
But correlation should not be confused with causation. Investment picked up after the installation of preservation controls but not because of them. Yes, the Lower Downtown Business Support Program attracted more than $15 million in new investments and 500 new jobs between 1987 and 1991. Yet these changes occurred, according to reports written in 1990 and 1992 for Denver’s planning department, as the city was speeding the regeneration of the area with $114 million in street and sewer improvements between 1988 and 1993. As developers know, private investment dollars tend to flow in the direction of such large public outlays for infrastructure.
Lo-Do’s surplus of sturdy old buildings, available for low prices just as Denver crept out of a local recession, also made the area ripe for investment, regardless of preservation controls. In fact, the 1990 report says that the renovation of Lo-Do buildings was 25 to 30 percent cheaper than new construction. And a new major-league baseball stadium just outside Lo-Do has strengthened the area as a location for bars and restaurants. Thus, public subsidies and market opportunities, not preservation rules, accelerated Lo-Do’s redevelopment.
Lo-Do isn’t unique. Scratch a preservation district “success story” and you’re likely to find public subsidies, tax breaks, or zoning bonuses, with one or more of these channeling investment toward areas favored by the preservationists. Thus, preservation awards may profit some targeted businesses or apartments by giving them an unfair advantage over their local competitors outside the district. If preservation rules were beneficial in themselves, tax breaks and other public assistance would not be needed to funnel investors into historic districts.
Preservationists also argue that their rules serve the public by raising the value of designated properties. How? “Properties with such designation tend to receive a higher degree of maintenance due to pride of ownership and thus maintain or increase in value better than those of comparable actual age without a designation of historical significance,” explains the National Trust for Historic Preservation.
But the facts say otherwise. The study in the Summer 1991 issue of the Journal of the American Planning Association reviewed the impact of local historic designation on property values around the country in the 1970s and 1980s. In the Park Slope neighborhood of Brooklyn, “the greatest property value increases occurred prior to designation.” Meanwhile, several “blocks in Galveston’s Strand historic district . . . experienced an annual growth rate of only about 11 percent from 1974 to 1977, although city values overall rose by 28 percent per year.” In five Washington, D.C., neighborhoods, the rate of increase in property values actually slowed after the imposition of local historic controls.
Despite the preservationists’ beliefs, assets do not become more valuable because the government has gained more control over them. A study in the May 1994 issue of the Journal of Real Estate Finance and Economics explains how stringent preservation rules in Philadelphia weakened the value of small apartment buildings by 24 percent relative to comparable apartments without the rules. And according to the 1992 report written for the Denver planning department, preservation controls on demolition and design in Lower Downtown created a “cap on expectations” for financial returns to investors in the district by prohibiting high rises and new parking facilities. Only the preservationists would equate progress with scaling back the future value of property.
Censoring Our Choices
The economic arguments for historic preservation rules—that they foster community benefits like urban renewal, local business growth, and rising property values—falsely presume that a political elite knows better how to manage property than do the individuals who actually own the properties. And supplanting the aesthetic choices of the property owner with the edicts of the historical commission isn’t just bad economics; it’s censorship. The government has no more business imposing aesthetic controls on our buildings than it does on our clothes or our cars. 
15. On February 22, Houston adopted a limited ordinance, allowing the city to designate properties as historic without the owner’s permission but also providing some opportunities for the owner to alter or demolish his “historic’* property as he sees fit after a 90-day waiting period.
20. Richard Moe, in “All Adding Up to Noplace; How Transportation Polices Affect Communities,” (Vital Speeches, May, 15, 1994, p. 468) explains how such zoning rules complicate efforts to proceed with new development patterned after older downtown areas.
28. Thomas M. Roelke, “Impact of Historic District Des. ignation, Lower Downtown, Denver, Colorado, Second Analysis, April 1, 1990-March 31, 1992,” Denver Office of Planning and Community Development, p. 25.
29. William Hathaway, in “Rocky Mountain High, Lessons from a real estate market that climbed out of a slump” (The Hartford Courant, August 8, 1993, p. J-1), says that the Denver economy ended its slump and “improved slowly between 1987 and 1989.”
31. See “Zoning Strengthens Character,” Southern Living, November 1990, pp. 104-105. Developers following preservation and other guidelines in Coral Gables, Florida were “eligible for square footage beyond what normally would be allowed under standard zoning.”
36. Paul K. Asabere, et al., “The Adverse Impacts of Local Historic Designation: The Case of Small Apartment Buildings in Philadelphia,” Journal of Real Estate Finance and Economics, May 1994, pp. 225-234.