Market Values in Preservation

1
Market Values in Preservation

• Private Sector Involvement in Historic
  Preservation

2
What are the public and private sectors

• With the development of government funding for
  cultural and environmental activities the playing
  field was conceptually divided between
  publicly-funded efforts and market-driven
  activity.

3
Preservation always has been, presently is, and
always will be primarily a matter of market
economics

• Historic preservation can rarely succeed unless
  both public and private sectors are operating
  together in a mutually supportive manner.
• a. Robert Stipe acknowledges that pride of
  ownership may generate some preservation
  activity.b. However, he asserts, the
  preservation or loss of cultural property is
  almost always the result of economic feast or
  famine in the local real estate market.
• High value risks destruction, low value risks
  neglect.

4
Why is this about money?

• 2. Approaches to preservation are an attempt to
  subsidize the cost of maintaining an economically
  unproductive piece of real estate, however
  important it may be in a cultural or
  environmental sense.
• a. This conclusion makes an exception of private
  homes, museums, public buildings
• b. This condition has the unexpected
  consequence of (liberal) government funding been
  to monetarize heritage and other quality of life
  issues.

5
Grants and Loans

• Why does Bob Stipe call this front-door
  assistance?
• Funds are debated and allocated in public as
  part of a political process through which
  citizens have an opportunity to participate,
  directly or through elected representatives, in a
  fair and open forum that decides how they are to
  be taxed and how their money is spent.

6
What are back-door assistance methods?

• Tax relief or incentives are considered back
  door
• How are these funds are off budget and
  politically easier to obtain?
• Both forms of assistance work well is
  unquestioned.

7
Competing agendas apply to funding and to the
building stock

• Concepts of Consumer fashion applies to the real
  estate market.
• Monumental buildings are owned by institutions or
  individuals who are least able to maintain them,
  including financially pressed local governments,
  universities, churches, and other charitable,
  nonprofit enterprises that face special
  challenges.
• What is the value of stability?1. Most local
  governments in the United States place a
  relatively low priority on preservation.2.
  American custom is replace rather than repair.

8
Economic realities are code words for contested
project goals

• 1. The rule of American political process has
  been to create and apply tactical rather than
  strategic solutions.
• a. The goal of every action is to save, or solve
  an immediate problem, not to educate the public
  and their representatives to an approach or
  philosophy.b. Money has been the universal
  medium of cultural exchange in a political system
  rife with competing interests.

9
Federal Preservation Assistance-subsidies

• Federal matching grants program to underwrite
  preservation projects1. Grants for the
  acquisition and development of historic
  properties. These designed to support
  bricks-and-mortar work on historic
  properties. a. Poorly funded. Annual
  appropriation rarely exceeded 50 million.
  Appropriations for the first ten years of the
  program were more frequently in the vicinity of
  5-6 million yearly.
• b. Through FY 2002, over 900 million had been
  appropriated for the grants program, but in terms
  of the total federal budget, the amount was
  minuscule. By comparison, the grants program of
  the National Endowment for the Arts received more
  than 4 billion during the same period.

10
The faucet metaphor

• Grants for survey and planning to underwrite the
  cost of developing state historic preservation
  plans and nominations to the National Register.
• a. Administration, including routine office and
  program managementb. Certification of local
  governments to participate in the national
  historic preservation programc. Activities
  related to the evaluation and nomination of
  properties to the National Registerd.
  Development of statewide and regional
  preservation plans and planning processese.
  Certifying properties and projects for federal
  tax incentivesf. SHPO participation in the
  Section 106 process and related environmental
  review systemsg. Field surveys and research to
  identify and document historic properties

11
Funding the Non-Profit

• A third category was assistance to the National
  Trust for Historic Preservation for the conduct
  of its program activities.

12
Revision of the federal tax code to encourage
private historic preservation (back door)

• In 1976, as part of the comprehensive Tax Reform
  Act, Congress amended the tax code to redress the
  imbalance between the tax treatment of new
  construction and rehabilitation of historic
  properties.
• Long history of supporting new construction and
  start-up business ventures.
• Removed incentive to demolish old buildings

13
The Economic Recovery Tax Act of 1981

• This act totally transformed the economics of
  preservation. Until the benefits were
  circumscribed five years later in the Tax Reform
  Act of 1986, private investment in rehabilitation
  soared and surpassed all expectations, far
  exceeding the direct preservation grant funds
  distributed during the entire first twenty years
  of NHPA.
• Activity declined significantly after 1986, but
  the incentives remain as the most important part
  of federal financial support.

14
Current incentives at the federal level

• The current tax incentive program offers a 20
  percent credit for the certified rehabilitation
  of a certified historic structure and a 10
  percent credit for the rehabilitation of
  non-historic structures built before 1936.
• Virginia program
• Federal program