Some people get it – historic designation and affordability
It has been fashionable over the last dozen years to blame historic designation for the rising cost of housing in cities and towns nationwide. If your brain is in a simple, mechanistic mode, it might seem that regulations that encourage the preservation of single-family homes could limit the supply of denser, cheaper alternatives. That has a logical flow to it that can be seductive if you leave your brain in that simple, mechanistic mode. Don’t do that. It’s reptilian.
Some people do get it – my friend and colleague Paul Steinke of the Preservation Alliance of Greater Philadelphia shared a recent article by the Philadelphia Inquirer’s architecture critic titled Knocking Down a Fable About City Historic Districts. Inga Saffron wrote there “is no credible evidence showing that historic preservation is the reason Philadelphia has become more expensive.” She sees the culprit as zoning. When I researched the history of zoning for my dissertation, it was clear that its wide adoption in the early 20th century was driven by suburbs that wanted only single-family homes. I get it.
There has been an effort in many places (Minneapolis, Oregon) to get rid of single-family zoning because it inhibits affordability. I summarized this in a blog last year. There a strong YIMBY (Yes In My Backyard) movement with similar goals. Ed Glaeser was a big champion of this theory in his book Triumph of the City, which I reviewed when it came out. I was not terribly concerned about his argument against historic districts because it had problems of scale, causation and even economics.
SCALE
Even the most preservation oriented cities landmark less than 5% of their buildings. That includes New York if you count all the boroughs. Yes, Manhattan might have up to a fifth of its buildings with historic status, but Manhattan is a unicorn in so many ways that unicorns should be called Manhattans instead. So, how could 4% of properties drive the cost of the other 96%?
Chicago has 60 districts and about 350 individual landmarks. The Chicago Historic Resources Survey done in the 1980s and 1990s identified 17,000 buildings that might have historic interest. So that’s a lot, right! I mean, there are about 370,000 buildings in Chicago, so we are talking 4.5%! But most of those “orange-rated” buildings get torn down after a short demolition delay, so our real percentage thirty years later is smaller.
Now, I did live in a suburb – Oak Park, Illinois – that had landmarked what looks like about a third of its footprint, beginning with the Frank Lloyd Wright Prairie School of Architecture Historic District back in the 1980s. Interestingly, its 1994 Long Range Preservation Plan called for more ADUs (called coach houses or granny flats) – that is to say: more density and a step away from single-family zoning.
As you can see, Oak Park does have a lot of big historic districts, but they do not include the apartments and highrises where a majority of the suburb’s population has lived for the last two generations. The third dimension is missing from the map. Most of the residents do not live in a historic district.
Preservation folks have been encouraging greater density in those districts since 1994. Last week the Village Board took up the issue. 30 years later. (Preservationists are always WAY ahead of the game.)
Similarly, Saffron’s article on Philadelphia noted that the Old City historic district has quadrupled in population since the district was created in 2003. And as my friend Jim Bailey notes, right in the center of the oldest historic district in Texas is a 1920s development with a density of 126 units per acre. It looks like this:
So, scale is an issue and density can work in historic districts. There is also the problem of…..
CAUSATION (ECONOMICS)
Where does real estate value come from? Location, location, location, right? I bought a Frank Lloyd Wright house in 1991 for $1, but it had a negative $40,000 value. Another one of the houses in the row recently sold for $30,000, thirty years later. Real estate is as asset whose value is entirely externalized.
Unlandmarked Bucktown in Chicago tripled in value in 1987 while contiguous Wicker Park lagged in landmark limbo. Saffron’s article points to an NYU study that showed the steepest rent increases happened in the least landmarked parts of Brooklyn. Rapidly increasing real estate values, gentrification and displacement happen in many urban areas. Generally, historic districts preserve and enhance real estate values, because they reduce uncertainty about location, location and location – you know it won’t change much. But designation always arrives AFTER rehabilitation has happened. Residents rehab and then act to preserve their investment. Designation doesn’t happen before values go up.*
Advisory Council on Historic Preservation Chair Sara Bronin has a book coming out about zoning (Key To The City)and has been speaking regularly about zoning changes that would support BOTH historic preservation and affordable housing, including provisions that: enable housing conversions, create mixed-use neighborhood centers, eliminate minimum parking requirements, encourage accessory dwelling units, and strengthen transferable development rights. As noted above and before, many of these items have been on our playlist for 30 years.
Here in San Antonio, the Office of Historic Preservation has been promoting preservation as affordable housing for some years, releasing a major study in 2019. As Donovan Rypkema, the guru of preservation economics has said for years: “You can’t build new and rent cheap.” In 2024 a million dollars will build you three and a half residential units if you are lucky. The economic challenge is on the supply side.
You can’t build your way to affordability. Better to fix – and add density – to what you have. Existing housing stock is a nonrenewable resource.
2021 – Government Hill, San Antonio
2023
*My dissertation on historic districts basically found zero examples of districts created without strong community support and without rehabilitation already happening at scale.
Givings
Recently the City Council passed a resolution that would require that any amendments proposed to the Uniform Development Code be subject to an economic impact analysis to see how much cost they would add to new developments. Many community activists are concerned that this would stifle public input, although the intention was to identify what extra costs would be passed on to consumers.
I don’t think it will limit public input, but the opponents raised a really interesting question. Why is the question of economic impact always one-sided, namely the side of the developer?
For centuries there has been debate over the issue of “takings.” “Takings” is when the government takes your property and has to pay you for it. About a century ago some clever lawyers came up with the idea of “regulatory takings” – whereby you put so many regulations on a property you stripped it of all its value. As with most clever concepts, it hit a hard stop in reality when even the prohibition of all development on a beach site in the Carolinas did not zero out property value (Lucas, 1989)
Here’s what gets me: Why doesn’t anyone talk about “givings?” Like when New York City doubled the zoning envelope in 1961, effectively giving every landowner a massive boost in asset value. Chicago did the same in 1957 – we were all going to be living on Mars by 2000 anyway, so it didn’t matter. Every bit of IDZ spot-zoning is a public “giving” to a private property owner. That’s what needs to be quantified.
“Givings” are in fact central to the entire history of real estate. In the 19th century canals and railroads were financed by the sale of public land along their routes. Kind of like TIRZ (TIF). In the 20th century it was hard roads and then interstate highways. Today it is tax increment financing, bonds and incentive packages.
The entire history of real estate development is a history of chasing public subsidies, primarily transportation. You hear “Location, location, location” and what that means is “transportation, markets, infrastructure.” Two-thirds of that recipe is public.
I’m not saying public support is bad. I have supported public subsidies of private developments that really made a difference. I’m just saying you need to count on both sides.
Back in the 1980s, there were so-called “impact fees” that municipalities would assess new residential developments that required new sewers, schools, streets, sidewalks, security, etc. That led to whining, which led to the era of “property rights” and by the 90s there were attempts in Congress to compensate owners for the reduction in the property value caused by regulations.
That silliness aside, the question has always been formulated on only one side of the equation: What are they taking from the property owner?
I would like to see a strict accounting of what we are GIVING.
Happy Thanksgiving!
Owning in an historic district
I own a house in a historic district and last year I blogged about how thankful I was for that fact. Real estate is an asset whose value is largely external – it comes from its location, which is to say, its surrounding buildings and environment. Because my house is in a historic district, its value is assured. Economic studies for over 40 years have confirmed this fact in communities across the United States.
If you look at the history of historic districts – which I did in my dissertation – you find that the first modern historic districts emerged in the 1950s in communities that were concerned about drastic changes to their environment and thus the value of their homes. Urban renewal was one threat, which proposed outright demolition. The other threat was posed by postwar zoning ordinances, which dramatically increased density and thus owners of brownstones or single-family homes faced the prospect of massive highrises next door.
“Right” Zoning
Jonathan Fine of Preservation Chicago spoke to my Preservation Planning class today and introduced them to an excellent phrase: “Right” zoning. This is more accurate than “downzoning” which is a phrase commonly used to describe what happens when a local alderman or city decides to reduce the allowable density in a district.
The recent book on the history of Chicago zoning describes the “downzoning” of the lakefront communities of Gold Coast and Lincoln Park in the 1970s and 1980s, which often followed landmarking of the area. Real estate expert Jared Shlaes opposed the downzoning in a 1980 report, and the book now judges that Shlaes was probably on the wrong side of history. Continue Reading