Transcript Market Values in Preservation

Market Values in Preservation
Private Sector Involvement in Historic
Preservation
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.
Preservation always has been, presently is, and
always will be primarily a matter of market economics
1. 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.
Why is this about money?
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.
This conclusion makes an exception of private homes,
museums, public buildings
This condition has the unexpected consequence of
(liberal) government funding been to monetarize
heritage and other quality of life issues.
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.
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.
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?
Most local governments in the United States place a
relatively low priority on preservation.
American custom is replace rather than repair.
Economic realities are “code words” for
contested project goals
The rule of American political process has been to
create and apply tactical rather than strategic
solutions.
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.
Money has been the universal medium of cultural
exchange in all political systems rife with competing
interests.
Federal Preservation Assistance-subsidies
Federal matching grants program to underwrite preservation
projects. (What is a matching grant? See
[www.tarleton.edu/research/documents/Grant%20Vocabulary.pdf])
Grants for the acquisition and development of historic properties.
These designed to support bricks-and-mortar work on historic
properties.
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.
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.
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 management
b. Certification of local governments to participate in the national historic preservation program
c. Activities related to the evaluation and nomination of properties to the National Register
d. Development of statewide and regional preservation plans and planning processes
e. Certifying properties and projects for federal tax incentives
f. SHPO participation in the Section 106 process and related environmental review systems
g. Field surveys and research to identify and document historic properties
Funding the Non-Profit
A third category was assistance to the National Trust for
Historic Preservation for the conduct of its program
activities.
The National Trust is a federally-chartered non-profit
organization. From 1966 to 1998 it received
appropriations from Congress, in 1998 the federally
appropriation was ended.
Congress established the Historic Preservation Fund
(HPF) in 1976 with income from fees charged for
offshore oil leases on the Outer Continental Shelf
(OCS)
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
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.
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