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? 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.

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?Most local governments in the United States place a relatively low priority on preservation.American custom is replace rather than repair.

8. 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.

9. 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.

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. 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)

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