The Case for incentives - Donovan Rypkema

R E V I E W 23 THE CASE FOR INCENTIVES DONOVAN RYPKEMA You think there are heritage buildings out there that need saving, right? So how can that be done? Fortunately, years ago at a symposium in Austria, Mark Schuster and colleagues (see Further Information) made a finite list. They concluded that there were only five tools to save historic resources: ownership and operation, regulation, information, property rights, and incentives. Schuster subsequently told his students at MIT that he’d give them an automatic A in his course if they could come up with a sixth. They never did. So today in Great Britain (and the rest of the world for that matter) what is the status of those tools? First, ownership. Does anyone imagine that with strained public budgets and growing demand for those scarce resources, parliament is going to decide, ‘Oh, let’s budget hundreds of millions of additional pounds for the acquisition, restoration and maintenance of thousands more heritage buildings’? Of course not. That doesn’t mean public ownership and management of heritage resources is no longer an effective tool, it can be. But it certainly isn’t a tool that we can expect to significantly expand in use in the foreseeable future. Beyond public budget constraints, however, there are two related reasons why the increased use of the ownership tool is unlikely. When as heritage advocates we moved from only focussing on monuments – the palace, the cathedral, the architectural masterpiece – to arguing that more vernacular, background buildings were also a critical component of our heritage, the sheer number of ‘heritage buildings’ expanded a hundredfold or more. The parallel consequence was that the vast majority of these buildings were in private hands. So the ‘ownership and operation’ tool would not only require paying the electricity bill and fixing the roof, but acquiring the building. Regulations still play a role in the protection of heritage buildings, and more are worthy of listing and regulatory safeguarding. But when heritage buildings are in private hands, having a policy that consists only of the ‘sticks’ of regulation without the ‘carrots’ of incentives can mean that investment is often discouraged, especially in those places where there is the greatest need for investment. Further, while regulations can be effective in prohibiting demolition or inappropriate physical changes to a building, they are much less effective in encouraging the periodic reinvestment that is necessary if the future life of the structure is meant to be generations, not just years. Information (education and advocacy) will continue to be both necessary and ultimately effective as a means to encourage heritage conservation. But the time-frame is often long, successes volatile and the impacts random. Property rights approaches (such as restrictions within the chain of title that binds not just the present but also future owners to appropriate heritage conservation) can be very effective, but they are time-consuming, often complicated to create and they generally apply to one property at a time. Which, by default, leaves incentives. First it is important to understand that the purpose of incentives is not to make rich property owners even richer. The underlying public policy purposes of incentives are twofold, one practical and the other more theoretical. As proponents of heritage conservation we will argue that the ‘values’ of heritage are multiple – aesthetic, social, symbolic, environmental, historical, political, cultural, educational, etc. And that is certainly the case. But from a property owner’s perspective the primary ‘value’ of a heritage asset is no different than the ‘value’ of any other piece of real estate – its financial value (or its occupancy value, which has a financial equivalent). This perspective is neither wrong nor selfish, but rather represents rational decision making. It is based only on the financial value The Buell Building in Rapid City, South Dakota: a vernacular building of 1888 which was restored with the aid of tax credits.