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HRAB 10-15-91 Meeting AgendaCOUNTY of FREDERICK Department of Planning and Development 703/665-5651 FAX 703/678-0682 MEMORANDUM TO: Historic Resources Board Members FROM: Kris C. Tierney, Deputy Planning Director DATE: October 9, 1991 RE: Meeting Notice and Agenda There will be a meeting of the Historic Resources Board at 7:30 p.m., on October 15, 1991, in the conference room of the Administration Building 1st floor, 9 Court Square, Winchester. Please let me know if you are unable to attend. Some informational items are attached for your use. AGENDA 1. Update on the status of the proposed Historic Area Overlay Regulations. 2. Discussion of proposal for requirements for historic sites contained within areas proposed for master plans. 3. Discussion of procedure for identifying locally significant historic sites. 4. Other. THE COURTHOUSE COMMONS 9 N. Loudoun Street - P.O. Box 601 - Winchester, Virginia - 22601 10/15/91 HRAB AGENDA page 2 1. Staff will brief the board on the current status of the proposed regulations. 2. Attached is a proposal, developed by the staff, to insure that historic sites and structures are dealt with appropriately at the time of MDP application. 3. The HRAB needs to pick up the effort to establish a list of locally significant historic properties. 10/15/91 HRAB AGENDA page 3 PROTECTION OF HISTORIC SITES PROPOSED AMENDMENT TO ARTICLE XIV, MASTER DEVELOPMENT PLAN OF THE FREDERICK COUNTY ZONING ORDINANCE INTENT The intention of this section is to preserve and/or protect sites of known historical significance as well as provide for the documentation of any site which exhibits characteristics indicating that it may possess significance. Those sites, which for whatever reason cannot be preserved, should be documented prior to their destruction or alteration so as to create a lasting record of the site. The requirements of this section shall apply to all zoning districts. In order to preserve areas of historic importance, any site over fifty years of age, lying within the bounds of a proposed Master Development Plan, shall be evaluated in order to determine the most appropriate means and degree to which the site should remain undisturbed and/or protected. Any site listed on the State or National Register of Historic Places shall be set aside in a permanent easement which shall be dedicated to either a homeowners association, as part of the open space within the development, an appropriate local, state or national organization or department, or to some other group determined to be suitable by Frederick County Board of Supervisors. The easement shall include acreage for adequate buffering as determined by the Frederick County Board of Supervisors following a recommendation from the Historic Resources Advisory Board and Planning Commission. If the property is to be conveyed to a homeowners association, a proposal shall be submitted which describes the method to be used to insure that an adequate maintenance budget will be established and maintained. Information shall be submitted with the MDP, for any site which has been designated as locally significant by the Board of Supervisors, which describes the proposed disposition of the site or structure. If the proposal does not include a method for preservation of the site or structure, reasons shall be stated indicating why preservation is impossible or impractical. The proposal shall include provisions for detailed documentation of the site or structure prior to any alteration, dismantling or destruction. 18 `Planning October 1991 P L P R What's New in Preservation Carrots, not sticks, seem to be the wave of the future. By Constance Epton Beaumont Twenty-five years after passage of the National Historic Preservation Act of 1966, preservation of historic buildings would seem to be a sure thing. So preservation planners were particularly shocked last July .when the Pennsylvania Supreme Court ruled that historic landmark designation could, under cer- tain circumstances, constitute a regulatory taking. Although the court has agreed to rehear the arguments in October, the case has preservationists con- cerned about a possible back- lash against land -use regula- tions based on aesthetics. Another factor that has caused concern is the devalu- ation of federal tax credits for the rehabilitation of historic buildings. Their dimunition has state and local governments scrambling to find ways to provide incentives to develop- ers who are willing to reno- vate rather than demolish and build anew. The result of all of this is a general consensus among preservationists that a mixture of carrots and sticks is the key to saving landmarks. The range of incentives is impressive. Facade easements, actual use (vs. "highest and best") property assessments, A N N parking exemptions, transfer of development rights, den- sity bonuses, design assis- tance—these are just a few of the techniques local planners across the country are using to make historic preservation more attractive to property owners. Here are some examples— and how well they've worked: The tax lure In San Antonio, tax abatements are offered to property own- ers who renovate the historic buildings that undergird the city's tourism -based economy. Under a program in effect since 1980, residential properties— both owner -occupied and rental—that have been sub- stantially renovated are taxed according to their pre -reha- bilitation value. The lower rate remains in effect for 10 years. Owners of historic com- mercial property enjoy even more favorable treatment. Their post -rehab taxes are The developer who renovated San Antonio's Old Bexar County Jail for use as offices in 1987 benefited frorn the city's policy of forgiving taxes on rehabbed historic properties. completely forgiven for ti. years, and for five years af_ that, the tax assessment is bas, on only half the property's a; praised value. According t Patricia Osborne, the city historic preservation office over 100 developers have use the program_ Most sell the' property within a year , renovation. Since the tax be, efits are not transferable. ch, city soon receives more t<: revenue than it would hat - otherwise. There has been no forn_; analysis of the program's if pact on city coffers, but Quinto Porter, San Antonio's chief to, assessor, reports that approN: mately $70 million worth c historic property is temporari exempt from local taxes a_ result of it. He notes, thou;:, that the city has benefitedV: many ways, including creased revenues from sal., taxes (from tourists lured b the historic areas) and frog utility payments. In Fairfax City, Virginia, the owner of this bakery could not build a deck for outdoor eating because the city's zoning requires two off-street parking spaces. Fairfax merchants are seeking to persuade the city council to loosen parking requirements in the historic district. P R A Less parking allowed Staunton, Virginia, near Charlottesville, has found re- lief from parking requirements to be a powerful incentive for preservation. The city's 1990 zoning ordinance exempts property owners in the down- town historic district from the sort of suburban -style, off- street parking requirements that have destroyed the dis- tinctive character of many communities. The city also permits on - street parking—despite a rec- ommendation to the contrary by the state department of transportation. City planning director Sharon Angle says the street parking allows custom- ers to make short visits to downtown stores and provides a buffer between pedestrians and vehicles. Angle concludes that the parking policies have strengthened the economic vitality of downtown businesses and have encouraged property owners to convert the upper C T I floors of historic buildings to housing. An offshoot of the down- town revitalization is the recent renovation of the city's rail- road station, which now in- cludes the "Depot Grill," an- tique and discount stores, and an Amtrak station. "The important point here," says Kennedy Smith, director of the Main Street Program for the National Trust for His- toric Preservation, "is that these offstreet parking requirements prevent the recruitment of new businesses and the expansion of existing businesses. This, of course, stifles the economic vitality of historic commercial districts." Get help here Atlanta provides both loans and free technical assistance to help property owners in the Sweet Auburn Historic Dis- trict improve the appearance of their businesses. The city's historic facade program offers up to $20,000 in interest-free loans for facade improvements; loan requests are reviewed by the Atlanta Economic Devel- opment Corporation. Mean- while, the city's Urban Design Commission provides free ar- chitectural design assistance; its services are paid for through the community development block grant program. Katherine Pringle. who di- rects the design assistance program, carries around a notebook containing facade "befores" and "afters" to show potential customers how dra- matically they can improve their buildings. "People are pleased with the results they can bring about," she reports. Loosening the code In 1988, the Boise, Idaho, city council enacted a special reso- lution to resolve building code problems that stood in the way of the preservation of the Idaho Building, a treasured community landmark. A de- Like many structures widen Atlanta's Sweet Auburn Historic District, the Odd Fellows Building got help from the city's facade improvement program. The before picture IrightJ shows a jumble ofsignst after Jabovel, the same building spiffed up with uniform signage. 19 veloper was ready to turn the 80 -year-old office building into apartments. Among the distinctive fea- tures of the Renaissance Revival structure are its oak and glass doors. A literal interpretation of the building code would have required the developer, the Parklane Company, to re- place the doors with new ones— without the glass. At the sug- gestion of Tim Hogland, director of the city's building department, the developer contacted a fire protection specialist who recommended that sprinklers be mounted near each door. This arrangement would provide fire protection equal to that provided by the doors called for by the code. The city council later passed a special resolution approving the compromise. The outcome of these nego- tiations: A major city landmark once slated for demolition has been saved. New downtown housing has been provided. 20 Planning October 1991 And the city has advanced its goal of enlivening the central business district. the his- toric preservation enabling lav, which gives local governments the authority to waive build- ing and fire code requirements in certain cases. Using TIF Alameda, California, recently approved a 40 -year, 5400 mil- lion tax increment financing proposal that will make funds available for assistance to property owners in several historic areas. The East Bay city now awards some S 50, 000 a year to owners of historic commercial property in a five- year-old program administered by the city's community de- velopment department and the local Main Street Program. The funds are derived from repay- ents on an Urban Develop- .nent Action Grant loan to a business park. Main Street Program direc- tor Jeffrey Eichenfield notes that the grants give the city considerable leverage over design. The city also maintains a list of buildings for sale or rent in the older business dis- tricts. The list is distributed to local business organizations, city Officials, and commercial bro- kers. This service helps to at- tract new businesses while re- taining old ones seeking to expand. Why incentives are needed Interest in local preservation incentives is growing as com- munities confront several re- alities. One is the change in the 1986 federal tax law that made rehabilitation tax cred- its much less attractive to in- dividual investors. Another is the growing resistance of property owners to landmark or district designation. With- out incentives it is sometimes A N N N A C T I C Politically impossible to "pre district legislation enacted. A third reality is that his toric buildings often do no meet modern building codes fire regulations, and zonin requirements. The strict ap- plication of these codes makes preservation technically and economically difficult. Com- munities like Staunton and Boise show that a common- sense interpretation of regula- tions can reap significant benefits. Constance Beaumont is senior Policy analyst for the National Trust for Historic Preservation in Wash- ington, D.C. More New Tools - A forthcoming APA Planning t Advisory Service report will take an in-depth look at some g of the incentives described in this article, as well as other innovative techniques used by local governments to preserve historic areas. Conservation districts are particularly promising, espe- cially in places where full his- toric district designation is not Politically feasible. In some ways, they are similar to his- toric districts. Boundaries are drawn and approved by the city council, and regulations and design guidelines are put in place. The regulations gov- ern such elements as height, scale, and roof line of new construction and additions. They also require proof of economic hardship before demolition is allowed. Gener- ally, however, things like paint The Idaho Building (lett), in down- town Boise, got a reprieve fi-o�n a building code regulation that would have forced the rehabber to replace the old oak doors. An example of appropriate rehab in Nashville's Locke - land Springs -East End conservation district. The neighborhood includes some 1,200 frame cottages. P L A N N I N G P R A color and building materials are Iess tightly controlled in conservation districts than in historic districts. Conservation districts are proving to be a popular tech- nioue in areas that have a dis- tinctive historic character but have lost some of their integ- rity to new development. A recent APA survey has identi- fied over 40 cities (including Memphis, Raleigh, and Cam- bridge, Massachusetts) that are using conservation districts. Nashville has several conser- vation districts, with design guidelines in place for each. The first Nashville district was the Lockeland Springs - East End neighborhood, which includes over 1,200 frame cot- tages and bungalows built around the turn of the cen- tury- In 1985, concern about incompatible infill construc- tion prompted city councilman John Summers to ask the Met- ropolitan Historic Zoning Commission to find a way to preserve the character of the area and stabilize property values for low- and moderate - income residents. Summers knew that full historic districting "wouldn't fly po- litically" but felt that the unique neighborhood merited at least partial protection. The conser- vation district was the result. In Tacoma, Washington, conservation districts serve as buffers between historic ar- eas and the rest of the city. They are "ambient to land- marks and historic districts," in the words of the city's cul- tural resources manager, Michael Sullivan. An example is the Union Station area. The city has designated the station (now being renovated) and its immediate vicinity a historic district. Surrounding it is a conservation district, with less stringent controls. Down zonin--reducing allowable density—can ac- complish some of the same preservation objectives. Most important, it reduces the in- centive to demolish older, smaller buildings and build bigger ones. Since many cities are overzoned—their codes al- low much higher densities than have actually been developed— downzoning can often be viewed as a "correction" to the zoning code. Among the cities that have downzoned specifi- cally for historic preservation: Savannah, Eugene. St. Paul, and Alexandria, Virginia. State -mandated plans of- ten include preservation ele- ments. They're required now in nine states (Delaware, Flor- ida, Georgia, Hawaii, Maine, New Jersey, Oregon, Rhode Is- land, and Washington), with more sure to follow. Florida communities get a choice. They may either in- 21 clude a historic preservation element in their comprehen- sive plan, or they may incor- porate preservation objectives into three other elements: fu- ture land use, housing, and coastal zone management. Oregon and Georgia both re- quire local governments to identify historic resources and develop strategies for protect- ing them. The other states have similar requirements. Several of these states are using urban growth bound- aries—a mapped line sur- rounding a city, within which development is permitted—to protect rural areas and en- courage development in exist- ing cities. The potential im- pact on historic resources is considerable, for developers are encouraged to turn to infill development and revitalization. 1111arya Morris Morris is a senior research associ- ate at APA in Chicago. The area around Tacoma's Union Station (left in a 1980 photo] has been designated a conservation district. The building above is part of the historic district adjacent to the station. No. 9 ]FvirginiaN O7..F E, Department of Historic Resources ks 221 Governor Street - Richmond, Virginia 23219 • (804) 786-3143 August, 1991 Report from the Board's August Meeting The Virginia Board of Historic Resources elected John R. Broadway as its chairman and John G. Zehmer vice-chairman during its August meeting. Mr. Zehmer and board member Arnold Henderson were reappointed to the Board by Governor L. Douglas Wilder in July. The Board, acting on the recom- mendations of the State Review Board, listed seven individual properties and four historic districts on the Virginia Land- marks Register. The individual properties are: Black Walnut, Halifax County; Front Royal Recreational Park, Warren County; Hanger Mill, Augusta County; Huntingdon, Roanoke; The Rectory, Albemarle County; and the Salem Presbyterian Parsonage in the City of Salem. The historic districts approved by the Board are: the Cifax Rural Historic District in Bedford County; the Clifton Forge Commercial Historic District; the Pulaski South Residential and Industrial District in the Town of Pulaski; and the Southwest Mountains Rural Historic District in Albemarle County. Department staff held public hearings in each of the localities for the four historic districts. All of the individual properties and the historic districts will be nominated to the National Register of Historic Places. Seven new historical highway markers were approved by the Board for inclusion in the state's system of historical signs. All new markers are being funded by private organizations, individuals, and localities. New markers are: Bethel Baptist Church, Chesterfield County. Gum Springs, Fairfax County; James L. Kemper Residence, Madison County; Low Moor Iron Company Coke Ovens, Alleghany County; Quaker Road Engagement, 29 March, 1865, Dinwiddie County; James Robinson House, Prince William County; Manassas Gap, Fauquier County; and a marker for the City of Manassas. Upcoming Meetings and Public Hearings September 16: Advisory Committee, Route 5 Corridor Study. James City County Government Center; Williamsburg, 7:00 P.M. September 18: Joint meeting of Board of Historic Resources and State Review Board to consider the Department's 1991-92 Work Program. Senate Room A. General Assembly Building, Richmond, 10:00 A.M. S.^tember 23: Pub1Ec Hearing on the Route 5 Corridor Study. Charles City County Neighborhood Center. Charles City. 7:00 P.M. September 25: Public Hearing on the Route 5 Corridor Study; James City County Government Center; Williamsburg,7:00 P.M. September 30: Public Hearing on the Route 5 Corridor Study; Eastern Henrico Government Center, 3820 Nine Mile Road, Richmond. 7:00 P.M. October 8: State Review Board, Senate Room A, General Assembly Building. Richmond. 10:00 A.M. October 9: Board of Historic Resources, Senate Room A, General Assembly Building, Richmond, 10:30 A.M. Virginia Archaeology Week A quick reminder: By special proclamation of Governor Wilder, the second annual Virginia Archaeology Week, October 5-13, will celebrate "Virginia's prehistoric and historic archaeological sites and collections representing a unique and irreplaceable element of the rich heritage of the Commonwealth...." It will feature over 100 events, activities and exhibits designed to appeal to all ages. The Department will support the theme, "Discover the Past for the Future," with an open house, October 9. The Department's labor- atories will be open to the public with special exhibits and artifacts displayed. Staff will explain lab procedures and artifact analysis. In conjunction with Virginia Commonwealth University, the Department will also conduct tours of Jordan's Point, in Prince George County, October 5-6. This Colonial settlement site, dating from the first quarter of the 17th century, includes a Native American Late Woodland -period village as well. Route 5 Corridor Study Under Way The neparr . A . has t_„nch�d a A!! ther sn,,ty of eff ctiv. ways of preserving the historic, environmental and aesthetic integrity of Virginia Route 5 as a two-lane scenic highway between Williamsburg and Richmond under the authority of a Joint Resolution passed by the General Assembly earlier this year. Among the issues mandated for study is the feasibility of various techniques for protecting the byway, including easements, establishment of a special foundation and adoption of stronger planning mechanisms. A committee of residents from the three affected counties - Henrico, Charles City and James City - met in late July to hear presentations on earlier studies of the Route 5 corridor by the Department of Trans- portation, the National Trust and the Lower James River Association. The committee will continue to meet regularly with the next session set for September 16. The Department will hold public hearings in each of the three jurisdictions this month. (See calendar). Department staff are working closely as well with local government planning officials, citizen groups, interested individuals, and other state agencies such as the departments of Transportation and Con- servation and Recreation and the Division of Tourism. The r-rgtt d?!e fer cempletion of the study is December 1. For further information, contact Robert Carter, Director of Preservation Services with the Department. Joint Meeting of Department Boards to Consider Work Program The Board of Historic Resources and the State Review Board will meet at 10:30 AM on Wednesday, September 18, in Senate room A of the Virginia General Assembly Building to consider the Department's work program for the coming year. Open to the public, the joint meeting will afford any persons interested in the Department's work program an opportunity to address the boards. ;f' Virginia Departmentof istoric Resources 221 Governor Street a Richmond, Virginia 23219 9560 HISTORIC RES'IUPCc; .0 0 SOX 601 'dI^a:4EST=R, Vo Compensation Study Pursuant to Senate Joint Resolution 162 adopted by the 1991 General Assembly, the Department is studying the question of whether adding property to the Virginia Landmarks Register and/or the National Register of Historic Places decreases that property's value (i.e. constitutes a taking of property) in a manner that should require compensation to the property owner. The study resolution, sponsored by Senator Charles J. Colgan of Manassas, came in the wake of complaints from property owners in the Bristow area of Prince William County that the recent state recognition of the Bristoe Station Battle- field has lowered the price developers are willing to pay for the land. As part of its study, the Department seeks comments from property owners and local officials. While all comments are welcome, the Department is especially interested in learning of any specific, documented cases in which a property's existing value can be shown to have been reduced by virtue of the Departrlent's nor -regulatory designation, independent of any other action the property owner or the locality may have taken to restrict the property's use. To submit comments or to get more information, please write to H. Bryan Mitchell, 221 Governor Street, Richmond, 23219. Public hearings will be scheduled later in the fall. The study is due for completion by December 1. Red Lion Tavern is Preservation Foundation's Newest Property The Virginia Historic Preservation Foundation has acquired the Red Lion Tavern located in the Winchester Historic District. The thirteen -room, 2-1/2 story stone residence dates from about 1783, and served as a successful hostelry for over 50 years. An ideal investment opportunity for operation as an historic inn or bed and breakfast, the Red Lion Tavern is a significant landmark for Winchester and the lower Shenandoah Valley_ For information on the tavern or to inspect the property, contact the Department at (804)786-1956 or Preser- vation of Historic Winchester at (703)667-3577. Final Burial Regulations Published In 1989, changes to the Virginia Antiquities Act authorized the Department of Historic Resources to issue permits in lieu of a court order for archaeological field investigations on unmarked human burials, and in addition to the court order for archaeological excavations involving marked burials. Remov- ing any part of a human body from a grave or damaging graves, gravestones or other features of a cemetery is a felony under Virginia's cemetery laws. Removal of graves outside the normal operations of a chartered cemetery normally requires a court order. Following a two-year public participation process, the Virginia Board of Historic Resources adopted Final regulations that were published in July, 1991. For further information about the law and the new burial regula- tions, contact State Archaeologist, M. Catherine Slusser at (804)786-3143. BULK RATE U.S. POSTAGE PAID RICHMOND, VA. PERMIT NO. 1225 aOvISC=Y Bt'aRJ Zesty^1 Archaeology Exhibit at Virginia's 1991 State Fair The Department of Historic Resources is joining with the the Archeological Society of Virginia, the National Park Service, the Association for the Preservation of Virginia Antiquities and the Association for the Preservation of Civil War Sites to present a special exhibit for this year's State Fair. There will be publications for sale, free brochures and other hand-outs for those who visit the exhibits. Photographs and drawings will illustrate the architectural, archaeological and landscape resources of the Commonwealth. The dates for the fair this year are September 26 through October 6. Native American Publication The Jefferson National Forest, U. S. Forest Service, has awarded a $5,000 challenge grant to the Department for the publication of a volume devoted to the prehistory of Virginia. Funded through the USDA -Forest Service "Windows on the Past" project, a cultural history of the Native Americans of Virginia will be written at a popular reading level and distrib- uted as part of the Department's on-going publications program. Publication is scheduled for July, 1992. Preservation Internships The Department of Historic Resources offers selected intern- ships to students that allow them to gain hands-on experience in the field of preservation while introducing them to the broad range of preservation activities in which the Department is involved. Student intems have contributed valuable work in several areas over the past summer. Brian Bates, a student at Longwood College, worked in the Division of Archaeology under the supervision of curator, Lysbeth Acuff, where he gained a basic understanding of archaeological methods while assisting in the cataloguing and processing of artifacts. He was also able to participate in field excavations at Jordan's Point, one of the Department's archaeological Threatened Sites projects. In the Preservation Services Division, Todd Peck, a graduate student at the University of Georgia, helped process National Register nominations with Jim Hill, the Department's National Register assistant. Richard Silverman, a master's candidate in architec- tural history at the University of Virginia, worked on the survey of the Southwest Mountains Historic District in Albemarle County and assisted in the preliminary survey of the town of Heathsville in Northumberland County. Although not a formal education program, an internship is seen by the Department as a successful method of providing practical training to those students who are interested in becoming preservation professionals. Students who wish to explore internship possibilities are urged to contact either Beth Acuff or Julie Vosmik at (804)786-31.43. FOOTNOTES i. ftin pan by • give from de Nad.ul NA S—i., U. S. Dep.— of the In.rioe. V k, Tit. VI d de C'MI Rifh. A. f 1954 .rd Semon 501 d ds Rd bili.d- A. d 1977, ih U. S. Doecp. of de 1 ped ibiu dbcrimhmiw m the ba.i, d n , wl« lunar( origin « hardic+p in t. &&.11y ..road pmgr If yw bel'¢w yw haw bevy d; a 6, i=wd .piw . ury p.ogrun «. Wity m f"iIay dr nbd .bm.. m it you de,im fwder irdomution, pl— -ire a: Once f« Eq.] Oppo w, U.S. Dep. of de I—i­ Wmhin&e^. D.C. X V0. The m,ocn. ab WW_ of Uu, pa ",ion donoe maevadly ie0en vie or de policiu d de Dep, d the L,mri«. nor d«, U,e ire ,w d t71 — or cvmne,ci.1 pr dh —61— <dorxmen « rtcmtmerd.,iw by de Dep. d de Ineri«. Virginia 'reservation Update October 1, 1991 NO DECISION REACHED BY CTB ON JAMES RIVER BRIDGE The Commonwealth Transpor- tation Board meeting on September 18, failed to reach a decision on the fu- ture of a proposal to con- struct a high -span bridge across the James River be- tween Surry and James City counties. After a discus- sion of several hours, the CTB decided that more eco- nomic information on the impact of the bridge was needed before a decision could be made. As a member of the James River Crossing Coalition, the Preservation Alliance has opposed the construc- tion of the bridge. Infor- mation on the proposal has been mailed to all Alli- ance member organizations, and many groups have con- tacted VDOT and CTB mem- bers about the proposal. Contacts with both groups during the next month are still encouraged. For ad- ditional information, call the Alliance office. OCTOBER BRINGS ARCHAEOLOGY WEEK TO VIRGINIA October 5-13, 1991 is Vir- ginia Archaeology Week in the Commonwealth and a full calendar of events is set across the state. Many groups have daily exhibi- tions scheduled for the week, while special one- time events are also planned. Preservation professionals and archaeo- logists will come together on Friday evening, October 11 in Roanoke for the an- nual meeting of the Arch- eological Society of Vir- ginia and the Council of Virginia Archaeologists. For a full calendar of events, or to obtain an Ar- chaeology Week poster, contact the Virginia De- partment of Historic Re- sources at (804) 786-3143. DESIGN WORKSHOPS SET TO BENEFIT ARBs AND LOCAL PRESERVA- TION GROUPS The Preservation Alliance will be sponsoring a series of four design workshops in November. Supported by a grant from the Design Arts Program of the National Endowment for the Arts, these workshops will help members of Arch- itectural Review Boards and other local preserva- tionists address design issues that are common in PRESERVATION ALLI.�i�CE 4 O F V I R G I N I A Vol. 4, No. 6 DETAILS Notes on Member Organizations The Virginia Association of Museums has been a- warded a $19,295 grant from the Institute of Museum Services to sup- port a Senior Management Institute in 1992 .... The Thomas Jefferson Memorial Foundation is sponsoring archaeolog- ical excavations at Shadwell, the birthplace of Thomas Jefferson. For information, contact Di- rector of Archaeology William Kelso at (804) 295-2657 .... The Valley Conservation Council recently held its initial membership meeting and elected a Board of Direc- tors to oversee the oper- ation of the organiza- tion, which is dedicated to the conservation of historic sites and open space in the Shenandoah Valley. For information contact Faye Cooper at (703) 885-3959. historic districts in Vir- ginia. The workshops will be held on November 1st in Warrenton, on November 2nd in Williamsburg, on P.O. Box 295 Charlottesville, VA 22902 (804) 979-3899 FAX (804) 979-3925 VIRGINIA PRESERVATIONISTS Old Southwest, Inc. member Joel Richert recently received the City of Roanoke's sec- ond Julian King Neigh- borhood Leadership Award for her work to bring the Old South- west neighborhood to life....Former Alli- ance trustee Mario di Valmarana has resigned as director of the Preservation Program at the University of Vir- ginia. He will remain in charge of the pro- gram until the end of the academic year.... Charlottesville archi- tect W. Douglas Gilpin, Jr., AIA has been ap- pointed Vice President of the Virginia Society, American Institute of Architects. Doug is a long-time preserva- tionist in central Virginia. November 8th in Radford, and on November 9th in Lynchburg. The workshops are designed for extensive audience participation. For information or to reg- ister, contact the Alli- ance office. ALLIANCE ACTIVITIES The Alliance staff recent- ly hosted French architect Pierre -Antoine Gatier, a Richard Morris Hunt Fel- lowship recipient visiting the U.S .... Plans are cur- rently underway for both our "Politics of Preserva- tion" workshop (January 13) and our annual Legisla- tive Reception (January 30). Please mark these dates on your calendar.... Several local preservation issues with state implica- tions have resulted in Al- liance assistance in the past month, including work in Lynchburg on easements, Richmond on the Latrobe state pen, and Roanoke's Explore project. CALENDAR OF EVENTS October 4-5 - "Presenting Virginia Traditions: Folklife" at the Museum of American Frontier Culture. (703) 332-7850. Staunton. October 5-13 - Virginia Archaeology Week. (804) 786-3143. Statewide. October 16-20 - 45th Na- tional Preservation Con- ference sponsored by the National Trust for His- toric Preservation. 1- 800-YES-NTHP. San Fran- cisco. October 25 - Board of Trustees and Board of Ad- visors meeting of the Preservation Alliance of Virginia. (804) 979-3899. Fredericksburg. October 31 - Symposium on the Potomac Waterfront. Sponsored by the Northern Virginia Community Ap- pearance Alliance. (703) 207-3234. Fort Belvoir. Member organizations of the Alliance are encouraged to make copies of Virginia Preservation Update for distribution to staff and board members. ------------------------------------------------------------ PRESERVATION ALLIANCE O F V I R G I N I A P.O. Box 295 Charlottesville, Virginia 22902 OCT - 1991 i Non -Profit Org. U. S. Postage PAID Staunton, VA Permit No. 10 ` e lbmpacts olistoric D0 istnic t Ing � 0 int][on Planning and Policy Implications Dennis E. Gale The designation of historic districts in residential neighborhoods has grown in popularity in the United States over the past two decades. Many planners have embraced designation policies as tools in the management of neighborhood pres- ervation and revitalization. However, opposition has arisen in some cases based on the assertion 'iat official designation could accelerate prop- erty values, thus increasing tax liabilities and rents and leading to rising displacement of low- income and elderly households. Existing research provides only a few insights into this issue. An analysis of residential historic district designa- tion in Washington, DC, finds little support for the displacement threat. Further research is nec- essary on the timing of designation and the in- tervening effects of the federal historic preser- vation tax credit. Gale is professor of public policy and management at the Edmund S. Muskie Institute of Public Affairs of the University of Southern Maine. From 1975 to 1989 he was a member of the urban and regional planning faculty at George Washington University, where he was director of the Center for Washington Area Studies. He is the author of Neighborhood Revitalization and the Postindus- trial City (Lexington Books, 1984) and Washington, D.C.: Inner City Revitalization and Minority Suburbanization 'Temple University Press, 1987). Journal of the American Planning Association, Vol. 57, No. 3, Summer 1991. ° American Planning Association, Chicago, IL. Ever since pioneering legislation was passed in Charleston, South Carolina. in 1931 and New Orleans, Louisiana, in 1937 the historic district technique has been employed as a device to protect neighborhoods and areas of historic and architectural importance. While only a handful of communities adopted historic district ordi- nances in the 1940s and 1950s (Reed 1969), today there are more than 1,200 historic districts scattered across the United States. Furthermore, encouraging historic districts has become a matter of national policy. The Na- tional Historic Preservation Act of 1966 empowered the National Park Service to create the National Register of Historic Places, a listing of landmarks and historic districts considered to be of significance beyond merely local or regional Ievels (Public Law 89-663). Of course, historic district statutes vary from com- munity to community and state to state in the stringency of their provisions. But typically they establish official - boundaries around a historic area and provide for the creation of a commission to rule on individual applica- tions to demolish or alter a property or to build a new structure in the area. The .commission is usually made up of from three to ten volunteers selected by the local government for their expertise or experience in matters related to preservation. An appeals process is provided for affected property- owners who disagree with a com- mission decision (Reed 1969). The proliferation of historic districts nationwide in the past 20 ,years testifies to their popularity among preser- vationists. Historic districts vary, however, in their ef- fectiveness at protecting historic buildings and spaces, depending on the strength of their legislation and the level of political support for their ideals (A Guide to De- lineating the Edges of Historic Districts, 1976). Many property owners and businesspersons resist passage of such ordinances, fearing that they will be unduly re- stricted in using real estate located inside a district. They worry that they will not be able to make desired exterior alterations to a building or yard, that they will be pro- hibited from demolishing a structure and replacing it with a new one, or that they may not be allowed to change the use of the building, as , for example, from residential to business premises. At bottom is their concern for the economic effects of designation (Listokin 1985). Another concern is germane both to property owners and to renters. Both groups may oppose designation of a historic district, fearing that property values will inflate and cause municipal tax assessments to rise. Some prop- erty owners argue that they will be burdened by steep increases in property tax liabilities. Disabled or retired homeowners on fixed incomes feel especially vulnerable. Renters, fearing the indirect effects of rising assessments, may worry that landlords will boost rents substantially to meet the increased costs of property taxes. In short, the issues for these people are involuntary displacement and excessive economic burdens. The purpose of the present study is to shed light on the effects of designation on property values in residential neighborhoods. Not infrequently, planners, preserva- APA JOURNAL 325 SUM.NIER 1991 DENNIS E. GALE tionists, and community officials are accused of catalyzing the displacement of low- and moderate -income renters and homeowners and of small businesses when they sup- port the historic designation of older neighborhoods. The validity of these claims is under scrutiny here. First, lit- erature on property values in historic districts is dis- cussed. Second, research on the relationship between historic district designation and growth in property values in Boston, New York City, and Chicago is described. Third, a case study of recent research in Washington, DC, is presented. Finally, the issue is discussed in light of these findings, and their implications for planning practice are explored. Property Values in Historic Districts Several authors have offered evidence to show that property tax assessments or real estate sales prices in historic districts were greater than, or accelerated more rapidly than, those in other parts of the community or in the community at large. Most of these observations arose in the 1960s and 1970s, at a time when fewer residential neighborhood historic districts existed in the nation. Generally, these authors sought to address opposition to designation proposals from businesspersons who made their living from real estate or from property owners and merchants located in neighborhoods being considered for such sanctions. Naturally. opponents feared that des- ignation would hurt property values and limit their free- dom to realize maximum return on their investments. Preservationists often argued for the desirability of his- toric districts by citing the alleged increases in property values occurring in designated neighborhoods. Most of these areas had experienced declining or stagnant values in the post -World War II era due to disinvestment, hous- ing abandonment, high crime rates, or other pernicious influences. Therefore, price inflation in these areas, whatever the causes, was viewed as desirable by many observers. Early evidence on the economic impacts of historic district designation came from Richmond and Alexandria, Virginia (Montague and Wrenn 1964; Scribner 1976), but these observations were flawed by sampling prob- lems, such as small size and nonrandom selection. A more systematic analysis was carried out by the District of Co- lumbia government in the city's first residential historic district, Georgetown. This area first began to experience restoration and reinvestment in the 1920s (Gale 1987), but it was not until 1950 that Georgetown was designated a local district by Congress. Only in 1967 was it listed on the National Register of Historic Places. The study found that, between 1958 and 1967, Georgetown had the highest rate of average annual increase in property values, 7.15 percent, in the city (Rackham 1977). Other case studies have examined historic districts in Galveston and Chicago. Beaseley (1976) found that property sales prices in the East End Historic District of Galveston were increasing at an annual average of 15 percent (1972-76); meanwhile, prices in a comparable non -historic district, the South Broadway area, rose by 10 percent in the same period, and those in the city overall by 4 percent in, the shorter period 1973-75. The Chicago research compared changes in the median value of owner -occupied housing in six historic districts from 1950 to 1970 (Cohen 1983). It found that the growth rate for Chicago's owner -occupied housing values was 58 percent in this period, while five of the six historic dis- tricts experienced greater growth rates. The Ridge his- toric district's median values rose by 52 percent, and therefore were only slightly below those of the city; the remaining five districts ranged from 81 to 330 percent in the rate of growth of their housing values. A parallel analysis of median rents in the same areas found almost identical patterns. Growth rates in rents were greater than the city's (130 percent) in all historic districts except the Ridge (1 17 percent), and ranged from 158 to 317 percent. Both the Virginia Historic Landmarks Commission and the U.S. Advisory Council on Historic Preservation have produced reports with a broader geographical sampling. The commission found that average annual increases in historic district property values ranged from 20 percent in Richmond's Shockoe Slip area to 104 percent in Lvnchburg's Federal Hill neighborhood (Virginia Historic Landmarks Commission 1982). Data for nondesignated sections of these communities were not presented, how- ever. The advisory counciI's study examined the historic districts in Savannah, Georgia, the Old Town of Alex- andria, Virginia. and the Strand in Galveston. (Data from the fourth district, Pioneer Square in Seattle, did not allow comparisons.) The Savannah historic district experienced an increase of 275 percent in the appraised value of se- lected blocks in the years 1965-77. In the county in which Savannah is located, the increase was 184 percent in the same period. Property values in the Alexandria historic district rose almost 32 percent annually from 1970 to 1977, while the citywide rate rose about 15 percent per year. Selected blocks in Galveston's Strand historic dis- trict, however, experienced an annual growth rate of only about 1 1 percent from 1974 to 1977, although city values overall rose by 28 percent per year. These observations succeed in demonstrating that property values in many historic districts were higher or rose more rapidly than those in other sections of the community or in the community overall. And indeed, they have probably been persuasive in allaying the fears of many property owners and businesspersons about his- toric district designation. However, they do not show that the official designation itself was associated with these disparities. Doubtless, in many districts other forces were operating in or near the designated areas; they might include speculation in real estate, rehabilitation of hous- ing and commercial properties, infill new construction, public infrastructure improvements, and enhanced city service delivery. These forces might very well have been in existence before designation occurred. In short, we cannot conclude from these data that historic district designation, per se, is related to increases in property APA 1OliRNAL 326 SUMMER 1991 HISTORIC DISTRICT DESIGtiATION values. We can conclude only that forces are at work in manv historic districts that do indeed accelerate the value of real estate (Kupiec 1985). For example, in Alexandria's historic district the sharpest increase in the growth rate of property tax revenues from 1949 to 1977 occurred in 1970, when commercial revitaiization began in the downtown. This was 21 years after the district was first established. The factors accounting for disproportionate rises in property values may or may not have something to do with the official sanctioning of historic status through the designation process (U.S. Advisory Council on Historic Preservation 1979). The next section presents results from a second set of studies that share a more sophisticated approach than those described above. Together, they provide a some- what less elusive picture of some of the economic effects of historic district designation. Designation and Property Values In recent years, as more communities have gained ex- perience with designated residential historic districts, at- titudes among property owners and businesspersons, while still cautious, seem to have softened somewhat. Historic districts in Boston, San Francisco, Seattle, New Orleans, and Charleston have demonstrated their appeal o tourists, real estate investors, preservationists, and .,thers. Reinvestment. property appreciation, and busi- ness success have resulted. in many communities. The rise of private reinvestment and gentrification in older inner city neighborhoods during the late 1960s and 1970s contributed substantially to local government designation of more historic districts. But gentrification also alerted many low- and moderate -income households, especially minorities, to the disruptive effects that these dynamics could have on their lives. Recalling the widespread op- position to federal urban renewal clearance and reloca- tion programs in the 1950s and 1960s, campaigns among social activists and community organizers in the 1970s and 1980s to limit the impacts of private reinvestment sought out convenient, highly visible, unitary targets at which to direct protest efforts. Because gentrification rarely proceeds by central direction, but rather, through the individual investment decisions of hundreds or thou- sands of people, identifying a protest target is usually difficult. Not surprisingly, then. historic district desig- nation, always an action of the public sector, offered government as the pressure point. Thus, in some com- munities historic district commissions, local preservation offices, planning commissions, and other units of local government have become the targets of mobilized citi- zensgroups. Over the past decade, as historic district designations have proliferated in many communities, opposition among low- and moderate -income persons and small businesses has also mounted. Because fewer of these people are property owners, their fears are more likely to be based on the alleged displacement effects of des- ignation, rather than on the restrictiveness of property controls or the dampening of property values. Therefore, they argue more or less the converse of property owners: that property values will rise in response to designation, causing rent increases and hikes in real estate tax liabil- ities. As this newer form of opposition has become more intense in communities with previously designated dis- tricts, preservationists have found themselves in the po- sition of arguing that, while appreciation in property val- ues occurs in historic districts, it is not due to designation, but rather, to the effects of other economic forces. One result is that more careful analyses have begun to emerge. An example is a study prepared for the Boston Rede- velopment Authority (Engle and Avault 1973). The au- thors examined residential property tax assessment data for several Boston neighborhoods. The adjoining Beacon Hill and Back Bav neighborhoods were analyzed as a single study area. Designated a historic district in 1955, Beacon Hill exerted so little influence on the study area's rate of growth in assessments that it was not until 1962 that assessments began to rise significantly beyond those of the city overall. But designation of Back Bav in 1966 paralleled a sharp rise in study area assessments. Yet, while assessments in the study area were higher than in the city overall, the rate of growth in assessments in the study area from 1966 to 1972 (136 percent) did not sub- stantially diverge from that of the city overall. As for the Beacon Hill Back Bay area's relative growth in assessments (383 percent) for the full study period (1946-72), it was exceeded by rates in Charlestown (619 percent), the Central./North End neighborhoods (531 percent), the South End (415 percent), and the Fenway/ Kenmore area (458 percent). None of these neighbor- hoods had been designated a historic district by 1972, although all had vintage building stocks. (Both Charles- town and the South End were designated in 1973, but data for the post -designation period were not provided in the study.) Therefore, although the Boston study pro- vides mixed evidence of the impact of historic district designation on property values, it does not demonstrate that growth rates were out of proportion to other rein- vestment areas where no designations had occurred. Further insights on the historic district designation is- sue are available from a consultant's study of a neigh- borhood in Brooklyn (New York Landmarks Conservancy 1977). The authors examined three sections of the Park Slope district, each with differing social, economic, and architectural properties. These sections were compared to three study areas from the adjoining nondesignated portion of the Park Slope neighborhood. The authors found that, in most of the study areas, "the greatest prop- erty value increases occurred prior to designation." After designation, "market values in the comparable areas ... increased at roughly the same rates as those within the districts" (New York Landmarks Conservancy 1977). The authors also conducted a survey of residents in the Park Slope historic district and found that "only 15 to 25 per- cent of the respondents mentioned the designation as one of the reasons for moving into Park Slope," although APA JOURNAL 327 SUMMER 1991 DENNIS E. GALE many cited the appeal of the architecture (New York Landmarks Conservancy 1977). The study concluded that "increases in market values have resulted from a number of factors in which designation did not play a major role. Market values cannot be directly linked to designation in Park Slope" (New York Landmarks Conservancy 1977). Unfortunately, the authors' research methodology, data sources, and results were not fully described in the study, and thus, conclusions must remain tentative. A third source of intelligence on this issue arises from research in Chicago (Schaeffer and Ahern 1988). One residential neighborhood listed on the National Register of Historic Places and two designated as local districts were examined. Housing sales data, secured from the files of a local real estate company, were used to measure property values. Sales over the period 1960 to 1986 (N = 255) were studied. (It is not clear how the sample was selected, but it appears that it was limited to single family housing.) Schaeffer and Ahern found a statistically sig- nificant increase in the rate of housing sales in the national district, but not in the local districts, after their respective designation dates. To the extent that rising turnover in ownership contributes to enhanced sales prices, one would expect that property values would accelerate after designation. Pursuing this issue, the authors found that, indeed, price increases in the national district were statistically significant after designation, while those in the local dis- tricts were not. The authors speculate that the difference might be due to the more st: ingent controls imposed on property use in the two local districts. These controls, they reason, could have the effect of discouraging prop- erty owners and would-be buyers from investing in housing. The National: Register district, on the other hand, offers buyers the prestige of property ownership in a nationally recognized neighborhood, with few, if any, controls influencing use and enjoyment of property. It is not surprising that public debate over the impacts of historic district designation in residential neighbor- hoods has often proceeded in a cloud of confusion. The preceding examples demonstrate that the optimistic claims of those people sympathetic to historic designation belie the uncertainties voiced by many low- and mod- erate -income people and by those more concerned with social justice. By the same token, evidence from more objective sources is not yet sufficiently developed to sus- tain confidence. Indeed, while research on the economic impacts of historic district designation has taken a more sophisticated methodological route in recent years, we are still left with a fragmentary and inconclusive picture. The next section attempts to contribute to a further clarification of the designation issue by drawing on recent research in neighborhoods in Washington, DC. In par- ticular, the research will examine two hypotheses: that property values in historic districts rise more rapidly after designation than before and that property values rise faster after designation in historic districts than in similar nondesignated neighborhoods. Following this discussion, we will reconsider the Boston, New York, and Chicago findings, as well as the Washington studies, in an attempt to svnthesize a clearer understanding of this important local public policy issue. While findings from individual communities do not allow us to generalize across the nation. the contribution of several studies gives us a firmer foundation for making initial judgments about the impact of designation. Designation in Washington, DC In Washington. DC, controversy has arisen with in- creasing frequency as older neighborhoods explore the merits of historic district designation. Georgetown, the oldest community within the capital city, was designated in 1950, the first residential neighborhood in the capital to be so named. At that time, however, only congressional approval was required, and there was little resistance to the act. Likewise. opposition was minimal to the desig- nation of the residential areas Logan Circle (1972), LeDroit Park (1974). and Capitol Hill (1976). By the 1970s, however, required federal review by the Joint Committee on Landmarks brought a more rigorous pro- cess to the designation of neighborhoods. A parallel de- velopment, the private market revitalization of older neighborhoods, a national phenomenon, had taken root in several parts of Washington by the end of the decade. The displacement issue rose in salience and, with it, questions were posed about the role played by historic district designation. Meanwhile, neighborhood groups, anxious about the spreading of commercial and high density residential development in older neighborhoods, sought historic district status as a way to protect the character of their communities. It is not surprising, then, that petitions requesting designation by the District of Columbia's Historic Preservation Review Board have in- creased in the 1980s. The first study of the designation issue in Washington examined annual changes in average residential sales prices for the period 1972 to 1978 in each of five resi- dential historic districts (Samuels 1981). The districts were Logan Circle. LeDroit Park, Capitol Hill, Anacostia, and Dupont Circle. Samuels performed identical analysis on five undesignated neighborhoods with otherwise comparable characteristics. (The undesignated neigh- borhoods—Adams Morgan. Mount Pleasant, Brookland, Kalorama, and Takoma Park—had experienced gentri- fication, had structures built in the nineteenth century, and were located in the older sections of the city.) Sam- uels found that in none of the five historic districts was there a statistically significant difference in the growth rate of property values relative to the non -historic dis- tricts. Rather, she argued, it was more likely that growth rates in property values were related to the "stage" of revitalization reached in each neighborhood. Where re- vitalization was more advanced, Samuels noted, rates of growth in values were also higher. The Samuels study raises doubts about the assertion that property value acceleration in historic districts is greater than that in comparable, but undesignated, APA IOURNAL 328 SUNINIER 1991 HISTORIC DISTRICT DESIGNATION neighborhoods. However, it is important to remember that two of the five historic districts in her sample were designated in 1978, the final year of her analytical period. titoreover, a third neighborhood was designated in 1976. Consequently, little time would have passed in these three areas to allow for post -designation effects to show up in property value growth rates. Also, it should be remem- bered that it is property tax assessment rates, not sales prices, that determine property tax burdens, and there- fore, the relative displacement impact of designation. Samuels wisely chose to employ sales price data for her study because assessment data were considered unreli- able by most observers. As in many cities, the District of Columbia did not undertake timely and systematic reassessment until the mid-1970s. Thus, assessment data throughout much of that decade were often considerably out of date and were poor indicators of property values. Nevertheless, Samuels's sales price data were less closely tied to tax -induced displacement pressures than accurate tax assessment data would have been, had they been available. Finally, because the Samuels study, which was completed in 1981, explores the previous decade, an analysis of a more recent period would complement her results and place them in a contemporary context. few Research on Washington: A Case Study With these concerns in mind, the author examined trends in Washington over the period 1975 to 1987. The study compares property assessments in three historic districts before designation with those after designation. In addition, it compares post -designation trends in prop- erty assessments in these three districts to those in three 'he Dupont Circle Historic District is characterized by brick or stone Victorian townhouses in a panoply of styles. A Metro Rail station and a popular commercial district make the neighborhood a desirable one for childless households. Takoma Park Historic District is made tip almost en- tirely of single-family detached houses, mostly of frame construction. With a nearby Metro Rail station, this district offers an easy commute to Washington's down- town. revitalizing neighborhoods where designation had not taken place. The studv builds on previous research by focusing on the issue of property values and historic districts. How- ever, it seeks to isolate the central issue—whether the act of designation itself affects property values. By com- paring post -designation values to pre -designation values it provides clearer evidence than previous research (with the exception of the Schaeffer -Ahern study of Chicago and the Samuels study of Washington) of designation's property value impacts. Moreover, it relies on property tax assessment data, rather than sales prices, as a measure of the effect of designation on property values; as dis- cussed above, these data provide a more explicit indicator of the potential displacement impact of property tax li- abilities than do sales prices.' Thus, the present study enhances and complements the Schaeffer -Ahern and Samuels research by offering insights from a different data source. In addition, it pro- vides evidence from two sets of comparisons (i.e., pre - versus post -designation, and designated versus nondes- ignated) rather than one. Finally, it gives a more recent assessment of the designation issue in Washington than the Samuels study; together the two studies yield a broader longitudinal perspective of the issue than either one by itself. The Selection of Study Neighborhoods There were 31 historic districts in the city of Wash- ington at the time the study was undertaken. Of these, several were historic sites wholly owned by the federal government or were specialized areas, such as embassy enclaves or downtown commercial centers. Three pre- dominantly residential neighborhoods—Mount Pleasant, Kalorama, and Cleveland Park—were designated too re - APA JOURNAL 329 SUMMER 1991 DENNIS E. GALE Gently (1986) for post -designation analysis to be possible. The Georgetown, Capitol Hill, LeDroit Park, and Logan Circle districts had been designated at a time when city tax assessment practices were inconsistent, and data consequently were unreliable. Among the predominantly residential neighborhoods that remained were two des- ignated in 1978 (Anacostia and Dupont Circle) and one designated in 1983 (Takoma Park). These three were chosen as the study areas. All three provided property tax assessment data that benefited from a reform program in the District of Columbia after home rule took effect in 1975 (DC Real Property Tax Revision Act 1974). Un- der reform, all properties were to be reassessed annually and all were to be assessed at 100 percent of market value. These policies yielded the most accurate and re- liable measures of property assessments heretofore available in the District of Columbia. The three neigh- borhoods were located in geographically diverse sections of the city (Figure 1). Anacostia. The home of fiery abolitionist, Frederick Douglass, is a National Historic Landmark and is owned by the National Park Service. Located in Anacostia, it lends a powerful symbol of Afro-American pride to the area, which is generally acknowledged as the heart of the black community of Washington. Originally settled by freed slaves after the Civil War, the community is home to the Anacostia Neighborhood Museum, a branch of the Smithsonian Institution. Anacostia suffers from high poverty, crime, and drug use rates and a high in- cidence of births to unwed teenage mothers. Nonetheless, the historic district has attracted both black and white middle-class residents and considerable housing reno- vation and restoration have taken place. Dupont Circle. Located in closest proximity to down - APA JOURNAL 330 SUMMER 1991 FIGURE 1: The study areas in Washington, DC_ HISTORIC DISTRICT DESIGNATION The Adams Morgan neighborhood has residents from several South American and African nations, as well as black and white native-born Americans. Eclectic early twentieth-century architectural styles predominate in townhouses and apartment structures. town Washington, this area is bisected by a popular retail corridor, with several restaurants, pubs, and cafes. It is amonthe oldest and most expensive gentrified neigh- C,oorhoods in Washington: nearby, many national nonprofit organizations, embassies, chanceries, and institutional organizations are headquartered. The spread of office, commercial, and institutional development into residen- tial sections has been a major policy issue to residents. Takoma Park. This neighborhood first developed as a stop on the Baltimore and Ohio Railroad line and later became a streetcar suburb connected to Washington's downtown. Large single family houses, interspersed with bungalows, characterize most of the area. Ten years ago a relatively large black population lived here, but gen- trification has brought a slow in -migration of white mid- dle-class families in the years since. Similarly, three older predominantly residential neigh- borhoods experiencing gentrification, private reinvest- ment, and historic preservation, but not designated his- toric districts (at the time period covered by the study), were also selected as control study areas. These were the Adams Morgan, Mount Pleasant, and Brookland sec- tions of Washington. Adams Morgan. This enclave, dubbed the "Latin Quarter" by some observers, is Washington's symbolic home to thousands of Hispanic residents in the metro- politan area. Smaller numbers of Ethiopians and Niger- ians moved in or opened restaurants during the 1980s. It has recently become a popular nightclub and disco center, and draws many patrons from throughout the city and the suburbs, as well as tourists. Gentrification began in the late 1960s, when the area was a center of local and national antiwar and social protest activity. Com- mercial expansion is a persistent issue. Mount Pleasant. Another streetcar suburb, this com- The Mount Pleasant neighborhood was once a streetcar suburb of Washington. Both amateur and professional renovators have transformed its housing stock. This Colonial Revival mansion, with modern addition, was subdivided into condominiums. munity was originally settled after the Civil War by New Englanders, many of whom worked for the federal gov- ernment as clerks. A mixture of single-family detached and row dwellings make up most of its housing stock. Gentrification began in the early 1970s and an unusual coalition of middle-class whites and blacks labored to maintain a mixed racial neighborhood throughout much of the 1970s. Hispanic households make up a small but significant share of the population. Brookland. This community is located on the same Houses such as this Queen Anne -style Victorian are scattered about the Brookland neighborhood and in- termingle with brick row dwellings and small apartment buildings. Black moderate- and middle-income families and younger white professional households make up the majority of Brookland's residents. APA JOURNAL 331 SUMMER 1991 DENNIS E. GALE railroad line as Takoma Park and came into being under similar circumstances. It is home to Catholic University of America, the National Shrine of the Immaculate Con- ception, the Franciscan Monastery, and other Catholic organizations. Brookland is composed mostly of single- family frame dwellings, with scattered row and apartment structures. Its population is composed predominantly of blacks, but white professionals have slowly increased their numbers ever since the Metro Rail station opened. Table 1 compares the three historic districts and the three non -historic areas. It shows that there was consid- erable population diversity in size, proportion of blacks, income, and educational attainment. Similarly, the hous- ing stock shows substantial variety in age and percentage of single family units. A District of Columbia government measure of the status of displacement in 1979 indicates that the dislocation of households primarily by the forces of revitalization had advanced in some neighborhoods and was negligible in others. Metro Rail rapid transit stations exist in some neighborhoods and are absent in others. As Table I indicates, there was variety both within historic districts and between districts and nondesignated neighborhoods. The only characteristics the neighbor- hoods shared were that they were all in Washington, all primarily older, residential sections, and all experiencing varying degrees of private market revitalization. Given this diversity, a consistent finding of significantly greater TABLE 1: Characteristics of the study areas property value increases in the historic districts after designation would strengthen the argument that desig- nation per se, (and not some other factor) had been the predominant influence. Similarly, a consistent finding that these increases were significantly greater in the historic districts, when compared to the non -historic districts, would undergird the charge that designation was the pri- mary variable affecting property values. It should be acknowledged that the study areas were not randomly selected. The reason for this is that so few designated and nondesignated revitalizing neighborhoods exist in Washington that the universe is simply too small for sophisticated sampling techniques. Moreover, our re- sults are intended to shed light on the designation issue in Washington; they do not allow unqualified general- izations about neighborhoods in other communities. Nevertheless, the weight of our results and those of other studies discussed are intended to clarify some of the issues concerning the impacts of historic district designation and to offer hypotheses for further research. Given the tentative state of policy research on this issue at present, we feel that our results are instructive for the planning, design, and preservation fields. Other Methodological Concerns Data on assessed valuations were acquired from the District of Columbia government's Municipal Automated Non -historic % with 4 Districts or more Adams No 15,352 43 Median HH years of % of 7 Near Morgane.b Metro rail income as college housing % single complete (three census station, % of (people structures family tracts) Year citywide age 25 built units of Status of Study opened Population % black median or older) before all units displacement areas 1975-87 1980 1980 1979 1980 1940(%) 1980 1979 Historic districts 1978 8,958 70 111 26 57 56 Not significant Anacostia No 6,394 95 78 7 19 24 Underway Dupont Circle 1977 3,974 14 90 56 66 7 Near Citywide N.A. 638,333 70 ($16,211) 21 39 35 complete Takoma Park 1978 6,042 79 123 23 46 57 Not significant Non -historic Districts Adams No 15,352 43 84 46 59 7 Near Morgane.b 90 complete (three census 105 tracts) Mount Pleasant° No 10,012 49 87 39 45 24 Near (two census 89 complete tracts) Brooklandb 1978 8,958 70 111 26 57 56 Not significant (three census 119 tracts) 89 Citywide N.A. 638,333 70 ($16,211) 21 39 35 N.A. a. Study area was slightly smaller than census tract area b. Some data available only by census tract. APA JOURNAL 332 SUMMER 1991 HISTORIC DISTRICT DESIGNATION Geographic Information System (MAGIS), a geocoded data file. MAGIS provided data by city square (i.e., gen- erally comparable to city blocks), and it was decided to employ median assessed valuation as the smallest unit of analysis in order to maintain computing capacity within affordable range. Furthermore, we restricted our data to single-family residential properties; we reasoned that apartment buildings and commercial and industrial properties are generally assessed by the income method, while single family housing is assessed by the comparable sales method. Therefore, we would not expect the former to be as responsive as the latter to the act of designation. Furthermore, apartment and commercial properties are much more likely to undergo appeals under assessment adjudication procedures, with the result that property assessment figures for recent years in the MAGIS system might subsequently be lowered. Our data item, then, was the median assessed valuation for single-family residential property per city square. The three historic district studv areas were defined as all the city squares that. were 50 percent or more inside the officially designated historic boundaries. The three non -historic district study areas were defined as all city squares at least 50 percent within those census tracts composing the three revitalizing neighborhoods. We de- cided to examine a three-year period before designation -id a three-year period afterward for each of the des- ,gnated and undesignated neighborhoods. We wanted to avoid short-term variations in housing market trends that might yield a distorted or incomplete picture. Moreover, we wanted to allow for the possibility that designation's effects might unfold slowly over a few years' time, rather than immediately after historic district status had been conferred. Thus, we rejected shorter analytical periods. These factors, and the selection_ of two areas designated in 1978 and one in 1983 determined, in turn, the total time period over which our observations reached (1975-87). We computed the change in median assessed valuation per city square before and after the designation dates for each of the six studv areas. The means of these data were calculated per study area and converted to percentages. The result was a measure of the pre- and post -designation growth rate for each area, as well as for the city overall. We decided to test two hypotheses to illuminate the impact issue. The first assumes that the growth rate in property assessments after designation in each historic district is greater than the rate before designation. A con- sistent pattern of higher rates of appreciation would sup- port the charge that designation is associated with higher property tax liabilities and therefore with higher rents. Alternatively, if there is no apparent pattern of higher rates of appreciation after designation, we could not con- clude that designation had any appreciable effect on tax urdens and therefore on tax -induced evictions or rent increases. The second hypothesis assumes that post -designation rates of appreciation in property values in historic districts are greater than those in non -historic areas. A consistent pattern of higher rates of gain among historic districts than among the control ;roup neighborhoods would lend support to the argument that designation by itself, rather than other factors associated with gentrifying areas. is the most critical factor in bringing about such displacement -related events as rapidly rising rents and property taxes. On the other hand. a consistent pattern of more sluggish rates of gain among historic districts than among non -historic districts—or a mixed picture— would tend to support an alternative hypothesis. We would then have to conclude that there was no evidence that historic district designation by itself contributes sig- nificantly to rising property values.' Comparing the Study Areas Figure 2 provides data on growth rates for the two districts designated in 1978. Immediately apparent is the fact that there were no increases in the rate of growth of assessments. In fact, growth rates dropped by approx- imately one-half in both districts after designation. Thus, the experiences in Anacostia and Dupont Circle ran counter to the predicted path'. Furthermore, Figure 2 demonstrates that the rate of growth in both districts did not sharply diverge from that in the city overall, both before and after 1978. Andcostia's residential assessments rose at about the same rate as those of the city before 1978, and Dupont Circle's assessments almost matched those of the city in the post -1978 period. Figure 3 shows data from the third historic district, Takoma Park, which was designated in 1983. This ex- ample provides evidence from a more recent time period that further enriches our conclusions. Again, the pattern of growth rates in residential property assessments does not correspond to the hypothesis. Rather than increasing after designation, the growth rate declined more than 50 percent. Moreover, the trajectories of these rates compare closely with those in the city overall. Once more, there is nothing in the data to suggest that designation had any effect on residential property values. A complementary perspective is offered by comparing the three historic districts to the three non -historic dis- tricts. Figure 4 compares the Anacostia and Dupont Cir- cle historic districts to the Adams Morgan and Mount Pleasant non -historic districts. It shows that growth rates in the non -historic districts declined, rather than in- creased. in the post -1978 period. This pattern conforms to those in the historic districts and in the city at large. Figure 4 also demonstrates that there were only modest variations in post -1978 growth rates among the four areas. None diverged substantially from the correspond- ing citywide post -1978 rate. Figure 4 supplies us with another interesting insight. Growth rates in both of the non -historic districts before 1978 were substantially greater than those in the historic districts or the city. The factors accounting for this are unknown. However, one speculation is that word of the impending designations in the Anacostia and Dupont Circle neighborhoods may have had a dampening effect on property values. Fear of limits on property use, prop- erty changes, and demolition permissions may have shifted investment activity to other neighborhoods, such APA JOURNAL 333 SUMMER 1991 DENNIS E. GALE as Mount Pleasant and Adams Morgan, where no des- ignations had been proposed or planned. Of course, this argument runs counter to the entire thrust of the present research—that designation accelerates property values. But it also highlights the possibility that forces other than designation, by itself, are the prime influences on rising property values. We shall return to this issue further on. It remains for us to compare Takoma Park. designated in 1983, to a similar, non -historic district—in this case, the Brookland neighborhood. Figure 5 demonstrates that Before Designation ® After Designation FIGURE 2: Growth rate in assessed values in two historic districts and city- wide, 1975-78,1978-81. the pattern of lower, rather than higher, growth rates after designation persisted in both areas. While growth rates in property values throughout the city had slowed considerably from the late 1970s to the early 1980s, they had slipped to even more modest proportions by the mid- ] 980s. Nevertheless, Figure 5 makes clear that the post - designation growth rate in the historic district did not depart meaningfully from that in the non -historic district. Notice, however, that the 1970s pattern of a higher pre - "designation" growth rate in the non -historic district APA JOURNAL 334 SUNI:.MER 1991 *° Before Designation ® After Designation FIGURE 3: Growth rate in assessed values in his- toric districts and city- wide, 1981-84, 1984- 87. HISTORIC DISTRICT DESIGNATION persisted in the 1980s. While the difference in these 1?rowth rates is very modest, the consistency of the pattern among the six neighborhoods raises questions about the Gource of economic forces anticipated by opponents of storic district designation. In the present case, at least, gyne more extreme shifts in property values were occurring in the non -designated neighborhoods. In anv event, Fig- ure 5 shows patterns quite consistent with those in Fig- ure 4. A paired comparisons t-test was performed for each of the six study areas to determine whether decreases in growth rates after the designation dates, relative to growth rates before designation, were of a magnitude to Before Designation Date ® After Designation Date FIGURE 4: Growth rate in assessed values in his- toric (HD) and non - historic (NHD) districts and citywide, 1975-78, 1978 -81 - be considered statistically significant. In all three historic districts and the three non -historic districts the declines were found to be significant at the 0.01 level, indicating that there was an extremely low probability that the de- clines were due to chance. Figure 6 provides further insights into the differences between the three historic and the three non -historic areas. It graphs the decline (in percentage points) in the rate of growth in property values of each area and of the city for each of the two observation periods. It is apparent that two of the three historic districts, Anacostia and Takoma Park, experienced declines that were less drastic than the corresponding citywide rates. Conversely, all 40 32.94 30 27.85 27.7 Mean % Change 20 12.13 10 9.24 6.12 0 0 .�., Takoma Park Brookland Citywide FD NHD APA JOURNAL 335 SUIk N1ER 1991 IN Before Designation Date ® After Designation Date FIGURE 5: Changes in assessed valuation in historic (HD) and non - historic districts (NHD) and citywide, 1981-84, 1984 -87 - 250 246.01 224.35 200 192.34 % 169.34 165.09 Change in Mean 150 Ass. Val. 93.94 100 83.16 80.82 88.12 84.63 50 0 Anacostia HD Dupont Adams Mount Citywide Circle HD Morgan NHD Pleasant NHD persisted in the 1980s. While the difference in these 1?rowth rates is very modest, the consistency of the pattern among the six neighborhoods raises questions about the Gource of economic forces anticipated by opponents of storic district designation. In the present case, at least, gyne more extreme shifts in property values were occurring in the non -designated neighborhoods. In anv event, Fig- ure 5 shows patterns quite consistent with those in Fig- ure 4. A paired comparisons t-test was performed for each of the six study areas to determine whether decreases in growth rates after the designation dates, relative to growth rates before designation, were of a magnitude to Before Designation Date ® After Designation Date FIGURE 4: Growth rate in assessed values in his- toric (HD) and non - historic (NHD) districts and citywide, 1975-78, 1978 -81 - be considered statistically significant. In all three historic districts and the three non -historic districts the declines were found to be significant at the 0.01 level, indicating that there was an extremely low probability that the de- clines were due to chance. Figure 6 provides further insights into the differences between the three historic and the three non -historic areas. It graphs the decline (in percentage points) in the rate of growth in property values of each area and of the city for each of the two observation periods. It is apparent that two of the three historic districts, Anacostia and Takoma Park, experienced declines that were less drastic than the corresponding citywide rates. Conversely, all 40 32.94 30 27.85 27.7 Mean % Change 20 12.13 10 9.24 6.12 0 0 .�., Takoma Park Brookland Citywide FD NHD APA JOURNAL 335 SUIk N1ER 1991 IN Before Designation Date ® After Designation Date FIGURE 5: Changes in assessed valuation in historic (HD) and non - historic districts (NHD) and citywide, 1981-84, 1984 -87 - DENNIS E. GALE FIGURE 6: Decline in growth rate of assessed values in historic (HD) and non -historic (NHD) districts and citywide, 1975-78, 1978-81 ('); 1981-84, 1984-87 ("). three of the non -historic districts suffered declines that were greater than the counterpart citywide rates. These data provide some support for the idea that the true in- fluence of historic district designation maybe to insulate property values from the cyclical peaks and valleys more common in other parts of residential Washington. In short, it may be that historic districts are more likely to experience a certain degree of indemnification from ex- tremely modulating property values, perhaps because of a higher degree of investor confidence in these officially recognized and protected areas. As Schaeffer and Ahern have observed, "Historic district designation may serve a function similar to that of a designer label; it guarantees the quality of the merchandise, reducing the uncertainty facing the buyer regarding the future value of the pur- chase" (1988). Whatever the case, this analysis of the residential his- toric district experience in Washington found no evidence that historic district designation, per se, was associated with increases in property values out of proportion to the effects of generally prevailing economic conditions in the city as a whole. Comparisons of pre- and post - designation growth rates in historic districts, as well as comparisons of these data in historic and non -historic districts, provide no support for the argument that official recognition of the historic and architectural merits of residential neighborhoods leads to accelerating property values. The fact that rates of appreciation in values de- clined in all six of the study areas at the time that they were declining citywide demonstrates that overall eco- nomic trends had a much more influential effect on the areas than did designation. It is probable that the con- sistent pattern of decline was related to higher mortgage interest rates and weakening consumer demand over the period covered by the study.3 The Findings in the Context of the Literature Studies in Boston, New York, and Washington, DC, concur in their findings that no association can be iden- tified between historic district designation and rising property values. These studies employed pre- and post - designation comparisons and/or comparisons between historic and non -historic districts. However, in a study of Chicago by Schaeffer and Ahern, one historic district, listed on the National Register in 1977, did indeed ex- perience statistically significant gains in housing sales rates and sales prices after designation (1988). The two locally designated (1982) historic districts did not show such patterns. though, and instead experienced statisti- cally significant declines after designation; this finding led the authors to speculate that the more stringent con- trols over property usage therein dampened investor confidence. Perhaps this is true. But an alternative ex- planation would raise queries about the timing of the historic designation in both of the local districts and the national district (Samuels 1981). Leaving aside differences in methodological ap- proaches among the studies cited above, the Schaeffer and Ahern study may have produced disparate results in the National Register -listed district if designation took place before the area had experienced significant reha- bilitation and restoration activity. Alternatively, if local designation occurred in the two remaining Chicago neighborhoods substantially after renovation efforts had commenced, prices might already have spiraled consid- erably. At issue here is whether designation, per se, con- tributes to price/value increases or whether the process of accelerated improvements in property—irrespective of designation—is the primary causal factor. As most APA JOURNAL 336 SUMMER 1991 -157.89 160 -143.53 140 -109.18 1 20 100 — 75.4 -80.46 80 Decline 60 in Mean -26.82 -18.46 Ass. Val. 40 -15.72 20 0 Anacostia Dupont Takoma Adams Mount Brookland Citywide' Citywide-- itywide"HD- HD-Circle HD' Park HD" Morgan Pleasant NHD" NHD" NHD' FIGURE 6: Decline in growth rate of assessed values in historic (HD) and non -historic (NHD) districts and citywide, 1975-78, 1978-81 ('); 1981-84, 1984-87 ("). three of the non -historic districts suffered declines that were greater than the counterpart citywide rates. These data provide some support for the idea that the true in- fluence of historic district designation maybe to insulate property values from the cyclical peaks and valleys more common in other parts of residential Washington. In short, it may be that historic districts are more likely to experience a certain degree of indemnification from ex- tremely modulating property values, perhaps because of a higher degree of investor confidence in these officially recognized and protected areas. As Schaeffer and Ahern have observed, "Historic district designation may serve a function similar to that of a designer label; it guarantees the quality of the merchandise, reducing the uncertainty facing the buyer regarding the future value of the pur- chase" (1988). Whatever the case, this analysis of the residential his- toric district experience in Washington found no evidence that historic district designation, per se, was associated with increases in property values out of proportion to the effects of generally prevailing economic conditions in the city as a whole. Comparisons of pre- and post - designation growth rates in historic districts, as well as comparisons of these data in historic and non -historic districts, provide no support for the argument that official recognition of the historic and architectural merits of residential neighborhoods leads to accelerating property values. The fact that rates of appreciation in values de- clined in all six of the study areas at the time that they were declining citywide demonstrates that overall eco- nomic trends had a much more influential effect on the areas than did designation. It is probable that the con- sistent pattern of decline was related to higher mortgage interest rates and weakening consumer demand over the period covered by the study.3 The Findings in the Context of the Literature Studies in Boston, New York, and Washington, DC, concur in their findings that no association can be iden- tified between historic district designation and rising property values. These studies employed pre- and post - designation comparisons and/or comparisons between historic and non -historic districts. However, in a study of Chicago by Schaeffer and Ahern, one historic district, listed on the National Register in 1977, did indeed ex- perience statistically significant gains in housing sales rates and sales prices after designation (1988). The two locally designated (1982) historic districts did not show such patterns. though, and instead experienced statisti- cally significant declines after designation; this finding led the authors to speculate that the more stringent con- trols over property usage therein dampened investor confidence. Perhaps this is true. But an alternative ex- planation would raise queries about the timing of the historic designation in both of the local districts and the national district (Samuels 1981). Leaving aside differences in methodological ap- proaches among the studies cited above, the Schaeffer and Ahern study may have produced disparate results in the National Register -listed district if designation took place before the area had experienced significant reha- bilitation and restoration activity. Alternatively, if local designation occurred in the two remaining Chicago neighborhoods substantially after renovation efforts had commenced, prices might already have spiraled consid- erably. At issue here is whether designation, per se, con- tributes to price/value increases or whether the process of accelerated improvements in property—irrespective of designation—is the primary causal factor. As most APA JOURNAL 336 SUMMER 1991 HISTORIC DISTRICT DESIGNATION observers of historic preservation activity will agree, his- toric district designation of a neighborhood usually fol- lows, rather than precedes, the point at which substantial growth in renovation occurs. If designation has any im- pact on property values at all, the question raised here is, how far must the property rehabilitation cycle progress before the effect is neutralized? If designation occurred relatively early in the reno- vation cycles of the Chicago National Register district, and in the study neighborhoods in the New York and two Washington studies, but relatively late in the cycles of the Chicago locally designated districts, it is plausible that there are no inconsistencies between the seemingly quarrelsome results. The mere presence of this uncer- tainty nevertheless points the way to future research on the property value impacts and dislocative effects of his- toric district designation in residential neighborhoods. While this variable is not an easy one to control, efforts should be made to analyze a sample of historic districts experiencing designation at different points in the prop- erty rehabilitation cycle.. It will probably be necessary to first conduct research on building permit issuances in each sample neighborhood so as to establish mutually comparable time lines around the designation date. Regression techniques might then be employed to cor- relate price; value growth to the stage of advancement renovation activity. If we set aside the timing -of -designation issue, how- ever, there is little support here for the belief that des- ignation, per se, significantly affects the economic value of real estate. Yet. there is concurrence that the intricate processes of rapid property turnover, speculation, arbi- trage, rehabilitation, and reinvestment associated with revitalizing neighborhoods and historic preservation movements do indeed inflate property values. Attempts to direct public policy toward fostering racially, ethni- cally, or socioeconomically mixed neighborhoods, com- bining middle-class reinvestment with incumbent up- grading, will have to address the more complicated nature of property value appreciation, whether in historic dis- tricts or nondesignated areas. Planning Policy and the Management of Change The designation of historic districts in older residential neighborhoods has proliferated throughout many parts of the United States over the past 20 years. Indeed, the issue highlights the "uneasy alliance" that has existed between planners and preservationists for many years (Birch and Roby 198411. The technique is almost univer- sally embraced by historic preservationists, while com- munity planners are not as uniformly enthusiastic. This is because planners are often in the position of balancing -enervation goals with competing interests and with other economic and social objectives. Nonetheless, his- toric districts are viewed by many planners not only as a device for encouraging respect for the architectural and historic attributes of a neighborhood, but also as a means to stimulate property rehabilitation and commu- nity reinvestment in infrastructure. Raising pride in neighborhood history and the built environment often improves resident confidence in the future of the area. In some states, modest amounts of local or state funding are available to support renovation and improvement programs in historic districts. Some locales offer property tax incentives to encourage reinvestment in these areas (Listokin 1982; Reigeluth, Reinhard, and Kleinbaum 1983). Furthermore, historic districts can increase tour- ism in a community_ , contributing to business develop- ment, employment, income, and community revenues. In short. there is much to recommend in neighborhood historic district designation as a policy in the management of preservation or revitalization. While myriad testaments to the property tax benefits of historic districts have fueled planner interest, the reservations of property owners and businesspersons about further restrictions on property usage may raise caution. But it is sometimes possible to ameliorate these concerns by imposing only modest his- toric district controls over demolition, new construction, and exterior alterations. More difficult to address is re- sistance to presumed tax increases (and therefore, to rent increases) from low- and moderate -income homeowners and renters. Many socially conscious planners have been loath to undertake any programs for community im- provement that threaten the already tenuous status of these groups. AlthouQh research on the property tax implications of historic district designation leaves many questions un- answered, it is fair to state that most of the results to date do not support the view that designation is associated with accelerated growth in property assessments or sales prices. On the other hand, there is modest evidence that historic districts are more resistant than essentially iden- tical but undesignated neighborhoods to price volatility associated with "boom and bust" cycles in real estate market trends. This tendency, however, may be due en- tirely to the less advanced stage of rehabilitation activity reached in neighborhoods that have not yet been des- ignated. In these areas, it is probable that speculation contributes to uncertainty about prices; in designated neighborhoods, on the other hand, where renovation is more likely to have progressed further, near -stability in the rate of growth in property values would lead to less extreme swings in sales prices and therefore in property assessments. In managing neighborhood revitalization, planners should probably view historic districts less with caution about designation, per se, and more with concern over the timing of wlesignatinn. Tile possible physical and eco- nomic benefits of historic districts are abundantly clear. But there are nagging doubts about whether the act of designation should Iead or follow reinvestment trends in older neighborhoods possessing historic attributes. There is great appeal to many in a policy of initiating early designation as a means to "jump start" private reinvest- ment in deteriorating areas. Preservationists view early designation as a way to protect historic character before APA JOURNAL 337 SUtMNIER 1991 DENNIS E. GALE it is irrevocably compromised by the unsympathetic ac- tions of property owners and municipal agencies. None- theless, if timing is as critical as suggested, planners would be well advised to preface designation with alter- native measures of protection, such as neighborhood plans, zoning amendments, and enhanced code enforce- ment. Programs to enhance participation in existing communitywide circuit -breaker tax relief and rent relief mechanisms might be targeted to impending historic dis- tricts through community promotion efforts.' Earmarking of a portion of rising property tax revenues in designated areas under a tax increment financing program would raise funding to subsidize low- and moderate -income housing resulting from revitalization -induced shortages. Programs such as the federal Neighborhood Housing Services provide incentives and guidance to code - enforcement and modest property improvements without requiring rigorous, historically accurate restoration. There is no doubt that some of the appeal of the historic district technique to many neighborhood and community groups is as a surrogate for neighborhood planning. Cities and towns that have failed to create or enforce neigh- borhood preservation policies through carefully drawn master plans and urban design controls have nevertheless too quickly embraced historic districts. The controls im- posed by historic district commissions on property alter- ations, additions, and demolition provide neighborhood groups with some of the police power authority over the aesthetics of neighborhood environmental design usually lacking in comprehensive community plans, zoning reg- ulations, and subdivision and site review procedures. Community governments, fearing judicial challenges based on the taking issue, are often reluctant to enact master plans with policies regulating private property on matters of taste and design judgment. State legislators worry that enabling legislation to give more regulatory authority to such plans will challenge traditional notions about private property rights. Historic district regulation, on the other hand, has al- most 60 years of legislative and judicial evolution on which to base controls over the exterior appearance of real property. While not invulnerable to successful legal challenge, historic districts are based on a much more narrowly circumscribed set of public purposes than most local master plans. Consequently, judges and legislators are generally less uncomfortable supporting local historic district regulation. Politicians have frequently recognized that historic district policies involve a more limited range of neighborhood issues than the spectrum of concerns raised by municipal comprehensive or neighborhood de- velopment plans. This means that neighborhood political consensus—or at least strong support from resident elites—is easier to achieve around historic district pro- grams. As a result, planners may view historic district designation as the only viable way to impose aesthetic controls—thereby enhancing neighborhood reinvestment —over private property. Finally, the timing issue has been further complicated by the federal historic preservation tax credit program (Andrews 1981; Oldham and Jandl 1983). Originalh% en- acted in 1976, the law provided those who renovate eli- gible older commercial properties with a credit agwinst their federal income tax liability. This inverse subsidy offered terms that were liberalized in 1981, profferring even greater financial benefits. The credit was calculated as a percentage of allowable renovation expenses for a given project. It could be syndicated to allow several investors to share in the risks and tax benefits of pres- ervation. Most importantly for our purposes, the law re- ouired that eligible properties be located in a historic district listed on the National Register of Historic Places or eligible for such listing. This requirement enhanced the appeal and prestige of historic district status and spurred many communities, developers, and citizen groups to seek designation to realize the financial, as well as the preservation, benefits. In some communities, it seems, the tax credit tail has come to wag the historic designation dog. Doubtless, in some -cases, planners, architects, pres- ervationists. and other community boosters. seeking tax credit tools to spur neighborhood revitalization, have too eagerly pursued historic district designations. In the face of federal budget reductions in housing, neighborhood, community development, and historic preservation grant programs, they have understandably turned with in- creased enthusiasm to the tax credit incentive and there- fore the designation of eligible areas. It is not surprising that public controversy has heightened over the property tax impacts of historic districts during the 1980s. We do not know what effect the presence of tax -credit -eligible properties in newly designated areas has had on local sales prices and property assessments. But it is not difficult to imagine that in some places they have contributed to the acceleration of property values, confusing in the minds of residents the effects of designation with the ef- fects of the tax credit. More recently, the passage of the 1986 federal Tax Reform Act cooled the ardor of investors somewhat for the tax credit program. It reduced the percentage of a]- lowable rehabilitation expenses to be credited toward the investor's tax liability. It also lengthened the period over which depreciation deductions must be amortized for investment properties, thus undermining the appeal of real estate investment in general. Finally, the law nar- rowed the federal definition under which real estate fi- nancial losses could be used to reduce tax liabilities. Thus, in the fiscal years 1983-86 about 33,000 buildings per year had been rehabilitated under the tax credit program: in the fiscal year ending September 30, 1988, though. slightly fewer than 1,100 buildings were rehabilitated (Downey 1988). It may be that any distortions imposed on neighborhood historic district designations by the tax credit program are now history, especially in the shadow of federa budget deficit reductions under the Bush administration. Alternatively, there is always the possibility that tax in- centives for historic renovation could be increased, if not restored to earlier levels, given their enormous popular - APA JOURNAL 338 SU'NINIER 1991 HISTORIC DISTRICT DESIGNATION ity. Whatever the case, the tax credit program persists, thus leaving the door open to uncertainties about its in- fluence on the designation process. More importantly, we know too little about the combined effects of early designation and the presence of tax credit properties on property values in historic neighborhoods. These issues, coupled with the substitution of historic districts for neighborhood plans, are cause for concern among prac- ticing community planners. Although planners should probably continue to selectively employ historic desig- nations, they should also be wary of the blithe acceptance of designation without careful analyses of possible con- sequences. The "uneasy alliance" between planners and preservationists (Birch and Roby 1984) should persist in being an uncomfortable one, if the broadest public in- terests are to be served by the planning profession. AUTHOR'S NOTE I am indebted to the Journal's co-editors and three anon- ymous referees and to colleagues at the Center for Wash- ington Area Studies of George Washington University, each of whom offered valuable insights on earlier ver- sions of this article. Research for the article was carried out under a grant from the university's Facilitating Fund in 1987 and 1988 and from further support through the center. I deeply appreciate the assistance I received. NOTES It should be recognized that the use of property as- sessment and tax data bears certain cautions. For ex- ample, in neighborhoods where properties change hands only infrequently, assessors have less evidence on which to base estimates of current values. Con- sequently, even though demand for property may be rising or falling, little direct measurement of sales prices is possible and, necessarily, assessments are more judgmentally based. Another issue is the lag rate between sales prices and assessments. In areas with rapidly escalating or declining prices, assess- ments may not reflect current values because valua- tions are not conducted frequently enough. As a result, assessments in areas with rapidly rising prices tend to undervalue, and those in declining neighborhoods often overvalue, real property. This second issue is partially ameliorated by the fact that property assess- ments have been conducted on an annual basis in Washington since the mid-1970s. Hence, even with rapidly changing price dynamics, assessments are not as likely to lag as drastically behind current prices as was the case when municipal reassessment proce- dures in Washington (and many other major cities) were less frequently carried out. For a discussion of problems in the use of property assessments for anal- ysis of neighborhood change, see Schill and Nathan 1983, 38-41. A related source by Listokin (1982) covers the mechanics of property tax policy in land- mark districts. 2. Conventional microeconomics often approaches this type of methodological problem from the direction of hedonic price theory. In such cases, the independent effects of several variables, including historic desig- nation, on prices (e.g., property values) would be tested, controlling for other variables. This approach was rejected in the present study on pragmatic grounds related primarily to the fact that data on other variables were not available at the areal unit of the city block or the unit encompassed by the historic district boundaries. Rather than employ faulty mea- surements of other variables in a quest for multivariate comprehensiveness, we opted for a more modest goal. For this reason, we are not able to dismiss the pos- sibility that other factors, independent of designation or intercorrelated with designation, may help to ex- plain changes in property values. Instead, our objec- tive is simply to explore the relationship between the official act of designation and changes in property values. Given the paucity of empirical studies on the issue—and rising public suspicions about designa- tions—we felt that this approach represented a worthy step forward. For examples of alternative methodol- ogies in analysis of neighborhood change see, for ex- ample, Galster 1987, 172-224, 269-72, and Varady 1986. 71-92. 3. Home mortgage interest rates in Was over the study period generally reflected national trends. While annual rates rose gradually over the late 1970s, a modest dip in rates occurred in 1980 and 1981. During the national recession of 1982-83, interest rates soared as high as 16 percent in the Washington area. A recovery, of sorts. occurred in the housing market, beginning in 1986, by which time interest rates were hovering between 10 and 1 1 percent. 4. Circuit breaker programs exist in more than 3 5 states. Their provisions vary from state to state, but most provide homeowners with incomes below prescribed limits a rebate of a portion of their annual property tax payments. Moreover, renters are eligible in several states: a percentage of their rental payments is con- sidered part of the landlord's property tax liability and is refunded annually. Thus. both low income hom- eowners and renters may benefit from circuit breaker programs. For example, in Washington, DC, elderly low-income owners and renters are eligible. While participation there has increased during the 1980s, many qualified households are not aware of the pro- gram and others choose not to apply. REFERENCES Andrews, Gregory E., ed. 1981. Tar Incentives for His- toric Preservation. Washington, DC: The Preservation Press, National Trust for Historic Preservation. Beaseley, Ellen. 1976. Historic Districts and Neighbor - APA JOURNAL 339 SUMMER 1991