pageok
pageok
pageok
Perverse Incentives and Historic Preservation:

The perverse incentives created by uncompensated environmental land-use controls are well documented. The Endangered Species Act (ESA), in particular, is notorious for encouraging the destruction of species habitat on private land. By restricting the use of land with ecologically desirable characteristics, the ESA effectively punishes private landowners for maintaining habitat on their land. As a consequence, landowners often engage in preemptive habitat destruction to avoid the Act's proscriptions. I've written on this subject at length (see here and here).

The ESA is hardly the only law creating such perverse incentives, and not the only law that encourages the destruction of resources it is supposed to protect. Today's NYT reports on the "preemptive demolition" of historic buildings in New York City before they can be classified as landmarks. Basically, when developers learn that a building may be designated as a landmark -- a status that will restrict their ability to modify or renovate the building -- they rush to destroy the historic aspects of the building, if not the building itself.

The strategy has become wearyingly familiar to preservationists. A property owner — in this case Sylgar Properties, which was under contract to sell the site to Related — is notified by the landmarks commission that its building or the neighborhood is being considered for landmark status. The owner then rushes to obtain a demolition or stripping permit from the city's Department of Buildings so that notable qualities can be removed, rendering the structure unworthy of protection. . . .

The number of pre-emptive demolitions across the city may be relatively small, but preservationists say the phenomenon is only one sign of problems with the city's mechanism for protecting historic buildings. . . .

In an interview Robert B. Tierney, chairman of the Landmarks Preservation Commission, called end-run alterations and demolitions "a terrible situation and a complete misuse of the process."

He added that the commission was trying to address the issue. Before putting a property on the calendar for landmark consideration, for example, Mr. Tierney or the commission's staff members meet with owners to explain the potential benefits of landmark designation —a federal tax credit for repairs or improvements, for example — in the hope of enlisting cooperation or even support.

"Owner consent is not required, but I strongly try to obtain it whenever possible," Mr. Tierney said. "It helps the process going forward. It's not a continually contentious relationship."

To address this problem, some members of city council want to tighten restrictions on landowners and make it more difficult to preempt regulation through renovation and demolition. One bill would "require the buildings department not only to withhold demolition permits but also to suspend existing ones and issue a stop-work order when the commission schedules a hearing to consider landmark status for a structure." This won't solve the inventive problem. Indeed, it's likely to make it worse by increasing the negative consequences of maintaining a building's historic characteristics and encouraging even early preemptive action.

Soronel Haetir (mail):
I've never understood the forces behind preserving historical urban spaces. Too me change is perhaps the single most defining quality of cities. Recycling building materials has been a major force in city development for nearly every prior age. Why forget this valuable lesson?
11.29.2008 10:41am
Portland (mail):
If preserving animal habitats and historic buildings is a worthy goal, how might we encourage it without falling afoul of these unintended consequences?
11.29.2008 10:45am
gregH (mail):
Portland,
That's not difficult at all; just have the government buy the property.
11.29.2008 10:55am
pmorem (mail):
how might we encourage it without falling afoul of these unintended consequences?

Make it worthwhile for the property owner to do so.

This whole compulsion thing tends to have nasty unintended consequences.
11.29.2008 10:59am
Tom Perkins (mail):

This whole compulsion thing tends to have nasty unintended consequences.


But, but, but...

...it's for the children!

Yours, TDP, ml, msl, &pfpp
11.29.2008 11:08am
John (mail):
Forcing a single landowner to bear the burden of "landmark" property restrictions for the benefit of all is sometimes an uncompensated taking that violates the constitutional prohibition. However, the Supreme Court has held that so long as the property owner can still earn a reasonable return on his property the restriction will not violate the constitution.

The only real remedy at this stage is legislative, but the "people" apparently are not willing to speak on this.
11.29.2008 11:27am
CullenS (mail):
It's not just government compulsion that has unintended, and unhappy, side effects. How many suburban residents bought ridiculous 6,000 pound SUV's because of IRS regulations that permitted tax deductibility of these "farm vehicles"? How many businesses, even now, are seeking to re-charter themselves as "banks" so as to belly up to the TARP bailout trough?

I think focusing on whether government action compels private behavior or merely incentivizes it is a little bit of a red herring. The better course is to ask if the government activity is directly and efficiently related to the outcome it's trying to achieve. Obviously, that requires regulators and legislators who are savvy, diligent, and thoughtful. It also requires a process that can nimbly adjust a regulatory course when it appears the ship is off course.

Of course, we won't always have those virtues. While I wish we always did, and agree we should always aspire to them, the alternative, of government abdicating its regulatory responsibilities because its good regulations won't always be perfect, is too drastic. Government regulation, in a democracy, led by accountable public officials, is an enormously powerful tool to achieve social good, including strong national security, a healthy and safe environment, safe and effective medicines and food. Before we toss that baby out with the bath water, we ought to be mindful of the unintended and unhappy consequences of that strategy.

CullenS
11.29.2008 11:30am
Pashley (mail):
As was pointed out, the problem is that government burden's a landowner for the common benefit, however it is defined. Bills are submitted by interest groups to their supoortive legislators. I suspect that the legislator who sponsors the bill neither knows or cares that the effect of the bill will be subverted.

Governmnet cannot possilby compensate us for all the burdens it places on us, they are too many. Once upon a time that was an argument for limited government.
11.29.2008 11:33am
Elliot123 (mail):
Any building owner interested in preservaton of his investment will make sure his bulding is unsuited for historic preservation.
11.29.2008 11:51am
John S. (mail):
I've never understood the forces behind preserving historical urban spaces. Too me change is perhaps the single most defining quality of cities.

I recall significant parking shortages in Ile de la Cite, Paris when I was there. I'm sure whomever owns Notre Dame could make a killing razing it and putting up a parking lot.

Anyhow, this is a great illustration of how difficult making good public policy is, because of unintended consequences. I tend to think that incentives rather than prohibitions would be more effective, but I haven't seen much in the way of scientific studies to support it.

As for the burden on the private individual for the public good, that's always a gray area. I have to take extra cost onto myself if I want to put a gas line in to make sure it meets code so I don't blow up my house and in the process set fire to my neighbor's. Individual liberty has to have some limit when it impacts the liberty of others; the vexing question is always what is the correct balance. And one's opinion usually depends on if you are the one saving a few bucks, or the one who's house is at risk of being burned down by the idiot next door.
11.29.2008 12:19pm
JB:
Property tax breaks.

The owner of a landmark building gives up some property rights in the building (the right to make renovations without consulting a planning board, the right to make some renovations at all), for the benefit of society. Society, in turn, must compensate the owner in some way. The most efficient means of compensation is financial.
11.29.2008 12:26pm
Dave Hardy (mail) (www):
ESA *has* a provision for habitat conservation plans. Basically, a developer comes up with a plan to conserve the species, in exchange for getting clearance to develop. He might, say, fence off a pond, and maybe buy a second pond and put the species in it, too, so that odds of its survival are increased despite the project.

The problem is that the way Congress rather reluctantly set this up, compounded by the fact the administering agency has an incentive to get as much out of the deal as it can, clearing a HCP is rather like negotiating a stock IPO. The concept is simple: come up with something that leaves the species more likely to survive than it was before the development. But getting to that determination requires elaborate planning, hiring of experts and lawyers, etc., etc.. (It was sufficiently complex to where Interior's legal shop had one guy assigned to it. It wasn't full time for him, because applications were uncommon, but he alone had to keep up his expertise). The other problem was that since no public money was injected, it still usually represented a net loss to the developer, just a smaller loss than giving up on development.
11.29.2008 12:29pm
p. rich (mail) (www):
It is a fundamental axiom of human (including business) behavior that people act in their perceived best interests. Always assuming it is not beyond the intellectual capability of the typical politician, such problems as the above must be approached with this as the governing factor.

What happens though is that politicians, and lawyers, see 'the law' as an effective bludgeon ("Do what we say or we will punish you."), whereas human nature will always approach the same issue from the standpoint of, "What can I do to achieve my aims in spite of adverse laws and restrictions?"

Politicians define 'the problem' as one of satisfying special interests (AKA voting blocs and campaign contributors) rather that those most affected by their narrow-minded actions - and are surprised at the results. So long as the objects of the law and their interests are not given equal weight in the considerations, this classic phenomenon, often labeled 'unintended consequences' rather than 'easily predictable effects of a stupid political decision', will persist.
11.29.2008 12:34pm
Ken Arromdee:
I have to take extra cost onto myself if I want to put a gas line in to make sure it meets code so I don't blow up my house and in the process set fire to my neighbor's.

Increasing your neighbor's risk of fire is imposing a cost on your neighbor. Destroying a landmark is only imposing a cost on your neighbor if you think your neighbor has some right to have a landmark there.
11.29.2008 1:11pm
Old33 (mail):
Interestingly, there was a story in the Washington Post earlier this week about the District's efforts to preserve the God-awful Third Church of Christ, Scientist at the corner of 16th Street and "Eye" Streets, N.W.

The congregation wants to tear the building down, largely because it is totally impractical, expensive as hell to heat, and they believe it undermines their spiritual mission.

The District refuses to let the congregation tear down their building...which raises not only property rights issues, but also First Amendment issues.
11.29.2008 3:14pm
hey (mail):
This is but one example of why so many of us ARE libertarians. Yet we have to have these fights every single time, explaining to people why they're invariably going to screw up.

What we really need is a pithy Law elucidating this. Heisenberg uncertainty and the Second Law of Thermodynamics both contribute, but aren't specifically on point. Plus there are so many engineers and scientists conversant in thermodynamics who insist on technocratic or marxist policies.

The major problem is the way the takings clause has been interpreted. With lawyers whose self interest lay in increased government power, the takings clause was stripped of all meaning before Kelo. Otherwise no unfunded mandates on individuals could be passed. One more crime against humanity by the Left.
11.29.2008 3:17pm
fortyninerdweet (mail):
And with urban problems like these we wonder why the flight to suburbia? But even in a rural area there can be discord over "view lines" and "night lights". Bah, neighbors!
11.29.2008 3:21pm
Portland (mail):

That's not difficult at all; just have the government buy the property.


You want the government owning more and more property and the higher taxes that would enable them to pay for it?

As was pointed out, the problem is that government burden's a landowner for the common benefit, however it is defined.


Part of the government's role is to promote "common benefit" even at the cost to the individual of taxes and other burdens (such as regulations).

It seems that the problem in this case is the incentive to destroy habitat or landmark buildings to avoid the cost of complying with regulations. One could address that with stiff penalties for such destruction or by paying compensation to landowners aggressively -- the carrot rather than the stick.

The difficulty with the latter approach is that it makes any sort of zoning law, environmental protection, or building regulation a potential windfall. It's an administrative nightmare, too, to try and determine what the value of a piece of property would be if there were no restrictions on it.
11.29.2008 6:14pm
Portland (mail):

It is a fundamental axiom of human (including business) behavior that people act in their perceived best interests.


As a rule of thumb this is pretty effective; as a fundamental axiom of human behavior to fails. Behavioral economists have dispatched it fairly thoroughly. See, for example:


Bolton, Gary and Axel Ockenfels (1999); “A Theory of Equity, Reciprocity, and Competition”,
fortthcoming: American Economic Review 100: 166-193
Charness Gary and Matthew Rabin (2002); Understanding Social Preferences with Simple Tests”,
Quarterly Journal of Economics 117: 817-869.
Dufwenberg, Martin and Georg Kirchsteiger (1999); “A Theory of Sequential Reciprocity”,
Discussion Paper, CentER, Tilburg University.
Falk, Armin and Urs Fischbacher (1999); “A Theory of Reciprocity”, Working paper No. 6, Institute
for Empirical Research in Economics, University of Zürich.
Fehr, Ernst and Klaus Schmidt (1999); “A Theory of Fairness, Competition and Cooperation“,
Quarterly Journal of Economics 114: 817-868.
Fehr, Ernst and Klaus Schmidt (2003); “Theories of Fairness and Reciprocity – Evidence and
Economic Applications”, In: M. Dewatripont, L. Hansen and St. Turnovsky (Eds.), Advances in
Economics and Econometrics – 8th World Congress, Econometric Society Monographs,
Cambridge, Cambridge University Press
Levine, David (1998); “Modeling Altruism and Spitefulness in Experiments” Review of Economic
Dynamics 1: 593-622.
Rabin, Matthew (1993); “Incorporating Fairness into Game Theory and Economics.” American
Economic Review 83: 1281-1302.



Altruism, resentment, and a sense of fairness can all cause people to act against their perceived best interests.
11.29.2008 6:22pm
Portland (mail):

Increasing your neighbor's risk of fire is imposing a cost on your neighbor. Destroying a landmark is only imposing a cost on your neighbor if you think your neighbor has some right to have a landmark there.


Environmental damage, through pollution, loss of habitat, or whatever, does impose a cost on the rest of society. If you believe a society's cultural heritage has value -- and the distribution of tourism income suggests that, in the narrowest sense, there is -- failing to take reasonable measures to preserve it also imposes a cost on society.

Maybe the best solution is to make these regulations uniform at least statewide, and keep them as stable as possible over time. Current owners could receive one-time payments for reduced value, and future owners would have full knowledge of restrictions, actual or potential, on land use. The prices paid thereafter would reflect that -- hence no loss of value to the owner.
11.29.2008 6:34pm
Cris:
Words alone are insufficient to convey the awfulness of the Third Church of Christ, Scientist building that Old33 pointed to.
11.29.2008 7:23pm
pst314 (mail):
Portland, my restaurant is valuable to the people in the neighborhood. If I decide to relocate, this will impose a "cost" on them. Should I be prevented from doing so? And are you going to decided what is a sufficient one-time compensation for the never-ending costs you will impose on me?

It seems as if you do not understand the many reasons why old office buildings so often are relatively unattractive for contemporary businesses.
11.29.2008 8:44pm
Obvious (mail):
Portland: "That's not difficult at all; just have the government buy the property.


You want the government owning more and more property and the higher taxes that would enable them to pay for it?"


No. I want the government, on facing the true cost of the regulations they pass, to rethink matters and decide maybe not quite so many buildings and other city structures are "historical landmarks" after all. Perhaps somewhat less than everything a bureaucrat on a whim happens to commit to paper deserves to be memorialized.

The point, Portland, is that these decisions are not costless. If the government is deemed the agency appropriate to decide whether the benefits exceed the costs to "society," then the government, through the taxpayers, needs to pay the costs, rather than have them accrue only to the owner of the property. If the taxpayers feel that leads to inappropriately high taxes, they have a choice to make, but essentially absconding with the value of an unfortunate individuals property should not be an option.
11.29.2008 9:41pm
Portland (mail):

Portland, my restaurant is valuable to the people in the neighborhood. If I decide to relocate, this will impose a "cost" on them. Should I be prevented from doing so? And are you going to decided what is a sufficient one-time compensation for the never-ending costs you will impose on me?


I recognize that one can make all sorts of slippery slope arguments related to restrictions on property rights for promotion of the general welfare. Unfortunately, you can make the same slippery slope arguments the other way: suppose you decide to start storing radioactive waste on your property, or opening a shooting range, or cremating animal remains.

Communities are messy. Limited government is good, but functional communities all limit what you can do with your property.
11.29.2008 10:52pm
Portland (mail):

The point, Portland, is that these decisions are not costless.


Nobody said they were.


If the government is deemed the agency appropriate to decide whether the benefits exceed the costs to "society," then the government, through the taxpayers, needs to pay the costs, rather than have them accrue only to the owner of the property.


Government imposes societal costs on property owners all the time -- check your property tax bill. And let's not forget that the government also does things that add value to private property -- if a new park raises the value of your home, should you pay the government the difference?

If a newly enacted law significantly compromises the productivity of a piece of property, I think it's reasonable to pay compensation. Of course, if you bought the piece of property after the law was passed, the reduced value should have been reflected in the purchase price.
11.29.2008 11:02pm
Elliot123 (mail):
"Altruism, resentment, and a sense of fairness can all cause people to act against their perceived best interests."


Perceived by whom?
11.30.2008 12:03am
Mike G in Corvallis (mail):
Let me give you a local example of of a bad outcome from well-intentioned preservation efforts. The Whiteside Theater, a classic movie palace, was built in downtown Corvallis in 1922. Due to competition from multiplex cinemas and the lack of downtown parking, it eventually became unprofitable, and the Regal theater chain closed it down in 2002. Regal was willing to sell the building at a very low price provided it would not be used as a movie theater -- they owned a profitable but struggling theater a couple of miles away and didn't want competition. In addition, several million bucks worth of renovation would be required to repair deterioration that had taken place over the years. (Trust me, you do not want to have a leaky roof in Oregon.)

Three years after the theater closed, a group of investors from Portland wanted to turn the building into a restaurant and small stores, preserving the facade and character of the building, but adding a door and several windows on an otherwise drab and nearly featureless wall. Things looked good for the Whiteside to be in business again.

Unfortunately, in 1988 the building had been placed on a list of "historic resources," apparently without the then-owner's knowledge. As a result, the sale to the development group couldn't be a simple transaction, it had to be Approved by the Authorities. A group of self-appointed preservationists (with the most noble of intentions, of course) fought the plan, saying that the changes would destroy the historic character of the building. The proposal bounced around in litigation at the city and state level for a couple of years, until the development group abandoned their plans in early 2008. A few months later Regal Cinemas essentially gave the building to the preservation group.

The local preservation group has high hopes, but no money and no immediate prospects for doing anything with the building. So there it sits, boarded up and deteriorating in the rain. By the time -- if ever -- the preservationists do scrape up enough money to renovate the building, there's no telling what condition it'll be in. Alas, poor Whiteside!
11.30.2008 5:41am
pst314 (mail):
"The point, Portland, is that these decisions are not costless."--Obvious
"Nobody said they were."--Portland

Maybe, but you are minimizing them and deprecating their importance.
11.30.2008 8:53am
pst314 (mail):
"Environmental damage, through pollution, loss of habitat, or whatever, does impose a cost on the rest of society."

Funny how quickly Portland moves from pollution to beauty. Talk about a slippery slope! It doesn't appear that Portland really sees any practical limits to government power.
11.30.2008 9:04am
pst314 (mail):
My neighbor has an unusually beautiful garden which she started over 40 years ago. She's getting rather old, though, and the day will come when she is no longer physically able to do the necessary work. Should the city require her to maintain it? Or maybe she will pass away before her husband who likes the garden but not enough to do all the work.

And what about when they sell the home? Should the new owner be required to maintain the garden? He might want to plant vegetables instead, or remove the garden entirely so his children have more room to play--or maybe to put in a larger garage for a second car or a workshop. Should the city have the right to tell him he cannot do those things?

I enjoy walking by that garden, and I'll miss it if it goes away, but I don't feel that I have the right to tell someone else what to do. If I want a garden that badly I can make one myself. It would be intolerably arrogant for me to impose this preference on a neighbor.
11.30.2008 9:13am
pst314 (mail):
Portland may not realize it, but people like him/her are teaching us to never build beautiful buildings. Mediocre is far safer.

And furthermore, developers should stay away from cities with strong preservationist laws. This will, like so many other "progressive" policies, depress the local economy, but those hurt the most will not those who join preservationist societies.
11.30.2008 9:17am
pst314 (mail):
If Portland cares so much about preserving a building, he/she should combine with other preservationists to buy and operate it (but only if the owners are willing to sell.) But that route is never chosen because preservationists seek to impose the costs on other people--costs that they know are far higher than they will publicly admit. It's a strange sort of altruism that is happy to so blithely cause harm.
11.30.2008 9:22am
Eli Rabett (www):
The problem, of course, is that many people behave badly and the government has to make inflexible rules to deal with those persons which affects everyone. As Angry Bear put it

So the process continues… Eventually, the Army has a spec that indicates even situations that a rational person would say – “This makes no sense. Everyone knows that.” But the rational person wouldn’t realize that when the Army specifies that no sawdust is to be used in making flour, or that no more than X parts of per million of rat droppings will be in the cookie, that the Army has a damn good reason for having that in there, namely that some upstanding leader of the community who waves a flag and is a member of the local Kiwanis actually tried to pass such things off on American military personnel. And of course, that upstanding leader of the community who waves a flag and is a member of the local Kiwanis is happy to lecture one and all about how much more efficient the private sector is than the public sector – exhibit A being the Army’s specs on making a chocolate chip cookie.


When you think about it, that is why there are laws against murder, burglary and mugging. There are people out there has incentive to commit all of these things or thinks that they do.
11.30.2008 9:33am
Mike G in Corvallis (mail):
The problem, of course, is that many people behave badly and the government has to make inflexible rules to deal with those persons which affects everyone. [...]

When you think about it, that is why there are laws against murder, burglary and mugging. There are people out there has incentive to commit all of these things or thinks that they do.


Huh? Eli, I don't understand your point. Virtually every action is performed because someone had an incentive to do it. We're talking about perverse incentives here -- the law of unintended consequences.

Are you really trying to conflate murderers, burglars, and muggers with people who want to use their own property as they see fit without being hamstrung by the wishes of people who have an emotional but not material interest in how the property is used?

Hmm. You write, "many people behave badly and the government has to make inflexible rules to deal with those persons which affects everyone." But are they the right inflexible rules? Two can play that game. It's undeniable that there have been many lynchings and race riots, in which groups of people of one race have unjustly and illegally persecuted people of a different race. Does that justify the government imposing apartheid?

I note also that Angry Bear, who is quick to condemn "that upstanding leader of the community who waves a flag and is a member of the local Kiwanis is happy to lecture one and all about how much more efficient the private sector is than the public sector" in his made-up parable (which is not an anecdote), also attributes the problem in part to too much government intervention:

Now, you might wonder "why doesn't the Army just cancel the contract?" Well, there are a few reasons. One is that the cookie maker is well connected, and canceling the contract is going to piss off one the local congressional delegation.
11.30.2008 12:16pm
Portland (mail):

Portland may not realize it, but people like him/her are teaching us to never build beautiful buildings. Mediocre is far safer.


Do you find me so intimidating that you can only address your remarks to those who already agree with you? Funny.

Your assertion here is silly. The idea that people are going to avoid building beautiful buildings because someone is going to come around a hundred years later and recognize them as historic landmarks is a stretch and a half.


And furthermore, developers should stay away from cities with strong preservationist laws. This will, like so many other "progressive" policies, depress the local economy, but those hurt the most will not those who join preservationist societies.


Yes, they do, which is why strong progressive cities like New York, Seattle, San Francisco and Chicago see so little development, and why, in contrast, the rural Montana compounds favored by your sort are such hotbeds of entrepreneurship and development.
11.30.2008 1:07pm
Portland (mail):

If Portland cares so much about preserving a building, he/she should combine with other preservationists to buy and operate it (but only if the owners are willing to sell.)


It's simpler and more effective to pass laws protecting certain buildings. This is a restriction on what an owner can do with their property, but then, so are zoning regulations and the fire code. Property rights are not absolute in our system, and I don't accept your assertion that limitations on property rights constitute "harm."
11.30.2008 1:11pm
Soronel Haetir (mail):
Portland,

I would agree that limitations on how property can be used are not per se harmful/devaluing to the property or the owner's interests. I would however argue that unilateral changes to the limitations placed on property especially without compensation for those changes can be.

Take the theater example from above, the new owners got a massive uncompensated deal because the old owners were given no other viable option.

Also, regarding the example of Notre Dame brought up earlier, if the Catholic church (assuming they own the property) wanted to replace the cathederal with something else I would have no problem with that. I would assume they would probably lose tax breaks of some form, but if the owner decided some other use would be more beneficial I say go for it.

It would not, however, surprise me if replacing the cathederal with a parking garage would suddenly aleiviate the need for a parking garage.
11.30.2008 1:35pm
autolykos:

Maybe the best solution is to make these regulations uniform at least statewide, and keep them as stable as possible over time. Current owners could receive one-time payments for reduced value, and future owners would have full knowledge of restrictions, actual or potential, on land use. The prices paid thereafter would reflect that -- hence no loss of value to the owner.


Not to pick on Portland any more than he already has been, but I'm surprised nobody has focused on this. Are you really suggesting that all land be deemed historic and that people have to jump through the same hoops to rip down an abandoned building in Detroit or a rotting old farmhouse as they would to tear down a historic building? I must be reading this wrong, because that's absolutely insane.
11.30.2008 9:40pm
George Smith:
If environmentalists or preservationists want to restrict what I may do with my land because, say, the Purple Bellied Worm Slurper lays over for a while on its migration route, then they or someone can buy it at a valuation of its highest and best use. Otherwise, they can buckle up their Birkenstocks and take a hike.
12.1.2008 11:08am
Mike Brown (mail):
I think a major concern is one of stability and predictability for the property owner. Declaring all land historic is obviously ludicrous, but so is declaring individual parcels historic only after the property owner announces plans to renovate or demolish, which in my experience seems to be the trigger for making a building a "landmark".

One thing which has puzzled and concerned me for a long time is why these historic preservation commissions are still declaring buildings to be new historic landmarks, usually at the last minute to prevent some pending action. The Federal laws for such declarations were passed in the 1960's and 1970's. State and local laws followed soon after - by the time I graduated law school in 1980, they were pretty much in place everywhere.

If a building was a landmark then, why wasn't it listed during the decade or two afterward? Surely by the turn of the century there had been ample time to find and list all existing landmarks in any given municipality. If a building wasn't a landmark then, why has it become a landmark in the ensuing 40 years? Sure, things happen which might change an otherwise ordinary building into a landmark (think of the Dallas Book Repository which became an instant landmark in November 1963), but in most cases these newly discovered "landmarks" were neither more nor less a landmark in 1978 than they are in 2008.

I would say that the various Landmarks Commissions (whatever they are called) around the country have had enough time to find and list every true landmark in the country. Personally, I'd stop there and prohibit any future landmark designations after some cut-off date (set it a year or two in the future, to let the commissions catch up on any pending business). After that, no declaration absent a reason why the building wasn't a landmark (or recognized as such) at the cut-off but has become so since.

Since that won't happen, I'd suggest that if a building has not been declared a landmark by now, then a principle akin to laches should apply - if you buy a building which is not listed, then you should be able to rely on that for your future plans, whatever they may be. The Landmarks Commission can still find "new" landmarks and list them, and tax breaks can compensate the property owner for the reduction in value on resale due to the listing. That should not prevent the owner from changing the property (and, of course, the tax breaks would stop when he does). Those who buy after the building is listed are on notice of the listing, of course, and can make their plans accordingly.
12.1.2008 11:33am
CG (mail):
To my knowledge, many, if not most, of the official historic districts in American cities obtained their legal restrictions through the efforts of neighborhood homeowners themselves, who petitioned city councils for protection of their own properties under preservation laws. This is how Brooklyn Heights' historic status came to be way back in the 50s and 60s, and it has worked much the same way in my hometown of Nashville from the 70s onward.

Instances where groups of concerned citizens band together to preserve a single landmark building, whose owner is opposed to historic designation, only represent a tiny fraction of all protected buildings, but are by far the best publicized cases. The best known of all was probably the Penn Central case from the 70s, where the Supreme Court upheld NYC's protection of Grand Central, shortly after Penn Station had been leveled. Cities clearly have the legislative authority to do this: the only issue is whether they will have to chip in some compensation in the process (i.e., if too much of the value of the property is taken).

To the extent that some property owners would rather tear down the buildings at once, rather than endure the hearing process, that may be an unavoidable side effect of the whole scheme. Rather than a loophole, one could view it as an economic "circuit-breaker" in those cases where the economic loss from historic status to the owner is so great he would rather lay out large short-term expenditures than risk a long and uncertain administrative process (and expensive proceedings on court). If this only happens to a handful of properties, it's a good deal in the aggregate. More regulations might simply increase waste and inefficiency without protecting many more structures.
12.1.2008 1:32pm
Portland (mail):

I would agree that limitations on how property can be used are not per se harmful/devaluing to the property or the owner's interests. I would however argue that unilateral changes to the limitations placed on property especially without compensation for those changes can be.


I absolutely agree, and I've suggested compensation to owners when legal changes substantively affect the productivity of a piece of property. All I've argued is that society may, in some instances, have an interest that requires restricting what may be done with a property, and that it might be more fruitful to think about the least disruptive way to do this as opposed to simply deploring the fact that there are legal constraints on what owners may do with their property.
12.1.2008 3:00pm
Portland (mail):

Are you really suggesting that all land be deemed historic[?]


No, I'm suggesting that any land-use restrictions (for historic preservation, habitat preservation, or whatever) be as consistent across regions, transparent in criteria, and stable over time as practicable, so that the market can effectively incorporate any limitations imposed into the purchase price of the land.

Sorry if that was unclear.
12.1.2008 3:04pm
Portland (mail):

If environmentalists or preservationists want to restrict what I may do with my land because, say, the Purple Bellied Worm Slurper lays over for a while on its migration route, then they or someone can buy it at a valuation of its highest and best use. Otherwise, they can buckle up their Birkenstocks and take a hike.


Saying it doesn't make it so. Land use is hemmed with restrictions of many kinds. Always has been. Unless you have a private army I don't know about, you need a better argument for your fellow citizens than "You can't do that." Because clearly, we can.
12.1.2008 3:07pm
George Smith:
That was partially tongue in cheek. I actually practice zoning and land use law. Land is always subject to restrictions on development under applicable zoning ordinances or rural land use restrictions. We have here a situation in which someone advocates what they do and don't want you to do with your property, beyond the existing ordinces or restrictions. "We think that man's old buillding is significant, so we don't want him to tear it down." "We think that man's land should remain wildlife habitat, so we don't want him to develop it." Developed its worth a lot, undeveloped its not. Fine, I'll have a MAI tell us the value as development property and they can buy it. I realize my economic expectation, they get what they want.
12.1.2008 5:46pm
markm (mail):

Portland: "That's not difficult at all; just have the government buy the property.

You want the government owning more and more property and the higher taxes that would enable them to pay for it?"

No, I want the individuals who think those old buildings are so valuable to pony up and make a fair offer to buy the properties themselves, instead of paying bribes "campaign contributions" to persuade politicians to screw the owners. Of course, we all know two reasons that doesn't happen:

1) The multiplier effect. $100,000 won't buy and maintain many historical landmarks, especially when they are in such condition that their owners want to tear them down or extensively remodel. $100,000 as campaign contributions can persuade a few politicians to pass regulations imposing costs in the millions on others.

2) Power. The politicians get considerable influence on who is victimized by such regulations - which they can use directly to bolster their positions, as well as extorting more contribuitons from potential victims.

There are only two cures for this syndrome. Thomas Jefferson would have advocated an informed citizenry lynching watering the tree of liberty with those politicians' blood. I think a better one would be a strict interpretation of the takings clause - that is, that aside from the necessities of war, the government should never have the right to victimize citizens.
12.2.2008 10:27pm