From Independence Hall to the strip mall: Applying cost-benefit analysis to historic preservation.

Author:Kazam, Alexander

Over the past fifty years, hundreds of municipalities across the country have enacted historic preservation laws--ordinances that regulate the alteration and demolition of buildings deemed historically or aesthetically significant. Recently, however, preservation has become pervasive, freezing the development of vast neighborhoods filled with undistinguished buildings. Local preservation commissions tend to focus on the benefits of saving old buildings rather than the costs. This Article encourages local governments to consider costs, and proposes adapting the federal model of agency cost-benefit analysis to historic preservation.

  1. INTRODUCTION 430 II. OVERVIEW OF HISTORIC PRESERVATION LAW 437 A. The Rise of the Historic Preservation Movement 437 B. Local Ordinances 439 C. The Limits of Judicial Review 441 III. COST-BENEFIT ANALYSIS AND FEDERAL REGULATORY REVIEW 446 A. The Basics of Cost-Benefit Analysis 447 B. Cost-Benefit Analysis at the Federal Level 448 C Arguments For and Against Cost-Benefit Analysis 451 D. Cost-Benefit Analysis at the State and Local Level 455 IV. APPLYING COST-BENEFIT ANALYSIS TO LOCAL HISTORIC PRESERVATION 457 A. The Case for Applying Cost-Benefit Analysis to Modern Historic Preservation 458 B. The Costs and Benefits of Historic Preservation 459 1. Costs 459 i. Overall Measurement 459 ii. Distributive (Affordable Housing) 460 iii. Environmental 462 iv. Aesthetic 463 2. Benefits 465 i. Aesthetic 465 ii. Community-Building/Civic Identity 465 in. Tourism 466 iv. Education 467 v. Environmental 467 V. IMPLEMENTING COST-BENEFIT ANALYSIS AT THE LOCAL LEVEL 468 VI. CONCLUSION 469 I. INTRODUCTION

    The rise of historic preservation law, as a nationwide force in urban planning, began with the fall of an exceptional building: New York City's original Pennsylvania Railroad Station. (1) In 1910, after a decade of anticipation, the station opened its doors to the public. (2) Crowds passed through a facade of stately Doric columns--grander in scale than the Brandenburg Gate in Berlin (3)--and entered a vast, 150-foot-high waiting room inspired by royal Roman baths. (4) "[O]n every hand were heard exclamations of wonder," the New York Times reported, "for none had any idea of the architectural beauty of the new structure." (5)

    But in 1963, despite public protests, this masterpiece of Beaux Arts design was reduced to rubble. (6) Under pressure from falling revenue, the Pennsylvania Railroad razed its "temple to trains" and converted it into the humdrum commuter station that it is today, tucked under Madison Square Garden and a cluster of office towers. (7) '"One entered the city as a god,' the architectural historian Vincent Scully famously wrote of the original station. 'One now scuttles in like a rat.'" (8)

    The demolition of Penn Station, described by one journalist as a "monumental act of vandalism," (9) became the avatar--indeed, the founding myth--of the historic preservation movement. (10) In response to the public outcry, New York City established its Landmark Preservation Commission (LPC) in 1965. (11) The LPC became the model for similar review boards across the nation, tasked with identifying historic buildings and protecting them against destruction or alteration. (12)

    Today, however, the use of Penn Station as a poster child for preservation is increasingly misleading. The architectural merits of Penn Station were obvious, while the opportunity cost to the city (of preventing redevelopment) would have been relatively low. (13) The Gotham of the 1960s was a far cry from the New York of the 2000s, with its fast-growing population and tight real estate market. (14) The population of the City actually declined between 1950 and 1960 as growth shifted to the suburbs. (15) Meanwhile, the City was gaining new office space at an unprecedented pace. (16) Nor was there any desperate need to relocate Madison Square Garden, which already had a home about a dozen blocks uptown. (17) As preservationists at the time pleaded, why destroy a cherished public space when the new complex could be built at another underutilized site in Manhattan--such as one of the city's many urban renewal areas? (18)

    This was the era of master planners like Robert Moses, when national policy favored "slum clearance" and federally funded bulldozers demolished broad swathes of downtown New York, Chicago, San Francisco, Boston, and New Haven. (19) Building on a massive scale was relatively easy. Preservation law was in its infancy, and New York, with its constant churn of Schumpeterian creative destruction, could fairly be described as the "House That Ruthlessness Built." (20) After all, who had protested when five hundred buildings were razed, in 1903, to make way for Penn Station? (21) No one had yet coined the term "NIMBY" (Not in My Back Yard), (22) let alone such neologisms as "LULU" and "BANANA." (23)

    Half a century later, historic preservation is ubiquitous. (24) Whereas New York was a pioneer in the 1960s, (25) today hundreds of municipalities, from small towns to major metropolises, impose restrictions on property owners in the name of historic preservation. The number of local historic preservation ordinances nationwide mushroomed from a mere handful at midcentury (26) to more than 2,300 in 2015. (27) New York City alone boasts 35,000 landmarked properties. (28) Collectively, preservation boards have jurisdiction over changes to hundreds of thousands of buildings. Often operating independently of planning and zoning offices, they decide the fate not only of individual landmarks but of "historic districts" encompassing entire neighborhoods. (29) As Peter Byrne argues, "One can no longer analyze contemporary urban development and redevelopment without regard to historic preservation." (30)

    It is easy to see why these laws have proven popular. At their best, they enable communities to safeguard their cultural heritage, preserve beautiful architecture, foster civic pride, attract tourism, and promote social solidarity by maintaining a distinctive "sense of place." (31) Jane Jacobs, who gained fame opposing the vast urban renewal projects of the 1960s, devoted a chapter to the "need for aged buildings" in her magnum opus, The Death and Life of Great American Cities. (32) The contemporary literature on preservation is rife with praise for its many benefits. (33)

    At the same time, many cities now face a combination of rapid population growth and a shortage of affordable housing. (34) Restrictions on development come at a cost. One recent study found that lifting barriers to urban construction could raise the gross domestic product (GDP) of the United States by between 6.5% and 13.5%--about one to two trillion dollars. (35) Zoning--which regulates building use, height, and bulk--emerged as a major force in the early twentieth century and has become increasingly strict in the past thirty years, even as academic support for it has faded. (36) Anika Singh Lemar coined the phrase "zoning as taxidermy" to describe how many land-use regulations restrict the supply of affordable housing and thereby unintentionally harm the poor. (37) Limiting urban density also has environmental costs, in part because it pushes development out to auto-dependent suburbs. (38) And excessive landmarking may block architectural innovation, holding cities hostage to an increasingly artificial past. (39)

    As the opportunity costs of preservation have risen, the marginal benefits have declined. The reason for this is simple: the most important sites tend to be preserved first, and few buildings are as iconic as New York's Perm Station or Philadelphia's Independence Hall. But remarkably, the pace of preservation has remained steady or even accelerated. (40) Historic preservation laws increasingly are used not as a means of saving cherished landmarks, but as an all-purpose tool for halting new construction--regardless of the architectural or cultural merits of the buildings preserved. Whereas once cities battled to preserve Penn Station and Grand Central, today skirmishes erupt over "historic" parking lots. (41) Washington, D.C. and Arlington, Virginia recently landmarked several strip malls. (42) In New York, the LPC landmarked a BP gas station as part of a historic district, nixing the station owner's plans to redevelop the property into a mid-rise condo development. (43)

    Approximately 27% of the buildings in Manhattan have been designated as historic, (44) many of them in the past three decades. (45) New development in these areas is heavily curtailed. (46) Harvard scholar Ed Glaeser, a leading urban economist, has described the trend of pervasive landmarking as a new "NIMBYism"that "hides under the cover of preservationism, perverting the worthy cause of preserving the most beautiful reminders of our past into an attempt to freeze vast neighborhoods filled with undistinguished architecture." (47)



    Despite increasing recognition of the costs of excessive preservation, (50) most cities lack a formalized process for evaluating the tradeoffs. (51) Most land-use regulations, including landmark designations, are enacted at the local level. Unlike federal agencies, however, local preservation boards are generally not required to apply cost-benefit analysis (CBA) to their decisions. (52) Despite the enormous stakes involved, especially in cities with the most valuable real estate, (53) these municipal agencies tend to focus on the benefits of saving old buildings, without considering costs such as effects on affordable housing, the environment, and economic development.

    This Article proposes adapting CBA to historic preservation at the local level. Part II provides an overview of historic preservation law. After a brief history of the rise of the historic preservation movement, I explain how local historic preservation typically works and describe the permissive legal regime that governs it. Whereas judicial...

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