The Impact of Local Historic Districts
(as provided in the draft report An Analysis of the Historic Preservation Tax Credit in Baltimore by consultant Place Economics)
In Baltimore, like most American cities, there are two kinds of historic districts. One, National Register Historic Districts, are an honorary designation, maintained on a list by the National Park Service. These are neighborhoods that the city and the residents of the historic district can be rightfully proud of.
However, there is virtually no protection for properties as a result of National Register listing. Without some local protections, National Register property can be changed, altered, or demolished at the will of the owner. There is no design review for National Register properties unless they are also in a local historic district.
Local historic districts do provide protection for properties within their boundaries. In the case of Baltimore that means that changes to the exterior of the property are subject to review by the Commission for Architectural and Historic Preservation (CHAP). CHAP also reviews the design of new, infill construction and whenever possible prevents demolition.
Both types of districts contain buildings of historic significance and/or architectural character. The fundamental difference is that property owners in local districts have to go through a design review process to make changes to their properties; owners in National Register districts, unless they are simultaneously also in a local historic district, do not. Does this “extra hoop” of regulation and protection of the neighborhood assets make a difference? To answer that question this analysis looked at comparisons in both value and change in value over time among properties in local historic districts, properties in National Register districts that are not also local districts, and properties in Baltimore in neither local nor National Register districts.
The first measurement was simple average value. Based on analysis of more than 170,000 properties here is what was discovered. The average current value of houses in local historic districts is over twice the average in the rest of the city.
(Map of National Register districts and Local Historic Districts)
But maybe buyers just prefer historic houses, and it doesn’t matter whether they are in a local historic district or a National Register district. So a comparison was made of the average value of all three categories of residential properties: 1) in local historic districts; 2) in National Register districts; and 3) in neither. And the average value of each was calculated at three points in time: 2000, 2010, and 2019.
At all three points in time, the market place was willing to pay more for properties in local historic districts, in spite of design review being required if the homeowner wanted to make significant changes. This is not because local historic district property owners loved going to preservation commission meetings, but rather the confidence that the property owner across the street would not be allowed to make changes that had an adverse effect on nearby properties.
This difference in average values is also reflected in the rate of change in value over time. While historic properties in National Register districts outperformed the properties in undesignated neighborhoods, properties in local historic districts did better than both National Register houses and the rest of the city.
This is what has been happening citywide, but what about at the neighborhood level? Twenty-one of Baltimore’s Community Statistical Areas (CSAs) have both local historic districts and National Register districts. For this report an analysis was made of the change in value over time in those CSAs comparing average values in both types of districts. Again, while properties in National Register districts increased in value more than did undesignated properties, average values in local historic districts increased more than both other categories.
This “preservation premium” that the market is willing to pay for properties in local historic districts certainly benefits the owner with more rapid growth in value. But the City of Baltimore is also a major beneficiary of this difference. If, over the last nine years, properties in local historic districts had only gone up at the same rate as the rest of the city, there would have been nearly $3.4 million fewer property tax dollars going into city coffers in 2019.
Local historic districts constitute only 3.3% of residential properties in Baltimore, but 6.3% of the value of residential properties, and in the last decade have seen nearly 12% of the overall increase in residential property value.
Do local historic districts and the design guidelines that accompany them make a difference? Clearly the marketplace shows that it does.
For more general information on the value of local historic districts, https://www.placeeconomics.com/resources/twenty-four-reasons-historic-preservation-is-good-for-your-community/.