Thursday, September 14, 2006

Preservation vs. dynamic renewal

I received this link from one of my readers, and it inspires quite a few mixed feelings: Save The Bungalows in Houston (mainly the Heights). Obviously, I have a soft spot for some historic preservation, as witnessed by my recent petition to save the Alabama Theater Bookstop. And I do find the character of the Heights to be charming. But I also appreciate the huge benefits Houston has from no-zoning and flexibly allowing land to get redeveloped into higher value uses. That includes all the new townhomes inside the loop, which make it more attractive and affordable to live there, and are a big part of our core renewal. I understand the desire to preserve the character of some of the bungalow neighborhoods, but I also have some concerns. Here are few excerpts from their site and my thoughts.
Deed restriction changes require getting signatures from up to 75% of property owners, a difficult and time consuming process for volunteers.
...
Save The Bungalows believes that those who live in a neighborhood should have some say over its future and we advocate changes in laws and policies that will accomplish that goal.
75% signoff on deed restrictions sounds like a pretty reasonable way for a neighborhood to have a say over its future. Translated, this sounds to me like "my neighbors are being too protective of their property rights and uncooperative signing the deed restrictions I want, so we need a political option that bypasses them."
Developers have "one stop shopping" at City Hall. Homeowners face many obstacles.
Actually, developers are the "homeowners" of the land they're trying to develop. A more accurate statement would be:
Developers and homeowners have a simple and straightforward process for doing what they want with their land. Meddling NIMBY neighbors face many obstacles to stopping them.
Kind of a different perspective, heh?
...the original homes edge closer every day to being worth nothing at all. Only the land itself has value. ... The math is simple. Knock down a house appraised at land value – 200K - and put up one appraised at $750K. Better yet, TWO houses appraised at 500K.
That sounds like a lot of value creation to me. A house nobody wants got turned into one or two houses people really, really want. This is bad?
Homes are huge because, if land prices are 200K or more per lot, builders want to put up very expensive homes. The effect is chilling. Smaller, historically significant homes are being bulldozed. Remaining neighbors find their homes are worth nothing at all – only the dirt has value.
If this is true (new development lowers neighborhood home values), then getting those 75% signatures for new deed restrictions should be a snap. People are quick to protect their home values. That doesn't seem to be the case though. People realize that a lot of the value of their property is the option to do something new on it, and if they sign deed restrictions taking that option away, they're going to lose a lot of the value in their home. Maybe the deed restrictions would be more popular if they enforced neighborhood character while still allowing developers to build what people want to buy - like bigger townhomes, but in a design style that matches the neighborhood - rather than forcing the preservation of old, small bungalows nobody seems to want.
Setting these changes in motion will help ALL older neighborhoods - especially those with fewer resources than the Heights - to have a say in their future.
That's exactly what I'm worried about. A few well-meaning regulations put in place to protect the historic Heights get stretched by neighborhood extremists all across the city to stop renewal and redevelopment everywhere. It's called "the law of unintended consequences," and we could end up paying a bitter price for it as a city.
We also want to help people understand the truth about renovation by offering resources and busting myths, like the myth that renovation costs more than building new. We believe many people tear down lovely older homes out of ignorance.
Bravo. Total support here. I'm not sure if the myth is true or not, but educating people about renovation options is a fine idea that can lead to better decisions. An even better idea, if a group of people really truly want these types of neighborhoods, is to form an organization with pooled money that buys these houses as they go up for sale, renovates them, and then resells them with new deed restrictions to preserve them. That's the free market and property rights at work.

I'm not saying Houston's perfect as is. There do seem to be a few problems around our development, neighborhood and historic preservation regulations that need fixing. But lets not start swinging a sledgehammer in a china shop to kill a mosquito. A few conservative adjustments can go a long way without giving up the dynamic benefits of our flexible approach to land use.

19 Comments:

At 9:29 PM, September 14, 2006, Blogger John Whiteside said...

I think you're touching on a fundamental question here: should we allow the free market to determine everything or is there real value in existing communities that doesn't have an easily-attached market value?

I am big fan of the free market, but I think that when we start to take the view that we serve the market, rather than the opposite something is lost. What's the market value of a historic community like the Heights? Setting some parts of the city aside to be free of development pressure is a reasonable way to make sure some of the past remains.

It's not an all or nothing situation. You wouldn't want the whole city to be overly restricted, but there are lots of close-in areas that will get developed in new ways - I think a reasonable solution is to have a process (such as historic districts that really mean something) to preserve some of the past while allowing the dynamic renewal you talk about.

For a good example I'll point (again) to my old DC neighborhood, Logan Circle, where strong historic preservation has kept lots of Victorian area homes intact - and around the corner commercial properties are turned into very modern high density residential developments, new retail space, and the like. Houston would be fortunate to have anything that's simultenously as historic and modern as that neighborhood.

 
At 9:42 PM, September 14, 2006, Blogger Tory Gattis said...

Well, couldn't a potential historic district get 75% of the homeowners to sign new deed restrictions? And, if not, and we use a political process to force the historic preservation, aren't we overriding what that neighborhood really wants? (or at least a substantial minority, if it's between 50 and 75%) And if these protections actually reduce the value of their home, isn't that a public taking, and shouldn't society compensate them? If the historic neighborhood has true value to its residents or the broader city, shouldn't they pay for any changes that negatively affect those homeowners' value? Which, at that point, would be the equivalent of the solution I proposed: buying them and reselling them with new deed restrictions, including the loss if that reduces the value of the home.

 
At 10:29 PM, September 14, 2006, Anonymous Anonymous said...

http://www.chron.com/cs/CDA/printstory.mpl/front/4176842


chron story about midtown for anyone who missed it.

 
At 11:21 PM, September 14, 2006, Anonymous Irwin said...

First, the courts have clearly said that reasonable restriction on property usage is not takings under the Takings Clause. This has been pretty extensively litigated and is pretty much a settled aspect of law.

Second, I am not sure that it can be assumed that property values will be reduced. Historic districts close to the central city are generally seen as desirable places and often draw people looking to live in historic homes with charm and character. This is especially true if those districts are supplemented by modern developments within close proximity.

In the end, I agree with John. I think Texas cities have for too long disregarded some of the truly historic areas of the city in favor of new development. New development is fine, but it should be balanced with older areas where people can still get a feel for the history of the city. The free market is great, but it is not the end all, be all. There are market failures and externalities that must be corrected.

 
At 8:04 AM, September 15, 2006, Blogger Tory Gattis said...

Anon: thanks for the link. I did see it, and probably should have posted it here, but my running assumption for the blog is that my readers have seen the Chronicle, so I don't feel compelled to post on every relevent article they publish (if anybody's wondering why I don't always talk about the Chronicle's coverage). If a lot of you are not reading the Chronicle, let me know and I might try to be more diligent about linking to their articles.

 
At 8:26 AM, September 15, 2006, Blogger Tory Gattis said...

Irwin: The inability to replace your house is a pretty unreasonable restriction in my book. And a measure like Oregon's Prop 37 that require compensation for value loss due to land use restrictions could pass in Texas in a heartbeat.

I agree that historic districts can be valuable. If that's the case, getting 75% deed signoffs should be no problem at all, if it adds value to everybody's home.

 
At 10:09 AM, September 15, 2006, Anonymous Anonymous said...

Actually that chron article seems pertinent. Its about how land use regulations backfire and dont allow people to create the type of neighborhood they want too.

anon 2

 
At 11:43 AM, September 15, 2006, Anonymous Irwin said...

Tory: Well, according to the courts, it is not an unreasonable restriction. To have a regulatory taking, the regulation must either physically intrude on your property (ex. utility easement) or the regulation must essentially reduce the value of the property to zero. Neither is the case here. Again, pretty settled law.

Not familiar with the Oregon law, but I have a feeling that such a law would lead to endless litigation. This is because every government regulation has some effect on property values. This includes environmental law, fair housing laws, noise regulations, etc. Of course you could have a reasonable standard (which is normally a question for the finder of fact), but that means trials. So, such a regulation would be a boom to lawyers, but not something any sane city official would welcome.

 
At 3:06 PM, September 15, 2006, Blogger John Whiteside said...

Has anyone seen statistics on property values in historic districts? I haven't seen anything like that, but it would be interesting. I freely admit that my viewpoint is probably colored by my experience in a historic district: my house tripled in value in four years, and the neighborhood became some of the most expensive real estate (in $/square foot) in the city. If that's a taking, bring it on! :)

 
At 3:37 PM, September 15, 2006, Blogger Kevin said...

I did see it, and probably should have posted it here, but my running assumption for the blog is that my readers have seen the Chronicle,

Actually, I would propose that people are interested in your PERSPECTIVE on news covered by the Chronicle, and not your simply linking/blockquoting Chronicle articles. The former interests me, and others I strongly suspect. The latter is handled by bloglines quite well.

I'd be very interested in reading your perspective on Mike Snyder's story on midtown.

 
At 4:28 PM, September 15, 2006, Blogger Tory Gattis said...

Well, thanks for the compliment. If I read a Chronicle article and a strong perspective strikes me, I do tend to post on it. But if I don't feel like I have a lot of substance or expertise or perspective to add, I generally don't.

I agreed with most of the Midtown article. That's why the city is working on this new urban corridors plan so it's not just a special exemption for downtown or midtown, but generally applicable in the right areas. I'll read it again and see if I can put together a post.

 
At 12:16 AM, September 16, 2006, Blogger Owen said...

irwin,

After Kelo, it would appear that most people don't agree with how SCOTUS views takings. If the mayor wants to turn my house into a stop-and-gulp, then slack-jawed teenagers could be downing slurpees on my property tommorrow morning. Needless to say, the courts have largely ducked the takings issue, Oregon's rebellious law. Similar efforts are underway nationwide.

Ultimately, restrictions like these DO tend to impair property values. More importantly, they prevent neighborhoods from densitifying. While I'm not a proponent of smart growth, I do tend to oppose measures that prevent inner-city neighborhoods from evolving to suit changing times. If the market supports apartments and condos, then that's what needs to be built. Midtown needs denser housing to suit a growing population. Keeping small, older homes in the Heights, while perhaps aesthetically pleasing, will inhibit the city's growth. Moreover, the market for single family homes has been trending towards higher square footage, so the demand may not be there.

 
At 7:43 AM, September 16, 2006, Blogger Larissa said...

FYI - in many of the older neighborhoods (First Ward, Sixth Ward, parts of East End), deed restrictions have never existed. To get them would require 100% support of property owners.

Only .03% of Houston is designated historic. Yes, less than 1/2 of one percent. Don't you think builders can find other land available and leave the historic neighborhoods to those who want to live there? I have friends who moved into a townhouse in the West End 8-9 years ago, they now HATE it, but can't sell their home. Streets are tight, no sunlight, walking is treacherous. They bought there because they liked the mix with old homes, but the old homes are now gone. They refer to it as a "townhouse canyon" where developers have run rampant. I tend to agree.

 
At 8:31 AM, September 16, 2006, Blogger Tory Gattis said...

100% is obviously too strong a hurdle for new deed restrictions. That probably needs to be amended to something like 75% - although I think that should be limited to residential areas. I don't think a large residential area should be able to use their majority to force deed restrictions on commercial businesses lining an arterial nearby.

Based on what I've seen of Houston, less than 1/2% being historic seems about right. I think you really have to abuse the term "historic" to get much higher than that.

Your friend's story doesn't inspire too much sympathy: "I got my cool town house in a cool neighborhood, but then too many other people did the same thing I did, so now it's not cool." I think that pretty much sums up all fashion trends.

 
At 5:06 PM, September 16, 2006, Anonymous Irwin said...

Owen-

The issues in Kelo are actually quite different from the theory of regulatory taking. Related, but also different in many distinct ways. Anyway, Kelo was also decided only about a year ago. Regulatory takings case law has been pretty extensive over the past 100 years.

As far as the law in Oregon and similar laws nationwide, again I am not familiar. Yet if they do require compensation for diminution in value due to government regulation, I think you will quickly find that such a law will not work. But, if Texas does pass such a law, I am going to forget energy law and switch to land use litigation. A law like that would be a goldmine!

 
At 5:12 PM, September 16, 2006, Blogger Tory Gattis said...

Irwin,
It depends on what you mean by "won't work." In Oregon, the regulating govt entity either has to compensate or waive the reg, and they are overwhelmingly choosing to waive the reg.

You can read more and find links here:
http://en.wikipedia.org/wiki/
Oregon_Ballot_Measure_37_(2004)

 
At 5:35 PM, September 16, 2006, Anonymous Irwin said...

Just blew through the law. Two things:

One, “land use regulation” is defined rather broadly, meaning that almost any law regulating the use of land or any interest within have the potential to fall within the statue.

Two, there are several restrictions, including regulations that cover what would be traditional nuisance under the common law. Yet, the statute specifically states that this should be construed narrowly in favor of compensation.

Sounds like good lawsuit potential to me. Especially if you can find regulations that the state/city cannot or will not waive.

 
At 10:42 PM, September 16, 2006, Anonymous MC said...

As someone who lives in a 2929 Montrose bungalow, this affects me directly and I don't like it one bit.

The article is correct. Land vales have doubled in the past three years. But the repairs needed to get my house up for sale in this neighborhood wil amount ot $75-100k. For an 1100 sq ft house. If this thing comes anywhere close to becoming law I'm selling out immediately, and at property value alone if need be.

I want to restore this house to its old glory but I refuse to be handcuffed in the process. I will do it on the terms that existed when I originally purchaed the property, and those only. If the terms change midstream I abandon my plan and intentions and walk away.

As I live on a corner, I'll have no problem selling the property.

 
At 10:08 AM, October 09, 2006, Blogger Unite Military said...

I'm in Oregon.

Measure 37 holds that if a new zoning is imposed after a property has been obtained by an owner, and it loses value in the market, the entity imposing a "taking" zoning on it must pay the difference between value imposed by the zoning and the amount that would have existed (greater) had it not been.

The second option under Measure 37 for that zoning authority is to waive the zoning for the property.

A local Portland land use attorney active in Measure 37 cases has indicated to me that no one has failed to waive zoning rather than pay. No one has the $$$ for it.

Restrictive covenants are outside of the zoning question. They cannot be a "taking" or a "windfall."

They rather are private contract law. A bundle of rights exist when a deed is unencumbered.

When a restriction is imposed, a right is set aside contractually. Buy that deed, and you buy only the rights it has unencumbered.

A restriction is not enforceable by any city, county, etc.
It is enforced by the courts. A person or organization can bring it to the court when they have standing as a person benefiting from the restriction, or indicated in the restriction itself as having standing to bring it to a court for enforcement.

This 75% political answer may seem convenient to the proposers, but it is quite a departure from restrictions in the common law or traditional sense. In effect, 75% of the people are voting to create a zoning. Recognizing that is a zoning, not a restrictive covenant arrangement, might help sell it.

Personally I think 75% of the people of the district so restricting their deeds would be more than enough to bring about such a result when the city or county, etc., planners plan zoning.

It can lead to a "historical structure" type restriction where more hoops might have to be jumped through to tear a house down and build another. Non-habitable, etc. structure? who knows.

 

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