Sunday 13 March 2011

Heritage preservation

Saturday's Christchurch Press includes an excellent Mainlander feature on Alan Slade's efforts to save the Octogon Restaurant in Christchurch, despite the best efforts of the Heritage board. The Slades are passionate about restoring old churches and fell in love with the old Trinity Congregational Church in Christchurch.
"The building's H1 historical registration meant that everything we did needed consent, which took forever. The roof had a lot of water damage: repairing that with matching timbers was a long job. We even restored the dilapidated 1871 London organ to superb recording condition. Finance held us up, as things always cost more than you'd expect, but it was worth it."

The restaurant opened in 2006 and, after a quiet first year, business grew rapidly, with a strong following built on the restaurant's food and live music.


Behind this success was an ongoing tension over heritage issues with the city council and the Historic Places Trust.

"When you take on a building like this, you do it with your heart, not your head. You are as keen to protect it as anyone. You don't want to cut corners, and preserving the building's integrity is vital. But the Historical Places Trust suspects every owner of deviousness."

The September earthquake hit Octagon Live hard, with more than $600,000 required to rescue the building. "We were allowed to take emergency action to build a frame to hold up the tower, but the retrospective consent ended up costing $8000 - for something I'd done to save the building."

The restaurant was closed for only two months, with the local community pitching in. The Boxing Day earthquake caused yet more damage.

Even though it was the building industry's traditional holiday period, Slade had 11 workers and two cranes onsite repairing the damage the day after, and the restaurant was open a day later, with the public enjoying the mannequins that adorned the temporary braces holding up the exterior walls.

Trinity Congressional Church was significantly strengthened in 1975, explains Slade.

"The engineers at the time strongly suggested earthquake proofing the tower by temporarily removing the roof, which would have meant some damage to the wooden shutters. They were over-ruled by the Historic Places Trust.

"Just recently, the engineer from the 1975 assessment told me that the tower was severely compromised, and warned that it was unsafe. Now it has come down as predicted. We were incredibly lucky no-one was underneath it at 12.51pm, but it was the conservative attitude of the conservation movement and the Historic Places Trust that caused the danger in the first place."

Slade believes this attitude in the heritage preservation industry amplified the consequences of the Christchurch earthquake.

"Maintaining our old buildings is incredibly important, but the heritage framework in this country has worked against keeping buildings in good condition. Spirit-sapping bureaucracy stands in the way of routine jobs like replacing weak stones. Even repairing roof tiles requires consent, and the damage that three weeks' rain can do while that is processed can be enormous. Many of Christchurch's treasured buildings are now in a pile, and the narrow-mindedness of the conservationists in the council and the Historic Places Trust played a substantial part in that. Sadly they will probably never be held accountable."

With thoughts turning to rebuilding the city, Slade is confident that Octagon Live will be a key part of the new city. The structure is considered saveable by engineers and the organ should be fine.

"I do think this is the time for us to radically change our approach to protecting our heritage," he says. [Emphasis added]
The preservationists would argue, perhaps rightly, that there are plenty of owners of registered buildings who'd like nothing more than to see them bowled over; guarding against those owners means folks like the Slades wind up as unavoidable collateral damage. But can't we imagine a system where preservation becomes incentive compatible?

I'm happy to grant that there are positive external benefits from having heritage buildings around. The great heritage downtown spots were a nice feature when we were deciding whether to move to Christchurch. A lot of these benefits can be appropriated by a private owner who builds a business around the building's unique character - like the Octogon Restaurant. But not all of them. So there is a potential role for local government in encouraging heritage preservation. How best to do it?

The current approach puts the costs of heritage preservation on the owners of a heritage building - they're an off-budget regulatory expenditure borne by private owners. Consequently local government doesn't spent much time or effort in ensuring the best bang for the heritage dollar.

An alternative approach would bring these expenditures onto the books: pay the owners of heritage buildings to maintain their heritage amenity value. But the mechanism design problem isn't trivial.

Specify that there are a continuum of heritage property owners. Some would be willing to pay lots to raze the building and put up something new - the location value in new use is very high. Some would have to be paid lots to ever be willing to see their heritage building razed - they love owning and maintaining heritage buildings and are willing to be out of pocket to do it. Some in the middle are roughly indifferent. The current regs impose some costs on the heritage-lovers (like the owners of the Octogon) and high costs on the owners who'd sooner raze the building.

An ideal system would see buildings razed where the heritage value is low relative to the opportunity cost and preserved where the heritage values are relatively high. And, payments should be targeted to where they make the greatest difference at the margin - folks who love heritage properties don't need to be paid to preserve them, they just need the City to get out of their way. It's the indifferent folks who need to be paid - the folks who'd be happy to keep their building as heritage if paid a bit every year but who otherwise don't get many personal benefits from having a heritage building.

If Council went to all property owners and made an offer of an annual subsidy for heritage maintenance based on the property's amenity value, we'd get the efficient outcome but with an awful lot of rents conferred on owners of heritage properties of high amenity value who would have been happy to preserve the property even absent subsidy.

If Council instead made such offers only conditional on the owner presenting the equivalent of an outside offer - putting in a building consent application for a changed use - there would be fairness worries about how only people who are willing to raze heritage properties get paid (which is the only way of maximizing the number of buildings preserved). We might get a bit of subsidy-seeking behaviour where folks at the margin who otherwise wouldn't have gone ahead with renovations put in applications in hopes of drawing a subsidy.

It's a problem worth working through though. The current system imposes heavy costs on owners of heritage buildings - even those who love their buildings and are doing their best to improve them. I doubt Council would consider moving in this direction though - bringing an off-budget cost imposed on private landowners instead onto the Council's books isn't something particularly popular with Councils.

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