Using Development Incentives for Preservation
While historic property owners must adhere to federal standards for rehabilitation if they want to alter and repair their buildings to ensure historic integrity and compatible alterations, the benefits of being listed on the State and National Register are primarily honorific.
To encourage the preservation of historic buildings, state and local governments may elect to use certain regulatory incentives. Programs for granting additional land use rights in exchange for historic preservation commitments are well established in the land use code and planning practice both in Hawai‘i and in other states.
The concept behind these programs is that protection of historic and cultural sites benefit the public at large through preserving significant properties important to Hawaii’s history; improving the community’s quality of life; providing economic development opportunities; and contributing to environmental sustainability. Although the entire community benefits from preserving our collective heritage, most historic properties are in private ownership and the primary costs of their preservation is often born by the private sector. Therefore, governments offer a variety of incentives to help make preservation feasible, affordable and accessible.
These incentives can take the form of tax credits or exemptions, additional approved uses in certain zone districts, or additional density or development entitlements. The concept of transfer of development rights from a donating parcel (the historic or conservation area) to a receiving parcel (the urban or high-density area) has been used successfully across the country for both historic preservation and conservation of natural and agricultural lands.
Another common method for preservation is to permit owners of historic properties to operate limited income-producing activities in areas zoned only for residential, such as a bed and breakfast, conference facility or museum. These conditional uses are subject to both administrative review and, often, public hearings to ensure that the community impacts from the use are not greater than the community benefit from the preservation.
Incentives which encourage preservation inevitably present trade-offs. These are usually unavoidable. A condition use permit for example, might allow the owner of a large historic home to operate a bed and breakfast, but there will be impacts on the neighborhood resulting from the commercial activity. In the same way, TDRs might encourage the owner of an historic building to avoid demolition through the sale of the property’s development rights, but the buyers of those air rights could then erect an adjacent building that is out of scale with the neighborhood.
Careful consideration of both the benefits and risks need to be balanced when using this techniques, but many significant buildings, lands and sites can be preserved through the appropriate use of these incentives.
Modernism and the Recent Past: What's Worth Saving and How Do We Know
It is difficult to have a good perspective on what is worth saving when the buildings we are talking about were built within our society’s living memory. However, it is important that we start to recognize those modern buildings that are significant and worth preserving.
Already people are starting to recognize and fight to preserve buildings from the past 50 years. Groups such as DOCOMOMO (Documenting the Modern Movement), the Recent Past Network, and the National Trust for Historic Preservation (NTHP) have launched nationwide efforts to increase awareness of the importance of architecture of the recent past.
NTHP describes Modernism as a design language with emphases on form rather than ornament, structure and materials rather than picturesque constructions, and the rational and efficient use of space.
“The Modern movement in architecture in the United States flourished beginning in the 1930s, and encompassed individual design movements with their own individual ways of expressing Modern ideals. These include the International, Expressionist, Brutalist, New Formalist, and even Googie movements, to name a few. Technical innovation, experimentation, and rethinking the way humans lived in and used the designed environment, whether buildings or landscapes, were hallmarks of Modern architectural practice,” according to the NTHP Modern + Recent Past program.
As with any time period, there is architecture from this era that is not worthy of preservation, but there are many buildings that are architecturally or historically significant. It is harder to decipher what is worth preserving and what is not when we are dealing with buildings that were constructed so recently. These buildings, perhaps because they were built so recently, are not given much attention by the general public, and many people regard them as ugly. Just because some people do not find them aesthetically pleasing is not a reason to demolish them. Additionally, many people, once they understand the great lengths to which the architect went to design the building in a specific way, start to see the beauty in the functionality of the building.
Vladimir Ossipoff’s IBM building, for example, is a wonderful local example of good modern architecture. Ossipoff won awards for its design immediately after it was built. Today, there are many people who do not think that it is a very attractive building, but when one realizes that the concrete grid that Ossipoff built over the structure was designed at a very specific angle to keep pigeons from roosting, and the grid was built in such a way as that it was self cleaning, the beauty in the functionality of the building becomes apparent.
The attention to detail and functionality that many modern architects had is truly amazing and certainly worthy of preserving. While not every tract house from the 1960’s is historically significant, there are many wonderful architectural specimens that are and we need to make sure that they are not overlooked by identifying and preserving them now before they are lost forever.
Section 4(f) of the Department of Transportation Act
Amidst much discussion of the Honolulu High Capacity Rapid Transit it is important to understand the various review processes in place to help protect historic resources impacted by the project. The process preservationists are most familiar with is Section 106 of the National Historic Preservation Act (NHPA) which requires any project with federal involvement to take into account effects on historic resources. The National Environmental Policy Act (NEPA) also includes disclosure about impacts to historic and cultural sites. For transportation projects, there is another law that also concerns the protection of historic resources, known as Section 4(f).
Section 4(f) is part of the Department of Transportation Act of 1966. Becoming law the same year as the NHPA, Section 4(f) was meant to reflect an effort of federal transportation policy to preserve the beauty and integrity of publicly owned parks and recreation areas, waterfowl and wildlife refuges, and historic sites considered to have national, state, or local significance.
Section 4(f) stipulated that the Federal Highway Administration (FHWA) and other Department of Transportation (DOT) agencies cannot approve the use of land from a “4(f) resource” unless there is no feasible and prudent alternative to the use of the land and the action includes all possible planning to minimize harm to the property resulting from use.
In instances where section 4(f) relates to historic resources, Section 106 of the NHPA is an integral part of the Section 4(f) process. The most important connection between the two statutes is that the Section 106 process is generally the method by which a cultural resource’s significance is determined for a federal undertaking under Section 4(f). Because of the similarities between Section 4(f) and Section 106, the relationship between the processes can be confusing. The most important difference between the two is the way each of them measures impacts to cultural resources. Section 106 is concerned with adverse effects, while Section 4(f) is concerned with use. The two terms cannot be used interchangeably.
If a project uses a 4(f) resource—whether it is through a fee simple acquisition, a permanent or temporary easement, or constructive use, meaning that the project does not physically incorporate the property but is close enough to severely impact activities associated with it and substantially impair it in the eyes of the DOT—then these uses must be avoided, minimized or mitigated.
Section 4(f) requires that if it is “feasible and prudent” to do so, then 4(f) resources must be avoided. If no feasible and prudent avoidance alternative exists then the alternative that will cause the least harm must be selected.
Section 4(f) provides the strongest protection for historic resources of any federal law as it requires the federal agency to choose alternatives that avoid the use of historic resources if it is possible to do so.
Property Tax Exemptions For Commercial and Residential Properties
In recognition that preserving a community’s historic resources is a way to serve the larger public good, many local governments offer economic and other incentives to increase the level of protection of historic buildings. In Hawai‘i, all four counties have made substantial contributions to preserving and rehabilitating historic structures by providing tax exemptions.
Historic Residential Tax Incentives
In all four counties in Hawai‘i, a property tax abatement is available through the county for owner-occupied residences that were listed on the Hawai‘i Register of Historic Places after January 1, 1977 either individually or as a contributing member of a historic district.
In order to receive this tax abatement, the owner(s) of the property must complete their county’s Petition to Dedicate Historic Residential Properties form by September 1 and submit it to the county. Owners of dedicated properties pay $100 each year in property taxes. The exemption is effective October 1st of the calendar year in which you apply.
In exchange for receiving this tax abatement, the owner agrees to maintain the property in accordance with the Secretary of the Interior’s Standards for Rehabilitation. The concept is that the savings in property taxes will be put into maintaining the structure and preserving its historic character. In the City and County of Honolulu, the owner of a historic residential property must place and maintain a sign or plaque on the property that has been approved by the director of the Real Property Tax Office and the State Historic Preservation Officer. This is not a requirement for the other three counties. Historic plaques that have been pre-approved by the County and SHPO are available for purchase from Historic Hawai‘i Foundation (www.historichawaii.org).
If at some point the owner chooses to demolish the residence or alters it to the point that the characteristics that caused it to be listed are lost or destroyed, the Hawai‘i Historic Places Review Board can remove a property from the register. If this happens, the back taxes with interest of 12% per year will be due to the Real Property Tax office.
The exemption is for 10 year increments and is automatically renewable indefinitely. It is subject to cancellation by the owner or director with five years’ notice at any time after the end of the fifth year.
Historic Commercial Tax Incentives
The City and County of Honolulu also offers a Commercial property tax exemption for commercial properties listed either individually or as contributing structures to a historic district on the Hawai‘i Register of Historic Places after January 1, 1977. A property tax exception is available for designated historic sites that are used for commercial purposes, except for hotel, resort or industrial uses. After acceptance into the program, 50 percent of the value of the real property designated as historic is exempt from real property taxes.
The program was established to provide an incentive for property owners to maintain and preserve their historic buildings. The intention is to use the property tax savings to supplement capital maintenance and improvements to the buildings. For the property owner, the benefit is a tax savings and program for reinvesting in the capital needs of the buildings. For the community, the benefit is revitalization of older commercial areas, keeping them vibrant and active, and preservation of historic buildings. For the City and County, the benefit is active commercial districts that generate opportunities for employment, services and economic development (such as from tenant activity or construction work).
When property owners receive this exemption, they must determine a plan to maintain the historically-significant features of the building following established preservation standards. The preservation maintenance plan is reviewed by the Department of Planning and Permitting, the State Historic Preservation Division and a preservation non-profit organization for concurrence before being sent to the City’s Department of Budget and Fiscal Management for final decision. The City determines whether to grant or deny the tax exemption. The property owners and the City sign a contractually-binding agreement that obligates the property owners to follow the preservation maintenance plan for a period of ten years. A short form of the agreement is recorded against the property. The maintenance agreement is monitored by the City to ensure that the terms are met.
The initial tax exemption period is ten years. It is automatically renewable for an unlimited number of additional ten year periods.
Using the Secretary of the Interior’s Standards for the Treatment of Historic Properties
The Secretary of the Interior’s Standards for the Treatment of Historic Properties (SoI Standards) were originally published in 1977 and revised in 1990 as part of the Department of the Interior regulations (36 CFR 67, Historic Preservation Certifications). These standards are in place to guide those undertaking projects on historic structures.
The Standards explain, in non-technical language, the general concepts that should be followed when undertaking work on a historic property. They pertain to all historic buildings of all materials, construction types, sizes, and occupancy, and they encompass the exterior and the interior of historic buildings. They also apply to related landscape features and a building’s site and environment, as well as attached, adjacent, or related new construction.
The standards provide property owners with general concepts as to how to go about undertaking work on the property while still maintaining its historic integrity. These are also the standards that the State Historic Preservation Division use when evaluating the effect of proposed projects on historic properties. The SoI Standards provide a fairly simple conceptual framework in which one can undertake work on a historic property.
The Standards address four different treatments of historic properties: preservation; rehabilitation; restoration; and reconstruction.
- Preservation places a high premium on the retention of all historic fabric through conservation, maintenance and repair. It reflects a building’s continuum over time, through successive occupancies, and the respectful changes and alterations that are made.
- Rehabilitation emphasizes the retention and repair of historic materials, but more latitude is provided for replacement because it is assumed the property is more deteriorated prior to work. These are the standards that are most often used by the State Historic Preservation Division when reviewing projects to historic properties.
- Restoration focuses on the retention of materials from the most significant time in a property’s history, while permitting the removal of materials from other periods. This treatment is often used for house museums or other sites depicting a particular era in history.
- Reconstruction establishes limited opportunities to re-create a non-surviving site, landscape, building, structure, or object in all new materials.
The Standards can be found at: http://www.nps.gov/hps/tps/standguide/
Section 106 of the National Historic Preservation Act: When Does it Apply?
The National Historic Preservation Act (NHPA) of 1966 was a significant step in providing a means of protecting our Nation’s history. The Act provides for a National Register of Historic Places to include districts, sites, buildings, structures, and objects significant in American history, architecture, archaeology, and culture that have importance at either the national, state or local level. Additionally, it provided funding for State Historic Preservation Officers and their staffs to conduct surveys and comprehensive preservation planning and established standards for state programs and requires states to establish mechanisms for Certified Local Governments to participate in the National Register nomination and funding programs.
Section 106 of the Act is perhaps the section of the law that is referred to most often. It requires that federal agencies having direct or indirect jurisdiction over a proposed federal, federally assisted, or federally licensed undertaking, prior to approval of the expenditure of funds or the issuance of a license, take into account the effect of the undertaking on any district, site, building, structure, or object included in or eligible for inclusion in the National Register of Historic Places, and afford the Advisory Council on Historic Preservation, the State Historic Preservation Office, and other interested parties a reasonable opportunity to comment with regard to the undertaking.
This means that before work can commence on a project with any federal involvement, the federal agency involved with the project must consult under Section 106 (NHPA). Section 106 does not apply only to projects that take place on federally-owned land. Whether it is a project undertaken on federal land, such as a military base, or one that is on private land but has received funding from a federal agency, such as Department of Housing and Urban Development (HUD) or the Federal Emergency Management Agency (FEMA), the federal agency needs to complete consultation under Section 106 before the project may commence. Section 106 also applies when a permit is required from a federal agency, such as the Army Corps of Engineers or the Environmental Protection Agency (EPA).
The purpose of Section 106 is to balance historic preservation concerns with the needs of federal undertakings. The review process ensures that federal agencies identify any potential conflicts between their undertakings and historic preservation and resolve any conflicts in the public interest.
Historic Preservation Trends and Issues
HISTORIC HAWAI‘I FOUNDATION
Historic Hawai‘i Foundation’s Preservation Resource Center (PRC) provides people with the help they need to save the places they love. Below we explore various trends and issues in historic preservation
The Preservation Resource Center is made possible through grants from the National Trust for Historic Preservation (NTHP) Partners in the Field challenge grant, the Office of Hawaiian Affairs, McInerny Foundation, the Atherton Family Foundation and through the generous support of Historic Hawai‘i Foundation’s members and donors.
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Phone: 808-523-2900 Fax: 808-523-0800
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