Every city wrestles with the tension between preservation and evolution, the tricky balance between saving great old buildings and not freezing neighborhoods in amber. The tension is especially acute in any metro area that lacks enough homes for all the people who want to live there. Historic preservation, when it interferes with homebuilding, can worsen a city’s shortage of homes, driving up rents and pushing out low-income residents.
Case in point: last year a Seattle historic preservation board rejected a proposed 200-unit apartment building because it was taller than the nearby historic buildings—even though local zoning allowed that height. So the site remained a parking garage, and Seattle lost 200 new homes adjacent to the region’s biggest transit hub.
But overzealous or misplaced preservation has real costs. Who pays when a capricious preservation ruling sacrifices 200 homes? The developers? They just move on: failed projects are built into their business model. The 200 well-off households that would have rented those shiny new apartments? They just compete for other homes in the city in bidding wars that their flush bank accounts ensure they win. But then that sequential process of outbidding steps down the housing market to lower and lower cost homes until the poorest families are left with nothing they can afford. When historic preservation cuts into home production, the people who pay most dearly are those with the least housing security.
Previously I described how design review and environmental review, while well-intended, can sabotage homebuilding and affordability. The same goes for historic preservation rules—especially in booming cities like Seattle where growing pains put historic preservation programs increasingly at risk of being hijacked by people whose true motive is not preservation but to stop change. It’s a problem across the United States, as summarized in this recent article in Environmental Law Review:
Gradually, one building or neighborhood at a time, local governments have blocked new construction in vast portions of major American cities, even as housing prices skyrocket and sites worthy of landmark status become increasingly rare.
If cities aren’t careful, their historic preservation regulations can function as exclusionary zoning.
Seattle’s historic preservation efforts, because they are treated in isolation, risk undermining affordability. But there are ways to fix this. In the near term, Seattle can make multiple tweaks to its existing preservation programs to avoid subverting its housing goals. The ideal, longer-term fix entails establishing a housing “budget”: every preservation ruling that causes a number of homes not to be built would require an offsetting change in zoning elsewhere in the same neighborhood to allow construction of the same number of new homes. In this way, historic preservation would operate under the principle of no net loss of homes.
Seattle’s historic preservation programs
The many benefits of historic preservation include economic development, civic identity, aesthetics, tourism, education, and environmental sustainability. Seattle has two flavors of preservation: historic landmarks and historic districts. For historic landmarks, an 11-member volunteer board can grant landmark status to any object—usually a building—that’s more than 25 years old and has “significant character, interest or value as part of the development, heritage or cultural characteristics of the city, state, or nation.” The nomination process is wide open: any person can nominate any building at any time. Seattle currently has more than 350 designated historic landmarks.
Once it designates a structure, the landmarks board establishes site-specific restrictions on alterations to it. The owner can appeal these restrictions, sending the case to a city hearing examiner who can adjust the requirements but cannot reverse the landmark designation itself. The owner can also appeal the hearing examiner’s decision to the city council, which has final authority.
For any construction project that involves a designated landmark, the builders must obtain a special “certificate of approval” from the board by demonstrating how the project will adhere to the landmark’s restrictions. Though the restrictions vary depending on the characteristics of the landmarked building, they almost always reduce the amount, and increase the cost, of new housing that can be built; in many cases landmark status precludes any new homes at all.
Seattle’s landmarks program also provides—albeit unintentionally—a means for people to obstruct proposed homebuilding projects by nominating buildings that need to be demolished to make way for new homes. The ensuing review process introduces expense, delay, and uncertainty that can push development projects from in the black to in the red even if the board ultimately votes to not protect the structure. A board decision to designate can kill proposed projects outright. To eliminate that malignant uncertainty, many savvy Seattle property owners take the bull by the horns: they apply for landmarks status before putting a redevelopment property up for sale, anticipating that the board will reject the proposal.
Seattle’s historic districts
Seattle has eight historic districts authorized by the city council at the request of residents and business owners. For each district, a volunteer citizen board regulates the appearance and historical integrity of structures and public spaces. Those who wish to build within historic districts must obtain a certificate of approval from the district’s board in a process that typically involves several meetings and may stretch out over six months to a year. Compared to individual landmark designations, historic districts tend to create even greater uncertainty around proposed homebuilding projects because there are no site-specific, pre-established restrictions to guide what will or won’t win the approval of the board.
Seattle’s two largest historic districts are Pioneer Square and the International District, located next to each other in the south end of downtown. Notwithstanding their prime location surrounding a major transit hub in the region’s biggest job center, neither district has seen much redevelopment, even as new construction has boomed over recent years everywhere else in Seattle. Homebuilders know they face a permitting minefield in these districts, so they seek opportunities elsewhere.
Complicating matters, old buildings in Seattle are commonly constructed of unreinforced masonry that can collapse in a major earthquake. The seismic retrofitting necessary to make these death traps safe against earthquakes is prohibitively expensive for most owners. Historic protections on such buildings often serve to put them in a sort of purgatory: old and deteriorating, they remain safety hazards because the owner can’t afford retrofitting but isn’t allowed to alter or demolish the buildings.
Clashes between historic landmarks and homebuilding
Below are some recent examples of Seattle’s historic landmark rules colliding with the city’s dire need for more homes.
- Wayne Apartments: In 2015, Wood Partners proposed a 124-unit apartment on the downtown site of the dilapidated Wayne Apartments, three rowhouses constructed nearly 130 years ago and then raised in 1911 to sit on top of a one-story unreinforced masonry commercial building (see photo at the top of the article). The Wayne’s owner nominated it for landmark status, presumably because Wood Partners would not purchase the parcel without it first being rejected by the landmarks board. Locals upset about the potential loss of popular neighborhood hangouts on the block advocated for landmark status, and the board agreed in a 6 to 3 vote. So ended any plans to build 124 new homes. Also, residents of the Wayne will continue to live on top of a building likely to collapse in Seattle’s next big earthquake.
- Mama’s Mexican Kitchen: In 2015, Vancouver, BC-based Minglian Realty purchased a 1924 single-story, brick commercial building from the owner who also operated Mama’s Mexican Kitchen, a long-time local favorite located in the building. Minglian began planning an 8-story, 63-unit apartment and nominated the building to the landmarks board, presumably expecting the board to deny the nomination. Neighbors mobilized to support the designation, primarily motivated by the cultural significance of the restaurant. Even though the preservation expert who prepared a comprehensive report concluded that the building “didn’t rise to the level of landmark status,” the board voted unanimously to protect it. Minglian has not announced any plans to pursue a project that somehow integrates the existing building, so that’s 63 new homes gone, for now, at least.
- Federal Reserve Bank: In 2013, a group of preservationists succeeded in getting the 1950 Federal Reserve Bank in downtown Seattle placed on the National Register of Historic Places. In 2015, developer Martin Selig paid $16 million for the property and proposed adding a 44-story tower with office space and 192 residential units on top of the existing building. The Landmarks Preservation Board’s Architectural Review Committee demanded a much shorter tower. The developer redesigned the project with just seven stories of office space and no housing. The board’s opinion that shortening the modern glass tower atop the original building would preserve its historic value cost the city 192 homes.
- Maritime Building: In 2015, Boston-based Beacon Capital Partners launched plans to renovate a 106-year-old 5-story commercial building and add office space and 114 apartments on eight new floors on top of it. About a year later the landmarks board gave it landmark status. Here again, Beacon nominated the building, presumably expecting that it would not warrant designation. Responding to negative feedback from the board on the original design, Beacon reduced the addition to just three floors of office space, with no housing at all: 114 homes lost.
- South Lake Union hotel: (This example concerns a hotel but I include it here because it could just as easily have been apartments—hotel and apartment developments commonly compete for the same land.) In 2016, GEM Real Estate Partners bought a property occupied by a 97-year-old, 3-story commercial building and began plans to replace it with a new 7-story hotel. Hoping to eliminate the risk of the building being landmarked, they nominated it, but unexpectedly, the board voted to landmark it. The photo below illustrates why the designation decision was unexpected: though old, the building is run-of-the-mill.
- SPUD’s: In 2017, Blueprint Capital began planning a 4-story, 60-unit apartment building on a site occupied by Spud’s, a local fish and chips chain. Blueprint worked with Spud’s to incorporate a space for the restaurant in the new building, including some of the original signage. Upon hearing that Historic Seattle might advocate for granting the building landmark status, Blueprint nominated the building itself, hoping to put the issue to rest. As shown in the photo below, it’s an unusual, quirky little building. But is it worth saving at the cost of 60 new homes? Blueprint will have to wait for a board of volunteers to decide the fate of the project.
- Eldridge Tire: In March 2017, the board granted landmark status to the 1925 Eldridge Tire building, a site that Seattle Central College had targeted for non-profit affordable housing development in a land swap negotiation with Sound Transit. In November that deal was finalized, and Capitol Hill Housing plans to build 78 apartments for families earning up to 60 percent of the area median income. In this case, public funds will likely be diverted from paying for subsidized homes to paying for preserving the landmarked building and incorporating into the new construction.
- Talaris Campus: In 2012, a Maryland-based firm purchased the 18-acre Talaris campus—a private park and conference center located in Seattle’s exclusive Laurelhurst neighborhood—and proposed constructing up to 333 homes on the site. Fierce neighborhood opposition ensued, led by the Laurelhurst Community Club. The owner failed to obtain the rezone necessary to build multifamily homes, and then in 2013, neighbors succeeded in getting the city to grant landmark status to the site, including the landscape. The owner explored options for building as many as 72 single-family homes, and then in 2017, put the property up for sale. Even single-family homes would be better than no housing on such a large site inside city limits, but it remains to be seen whether any potential buyer will figure out a way to profitably build on a site so encumbered by landmark status.
- Bonney-Watson Funeral Home: In 2017, developers were compelled to go through the motions and nominate this drab, unremarkable building for landmark status with the expectation that the board would give the thumbs down, which it did, unanimously. One board member commented, “I’m glad I’m alive and I didn’t have a service there,” underscoring the ridiculousness of the nomination and the dysfunction of the process that causes such a waste of everyone’s time and money.
Clashes between historic districts and homebuilding
Perhaps the best recent Seattle illustration of the clash between homebuilding and preservation is the case in the Pioneer Square Historic District mentioned at the outset: In 2014 developer Gerding Edlen proposed a 12-story 200-unit apartment building on a site occupied by a parking garage. Even though the building’s size conformed to the zoning rules, members of the Pioneer Square Preservation Board rejected the design, in brief, because they felt it was too big for the neighborhood. In an unusual move, the director of Seattle’s Department of Neighborhoods overruled the board’s decision. Neighborhood residents then appealed, and the city hearing examiner upheld the board’s original rejection of the project, writing that the proposed building “would appear so large as to be monumental at this location, dominating attention and drawing the focus away from surrounding and nearby historic buildings.” The property has since been sold to a developer who plans to construct an office building—those 200 homes are gone for good.
Three homebuilding projects that are currently winding through the approval process in Pioneer Square further illustrate the friction:
- Grand Central Block, a renovation of three early 20th-century buildings and an addition of four new upper floors with 132 apartments. The new floors of housing would help offset the major expense of seismic retrofitting. Approval of the addition is likely to be contentious: one board member is on the record stating that he was “not in favor of a large massing on top to reach revenue; 100 years of history would be sacrificed.” However, if the board insists on restrictions that render the project an infeasible money loser, the city will lose 132 homes, and in the event of a major earthquake, it may well be human lives that are sacrificed.
- The Cannery, a 54-unit apartment on the site of a crumbling one-story historic brick building. The board approved the design if the original façade could be preserved, but the owner has stated that the cost of doing so is a deal breaker financially. The site’s unstable soils also jeopardize feasibility, but piling on the façade preservation only makes the equation worse.
- Canton Lofts, an 80-unit apartment targeting rents affordable to people earning median income without relying on public subsidy. The developers endeavor to keep the rents lower than typical market rate by squeezing construction costs in every way possible. This project underscores the challenge of balancing priorities: design features desired by the board to help the building fit in better with neighborhood are likely to make it more expensive to construct, compromising the affordability objective.
The impact on housing affordability
The examples cited here add up to over 1,000 homes lost to historic preservation over the past few years. And that doesn’t include homebuilding projects that never got past the idea stage because developers were scared off from the start by the cost, delay, and uncertainty inflicted by the preservation process and restrictions—perhaps another 500 or 1,000 homes?
To put these numbers in perspective, planners project that Seattle’s Mandatory Housing Affordability (MHA) program will yield an average of 600 subsidized homes per year over 10 years. True, any new homes forfeited to preservation would have been market-rate, not subsidized. But when there aren’t enough homes in a city for everyone who wants one, even the loss of relatively expensive market-rate homes ends up squeezing out families on the low end of income spectrum. The housing market is like a huge game of musical chairs. When there’s a housing shortage, the wealthy always get a chair, and the poor end up on the floor—that is, without a home they can afford. Through the market gyrations of competition for scarce housing, every home not built converts to one fewer home available to a poor household—the very people served by affordable housing programs like MHA.
Who pays the big bill for historic preservation?
Because historic preservation provides a shared public benefit, it’s only fair that the public as a whole should pay for it. But as the above examples reveal, typical preservation rules put the burden on people who happen to own a historic property. Imagine you buy a house with the intention of building an addition for your aging parents. But then unexpectedly the city decides to designate your house a landmark and says you can’t build that addition. You take the hit for historic preservation that benefits the greater community.
That same unfair deal often plays out when Seattle’s landmarks board designates a building. To help offset the loss of property value that a designation can cause, Seattle offers landmark owners zoning and building code exceptions, a special tax valuation program, and transfer of development rights. But for cases in which a designation prevents redevelopment of a property, such compensation is unlikely to come anywhere close to covering the owner’s loss. For unreinforced masonry buildings in particular, preservation mandates can lead to neglect and dilapidation. Historic preservation is inordinately expensive, and cities shouldn’t rely on individual property owners to foot the bill.
Balancing preservation and affordability
Seattle’s Housing Affordability and Livability Agenda (HALA) recommends reforming the city’s historic review process to reduce permitting delay and uncertainty, but does not offer any specifics for how to accomplish that. Since the HALA plan was released in July 2015, policymakers have not initiated any reform efforts.
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One shortcoming of Seattle’s historic review process is that it treats preservation in isolation, ignoring its relationships to other important city goals—notably housing affordability. Self-selection all but guarantees that volunteer board members will elevate historic preservation over other values. And Seattle’s cultural climate of unease over rapid growth only raises the likelihood that boards will overreach. To better balance historic preservation with the city’s affordability efforts, Seattle can:
- Update mission statements to acknowledge that historic preservation can undermine other goals and must be balanced with other city programs.
- Educate board members about how the historic review process and resulting preservation mandates can impede homebuilding and harm affordability (and consider screening out prospective board members who are resistant to such ideas).
- Raise the bar for justifying landmark designations to counteract intensifying anti-development sentiment felt by growing numbers of Seattle residents.
- Move the program from the Department of Neighborhoods to the Department of Construction and Inspections to enable efficiency improvements through integration with other permitting processes such as Design Review.
More effective still, though undoubtedly more controversial, would be to:
- Require owner consent before granting landmark status, as Portland, OR, does.
- Eliminate the volunteer landmark and district boards and instead dedicate city officials to historic preservation decision making—in Vancouver, BC, heritage designations are recommended by Director of Planning and enacted by the city council.
- Prohibit historic preservation restrictions from limiting new construction to less than the height or capacity that zoning allows, including additions to historic structures.
Beyond these relatively straightforward fixes, Seattle can also pursue a deeper overhaul. The ideal program would combine two key ingredients:
- A housing budget under which any homes lost to preservation would have to be offset with corresponding additional allowances for new homes elsewhere in the same neighborhood.
- A method to capture the value of the extra private development enabled by these allowances and use it to fund the preservation of historic buildings.
As it happens, Seattle already has a policy that gets part way there: transfer of development rights (TDR). Landmarked buildings are usually smaller than what zoning permits. TDRs enable owners to sell the rights to that extra development capacity that landmark status precludes them from using. In designated zones throughout the city, developers can buy those development rights and build larger than what the baseline zoning would allow. The TDR proceeds can help owners maintain their landmarked buildings.
In practice, however, Seattle’s TDR program falls short because the market price of the TDRs is too low to cover the typical cost of preserving old buildings—especially those that need seismic retrofitting. There’s a price-squashing glut of TDRs available for sale in Seattle’s program because there aren’t enough development projects that want to buy them, and the city has several types of TDR besides historic—open space or performing arts centers, for example—all competing for that limited pool of TDR buyers. Furthermore, the city has curtailed any future expansion of TDR by tying increases in the building size allowed by zoning—“upzones”—to affordability requirements through the new MHA program.
Putting more people’s skin in the game
So what else could Seattle do to further calm the conflict between preservation and affordability? Localize it with neighborhood housing budgets: If a neighborhood decides that it wants to preserve a building that otherwise could be redeveloped into housing, the city would require upzones to make room for more homes somewhere else in the neighborhood. This upzone would offset the homes sacrificed for preservation, and it would balance the housing budget.
For the second key ingredient—funding—the city could pay the owner of the preserved building the market value of the development capacity that was extracted. Compared to TDR, an immediate payment of the full value of the capacity would provide the owner with compensation more in line with what’s typically needed to keep old buildings in good shape. The city could then reimburse itself by charging builders a fee to use the extra capacity granted through housing budget upzones. (Of course, a zillion details would have to be nailed down before city could launch such a program.)
Vancouver, BC, has a program based on similar principles, though narrower in scope. For projects combining new and old on the same site, Vancouver grants developers extra capacity in the new construction in exchange for preserving the historic building. For historic properties without room for bigger buildings the capacity can be transferred elsewhere in the city.
The beauty of a localized, housing budget approach is that it would stimulate debate among preservation advocates and residents about the tradeoffs. Representatives of residents of the neighborhood could be granted authority to decide where (but not if) to accommodate the compensating increases in zoning capacity. For example, they could choose between allowing a single highrise or a few extra floors on multiple buildings. If neighbors were dead set against adding any more capacity for housing to the neighborhood, the neighborhood would not be able to preserve any additional buildings.
Such debates would also help Seattleites loosen up their rigid conceptions of preservation. Why not hybridize old and new? Why not a sleek steel and glass tower rising among historic brick buildings in a neighborhood like Pioneer Square? Why not a modern, contrasting addition floating atop on old building? Urban places thrive on a healthy mix of new and old, as observers have noted about Denver’s LoDo neighborhood, for example:
Along with its old buildings, new towers have boosted its residential population, creating a neighborhood that feels fresh and alive, rather than stuck in a time warp.
Communities can benefit from historic preservation. But when preservation hinders homebuilding and drives up rents in housing-short cities, those who suffer the most are the low-income people forced to leave their communities in search of cheaper homes.
Seattle’s preservation rules can undermine affordability not only by preventing construction outright, but also by imposing cost, delay, and uncertainty on homebuilding projects. Several modest modifications to Seattle’s existing preservation programs would help create a better balance with the city’s housing goals. To prevent preservation from cutting into home production, over the longer term Seattle can work towards a program incorporating a housing budget that requires upzoning to compensate for homes not built because of historic preservation.