"Critical Legal Issues in Historic Preservation"

First of all, I've noticed that I have an audience. Great, I'd love to hear from you. The goal of this blog is for it to be a research journal so that one day I can put it all together as some sort of great scholarly work. If you want to get in touch and leave feedback, the places to go to are Facebook or Twitter. Any feedback is good. http://www.facebook.com/lenorelowen or http://www.twitter.com/glamavon Now to the matter at hand, important legal issues in Historic Preservation. This is a very dense field because the important legal issues cover a wide variety of topics such as planning, land use, due process, the use of legislative power, and so on. I can't even pretend to know everything about the subject and I doubt that even the most experienced lawyer would be able to wax prosaically on the subject. However, through this journal I am learning a good deal more than what I did in school. So let's focus on the critical issues. There have been two major legal decisions that have shaped the nature of Historic Preservation in the United States, Penn Central Transport Co. v. New York and Village of Euclid v. Ambler Realty Company. The argument in both cases centered around landmarking buildings and historic districts fell under the auspicies of zoning and other land use legislation. In one sense, the preservation of buildings of historic or aesthetic value and historic districts falls under land use law and development, encompassed in the term zoning. Thus, the history of zoning and similar land use laws present interesting parallels. In 1916, New York City enacted the first comprehensive zoning of height, area, and use. Actually, between 1909 and 1915 the City of Los Angeles divided up the city into twenty-seven districts including a large residential area. In 1915 Hadacheck v Sebastian, 239 U.S. 394 upheld the ban on brickyards in Los Angeles. (landuselaw.wustl.edu/powerpoint/Tab%20History%20of%20Zoning--11-01-2006.pdf). It was noted that the first comprehensive zoning laws, like historic preservation, appeared about one hundred years too late. In the early twentieth century, the zeal for zoning grew out of New York's laws. A standard state zoning enabling act prepared in the early twenties by then-Secretary of Commerce Herbert Hoover was adopted in parts and whole by nineteen states. In the decade that followed, the question became what would the Supreme Court do in light of the new restriction on property rights? In 1924, the U.S. District Court of the Northern District of Ohio (297 Fed. 307) struck down the comprehensive zoning ordinance of the Village of Euclid which would have, for all intents and purposes, settled the constitutional validity of zoning. The Village of Euclid, a suburb of Cleveland, adopted a comprehensive zoning ordinance in 1922, which regulated use, lot area to be built upon, and the size and height of buildings. The ordinance cut Ambler Realty Company's land, which it held for industrial development, into long, thin slices and placed substantial portions into residential zones. The alleged market value for industrial use of the land was $10,000 and $2,500 an acre for residential use. While Ambler did not challenge the particular application of the zoning ordinance to a specific parcel, which did look unreasonable as precluding any logical development. Euclid did challenge the whole concept of comprehensive zoning. The Court noted that the effect of the bill is that the ordinance greatly reduced the value of Ambler's land and destroyed their marketability for industrial and residential use. The attack was directed not at any specific element of the provision, but at the ordinance as a whole. Two opposing state court decisions were submitted to the Court. After the first argument, the majority of the justicies were ready to declare the ordinance unconstitutional. In a rehearing, the ordinance was sustained by a vote of 6-3. Within four years zoning enabling legislation was enacted in forty-seven state and in the forty-eighth, home rule provisions had been declared judicially as enabling cities of the first class to adopt similar ordinances. The state and municipalities' response to the need for zoning regulation prior to Village of Euclid v. Ambler Realty Company was extensive, prompting a flood of zoning regulations in all forty-eight states. What preceded Penn Central Transport Co. v. New York in the states, with respect to landmark and historic preservation was a modest response than the response for zoning regulation. The reason was that the public perception of the need for light, air, and uniformity to protect the market and use value of the American home is and always has more urgent that the need for a quality of life served by the aesthetics of historic architecture. However, the foundation for a comprehensive national historic preservation law was laid down in all of the states and a large number of municipalities that encouraged or required preservation of districts and buildings of historic or aesthetic value. Overall, while the state and local response to the need for historic and district preservation has been widespread, it was tentative in its implementation. Some of the states authorized the preservation of certain districts, others authorized local enactment of historic zoning ordinances, still other authorized municipalities to note the need for historic preservation in the administration of zoning and land use regulations. There was a definite tendency in the legislation to create historic commission that would identify the properties and areas to be preserved and work with the owners toward that goal on a voluntary basis, or use such powers so as not call into question the basic issue of whether the regulation is a taking calling for an exercise of eminent domain powers. Now there's a big topic, eminent domain, thank you Fifth Amendment. Eminent domain powers including restrictive easements, have given been given to state and local historical trusts or commission in order to acquire landmark structures or interests but restraints on budgets were and have been deterrents to exercising this power. Some state use incentives like tax exemptions of historic properties or permission to credit again property tax expenditures to the extent to which preservation depreciates the market values, and in the case of the state of Virginia-a presumption that landmark status depreciates its value for commercial, residential or other purposes. In New York, which has been at the forefront of historic and landmark preservation in recent years, effort were focused on public or quasi-public structures; possibly because these properties were owned by charitable, education or similar organizations, the legal issue was whether preservation of a historic or landmark property, physically or financially, seriously interfered with the goal of the organization. This is very different from the legal issues presented by landmark or historic district ordinances as it affects private property. The one significant and startling difference between the history of zoning laws and landmark/historic district laws is the absence of the former and the presence of the latter of an interest and encouragement by the federal government. Zoning, subdivision and planning ordinances are a particularly local phenomenon, written by local legislative bodies, administered by the local citizens, interpreted and enforced by the state courts. Not true for landmark and historic district regulations. Here the federal presence has really made itself felt. One example was the opinion rendered by the United States Second Circuit Court of Appeals in WATCH v. Harris. Congressional interest in historic preservation has had a long history. The Antiquities Act of 1906 authorized the President to set aside national monuments on federally controlled land. The Historic Sites Act adopted in 1935 made it national policy to preserve for public use historic sites, buildings, and objects of national significance and established the Advisory Board on National Parks, Historic Sites, Buildings, and Monuments. In 1949, Congress charted the National Trust for HIstoric Preservation, a nonprofit corporation charged with task of of facilitating public participation in the preservation of sites, buildings, and objects of national significance or interest. This was huge because up until this point there really was not any federal agency that was given this job or empowered to establish preservation policy. In 1965, recognizing that urban renewal project might have an affect on historic resources because of the Housing and Urban Development Act of the same year, permitted a project to relocate a resource determined to be of historic value and would be disposed of to a public entity or private nonprofit organization which would renovate and maintain said structure for historic purposes. However, It was not until the United States Conference of Mayors' study by a committed on historic preservation, "With A Heritage So Rich," did Congress, in enacting the NHPA, took a crucial step in protecting resources not only of national significance but also properties of of historical, architectural, or cultural significance at the local, state, and federal level. A report by the House of Representatives emphasized the importance of focusing attention on the significance of these resources especially in the realm of urban renewal and the need to strike a meaningful balance between preservation and new construction. The proposed NHPA had a three-point purpose: 1) to strengthen and expand the work being done under section 2(b) of the action of August 21, 1935...and to establish a national register of sites, structures, and the like which are significant in American history, architecture, archeology, and culture; 2) to encourage local, regional, state, and national interest in the protection of such properties; and 3) to establish an Advisory Council on Historic Preservation charged with the duties of advising the President and Congress on matters related to preservation of such properties, recommending measures to coordinate public and private preservation efforts, reviewing plans for federal undertakings and undertakings of other involving federal assistance or requiring a federal license with affect sites, structures, and the like listed in the national register referred to above. Very huge The National Historic Preservation Act of 1966 sums up the goal of the federal involvement in landmark and historic preservation succinctly by stating that "the historical and cultural foundation of the nation should be preserved as a living part of our community life and development in order to give a sense of orientation to the American people." Since public construction projects have been the chief cause of landmark and historic site destruction, federal intervention on their behalf is enormously significant as exemplified in Section 106 of the NHPA. Section 106 requires that every federal agency head consider the effect of a federal project(s) or those receiving federal assistance on historic properties listed or eligible for listing in the National Register. This provides the ACHP with an opportunity to comment. Recent cases which have centered on applicability rather than factual situations (procedural instead of substantive questions) have demonstrated how effectively a project can be stalled indefinitely when the question of preservation is presented and finding an acceptable alternative to demolition. In Wisconsin Heritages Inc. v. Harris, the nonprofit corporation brought Section 106 action to prevent the demolition of buildings,deemed of historical and architectural value, located in urban renewal areas on several grounds. The reasons were: the alleged applicability of requirements of the National Housing Preservation Act. Executive Order issued to implement that act directing federal agencies to consult with the Advisory Council to assure that federal plans and programs contributed to the preservation and enhancement of these sites and of the National Environmental Policy Act. The Court held that the NHPA and the Executive Order were inapplicable because the historic structure in question was not listed on the National Register at the time the urban renewal agreement was signed. However, the Court granted an injunction on the grounds that the National Environmental Policy Act was applicable so long as some control existed over the remaining funds for demolition and an adequate environmental state had not been prepared. The section in NEPA that requires federal agencies to include all recommendations or reports on any major federal actions significantly affecting the quality of the human environment also applies to historic structure located within federally assisted urban renewal projects as long the federal agency remains meaningfully involved and HUD was still involved when the action was brought. The Penn Central decision appears to be based largely on interpretations of previously enacted federal legislation. This decision seems to have a greater impact at the state and local level and the New York City Landmarks Preservation Law may have been a model such legislation, as its zoning law for similar ordinances following Village of Euclid v. Ambler. Thus, the New York law warrants more careful examination because of its role as a standard bearer for the United States Supreme Court on its format. In the beginning, there was state enabling legislation expressing New York's public policy to preserve buildings and districts of special historical or aesthetic value and authorized the enactment by local government of ordinances to create the mechanism whereby reasonable restrictions could be imposed and implemented to perpetuate them. Thus enabled, New York City enacted its landmarks law. The New York City Landmarks Preservation Ordinance established a commission representative of the building professions and interested citizens: three architects, one historian, one city planner, one realtor, and a resident of each of the city's five boroughs. The mechanics of the law can be outlined as follows: Owners of properties given landmark designation by the commission must apply to the commission for a permit before altering or demolishing such designated structures, and to obtain the permit must show that the property as it exists cannot earn a net annual return of at least 6 percent of the assessed value; the net annual return is the excess of earned income over operating expenses excluding debt service and allowance (2 percent) for and reserves but including a specified allowance (2 percent) for depreciation. If the property is not that minimum amount, the commission may work out an alternative plan to achieve that standard including remission of real estate taxes-all, of course with the approval of the city's governing body, the Board of Estimate. As part of the permission process, owners of landmark properties may be allowed to transfer excess development rights to adjoining. In a recent transaction involving a proposed New York City office structure, such development rights were valued by the adjoining owner at several million dollars, primarily because it assured a view of Park Avenue for the adjacent office structure by precluding construction on the "landmark" site-in other words, not actually for increased development on its site which it had achieved in other ways, but to achieve a permanent easement of light and air for its own structure. This outline makes a couple of key points. First, permission to demolish or alter a historic structure must be granted. However, this statement specifically indicates that before such permission is granted, a building must demonstrated a rate of annual return of 6 percent. I don't believe I've seen this stipulation in either the in the Los Angeles Historic Preservation Ordinance or the one for the Village of Oak Park, Illinois. Second, historic property owners are allowed to transfer excess development rights to adjoining structures-i.e. transfer of development rights (TDR). A quick digression-I have to confess that this is something I should've been paying a bit more attention to in my Preservation Planning, Management, and Economics class. Anyway, what TDRs are is a property owner is allowed to transfer the air above the building-"air rights"- to the adjoining property for a a greater return on the profit. Here, it's used as an incentive for developers to preserve historic structures. The basic premise of New York City's preservation law, as well as others, is that historic and other landmark structures must be preserved by alternate means instead of simply demolishing them. This may have worked in previous decades when historic structure rehabilitation costs were lower and there people readily available who had the specialized skills necessary but not so much today. Further, public entities are given the task of encouraging preservation to private owners and users of buildings by providing services, standards, controls, and incentives. This implied that city budgets could not afford the demolition costs including the reduction of the tax base, even if that was not true, it would obviously be better to that theses buildings not be converted to cultural institutions supported by public funds. Not that this is a bad thing but you can't make every historic structure a museum or cultural center especially since urban populations are growing. So where are we now that the Supreme Court has spoken? Prior to the Court's involvement, state courts had sustained state landmark and historic district legislation through various approaches. For example, in 1931, Charleston, South Carolina, preserved its historic district through use of its zoning law. About a half century later, the United States Court of Appeals for the Fifth Circuit upheld, New Orleans' Vieux Carre ordinance to preserve the "tout ensemble" (see previous post on Maher v. New Orleans) of the French Quarter. The court cited this ordinance as a legitimate constitutional end using permissible means because, "the operations of the Vieux Carre commission satisfy the due process standards in that they provide reasonable legislative and practical guidance to, and control over, administrative decision making." In 1915 only about 100 municipal landmarks or historic district preservation ordinances existed; presently, there are literally thousands of such ordinances. What Penn Central accomplished is that it permitted landmark and historic district preservation to stand on its own merit as an appropriate use of police power, placing the burden of proof that the historic commission acted illegally or arbitrarily on the owner. So, one issue for the future is the question of "taking." The question is whether or not the historic preservation ordinance is a "taking" or permissible exercise of police power not compensable, has been resolved. Meaning, has a "taking" been justified thus requiring due compensation so stipulated under the Fourteenth Amendment or not? The Court conceded that they have frequently noticed whether a particular restriction would be rendered invalid by the government's failure to make just compensation caused by a "taking" that was essentially based on ad hoc factual research. In other words has actual fact be differentiated from opinion? In the Penn Central case, the justices may have reached a different decision if opinion outweighed fact. Thus, the constitutional question of a "taking" will remain a critical issue in litigation based on landmark designation, especially regarding whole districts, unless the Supreme Court can stem the tide as it did with zoning regulation cases. Second, there will continue to be serious procedural implications under state and local law by virtue of the National Register designation. For example, a developer seeking to build a commercial space, "as of right" under applicable building and zoning laws, maybe stall by procedural delays because the site is adjacent to a structure listed on on the National Register (CEQA, in California, or NEPA hearings and comments are the frequent cause). Real estate lawyers must be aware if they are representing owners who are potential sellers or buyer who are possible developers or simply owners of designated properties, that as a consequence of local ordinances, their clients will have an obligation to keep the exterior portion of their buildings in "good repair;" also that the buildings are burdened by a severe nonconsensual servitude that restricts demolition or future development. In simple language, historic preservation ordinances have the potential to infringe on a potential owner or developer's right to dispose of the property as they see fit or earn a living on it. It also opens the door to potential abuses by community groups and individuals who may or may not have any vested interest in preservation but simply want to "shake down" the owners and developers, as in the case of the proposed Downtown Los Angeles football stadium Farmer's Field. One of the unfortunate consequences of Penn Central is that may discourage distinguished architecture, whose design represents an outstanding example of a specific style. I can definitely see this one happening both literally and metaphorically as more corporations get involved in stadium building at the college and professional levels. Obviously, more needs to be done to improve landmark ordinances so that they don't become an undue burden on owners or developers. More also needs to be done to educate the general public regarding the desirability of landmark designation and historic district preservation as an enhancement of the quality of live and dispel some myths about preservation. Even more important, landmark conservation citizen groups and commissions must do more to relate municipal programs in cycling housing and revitalizing commercial areas to the objectives of historic and architectural preservation. Litigation involving denials of demolition permits will increase substantially and their final results could hinge on these efforts. One illustration, the New York Landmarks Conservancy, a private not-for-profit corporation dedicated to the preservation of and continuing use of landmark buildings, has actually assumed responsibilities of ownership or lease hold tenure and has successfully completed complicated real estate transactions to insure a building's preservation. The assumption of the conservancy that landmarks should just become museums and that the only practical means of preservation is to find new uses for the city's rich architectural heritage is find new use for the buildings. After all, "the greenest building is the one already built." The Conservancy purchased five properties on the historic Fraunces Tavern block in lower Manhattan from an owner who intended to demolish the early nineteenth century structures and turn it into a parking. Pave paradise put up a parking lot, Joni Mitchell. The organization then leased the buildings on a long term basis to a private developer who converted the buildings into residential and commercial uses in conformity with guidelines set by the Conservancy that preserve the historic character of the place. See my point about the green buildings. Taking a completely different approach than public regulation for landmark preservation, the National Conference of Commissioners on Uniform State Laws began to consider the possibilities of a Uniform Conservation and Historic Preservation Agreements Act. Instead of protecting the future of landmarks preservation ordinances, the landmark's future would be safeguarded through a voluntary private property owner's agreement, that would create an enforcement right in a charitable or governmental agency to enforce through action on contract such preservation. The reason for this interest is that current legal doctrine in many states would not support such contrats without appropriate statutory permission. Common law does not look favorably on these easements in totality, where there is no dominant tenement and the obvious donee of a privately created easement would be an historic trust or governmental entity. Thus a statue would be necessary in order to create important rights in such organizations which would obviously not have common law sanctioned relationship of "privity" with the donor of the easement and does not own "appurtenant property" required by common law to sustain the status that would come from the right to enforce restraints of the easement by and against strangers to the private contract transaction under which the easement was granted. I think my head just exploded from wonk overload. Seriously, a Uniform Conservation and Historic Preservation Agreement Act sounds(ed) like good idea but in the current realpolitik climate the chief battle cry against this would be "It's my property and I'll do what I want with it." Hence, easements need to be accompanied with some sort of real incentive for private owners to enter into such agreements. A ten or twenty percent tax credit is pretty minor when the commercial value of a property outweighs the benefit. Another issue would be is the mechanism of enforcement. How would the restraints of the easements be enforced? Through warnings, sanctions, something else? Why would a private property owner allow a charitable or governmental agency to come in and take over some or all of the property at all? Clearly, there are some attendant issues that need to be addressed. No one will be happy with whatever the solution(s) is(are) but the idea of a Uniform Conservation and Historic Preservation Agreement Act has some critical points that need attention. Additionally, there are some extremely significant policy question that need to be resolved before a Historic Preservation Agreement statute can enacted. The public policies that support the historic common law rules against long-term restraints on land need reexamination. How are privately enforced restraints on the future of real property adjusted so that they respond to the contemporary needs of the property. One serious policy question is whether intervention of any public agency is a necessary instrument to modify, release, or extinguish any privately created mechanism that would limit the change in use of a property over generations of ownership. If the appropriate purpose is no longer be served by a privately owned restraint on use and the conditions have change so much that it is clear that it is no longer in the public interest, should there be a mechanism other than the actions of the original parties to the easement contract or their successors in interest to extinguish control? The doctrine of "changed conditions" is a typical common law concept in ending property restrictions that no longer fill a valid or valuable purpose. Recording acts be a useful tool for control with the purpose of extinguishing "stale" restrictions. There are also issues of local property taxation that result from such agreements. A Historic Preservation Agreement could very well reduce the market value and the assessment for municipal taxes. Should legislation which authorizes private restrictive agreements of this kind also provide for changes in the real property tax laws corresponding to the changes already in the Internal Revenus Code with respect the deductibility of the value of such easements to governmental and charitable organizations? (Yes) As the kinks are worked out of the Historic Preservation Agreements Act, we can begin to see a meaningful relationship between this and Landmarks and Preservation Act, premised on public regulation of land use and development reflected in the Penn Central case.