Economics in Urban Conservation

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Economics in urban conservation

Economics in urban conservation Nathaniel Lichfield

The right of the University of Cambridge to print and sell all manner of books was granted by Henry VIII in 1534. The University has printed and published continuously since 1584.

Cambridge University Press Cambridge New York

New Rochelle

Melbourne

in association with Jerusalem Institute for Israel Studies

Sydney

CAMBRIDGE UNIVERSITY PRESS Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, Sao Paulo, Delhi Cambridge University Press The Edinburgh Building, Cambridge CB2 8RU, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521105309 © Cambridge University Press 1988 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 1988 This digitally printed version 2009 A catalogue record for this publication is available from the British Library Library of Congress Cataloguing in Publication data Lichfleld, Nathaniel. Economics in urban conservation/Nathaniel Lichfleld. p. cm. Bibliography. Includes index. ISBN 0 521 32851 9 1. Urban renewal — Economic aspects. 2. Cultural property, Protection of— Economic aspects. 3. Urban economics. 4. Architecture - Conservation and restoration. I. Mekhon Yarushalayia le-heker Yisra 'el. II. Title. III. Title: Urban conservation. HT170.L54 1988 3 3 3 . 7 7 - d e 19 88-2845 CIP ISBN 978-0-521-32851-7 hardback ISBN 978-0-521-10530-9 paperback

Contents List of diagrams, tables and plans

page xi

Preface

xiii

Acknowledgements

xv

Introduction

The evolution of conservation and its economics

1

Part I Planning and management in the conservation of the urban system Summary

Life cycle in the urban system 11 1 2 1 3 1 4 14 14 14 15 15 15 15 15 1 6 16 16 16 16 1 7 1 8 18 18

A concept of the urban system Interaction between people's activities and the physical stock The urban system as a resource Categorisation of urban resources 1 Natural 2 Human 3 Man-made Life cycle of urban resources 1 Overview 2 Natural 3 Human 4 Man-made Obsolescence, renewal and conservation in the life cycle of the built environment 1 Overview 2 Obsolescence 3 Renewal and conservation 4 Summary over the life cycle Why develop or conserve urban resources? Logic of conservation in the various categories of urban resources 1 Natural 2 Human

9

11 11 13 16 17 17 17 17 19 19 19 20 20 21 21 22 25 27 29 30 30 31

vi

Contents 1 8 3 Man-made 1 8 4 Overall

2

3

32 34

Planning and management of urban resources 2 • 1 From resource to property and commodity 2 1 1 Overview 2 1 2 The built environment as resource, property and commodity 2 2 What is management? 2 3 What is urban management? 2 4 Management for urban conservation 2 4 1 Focus 2 4 2 Natural resources 2 4 3 Human resources 2 4 4 Man-made 2 5 The process of planning and management for change 2 5 1 Change through development and conservation 2 5 2 The management process 2 5 3 Planning for management 2 5 4 Management in urban and regional planning 2 5 5 Management and planning

35 35 35

Planning for urban conservation 3 * 1 Role of planning in the evolution of the urban and regional system 3 1 1 The general planning process 3 1 2 Plan making 3 1 3 Plan implementation 3 1 4 Monitoring and review 3 2 Role of conservation in urban planning 3 3 Role of planning in deferring obsolescence 3 4 Role of planning in urban conservation

50

36 38 39 43 43 44 44 45 45 45 47 47 48 48

50 50 51 52 52 52 54 55

Part II Conservation of the cultural built heritage Summary 4

The nature of the cultural built heritage 4 1 Man's heritage 4 2 Proprietary rights in the heritage 4 3 The general and cultural heritage 4 4 The cultural built heritage 4 5 The CBH as property and commodity 4 6 Why conserve the cultural built heritage? 4 7 Conservation of the cultural built heritage as a special case of renewal 4 8 Property management for the conservation of the CBH Appendix 4.1 A description of the cultural and natural heritage Appendix4.2 Adescriptionof mo veable cultural property

61 63 63 64 65 66 67 68 69 71 73 75

Contents

vii

5

Identification and protection of the CBH 5 • 1 The issue 5 2 Content of inventory or list 5 2 1 What kind of artifact is to be included? 5 2 2 What are the criteria for inclusion or exclusion? 5 2 3 How to grade conservation quality? 5 3 Machinery for protection of list or inventory 5 3 1 What kind of listing mechanism? 5 4 The effects of listing 5 5 Securing permission to alter or demolish objects on the list

77 77 78 78 79 82 83 83 85 88

6

Management and planning in the conservation of the urban cultural heritage

91

6 6 6 6 6 6 6 6 6 6 6

Part III

1 2 3 4 4 4 5 6 7 8 9

Relation of planning and management Role of the CBH in urban planning Role of the cultural heritage in urban planning Plan making in the conservation of the CBH 1 Macro planning 2 Micro planning Plan implementation in the conservation of the CBH The conservation programme Project implementation in the conservation of the CBH Project execution Some planning and management questions in the conservation of the CBH

Economics in the management of the built environment 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7

105

Economics in urban conservation Introduction Summary

7

91 91 95 96 96 98 99 102 103 104

1 Conservation in economic life 1 1 What is economic life? 1 2 Economic life and conservation 2 Economics of proprietary interests in conservation 3 Economics in management for urban conservation 3 1 Natural resources 3 2 Human resources 3 3 Man-made resources 4 Economics decisions in the life cycle of the built environment 4 1 Introduction 4 2 The model over the life cycle 4 3 The model notation 5 Application of the model 5 1 Use of open land 5 2 Development on unbuilt land 5 3 Use of the built fabric 5 4 Economic obsolescence

113 114

117 117 117 119 120 122 122 122 123 124 124 124 125 127 127 128 130 131

viii

Contents 7 7 7 7 7 7 7 7 7 7 7

8

5 5 Rehabilitation 5 6 Redevelopment 5 7 Rehabilitation versus redevelopment 5 8 Heritage value 5 9 The private and public sector 5 10 Incidence of costs and benefits on property interests 6 The implications of borrowing money 7 Taking account of the future 8 Land use and value in the life cycle of the built environment 9 Life of property 10 Effect of planning control

Economics in the conservation of the CBH 8-1 8 2 8 3 8 3 8 3 8 3 8 3 8 3 8 4

9

The CBH as a resource The CBH as property Economics in the life cycle of the CBH 1 Economics in use 2 Economics of obsolescence 3 Economics of renewal 4 New uses for old 5 Financial aids to meet the viability shortfall Land use and land value in the life cycle of the CBH

Economics in planning for conservation of the CBH 9 • 1 The similarity and distinction of purpose in economics and planning 9 2 Planning and the market 9 3 Role of economist in urban and regional planning 9 4 Some economic principles in plan making for conservation of the CBH 9 5 Economic feasibility of plans for conservation of the CBH 9 6 Economic evaluation of plans for conservation of the CBH 9 7 Economics in the CBH conservation programme 9 8 Priorities in the conservation programme of CBH 9 9 Economics in project implementation

10

132 133 134 134 134 136 137 138 140 141 143

145 145 146 146 146 147 147 148 148 150

152 152 153 155 157 159 161 161 163 165

Valuation of the cultural built heritage

167

10 1 The issue 10 2 What is value? 10 3 What is being valued in the CBH ? 10 4 By whom is the valuation being made? 10-4-1 An individual 10 4-2 Agroup 10-4-3 Society 10 4 4 Government 10 5 Market value and the CBH 10 6 Approaches to valuing the CBH

167 167 168 170 170 171 172 174 175 176

Contents 10 7 Approaches to grading heritage quality in preparing the inventory/list 10 8 Role of economics in cultural valuation 10 9 Opportunity cost and the CBH 10 9 1 The concept 10 9 2 Private 10 9 3 Social 10 10 How can economics help in the social decision on conservation? 10 11 The valuation in its decision context 10 11 1 Approach 10 11 2 Valuing conservation quality for plan and project evaluation: worth whileness 10 11 3 Ranking of priority in conservation with given budget 10 11 4 Project implementation 11

ix 177 181 182 182 183 186 188 190 190 190 190 191

Screening of the inventory or list 1 1 1 The issue 1 1 2 Nature and purpose of the list 11 3 Screening the inventory 11 3 1 Prior consultation 11 3 2 Planning proposals 1 1 3 3 Economics 1 1 4 Economic criteria for development affecting heritage quality 1 1 4 1 The issue 1 1 4 2 The owner/developer 1 1 4 3 The community

192 192 192 194 194 194 195 196 196 198 199

12 Who benefits and who loses from conservation of the CBH?

201

12 12 12 12 12 12 12 12 12 12

1 2 3 4 5 5 5 5 6 7

The issue How to assess the true costs and benefits? Who benefits and who loses? The sectoral distribution of the costs and benefits Who should pay the cost? 1 The issue 2 Compensation 3 Betterment How much should be paid? - pricing for conservation Conservation and tourism

201 202 203 205 208 208 210 212 213 214

Part IV Selected tools of economic analysis for project evaluation Introductory

13

219

Financial impact: financial analysis

227

13 13 13 13

227 227 232 233

1 2 2 2

Context An illustration offinancialanalysis 1 Where the refurbishment is viable 2 Where the refurbishment is non-viable

x

14

15

Contents 13 2 3 Effect of taxation relief on financial viability 13 3 Social financial analysis 13 4 Illustration of social financial analysis

234 235 238

Economic impact: social cost benefit analysis

240

14 14 14 14

240 241 241 245

1 2 3 4

Context Origins of method Method and technique of SCB A The social rate of discount

Community impact: community impact analysis

249

15-1 15 2 15 3 15 4

249 250 251

15 15 15 15 15 15 15

5 6 6 6 6 6 6

Context Evolution of the method of PBSA/CIA Some features of CIE Concepts of efficiency, equity and trade off in community impact evaluation The method of CIE The method applied 1 The case 2 The options 3 The method in summary 4 The community impact analysis and evaluation 5 Conclusions on efficiency

252 255 256 256 260 260 262 276

Appendix 15 1 Selected published examples of planning balance sheet/ community impact studies 280

Part V Case studies in the economics of conservation of the CBH Summary

16 The case studies 16 1 Case study 1: Viability for occupation 16 2 Case study 2: The Royal Holloway Sanatorium, Virginia Water, Surrey 16 3 Case study 3: The Old Sha'arey Tsedek Hospital, Jerusalem 16 4 Case study 4: Covent Garden, London: redevelopment or conservation over an area 16 5 Conclusion for all cases Appendix 16 1 Criteria for listed building consent Notes Bibliography Index

287

289 289 291 300 303 314 315 317 332 354

Diagrams

1.1 1.2 1.3 2.1 9.1 10.1 10.2 10.3 12.1

Activity of people in a community through their life cycle page Way of life in community Obsolescence, renewal and conservation in the life cycle of urban fabric Development plan/operational plan relationships Assessing priori ties of conservation projects in fixed budget Evaluation of cultural quality in buildings by points scoring Private opportunity costs to proprietor of conservation of the heritage Social opportunity costs to community of conservation of the heritage Schematic model of circulation of spending on tourism related activity

12 13 28 42 164 179 185 187 214

Tables

1.1 The stock in the urban and regional system: past, present, or future 7.1 Maximum cost of improvement per dwelling as proportion of cost of new building 12.1 Distribution of benefits and costs of conservation IV. 1 Frame work for change visualised by a development project IV. 2 Difference between the tools for analysis of costs and benefits IV.3 Comparison of inputs of Department of Transport social cost-benefit analysis with community impact model 13.1 Development appraisal: refurbishment of listed building within constraints 13.2 Development appraisal: refurbishment with listed building consent outside constraints 13.3 Development appraisal: redevelopment 13.4 Effect on viability of listed building refurbishment (Table 13.1) on revised assumptions on significant items 13.5 Social financial analysis 15.1 Comparison of land uses in Sha'arey Tsedek: options A and B 15.2 Master table ofCIE showing source ofinput to Table 15.9 15.3 Framework for change: option A (rehabilitation) 15.4 Framework for change: option B (redevelopment)

14 136 206 220 224 225 228 229 230 231 236 260 261 263 264

xii 15.5 15.6 15.7 15.8 15.9 15.10 16.1 16.2 16.3 16.4 16.5 16.6 16.7

List of diagrams, tables and plans Impacts from project variables: option A (conservation) Impacts from project variables: option B (redevelopment) Community sectors and options in which they are involved Summary of impacts on completion of options A and B Evaluation of options (on completion) Conclusion on options from Table 15.9 (on completion) Royal Holloway Sanatorium: rehabilitation: financial viability of scheme (1): office/residential Royal Holloway Sanatorium: rehabilitation: financial viability of most profitable residential scheme (Y) Royal Holloway Sanatorium: evaluation of office/residential and residential options Royal Holloway Sanatorium: summary of evaluation in Table 16.3: O/R against R options Covent Garden: redevelopment: investment costs and returns on land transaction Covent Garden: redevelopment: annual surplus/deficit to parties on land transaction Covent Garden: comprehensive versus piecemeal redevelopment: a planning balance sheet appraisal

266 267 269 270 272 276 294 295 296 297 309 309 313

Plans

15.1 The old Sha'arey Tsedek Hospital: Jerusalem: location plan 15.2 The old Sha'arey Tsedek Hospital site: Jerusalem: rehabilitation scheme 15.3 The old Sha'arey Tsedek Hospital site: Jerusalem: redevelopment scheme 16.1 The Royal Holloway Sanatorium: Virginia Water: current block plan 16.2 Covent Garden, London: location plan 16.3 Covent Garden, London: redevelopment opportunity

257 258 259 292 304 306

Preface This book is a sequel of joint research in 1982-84 by the writer and Professor Joseph Schweid with a grant from the Jerusalem Institute for Israel Studies*. The Research Report, The Role of Economics in the Conservation of the Cultural Built Heritage: Policy Conclusions for Israel, was presented in English in four parts: I Planned Conservation of the Built Environment II Economics in the Conservation of the Built Environment III Two Jerusalem Case Studies IV Application to Israel: Principles, Practice and Procedures The Jerusalem Institute asked that the Report be published in two versions: in Hebrew for the Israeli audience and in English for Israel and abroad. Since the Israeli audience would be primarily concerned with Parts III and IV, these were highlighted in the Israeli version with the remainder being presented as summaries. This version, edited by Joseph Schweid, appeared under the title Conservation of the Built Heritage (Jerusalem: The Jerusalem Institute for Israel Studies, 1986). By the same token the English version required adaptation of the Research Report, in this instance the omission of Parts III and IV, and concentration on Parts I and II. In addition there was a further significant enlargement of scope. This arose from the experience of writing the Research Report, namely, that it was not practicable to discuss the economics of conservation without first presenting as a context the subject matter of conservation; and not practicable to present the conservation of the cultural built heritage without discussing as a context the conservation

* The Institute set up a Stealing Committee (Chairman, Professor Morris Hill) who helped us through successive drafts.

xiv

Preface

of the built heritage in general.* This approach is adopted here. But the general built heritage has been presented in greater depth, and the scope has been broadened beyond the general built heritage into 'urban conservation' as a whole, to take in also the national and human resource content of towns. In the process, considerable additional material has been added in relation to urban conservation, conservation of the cultural built heritage, and the economic aspects. These include four case studies in Chapter 16, one being derived from the Jerusalem case studies, with the others from consultancy practice in Britain. Thus the subject has been considerably broadened in scope since the initial research study, as shown in the following outline of contents. Part I sets the scene for urban conservation in general, including its management and planning. Part II sets the scene for conservation management and planning for the cultural built heritage, first showing its relation to the general cultural heritage, and then how it is identified, managed and planned. Part III introduces economics into the planning and management of urban conservation before going into depth on the economics of the conservation of the cultural built heritage. Part IV introduces four tools of economic analysis needed for applying the economics of Part III. Part V presents four case studies which demonstrate the use of the tools in Part IV and the conclusions that can be drawn from them for answering a series of relevant questions. This is the skeleton of the treatment of our theme. Its fleshing out is contained in the summary introducing each of the five parts so that the flavour of the book as a whole can be obtained from their prior perusal. * The 'cultural built heritage' (CBH) is used below to indicate that part of the built environment (the general built heritage, GBH) which is intended for protection and conservation. But, for the Israeli version, it was argued, the word 'heritage' itself is sufficient to make the distinction, for in popular usage it denotes that part of the past which is to be protected: in brief, 'cultural built heritage' and 'built heritage' can be taken as synonymous. But since this book deals, more with the general built heritage, it retains for contrast, 'cultural built heritage'.

Acknowledgements My thanks are due to many people, notably in Britain, Israel and Italy, from whom I have learned about conservation in work, lectures and discussions. In relation to this particular book my special thanks go to the following who have read the manuscript in draft and made comments which enabled me to improve the content: Donald Denman, Professor Emeritus in the Department of Land Economy, University of Cambridge; Sir Bernard Feilden, Conservation Architect; Luigi Fusco Girard, Professor in Department of Urban Economics, Faculty of Architecture, University of Naples; David Pearce, Professor of Economics, University College London; David Warren, Conservation Architect, English Heritage. Then come those with whom I have discussed at length particular aspects within the text, namely: Michael Beesley, Professor of Economics, Graduate School of Business Studies, London; Eric Cohen, Professor in Department of Sociology and Anthropology, The Hebrew University, Jerusalem; Almerico Realfonzo, Professor of Estimo, University of Bari; Joseph Schweid, Professor in Bezalel Academy of Art and Design, Jerusalem; Roberto Di Stefano, Professor, Head of School of Reconstruction of Monuments, University of Naples; Roger Suddards, Solicitor, Bradford. Then come those too numerous to mention, from whom I have learned, in discussion and in practice. In addition my thanks are due to my firm, Nathaniel Lichfield & Partners, in so many ways. To my partners, Geoffrey Smith and Dalia Lichfield, for their benign tolerance to my academic self-indulgence. To them and other colleagues, notably Nick Thompson, with whom I have worked on, and benefited from, our conservation studies. To Annabelle Disson for wordprocessing impeccable text in impeccable humour from the innumerable alterations I have imposed on her. To Sutchinda Rangsi for her elegant illustrations. To our librarians for their relentless pursuit of material and references.

xvi

Acknowledgements

Finally I wish to thank the following for permission to use illustrative material or text: Her Majesty's Stationery Office for Diagram 2.1, which is Crown copyright and reproduced with the permission of the Controller of Her Majesty's Stationery Office. The Minister of Supply and Services, Canada, for Diagram 10.1. The Jerusalem Institute of Israel Studies and Mr. Yaacov Allon for Plans 15.2 and 15.3. Hunter & Partners for Plan 16.1. The London Residuary Body for Plan No. 16.3. Pergamon Press for Table 16.7.

Introduction The evolution of conservation and its economics It would have been helpful, to author and reader alike, if our treatment of the subject could have been placed from the outset in some recognisable wider context, within which our particular approach could be pursued. But this is not so. The elements in the subject which are expressed in our title are in themselves diffuse and not clear cut, while the approach to and understanding of them have changed vastly. We therefore need to start with an Introduction which places them in some perspective from their evolution over this century. From this it will be apparent that the wider context touches upon great variety in our lives. This very variety means that the brief Introduction can be only sketchy. A guide to its further exploration is given in the footnotes and Bibliography. The scene for our detailed study of economics in conservation is broadly sketched out in Part I. From the various meanings of the term urban (1.1) we choose the most familiar: the parts of the earth's surface which are built up as opposed to rural and open. Within this we see not just bricks and mortar but also the areas left to nature, the people themselves and their mobile goods as well as the immobile bricks and mortar (1.4). But while this concept of the urban area has remained, its size, distribution and functioning has changed violently over the century (through change in transportation, communication, distribution of income and wealth, etc., leading to widespread and damaging obsolescence) (1.6). And with the change has grown the awareness of the need for conservation (1.8) and the role of management and planning in achieving it (Chapters 2 and 3). It is against this scene that we now consider the evolution of conservation and its economics.

2

Introduction

The modern conservation movement and its philosophy originated about the turn of the century, around two related but distinct fields which are pertinent to our theme: natural resources, largely in rural areas, and monuments and historic buildings, largely in urban areas. But while originating about much the same time, they have each since taken different paths. In the first, natural resource conservation has retained much of the focus of its United States origins,1 but has taken on additional dimensions since World War II in the concerns for conservation of the natural environment against pollution.2 In the second, the early limited essays have spread enormously beyond monuments and archaeology to buildings and objects of much more recent origin and also to extensive urban tracts, the 'conservation areas'. 3 But while this conservation of the historic parts of our towns has attained strength, conservation of the remainder has lagged behind. In its evolution, the movement has received stimuli from many sources. Very early on it became identified with the 'progressive political reform programme' of the United States,4 which is seeing its contemporary equivalent in the political movement of the 'greens', a movement which has become accepted in varying degrees by all parties. 5 Then there was the shock delivered by the Club of Rome sponsored studies which enlarged the conservation concern from limited areas to the global scale,6 and the United Nations Conference on the environment in 1972 which highlighted environmental pollution.7 The conservationists have met spirited resistance. 8 The controversy has crystallised into the searching and fundamental question of whether mankind can continue to pursue the growth ethic of the past two centuries or whether it must accept limitations on such growth, with its grim implications for the lagging development of huge areas and populations of the Third World, because of the potentially disastrous consequence to 'spaceship earth' and to mankind itself.9 With this huge growth in concern for 'conservation' there has been an enrichment in analysis and policy from a variety of sources. 10 Some are: technological/scientific/ecological, in respect of the impact of man's growth and development on nature; 11 ethical, which emphasises that the contradictions give rise to a need to adapt human values;12 aesthetic, which asks for amelioration of the horrors of ill-considered rural development, for prevention of demolition of historic buildings, and protests against 'modern architecture'; 13 social, which registers the impact of growth on society, the protest against comprehensive redevelopment and dislocation

Introduction

3

from the older neighbourhoods and against the erosion of established culture by tourists; 14 and economic, which argues that there is no black and white answer and offers a rationale for approaching a balance. 15 The emergence of this deeper and wider concern has been accompanied by the emergence not only of the conviction that countries individually and in combination ought to do something about the problems rather than drift, but also that they can do so with the post-World War II tools of government intervention and planning. 16 In practise this has led to friction at the three levels: national, regional and local. At each the conservation issues have become critical, at for example the national level in terms of new development and rural conservation; at the regional level in terms of equity in spatial balance; and at the local level in terms of protection of amenity and environment. And issues are being seen differently in the First, Second and Third Worlds. In the First, the balance recognises the high average levels of prosperity and the history of damage which has been inflicted in reaching it through the first industrial revolution. In the Second, the balance is seen in the need to increase development and growth in order to improve distribution; in the Third, there is seen the need for development to catch up, but hesitation in following the brutal exploitation of the first world in its path to development. Within all this there is a fundamental question of 'growth or no growth' 17 and given the wish to control growth, how to do so. 18 Despite all the dramatic and traumatic changes, the term 'conservation', coined in the early days of the United States movement, 19 has persisted. It is an umbrella word covering both the rural and urban scene. But it clearly means something very different from its origin, as the following indicates.20 The concept of conservation can therefore be visualised as an amalgam of interacting forces which are embodied in the viewpoints of a number of disciplines. There is no central focus to this philosophy, no concrete issue around which it coalesces and becomes operational. Rather it is an ambiguous vaguely conceived notion which reflects great disparities in the views of its proponents. Furthermore, it is subject to subtle yet important shifts in emphasis over time, which further reduce the clarity and consistency of its expression. So far we have considered only the 'conservation' of our title and we now come to the 'economic'. This aspect has also been affected by the search to find the intellectual basis for conservation, in particular in relation to natural resources, in its analytical, descriptive and also policy aspects. 21 Stimulated in part by this search, there have been significant changes in the

4

Introduction

content of economics over this century, in the need to comprehend many new phenomena apart from conservation. Again a number of strands can be seen of which a few are noted. At the turn of the century, economics was dominated by attention to the private sector and its market, and it was only in the thirties, regarded as the turning point in economic analysis,22 that public sector economics received its major stimulus leading to its considerable present status. 23 One significant and far reaching element in this economics has been the recognition and treatment of 'externalities', also called 'diseconomies', 'side effects' and 'spillovers', which have attempted to apply to social (non-market) costs and benefits the analytical treatment accorded to private costs and benefits of the market place. 24 Linked with this has been the need to consider how choice is to be made by the public sector where because of externalities reliance cannot be placed on the market. 25 With the growth of government's role since World War I, greatly stimulated by World War II, there is the further controversy over how government can and should introduce and manage economic policy.26 There is some doubt as to whether it is possible or proper for the economist to go beyond 'positive' descriptions of the working of the economy (what is, was or will be, independent of any particular ethical position or normative judgement) in order to enter into normative economics, i.e. advice on what ought to be and the prescription of policy.27 Within the latter, some think it inevitable and desirable that values should be treated with care. 28 Some go beyond this to argue that it is indeed values (be they of government or the economist) which in themselves influence the content of economics.29 Then amongst those who are in favour of economists assisting with normative or regulative policies, there are the controversies over which policies and how to implement them. Here the controversy ranges from those who as a reaction against dirigisme are reluctant to tamper with the market beyond what is essential30 and those who deprecate the market in favour of centralised state planning. 31 And between the two are those who consider the way forward to be the management of a mixed economy32 and the greater use of markets in a socialist economy.33 Within this changing scene there has been uneven development in the economics relating to our theme. Again, natural, rural and environmental resources have received very rich and advanced treatment. 34 But, historic buildings apart, the topic of urban conservation in general, in urban planning and management, has advanced only modestly,35 although one

Introduction

5

aspect, the management of large urban estates comprising historic buildings, was pioneered early in Britain and has become sophisticated.36 In general, the economic aspects have lagged behind, providing only for the scattered and partial treatment. One reason has been the sub-division of the subject between different academic and practitioner skills: mainstream economics; urban economics; land economics; land economy, management and administration; and financial appraisal.37 While each skill could supplement the other they have in general been pursued without adequate mutual enrichment.

Parti Planning and management in the conservation of the urban system

Planning and management in conservation

Summary Urban conservation aims to restrain the rate of change in the urban system (1.7) which embraces the regional systems within which it functions, with a view to achieving a better balance between conservation and development than would otherwise prevail. To assist our understanding of how to do so leads us to formulate a concept of the urban system (1.1) and how this changes through the interaction between people's activities and the physical stock (1.2). In this the urban system is seen as a resource to satisfy human needs, wants and desires (1.3). The resource can be categorised into three interacting components: natural, human and man-made (1.4). It is in relation to each of these that the life cycle is sketched out (1.5) and then discussed in greater depth in respect of the man-made fabric with which we are primarily concerned (1.6). This leads to the general question of why we develop or conserve urban resources (1.7) and to taking into depth the logic of conservation of the three components (1.8). If a better balance is to be kept between conservation and development there needs to be management of urban resources (Chapter 2). But since management is a function of the proprietary interest in a resource, controlled by the manager on behalf of the owner, we start with a description of the relationship between resource, property and commodity (2.1). This leads to the discussion of the nature of management in general (2.2) and then to the question: what is urban management (2.3) leading to the focus of the study, management for urban conservation (2.4). We then enter into the process of planning and management for change, bringing out the relationship between the two (2.5). Having seen the role of management we next concentrate on planning, not for all elements in the urban system but for those relating to its conservation (Chapter 3). This requires an introduction of the general role of planning in the evolution of the urban and regional system (3.1) leading to the role of conservation in urban planning (3.2). We then consider how planning can help in urban conservation, first in terms of deferring urban obsolescence (3.3) and then in advancing conservation (3.4).

1

1.1

Life cycle in the urban system

A concept of the urban system1

We use the term 'urban' to convey a simple image: the familiar concentration of bricks and mortar, varying enormously in scale from the village to the metropolis and conurbation, which contrasts with the rural. But the image is over simple. Webber has pointed out a second meaning: the relatively sophisticated urban life-style which can be obtained in the rural area by those having a high, i.e. urban, standard of living (television, radio, cars, private planes, etc.). 2 There is a further dimension to the term which is significant for us. No urban area, except perhaps the remotest jungle-bound or desert village, is self-contained in that only residents use it. In contrast, the typical town is used in part by residents and in part by others who visit for various activities (work, education, recreation, etc.); and some of the town's residents will travel outside for their activities (work, recreation, etc.). Thus any town can be defined in relation to this functional criss-crossing of 'urban activities'. This definition in itself must bring in the 'regional system' in which the town functions. In this sense, the 'urban' embraces the 'regional' system within which it functions. Any town or region thus comprises a diverse array of physical elements (buildings of all kinds and spaces between them, parks, roads, etc.) and of diverse human activities (shopping, production, recreation, etc.). In the diversity there is some order, for otherwise people would not get to work on time, they would not have the milk bottle on the doorstep each morning, and they would not meet in groups for religion, culture, etc. Diagrams 1.1 and 1.2 give one version of this order. Within any community, from village to metropolis, each individual will participate in activities according to his/her stage in the life cycle (Diagram 1.1). Some of the activities will be purely individual, others as members of

12

Economics in urban conservation ACTIVITIES

PEOPLE AS INDIVIDUALS

HOME WORK EDUCATION RECREATION ENTERTAINMENT SHOPPING ETC.

Diagram 1.1 Activity of people in a community through their life cycle families and others as members of wider ranging groups (clubs, associations, youth organisations, etc.). In sum the activities make up the way of life in the community, be it limited or full. A concept of how people achieve a particular way of life within the external constraints over which they have little control, such as the economy, national policies, etc., is shown in Diagram 1.2, by reference to the box numbers. At the top of the diagram are the people (1), not at any one moment in time but as they change over their life cycle. People's activities (2) require their own institutions (organisations and style of management) (5). The nature of such institutions has implications for the way of life, ranging from highly centralised direction to considerable freedom for initiative, innovation, self-management, etc. People engaged in these activities require an appropriate physical environment, both natural and man-made (3) with its institutions for organisation and management (6). This will interact with the activities (2). Good housing will help good family living. The absence of schools and community centres will stultify education and recreation. Correspondingly, the management of the activities (5) and environment (6) will interact with government (7). All these influences will affect the way of life and thereby people's perception of the quality of that life (8). They are concerned not simply with what is being done but how it is done. In this a critical factor is the way in which that life is managed (5 and 6) and governed (7). The greater the degree of self-management, the greater the likelihood of people responding

Life cycle in the urban system

13

PEOPLE THROUGH LIFE CYCLE

ACTIVITIES

INTERACTION

PHYSICAL ENVIRONMENT

MANAGEMENT OF ACTIVITIES

GOVERNMENT

MANAGEMENT OF ENVIRONMENT

WAY OF LIFE OF DIFFERING QUALITY

Diagram 1.2 Way of life in community quickly to external changes and adopting solutions which suit their own perception of their needs and values. A high standard of life under a dictatorship is quite different in quality from a poor standard of life with freedom in law and self-management in an open democracy. A high standard of housing and landscaping can be coupled with a low level of personal fulfilment and a poor quality of social relationships. In essence a high quality of life gives people, whether as individuals, in families or groups, the opportunity to fulfil themselves as human beings. For this they need not only an appropriate material standard of life but also appropriate management of their environment in all spheres (social, economic, institutional, physical) and appropriate administration by central and local government.

1.2

Interaction between people's activities and the physical stock

In Diagram 1.2 is shown the interaction between people's activity and their physical environment in the urban system. In this section we amplify that interaction.

14

Economics in urban conservation

Table 1.1 The stock in the urban and regional system: past, present, or future

Physical elements

Supply Demand Physical stock Flow of activities Natural Man-made Man-made resources Fabric moveables Producers Consumers (Built Environment)

1 Human population 2 Natural resources Land, water, minerals, etc. Fauna Flora Air Sun Rain 3 Utilities infrastructure Gas Electricity Water/sewerage, etc. 4 Transportation Train Bus Car Cycle Foot Parking (various) 5 Telecommunications Telephone Radio Television Cable 6 Buildings & sites Residential Industrial Commercial Shopping Administrative Recreation/leisure Educational 7 Open spaces City-wide District Neighbourhood

X

X

x

X

X

x x x x x

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

x

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

Life cycle in the urban system

15

Table 1.1 shows a representation of the urban system which is suitable for our purpose. It is made up on the one hand of the supply of physical stock and on the other of the human population who in their various activities (work, recreation, education, etc.) exercise the demand on that stock. The physical stock can be divided into: natural resources and the built environment (fabric and moveables). The former comprise the land (water, minerals, etc.), the product of the land (fauna andflora)and the life giving air, sun, rain, etc. The latter comprises the infrastructure in utility services (water, sewerage, gas, electricity, etc.) on which the utilisation of the buildings and places depend; the buildings and open places which are used for residential purposes on the one hand (homes, hotels, barracks, etc.) and for social activities on the other (work, education, leisure, recreation, etc.); the means of transportation between buildings used for these various purposes (private automobile, buses, trains, etc.); and also in substitute, the means of telecommunication between them (telephone, radio, television, etc.). The activities take place within the framework of Diagrams 1.1 and 1.2. There is a flow of people with their activities, from within the town and surrounding area, which uses this physical stock as producers and consumers; for part of the time people enjoy their dwellings (homes, hotels, etc.) and for part of the time they are engaged in social activities (of work, recreation, leisure, education, etc.). As linkages between the activities there are the means of transportation and communication. The situation at any moment in time, as shown in Table 1.1, changes through the interaction between the physical stock and human demands on that stock, growth or decline in the numbers of population and their requirements for work, etc. (Diagram 1.1) will give rise to growth or decline in the numbers of dwellings, work places, etc. which are needed. These changes will come about not only from forces within an urban area but also from outside, in the particular region supporting a particular urban area, or in the wider system of urban areas of which the particular urban area is part. Conversely, the availability or non-availability of a stock of man-made fabric of various kinds will attract to itself or deny human activities, as a stimulant or a constraint to socio-economic life. Thus it is through this interaction of the man-made fabric and human activities that cities, towns and villages change, grow and decline. The urban fabric tends to last a long time (varying from decades to centuries) owing to the relative durability of construction materials. By contrast, human activities which have to be accommodated within the

16

Economics in urban conservation

fabric can change much more rapidly (e.g. the size of families, modes of production, abandonment of cinemas for television, dislocation through war or earthquake). Thus changes in human activities will tend in the first instance to be accommodated within the existing urban fabric, adapted as appropriate through refurbishment or other kinds of renewal, perhaps for a brief time and perhaps over a long period. At that time the physical stock reflects the then current demands on it. But it may not do so later, with changes in location of activities or in means of accessibility of people to the physical stock. Beyond a certain point in time the interaction cannot be quantitatively accommodated in the existing or adapted urban fabric, giving rise to the need for new physical stock on open land, either infill within the urban fabric or more commonly on its edge, which we call new urbanisation. The adaptation of the current stock and the new development are in competition with each other in satisfying the common need for the matching of the fabric to contemporary requirements. The competition is not even, for the provision of new stock on open land is generally easier than renewal, so giving rise to a basic issue in urban conservation: the syphoning of demand from the established fabric to open land.

1.3

The urban system as a resource

Diagram 1.2 shows how the urban area provides a foundation for a people's way and quality of life throughout their life cycles. Thus the urban system can be regarded as a resource^ in that it potentially provides the means to produce goods and services for consumption which can favourably satisfy human need, want or desire. 4 More precisely, the resource has characteristics or attributes, objective properties which are relevant to consumer choice, which provide consumers with the means of reaching these objectives.5 The activity can be for production or consumption, the latter relating not only to material goods and services (standard of life) but also to psychological, emotional and religious experiences (quality of life). To people in a town other people can also be considered as a resource. The existence of the other sex leads to friendship, cohabitation and marriage; the existence of a group devoted to mountaineering can attract other people to this activity, so adding to their satisfaction from participatory leisure.

Life cycle in the urban system 1.4

17

Categorisation of urban resources

The preceding shows that the urban resource available to people has three components: natural, man-made and human. 1.4.1

Natural

These are derived from nature or, as many believe, from God, although man has often adapted them by 'improvement', in drainage, etc. Depending on the objective, natural resources can be categorised in a number of ways.6 Since we are primarily concerned with conservation, our categorisation relates to renewability of stock rather than other attributes: (a) exhaustible and non-renewable (irreplaceable): land as space, topography, landscape, minerals; (b) exhaustible but renewable: vegetation, wild life animals, water in place, soils; (c) non-exhaustible but pollutable, when they are 'renewable5 by removing the pollutants: sun, air, rain, climate. The levels of exhaustion, renewal and pollution is affected by the management of the stock in terms of its flow.

1.4.2

Human

There is little need here to dwell on the human resource except to note the obvious. As a human animal, man is comparable to natural resources which are 'exhaustible but renewable'. As with other animals, the exhaustibility comes for individuals from death but the species is renewable through birth of others. People as a resource have great variety in their characteristics, derived from the interaction of nature (innate) and nurture (acquired). From the former might come qualities of character, personality, intelligence, etc. But in contrast to other animals, the human has a long learning curve; he acquires much more from nurture, for example as a growing child from the accumulated reservoir of knowledge, technology, ethics, etc. of human society. 1.4.3

Man-made

In the urban area this comprises what is called the built environment (Table 1.1) made up of the built fabric which is attached to the land (including

18

Economics in urban conservation

space around which is used with the fabric, the roads, utility services, etc.) and the moveables which are not (motor cars, clothes, furniture, etc.), being made in particular localities and transported to their place of use/consumption. The land apart, these resources clearly come under the category of exhaustible but renewable. The immoveables comprise a special kind of resource as the following brings out: 7 1 It is man-made, as a result of the production process in the building and civil engineering industry. 2 It has a terminable (though lengthy) life compared with the land itself, which is non-exhaustible as building sites. 3 During its life it is attached to the 'land unit' of which it forms part. This is defined spatially (for definition in terms of property see 2.2) and can therefore be adjusted in extent during the life of the property. By being joined to the relevant 'land unit' the man-made resource enjoys, during its life, or location on the site if mobile, the unique qualities attaching to that particular parcel of land (its location, linkage with surrounding land, soil, slope, orientation, etc.). 4 Over the joint life, the resource will produce a flow of services for one or other kind of urban activity. The services can be for production or consumption, or intermediate in both respects (the source of raw materials for a factory or retailing food for consumption at home or in restaurants). 5 The services need not be constant (in kind, in quantity or quality) throughout the life of the joint product, for there can be continuing adaptation to contemporary needs. 6 During the life, any particular kind of service will fluctuate through obsolescence (1.6). This can be in absolute terms (for example, the difficulty of running a hotel with a leaking roof); or temporary (a house past which a new road under construction undermines the residential amenity). 7 Its services can continue only for the life of the man-made fabric. Should this life come to an end (e.g. overnight through an earthquake or slowly through physical deterioration) the services will be terminated. 8 During the life of the joint product the associated 'land unit' is inhibited from any other use. 9 All the while the joint product is being used for some urban

Life cycle in the urban system

19

activity there will be avoided the need to enter on fresh land to duplicate that particular activity. Coming to 'moveables', they are essentially an aid to the use and enjoyment of the 'immoveables'. As such they are not part of the joint product except where they are 'fixtures' (the plant and machinery built into the structure) as opposed to 'fittings', furniture, etc. Fixtures take on the characteristics of the immoveable to which they are attached. Fittings do not.

1.5.

1.5.1

Life cycle of urban resources

Overview

From what has been said above it is apparent that most urban resources have limited life and go through life cycles from inception to exhaustion. But the nature of the life cycle differs as between various resources as we now bring out. 1.5.2

Natural

Prior to the intervention of man, natural resources would spell out their lives on the dictates of nature. The exhaustible but non-renewable (irreplaceable) would continue indefinitely; the exhaustible but renewable would follow paths dictated by ecology; and the non-exhaustible might be pollutible (e.g. earthquake, flood). Urbanisation clearly displaces natural resources, which before the man-made development could be found in the primal state, e.g. Brasilia in the natural forest. But the urbanisation will not necessarily displace them completely. If properly planned it will leave a residue as part of the urban resource: open space with its vegetation and animals, water with its plant life and fish, soils for gardens, etc. And if properly managed new 'natural' resources can be created, e.g. an amenity lake in a worked out gravel pit, making new landscapes, urban wildlife parks. But some natural resources must disappear as a result of the urbanisation, as for example soils with their vegetation and insect life which become building sites. They could be reclaimed (greened as opposed to renewed) once the urban activity ceases, as in the gold and silver shanty towns of former mining exploitation, or following open cast coal workings or land made derelict through obsolete industrial plant and buildings.

20

Economics in urban conservation

Certain natural resources will not be displaced in this way: the nonexhaustible sun, air, rain and climate. But urbanisation could and normally does give rise to their pollution, to a lesser or greater degree. Rain can become acid. Air can be assailed by impurities from traffic combustion and noise. In extreme cases conditions of atmospheric inversion can lead to 'smog5 with its irritation to eyes and throat.

1.5.3

Human

The life cycle of human beings is clearly more standardised than that of the diverse natural resources. Generally speaking there is the allotted span of three score years and ten. But while life expectancy has scarcely increased over this century for those over forty years old, the proportion of people dying before reaching seventy has fallen considerably. In brief, improved medical services significantly affect morbidity but not mortality. 8 There is also standardisation over the life cycle itself, as described in Shakespeare's seven ages of man. 9 But while this is reasonably uniform for lives of common duration, the life cycle of particular individuals varies enormously. There is the waste of the stillborn baby or cot death. There are the young combatants cut down in their prime in wars, and babies or the elderly equally cut down when the war is carried to the civilians. There are the random interruptions by death through traffic accidents, disease, terrorism, etc. The life cycle just indicated for man as the human animal must necessarily apply to the attributes acquired by any individual as a result of both nature and nurture. But such attributes can also have a life cycle of their own, independent of the morbidity or mortality of the individual who carries them. A culture can be throttled and terminated under the heel of dictatorship or foreign conquest and oppression; or more benignly, through the absence of funds and institutions to keep it alive. 1.5.4

Man-made

Moveables tend to have a life cycle of steady deterioration of physical quality (the wearing out of clothes and furniture) or through functional obsolescence, whether planned (the notorious light-bulb) 10 or unplanned (the main frame computer displaced by the micro). As to the latter, a striking contradiction is that at a time of rapid change the more advanced the technology the more speedy the unplanned obsolescence.

Life cycle in the urban system

21

This kind of life cycle is echoed in the immoveable built environment (1.4.3) with which we are here more concerned, and on which more detail is now given.

1.6

1.6.1

Obsolescence, renewal and conservation in the life cycle of the built environment

Overview

The built environment typically comes into existence on open land on the edge of a town, which is used for some form of agriculture, or perhaps some transition between agricultural and urban use (for the parking of cars, storage of materials, etc.). Then the earlier use is displaced so that vacant land becomes a development site. On completion, the first life cycle of the built fabric starts, with a use which is associated with the purpose for which it was designed (dwellings, manufacturing, retailing, etc.). In the nature of the material typically used for the urban fabric its life tends to be long, exceptions being: the cane huts of an African village, tins and board of a Latin American squatter or the readily demountable tents of the nomadic Arab. This apart, the life will vary: relatively short (the ten years design life of 'temporary housing'), or lasting over centuries (the monumental palazza of medieval Italy). But whether the life be short or long, in due course the built fabric itself calls for replacement by new fabric (in the process we call reconstruction or redevelopment). Over this life the use and the conditions of the fabric, as a whole or in its separate parts, or within parts, do not remain constant. Maintenance and renovation lengthens physical life but after a certain point, before it reaches 'exhaustion', the fabric becomes 'obsolescent' (1.6.2). Then some form of renewal (in the form of 'rehabilitation or remodelling') is carried out, enabling the fabric to enter a new stage of life. This process will be repeated, once or more, before the degree of obsolescence is such that a different line of renewal takes place, that of redevelopment, the replacement of the fabric by new construction, for a similar or different use. This is the beginning of a life of new built fabric on that site, the second life cycle on the original site. But it could be that instead of 'renewal' taking place at the stage indicated there is some resistance because of the objectives of conservation

22

Economics in urban conservation

(1.7). In this case the process of renewal, and the uses which would flow from the works of construction, would be different. We now amplify in turn each of the three processes just described, namely obsolescence, renewal and conservation. In so doing we leave for later the economic aspects (Chapter 7).

1.6.2

Obsolescence

When a part of the built fabric is newly completed it must be suited to the activities of contemporary society as seen by contemporary eyes rather than the future or past (1.2); otherwise it would fail to attract the generality of occupiers or purchasers, being too 'dated' or too 'advanced'. This is reflected in the typical lending policy of financing institutions which is conservative, wishing to protect its loans in the 'resale value', and so does not favour developers and architects who deliberately aim for a minority market, which is ahead of or behind the times. The built fabric lasts a long time during which there can be many changes in contemporary needs. It follows that during its life the fabric will appear as no longer suited to the later contemporary eyes. Clearly the mismatch will not be uniform between all parts of the fabric, even of a particular building (e.g. walls and electrical services), and certainly not throughout the town. And it will be perceived differently by different generations. Thus in any moment of time there will be varying degrees of what will be perceived by occupiers as 'obsolescence' in buildings, that is approaching the 'obsolete' when they have become 'completely useless with respect to all uses that they might be called upon to support'. 11 Thus 'obsolescence' is a relative term with regard to the terminal state, the 'obsolete', which may never be reached. Obsolescence is an elusive term. Following a valuable review of concepts from 1917 to 196912 the authors conclude that while the ' . . . comprehensive notion of obsolescence is becoming established at a general conceptual level there is no integrated theory on which to build'. They then proceed to build a model for housing obsolescence.13 For our purpose we find it more useful to use one of the concepts in the review just mentioned because it was devised for conservation.14 In this concept, the state of obsolescence of the built fabric at any particular time can be seen from a survey of each of four elements, which are independent of each other but also interdependent; they do not include economic obsolescence, which is introduced below (7.5.4).

Life cycle in the urban system

23

Physical or structural deterioration.15 The fabric has deteriorated through time, weather, earth movement, traffic vibration, poor maintenance, etc. so that it needs repair and improvement beyond that offered by normal ongoing maintenance. Otherwise the physical condition interferes with occupation. Functional quality. The fabric is no longer suited for the function for which it was designed, or is used, in accordance with contemporary standards or requirements of the occupier or potential occupiers. This inadequacy can relate to the fabric itself: the hotel which is not offering adequate hot water, central heating, lifts to upper floors, etc. or, more dramatically, to the recent office buildings made obsolete through not having modern telecommunication facilities; to the recently and expensively built trading floor of the London Stock Exchange made superfluous by change in function of brokers and jobbers and the use of computer terminals in dispersed offices; or the nuclear power station which could be closed down in the aftermath of the Chernobyl power station accident. The obsolescence could arise from external factors on which the function of the fabric relies (inadequate car parking on site and the surrounding streets, or difficulties of access through traffic congestion). This unsuitability can arise also institutionally through the supply side. Examples here are by 'legal obsolescence',16 the introduction of new standards by legislation, administrative decision, etc.; or 'lease obsolescence',17 or 'landlord and tenant obsolescence',18 where the parties find that their relationship affects the use they would like to make of the property. Locational change. When originally built the location was presumably decided in relation to the links with the surroundings, in terms of accessibility to other uses, transportation, etc. It is the change here which could introduce the locational obsolescence, as where shops were built around a railway station or a bus terminal which has become defunct, or a rural population leaves the land for the towns and no longer has use for the village church which was built to serve them. Environmental unsuitability.19 The human, social, economic or natural environment has changed, so making the fabric less suitable in contemporary eyes for the needs it served. Examples abound in the inner areas of our towns where air pollution, noise, vibration, etc. makes unattractive the occupation of dwellings erected in former times; or where the social change

24

Economics in urban conservation

in the population groups, income levels, mores, etc. means less attraction to former occupiers. An obsolescence survey of the four elements shows the stage of 'current obsolescence' at any particular time. 20 In this, it follows from the above, that the degree of obsolescence under the four heads will not be uniform for any one building. A functionally and environmentally obsolete electricity generating station could have low structural deterioration and indeed represent a major terminal cost in its removal. And the degree of obsolescence will not be uniform within any one head. The mechanical services of a building could be obsolete long before the walls and foundations. But it does not follow that the rate of obsolescence over the years will be uniform: functional obsolescence clearly speeds up at times of rapid technological innovation. Nor does it follow that the degree of obsolescence in later years will be on a continuing downward curve. The kind of changes which have produced the mismatch will continue, and the later survey could show less rather than more obsolescence. An example is the change in attitude of commuters as commuting times and costs grow, so that they begin to place more value on location nearer work place, etc. and less value on the environment of the dwellings. The change in their 'trade off will lead them to seek to live in the inner area rather than the suburbs. The result is less locational and environmental obsolescence in the inner city. Or conversely, changes in technology, which enable former city centre workers to operate from rural areas with the use of computer linkages, could increase locational obsolescence in central city offices and give rise to office values in remote towns and villages. All these causes of obsolescence could clearly be influenced by government action, of one kind or another. For example: physical: stipulating minimum standards in new construction will defer obsolescence while the imposition of rent control (reducing the prospects of repairs by the landlords) will advance it; functional: imposition of standards in planning control over the internal and external layout of new developments could defer obsolescence, but could advance it where there is restriction on forward looking design which proves to be acceptable in the future; locational: planning controls which tend to ensure that new development is well located in relation to its needs will clearly defer obsolescence;

Life cycle in the urban system

25

environmental: environmental control will defer obsolescence through nuisance by ameliorating poor conditions as they arise. As the preceding examples show, as the mismatch develops between the services offered by the fabric (the supply) and the needs seen through contemporary eyes (the demand), there will be adjustment by the users of the fabric. Dwellings which lose their attractions through obsolescence will also lose their rental value. Should they be offered at lower rents then they will attract poorer people, to whom the attraction of lower rents offsets the disadvantage of obsolescence in the fabric, in what is called the filtering down process.21 Obsolete offices will in the same way attract businesses where profit margins are low, and to whom therefore the poorer premises at lower rents will be acceptable. Obsolete areas will attract those in society who are at the lower ends of the socio-economic scale, typically 'the underprivileged'. From this it follows that a measure of obsolescence can also be obtained by social survey of the occupiers since there will be some correlation between socio-economic levels and degrees of obsolescence.22

1.6.3

Renewal and conservation

As the obsolescence grows in the fabric there emerges the question: what should be done about the mismatch? It can either be left, in the knowledge that while it will grow in the physical aspects it might not in the others; or some action could be taken to retard or halt its growth in one or more of the four constituents. This action to cope with actual or potential obsolescence, ranging from varying degrees of amelioration in the existing fabric to its complete replacement, we call 'urban renewal'. 23 Its nature and degree is clearly influenced by the kind of obsolescence. A building which is well constructed or maintained will require less work in rehabilitation than one which is not; as will a building which is contingency designed with an eye to possible prospective change of function, that is with a 'loose fit, long life, low energy'. 24 A building which is very well constructed could be costly to demolish (e.g. an atomic power station). Since any renewal decision implies a commitment of economic resources, such factors are accordingly brought into the decision to review via economic analysis. To this we turn below (7.5). Since the mismatch has its source in either the urban fabric and its environment, or the change in activities in the fabric (1.2), the renewal can stem from either end. At the first end, the fabric is adapted to contemporary requirements,

26

Economics in urban conservation

either by using the existing structure, including by extension or reduction, as a base for adaptation, or by sweeping it away for replacement (redevelopment) (1.6.1). In the former the work can be tackled in many different ways.25 For our purpose, the following is adopted; it was devised for conserving the cultural built heritage but can be used for renewal generally outside redevelopment,26 so showing how conservation can be regarded as a special case of renewal (4.7): (1) prevention of deterioration (indirect conservation): by for example a sound maintenance programme and controlling environmental pollution; (2) preservation: keeping the object in its existing state of repair to prevent further decay; (3) consolidation (direct conservation): adding or applying supportive materials into the actual fabric in order to ensure its continued durability and structural integrity; (4) restoration: reviving the original concept, either or both in relation to the fabric or use (also called restitution); (5) rehabilitation: adapting the building to a contemporary use which will be capable of sustaining it (also called reconditioning, renovation, remodelling, adaptive use); (6) reproduction: copying an existing artifact in order to replace some missing or decaying parts; or in extreme circumstances moving the object to a more suitable environment; (7) reconstruction: rebuilding anew in imitation of the old, as necessitated by disasters such as fire, earthquake or war. The reconstruction could take place on the same site or in extreme cases, another. Some interventions are more capable of tackling the first two kinds of obsolescence (physical/structural by repair and maintenance or functional by internal adaptation) than the latter (locational or environmental) where there clearly are stricter limits on what can be done. The demise of shops near the defunct railway station can hardly be remedied without replacing the attraction of the former station; retarding residential obsolescence by change in the physical environment is difficult, but reduction of air pollution or noise less so; change in the social mores of neighbours is particularly difficult. At the second, human activity end, the renewal can arise from changes in occupation, with or without a significant amount of structural works. Clear examples are new uses or activities replacing the former ones (i.e. 'new uses

Life cycle in the urban system

27

for old') (4.8); or the kind of use or activity remaining with the kind of people in the occupation changing. Where the new occupiers have higher incomes there is 'gentrification'. Or the reverse could take place, as where part of a large house occupied by a high income family in war-time was 'requisitioned' by government in order to house families which were made homeless through bombing. 1.6.4

Summary over the life cycle

The process of change over the life cycle is clearly both complex and individual for any part of the built environment. And the process in any particular part will affect others, as seen in the chain reaction in the gentrification of individual houses in a street, and in city centres. 27 In order to summarise this complex process it is illustrated in a consistent way in Diagram 1.3. This sets out at A the process of change on one particular parcel of farmland which enters through development its first life cycle in the built environment, and is then redeveloped into its second life cycle. It then analyses diagrammatically the ingredients of the change. At B is traced the obsolescence under the four heads introduced above. In each case the completion of the initial development introduces the building with hoped for zero obsolescence. Thereafter the change in obsolescence under the four heads does not follow a uniform pattern. It declines gradually in physical terms; it remains constant in functional terms, then to fluctuate with changes in fashion, demand, etc.; locational change is constant until there are introduced some external factors which first increase and then ameliorate the obsolescence; and finally the environmental obsolescence is shown to be constant and then gently decline. In all cases redevelopment removes the building and thereby the degrees of obsolescence, only to start the cycle again on completion. At C is shown the effect of renewal on the obsolescence during the initial life cycle (rehabilitation, etc.). In the physical and functional obsolescence the renewal action will reduce the obsolescence as a preliminary to further decline; the effect on the locational and environmental obsolescence, resulting not so much from the renewal as from the external change, will be more random. It is this last pattern which is affected when the conservation constraint in D is introduced. The physical and functional may be little affected, since the conservation will aim also at the management decisions in C which maintain the value of the property. But both the locational and environ-

£ i FL i D i

31

I RD I LIFE CYCLE 2

LIFE CYCLE 1

j!

jjj! i i I I I I

I I I I

D5

Abbreviations: FL : Farmland D

: Development

RD: Redevelopment

P : Physical F : Functional L

:

Locational

E

:

Environmental

Diagram 1.3 Obsolescence, renewal and conservation in the life cycle of urban fabric

Life cycle in the urban system

29

mental obsolescence could be mitigated by control of the surrounding conservation area or other measures to defer obsolescence. The big difference arises in what would in C be the redevelopment phase into life cycle 2. In D there is no redevelopment, with the degree of obsolescence in life cycle 1 extending into life cycle 2.

1.7

Why develop or conserve urban resources?

Within the life cycle of resources just described we can see the place of both 'development' and 'conservation'. As to the former, speaking generally, development of resources stems from their fundamental characteristic: potential to give rise to an activity which can satisfy human needs, wants or desires, be they material or non-material (1.3). The application of the development process (2.5.1) to the resources will generate the growth in goods and services (material and non-material) which will be the basis for the growth in activities. Since these appear to be limitless (the motor-car, home and holiday, soon give rise to the desire for more) the stimulus for development also seems limitless. But such development, in utilising resources, tends by definition towards their exhaustion (in natural or human resources) or obsolescence (in the man-made). Such growth in itself is beneficial if it has no adverse impacts when satisfying human needs, wants and desires. But the adverse impacts are only too familiar in the contemporary world: in exhausting non-renewable or renewable resources; polluting the air or rain; or blighting, eroding or wasting human life. Yet their occurrence is concealed in the manner in which the indicators of growth are shown in national economic accounts, which relate to direct production and consumption but not the indirect. Then the harm becomes palpable, giving rise to the pressures for conservation, whose aim in essence is to check the rate of change (e.g. in progress of exhaustion in natural or human resources, and in obsolescence in the man-made resource), in order to enable resources to offer greater capacity over their life cycles for use and enjoyment by people. This is 'sustainable development','... that meets the needs of the present without compromising the ability of future generations to meet their own needs' leading to the suggestion t h a t ' . . . the goals of economic and social development must be defined in terms of sustainability in all countries'. 28 However aims for such sustainability produce the reaction: since growth is needed to equalise between income groups in any society, and between the

30

Economics in urban conservation

First and Third Worlds over the globe, conservation can be socially unjust. 29 These considerations apart, on the second question, why conserve, there is a commonsense answer. The potential benefits from our urban resources are inherited without specific payment, although there is implied acceptance of the ongoing liability of funding past debts for the heritage and of operating costs, both direct and indirect. Accordingly there is every temptation to continue to use the established resources since the alternative, of replacing entirely with new, would be out of the question for any particular generation: there would be inadequate real economic resources yet responsibility for the accumulated debt. But there could also be commonsense reasons for not accepting the gift on these terms. The operating costs could be too high, as in an outmoded hospital; no value is seen in the benefits to be derived, as in a vandalised housing estate; a political revolution could demand a break with the past and thereby the abandonment of assets associated with the former ruling class. These commonsense answers will be varied according to the nature of the resource in question, as will now be described.

1.8

1.8.1

Logic of conservation in the various categories of urban resources

Natural

The reasons for conservation have been most clearly seen in relation to natural resources. Since they are not man-made, they are not so obviously reproduceable and renewable, although they are substitutable to a large degree by other minerals, 30 given adequate energy. And where exploitation has been profligate, e.g. in forests or farming, the evidence is only too painfully apparent. But failure to pursue conservation policy has rung alarm bells only in comparatively recent times (Preface). The pressure on the resources has grown remorselessly with the explosion in world population; the rising standards of living and expectations of Third World countries; the advances in technology which can be used for capturing resources to satisfy demands; the rise of the capitalist profit-seeking ethic which drives forward the exploitation without regard to social costs; the pollution of

Life cycle in the urban system

31

the non-exhaustible resources so that environmental conditions are degraded. Whilst factors such as these triggered off the conservation movement, this of itself has been stimulated during this century by the other factors described above (Preface) into the Green political parties, pressure for the zero population growth society, etc. The alarms have been rung by those who predict disaster through resource depletion and equally strongly resisted (Preface). Whether or not the arguments against the approaching doom be accepted there is general recognition that they cannot be ignored and that conservation must be an important strand in our management and planning ethos. There must be protection of the stock of non-renewable resources; prudent management in the flow of exploitation of renewable resources; environmental control over pollution. The concern is encapsulated in the statement that, 'We have not inherited the earth from our fathers, but we are borrowing it from our children.' 31

1.8.2

Human

The reasons for the conservation of the human resource, people, would hardly appear to need spelling out. While not all, even all Catholics, would go along with the extreme view of the Vatican, that human life is sacred from conception, and that contraception is sin, there is the general presumption in the values of Judeo-Christian religion that each life is sacred and should be capable of self-fulfilment. These values are not however completely accepted in non-JudeoChristian cultures. In Japan and Africa the lives of the elderly are terminated when they can no longer function; in India in some castes wives are encouraged to join the husband's burial pyre; and in China population control through one child per family has led to the killing off of female children. Where the individual life is considered sacrosanct, the general efforts of medicine under the Hippocratic Oath are to extend the span of human life, through eliminating mortality, and enriching its enjoyment through decreasing morbidity. So far the progress of medicine has not advanced life expectancy at birth but is certainly advancing that for the elderly approaching their three score years and ten. It is this very progress which has sharpened the question of human values in relation to life prolongation. The tendency has been to cease discussing life expectancy just in terms of years but to qualify these years as with or without capacity to function in a

32

Economics in urban conservation

reasonable manner. If this condition no longer obtains, should the doctors prolong life? Should the individual concerned be able to request, when suffering from an incurable disease, the privilege of 'dying with dignity'? When prolongation requires heavy investment (e.g. dialysis machines) of which there are insufficient to go round, who is to be allowed to live or die? In all these questions: should the decision to terminate be taken by the doctor, lay administrators, the parents, the children, husband or wife?32 Whereas the preceding relates to the individual, the implied attitude of society is however a disdain of human life, in appearing to tolerate so much slaughter on the roads, terrorism, repressive regimes, torture and war itself. Another such contradiction arises in respect of'quality of life'. Whereas the 'self-fulfilment of the individual' would be thought to be the value accepted by society, it is flouted daily in the intolerable conditions around the world in the degradation of rural poverty, slums, shanty towns and urban squalor. But even where the physical conditions are acceptable, the seemingly remorseless pressures for change threaten the ways of life and values which are traditional and which people cling to in order to provide stability in a changing world. They are assisted if a balance can be kept between the new and the old; they are enriched if the past culture which is valued can be transmitted. Thus there are clearly no universally accepted values in relation to human resources. But most would accept nonetheless that the prolongation and improvement of quality of human life, its conservation, is an aim to be pursued. 1.8.3

Man-made

We expand here the distinction made above (1.4.3) between moveables and immoveables. Moveables The reason for conservation here relates to the commonsense view above (1.7): given ownership and possession why spend new resources on replacement while the goods have potential for satisfaction? But there is the deeper reason: the wish to have a visual reminder of the past, for the

Life cycle in the urban system

33

purpose of education, culture, history, etc., which is catered for individually or in museums. 33 However, while consumers would take the commonsense view producers do not always do so. In part, production for indefinite life could so increase production costs as to make new goods unsaleable. But in part there is built in obsolescence in order to stimulate greater sales than would otherwise occur. 34 Immoveables By definition this stock (unlike the moveables) is of necessity attached to the land and is, through people's locational requirements, of necessity distributed in settlements throughout the country, from the metropolis to the village or hamlet. As shown above (1.2) in societies in which there is change there is continuing pressure on the man-made environment. Population growth generating new families gives rise to the need and demand for new homes; growth in income gives rise to the demand for more space, and more modern space; growth in leisure time gives rise to the need and demand for more buildings and places devoted to mass recreation and/or cultural pursuits. And even if there is little growth similar pressure can arise from migration of people and activity to new locations. Alongside this pressure there is inevitably, because of competing pressures, a limitation in the amount of investment resources, both real and financial, which are available for the creation of the man-made environment. Accordingly, there is an overriding pressure for society to use its stock of man-made environment as opposed to discarding it and providing new. The possibilities of such use are greatest in immoveable compared with moveable capital goods (motor cars, clothes, etc.) simply because of the relatively longer life of the built environment. And this tendency is reinforced by the uneven distribution of income within society, for whereas those with higher incomes can afford the 'conspicuous consumption' of buying or building new instead of using the old, those with lesser incomes do not have the luxury of this choice. For them, and they are the larger in numbers, the use of the established resources becomes a necessity. In general, the built environment is a resource whose continued use enables investment resources, otherwise required to replace it, to be used for other purposes.

34

Economics in urban conservation

To this economic reason must be added another, of a social kind. People will express a demand for the new stock (growth in population, income, taste, etc.) but concurrently would have an attachment to the past through nostalgia, familiar way of life, etc. They would accordingly like to have both. In this people are not homogeneous and enter into all sorts of compromises. Some will prefer to live in older property but enjoy modern facilities in schools, work places etc. Some would prefer to have also new homes as long as others live in the older areas, which they can occasionally visit. Some would be attached to the old completely in order to avoid disruption of homes, families, neighbourhood relations, etc. 1.8.4

Overall

Thus there can be no consensus on the logic for conservation, as between the different kinds of urban resources or within any particular kind. But there would be general agreement that some mix is essential and desirable at the appropriate balance. Where such mix emerges from the market process (supply and demand for both old and new in one market) the results are likely to be patchy since the decisions will relate to individual ownerships and there will be externalities. Some improvement on this is a central feature of management and planning for conservation, to which we now turn (Chapters 2 and 3).

Planning and management of urban resources

2.1

2.1.1

From resource to property and commodity

Overview

The preceding chapter introduced the urban system as a resource (1.3). but it was found from the earliest days of settled cultivation that for their potential to be realised the resources in production and consumption must be appropriated into ownership by particular individuals or bodies. 1 Producers must own their means of production to provide incentives and security for output; consumers must own their purchase of the output; the ownership must therefore be protected under the law, for otherwise there would be a general loss of liberty, freedom and welfare.2 Thus while in common parlance property is the real object which is possessed or owned, it cannot b e ' . . . defined as something apart from those relationships which in juridical thought give a thing, a benefit or a privilege the status and quality of property'. 3 In this book we use the term property to mean both the real thing and also the property relationships. Thus resources potentially have use value (1.3). When they become property, and as property are available for exchange as commodities, they may have exchange value. Typically this applies to the first two categories of natural resources described above (1.4.1) (exhaustible but renewable or non-renewable) and also to man-made resources (1.4.3). But all the while they are free goods (i.e. accessible to all without payment) it has not been practicable to appropriate the non-exhaustible resources (sun, air, rain and climate). On the whole, human resources have not been appropriated except as slaves, who become property and commodities for exchange. In non-slave societies it is not people but their labour power which, as their property, becomes a commodity for exchange. In such societies there are mixtures of

36

Economics in urban conservation

political and economic freedom. Compare, for example, the political freedom of the western open society with the necessity for permits for dwelling and working in specified locations in some countries, such as China and North Korea; with the comparative lack of economic freedom in western societies where the surplus value from labour power is appropriated by the capitalist class.4 Thus while the appropriation of resources in the evolution of human society has its logic, it raises conflicts which go to the very root of social organisation.5 Some are apparent from this overbrief review: the struggle for releasing slaves from being commodities; the class warfare explained by Marx in that it is the appropriation of their labour power by owners of capital which denies even non-slaves the full fruits of their labour; the struggles for social control over the use of resources where this is exercised by owners with regard only to the costs and benefits of the proprietor and not society as a whole; the indignation that natural resources, which are God or nature given, should be owned by individuals or corporations (public or private) and not by the people as a whole; the conviction that even though the market system be acceptable in relation to many aspects of socio-economic life, it is offensive in relation to land, simply because it is the platform of all activity and access to it is identified with freedom, citizenship and statehood. What we call land is an element of nature inextricably interwoven with man's institution. Land is thus tied up with the organisation of kinship, neighbourhood, caste and creed - with tribe and temple, village, guild and church . . . the economic function is but one of many vital functions of land. It invests man's life with stability; it is the site of his habitation; it is a condition of his physical safety, it is the landscape and the seasons. To isolate it and form a market out of it was perhaps the weirdest of all undertakings of our ancestors. 6

2.1.2

The built environment as resource, property and commodity

The built environment is a resource which is the joint product of land and buildings, during the life of the buildings (1.4.3). Being appropriated they become commodities: clear examples arise, both in the private sector, where the specific services are paid for directly (housing, shops or cinemas) and in the public sector, where the services are provided by a public authority out of taxation (town hall, hospital, park, etc.). Within this broad sub-division there are many interesting mixtures. Public housing is provided by a public authority for individual consumption

Planning and management of urban resources

37

by specific payment, in part subsidised out of taxes. Education can be offered by private education bodies on specific payment as opposed to a charge on public funds; or, as some would propose, education could be offered by state schools on specific payment which is provided by the state as vouchers. Thus within the extremes of clear private and public there is a spectrum of mixtures of the private and public, which in turn affects the degree to which the individual services can be bought and sold as commodities. 'Within this spectrum lie (towards the public end) the category of public goods or services which if supplied can be made available to others at no extra cost' (e.g. a park or road surface) and 'one person's consumption of the goods does not reduce its availability to anyone else'. In practice the pure public good (non-rival in consumption and non-excludable to anyone wishing to consume it) is rare and there are many 'mixed or impure public goods'. 7 Because the built environment is 'immobile' it can take on the special characteristics of 'real' as opposed to 'personal', that is 'real estate'. 8 Of these characteristics two are of special concern here. First, within the one physical property it is possible to have a variety of interests, for example, the owner who creates an occupation tenancy, with the occupiers being free to create subsidiary tenancies, down to the legitimate user. The owner includes those who have a financial stake in the property, as financiers of new development, mortgagees, etc. The user can be sub-divided into the principal occupier (the tenant or lessee), the employees, and also (for example in shops) members of the public who visit the building to carry out their activity as shoppers. These attributes have led to the concept of the 'proprietary land unit' which has been defined as an area of land used as a single entity and co-extensive in its physical dimensions with vested rights of property, to use, to dispose and to alienate. Land in its context is the lawyer's definition of the soil and all that is affixed on the surface and beneath. Rights of property more particularly are rights to do and forbear from doing positive acts on or in relation to the land in the unit.9 Second, in respect of these individual interests, there are rights and obligations, both as between the interests and also in respect of other property whose interests are affected. For example, a freehold owner may be subject to an easement of light, being the right of an adjoining owner to restrict development of the land in a way which would interfere with his light. And an occupier must respect certain social rules of behaviour, such as not creating a nuisance to others. It is for such reasons that 'real

38

Economics in urban conservation

property' is seen as a 'bundle of rights and obligations' as between all (particularly adjacent) property owners. 10 Against this background all 'rights and obligations' relating to the built environment, whether in private or public ownership, must be thought of not in relation to one homogeneous interest but to a complex variety. Their position is regulated by law, in what has been termed 'private land policy', which runs in parallel with 'public land policy': the considerable amount of statutory and administrative regulation by public authorities to ensure that ownership and occupation of property do not infringe the 'public

2.2

What is management?

We saw above (1.3) that the urban system can be seen as a resource. From this it follows that if its use to satisfy human needs, wants and desires is to be maximised over its life the resource requires 'management': that is taking conscious decisions, with an eye to the future, about ongoing operations or the use of assets, or both in combination, within a structured organisation. The price of not so doing, of 'bad management', could mean that the fullest use is not obtained from the operation or asset. The approach and methods of the generic activity of the management process are generally applicable in all situations.12 But they will vary considerably in the nature of the activity or asset under consideration. In this are two major variables, each with two sub-divisions: (a) The field of management: (i) What is being managed? Is it a market stall for fruit, which operates on a day by day basis? A shop in a High Street which is part of a chain and therefore subject to national management considerations? An industrial undertaking, which in reaching its objectives must have regard to what is happening around the world in terms of competition, energy substitutes, markets, etc? (ii) What means are available to achieve the management objectives? Is the enterprise independent so that it can be controlled directly by the management, as for example in the daily household operations of a family? Or are they so subject to outside influence that the management is dependent on external factors, such as the weather in the sale of ice-cream?

Planning and management of urban resources

39

(b) The viewpoint of the manager: (i) Who is doing the management? Is it the person who owns the undertaking, framing objectives for himself or his family? Is it a non-owning managerial hierarchy and bureaucracy, working on behalf of the absentee shareholders? Is it government, managing an economy on behalf not only of the people who elected it but of those who did not? (ii) What is the time horizon in management? Is it short term so that the success or failure can be judged in days or weeks? Or long term so that the result will not be available until well into the future, to be judged perhaps by future generations? We now apply this approach to the management of urban resources.

2.3

What is urban management?

We have seen above that the urban system is a complex collection of diverse inter-dependent resources (1.3) which need management to maximise their use over their lives (2.2). Given this totality we are thus led to ask whether there can be a concept of 'urban management'. While urban management is capable of being conceived in principle, it raises great difficulties in application, and indeed is rarely seen as a whole in practice. Perhaps the best approximation would be the 'company town' (minerals, steel, etc.) where ownership, administration and the operation of the main industrial activity are concentrated in one organisation. But while the totality is rare, seven different strands can be detected, each contributing towards the overall concept. First, property owners in an urban area, both private and public, will manage their field (property) according to their viewpoint (objectives). Each unit of property will be both unique and have unique relationships with its surroundings, both geographical (linkage) and legal (rights and obligations), giving rise to the concept of the 'proprietary land unit' (2.1.2). Each such unit can be short in time (the tenancy of a flat) or very extensive in area (the whole of a town or a large rural estate) and in the public or private sector. Whatever it is, it is the proprietary land unit which is the subject of management in the interests of the owners. Traditionally such interests have been termed 'estates in land' with the legal connotation being distinct from the geographical, in which 'estate' is a physical entity. Both have given rise to the generally interchangeable terms 'estate management',

40

Economics in urban conservation

'land economy' or 'land administration'. 13 Estate management has been defined as 'the direction and supervision of an interest in landed property with the aim of securing the optimum return; this return need not always be financial, but may be in terms of social benefit, status, prestige, political power, or some other goal or group of goals'. 14 The aim of property management can thus be broader than simply the commercial. It often is so where the property is owned by a public body, which may (but not necessarily will) take a broader and longer view. Second, the proprietary land unit as just described could be extensive, either in a compact geographical area, as in the urban landed estates of Central London, or scattered throughout the urban area in different parcels. In such a situation the mere existence of a larger geographical area will result in different management decisions being taken on particular parcels than would occur if the whole were in fragmented ownerships. In simple terms, net benefits will not necessarily be maximised on particular parcels, for this could be inimical to net benefits over the total area in the proprietary land unit. 15 A third dimension in urban management arises where the large estate is seen not simply as a function of land ownership but of the development of a community, in physical, social or economic terms, as in the building of a new town. Here the maximisation of the net benefits from the land is seen as a function of building the socio-economic base for the immigrants. 16 For land to be used and developed at all requires an infrastructure of services. Traditionally these are provided by central and local government and their special agencies in combination; this is so even where the whole of the new town has been built in the British system by New Town Development Corporations, even though these have contributed in the process.17 This provides the fourth dimension of management. At the simplest level comes the 'specialist management' by local government of particular urban facilities which need to be comprehended as a whole, as for example water supply, refuse or sewerage, traffic or car parking. 18 Until comparatively recently such facilities were managed individually. But in the interests of their co-ordination there arose the principles and practice of corporate local authority 'general management' which, as the name implies, attempts to apply overall management strategies to urban and local government facilities as a whole. This latter concept was more fully developed with corporate planning and management for local authorities. 19 The concept is expressed as follows:20

Planning and management of urban resources

41

Local government is not, in our view, limited to the narrow provision of a series of services to the local community, though we do not intend in any way to suggest that these services are not important. It has within its purview the overall economic, cultural and physical well-being of that community and for this reason its decisions impinge with increasing frequency upon the individual life of its citizens. Because of this overall responsibility and because of the inter-relationship of problems in the environment within which it is set, the traditional departmental attitude within much of local government must give way to a wider-ranging corporate outlook. A fifth management dimension linked to local government is urban and regional planning, whose aim is to ensure that decisions taken in relation to development or renewal in particular are seen in accordance with plans for the whole community (3.1). In contrast to the previous dimension such management is not based primarily upon actual executive responsibility connected with ownership or administration of services but rather with governmental stimulus or regulation. As we shall see below (2.5) in the implementation of such planning there is a close relationship with management. A fusing of the fourth and fifth management dimensions to provide a sixth was attempted in studies for three northern towns soon after the setting up of the new District Councils under local government reorganisation in England in 1972.21 In brief the studies originated from a concern that conventional management and planning procedures in local government had in general failed sufficiently to improve the conditions of the urban environment, both because of the fragmented nature of local government itself and insufficient spread of development planning. The three reports opened up diverse aspects of the problem and made many innovative suggestions. One is introduced in exemplification.22 For the purpose of this study it was necessary to define the scope of the term 'environment'. While recognising that this could involve all the circumstances and conditions affecting people, the scope was limited to those responsibilities and functions central to the new District Councils and the Department of the Environment (DOE) This was clearly not all embracing, comprising only the land; the built fabric; transportation; public services; and the protection of the quality of the environment. But to embrace even these it was necessary to propose 'extended development planning' and also management (termed operational planning) and furthermore to show how these two processes could be related in practice as shown in Diagram 2.1. A seventh dimension was provided in a study 23 which recognised that

42

Economics in urban conservation

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Diagram 2.1 Development plan/operational plan relationships Source: Reference 39

additional emphasis on "efficiency monitoring"

Planning and management of urban resources

43

while local authorities had many plans and programmes which had economic content (town planning, financial budgeting, corporate management, housing, transport and urban programmes) they nonetheless had no framework in the form of a local economic plan or strategy. It was this possibility which was explored, in terms of principle and practice, with proposals as to how the economic content could be grafted onto DOE style local development planning which as practised fell short of this concept, even though there was some recognition of its social and economic content. While particularly prepared for the inner city programme the approach could be generally applied to the town and its hinterland as a whole. But the broadening in both local government corporate planning and urban and regional planning hardly approaches the totality of urban management. So much of the executive responsibility would lie outside the province of local government. One possibility of overcoming the weakness lies in a concept of urban management which accepts the difficulty in comprehensiveness and goes back to the market for its inspiration. 24 By definition there will in any urban area, interpreting this to mean not only the administrative but the functional area, be a large number of fragmented units (public and private) who have responsibility for managing their own assets and affairs. In practice they would not do so independently of what is happening around, for this will influence their management decisions. An organised management framework for this operation is difficult to conceive but on the analogy of the market the framework could be organised on the basis of markets, where ' . . . human activity adapted itself to data about which it had no information'.25

2.4

2.4.1

Management for urban conservation

Focus

From this perspective on 'urban management' we narrow down to management for urban conservation. In presenting the approach it would be helpful if we could adopt the conclusion reached by O'Riordan in describing the lack of clarity and consistency in the concept of conservation of natural resources (Preface). This vagueness in the term led him to state *... it has been felt wise to substitute the phrase "resource management" for conservation . . . Resource management should therefore be conceived as a new conservation.'26 But even if our concern was just with the conservation of natural resources, the identity of the terms would hardly

44

Economics in urban conservation

appear to be adequate. Conservation can certainly be seen as one objective of resource management. But there can be others. Thus to grasp the full nature of management for urban conservation requires that we consider the nature of management generally as brought out above, that is: (a) The field; (b) The viewpoint of the manager. We now trace through these variables in relation to each category of urban resource.

2.4.2

Natural resources27

Where a resource is exhaustible but renewable (vegetation, animals, fish, etc.) the management objective of the owner/occupier will be to maximise the return from the asset, over the period of his interest. This could lead to management for exhaustion which prevents renewal of the resources (soil erosion or fish depletion) and so be in conflict with social management objectives, which would wish to see the asset conserved in a way that allowed for its being renewed and sustained, as for example in soil conservation. This same kind of conflict arises where the resources are exhaustible but non-renewable (irreplaceable). The private management objective could be to exhaust as soon as possible in order to 'get rich quick'. Here the social objective cannot be management for renewability but management in order to ensure reserves for future use (e.g. in minerals, agricultural land). Where the resource is non-exhaustible but pollutable (e.g. air, climate) the conflict is different. The private objective of the industrialist or motor-car producer would be to cut direct costs even though atmospheric pollution arises from external effects. Social control takes measures for protecting the environment, for example by insisting that the industrialist and motor-vehicle 'polluter pays' by adding to their costs in order to eliminate or mitigate the pollution at source. 28 2.4.3

Human resources

A general objective of individuals is to achieve human satisfaction and happiness, and so achieve 'quality' in their way of life. For this purpose they will combine in family and other groups for mutual assistance. Increasingly, to advance these objectives individuals and families (natural and extended) migrate to urban areas in order to achieve many qualities of life that would not otherwise be available in villages. But the

Planning and management of urban resources

45

very act of living together poses the well known disadvantages of urban living. As urbanites they need to give up to institutions their ability for self-management and are faced with congestion and pollution from others, leading to overall deterioration in their quality of life. Social policies for human conservation will aim at the minimisation of these impediments to, and enhancement of opportunities for, achieving high quality of life.29

2.4.4

Man-made

Mobile resources, which are personal property, will be used by their owners in their own way. But where they are not personally owned but held for the public (e.g. goods in public museums, books in libraries, etc.) then the public agency has social control with an eye to conservation and extension of life for the common benefit. The fabric in the man-made environment suffers from obsolescence and its private owners and users will be concerned with its renewal. But in this the management policies may be different from those which would be adopted by government for urban conservation. The divergence will relate not simply to the fabric itself but also to those using the fabric. Promoters of urban renewal projects, even when public, may not be as concerned as would government about the implications for people of consequential dispersal to the suburbs or loss of homes through gentrification.30 Part of this possible divergence arises in the continuing controversy over the conflicting objectives of unrestrained and limited growth, in urban areas and in the economy. The no-growth policies are in essence extreme conservation policies.31 Special conflicts in private and social objectives arise, and special need for urban conservation, in that part of the built environment which we have called the cultural built heritage. To this we turn below (Part II).

2.5 2.5.1

The process of planning and management for change Change through development and conservation

We saw above (1.2) how the urban system changes through the interaction between people's activities and the physical stock. As a result the stock and activities become augmented, either through new or the adaptation of

46

Economics in urban conservation

existing. We also saw (1.7) that conservation can be seen as a check on change. Both are therefore determinants of the rate of change. Since such change provides the focus of urban management, we now describe in greater detail the process by which it comes about.

Physical Whether growth in urbanisation be by development on open land, or renewal or conservation of the built fabric, the change comes about through the physical 'development process'. 32 In this the developer as entrepreneur (a private or public agency) develops; he brings together the factors of production for renewal or new development (land [sites], economic and financial investment, the construction industry), some or all of which the entrepreneur may directly command, to meet an economic demand for the activities to be provided in the new development (a need for the satisfaction of which potential owners and occupiers are prepared to pay at stated prices). Where people would like to pay but do not have the necessary financial resources at the stated price then the need will not be met unless it be turned into demand through their resources being supplemented, e.g. by employer allowances, public subsidy, etc. When this process takes place there is set up new or renewed urban fabric, fashioned to meet contemporary requirements, as seen by development agencies (with the collaboration of the other factors) for consumers. Completion of this process, on the occupation of the buildings, etc., initiates an addition to the man-made stock of the built heritage, described by the noun development.

Activity The physical development will have been stimulated by the socio-economic need/demand derived from visualised change in activity. Such change is also described as development in the literature and practice relating to national and regional (socio-economic) development planning, 33 being the change in the flow of socio-economic activities that take place in production and consumption. Such literature and practice sees the physical stock as the capital which gives rise to the flow of socio-economic activities. In effect they contemplate physical development from the other end of the telescope. Another difference arises that while socio-economic development is some-

Planning and management of urban resources

47

times equated with growth in product, it more strictly means the carrying out of the structural changes in society which are needed to make such growth possible.34 It is possible to have development without growth and growth without development. In physical development the parallel could be between development in infrastructure and the growth in the buildings and places which rely upon it.

2.5.2

The management process

As seen above (2.2) management is a process which is applied to particular fields by particular managers and within urban management there are several different strands of fields and managers. Running through this variety there is a common approach to the management task, which is adapted to each situation. For example it has been described in relation to management in local government as follows:35 the organisation identifies certain needs, present and foreseen, in its environment; it sets goals and objectives in relation to those needs, i.e. the extent to which it will plan to meet those needs; it considers alternative ways of achieving those objectives; it evaluates those alternatives in terms of their use of resources and of their effects; it makes decisions in the light of that evaluation; it translates those decisions into managerial action; it monitors the results of the action and feeds back to modify the continuing process; by altering the perception of needs, the objectives set, the alternatives considered, the evaluation, the decision made or the action taken.

This generic process can also be seen in the urban area in the management of real property, be it in small parcels or over large estates, where it has been described as: identification of estate strategy; evaluation of alternative tactics; selection of preferred tactics; implementation; monitoring and review.36

2.5.3

Planning for management

The model of management which has just been described (2.5.2) is very reminiscent of any model for rational planning: the generic activity which human beings adopt to bridge the future to the present. As such planning, even for the short term, is a necessary requirement for management. In this short term, management might conceivably be carried out on a tactical basis without regard to the longer-term future, as perhaps in the maintenance of flower-beds and grass in an urban park. But even this will have some longer-term perspective, as for example in deciding on the kind of

48

Economics in urban conservation

materials to be used in making the path or in the soil preparation and drainage for the provision of the turf.

2.5.4

Management in urban and regional planning

As we will see (3.1) much the same model (for both management and planning) is used in the typical plan making in the urban and regional planning process. We will also see that alongside the plan making there is the 'implementation and review of the plan'. This can be seen as management of the ongoing process of implementation of an urban and regional plan, strategy or programme. 37

2.5.5

Management and planning

Management and planning are thus interrelated, with managers seeing planning as an input and planners seeing management as an output. The critical difference between planning and management is in the agencies responsible for each of these two aspects, and to the kind of skill and profession they typically rely upon for advice. Management looks in the main to managers, accountants and administrators. The tactics of their day to day management are clearly helped by having regard to objectives, and these become meaningful if translated into policies, strategies and plans which have regard to the longer and broader view.38 Urban and regional planning on the other hand stems from the responsibility of government to take the wide and long view over the future of the urban and regional area as a whole. In this it relies in the main for implementation upon the agencies concerned with the management, conservation and development of the urban and regional resources. It looks in the main for advice to urban and regional planners working with a variety of contributory skills: in development (architects, engineers, surveyors, landscapers); conservation (naturalists, ecologists); social sciences (sociologists, economists). It thus provides a plan to illuminate critical management decisions in relation to resources and property. Thus owners, occupiers and operators see the need for a plan to help tactical management; and planners see management at a tool for tactical implementation of its plans. Both overlap. This in practice makes for strength in the planning and management process, since each can be taken

Planning and management of urban resources

49

as complementary, and each uses a 'planning process' which is reminiscent of the other. 39 That there are potential conflicts between the objectives stemming from each side is apparent, not least in the fact that each is studied, taught and practised by different academic and professional skills; in Universities and Polytechnics the management and planning schools tend to be distinct, with distinct academic strengths. But the conflicts can be readily reconciled in practice. This was achieved in one study, jointly carried out by planners and managers, where the relationship between development planning and operational planning was presented (2.3) (Diagram 2.1). 40

Planning for urban conservation

3.1

3.1.1

Role of planning in the evolution of the urban and regional system

The general planning process

The urban and regional system of cities, towns and villages has evolved over the centuries under the stimulus of forces within which the private or public sector entrepreneurs and land owners take their decisions (1.1). In simple terms, these are the 'market forces' of the interplay of supply and demand. For most of these centuries, and in most communities, there has been some constraint over the 'market' through governmental control. For example, those rebuilding in the City of London after the Great Fire of 1666 needed licences. But it is only over the current century that government generally and internationally has taken the view that the evolution of their urban and regional systems under the impact of 'market' forces can lead to future situations in town and countryside which are not desirable in terms of community goals and objectives.1 Accordingly they have introduced urban and regional planning, known also by a variety of synonyms: town, town and country, spatial, physical, community. 2 In doing so government has recognised that such a planning can have little effect in practice in any particular country unless it is introduced as a governmental function, with its own system of laws, administrative machinery, institutions, financial adjustments between affected owners and the state, and qualified manpower.3 The function typically embraces plan making, plan implementation and plan review. The generic process varies from country to country, and time to time. In the following is described a typical, mature process, based on the British planning system,4 in which can be seen the planning and implementation model described above (2.5).

Planning for urban conservation 3.1.2

51

Plan making

Government, central and/or local, has a duty or opportunity to prepare plans for its communities, central, regional and local, within the planning system it sets up. The actual plan making process differs from country to country. But there is a rational model of a process and procedure which is adopted throughout the world with varying degrees of emphasis and adaptation. 5 In essence this involves the identification of the current situation and how it has evolved; some prediction of the future events without the intervention of planning; the formulation of optional future possibilities which would arise with the intervention of planning and implementation; the testing of such options for feasibility and desirability; the detailing of the selected options; the formulation of a programme for the implementation of the options with the necessary means, legal, administrative, financial, etc.; and the review of such options in the light of experience following implementation, for which purpose there is a monitoring of events. The typical plan content for the urban area has twin components, brought out above in relation to the urban and regional system (1.1). The first is the current and future profile of the present and future users of the plan area, that is those resident in or making use of it in their everyday activities: work, shopping, education, recreation, etc. The second is the provision for them of the appropriate mix of land uses for the activities (industry, shopping centres, schools, etc.) which will provide for them the appropriate physical development. The latter component has earned for the process the title 'physical planning'. This title is not altogether accurate for covering both components. The name reflects a tendency in urban planning to be concerned more with the physical aspect than with the related socioeconomic activity. From the preceding there will emerge a programme for implementation. This could comprise a broad approach in terms of policies, proposals, strategy or plan, together with specific elements of a programme of projects (particular buildings, environmental areas, conservation areas). The essence of the programme would be its phasing by priorities and with a clear indication of the means whereby the programme is to be implemented: such as the implementation measures of the implementation authority, the implementation agencies and the resources needed from the various actors involved.

52 3.1.3

Economics in urban conservation Plan implementation

Within the framework of the plan, etc. the implementation authority will steer, influence or control the actions of development, conservation and renewal agencies who are responsible for implementing their individual sectors (housing, shopping, industry, roads, etc.)- Within this a plan making authority may also have distinct implementation functions for particular sectors, as in parking, housing, roads, etc. and, as we shall see, conservation.6 The nature of the implementation process will vary from country to country and from locality to locality, according to the implementation measures, economic resources, political interest and will, etc. Within the process will be available a variety of implementation measures. From what was described above (1.2), on the interaction between the physical fabric and human activity in the urban and regional system, it is apparent that the implementation can be directed either at the fabric or at the activities, or both. The former involves measures ranging from the indirect (control over the actions of others) to the direct (positive action taken by authorities as in the provision of new roads or new buildings). The latter involves the exercise of influence by indirect means (general persuasion, taxation or subsidy).

3.1.4

Monitoring and review

Implementation will be ongoing, typically starting during the plan making process itself. Over the years of implementation there will be continuing change, some of which will affect the basis and assumptions on which the plan making was founded. Furthermore, as time elapses, the programme for implementation will need extending beyond that initially prepared. Thus a process of monitoring change is needed, leading to a review of the plan and its implementation, leading to changes in the plan, its implementation and programme. While such monitoring and review is necessarily periodic, in practice the plan and its implementation could be continually under ongoing review.7

3.2

Role of conservation in urban planning

Having presented the planning process as a whole, we now consider the role of conservation in such planning, as adapted for each category of urban resource (1.4).

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53

As regards natural resources, urbanisation on our planet began only some ten thousand years ago. 8 During this brief period man has shown his capacity both for creative development and for exploitation and destruction, becoming divorced from his natural origins and surroundings. Planning must accordingly aim both to conserve nature in urban areas and also enhance it. As regards man, the conservation role has the many facets indicated above (1.4.2). Parents and teachers must be given the opportunity to nurture children in both a good standard and quality of life. In projecting the stream of activities in the planning process (3.1) there is the need to consider 'continuity5 as well as 'change'. The change is made up of new forces affecting demand (change in taste, income, etc.) and supply (technology, innovation). The continuity is the protection of the traditional and established way of life from the new. This concern has been seen as 'culture conservation' relating not only to the tangibles (buildings and objects) but to the intangible elements of the cultural heritage, that is 'folklife' and 'folkways'. This is also expressed as 'community life and values', 9 with community being interpreted in terms of place or interest or attachment. In this the conservation aim is to see that planned change avoids, as far as practicable, the disruption of traditional and contemporary community patterns (folkways); and where not practicable, in the planning survey phase to document forms of expression which will vanish from the disruption, and to introduce change by reference to the views and choices of the people affected. Thus, while it is not thought practicable to freeze folklife in time, it is thought desirable to follow the objective of 'continuity and change'. The application of this approach to town planning was seen at the beginning of this century by Patrick Geddes, who applied his insight as a biologist to towns and regions. He saw that it was necessary in contemporary proposals for towns to identify and conserve traditional culture (cultural evolution) and to graft the new proposals on to existing heritage (conservative surgery). 10 For the built environment, the conservation role stems from the picture presented above (1.2) of physical stock which has considerable life once established, and over its life cycle is continually being adapted to change in socio-economic activities. In consequence, in any particular year the relative proportion of the new development which is carried out is comparatively small compared with the mass of urban fabric which exists, with the old being greater in geographic extent and quantity of stock than

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the new. From this it follows that any plan making must pay considerable regard to the current stock which will continue to evolve over its life cycle as well as the change for the future which is being planned. This approach has been forcefully applied by Perloff:11 'A community is, at any moment in time, made up of the old and the new'. While the old is clearly an inheritance from the past the new development which is planned also has links to the past: through the life cycle of what exists; the future is made up of decisions taken at present which are clearly influenced by the past; and forecasts for the future are geared to experience of the past. This leads to 'time oriented planning' where 'continuity and change converge'. The endurance of capital and other urban features involves benefits and costs. Significant benefits can be found in the additional resources (assets) that longevity makes available for carrying out the city's functions. The inherited urban assets continuously constitute a large share of the nation's total wealth (as well as of the wealth of individuals). Benefits can be found in the comfort given people by the availability of familiar features . . . Costs of longevity appear in the form of constraints on the introduction of new technologies such as when a new means of transporting people and goods is delayed by the existence of the old or when an old school building delays introduction of new approaches to education.12 Within this approach it is not difficult to see the role for urban conservation. Not only are there clear reasons for conservation in the management of resources (1.7) but conservation as a brake upon unnecessary and undesirable change becomes a major objective in planning the future of the urban area.

3.3.

Role of planning in deferring obsolescence

As explained above (1.6) renewal and conservation of the built environment are means of tackling obsolescence which have emerged over the life cycle. Thus it is possible to consider conservation simply as a remedy for obsolescence as it emerges. But such an approach would hardly be as positive a contribution as implied in the approach outlined above (3.2). What is needed is not simply the control of change but the promotion of continuity. Put simply, how is it practicable to defer the growth of obsolescence and thereby enhance continuity and postpone the necessary remedial treatment. How is it practicable to carry out 'planning for the survival of things'. 13 The starting point here is clearly the obsolescence survey outlined above

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55

(1.6). But whereas that was couched in terms of analysis of individual properties and homogeneous groups, the area approach implicit in planning requires that the obsolescence survey be carried out in broader areas. For this purpose generalisation is needed. 14 The first approximation would be the demarcation of the town by date of original development, in order to be able to exclude more recent belts of growth where by definition the obsolescence problem would not be so severe. Within the remainder the survey would be tackled under the four heads at the micro level envisaged above (1.6) or if this were found to be too elaborate and time consuming, on a sampling basis with the particular properties picked out by inspection to represent areas of homogeneity, the definition of such areas being related to each of the four obsolescence factors. Whatever the approach to detail, the result would be the same: the attempt to pick out areas in the town which were clearly candidates for obsolescence of varying degrees and of varying kinds. While the four obsolescence factors would be tackled separately it is likely that in practice many areas will contain more than one. From this datum the next step would be to attempt to predict whether or not the degree of obsolescence for each of the defined areas is static, growing or declining. For this purpose regard would be had not only to historical trends but also to the implications of known planning proposals, as for example the routeing of urban roads which would advance blight and obsolescence through proximity to the route, or the reverse by contemplating the removal of congestion from the area. From this macro review it should be practicable to define areas by severity of current obsolescence and severity of future deterioration. As always in the planning process, this is the starting point for the devising of measures for the deferment of the obsolescence to which we now turn.

3.4.

Role of planning in urban conservation

The question then arises: what role can urban planning itself play in such urban conservation? This shift of emphasis to conservation will aim to redress the imbalance experienced in urban and regional planning, where it is the change that has become the focus for the plan making, on the understandable premise that given the likelihood and inevitability of such change it is desirable and necessary to take measures in advance, through planning, to influence and control it. In brief, it was planning for

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developmental change as opposed to conservation against change, which has been the ruling preoccupation. And just as planning intervention by government is needed to regulate 'market failure' in development (3.1) so it is in conservation. As regards the stock, the planning process needs to reflect the change of emphasis urged by Perloff,15 namely to introduce 'time oriented planning' where 'continuity and change converge': ' . . . preservation and conservation should become a built in part of the developmental activities of the community . . . keeping something of the lives of people from each epoch of the past is of value for the future'. As regards activities, there must be the greater weight given to people, communities and their 'folk-life' and 'culture', of a kind which has been continually stressed in planning by sociologists and anthropologists.16 These considerations in urban and regional planning can be seen to be a reflection of the major debate and battle in the world at large, between 'growth' and 'no growth', introduced above (1.8.1). In that debate the focus has been on the exploitation of natural resources and pollution of the environment in their threat to the standard and quality of life of people on the planet, in a situation of exponential growth in their numbers and expectations. As with the macro debate, it cannot be correct to assume that either 'growth' or 'no growth' will be applied to the exclusion of the other. The world in general, and all urban areas in particular, need both 'continuity' and 'change'. Thus the balance needs to be struck in the making of plans for the future as well as in the management of resources. In this regard the striking of such a balance is a common enough feature in all planning, which seeks to prepare and evaluate the outcome of options with a view to striking that which is best in the interests of the community for whom the plan is being prepared. 17 The shift of emphasis is to recognise that the 'conservation option' must always be considered alongside the 'development option', including the search for combinations of the two in any given project. This balancing of the outcome in evaluation will be the easier if it be recognised in the plan making that conservation and development are not of themselves inimical. Change in the sense of development is inevitable in any community as regards both the physical stock and activities. The countervailing tendency to the change could be 'preservation', that is the attempt to freeze in time. Such an approach would at the least frustrate the legitimate aspirations of people for an improvement in the urban living

Planning for urban conservation

57

conditions which they have inherited; or at a higher level, the achievement of a standard and quality of life beyond that which they currently enjoy. From this it is natural to think in terms of 'conservation' rather than 'preservation' for it is in the conservation that change is introduced in a way which adapts the present to the future. Seen this way, 'development is the answer to conservation not the problem' 18 and 'It is recognised that urban conservation and development can be mutually supportive'. 19 This balance will be borne in mind also in the process of plan implementation. It is here where the conflict and friction occurs in practice. In exercising indirect control, is it in the best interests of the community to go along with development intentions which would undermine the conservation value of the object in question, or should conservation be maintained against development pressures? If development pressures are strong, should government take more positive action (e.g. by subsidising owners to achieve conservation or by buying property) in order to carry out the conservation objective? In the preceding, striking the balance requires ex ante evaluation. The process of monitoring and review (3.1.4) is a means of ex post evaluation of whether the balance has been satisfactorily found, having regard to changing circumstances and experience. One final, fairly obvious, point needs to be stressed in relation to the preceding. While the role of conservation and urban planning has been described by reference to the different categories of resources in the urban area (3.2) in planning for urban conservation (3.4) the different resources will be treated as an interacting system. The conservation of nature in the urban area is not seen so much as an end in itself but as an enhancement in the way of life for people in the area, in offering them visual and psychological relief from the mass of bricks and mortar, fresh air in the city's lungs, places for active or passive recreation. 20 The conservation of the built environment itself is seen in relation to the conservation of the life-style carried on in that environment.

Part II Conservation of the cultural built heritage

Conservation of the CBH

61

Summary Having set the general scene for urban conservation we now concentrate on the process for one particular element in the system, the cultural built heritage (CBH): that part of the built environment selected by Government for conservation into the future. In order to explore the nature of the CBH (Chapter 4), we first link it with the general heritage of man of which the CBH is but a small part (4.1), emphasising that such general heritage also has proprietary interests (4.2). We then bring out the distinction between the general and cultural heritage (4.3) in order to concentrate on the CBH (4.4), bringing out its characteristics as property and commodity (4.5) and then return to the question (1.8 above): why do we conserve it? (4.6). We then show how such conservation relates back to the process of obsolescence, renewal and conservation, discussed in 1.6 (4.7). We then bring out the distinctive features in property management for the conservation of the CBH (4.8). If we are to conserve the CBH in any meaningful way, we need to identify just what that heritage is and how the protection against erosion is to be carried out (Chapter 5). This needs the foundation of some coherent philosophy and theory of conservation and logical answers as to the why of conservation (5.1). While countries around the world have here much in common, there is no standardised system, and each has evolved a different approach for identification and protection, varying for example with the amount of their cultural built heritage, attitude to it, etc. In order to present a picture we have sub-divided the process into four elements, namely the content of the list or inventory (5.2), the machinery for its protection (5.3), the effects of the listing (5.4) and how permission is secured to alter or demolish objects on the list (5.5). A review of these elements is presented by a brief introduction of the practice in England and then of related practice in a range of other countries which have been studied. We then return to the theme of management and planning of urban

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resources (Chapters 2 and 3) and trace the steps again in relation to conservation of the urban cultural heritage, within which we include both activities and physical stock (Chapter 6). We first introduce the relation of planning and management. We note that as with the general built environment, we have activities as well as stock; cultural conservation is thereby introduced, emphasising that it is not necessarily related to the CBH (6.1). We then show how the role of the CBH in urban planning has become identified over the last fifty years by a succession of international conventions which have sought the integration of the conservation into urban planning generally, resulting in the strengthening of the conservation beyond its capacity as a discrete movement (6.2). We introduce the same theme for the cultural heritage, which has however been far less integrated into urban planning (6.3). In the remainder of the chapter we go into further depth on plan making in the conservation of the CBH, both at the macro and micro level (6.4), and then to the implementation of plans for the conservation of the CBH (6.5, 6.6, 6.7 and 6.8). In the process of planning and management for the conservation there are raised some searching questions which hark back to the fundamentals of the philosophy of the conservation. These are enumerated and discussed (6.9).

The nature of the cultural built heritage

4.1

Man's heritage1

At any moment in time, any society is using its general heritage from the past, namely all that it inherits from its forebears. This is very varied in character. It can be categorised in relation to our concept of the urban and regional system (1.2) as follows: Physical stock2 (a) natural resources: land, with its minerals, agricultural and timber products, animal and bird life; the water, with its fish and plant life; the environment in sun, air, rain, climate; (b) man-made: works and buildings which are attached to the land (immobile); (c) man-made: works which are not attached to walls and buildings (mobile). Activities (a) consumption;, quantity and kind of goods and services available to people for their standard and quality of life; (b) production: way in which society has learned to provide the goods and services for consumption; (c) religion: relation with the God(s) of the country and the institutions which serve that relation; (d) arts: graphic, music, dance, literature, film, plays; (e) knowledge: accumulated and transmissible through education and training of all kinds;

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(f) folklore: collective memory of past generations, absorbed through the family, teachers, etc.; (g) tradition: carrying out activities in a manner reminiscent of previous generations. By definition, this heritage is continually growing, both with the rise in numbers of population who are able to transmit to the future, and the increasing amount of heritage goods and services of the above categories which are left behind. But the rate of growth is not uniform in all categories. In the natural heritage there is indeed a diminution, as certain irreplaceable resources of the earth become consumed. Certain kinds of inheritance are diminishing, for example particular crafts and skills, particular forms of education, such as the classics, and particular traditions, when discarded by the young. Others have newly appeared, the home computers. Thus there are variations in stock in particular categories and sub-categories. Associated with these variations in growth in categories are variations in the future life that can be expected of them. In the built heritage, the passage of years must erode the structure. Its maintenance will also be undermined unless measures are taken to preserve and continue the knowledge, number and skills of master craftsmen; to emphasise the point in Japan and Morocco these are classified as 'living cultural heritage'. 3 In the transmission of certain languages or dialects only a short life can be visualised if there is lack of use, unless efforts are made at continuation under adverse circumstances (Catalan in Franco Spain) and revival (as with Gaelic or Hebrew). Folklore, music and dancing are particularly exposed to disappearance without efforts to record and revive.

4.2

Proprietary rights in the heritage

The heritage can also be property and commodity (2.1). But there is variation in the kind of proprietary rights in the different categories of heritage. While natural resources have been given to men by God or nature, they have become appropriated in most societies: in the state (nationalisation or public ownership of land), in private ownership (large landowners or peasants), or in the tribe; the same can be said of the built heritage which becomes attached to land in various forms of ownership; personal property can be owned by government, companies, individuals, etc.; and cultural arts are owned by any person who can use the painting, music, dance,

The nature of the CBH

65

language, etc. of preceding generations, although the content of the performance could be owned by others under copyright. But whatever the nature of the 'appropriation5 there is in respect of certain parts of the heritage a form of ownership which transcends that of the proprietor protected in law. This arises where the society in question, through its government, attaches sufficient value to any element in the heritage to lead it to exercise some influence or control in its protection, nurture and survival. Examples are the wish of a government to ensure the continuation of certain arts (e.g. folk dancing or language) or, of greater concern to us here, of buildings of historical or architectural significance. When this governmental concern is sufficient to justify its taking such a stand it can be said to create in the heritage a 'heritage tenure', that is rights without necessarily assuming ownership, of the kind which are taken by central and local government when adopting laws in urban and regional planning. But it could also go with ownership, as in museums which set out to record, store, exhibit and make available to the public collections of the past, covering any of the elements of the heritage described above. The principle has a particularly poignant expression in respect of mobile elements of the cultural heritage of a country which have been taken abroad, whether as booty from conquest or exercise of other power. The heritage tenure is here taken to justify restitution to the original country. The debate continues while an international code is being built up. 4

4.3

The general and cultural heritage

By definition, the natural resources (4.1) are not part of man's cultural heritage (Appendix 4.1). But within the man-made general heritage can be detected part which is termed cultural: that which expresses some indefinable but recognisable element which the current society values especially and which it would wish to pass on to posterity. It is this part which is popularly called the heritage which is thought to be the hallmark of the 'civilisation' of the people who created it, 5 so enabling civilisation to advance ' . . . by extending the number of important operations which we can perform without thinking about them'. 6 It is the 'sum of human endeavour' and 'includes styles, institutions, activities and memories and values'. 7 The division between what is to be passed on or not is obvious in certain instances (traditional cooking versus harmful drugs) but not in others

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(classical versus jazz music). In these instances the distinction is seemingly subtle and arbitrary. It is made by successive generations (in some kind of consensus or elite choice) as the following examples show. Man-made moveables to be preserved find their way to private or public museums and art galleries; religion is perpetuated through its institutions; the arts which survive will depend upon taste as the years go on; all knowledge is stored (books, TV, film, etc.) with later generations selecting what they find of value sometimes to become 'classics'; traditions are a matter for individuals or institutions. The choice cannot be made once for all but is reviewed by successive generations. The Victorians disdained Georgian architecture, as the Edwardians disdained the Victorian. While popular music was originally disdained by the classical performer it now has a classical era of its own, in jazz and the blues. Classical Latin and Greek, initially the hallmark of education, have become dispensable and not mandatory; folklore and folklife have been pushed aside with 'growth and development' and tourism is now being treasured; traditional technology is now being restored under the slogan 'small is beautiful'; obsolete buildings of the nineteenth century are now revered as industrial archaeology. These examples relate to both activities and buildings. But they are not necessarily found together. The cultural built heritage can house mundane activities such as warehousing or manufacturing. And traditional pursuits are carried out in contemporary schools and community centres. And it is not even apparent that the matching of the two would assist in conservation generally. The historic buildings need high value uses, not necessarily cultural, to maintain them; and the cultural activities need low rented accommodation, not necessarily the CBH, to sustain them.

4.4

The cultural built heritage (CBH)

We now focus on a small proportion of part of the general heritage, the works and buildings and their associated land, which we call the cultural built heritage (CBH). This could cover a wide array of isolated objects, such as archaeological sites, ancient monuments (buildings which remain in whole or ruins which are typically not occupied nor capable of occupation), individual buildings or groups, streets and ways connecting the groups, places surrounded by buildings, objects such as single standing columns, statues, etc. Or it could extend to whole areas, be they ones which in themselves have a heritage value or, having no such value, are

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nonetheless of importance because they are surrounding or nearby part of the CBH. By definition, the CBH will have had some considerable life, even millennia in the case of archaeological sites. But even for the more recent buildings the tendency is to select the older ones, simply because they have the patina of age, and have come to be valued because they are of days gone by; society is not yet ready to select for conservation the more recent buildings, if only because the value for posterity is less clear and the urgency to do so is smaller, in that they are less under threat. But what is of equal if not of greater importance is the expected future life, since the most important single objective of such conservation is to secure the extension of the life into the distant future, for otherwise the effort would hardly be justified. Termination here could be a function of the object itself (age, physical decay, etc.) or of the threat of demolition. Thus the inherent condition of the heritage element (its obsolescence in degree and kind), together with the possibilities of finding a long and future useful life for it, becomes of critical importance. * . . . with the conservation progress, we are creating a future heritage not preserving an historic one'. 8 Where the conservation movement is strong, there is a tendency to create a bigger and bigger reservoir of the heritage which is selected for conservation, be it through the addition of more recent or less worthy buildings, or the enrichment of historical interest. When to this is added the contemporary strengthening of the conservation movement through a reaction against the nature of contemporary additions to the built heritage there can be seen a swell in quantum of buildings, objects, etc. which are thought worthy of consideration for conservation. This swell emphasises the need for criteria for selection within the built heritage of those thought worthy of protection, and the need for machinery aimed at such protection. To this we turn below (Chapter 5).

4.5

The CBH as property and commodity

All that was said above about the built environment as resource, property and commodity (2.1) would apply equally to the CBH. This in addition has the special feature of 'heritage tenure' (4.2). The State can express its interest in any works of art which it does not own, because it regards them as part of the general heritage (for example in forbidding the export of pictures or archaeological remains). But it can do so the more easily when

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the element of the heritage is fixed in place as real, immoveable property. In addition in such property the concurrent existence of interests is normal (2.1.2). For another it is accepted that the State can have such an interest (4.2). The exercise of heritage tenure could affect differently the various property interests in a property. For example, the denial to an owner of his redevelopment rights could be to the advantage of an occupier who finds the premises suitable despite the obsolescence; indeed he might find it advantageous to be paying a lesser rent for the older premises than he would have to pay for the new. Any lender of money on the property would take a different view. Clearly his security would be undermined by the obsolescence and would not be improved without redevelopment.

4 - 6 - Why conserve the cultural built heritage? One reason for conserving the cultural built heritage is the same as for conserving the general built heritage: as a resource for continued use by the current generation, so avoiding the need for new investment resources to replace it (1.8.3). Even more important, irreplaceable value is saved for the current generation, since by definition the CBH has quality which is different from, and in many ways superior to, the contemporary structure which would replace it: it provides refreshing contrast from the contemporary scene; it can be distinctive and may have rarity value; it offers a welcome opportunity for imaginative conversion and adaptation of a familiar building in the local scene to 'new uses for old' in housing, offices, light industry, retail and catering, leisure and conference.9 There is a further reason: the obligation felt by any contemporary society to hand over its cultural built heritage to succeeding generations. However elusive of definition and assessment of quality (Chapter 5) it is regarded as a trust for future generations, to be handed on. In the purist views of John Ruskin 'We have no right whatsoever to touch them. They are not ours. They belong to those who built them and partly to all the generations of mankind who are to follow us.' 1 0 Similarly William Morris ' . . . these old buildings do not belong to us only . . . they belong to our forefathers and they will belong to our descendants unless we play them false . . . we are only trustees for those that come after us'. 1 1 Or more contemporaneously 'A city without old buildings is like a man without a memory.' 12 In this spirit, certain countries act as trustees not only for future

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generations of their nationals but also for non-nationals around the world (Greece), as have certain Colonial governments occupying foreign countries (the British in India) who continue the protection even when transferring the foreign heritage to the homeland (Elgin Marbles in the British Museum). An extreme instance is seen in Jerusalem where the trust is even extended from the national religion, Judaism, to another, Islam, whose adherents are on the whole hostile to the state which conserves its monuments: to the point of open avowal to extinction. There are arguments against conservation. The heritage quality which is the object of conservation may co-exist in particular buildings with an internal space which is quite outmoded for contemporary use, even with expensive adaptation. Insistence on protection of such buildings could lead to the retention of white elephants which are uneconomic to operate and maintain: the need to maintain in materials which are compatible with the original (which cheaper substitutes are not) and the difficulty of finding craftsmen who can do the repairs, has led to 'a maintenance crisis' for the architectural heritage. 13 Furthermore, protection could lead to the sterilisation of important sites for new development. This could be significant not only for the site in question but for those surrounding areas where, understandably, there is the attempt to limit the size of new buildings in order to maintain scale with the protected building.

4.7 Conservation of the cultural built heritage as a special case of renewal In the evolution of human settlements the buildings and places which later become the cultural built heritage start their lives in no way different from others. As such they are subject to all the pressures for obsolescence, adaptation and replacement (1.6). But there comes a time when contemporary society takes the view that there should be resistance to renewal in particular buildings or places which have heritage qualities. When such a decision is taken two situations arise. First, since by definition the fabric is old, it can be assumed that it will embody some degree of obsolescence (1.6.2); secondly, the forces for their renewal must be constrained to avoid destruction of the heritage (for example, by major alteration or replacement). Thus buildings, etc. picked out for the cultural heritage become special cases in the evolution of a settlement in terms of

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obsolescence and renewal: they may well be obsolete and therefore candidates for renewal (1.6.3) but there is a special case for resisting their renewal. The resistance becomes a matter for official policy, legislation, enforcement, etc. Government acts as trustee for the protection of the heritage on behalf of future generations, even though the contemporary generation be called upon to make financial and economic sacrifice for the purpose. Thus the introduction of a conservation objective in respect of any part of the urban fabric introduces constraints on the way in which the fabric should be treated during its remaining life cycle, compared with the situation if there were no such objective. This treatment involves intervention at the seven differing scales and levels of intervention described above (1.6.3). Redevelopment apart, each comes within the ambit of renewal aimed at 'obsolescence'. Such renewal can be recognised as 'conservation' in the general built heritage. But in the cultural built heritage there is also need to restrict and conserve the cultural quality of the building, as far as practicable within the constraints of the development process (2.5.1). The object is ' . . . to present to those who use and look at historic buildings with wonder the artistic and human messages that such buildings possess'. 14 The kind of constraints introduced by the conservation can be seen in the control of 'restoration' and 'rehabilitation'. For the former the objective is to ensure that the building continues into the indefinite future in the form in which it was initially created, even to the point of removing changes since its construction which depart from the original designs, purpose, intention, etc. In the latter it is recognised that restoration in the original form is not practical nor desirable having regard to contemporary pressures, so that some adaptation of that original structure or use can be accepted. But even this can be very restrictive. In the use of the building there would be limitations coming from the need to respect the interior and exterior of the fabric as originally designed (e.g. to alter the fenestration or the interior partitions, ceilings, etc.). There would also be loss of freedom in taking measures against the obsolescence of the building: in the remedial works to physical obsolescence, there would be restrictions on what could be done (e.g. in the strengthening of the fabric where this would mean alteration of the external appearance); in the remedy of functional obsolescence there would be a limitation on the modernisation of the interior. All this leads to restrictions on the mode of renewal that might otherwise be employed.

The nature of the CBH 4.8

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Property management for the conservation of the CBH

In property management generally (2.4) historic costs are seen as 'foregone' or 'sunk', i.e. no specific future act of the owner can affect them. By contrast the value (measured by cost) is not, so that management policy and decisions can have their influence. A general management objective would be to maintain the value of the asset at as high a level as practicable throughout its visualised life: in other words to conserve it. In essence the manager tries to maximise net benefit over the visualised life, discounting costs and benefits over this life to the point of any decision (Chapter 7). In this he would not necessarily try to get the maximum intensity of use (e.g. over-dense occupation of a house) for he could then be shortening the potential life over which he could benefit. And he would not necessarily try to lengthen the life indefinitely, for then he might be frustrating the benefits from both the building and also the site in an alternative use. Such conservation has implications for management practice: in levels of maintenance and repairs; adequate return for investment in proposed rehabilitation; viability of scrapping the asset in order to realise the latent value of the site covered by the building. These objectives are consistent with securing an occupier of the built fabric who would be able to afford high level expenditure on maintenance of the property and thereby ensure its longer life. But it could be that such occupation would be less profitable, in the long run, than one which neglected the maintenance. For example, where early redevelopment was visualised, neglect of the property could lead to maximisation of net income in the meantime as would intensive occupation, even though it would physically damage the property. By contrast, management of the CBH with an eye to conservation of necessity leads towards the avoidance of such short-term courses of action. High level maintenance would be essential in order to maintain the physical fabric to lengthen life, simply because the overriding aim is conservation enduring into the future. Indeed the aim would affect the very modes of maintenance: using sympathetic materials and craftsmen even if more expensive.15 This property management for conservation of necessity acts as a constraint on the freedom of action available for such management which does not include the conservation objective, as the following examples show. On the cost side, it may be necessary to spend more than would otherwise be thought desirable. On the value side there is impediment to

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the use which has the greatest net surplus: in general, maximisation of net asset value needs to be tempered with maximisation of conservation value. But conservation measures could enhance the occupation value of the property, arising from the scarcity of its qualities compared with the generality of the built heritage. When rehabilitation is under consideration, proposals consistent with the retention and perhaps enhancement of conservation quality must be chosen rather than those which are indifferent to it. And since redevelopment itself is the ultimate frustration of conservation, the very objective of conservation must be to frustrate demolition. This necessity, to place the conservation objective in the forefront of management policy, has led to the necessity for searching out those uses which can function in conserved properties, which has been dubbed 'new uses for old' or 'adaptive use'. 16 In this process, it is necessary to find the balance between the requirements of the occupiers for continued occupation and the requirements for continued conservation. The solutions in practice have been very creative.17 Inevitably there must be compromise. This could fall upon the occupiers in terms of less efficient functioning than would be possible in a contemporary purpose designed building, or on the owners in less surplus of income over cost. It could fall on the cultural quality which would need to suffer in the adaptation needed to make the balance possible, compared with that which it is desired to retain. But what is left must be worthwhile, for otherwise the effort in compromise is wasted, since commercial advantage has been lost without achievement in heritage quality. 18

Appendix 4.1 A description of the cultural and natural heritage The World Heritage Convention of 1972 for the protection of the World Cultural and Natural Heritage, which is of outstanding universal value, has the following definitions (UNESCO, 1972): Article 1 For the purpose of this convention, the following shall be considered as 'cultural heritage': monuments: architectural works, works of monumental sculpture and painting, elements or structures of archaeological nature, inscriptions, cave dwellings and combinations of features, which are of outstanding universal value from the point of view of history, art or science; groups of buildings: groups of separate or connected buildings which, because of their architecture, their homogeneity or their place in the landscape, are of outstanding universal value from the point of view of history, art or science; sites: works of man or the combined works of nature and of man, and areas including archaeological sites which are of outstanding universal value from the historical, aesthetic, ethnological or anthropological points of view. Article 2 For the purpose of this convention, the following shall be considered as 'natural heritage': natural features consisting of physical and biological formations which are of outstanding universal value from the aesthetic or scientific point of view. geological and physiographical formations and precisely delineated areas which constitute the habitat of threatened species of animals and plants of outstanding universal value from the point of view of science or conservation.

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natural sites or precisely delineated natural areas of outstanding universal value from the point of view of science, conservation or natural beauty. For an object in the 'cultural heritage' to be considered of 'outstanding universal value' it must meet one or more of the following criteria and the test of authenticity: a) (i) represent a unique artistic achievement, a masterpiece of the creative genius; or (ii) have exerted great influence, over a span of time or within a cultural area of the world, on developments in architecture, monumental arts or town-planning and landscaping; or (iii) bear a unique or at least exceptional testimony to a civilization which has disappeared; or (iv) be an outstanding example of a type of building or architectural ensemble which illustrates a significant stage in history; or (v) be an outstanding example of a traditional human settlement which is representative of a culture and which has become vulnerable under the impact of irreversible change; or (vi) be directly or tangibly associated with events or with ideas or beliefs of outstanding universal significance (the Committee considers that this criterion should justify inclusion in the List only in exceptional circumstances or in conjunction with other criteria); and b) meet the test of authenticity in design, materials, workmanship or setting (the Committee stressed that reconstruction is only acceptable if it is carried out on the basis of complete and detailed documentation on the original and to no extent on conjecture).

Appendix 4.2 A description of moveable cultural property In adopting a Recommendation for the Protection of Movable Cultural Property in 1978, UNESCO has the following description of moveable cultural property (UNESCO, 1983, p. 215): (a) 'movable cultural property' shall be taken to mean all movable objects which are the expression and testimony of human creation or of the evolution of nature and which are of archaeological, historical, artistic, scientific or technical value and interest, including items in the following categories: (i) products of archaeological exploration and excavations conducted on land and under water; (ii) antiquities such as tools, pottery, inscriptions, coins, seals, jewellery, weapons and funerary remains, including mummies; (hi) items resulting from the dismemberment of historical monuments; (iv) material of anthropological and ethnological interest; (v) items relating to history, including the history of science and technology and military and social history, to the life of peoples and national leaders, thinkers, scientists and artists and to events of national importance; (vi) items of artistic interest, such as: paintings and drawings, produced entirely by hand on any support and in any material (excluding industrial designs and manufactured articles decorated by hand); original prints, and posters and photographs, as the media for original creativity; original artistic assemblages and montages in any material; works of statuary art and sculpture in any material; works of applied art in any such materials as glass, ceramics, metal, wood, etc.;

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5

5.1

Identification and protection of the CBH

The issue

As indicated above (4.4) a government cannot protect all possible candidates in the CBH and must accordingly identify those objects which it does decide to protect. For this purpose we distinguish between an inventory of possible candidates which can be screened into a list for protection. 1 This calls for a comparative estimation of the cultural value of the various objects, with priority for those of higher value. This estimation is elusive for a number of reasons. Cultural value is an intangible quality which is difficult to measure. There is no exchange value in the market as a guide to contemporary valuation by individuals. There is no way of establishing the values which will be held by future generations, on whose behalf the selection is being made. Despite the difficulties, it is important to have a robust method of identification, for a variety of reasons. Just because the criteria for selection are intangible and subjective, there is considerable room for debate which can erode the time needed for concentration on the conservation itself. Criteria which are not understandable and acceptable will not secure the necessary resources for conservation. There is need to secure the confidence of those affected by the conservation measures, viz. owners/ developers of the properties concerned, or the taxpayers called upon to find the financial resources for conservation. There needs to be some firm basis for an action programme within the overall conservation strategy. All this needs the foundation of some coherent philosophy of conservation (Preface), some theory to give logical answers as to the why of conservation (1.8 and 4.6). But, however firm the basis for identification of the CBH, it is of little significance unless there is also a firm legal and administrative basis for its protection; otherwise the exercise has no impact on practice. The purpose

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and role of the inventory in this regard varies from country to country. 2 It could simply offer data as a basis for legal protection by others (Canada); it could be the basis of legal protection, when it becomes the list (India, Japan, Mexico, Morocco); or could be both (France, Italy); or could be intended for integration into development policies and plans (Poland, Morocco). This chapter deals with the inter-related pursuits of identification and protection. This process follows similar principles in countries the world over which have concern with the conservation of the cultural built heritage.3 However it is carried out at different levels of interest and is not standardised, so that variations emerge from an international comparison. Thus rather than go into one process in depth we make a broader review which summarises a comparative study of practice around the world. The summary is presented by reference to four main items, which are then sub-divided into sub-items: 5.2 5.3 5.4 5.5

Content of inventory or list; Machinery for protection of the list; The effects of listing; Securing permission to alter or demolish objects on the list.

For each there is in introduction a review of the issue, then a brief statement of the practice in England to provide a point of departure, 4 and then a comparison of relevant practice from selected countries. 5 Since the statements are based on complex legal provisions they purport to be only indicative not authoritative.

5.2 5.2.1

Content of inventory or list What kind of artifact is to be included?

As indicated above (4.4 and in Appendix 4.1) the CBH is wide ranging in content, from natural or archaeological sites and free standing monuments, to buildings which are less than a century old and still occupied, or to groups of buildings. In the literature all these are referred to as sites. Some countries include moveables (France, Italy, Poland) but most do not. Furthermore, the claim to be included in the heritage can relate to a wide number of qualities, such as historical, architectural, aesthetic, educational, ethnographic, etc. Thus it is necessary to establish just what kind

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of site is to be included in the inventory or list (e.g. Chapter 4, Appendix 4.1).

England Four categories of artifact can be conserved, each under distinct legislation: buildings, conservation areas, ancient monuments and archaeological areas,6 with nature covered by yet other legislation.7 Each category of artifact is defined. For example, a building ' . . . includes any structure or erection, and any part of a building as so defined, but does not include any plant or machinery comprised in the building'. This covers not only conventional buildings but such minor structures as dovecotes, bird-baths, fountains, etc.

Review In other countries, a 'conservation site' could be a whole district, a single building, a detail of a building, a site with archaeological remains, or some vegetation or rock formation. The most common definition of what can be listed are immoveable objects, buildings, monuments, groups of objects or buildings or districts. Few countries permit the interior of buildings to be listed or the inclusion of the area around the object in question. Only some countries stipulate that religious buildings can be listed, since they are protected under separate arrangements. In some countries the identification of the type of objects leaves little discretion to the listing authorities, as in Sweden. By contrast, some Swiss cantons prescribe the kind of object but permit also the protection of others.

5.2.2

What are the criteria for inclusion or exclusion?

In any inventory there will be objects which must be included and clearly those which should not. While in general there will be a tendency to include rather than exclude, certainly in the inventory and even in the list, since its purpose is to ring protective bells. The borderline will vary with the relative scarcity of the heritage which is available (compare Italy and the United States). The difficulty arises on the borderline. What are the criteria?

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Should regard be had to considerations other than 'historic or cultural value', as for example the condition of the artifact (good, or bad, threatening decay), cost of restoration or conservation, etc.? How is comparative 'cultural value' to be assessed? Clearly all possible items are 'historic' in the sense of belonging to the past, but what particular features should identify them? Is it their special place in history, as for example the work of notable architects, whether these are valued in contemporary circles or not? Is it their outstanding aesthetic value, judged by contemporary or other standards? Do they represent a living museum of a past way of life? Is it the educational value, comparable to items on display in a museum, for scholars and practitioners of the future? Is it a group which as a whole has a special quality, even though the individual components do not have quality?

England As indicated above (5.2.1), there are four distinct kinds of object for conservation: buildings, conservation areas, ancient monuments and archaeological areas. The criteria for inclusion differ with each:8 Buildings These are of 'special architectural or historic interest' including the way in which the building's exterior contributes to the architectural or historic interest of the group of buildings of which it forms part. Where any part of a building is listed protection relates to the whole building, including any object or structure fixed to it. In addition to this 'principal building' the list will cover also any building within the curtilage of the principal building ('Curtilage building') which has been so since before 1st July 1948. The list does not extend to the gardens or parks associated with the building, even if in itself of special interest, although they can be covered in non-statutory lists issued by the Historic Buildings Commission. The central government department concerned, the Department of the Environment, interprets these provisions by means of advisory circulars, which can then be changed according to the circumstances. The criteria are devised in consultation with persons 'who have a special knowledge of, or interest in, such buildings' and by reference to national criteria in which the Department is advised by the Historic Buildings and Monuments Commission.

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Conservation areas. Since around 1967 protection has been extended to buildings which may be individually of lesser quality but collectively have considerable townscape value. Two tests must be satisfied before designation as a conservation area: it must be of special architectural or historic interest and it must be desirable to preserve or enhance its character or appearance. Ancient monuments. Protection of ancient monuments was first initiated in 1882 and has continued since. Under the current Act of 1979 a number of categories of monuments were set up, each defined and accorded different levels of protection: scheduled monuments; ancient monuments and protected monuments. Archaeological areas. An archaeological area is one which (to either the Secretary of State or the relevant local authority) merits treatment as such. Given this they may (not must) designate it as such. The effect is not necessarily to preserve the area (and thus sterilise development) but to give a period of six weeks notice to the authority to enable them to decide action. If development is not prevented it follows a period for archaeological investigation.

Review The main criteria used by most countries are historic, architectural, artistic and cultural interest, each of which is divided into sub-groups. A comparative perusal shows that similarities and differences in criteria between countries, regions and cities reflect cultural values (what they consider to be worthy of conservation) and also the amount of the CBH that actually exists in relation to the totality of the general built heritage. But the use of the criteria will not necessarily result in standardised assessment, since investigators who actually undertake the listing may interpret the criteria differently (particularly where they are disseminated from the centre) and may use criteria which are not specified. In some countries this problem is addressed by adoption of dates: for example, anything before certain dates receives automatic protection, as in Cyprus before 1850 or Israel before 1700. In certain countries different criteria are used for objects of different dates. Variety in criteria is greater in those countries where different levels of government are involved. In the United States the criteria at the national level have no legal status, the actual listings

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being undertaken by state and municipal governments. Since many cities use the criterion of aesthetic interest, which is vague, it follows that a city can choose to list almost anything that it wishes to include. Also of relevance in this context are the criteria for inclusion in the World Heritage List (UNESCO, 1972) (see Appendix 4.1). 5.2.3

How to grade conservation quality?

Given the inclusion in the inventory, how can the analysis be further refined to sub-divide the included candidates in terms of their grades of quality, having regard to the criteria already chosen for inclusion. This will clearly not be uniform for each kind of object. The reasoning behind archaeological sites cannot be the same as that behind historic sectors of towns. The questions of grading raise the same operational considerations as the questions of inclusion. Is it to be centralised or decentralised? Is it to be the subject of individual judgement, having regard to the variety of criteria (5.2.2), or the consensus of a committee of scholars from the various fields? Is the judgement to be entirely subjective or should the attempt be made to introduce objective analysis by, for example, a points scoring and weighting system? England9 The list sub-divides buildings in the following Grades: I - of exceptional interest, II - of special interest, II* - within which some are particularly important, and former III and current local lists - others of listable quality which are not statutorily protected. In order to introduce some objectivity the list includes most buildings between 1700-1840, with sub-divisions into four different periods: pre-1700, 1700-1840, 1840-1914, 1914-39. Within these dates there are differences in the detailed criteria. Review In nearly all countries, regions and cities, there is only one grade of classification; only Denmark, France and Alberta have two. Thus, generally speaking, there is little attempt to differentiate value and significance in terms of conservation quality.

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This failure to discriminate in grading quality is of importance for two reasons. First, it fails to indicate to the owner the degree of protection which the authorities will seek to ensure for the object in question. Second, it fails to indicate to the authorities just how seriously they need to take threats of erosion of the heritage in that particular object. These signals are important in terms of machinery for protection, as we shall now see.

5.3

5.3.1

Machinery for protection of list or inventory

What kind of listing mechanism?

To what degree is the assembly of the heritage inventory to be centralised, with a view to achieving uniformity in approach? To what degree is it to be decentralised with suggestions for inclusion coming from localities, for scrutiny by a central body? What are the skills to be employed in the assembly (architects, historians, artists)? How is the material relating to each of the identified objects to be compiled with a view to comparison? Should the information sought relate simply to facts? Or should it also relate to consequences of failure of protective action? Should the views of owners/occupiers be taken into account? If yes, should these be related only to the criteria for inclusion/exclusion (5.2.2). Or should they go beyond this into the circumstances of the owner?

England Although the machinery for protection is different for the four categories of conservation object, in that each was provided for initially under distinct legislation,10 the machinery has been centralised in the authorities concerned with town and country planning, into which the conservation is integrated. Thus the authorities are the planning authorities (the Department of the Environment and local authorities in two tiers) together with the specially constituted Historic Buildings and Monuments Commission for England, popularly called English Heritage, which in parallel to assisting the authorities in their conservation functions, has its own duties: 11 (1) to secure the preservation of ancient monuments and historic buildings in England; (2) to promote the preservation and enhancement of the character and appearance of conservation areas;

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(3) to promote the public's enjoyment, and advance their knowledge, of ancient monuments and historic buildings and their preservation. The ultimate responsibility for listing and designation procedures rests with the Department of the Environment with its team of inspectors, who enlist the aid of the Commission, local authorities, voluntary bodies, etc. in providing inventories. But the records, registers and archives are not centralised, and there is duplication with poor co-ordination. This has led to the call for 'A Heritage Database for England'. 12 The mechanics of the procedures are laid down by legislation. Owners are notified not consulted, and the listing and designation are not subject to money compensation for loss of property value. This makes for hardship where there is spot-listing, i.e. emergency listing, to give temporary listing protection to a site which is threatened. In archaeological areas there has evolved a voluntary code of practice sponsored by the British Property Federation on behalf of property owners and the Standing Conference of Archaeological Unit Managers on behalf of the archaeologists.13

Review As might be expected, the law and the practices under it vary considerably from country to country, and within countries. Major points are: Legislation. Most countries, regions and cities have a single law for the listing and protection of heritage objects. But many countries in Europe have various heritage laws, each covering different aspects or types. France, for example, has separate laws for the listing and protection of immoveable monuments, sites and protected zones, while Sweden has separate laws covering ecclesiastical sites, monuments, antiquities, public buildings and expropriation. Some countries provide for the listing of sites within the town planning law, which is usually used together with the national heritage law, as in Denmark. Authority. In almost all European countries the listing authority is the state: in Switzerland, West Germany, Canada and the United States it is the regional government. Some countries with national listing powers permit local authorities to undertake local listing so long as it does not conflict with the national legislation. In some countries (e.g. Canada and the United States) regional governments enable local authorities to undertake the

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listing, following consultation with their local heritage board, which is identified with the authority. Some cities grant listing powers direct to the board. Mechanism. rest:

While the authority is with the state, the decision could

in the legislation and not in administration (in Norway, for example, ecclesiastical buildings receive automatic protection, as do antiquities in Cyprus and Israel); with a minister or council of ministers, commonly requiring prior consultation and assistance from special heritage boards, councils or other bodies, though to different degrees. Procedure. Except for objects or sites which receive automatic or spot listing, a statutory procedure must be followed in order to afford protection. This is usually started by the decision-making authority, but in many countries the owner, heritage board or heritage groups can request the listing. This privilege is extended in some countries to anyone at all (e.g. Detroit, Miami and Tucson in the United States); but it is limited in Turkey, West Germany, Miami Beach and San Francisco to the owner. Notification to owner. In almost all countries the owner must be notified of the intent to list, in most cases his consent being required. In France this consent must be obtained only for the listing of moveable objects. Only in cities in the United States and Ontario is a public hearing held on the listing proposal. Right of appeal. Very few countries contain provisions in their legislation of the right to appeal against the listing. Such rights do exist, to the city council or the Courts, in all American cities.

5.4

The effects of listing

Whether consulted or not, it is important for owners to know the consequences of the inclusion in the list. Are they to be light, simply asking for consultation on proposals which might damage the heritage? Or are they to be severe, imposing a ban on any works of external or internal alteration, with or without compensation?

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Once the formal listing and designation has taken place, the effect is to give firm control by the authorities over any works which affect the object to be conserved and its setting. Listed buildings, for example, require 'listed building consent' for any works of alteration or demolition, including for the interiors. This control is extended to conservation areas, where all buildings are treated as though they were listed, with the listed building control relating to demolition not alteration, and not the interior. It is an offence to execute any works resulting in the demolition or destruction or damage to a scheduled monument, or to carry out operations in a designated archaeological area without first serving notice, and allowing six weeks to elapse after the service of the notice, so enabling the authorities to act. Powers also exist for authorities to carry out works of maintenance and repair to prevent deterioration of listed buildings and also to enforce restitution of such buildings where unauthorised works have been carried out. There is a comprehensive programme of financial subsidies for conservation, in the main amounting to capital grants with some minor relaxation of taxation.

Review In general, the effects of listing involve control and restriction on the owners and occupiers of the site, and duties on the public authority. These range over: Consent for alteration or demolition. In most European countries, construction, alteration and demolition of all listed sites require prior approval. In a few countries and regions only specific grades in the listings require consent (France and Alberta) whereas in others a distinction is made between alteration and demolition. A few countries in Europe provide protection for a stated radius around the listed sites, in France, for example, extending up to 500 metres for Class I buildings. In some American cities demolition can be refused only on certain conditions: for example in Miami, where incentives are offered to the owner, or in New York provided that the owner can earn a reasonable return from the site.

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Action by the authority. In two places (Alberta and France) where alteration or demolition of Grade II listings require only notification to the government, it may respond by reclassifying the site so as to give it full listing protection. If it does not, the owner may carry on with his proposals. In several American and Canadian cities the local authority can temporarily delay alteration and demolition of the listed sites or of sites in the listed district, to give the opportunity to decide what action to take. Control on erection of advertising. Outside legislation relating to the general control of advertisements, a number of countries, regions and cities place restrictions on advertising on listed sites. These may vary from total prohibition (Cyprus), total prohibition within 100 metres (Denmark and France), total prohibition and possibly on adjacent sites (Portugal), and prohibition at the discretion of authorities (Italy). In other countries, permission must be obtained for advertising (Germany and American cities). Maintenance and repair. In order to prevent a listed site from deteriorating, most countries can require the owner to undertake necessary maintenance and repairs. On non-compliance the authorities can order the owner to undertake the repairs, or they may carry them out and charge the costs. In some cases (Cyprus, France and Portugal) the government may contribute. In some (Italy), if the owner does not refund the entire cost, the state can acquire at a price based on condition before the repairs were done. Restoration. In some countries, where an owner of a listed site has done unauthorised work, the authorities can require him to restore the site to its previous condition. Expropriation. In most European countries as well as Canada, a listed site can be expropriated, where the authorities consider that the action is necessary to ensure the conservation. Incentives. In nearly all countries, regions and cities, listed sites are eligible for various financial incentives in order to advance conservation.

88 5.5

Economics in urban conservation Securing permission to alter or demolish objects on the list

In law, once an object is on the list it cannot be removed except for, say, wrongful inclusion. But provision needs to be made for the authority to agree action which will permit departure by the owner/occupier from the restrictions imposed by the listing. What are these circumstances?

England In England alone there were (December 1977) some 12,000 scheduled ancient monuments and (December 1985) some 368,000 listed buildings and (April 1983) 52,000 conservation areas. 14 In the process of preparing the inventories there is a limit to the depth of investigation that can be carried out. Indeed, in a situation where, under general planning law, consent for demolition of buildings is not needed, depth is limited simply because the purpose is not to provide a sacrosanct list which can never be eroded so much as a trip wire which enables the authorities to consider appropriate action when a threat is raised, by proposed works, etc. Application for listed building consent is distinct from that for planning consent for development of the listed building. The need for planning consent can protect listed buildings in another way: permission can be refused if the development would adversely affect a listed building in another ownership. Not all alterations to a listed building require consent but only those which affect its character as a building of special architectural or historic interest. When this situation arises permission must be obtained for the works. This creates an embargo on demolition of the listed building, without the listed building consent. In considering the application authorities are presented with four criteria from the Department of the Environment, briefly:15 (a) the importance of the building, both intrinsically and relatively, bearing in mind other comparable buildings; (b) the architectural merit and historic interest; (c) the economics to the owner; (d) the importance of the alternative use which is proposed to the area which would remain. As regards conservation areas, although the buildings are deemed to be listed the control is not the same as for a listed building outside. The test is the effect of the loss on the character and appearance of the conservation

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area in question. 16 The control in respect of monuments is severe and works are authorised only if they are executed in accordance with the terms of the consent and any conditions attached to it. 17 As regards archaeological areas, operations can be carried out only with the consent of an investigating authority, appointed by the Secretary of State. 18

Review Deletion from the list. In only relatively few places does legislation enable a listed site to be deleted (e.g. New Zealand, Belgium, Norway, West Germany, Alberta and Ontario in Canada, and New Jersey in the United States). New Jersey legislation stipulates that a site can be deleted from the list if the qualities which warranted its listing have been lost or destroyed. Authority for consent. In most places, powers rest with the listing authority. In a few places, this applies to the higher grade sites, with the power for the lower grade sites resting with another authority (e.g. France). In a few cases the powers rest with an authority different from the one which undertakes the listing. Who must be consulted? In most places, consent cannot be given without prior consultation of other bodies. Most European countries require the minister to consult with the heritage board or, in Norway, Switzerland and Turkey, with the local authority. In some other countries, consultation is extended to academic and heritage groups and specialists. Criteria. Legislation in most countries, regions and cities does not outline criteria to be used for deciding on consent, exceptions being in certain American cities. However, while the statutes may not be specific, guidance is given by non-statutory government circulars, and authorities have discretion. The criteria are divided into the cultural importance (e.g. historical or architectural value); and conditions relating to aesthetics, architecture, environment and economics. Criteria relating to importance include whether the consent would be in

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the public interest; and the effect of new construction on the historic and architectural value and significance of the listed site. Aesthetic-architectural-environmental criteria involve examining both the retention of the listed site and the proposed new construction for their effect on the character of the surrounding area: for example, would either enhance its surroundings, taking into account the architectural design and details of the new building. The economic criterion applies in certain American cities. Generally speaking by this is meant 'undue financial hardship'. Most places do not define the term. An exception is in New York. Delis ting may be granted if the listed site is not capable of earning a reasonable rate of return, which is set at 6 per cent of the property's value. However, in none of the cases does the legislation and its derivatives give a comprehensive list of the criteria to be used, which is to be given the greater weight, and how to compare as between the criteria. The result is that there do not exist comprehensive objective criteria to guide the process. Consequently, decisions are often based on subjective criteria at the discretion of the delisting authorities.

6

6.1

Management and planning in the conservation of the urban cultural heritage Relation of planning and management

We saw above (2.5.5) that the process of planning and management are closely inter-related, with the difference of emphasis in particular situations stemming from the vantage point of the institution concerned and its professional advisers. In this context, in relation to urban and regional planning, we saw that it is conventional to see management as the implementation of policies, strategies, proposals, plans and programmes. That is the emphasis in this chapter. It will also be seen from the title of the chapter that we are referring to the 'urban cultural heritage' and not the 'cultural built heritage'. This is to introduce the twin aspects of the urban system (the physical stock and the related human activities) into our planning and management of the urban cultural heritage, even though for reasons already displayed (4.8) the cultural activities are not necessarily found in the cultural built heritage itself.

6.2

Role of the CBH in urban planning

The roles of conservation and planning (3.2, 3.3, 3.4) take on special emphasis when considering the future of the CBH. As we have seen (5.1), where society decides to impose conservation constraints upon owners in the renewal of heritage property, it is in effect asking them to make management decisions on the future of their property which balance their own proprietary interests with the social objectives of conservation. For this purpose society needs to intervene in the market process. And, as we saw above (5.3), for such intervention it needs to arm itself with legal powers which override the general laws of property; with

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administrative machinery for implementation; and with financial resources where these are needed to support the conservation programme. With these aids it can intervene at various levels, as follows. One approach can be referred to as 'random'. Here the totality of the built heritage is scanned for candidates for conservation and each unit is then considered when the need arises, for example when there is a threat of deterioration or demolition. More comprehensive is sectoral planning for the conservation stock as a whole. This involves initial inspection and documentation for the preparation of an inventory of the CBH stock, with some grading of priority in conservation quality. Such inventory provides a basis for a forward looking policy, strategy or plan for the conservation of the CBH, with its own conservation priorities and programme, budget, maintenance strategy, workforce, training. 1 This would have regard to modes of conservation which are appropriate to the particular item, backed up by some conscious purpose in retaining the stock, the problems involved in so doing, the means available, the financial resources required, etc. However, such policy, plan, strategy, etc. could be lacking in one very important respect: it could have been prepared without regard to the planned future of the remainder of the town, village, district, etc. in which the particular item of the built heritage is found. It would not be taking into account, for example, whether or not the area was to grow in population or activity, be improved in traffic accessibility, be surrounded by uses and activities which are harmonious or not harmonious to the conservation objective. And, more particularly, by so neglecting the context of the conservation it would not be considering in full one critical aspect of the conservation possibilities: the prospects of finding a potential use for the heritage which would in itself contribute to its maintenance and upkeep into the future. For example, a historic mansion in an area of residential decay would hardly attract a possible hotel use. But if its future were seen as part of an urban conservation area, the hotel use would be more likely and promising. It is for reasons such as these that planning for conservation of the CBH has in practice been integrated more and more around the world into the ongoing process of urban and regional planning. This integration has been propelled from two sides. On the one hand those concerned with urban and regional planning have always seen the need to embrace rural and urban conservation as one of a series of sectoral concerns to be absorbed within the comprehensive planning. On the other, those concerned with CBH conser-

Management and planning for conservation of the CBH 93 vation have over the years seen the need to prepare the conservation strategy within the wider context. There is another equally compelling reason. As seen above (3.1.3) there has grown up as part of the means of implementing urban and regional plans the exercise of control over proposed development through the need to apply for a permit to carry out development. This clearly is of great significance in controlling erosion of the heritage, as are other means of plan implementation (e.g. partnership ventures, financial incentives or disincentives). Over this century this integration received stimulus from cultural internationalism introduced in the post-World War I League of Nations. 2 Some highlights are given here. The initial step was taken at the Athens Conference of 1931, on Restoration of Historic Buildings, organised by the International Museums Office, which introduced for the first time in history the concept of international heritage. 3 This was followed in 1933, also in Athens, by the Fourth Assembly of the International Congresses on Modern Architecture (ICMA) which laid down the principles of a town planning Charter. 4 A major step forward was also taken in the First International Congress of Architects and Specialists of Historic Buildings in Paris in 1957, which recommended, inter alia, 'that architects and town planners co-operate so as to secure integration of historic buildings into town planning'. 5 This led to the Second Congress in Venice in 1964, which produced the Venice Charter on International Restoration. 6 This showed the evolution since 1931 of ideas and actions, as evidenced by the following: the concept of an historic monument embraces not only the single architectural work but also the urban and rural setting in which is found the evidence of a particular civilisation, significant development of an historic event . .. the conservation of monuments is always facilitated by making use of them for some socially useful purpose. The Venice Congress was also significant for the resolution put forward by UNESCO for the creation of ICOMOS, the International Council on Monuments and Sites. This was founded in Warsaw in 1965 as an international non-government organisation.7 It works in co-operation with other such organisations, such as ICCROM (International Centre for the Study of the Preservation and Restoration of Cultural Property: the Rome Centre) and ICOM (The International Council of Museums). Since then it has embarked on a continuing programme, including annual international congresses on different aspects of its work, in close association with UNESCO. 8

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This led to a major advance at the conference of UNESCO in Paris in 1972, which adopted the World Heritage Convention concerning the protection of the world cultural and natural heritage. 9 Another significant milestone was the initiative taken by the Committee of Ministers of the Council of Europe which designated 1975 as European Architectural Heritage Year (EAHY). 10 This put forward the principles of integrated conservation policy as follows: (1) integrated conservation of the cultural heritage and monuments and sites is one of the basic constituents of regional town and country planning; (2) the integrated conservation of a country's cultural heritage and monuments and sites concerns its citizens first and foremost; (3) public authorities at national, regional and local levels have special responsibilities in the integrated conservation of the cultural heritage of monuments and sites. The Council's resolution was also specific on the financial measures which were needed in terms of: (1) reallocation of funds; (2) official financial aid in various forms: increasing the size; financing of preliminary surveys, financing of works by grants or long-term low interest loans, tax relief, and the establishment of a revolving fund. These financial considerations were further developed in the Nairobi Charter of 1976 which stressed economic and social considerations:11 33. Protection and restoration should be accompanied by revitalisation activities. It would thus be essential to maintain appropriate existing functions, in particular trades and crafts, and establish new ones, which, if they are to be viable, in the long term, should be compatible with the economic and social context of the town, region or country where they are introduced. The cost of safeguarding operations should be evaluated not only in terms of the cultural value of the buildings but also in relation to the value they acquire through the use made of them. The social problems of safeguarding cannot be seen correctly unless reference is made to both these value scales. And 46. It is most important that the safeguarding measures should not lead to a break in the social fabric. To avoid hardship to the poorest inhabitants consequent on their having to move from buildings or groups of buildings due for renovation, compensation for rises in rent could enable them to keep their homes, commercial

Management and planning for conservation of the CBH 95 premises and workshops and their traditional living patterns and occupations, especially rural crafts, small scale agriculture, fishing, etc. This compensation, which would be income-related, would help those concerned to pay the increased rentals resulting from the work carried out. This work has been continued with the Washington Charter of 1987 for the conservation of historic towns and urban areas, which complements the earlier Charters, identifying the conservation of historic towns and urban areas ' . . . to mean those steps necessary for the protection, conservation and restoration of such towns and areas as well as their development and harmonious adaptation to contemporary life'. 12

6.3

Role of the cultural heritage in urban planning

This integration into planning of the cultural built heritage concentrates on the built environment. This is to be expected, since the driving force behind the successive conferences and charters has been in the main the professions concerned with the physical stock. However, in parallel there has been growing up the quite different emphasis which was referred to above (3.2), on the activities of the people, which are seen as adjunct to the human rather than to the man-made resources in the urban system (1.4.2, 1.5.3 and 1.8.2). This emphasis has its origin not in the developmental skills but in the social sciences, in particular urban history, historical geography, sociology and anthropology.13 As a result it contributes a quite different offering to our understanding of the urban system, repeating a pattern of absorption of new insights so often found in the evolution of urban and regional planning. To consider this aspect fully we would need to enter into the literature and practice on the contributions of sociology and anthropology in the planning system, bringing out that particular aspect which is related to the cultural as opposed to the general heritage in relation to such activities (4.1 and 4.3). There is hardly the space for that here so that only a brief mention is made. As in all urban and regional planning there needs to be an awareness of these relevant aspects before they can be encompassed within the planning process. This brings forward the need to understand, in the community which is being planned, the existence and significance of people's activities (3.1.2); and since these are not homogeneous, to understand their activities by reference to sub-groups relating to ethnic origins, religion, culture,

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tradition, etc.; to understand in other words what has been described as 'folklike' and 'folkways' (3.2 above). Clearly these kinds of activities, however rooted, are susceptible to change, be it the change coming from the dynamism of the group itself (for example, the absorption into the new country of an immigrant of an ethnic or religious group), or from the change imposed from outside the urban area. But while such groups, like all, must face up to change, they are asking for the change to take into account the values that are generated and are treasured; and to have the opportunity for commenting on proposed changes and making their contribution to amelioration of the social and cultural impacts. Thus cultural conservation is a positive and deliberate attempt to keep what is of value in folklife against the seemingly inevitable changes in activity, changes which are coming at an accelerating pace. The theme is 'continuity and change' or 'change in the context of continuity' (3.2). In this regard, it would make for ease of presentation if cultural activities in this selective sense were carried out only in buildings which could be identified as the cultural built heritage. This is not so (4.3) and indeed, in many cases, the opposite is found. Having introduced this aspect of the conservation of the urban cultural heritage, we do not pursue it but concentrate in the remainder of the chapter on the cultural built heritage.

6.4

6.4.1

Plan making in the conservation of the CBH

Macro planning

The conservation of the CBH is a social objective, which can be pursued at state, regional and local levels, within the orbit of urban and regional planning (3.2 and 6.2). The same question arises as posed above (3.4): how can such planning contribute to the objective? It can supplement the role introduced above in urban planning which takes account of the general built heritage (GBH) (3.4): the need to plan for 'continuity and change'. By definition this will apply also to the CBH, with certain added dimensions, as follows: (1) instead of the GBH, which is simply a fact of existence at the time of preparing the plan (3.3), the starting point is conscious selection in the inventory of the CBH (Chapter 5);

Management and planning for conservation of the CBH 97 (2) this inventory, with its implied conservation objective, must be considered alongside other selected inputs to the plan making process, as brought out above (6.2); (3) in terms of the inventory the threat of 'market failure', leading to the need for government intervention (3.1), is sharper than in relation to urban conservation of the GBH: the market cannot cater for the externality of keeping the benefit of the CBH for future generations; (4) where the inventory shows areas to be conserved, they need to be sheltered from current intrusion which threaten their conservation, such as modern traffic and car parking, large buildings and incompatible uses. Equally well they need to be protected in the planned future from new intrusion, and enhanced by the creation of new environments. In all the above, there is the tendency to regard the inventory as a given fact around which the plan must be built. But it must be recognised that while the inventory is an expression of cultural value at the time of preparation, the very planning process could influence these values. How can this be reflected? Two critical questions arise: will the emerging plans, policies, etc. indicate a different after-use for the CBH than that evolving in the unplanned urban system; and will the plans, policies, etc. advance or retard its obsolescence? In answer, a preliminary screening should identify the use to which the heritage element is being put and to which it could be put following rehabilitation; the degree of opportunity it offers as a resource (1.3); and then the prospective degree of obsolescence within the factors described above (1.6). It is those buildings, etc. which will show high degrees of obsolescence for any prospective future use which would be screened out of the inventory at this stage. It is not suggested that this analysis be carried out with precision; indeed, current knowledge would prevent this. But it is suggested that consideration be given to each element of the CBH at least to the level of generality carried out in respect of identifying the quality of the heritage which justifies inclusion in the inventory (Chapter 5). To assist in this analysis it will be necessary to pose and answer certain leading questions relating to the planned future of the area insofar as it affects the CBH. Some examples are: 1 In respect of any local community, is there visualised growth, stagnation or decline in population, and/or in the various

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economic activities which form the economic base of the community? 2 Whatever the economic profile, how can the conservation of the built heritage be used as a resource to facilitate growth (for example as distinctive adapted buildings for the tourist industry, or the supply of needed social and welfare services)?14 3 How can investment in the heritage be used as a base for improving the economy of the area, both in terms of output and in retention of the output in the locality? 4 Where growth is not needed, and added tourism, etc. could only add to congestion, etc. how can the plan be used to cater for the disbenefits, for example in traffic routeing, car and coach-parking, etc.? To answer these questions a review is needed of the official and unofficial policies, plans, programmes, etc., which are to be found at the regional and local levels, m order that their content should be reflected to the degree possible. However, since these are continually evolving they may not give the firm guidelines to the planned future which is being sought. If so, there needs to be assumptions about this planned future, and conclusions drawn on the basis of these assumptions, to enable the next stage of the screening process to be pursued. 15 The assumptions will indicate those parts of the heritage on which conclusions can only be tentative at this stage, so that decisions in terms of conservation should be provisional for this reason alone. Where there is more certainty as to the planned future the assumptions will be a basis for the review of the current policies, plans and programmes, and its amendment over the years, as the assumptions become firmed up through monitoring of experience. 6.4.2

Micro planning

The macro planning just described will be followed, accompanied or replaced by micro planning for elements of the CBH, which will consider their current conditions and future in more detail, resulting in conservation projects.16 This would involve such matters as: (a) an indication of the future of the areas affecting the heritage, from the macro planning just described (6.4.1); (b) a more detailed investigation of the heritage values of the

Management and planning for conservation of the CBH 99 buildings and groups than would have been practicable on preparation of the initial inventory; (c) a study of such buildings and groups in their setting, in order to consider how wide the conservation proposals should be drawn; (d) the search for 'new uses for old', which will present an array of potential occupiers around whom the viability exercise on the conservation can be built; 17 (e) the study of areas adjoining the heritage buildings, to see what they could gain in rejuvenation from the stimulus of the conservation of the heritage.

6.5

Plan implementation in the conservation of the CBH

In introducing planning above (Chapter 3) we referred to the measures that were available for implementation (3.1.3). We here amplify those measures with particular reference to implementation relating to the conservation of the CBH. They are presented in ascending order of government involvement. 18

General influence An attempt to influence the practice of owners and occupiers of the CBH, in the direction of adopting a 'conservation ethic' 19 which reflects the conservation objectives of the plan. The attempt would cover a variety of measures such as persuasion through publicity and social pressure; information about the cultural value and importance of the buildings, etc. concerned; education on the importance of the CBH as part of the general cultural heritage, directed to the schools, universities, adult education, etc. In all this there would be liaison with and involvement of conservation pressure groups, 20 and development agencies interested in carrying out conservation. Urban and regional planning policies In urban plans there could be policies which are either helpful to conservation objectives, or undermine them, or are neutral. A review of these policies should be made with an eye to the effect on the achievement of the

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conservation objectives. For example: given that there are buildings within the CBH which are suitable for residential, shopping, office, etc. purposes, a policy which is helpful to conservation would limit the amount of new building that could be devoted to these purposes and so help to channel latent demand to the buildings of the CBH; or, policies which affect a local environment (e.g. transportation) could be so devised to avoid damage to the environment of the CBH buildings, and increase their accessibility, and so increase the demand for them relative to other places.

Direct control under urban planning According to the precise powers which are available any applications for permission to alter, extend, demolish, etc. buildings in the CBH would be judged from the conservation viewpoint. Any attempts to carry out such work without permit would be subject to penalty. Neglect of the buildings, which advances obsolescence to the point of making demolition inevitable, would be delayed through enforcement of compulsory repairs at the owners expense. Where change of use, which would not be granted in a non-heritage building, would provide for viability in conservation not otherwise possible, then a relaxed attitude on planning control would be considered, and also on building regulations, where these would be costly to meet in an old building. But even so there could be diminution in the value of the property affected to the point of non-viability if the conservation objective is sustained. Where this attracts compensation from the authorities to the owner, there would need to be provision for payment, in money or kind, to ensure that the conservation objective can be implemented. 21 Financial intervention in the market Where owners and occupiers of buildings in the CBH find it financially non-viable to carry out conservation objectives, then their paths in that direction can be made easier through the offer of financial carrots. This could take various forms:22 (1) grants to owners, developers, or occupiers; (2) loans to the owners or developers at favourable rates; (3) tax rebates on expenditures for conservation by developers.

Management and planning for conservation of the CBH101 Environmental improvement23 Where environmental obsolescence is contributing to the difficulty of conservation then the authority could intervene by carrying out improvements itself to the local physical environment, e.g. closing traffic from certain streets and diverting to new, demolishing of poor structures to provide open space, modernising of water supply, drainage and other utilities.

Government occupation Very often a key to the inability of owners to carry out conservation objectives is the difficulty in finding occupiers who would be prepared to pay the kind of rent which would offer the appropriate return for the use of the property, or to finance the appropriate conservation works in the face of obsolescence. In such an instance it would be possible for local or central government, instead of offering financial subsidy, to take on the occupation direct (for one or other of their functions) and to pay the appropriate rent. If this were higher than the market would justify they would thereby be making a direct financial subsidy to conservation; they would be substituting rental payment to an owner outside the CBH to one who is within. Government ownership If the above measures fail to produce results, then the government could buy the building, by agreement or compulsorily, and then manage it for the achievement of conservation objectives even though financially they would lose money. They could, for example, channel the building to a use for which they would otherwise be responsible, such as a museum. As with government occupation above, they would be financing a CBH property rather than another, or a new building. Public-private partnership Where government assumes ownership but has no prospective use in mind for its own occupation it could sell on, by definition at a loss, to a body which would agree to conserve; or it could enter into partnership with a developer for joint conservation work and marketing of the property.

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To pursue the appropriate instruments from within this range requires careful consideration of the alternatives and the possibilities. And the possibilities are strengthened if there be some means of co-ordinating the views of the various public and non-governmental bodies who might be interested in ownership or occupation, who would be amenable to purchase.

Register of CBH available property In respect of the last three measures it would be an aid on the supply side if there were made public a full list of CBH property which is available for occupation,24 in particular noting those which are subject to risk.

6.6

The conservation programme

As indicated above (3.1.2) the plan making process will result in a programme for implementation which would be a basis for action. The programme would reflect the nature of the 'plan' itself, ranging from policies and strategies through to a development plan. Should the 'plan' be of a general kind, then the programme will relate to conservation policies or strategies, which will be the guidelines for decisions on particular cases. If it be a development plan it will comprise a programme for action in conservation projects. For the conservation programme to be meaningful for implementation it will be helpful for each of the projects to be specified in greater detail as regards, for example, the agency or agencies which will be involved; a description of the works to be carried out; statement of the order of magnitude of the resources required; an indication of the sources of support from government or other institutions, etc. For this purpose there may be need to call on a conservation team: the town planner, urban designer, landscape architects, conservation architects, engineers, economists, cost consultants, property managers, environmentalists, transport. 25 For such a programme to be a viable basis for action it clearly will need to be prepared with some regard to its feasibility. This could be carried out in two steps. First, there would be the general screen for feasibility or implementability which would be a feature of the macro planning of the

Management and planning for conservation of the CBH103 area, in which proposals need to be tested before inclusion in the plan, having regard to their prospects for implementation in the circumstances available in the locality. Second, there would be the more detailed viability studies in which varying options for projects would be designed and then analysed in terms of cost and benefit, the latter including the degree of heritage value which could be 'bought' under each project. The options would reflect the varying degrees of intervention which are available (1.6).

6.7

Project implementation in the conservation of the CBH

The conservation programme just described is intended to be a summary of the action to be taken in conservation implementation over the foreseeable future, perhaps five to fifteen years. In practice it will comprise projects ranging from those already in an advanced stage (of preparation or implementation), to others which are yet to be launched. In the former there will typically have been consultation between the plan makers and those responsible for the project implementation. In the latter there will, in the plan making process, need to be some machinery whereby the implementing authorities are in consultation and discussion with the potential implementation agencies, and those providing for governmental financial support, with a view to initiation of potential projects. For each particular project the implementation agency could be one of many kinds: a private owner/developer/financier/occupier who finds it worthwhile to carry out conservation of a particular building or group of buildings; a local authority which intends to initiate the conservation on its own, and for its own occupation; a non-profit making body set up for the purpose of conserving particular elements of the heritage with public financial help; or there could be a formal partnership between any of these parties, in which each has specific functions contributing to the totality: such as ownership of the property; development and managerial knowhow; private finance; public finance in terms of subsidy, loans, contribution to repairs, etc. Whatever the basis for the partnership, there must be some agreement or bargain preliminary to the initiation of the works. 26 This can be simply implied, as where the owner of the property and his developer/financier collaborators proceed with the benefit of a planning and building permit, in negotiations for which each side has expressed its views and intentions on

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the project to be permitted. Or it can be formal, as where the authority as owners of the property in question are seeking the collaboration of the private sector with its funds and entrepreneurial skills, spelling out its conservation requirements as a planning or development brief.27 This must satisfy the private sector having regard to any incentives which it will be obtaining for the conservation action, this being the price of ensuring conservation quality in the completed project.

6.8

Project execution

Once the agreement or bargain has been struck and the necessary permits obtained, the way is clear for the conservation work to be executed as part of the development process (2.5.1). The building contract would be similar to that undertaken for non-conservation works. But the nature of the works would vary. For one thing, the professional team must adapt to the conservation requirements. Within this team there is a particular responsibility.28 The conservation or historical architect, in addition to his (or her) basic and practical experience as a general architect, must have a knowledge and understanding of early building technology and must be able to identify the original fabric and later additions, and interpret his findings to a client. To execute any scheme he must co-ordinate the work of archaeologists, engineers, planners, landscape architects, contractors, suppliers, conservation craftsmen and others who might be involved in an historic building project. The conservation architect is the generalist in the whole building conservation process. He must have a good knowledge of all periods of architecture, combined with a thorough understanding of modern building practice; he must be able to preserve the artistic and historical value of the old structure, yet prepare schemes which are satisfactory in respect to modern requirements. This latter includes complying with relevant requirements laid down by codes of practice and building regulations, or obtaining waivers to any inapplicable building codes regulations where justified by reference to fundamental principles. He needs not only a knowledge of building technology but also an understanding of the pathology of buildings as evidenced by sinking foundations, crumbling walls and rotting timbers.

In this work should be observed the 'ethics of conservation', namely an unofficial code of practice which calls for respect for the historical and architectural integrity of the artifact in question. One formulation is: 29 (1) The condition of the building before any intervention and all methods and materials used during treatment must be fully documented. (2) Historic evidence must not be destroyed, falsified or removed.

Management and planning for conservation of the CBH105 (3) Any intervention must be the minimum necessary. (4) Any intervention must be governed by unswerving respect for the aesthetic, historical and physical integrity of cultural property. Any proposed interventions should: (a) be reversible, if technically possible, or (b) at least not prejudice a future intervention whenever this may become necessary; (c) not hinder the possibility of later access to all evidence incorporated in the object; (d) allow the maximum amount of existing material to be retained; (e) be harmonious in colour, tone, texture, form and scale, if additions are necessary, but should be less noticeable than original material, while at the same time being identifiable; (f) not be undertaken by conservator/restorers who are insufficiently trained or experienced, unless they obtain competent advice. Clearly the degree to which this ethic is followed in any particular project provides an essential element in the degree of retention and achievement of heritage quality.

6.9 Some planning and management questions in the conservation of the CBH From the preceding it is seen that conservation decisions in respect of the CBH should not be taken lightly: if necessary they must be viewed as commitments into the long term, thus involving considerable expenditure of current resources in investment and operation, together with commitments to their financing by both current and future generations. If only for this reason, answers must be found to some of the following perplexing questions, relating to both planning and management. 30

Why do we value the CBH? Is it just the obligation of any particular generation to play its part in the successive stream of history? Is the purpose to retain evidence, in an open air museum, of past history, culture, art and way of life? Is it the recognition that these cultural artifacts of the past are just as much a resource as the most recent ones to be used for current living? Is it to provide a contrast, with its refreshment and variety, through a particular built environment from that of the present?

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Economics in urban conservation What part of the built heritage should we keep?

Clearly we do not intend to keep all the built environment which we inherit. Some selection is needed. This comes back to the purpose of the retention, bringing with it some need for selection criteria as a means of indicating priority by valuation of admittedly intangible values (Chapter 5).

In what form should we keep what we select? Each part of the built heritage was designed at a particular time (not necessarily with the aid of a professional designer) and built at that time for a contemporary purpose. Should the conservation objective be to continue the past in the original form of that time (restoration)? Or is it acceptable to depart from this rigid specification by, for example, admitting modern bathrooms into a sixteenth-century home (adaptation)? If such departures be accepted, how far should they go without losing the conservation quality? Are we more interested in the physical structure or in the way of life that such structure saw? If the original design, structure and use were succeeded by others in the long history of the monument or building, and the other uses are of historic interest, should the conservation objective be to the original or to the successors, bearing in mind that these would also be of historic and cultural interest? In the former, we are concerned with historic rectitude, so that only the original is of interest, the main aim being one of scholarly information. In the latter we are more concerned with the use of the building or object as a resource for the contemporary generation in its way of life, so that it is to this generation which we look for the conservation specification with the objective of a future healthy and viable occupation of the building. While these considerations could be pertinent to any particular building they are particularly so in archaeological discovery, through layers of successive generations. And they are particularly searching when exposure at the upper levels will conceal the lower; and exposure of the lower level could destroy the younger and later. Given the conservation objective, what problems arise in keeping the heritage? The problems are manifold since the decision on conservation brings with it many responsibilities. Some examples are:

Management and planning for conservation of the CBH107 (a) How to cope with the costs of maintenance and operation (e.g. heating and lighting of large rooms) which tend to be heavier in the older fabric? (b) Given the conservation, is it to be kept in seclusion or opened up to access by contemporary generations, including those from around the world, of whom the bulk could be tourists? (c) Given wholesale accessibility, how to cope with the problems of wear and tear by the public on the heritage itself (for example, the literal erosion of the stones of the Parthenon) and the consequential provision that has to be made for the modern mass visitor (in cars, coaches, etc. with the wish for purchase of mementos, food, refreshment, etc.)? If accessibility is to be denied because of the wear and tear and environmental damage, what is the true purpose of the conservation? (d) Given such mass use, how to cope with the interference by the tourists and visitors with the conventional occupation of the heritage, which of itself makes its contribution to its continued life and viability? Examples here are the many cathedrals devoted to worship which are visited by the masses; or the privately owned house or office to which the visitor makes his way at the expense of interference with privacy. (e) All of this carries with it the problems and responsibilities of administration, of a labour intensive and therefore costly kind. At the one extreme there are the ruined cathedrals and castles which nonetheless require the constant presence of attendants. At the other extreme is the crowd control necessary at Woburn Abbey or the Church of the Holy Sepulchre in Jerusalem or the Church of the Nativity in Bethlehem. Is there a need to take action for conservation? The fact that an artifact is part of the cultural built heritage may not of itself require that action be taken in its conservation. There is little problem, for example with churches and cathedrals which in daily use are in the upkeep of the religious institutions; the owners look after them for their own purposes and in doing so serve the objects of conservation.

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But action could become necessary, to avoid erosion of the heritage, where the owners and the occupiers are not so purposeful in the continuation of the traditional use. Examples are the stately homes of Britain, huge mansions which are a crippling financial burden in their upkeep and in the payment of death duties; 31 period buildings occupying sites which are valuable for contemporary commercial purposes; old buildings which have run their physical lives and are in the process of physical deterioration. Accordingly there is the need for watchfulness, which goes beyond the 'listing' or 'designation5 warning to all concerned that destruction or erosion will be resisted by the public authorities. It implies a readiness to take action in advance of the problem arising, or quickly if not in advance.

Given the need to take action, what mode of conservation is to be pursued? Here there is the variety of action, each with its terminology, which has been described above (1.6). What means are available to government to implement conservation objectives? How can effective use be made of the array of measures which are available for implementation of planning and conservation (6.5)? Is anything needed in addition?

Within such means, what are the financial instruments for conservation? How can effective use be made of the financial inducements and penalties which are available to advance conservation (6.5)? And since resources are always inadequate, how and where can additions be found (12.6)? Given the above, how are the decisions to be made on whether or not there should be conservation; and if conservation, the mode, financial inducements, etc.? There are clearly many considerations to be borne in mind before conservation decisions are taken. Accordingly, unless such decision making is to be randomly based on the threats as they arise to particular items in the

Management and planning for conservation of the CBH109 CBH, there needs to be formulated guidelines on decision criteria, resulting in CBH conservation policy. This can follow many forms, depending on the basic purpose of the conservation objectives. Some examples are: (a) As a resource to be utilised to the full for the better life of the community: the heritage is seen as a resource in contributing to the social and economic life of the community (1.3), in contrast to the alternative contribution that would be made from the replacement of the heritage. (b) As attracting tourists: given that the attraction of tourists could be a major feature of the local economy, make the decision to attract visitors and tourists, and see the conservation expenditure as an offset against the expected income, both direct (fees, etc.) and indirect (spending in the economy). (c) As a sector within urban and regional planning: see the conservation objective alongside the others in the planning of the community, and use the planning system in support. Decisions which come up against conflicts between policies (e.g. the heritage will attract tourists but at the same time create traffic problems) should be resolved in the manner appropriate in urban and regional planning, where such conflicts are the everyday scene.

Part Economics in urban conservation

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Introduction The opening paragraph of a recent report with the compelling title The Livable City stated:1 1

3

6

The World Conservation Strategy, the starting point for the British programme, is about matching the superficially conflicting goals of development and conservation: development being the means of meeting human needs and improving the quality of life and conservation being the use of resources, especially living ones, in a sustainable way, so safeguarding all their benefits for future generations. . . . the Strategy reflects the growing convergence over the last decade of environmental and development thinking: that both are about sustainability and that to succeed in realising their potential benefits both must impinge upon the lives of people at the local level. Conservation has never been seen as having a dominant part to play in the affairs of urban areas

And the first chapter concludes with a quotation from Barbara Ward: Tor an increasing number of environmental issues, the difficulty is not to identify the remedy because the remedy is now understood. The problems are rooted in the economy and society.'2 This reference to how economics can play its role in society, which is concerned with development and conservation,3 is a useful starting point for Part III. We wish to emphasise that economics has an essential role in the reconciliation of the interdependent, and superficially conflicting, goals of development and conservation in the face of limited resources; and that the sensible use of economics for the purpose can achieve better results in both development and conservation for the people who are affected. But our canvas for the application of economics is more limited than that in Parts I and II. While there we brought in the urban area as a whole, in Part III we recognise that economics has made a considerable contribution to the subject of the natural environment and of human capital, but so far not in depth to the built environment. We therefore concentrate in the main on the built environment, and within this on that particular element of the built environment which we have called the cultural built heritage.

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Summary Our first step is to emphasise from the economic aspect much of what has been said already on the management of urban conservation. We thus need to consider the role of conservation in economic life (7.1) and how economics can contribute to the management decisions of proprietary interests in conservation (7.2). This leads to the introduction of economics in management for urban conservation in general, again with sub-divisions relating to natural, human and man-made moveable and immoveable resources (7.3). The first three are touched on briefly, for they are well covered in the literature. But we elaborate on the last which is not. In this we set the foundations for economic decisions relating to proprietary interests in the life cycle of the built environment by introducing a generalised model and the notation applicable to that model (7.4). We then apply the model to a description of the role of economics in management decisions, at particular decision stages in the life cycle of the built environment, from the use of the open land to rehabilitation and redevelopment. In this it will be seen that at each stage a common set of variables are used, adapted to the particular situation. We then emphasise how the incidence of costs and benefits will vary as between property interests in the process (7.5). So far, the model and analysis have not considered the question of financing or time. These we now bring in. For the first we consider the implications of borrowing money (7.6). For the second, we see how to look ahead over the life cycle so that the differing flows of costs and returns are discounted to a given point in time, in the process taking account of real and inflationary changes in price (7.7). We then see the same process from another standpoint: the relation of land use and land value throughout the life cycle (7.8) leading to a discussion on the concept of the economic life of property (7.9). Finally we consider the effect of government intervention, in particular planning, on the estimates of cost and return and thereby land value (7.10). Having considered this aspect of economics in urban conservation in general we now retrace the steps in respect of the CBH itself (Chapter 8). What are its characteristics as a resource (8.1) and as property (8.2)? This leads to bringing out the particular economic features in the life cycle of the CBH (8.3) and the role of financial aids to meet the shortfall in conserving the CBH when management decisions would indicate non-conservation were the property not protected. This leads to a profile different from the

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non-CBH for land use and land value in the life cycle of the CBH, and in forecasting its economic life (8.4). We then go on to retrace the content of Chapter 6, on management and planning for conservation of the CBH, by reference to economics in this process, in a wider sense than the preceding (Chapter 9). We start by considering the similarity and distinction of purpose in economics and planning (9.1) considering also planning and the market (9.2) and then the role of the economist in urban and regional planning (9.3) leading to some economic principles in plan making (9.4), and the test of the plans for economic feasibility (9.5) and economic evaluation (9.6). We then come to the use of economics in the conservation projects and programme, its priorities and implementation (9.7-9.8). In the preceding it is value for money in urban conservation which is pursued. For this it is necessary to have some estimate of the value of the cultural qualities of the built heritage (i.e. make a valuation), both for inclusion from the inventory to the list and also for consideration when threats are raised to objects on the list (10.1). But there are severe problems in attempting to assess the value of this intangible. We go on to consider what is the basis of the cultural value and how can such basis be valued when it is not sold in the market-place, by asking just what is value in this context (10.2) and what is being valued (10.3) before going on to recognise that the valuation is made in the real world and is therefore influenced by whom it is made, ranging from the individual to government, and in respect of what decision, ranging from the inventory to contribution to society (10.4). This leads to the question: how is the valuation made? We recognise that valuation of this particular 'incommensurable' is part of a large field relating to many intangibles, and present some approaches. We first consider its relation with market value (10.5) and then review other approaches (10.6) before considering the particular approaches to grading heritage quality in preparing the inventory or list (10.7). We then consider the role of economics in cultural valuation (10.8) and the economic concept of opportunity cost (10.9). We demonstrate the concept in relation to an example, first of private opportunity cost (10.9.2), then of social opportunity cost (10.9.3). We then highlight how economics can help in social decisions on conservation (10.10). To some degree the cultural value is indicated in the inventory and list prepared for its protection. The question arises: to what degree (11.1)? To explore this we introduce the nature and the purpose of the list, which

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establishes its limitations for establishing comparative cultural value for money (11.2). This leads on to exploration of how the inventory can be screened before it becomes the list, under three heads: prior consultation, planning and economics (11.3). But however well screened, the list is still no more than a warning that development/conservation pressures need to be fully considered before decisions are taken to alter or perhaps demolish the property. Such considerations have an economic content in that on the one side there is the potential loss of value in heritage quality, and on the other the differences in costs which would fall upon the developers and community if the quality were protected. These are introduced (11.4) pointing to the tools of economic analysis which are involved and which are later to be amplified (Part IV). But whether or not valuations can be made of the incidence of the qualities to be conserved, there can be no question but that the conservation itself confers both benefits and costs so that we are concerned with their assessment (12.1). This leads to identifying the true costs and benefits of conservation of the CBH (12.2): who benefits and who loses (12.3); and how costs and benefits are in fact distributed in the process of conservation (12.4). We then focus on who should pay (12.5). We tackle this by recognising that this issue arises in all fields tackled in urban and regional planning and not simply in conservation, where they come within the ambit of compensation and betterment. This leads to a discussion of the issue in these terms (12.5). We then come to the question: how much should be paid by those who pay, or pricing for conservation (12.6). One reason why there is so much difficulty in obtaining payment for conservation is that the external element of the building, etc., is a public good which cannot be charged for; and that in respect of the interiors, even when available to the public, there is reluctance to charge the consumer in full for enjoyment, since there is the general social aim of facilitating the spread of the benefits of cultural conservation by reducing prices for its enjoyment, even to the point of zero pricing in museums, art galleries, etc. These issues are put in sharper focus when the relationship between conservation and tourists is examined (12.7).

7

7.1

7.1.1

Economics in the management of the built environment

Conservation in economic life

What is economic life?

In his everyday activities, as an individual or in a family or wider group, man has many different lives, spiritual, cultural, social, psychological, physiological as well as economic. The lives are concurrent and interdependent: religious activity needs financial resources for maintaining the religious establishment and places of worship; cultural activities need a social framework; physiological well being is very much influenced by employment and income. Within this array of diverse lives, economic life has one special characteristic. The implementation of any decision to act in any of the lives typically implies the use of economic resources, natural or man-made, for without them the decision will not result in action. Even daily meditation or jogging absorbs time which could be put to competing purposes. It is in this way that economic life penetrates all other lives. We now turn to how this takes place. 'Economic life is an organisation of producers to satisfy the wants of consumers.' 1 It enables people to exchange, typically via the means of money, the output of their production (as owner of one of the classical factors of land, capital, labour or entrepreneurial/management skills) for the goods and services they consume. In the private sector the money typically comes from private income or capital. In the public sector the money is typically owned collectively, in that it is raised from taxes. In economic life, man's behaviour shows an almost limitless tendency to increase his consumption of goods and services, and so his 'standard of living'. But his resources for purchase are limited in relation to his needs, wants and desires. This applies to countries as a whole and within a

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country: some have enough resources only for bare necessities, others for an adequate standard of life, others for a high 'quality' of life while others reach 'conspicuous consumption'. Whatever the level there is the need to trade off between different ways of spending resources for the goods and services to be consumed. In this the criterion of choice is seeking the best 'value for money': that bundle of purchases which will achieve the greatest value to the consumer (benefits) from whatever expenditure he makes (costs). In this search for best 'value for money' a consumer can usually estimate the cost, the amount of resources (price, time, travel, etc.) he needs to spend. But he has much greater difficulty in estimating the value to him of the purchase, i.e. its capacity as a resource with potential to give rise to an activity which would make a favourable difference to his life by fulfilling some need, want or desire (1.3). This capacity is 'utility', 'the quality in commodities that makes individuals want to buy them, and the fact that individuals want to buy commodities shows that they have utility'. 2 In practice he cannot measure this 'utility' for it is entirely subjective to him. 3 But he can form a view of which of alternative buys for a given cost would give him personally the greatest utility. In effect he trades off in his mind the value to him of any specific purchase not simply in terms of its cost to him, but of its opportunity cost: what he is foregoing by spending his resources that way rather than the alternative way which gives him the greatest utility (10.9). Such trade offs are entirely subjective and personal, whether it be in a purchase as mundane as goods in the supermarket; or less material, as a seat at the opera; or in a transaction involving future generations, such as conservation. And since everyone will have different perceptions (some valuing books more than food, etc.) the decisions are entirely peculiar to the individual and cannot really be made for him, not even by a parent for his children. However he is not free to dispose of all his income in this way, for the government of the country will decide on behalf of all citizens to spend a certain part of their money collectively in accord with its own programmes: housing, roads, defence, social services, conservation, etc. For these programmes government in theory decides the utility to all, and which programme will give them the best value for money. To help this decision it uses a variety of means: carrying out or observing opinion polls, referenda, consultation of representative bodies, public participation, knowing 'what my electors want'; knowing what is 'best for them'. 4

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Economic life and conservation

We saw above (4.8) how property management principles are applied in the conservation of the CBH. Analysing the value for money approach in economic life (7.1.1) to a heritage building designated for conservation we see that the occupier will be able to trade off in his mind the building's extra occupation costs (inefficient heating, etc.) against its extra occupation value (7.5.3), compared with one which has different (perhaps zero) heritage quality. Even if he can quantify the cost but not the value, he will be able to trade off this value against other opportunities which he could purchase for the cost, so deciding a money price to be paid for the occupation. The producer of the conserved building, through rehabilitation designed to extend and enhance both its occupation and heritage qualities, will thus be able to judge the money cost to him against the money price to be derived from the consumer. But as we saw above (5.2) in conservation of the built heritage there is another party to the transaction, namely government. In the ultimate it is government which decides the inventory of buildings, etc. which have heritage quality and how much and which ought to be conserved; and then, through its listing mechanism and procedures, imposes a 'heritage tenure', i.e. regulation of the freedom of owners to manage their property in what they consider their best interests (4.2). To do this efficiently, those concerned with the administration of conservation policy should understand the market process in which they are intervening, so as to secure conservation objectives without undermining the private property interests which in practice conserves the heritage through rehabilitation, etc. 5 (8.3). This process results in the cultural heritage element in the built environment being a singular commodity, for the following reasons: The management objectives of the owner/occupier (private or public) of the listed building will reflect the heritage quality of the building insofar as it has utility to them, but will not necessarily reflect the heritage value as seen by government on behalf of current and future generations, both nationals and others. In appraising this heritage value government will recognise its many components: those who actually visit the buildings for direct experience of the heritage quality; those who do not or can not visit the buildings but who cherish the fact, from books,

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Economics in urban conservation TV, etc., that they exist so that there is an option to visit; those who may not be directly interested but who wish to ensure the bequest of the artifacts to future generations.6 In constraining the management decisions of the owner/ occupier through 'heritage tenure' the government is imposing its values, while the owner/occupier is bearing the cost, as are other members of the community who would prefer the use from a replacement building rather than the listed building (a modern versus rehabilitated hospital). Where the owner needs subsidy to conserve the building for its heritage quality, he is asking taxpayers to pay for the utility to them of that quality, for the benefit of current and future generations.

From this it follows that the government has general difficulty in deciding on 'value for money' in heritage value. It must somehow estimate its utility (which can only be personal and subjective) on behalf of the current generation, both nationals and others, and on behalf of unknown future generations, for an unspecified time into the future. And this it must somehow trade off against a cost which is not theirs in the main but is incurred by the property owners concerned and also certain other members of the local community who suffer loss through conservation.7 They can more readily consider 'value for money' in those instances where they incur costs in direct subsidy to owners for conservation; since they have limited amounts of money for grants, etc. they must ration amongst competing claimants for aid. 8

7.2

Economics of proprietary interests in conservation

We saw above (4.8) that management decisions for urban conservation have regard not so much to the resource but to the particular proprietary interests in the resource with which management is concerned. We now articulate further how the differing proprietary interests enter into the economic calculus. For any particular resource there will be an owner, occupier, operator, financier, etc. (who may be private or public, and may be rolled into one). Each of these interests will take the relevant decisions for the sections of the stock they are legally concerned with. But their objectives may not be

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simply financial (pecuniary). The owner of a fine house and landed estate under which minerals are found might eschew the exploitation of the minerals in order to conserve the surroundings and environment of the house, with a view to handing it on to succeeding generations. He will thus value the 'psychic' benefits as well as the financial. But even where the objectives are all financial, each of the interests will have differing sub-objectives. The owner will regard the property as an investment, and therefore look to his returns; the occupier will consider the property as a base for his activities, and will look to profitability (in production services) or satisfaction (in consumer services); the financier would have in mind the return on his loan and its security. Clearly these sub-objectives could be conflicting, making for potential disagreement. The benefit to the owner (the financial return) is a cost to the occupier (his rent). Thus the overall optimising of services can be complex, owing to the various interests who may be taking conflicting decisions, against a background of changing qualities of the services which can be obtained over the life cycle. Since the sub-objectives can be conflicting, it is necessary that they be balanced by institutional arrangements in the management of property. Examples are in lease provisions: insistence on dilapidation clauses in the management of a building by the occupier so as not to erode it to the detriment of the owner; and on good husbandry by the tenant farmer.9 Unless internalised by contract, these are examples of externalities, namely the costs created by owners and occupiers of resources which they do not need to bear, and the benefit for which they cannot charge. 10 These arise also as between different properties. Factory production could clearly introduce noise and traffic nuisance to surrounding dwellings. Typically these are not covered by contract but by law relating to the land, nuisance, etc. aimed at the mutual protection of neighbours. 11 It has been found necessary to extend the law beyond this by environmental protection, town planning, etc. to protect the public at large from private mismanagement of resources.12 Examples are (a) against depletion of natural resources, as where tree felling must go hand in hand with replanting; or where fishing is limited to particular seasons, size offish, etc.; (b) against pollution of the environment, as where exploitation of a resource is controlled to limit the polluting effects on the atmosphere, etc.; (c) against unco-ordinated development which would be

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mutually harmful, as in town planning provisions which introduce use zones, development in parallel with utility services, etc. We now apply these general management principles to each of the categories of urban resources described above (1.4).

7.3 7.3.1

Economics in management for urban conservation Natural resources

Volumes have been written on this 13 and only points of principle will be introduced. The management approach to natural resources varies with categorisation in terms of exhaustibility, etc. (1.4.2). Generally speaking, the role of economics is to predict the costs and the benefits, and their relationship, that will flow from the management options, which introduce variables that relate to exhaustibility, renewability, irreversibility, etc. Where natural resources are found in the urban area, the economics of their conservation is similar to that in the non-urban. But one major difference is inevitably introduced. In rural areas the conflict between competing land uses tends to be less sharp. For example, agricultural and mineral use are compatible with each other over time (farming, followed by gravel extraction, followed by soil restoration and farming). But in urban areas the conflict is much more severe. By definition urban use will entirely sterilise natural resources, as for example the soil on a building site or the view in undulating topography. Thus succession of uses cannot be so readily arranged. This leads to the need to conserve natural resources within the urban fabric, and compare competing land uses in terms of sequence of cost and value as part of management decisions. For example, do you develop housing to sterilise gravel? Or do you exploit the gravel and then use the pit for some other urban use, such as water recreation, or remake the landscape for mixed housing and recreation use?

7.3.2

Human resources

As with natural resources, the economics of the conservation of human resources has been well developed in the literature. 14 In this the human being is regarded as any other form of capital so that investments made in

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him (costs) can be considered in relation to the expectation of future benefits (e.g. higher productivity through training; higher usefulness in economic life through education; greater output through improvements in health, etc.). In the returns to the investment will be not only the power to have a higher standard of life through higher income, but also a better quality of life through better education, health, etc. In this there is one critical factor introduced by the urban environment which is not found in the rural. Whereas in an urban environment the human being gains much that is not available in the rural (work opportunities, social contact, higher levels of education and culture, etc.) the benefits must be bought at costs of urban crowding, traffic congestion, stress of competition, etc. While some such costs are inevitable, it is not inevitable that they be as high as experienced. Major areas are environmentally degraded; people are deprived of the urban opportunities they came to seek; nature's free goods of sun, air and light are denied through pollution. These considerations bring to the fore the economic benefits of improved urban and regional planning 15 and control of environmental pollution.16

7.3.3

Man-made resources

Of the two categories in man-made urban resources (moveable and immoveable) the economics of the former is well covered in the literature and is not of strong relevance here. 17 The economics of the immoveable is also well covered in theory and practice, 18 but the treatment tends not to reflect the thrust here of considering use over the life cycle. Hence we need to elaborate. This is done in the following way: 7.4 A general model with its notation for considering on a comparable basis the successive stages in the life cycle for which economic decisions need to be made: use of urban land, new development on open land, use of built fabric, obsolescence of the fabric and its renewal. 7.5 The simple application of the model to these stages, that is without regard to the effect of the following, which are then introduced in sequence in general terms. 7.6 The implications for the decision of the need to borrow money, i.e. financing the venture. 7.7 Having regard to the future, in terms of both discounting and inflation.

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Economics in urban conservation 7.8 An overview of the relationship between use and value during the life cycle as a whole. 7.9 The relevance of predicting the economic life of property. 7.10 Effect of planning control.

7.4 7.4.1

Economic decisions in the life cycle of the built environment Introduction

We now use the concept of the life cycle of the built environment introduced above (1.6) to trace the typical economic decisions that need to be made during the life cycle of any particular property, from its initial development through to its eventual redevelopment. In this we do not initially reflect the fundamental impact of urban and regional planning controls (Chapter 3) but consider this at the end (7.10).

7.4.2

The model over the life cycle

As brought out above (2.1 and 2.4) property management decisions are concerned with optimising the value of particular proprietary interests in a resource over the expected remaining life of the interests. Economics provides the calculus for such decisions, by showing how costs and benefits can be compared in critical situations such as the following: (a) use of the unbuilt land prior to development (7.5.1); (b) development, in the initial transformation of the unbuilt land (7.5.2); (c) use of the built fabric (7.5.3); (d) obsolescence of the built fabric and its site (7.5.4); (e) rehabilitation during the life cycle (7.5.5); (f) redevelopment at the termination of the life cycle when there is introduced a new element of built fabric (unrelated to the former element) and the beginning of a new life cycle (7.5.6). Since throughout the life cycle we are, by definition, dealing with the same variables (the land, property, occupation costs, etc.) it is possible to describe them by a model which can be used throughout. The model is introduced (7.4.2), then a description of the notation for using the model (7.4.3), and then its application to a typical situation over the life cycle using the common notation (7.5).

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In each situation (a) to (f) there could be two variations, each relating to the costs and returns: (i) independently of using borrowed finance, or with such borrowing (terms of repayment and interest on loan); (ii) allowing for time or not; in any of the above situations (a) to (f) we are concerned with management decisions at a point in time, which will relate to the flow of costs and returns over subsequent years, typically with asymmetry between the timing of the flows. Adjustment for time brings the flow of cost and return to a common date, called discounting. Since both the financing and discounting are simple in concept yet complex in application19 we introduce them only in general (7.6 and 7.7).

7.4.3

The model notation

We now introduce the notation for the models. The initial letters relate to the interest (occupier, etc.) or element (relocation); the second letters relate to cost (c), value (z>), gross (g) or surplus (s), which could be + / - . Their meaning will become clearer in their application below (7.5). Capital or annual Cost Value (a) Use of open land Owner annual operating cost annual value (return) gross (surplus) ( + / - ) (o/vg-o/c) capital value: {ols x years purchase (yp)) Occupier annual operating cost annual value (return) gross (surplus) ( + / - ) {oclvg-oclc) capital value: {ocls x yp) (b) Development on unbuilt land (landowner, developer and financier combined)

olc olvg ols olv oclc oclvg ocls oclv

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Economics in urban conservation Capital or annual Cost Value (i)

Land Cost (at beginning): to owner (o/v) to purchaser Value (on completion) (ii) Relocation and disturbance Cost (iii) Construction 1. Clearance 2. Utility services 3. Roads 4. Building (iv) Fees and charges 1. Professional fees (on (iii) 1-4) 2. Interest on capital: short term long term 3. Developers profit (v) Completed development Cost (i) - (iv) Value (vi) Surplus ( + / - ) Development (d/v—d/c) Land (l/v-l/c) Land profit (// p ^-// c ) (c) Use of built fabric As occupier in (a) (d) Obsolescence (i) Additional value on rehabilitation (ii) Additional cost for rehabilitation (iii) Building obsolescence surplus ( + / - ) (reh/v-reh/c) (iv) New property value on development (v) Cost of works for redevelopment (vi) Site obsolescence surplus ( + / - ) (red/v-red/c)

IIc llpdv IIv rdlc clc ulc rlc blc

plf i/s ilt dlp dlc dlv s/dv llpdv //p

rehlv rehlc bl0 redlv redlc s/o

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Capital or annual Cost Value (e) Rehabilitation (i) Heritage value before work (ii) Additional value following work - market - heritage (iii) Cost of work as in items (b) (ii) (iii) (iv) (iv) Surplus (+/-) - property (rehlv—rehlc) - heritage (hlv2-hlv\) (f) Redevelopment (i) Property value before work (ii) Heritage value before work (iii) Property value on completion (iv) Cost of work as in items (b) (ii) (iii) (iv) (v) Surplus (+/-) - Property (redlv-olv) - Heritage (hlvX-o) - Site (red/v-red/c) 7.5 7.5.1

hlv\ rehlv hlv2 reh/c s/pv slhv olv h/vi redlv redlc slpv s/hv sliv

Application of the model Use of open land

A vast proportion of the earth's surface is undeveloped. Within this, part is literally unused (deserts or Arctic wastes), some is used for human consumption (farmland, forests, etc.). Other 'open' land is used for 'urban' purposes without being developed by built fabric (e.g. waste disposal, open air recreation, quarrying for minerals, etc.), mostly following 'improvement' with roads, utilities, etc. If land and improvements have any value at all it is because they can be used by people for particular purposes, from which there is derived some excess of the value of the product compared with the cost of achieving it. This clearly applies in farming (in the contribution that the land makes to producing the output) but less clearly in offices (which facilitate the work leading to the output) and in dwellings (which provide the output of shelter for the family, etc.). It is the possibility of obtaining these net outputs

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which the occupiers value, and for which they are prepared to pay a rental or price related to the net value of the output to them. Thus the value to them can be established, being the estimate of the discounted net values for such occupation into the future. The art of valuation is to make the relevant estimates of value over the expected life under various assumptions. The occupiers management decision is how to secure the use which would realise the maximum net annual surplus (oc/s), which is the annual gross value derived from the occupation less its annual costs (oclvg—oclc). In such situations there is clearly identity of interest between owner and occupier (both seeking the maximum ocls) but there is also conflict. The owner will seek to obtain the maximum rent that the occupier can pay (i.e. the total of the ols) for then he will obtain the maximum capital value, which is the capitalisation of the net rental payments (o/v). But then the occupier's capital value would be nil, since the operating surplus (oc/s) is swallowed up by rent and he has no 'profit rent' (although he would still be earning his net revenue from the occupation itself). There is another possible management conflict. In using the land for any purpose the interest of the occupier is to extract the full return from the land over his visualised occupation. While this would not be critical for people in an open desert or Arctic waste (although possibly harmful to nature), it could be critical near an urban area where the current use of the land is interim, on the way to another use. The exploitation by the occupier should not, in the view of the owner, inhibit transference to the new use (from mineral excavation to farming land to urban development). In brief the owner must ensure that he will not have heavy costs of preparation for the next use arising from the over-exploitation of the interim use. He must therefore use appropriate constraints in his leases (7.2).

7.5.2

Development on unbuilt land20

We start with the open land which has a use (e.g. farming or recreation) for which there is a market value (the exchange price for the net benefit of the current use projected into the future for its expected life). Where prospective demand arises for the use of such land for urban purposes, the land will have a potential higher value for the higher intensity of use. To realise that value the developer must invest in works and buildings. To provide an indication of the best mode of investment (layout, use density, etc.) he will commission designs (by architects, engineers, land economists, etc.) to show the market values for the development which could be obtained on

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the realisation of optimal forms of completed development (dlv) and the costs necessary to realise such development (d/c). Any excess of value over costs (d/v—d/c) (with costs including developers profit) is considered as flowing to the land and becomes the potential development value for the land (llPdV) or, popularly the land's 'site value' or 'residual value' for the particular development. This is the maximum available for purchasing the land in question for that development, without encroaching on developers profit. But that price will not necessarily equate the 'land profit', which is the difference between such potential development value (llpdv) and what the land will sell for on the basis of its value for use (o/v) without expectation of development. This difference is the 'land profit' {lip). From the relevant calculations, the developer can also answer other questions of interest: what would be the capital and operating costs, the land profit, the developers profit, the likely cash flow? Accordingly, the bid which any prospective (private or public) renter or buyer makes for the land is based on some estimate of the value to him of using it for a specified new use, with or without incurring development costs (d/c) (i.e. from simple change of use through to major construction). But he is not the only bidder in the land market. There will be others with the same or different uses in mind. And they will be faced with different supplies of land, each with its varying characteristics. The owners of this supply will also consider the land value from similar approaches: what can he expect the bids to be having regard to the residual value? In totality this competition makes up the particular 'land market' in the overall group of such markets. 21 In order for the developer to secure the land for his purpose his offer price must meet at least two conditions: it must at least exceed the value of the ongoing current activity to the owner and occupier, both the value in exchange (o/v) and use (oc/v) and the value of the disturbance and relocation costs of the occupier (r/c); and it must be sufficiently high to outbid others concerned to purchase the land for development. This in itself forces any prospective developer to instruct his professional team to design that scheme which is most efficient in achieving the maximum value in the development over its cost (d/v—d/c or l/pdv) and thereby the maximum surplus available for his offer.22 This is the 'highest and best use' of United States appraisal literature. 23 The best offer will typically result in a sale. Thus it is the market process by which the use of particular land is decided via development, for this is the institutional framework in which

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land becomes developed. The result of the process is a decision on the use, form and intensity of the development, and thus the nature of the physical stock which becomes the built heritage when it is completed, to endure over its life cycle. This market process has various significant repercussions for the built environment. First, possible uses which generate less residual land value than the one chosen tend to be squeezed out from the particular site to other sites, for which the competition from bidders for development is not so severe and thus in respect of which the landowners must accept lower prices. Second, by the same token, where a successful bid associated with less residual land value is higher than one associated with more, the successful bidder will need to reduce other costs. Where he wishes to maintain his developers profit, there is a tendency in the design to reduce the former (with the prospects of bidding more for the land) and to increase the latter, since it is the capital costs of construction which are immediate and not the ongoing costs of maintenance and operation. The result is that the building construction may be poor and the 'life cycle costs', 24 the 'costs in use' 25 over the life cycle of the building, may be higher than necessary. Third, since a prime consideration in the new development is always the need to obtain the appropriate financial loans, with the lenders being primarily concerned with the security of their investment in the long term, the financiers' requirements are often a key to the built form.

7.5.3

Use of the built fabric26

Once the development is completed by occupation then the decisions which have been taken, and the capital which has been sunk (committed), become the starting point for the building's long life. In this the critical agency is the occupier and not the owner, for without him the building's potential services are not being utilised. In his use of the building, the occupier (be he producer or consumer) has the returns from his occupation to earn (oc/vg) from which he needs to find operating costs (oc/c). As to the former, he can use the qualities of the land and buildings in his occupation, linked with the off site qualities on which he is dependent: location in relation to other occupations and activities; accessibility to and from elements of concern to him (e.g. labour power, markets, transportation); the utility services available (gas, water, electricity, telecommunications, etc.); and the more immediate environmental factors (noise, atmospheric pollution, vibration, visual outlook, etc.). As to

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the latter he must meet the operating costs which are real in relation to the occupation itself (heating, water consumption, air conditioning, maintenance, etc.)i; financial in servicing the owner's capital investment; and fiscal in his contribution to taxes as a means of contributing for the public services which are offered (access, street lighting, etc.). Generally speaking, faced with these variables the occupier will be under financial and business pressure to maximise the surplus of occupation benefits over operating costs (oc/s). The pressure comes from various sources; from the landlord, who will over the period of the occupation seek to increase the rent payable; the owners of the business which he is operating in terms of net profits; and from his own limited financial resources having regard to the other claims on his income. These variables will not remain constant over any length of time, except for those periods where a contract has established fixed costs, such as rents. And thus the relationships between the returns and the costs become the subject of continuing management of the occupation depending on its nature (a private house through to a museum). In this there are clearly the twin objectives, of maximising the value of the services being enjoyed through the occupation (oc/vg) while at the same time minimising the operating costs consistent with this enjoyment (oc/c). Within this, management decisions will clearly be taken looking some period ahead (short term for example in levels of heating but long term in the kind of heating to be provided). And, within these realities of decision making, the overriding objective will be to find the optimal state whereby the maximum net value or benefit can be obtained over time. In other words, the use of the built fabric will be conserved.

7.5.4

Economic obsolescence 27

We saw above (1.6.2) that during its life the building will show obsolescence of one or more of each of the four kinds enumerated: structural, functional, locational and environmental. Faced with approaching obsolescence, the occupier and owner will need to decide the actions necessary to cope with the obsolescence, in particular those which come within their powers, the structural and functional in the main. In facing up to the appropriate decisions the owner/occupier/investor will be faced with calculations of financial costs and returns for rehabilitation (7.5.5). Unless the additional expected returns to be obtained, from any use of the building, exceed the costs of coping with the obsolescence, the decisions

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will not be taken. In such cases the building may not be obsolete in the sense of being 'completely useless with respect to all uses they might be called upon to support' (1.6.2) and may still be maintained to support its current use. But it can be regarded as economically obsolete and on economic grounds, having regard to the variables foreseen at the time of the decision, it will not be renewed but allowed to deteriorate in anticipation of its next phase in the life cycle. However if the conclusion be that the building is not economically obsolete, renewal measures will be devised to retard the obsolescence and extend the remaining life, in both years and quality. But it could be (and often is) that the potential value of the site for redevelopment following destruction of the existing building {sltv) could be higher for new development than the value of the property as it stands (o/v). If it be sufficiently higher (by at least the developers profit), the site could be described as being economically obsolete in the current use. This clearly results in the demolition of buildings which are not obsolete, and certainly not economically obsolete, for the purpose of replacing them with new stock.

7.5.5

Rehabilitation28

Rehabilitation of a building (1.6.3) takes place when works are carried out with the aim of overcoming some at least of the obsolescence, normally structural and functional. In the process work could also be introduced which would add to the bulk of the building (e.g. by lateral or vertical extension) which would facilitate the economics of rehabilitation. The economic calculus of the owner follows that of new development, but differs in one important respect. The land cost is taken as already sunk (it is embodied in the joint structure of land and buildings) so that only marginal costs and values are considered. The owner or developer will study the alternatives of renewal by rehabilitation, reconditioning, revitalisation, etc., but the costs of rehabilitation (reh/c) (without land/property costs) will need to be compared with the increased value which will be obtained in the building to be renewed following the execution of the work (reh/v). If the latter be sufficiently more than the cost (s/pv is +) to show adequate developers profit he will proceed. If not, then he will not proceed without some inducement subsidy. In making this assessment there are two datum points of interest: the property as it stands; or as it is likely to be if the rehabilitation works are not carried out but only the minimum maintenance needed to prevent the

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buildings becoming structurally defective, or functionally incapable of use (1.6.2), so that the property will decline relatively in relation to the supply of competitive property. It is the latter which is the true measure, since the economics of rehabilitation then takes into account the prospective loss or gain in the investment if no action be taken.

7.5.6

Redevelopment29

In this case the option is to pull down the building to release the site which has become economically obsolete, so that the cost of the site is the cost of the property, which equals its current value in the market (o/v) disregarding development potential. The process of bidding for the property in order to establish the right to create a new property of higher value is identical with that for open land which is to be developed for the first time (7.5.2). But there is one critical difference. The residual value which the entrepreneur could afford to pay for the property, in order to bid it away from its current use, would need to be sufficient to provide a profit over the value not of open land but of urban land. Since this is usually much higher it necessarily means a relatively high 'land' bid, since properties could have a value in the market long after they might be thought obsolescent on the four criteria (1.6.2), even if judged economically obsolete (7.5.4). It also means greater chances than in new development of the property having a negative value for development as a site. It is these considerations which make it so important for entrepreneurs concerned with redevelopment to secure high intensity schemes following demolition of the standing buildings. Such considerations have another significance. Given the: (a) likelihood of a development being attracted to obsolete rather than non-obsolete property (to keep down acquisition costs) and (b) need to secure a high land bid in competition with other purchasers and would be developers there is an upward pressure on the rentals or sales values to be obtained from the new scheme. This bears heavily on the pre-renewal occupier who, by definition, will be living at rents at the lower end of the scale, because he is in obsolete property. If he cannot afford the higher occupation costs which will be brought about through the redevelopment (the typical situation) then there is a pressure for his displacement from the property. If this be residential then he will be forced to find accommodation also at the

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lower end of the market, which may mean relocation in another area with contingent loss of job, through commuting, in community association, etc. 30 If it be business, then there is likely to be the loss of business linkages and, in shops and services, of goodwill.

7.5.7

Rehabilitation versus redevelopment

The previous two sections have considered rehabilitation and redevelopment as discrete management options. But during the life cycle of the building it will be necessary on occasions, certainly towards the end of the life, to consider these as alternatives. It is this decision which we now review. For each case the common question is that posed (7.5.5/6): given the conditions as they exist, or as they might be if no action is taken, what will be the difference in the marginal net benefit of rehabilitation versus redevelopment?31 In this comparison there is little difficulty in method outside what has been discussed above, although there are differences in estimation, except for one critical factor: the comparison of the value of the new and rehabilitated property on the same site. This is part of the difference between the calculus for the private and public sector to which we turn below (7.5.9).

7.5.8

Heritage value

The model and notation have been devised for buildings without heritage value. We turn below (8.3) to the implication of such value for this kind of economic calculus. But it is useful at this point to show how such value (h/v) fits into the model in the relevant cases: rehabilitation and redevelopment. In both the heritage value is seen alongside the economic value. In conjunction with the calculation for financial surplus or loss arises the question: what is the implication for the heritage value before and after the works? In rehabilitation is (hlVl — hlv) a 4- or - ? In redevelopment, what is the h/Vl which is irretrievably lost? 7.5.9

The private and public sector

All the elements on the cost side are common, although there could be differences in approach to their estimation; for example, in the public sector interest on capital could be lower than the market rate, as could the rate for discounting the future (7.7), the assumed life (7.9) could be

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different and developers profit could be zero. This brings with it variations on criteria for viability.32 But on estimating the value side there are differences.

Value in the market Exchange value in the market can be estimated in the usual way through market value appraisal, in either rental or capital terms, but questions arise in respect of rehabilitated property. 33 First, will it have a higher or lower quality (value) than the new accommodation following redevelopment? Although, by definition, it will not be designed as though new, it may nonetheless be of sturdier construction; or, in kind of layout, have a scarcity value; or in terms of age, have a period quality which may give it a prestige value. Second, there is a possible difference in the life of the property. Even if of higher occupation value than new, it cannot be typically expected to have a predicted life as long as the new since obsolescence will tend to arise earlier although, as just indicated, there could be exceptions. Conventionally in housing a thirty year future use is taken for rehabilitation as opposed to sixty for new. Third comes the question of whether or not the values immediately following completion of the project will hold on the same profile in competition with properties following redevelopment. Here the expectation would be that the value of the rehabilitated properties could fall off more sharply. Fourth, will the maintenance costs per unit be the same? Fifth comes the rate of discount for the differential flow of costs and returns, bearing in mind the shorter expected life of the rehabilitated property. A simple approach to handling the first two variables for houses which could be either improved or redeveloped is shown in Table 7.1. 3 4 Given estimates of the quality of the improved dwelling as a percentage of that of a new dwelling, and of its useful life in years, the table shows the maximum to be spent in improvement of the dwelling as a proportion of the cost of the new building. In this instance, using an 8 per cent rate of interest (the fifth variable), the table assumes that the comparative profile of values of the properties will remain constant (third variable). In addition the fourth variable must be taken into account, that is the capitalised value of any additional costs and maintenance for the rehabilitated dwelling must be deducted from the maximum cost of improvement.

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Table 7.1 Maximum cost of improvement per dwelling as proportion of cost of new building

100

Quality of improved dwelling as percentage of that of new dwelling 90 80 70 60 50

0.96 0.91 0.79 0.69

0.87 0.82 0.71 0.62

Useful life (years)

40 30 20 15

0.77 0.73 0.63 0.55

0.68 0.64 0.56 0.48

0.58 0.55 0.48 0.42

0.48 0.46 0.40 0.35

Source: MOHLG Circular 65/69, Appendix B.

No market price Where the comparison relates to a building for which there is no market (unpriced) value (for example hospital, school, etc.) then the comparison of exchange value is not possible. The actual value must then be estimated on some other basis. The techniques for so doing are well advanced, having been matured of necessity in the economic dealing with public sector goods, in cost benefit analysis (Chapter 14).35 But a simple comparison on quality is feasible by allocating a points scoring system to qualities of the new accommodation which would be obtained on redevelopment and comparing this, item by item, with the accommodation to be provided on rehabilitation.36 A particular instance of this kind of quality, relevant to this study, is the heritage quality which will feature in the buildings to be rehabilitated but be lost on redevelopment. In some cases this feature will be fully reflected in market value and can be measured this way. But there could be heritage quality in the rehabilitated property which would not be so reflected. We turn to this point below (Chapter 10). 7.5.10

Incidence of costs and benefits on property interests

The varied property interests become important when considering the incidence of costs and benefits of ownership and occupation during the life cycle of property. Some examples echoing (7.5.1-7.5.7) will demonstrate: (a) In new development: the developer/entrepreneur is concerned with the costs of carrying out the development and the returns (benefits) from occupation, either of himself or

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another. These benefits to the developer/entrepreneur are the costs to the occupier of securing the occupation, for which he in turn receives the direct benefits of occupation. (b) Use during the life cycle: clearly it is the occupiers who are primarily concerned (that is the user, his employees, the visiting public, etc.). But again it is the financial costs of occupation (7.5.3) which are the benefit to the owner, thus leading to potential divergence of interests (for example when needing to adjust rentals during periods of inflation, or on termination of leases). (c) Obsolescence: the various kinds of obsolescence could affect the occupation value of the premises, although not uniformly. But the adjustment to rents payable to the owner would tend to lag behind the obsolescence, perhaps because of lease or tenancy terms. (d) Renewal: the owner of the building is concerned to renew against obsolescence, for this undermines the value of his investment. His decision to do so will be affected by the expected costs and the returns of the investment that would be involved. The occupier faces a different problem. The obsolescence may or may not affect his functioning. And he may or may not be willing to pay the additional rents required in order to make the renewal economically feasible for the owners.

7.6

The implications of borrowing money

As brought out above (7.4.2) in the methods of estimating costs and returns so far (7.5) no allowance has been made for borrowing money by the landowners, developers, etc. In practice this is the very rare situation for in the great majority of development and renewal projects money is borrowed, and even when not borrowed is treated as if it were, so making allowance for the opportunity cost of the capital involved. The simple effect on the calculations displayed are that the prime actors must make provision in their estimates for the cost of borrowing money, in terms of interest and repayment of capital. In effect this produces interlinked calculations for the two parties involved: the agencies directly involved in the project (the equity owner) and those who are financing it (the lender). So powerful is the

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financing role in development and renewal that financing requirements will affect the economic outcome of all projects. The sources of the financing are very varied indeed as owners of funds seek investment outlets; and furthermore the methods used in such funding are continually evolving in response to the dynamics of the market, shifts between differing portfolios for investment, taxation, interest rates, inflation, etc. 37 And the changes are speeding up under the impact of deregulation in the operations of the financial markets. The implications in practice are that in addition to considering the incidence of costs and benefits on the various property interests in any particular project it is necessary to add another interest, that of the financier.

7.7

Taking account of the future Discounting

Some economic processes can be analysed irrespective of the time element. The payment of cash for the receipt of an immediate consumption of goods or services (ice cream or a shoe shine) are cases in point. This certainly does not apply to the production and use of the built heritage over its life cycle. In the production, capital costs are incurred over the period of the development process and then, on completion of the development, operating and renewal costs throughout its life. This results in a flow of unequal costs and benefits, which endure for differing periods. These cannot be simply added up to represent totals. The logic is simple. Payments today are more onerous, and benefits today are more desirable, than tomorrow. How then can they be transformed so that the individual items can be summed? For this problem the accepted approach is discounting for time. The simple economic model was that 'individuals making their decisions regarding present consumption and saving would be governed by their time preference regarding consumption, that is, their marginal rates of substitution between present and deferred consumption'. 38 The clearest application is in the private sector, in which money not used for payment can be earning interest and benefits deferred can be immediately realised by borrowing their capital value and paying interest. This leads to the following basic techniques of calculation:39

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Let the investment cost be c, the rate of interest i and the period of years t. Then: Accumulation (A) of a fixed sum at the end of year t c(l + i)' Present (discounted) value (PV) of c payable in the future after t years; this is the inverse of A, that is 1/,(1 + i)' With these formulae it is possible to value streams of future payments or benefits at a common point, typically the time of decision. The value can be expressed in capital terms (by capitalising periodic payments) or in annual equivalent (by decapitalising capital sums). In these formulae, the arithmetical outcome clearly depends on the rate of interest (i) which is adopted and the period of years (i). For the private sector this rate is simply the one in which the payments would be earning interest if otherwise employed (opportunity cost of capital) adjusted upwards for the risk element compared with other kinds of investments. This logic does not necessarily prevail in the public sector, as we will see below (14.4). Change in price level As just indicated, discounting for the future has regard to the expected flow of unequal costs and benefits. These variations in flow can stem from various sources: costs in economic activity will be reduced through technological change in, for example, methods of building; or be increased if particular materials become scarce in real terms. Such changes need to be reflected in the calculations. It is easier in relation to costs, for the construction period itself will be relatively short term. But it is much more difficult for value, since what is being considered is the remaining life of the property as far as can be foreseen. Further complications arise in that changes in real costs and values cannot be expected to be uniform over all kinds of projects in the built environment. In terms of labour costs, the reduction in the numbers of skilled tradesmen means that their costs are likely to be higher than the typical. In terms of values, the increasing scarcity of particular types of historic buildings, with the erosion of the heritage, suggests that they will increase relatively in values with other property.

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Side by side with these changes in relative prices there are also the familiar effects of inflation on the general level of prices. 40 In this instance the changes relate to all the costs and values which are taken into account, as their levels change with inflation. The arithmetical adjustment here is more straightforward since it is uniform. But a particular difficulty can arise since it cannot be assumed that the prices of individual elements will necessarily rise symmetrically. The very inflation itself creates changing conditions in subeconomies, as will the measures taken by government to control the inflation, as for example by freezing prices, wages, interest rates, etc. Finally there is the difficulty that in predicting the level of costs and values it is difficult to distinguish the real from the inflation rate, despite the need to consider them in different ways. From this arises the need to make simplifying assumptions in carrying out the estimates and then to test the validity of the assumptions in terms of sensitivity.41 In essence these tests ask the question: what would happen to the conclusions if the assumptions vary by certain stated amounts?

7.8

Land use and value in the life cycle of the built environment42

So far in this chapter we have considered the economics of the built environment largely by reference to the man-made structure itself. This, as indicated above (1.4.3), is part of a joint product, the land and the buildings. We now turn to the land on its own. Once the land is joined with buildings through development it is 'trapped' in terms of its use; it is completely subservient to the use of the structure itself and its curtilage (the land surrounding which is used with the structure). It becomes free from this trap only at the end of the life cycle when the structure is cleared for redevelopment. Thus the value of the land throughout the life cycle is affected by the value of the joint product. It is this we now trace. As indicated above (7.5.2) it is the successful bid of the potential developer for the property in question which primarily decides the use which is to come about, should he carry out his intentions. At this point in time, land use and land value run together. But thereafter, while the land value is trapped in terms of the structure's use it can, without development works, fluctuate within that use. For example, a dwelling could become an office overnight, without any structural alterations, so attracting higher rental value, even though the contract rent could persist at the residential value, so earning a 'profit rent' for the occupier.

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This simple example shows that there is a relationship between changes in the use of a property and changes in its land value; and in respect of these fluctuations it is possible to estimate that part of the value of the joint product which flows to the structure and that to the land. 43 In brief, current land use and its appropriate current value will run together until such time that there is some prospect of change of use, through the development process. This process is generally lengthy, but once it has started the current use and the new value do not necessarily run together. As soon as there is some prospect of development there is a prospective potential use, attracting a potential value which is higher than the current use value. Transactions in the market will reflect this 'hope' pending a decision on the use in the planning permit. Competitive bids for the land will then discount the expectations of net value from the development to take place. On the acceptance of the final bid which is associated with the new land use, and the realisation of this land use through development, the use and value for that use will run together again. After some time the same process will begin again owing to the obsolescence of the established property and the prospects of renewal. The prospects will be explored in terms of reconstruction, rehabilitation and restoration (7.5.5-7). Here again there will be some 'hope' value in respect of the prospective use, so that the value of the land for the current use will again not run together with the value of the property.

7.9

Life of property

In the management of property an estimate of its future life is of significance for many decisions. For example, when new, over what period would it be safe to make provision out of rental earnings for the repayment of a loan on the property or the accumulation of a depreciation fund for its reinstatement; when considering works of rehabilitation to extend life, over what period is it reasonable to visualise that the rehabilitated property would be in a position to produce the rental income; in granting long leases, at what point of time in the future would it be reasonable to expect that a group of properties owned by one landlord and leased separately would fall in for comprehensive renewal? While for all such decisions, and others, it is necessary to make some estimate of life it follows from the preceding (7.5) that the estimate will be difficult to make, because of uncertainty owing to the complexity of issues

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surrounding the concept of 'life of property'. 44 When will obsolescence of the various kinds come in, to the degree of shortening the life? To what degree will any particular renewal provision extend such life? What are the chances of property becoming the object of conservation policy, so constraining the termination of its life at the will of the owner? Thus it is necessary to make assumptions, explicit or implicit. Such assumptions at any particular time could be eroded in the following years. They could provide an underestimate, as where the rehabilitation of the area surrounding the property, through public or private agencies, has increased the attractiveness and rental value of the property in question, and so made more feasible rehabilitation to extend its life. Or the revision of the assumption may need to be downward, as where a suddenly announced proposal for a new road project, etc. creates blight in the area, and so undermines prospective rental values and the possibility of introducing feasible rehabilitation. But even if the assumptions are not eroded, arrival at the estimated date for the end of the life of the property may find it still very much 'alive and kicking' rather than on its death bed, for all kinds of reasons, of the kind just indicated. At that point in time the property would have yet further economic life, in that the building would not be economically obsolete (7.5.4). Should this occur, then any reasons of an 'accountancy' nature (e.g. that the loan on the property has been amortised or the depreciation fund accumulated sufficiently) are no reasons for decisions to terminate the life: the landowner will regard the fact as a windfall gain and base his management decisions on the property in respect of the future potential. His approach would be: 'bygones are bygones'. Equally well, unexpected blight which undermines the future viability of the property will be a basis for management decisions to shorten the expected life rather than to gear the decisions to the notional periods based on amortisation or depreciation, even if there be outstanding loans at the termination. Similar considerations arise where a 'life' for the occupation of the property has been decided upon in granting a long lease, be it in a building lease for the erection of new property or an occupation lease for a standing property. At the time of the grant, both landlord and tenant will have considered the implications of the 'contract life' for their respective investment appraisals. But for the same reasons as those indicated, this 'notional life' may prove in the event to be an under or overestimate in terms of the economic life of the property. The end of the lease may see the property with a viable economic life into the indefinite future, or with one

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that has already in fact terminated so that the property is ripe for renewal. In the former instance the lessee would seek to continue his lease and in the latter he would be anxious to terminate. It is such factors which will form the basis for negotiation of the renewal of the lease. In brief, while the 'life' and 'economic life' of the property are valuable and indeed essential concepts in a variety of situations it is clearly difficult to make estimates at any particular moment in time. This makes it difficult and indeed unwise to use such estimates as a basis for making decisions which will be binding in future, for example the date when a certain area will be redeveloped.

7.10

Effect of planning control45

In all the preceding we have not taken account of one effect on cost and values which is paramount and all pervasive, namely the impact of government activity on the land and property market. This influence affects the whole of the economy: so much so that the central debate in mixed economies is the balance that should be observed between allowing the economy its head and government intervention. 46 In relation to the built environment the intervention from urban and regional planning is very powerful (3.1) with the many controls from other sources (protection of road lines, environmental controls) which it takes under its wing. Paramount here for our concern are the conservation constraints. The impact of such planning is most strongly felt when a permit is needed for the carrying out of new development or renewal, for then the impact becomes crystallised in the decision. But it also is felt at other points over the life cycle of property, in the manner in which the urban and regional planning process steers evolution of the urban entity, or fails to do so. The allocation of new areas for development will stimulate associated rises in land value for retailing to serve the new residents; or diminution in property values where amenities are undermined. Equally well the failure to tackle urban problems, such as the inner cities or transportation, carries with it deterioration in property and land values through environmental obsolescence, etc. The direct effect referred to in the granting of the permit could be felt in any of the situations described above (7.5). In brief, while the trends affecting the properties in question are the main determinants of the economic action to be taken, no development except the minimal can be

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carried out without the actual permit, for then the investment would be unauthorised and subject to enforcement action. Thus until that permit is granted the values are expressed in terms of 'hope'. In some cases the hope can be very strong, so that their realisation can be counted upon. In others it can be so remote (building within the green belt) that the discounting for their realisation must be high. It is at the point of realisation of value with the grant of the permit that there is the counter effect of what has come to be called 'planning gain' . 47 In essence this is the use by authorities of their positions of power in the development process to exact a contribution from the developers which they would not otherwise or normally make in terms of their obligation in law. Simple examples are the contribution of public buildings, release of land in the development project for open space, amenities, planting, etc. 48 In such situations, the terms of the bargain struck between the developer and the planning authority for the grant of the permit must be reflected in the cost of the project. This affects the financial outcomes in the situations described above (7.5).

8

8.1

Economics in the conservation of the CBH

The CBH as a resource

Certain buildings are created with the intention of their being monuments (royal palaces, royal burial chambers, mansions intended to be the home of a family for generations, churches or mosques). These apart, when the CBH is initially developed it would not be seen as distinct from the generality of the built environment; it is by definition only later that the social decision is taken to conserve it. Such a decision certainly constrains the use of the stock in question as a resource. For example, how can you expand the economic base of the community in manufacturing, retailing, commerce, etc. if large parts of the relevant fabric were designed with an eye to the requirements of centuries ago and conserved since?1 But in other respects the CBH can be seen as a resource of even higher value than if it were not so earmarked, as the following examples show: 1 Stock designed in a previous age can provide an environment which will not or cannot be reproduced today, and therefore offers a relatively scarce opportunity for both stability in the physical environment and enrichment of human experience. 2 Architecture from earlier centuries can give an aesthetic character to a locality which is distinctive from that provided solely by recent and contemporary generations, and can so enrich the human experience. 3 This distinctive character, and its architectural and historic interest, will attract visitors to the locality, from the same country or abroad, who will generate spending in the locality. 4 Such spending will generate employment, both direct in relation to the expenditure itself, and indirect through the spending of those employed (the multiplier effect).

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In summary, while the conservation of the CBH can be regarded as a constraint on the freedom of the current generation in the management of its assets, it can also be exploited as a resource for the socio-economic advancement of that and later generations. Thus the conservation of the heritage for that purpose can become an objective of socio-economic development.

8.2

The CBH as property

The CBH is property in a way similar to other elements of the built environment, except that it is subject to the constraining interest of the state in its conservation, which we called above 'heritage tenure' (4.2). This creates impediments to finding the use which has the greatest net surplus; maximisation of net asset value needs to be tempered with maximisation of conservation value. But the result might not be long-term diminution in asset value, since the very conservation measures themselves will tend to enhance the long-term occupation value of the property, arising from the scarcity of its qualities compared with the generality of the built heritage.

8.3

Economics in the life cycle of the CBH

We now illustrate the effect of the heritage tenure constraints on particular situations in the life cycle of the CBH, following similar treatment for the general built heritage (Chapter 7). 8.3.1

Economics in use

Older buildings do not necessarily have higher 'costs in use' than the more recent. The traditional technology relied on few materials, simple construction and generous proportions which provided a high thermal capacity and moisture 'buffer' effect. By contrast, industrial technology has developed complex forms of construction in a multitude of interacting lightweight materials; and design procedures have been dominated by standards. They rely heavily on mechanical/electrical services and the systems, once installed, are very expensive to modify.2 But the conservation constraints could introduce limitations on the freedom of the occupiers in the use of the building for activities (so that

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these will not interfere with the structure) and therefore the costs to be incurred (e.g. need to retain fenestration or have more fire protection). This will affect the economics in use of the building, and the management consideration which can be given to these aspects by the owners and occupiers.

8.3.2

Economics of obsolescence

By definition, a building which is to be conserved as part of the CBH will tend to be older and have had a longer life than most contemporary buildings. Thus the tendency will be for a greater degree of structural and functional obsolescence. But nonetheless there will be greater inhibitions on the owners and occupiers to tackle the growing obsolescence.

8.3.3

Economics of renewal

If only constrained rehabilitation is allowed in the interests of conservation then the owners and occupiers will be hampered in their search for the optimal renewal project. This can be illustrated by a simple example. Let us visualise a 100 year old merchant's house, listed Grade II, which is physically deteriorated and functionally obsolete for its original purpose (one family) and is occupied without proper sub-division by numerous families. Being in the centre of the city, surrounded by commerce, the local planning authority would agree to office use. The site suffers economic obsolescence in that its value for redevelopment for offices is greater than the value of the building in its entirety. The owner would like to demolish and redevelop for that purpose. Redevelopment. If the authority resists redevelopment then the owner will suffer the potential loss of the excess of the site value for an office over the value of the current property. He is thus deprived of a speculative gain, and the developer a profit. However such gains could well go to another site, also suitable for offices, on which the authority would give permission. Restoration. The authority might start its bargaining by wishing to see the house restored to occupation by one family. The owner finds little demand for such a use, so that the price he would obtain on sale would be less than the cost of works. He could not proceed because of non-viability.

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Rehabilitation. The owner would then consider rehabilitating the building for offices. If the extra value were less than the extra cost then the owner would not be interested and would continue to use the building as it stands. If the extra value would exceed the extra cost he would wish to adapt the building. Should the authority resist because of diminution of heritage value then the owner and developer will be denied gains which again could be picked up on another site. Do minimum. Whether the owner elects to continue occupation in the current structure, or is forced to do so by resistance from the authority to rehabilitation, he is faced with the need to operate a building which is physically and functionally obsolete. Nonetheless the receipts from the occupation of the building could exceed the expenses, so providing economic viability. But whether or not the profits were adequate for the upkeep of the building, the owner would hardly be encouraged to continue its life. Thus the building would deteriorate, towards non-viability. Should the authorities intervene with a view to preventing deterioration through enforced repairs and maintenance, they might be driving the owner into a situation of annual loss as opposed to annual gain. The use would then not be economically viable.

8.3.4

New uses for old

In economic analysis for tackling obsolescence via renewal (7.5), the decision as to rehabilitation or redevelopment includes the redevelopment option. This is constrained away by conservation. Thus the economics of conservation has as a focal point the need to explore possible uses for the fabric which must be retained (subject to adaptation through acceptable alterations, etc.). It is this exploration, the key to conservation by rehabilitation, which has been richly pursued under the impact of the conservation objective.3

8.3.5

Financial aids to meet the viability shortfall

Where governments wish to conserve, but the conservation constraints result in non-viability in rehabilitation, they have made available a diverse and complex array of financial aids to meet the shortfall. These can be in a variety of forms4 of which some are:

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(a) repayable loans at favourable rates of interest and period of repayment; (b) capital grants to reduce the incidence of the cost on the developing owners; (c) reduction in capital cost to the owners by provision of staff and materials at low or zero cost; (d) contributions to maintenance costs; (e) tax relief whereby the government does not pay directly but indirectly through a reduction in tax liability on the property in question, either on a capital or revenue basis; (f) tax increment financing, whereby incremental increase in taxes on a project area are earmarked for recycling into further projects; (g) governmental patronage, whereby government takes on appropriate buildings and rental payments or capital purchase; (h) revolving funds whereby the capital is made available to an agency wishing to rehabilitate and sell and repay the loan, using the surplus and additional loans for tackling the next property; (i) making available incentive schemes applicable to the generality of property which suit the situation of the heritage property; (j) authorising charitable arrangements whereby industry and financial institutions can use some of their resources for conservation, for the benefit of tax relief. Not all such aids are relevant to particular cases and nor are they necessary. Thus selection is needed. This can be approached by reference to the various financial aspects in the development process (7.4) in order to identify where there is a particular bottleneck which can be alleviated. In terms of contribution to the shortfall, both kinds of source, direct or taxation, are clearly of interest to the owner. But there is a distinction between the two from the viewpoint of government concerned for conservation. With tax relief the initiative comes from the prospective owner/ developer who takes advantage of the relevant rules, which may or may not favour particular kinds of property or conservatioxi situations; speaking generally, the conservation priorities are then decided through the market. 5 With the direct subvention, the bureaucratic control will rest with the government department concerned with conservation and not with the

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generality of taxation. This permits of specific attention to conservation objectives. More particularly, within the focus of this chapter, there is the possibility of government exercising priority in terms of conservation value for money, in the allocation of the relatively scarce subvention funds to the large and growing calls upon them. 6

8.4

Land use and land value in the life cycle of the CBH

Within the context given above (7.8) we now introduce the special element in this relationship which arises through constraints on change when the built environment is part of the cultural built heritage. Generally speaking a new variable, heritage quality, enters the economic calculus for optimising asset value. Three typical situations will illustrate. (a) Continuation of the activities related to the current use of the property, e.g. a residence or museum in the case of a building capable of occupation; or a public park in the case of a ruin or archaeological site. Here the qualities which make the building, etc. part of the CBH are maximised but the commercial value may suffer. (b) Change involving limited structural alteration (from an individual house to a series of apartments) or major alteration (from an individual house to an office, convalescent home, hotel, etc.). Such change of use, and the associated structural work, could be inimical to the conservation objective. But it might not be so. It could be that the particular use which is visualised is as much or more in sympathy with the building than the current, as where a storage warehouse becomes a museum. Indeed the search for 'new uses for old' opens up creative possibilities of a whole range which could be sympathetic to the building. Given the right bargain, both commercial and conservation values can be maximised.7 (c) The value of the property as an economically obsolete site. Here demolition of the structures is visualised so that the land itself is released for development for a new use and optimal value. Clearly this is completely abortive of any conservation objective. In brief, if left to itself the market would decide which of these values would be the highest in money terms. The resultant transaction would

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decide the future use of the heritage quality. If conservation quality be threatened, conservation constraints would regulate market value to the benefit of conservation quality. The land use, land value and conservation profits would be affected, as would the prediction of economic life.

9

Economics in planning for conservation of the CBH

9.1 The similarity and distinction of purpose in economics and planning As indicated above (Chapter 3), planning for conservation is seen as part of urban planning. Accordingly we here see the economics of planning for conservation as part of the use of economics in urban planning. Such use is not all that straightforward. It is thus necessary to introduce it as a preliminary. There is a decided tendency for planners and economists to mutually consider the other inimical to their purpose. For this there need be no fundamental reason, considering that they have some identity of purpose. While open to controversy,1 economists would generally accept as a starting point the classic statement of Robbins, 'economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses'. 2 Amongst economists this formulation calls for planning. Two brief references from economists of different views will rub home the point. Even Hayek can say: All economic activity, in particular, is planning decisions about the use of resources for all the competing ends. It would therefore seem particularly absurd for an economist to oppose 'planning' in this most general sense of the word . . . The dispute between the modern planners and their opponents . . . is not a dispute on whether we ought to choose intelligently between the various possible organisations of society . . . It is a dispute about what is the best way of so doing. 3

And Myrdal, a dedicated planner, points out that the term 'planned economy' contains ' . . . a plain tautology, since the word "economy" by itself implies a disposal of available means towards reaching an end or goal'. 4 It has 'an automatic direction of economic life towards an inherent goal, i.e. of non-planned planning'. 5 While urban and regional planners do not have a neat definition as a

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6

starting point, they would also recognise the Robbins statement as a point of departure. 7 But then divergence soon appears. They would disagree with the Robbins concept of planning being concerned only with studies and of neutrality about ends. The formulation of the ends, in terms of goals and objectives, is an essential part of the planning process; and while there is controversy in planning as to whether the values of the planners themselves should enter into the formulation, even those who claim to be value free in this regard would certainly see their planning as normative and not just positive. Planners find another divergence in that they by definition are concerned not only with economic costs and benefits but also with social, environmental, etc.: the inherent costs and benefits falling on the community being planned for (the externalities) and not simply the direct costs and benefits on individuals and firms, which has been the major preoccupation of economics until the application to the public sector, public goods and choice over the last fifty years (Introduction). Thus there is a fundamental identity of purpose with good reasons for divergence. These have led to many attempts at reconciliation in the literature, from both planners and economists.8 That there is growing convergence is clear, not only in literature but in practice as economists work within the town planning process and town planners within development and operating enterprises, each learning from the other, in terms of content. 9 This is accompanied by mutual influence on method. Economists benefit from needing to apply their mature discipline to new topics: amenity, the natural environment, pollution, leisure. 10 Planners benefit from seeing growing rigour enter their practice, as in the process of evaluation of projects and plans (9.6 and Part IV). 11

9.2

Planning and the market

Both economic planners and town planners share the common starting point in their work: intervention into an ongoing system with a view to improving upon the outcome that would otherwise prevail. Both recognise that, as just indicated (9.1), the market carries out 'non-planned planning' and so produces order in the ongoing system. But both recognise that this order could be improved upon because of its well known features, such as the following: the market is primarily concerned with efficiency and not equity; the efficiency is judged in the main by private and not social costs

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and benefits; the absence of equity is due in some measure to economic and social inequality; there is the difficulty of accommodating the public sector, alongside public sector activities. For economists this field is generally known as 'market failure'12; to planners it is the imperfections of the land and development market which are even more marked than with other markets. 13 In both instances the intervention is carried out by government. From this it follows that there are necessarily great variations in the nature of the intervention, be it in the economy in general (compare East and West Europe); or in urban and regional planning (compare the different systems in north-west Europe). But there is a common thread. In simple terms, in all countries there are twin drives for both efficiency and equity, with too much emphasis on efficiency resulting in a sacrifice of equity (Britain in the 1980s) or a drive for equity resulting in a loss of efficiency (Eastern Europe). 14 The problem therefore is to find the right balance in intervention against 'market failure'. It is in achievement of this right balance around which the discussions revolve, in the theory and practice of intervention in all countries, and there have been many essays on the topic in regard to urban and regional planning in Britain.15 But in the preoccupation of balancing against market failure it has been forgotten that two other kinds of failure can emerge. First, it does not follow that government intervention to remedy market failure will necessarily produce a situation which is better than the market would otherwise have produced. Government after all is human in that it is made up of politicians and their administrators; and these have the difficult task of showing that their intervention produces better results than the 'nonplanned planning of the market. In principle a plan should be better than no plan; in practice it does not follow that any plan is better than no plan. There is also the possibility of 'freedom failure'. Any intervention for social control and social justice, however well intentioned, must mean some loss of freedom to individuals and corporate bodies. How far should this go in the balance between the rights and obligations of the state and those of the individual? It is the judgement that the individual freedoms are sacrosanct that has led the 'marketeers' to be so vehement against public intervention beyond the most limited kind. 16 This necessity to define and consider the 'logic of intervention' in all cases and at all times has relevance also to intervention for conservation. The market left to itself will not conserve the cultural built heritage, in quantity and quality. Intervention is needed. But is government fully

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effective in its administration? Is it not desirable to at least consult with the owners of the buildings affected prior to legal control? Where are the boundaries to be drawn in coping with market failure, government failure and freedom failure?

9.3

Role of economist in urban and regional planning

It is today taken as axiomatic that urban and regional planning is too complex and important to be left as it once was just to the generalist urban and regional planner. Of ever growing importance is the contribution of a large range of other 'contributory disciplines': architecture, urban design, engineering, law, sociology, ecology, economics and so on. But what is not so generally agreed upon are the respective roles of these skills in the planning process. At one extreme some have thought that these need contribute only information and advice, by way of 'feed'. At the other extreme some say that if all could act as planners in concert - social, transportation, economic planners, etc. - the need for the distinctive role of the general planner himself would be removed. Within these extremes there are other views. Following is that taken here. 17 While exemplified by the use of economics it is applicable to other 'contributory disciplines';18 and while referring to 'economics' it applies also to the contributions of those concerned with all aspects of economic life: the surveyors, valuers, accountants, etc. Clearly there can be no uniform mix of skills: the job in hand varies throughout the duration of the process, the particular problems which are studied cover a wide range, as does the level at which the planning operation is being conducted - from the region to the village. From this it follows that the particular contribution of economics in town planning studies will vary, receiving greater emphasis in some than others. In one case everything could depend on the economic feasibility of attracting industrialists to a particular location; in another everything could depend on judgements in which the economist can give no immediate help, for example, the architectural quality of a historic town centre. Economics must be relatively more important to the whole operation in a regional study. But even at the local scale, where site design and layout is a major concern, economics must play its part, for example, in measuring the marginal costs and benefits of variations in density.

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There is no particular point at which economics can be said to enter or leave the process; it must participate throughout. This is not to say that it would be employed at an even pace or rate, but rather that the economist must be available for the appropriate task at the appropriate stage. From this it follows that the nature of the economics contribution will vary with the particular stage, as we now illustrate by reference to a typical planning process.19 There may be need to invite views in the early formulation of economic objectives. This would involve a variety of economic studies, for example, the economic history and base of the area, analysis of trends, review of constraints upon full utilisation of local resources, forecasts of employment prospects, market analysis of the demand for the different activities and uses. These studies will lead to a crystallisation of the specific economic problems, opportunities and objectives which could be followed and of the economic constraints on choice of solution: for example, in the capacity of the construction industry or sources of finance or public subsidy. When alternative plans are being prepared, economists can help across the drawing board, as it were, with guidance as to designs where costs can be minimised and value maximised, definition of cost thresholds, marginal costs and returns in variations from particular planning standards. This will lead on to tests for economic feasibility of the alternatives. In the selection of the preferred alternative, cost minimisation, cost effectiveness and cost benefit techniques will enter into the evaluation of designs, and also estimates of financial cost and return will give a lead on financial viability to particular developing and operating agencies. The preferred alternative would need the contribution of economics in its detailed design, in resources required, the demands that will arise for the accommodation to be provided in the various time phases and financial costs and return appraisals. This will lead to feedback to the designers, as where costs are considered too high or revenues too low for any particular implementation agencies. At the implementation stage, real estate analysis is needed on private and particular public sector projects. And in the more varied world of development control, economics can indicate where, for example, proposed planning conditions and restrictions would affect the economics of the development and, therefore, its viability; suggest alternative locations for enterprises where it is contemplated refusing permission for siting in the location proposed; and could suggest pricing policies for car parks, traffic congestion or environmental pollution. From the above it is seen that the orchestration of the planning team

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requires management. This is part of the education, skill and experience of the town planner, as has always been recognised: the awareness of when, how and at what scale to invite collaboration from other skills and how to organise the collaboration. It is not a matter of the size of the operation: whether or not to site a new office block near a road carrying heavy traffic could require specialist calculations from a traffic engineer. A final point needs to be made about this particular view of the constellation of planning skills. Here the process is looked at from the viewpoint of the urban planner, for it is within such planning that the economist is collaborating. But an economist seeing urban planning from his own viewpoint, for example when advising an industrialist on the scale and character of investment, would do so as a background to the economic analysis needed; the planning framework is regarded as external to the operation and investment decisions. This vantage point would be adopted by every discipline, including the conservation architect (architectural conservation), so that we have no Copernician concept but a galaxy of inter-related conceptual systems. From such standpoints, town planning is thus also a ^contributory discipline'.

9.4 Some economic principles in plan making for conservation of the CBH Reference has been made above to the manner in which urban and regional planning embraces conservation, in general (Chapter 3) and for the CBH (Chapter 4). This is now picked up with examples of the economic strands in the process. Recognising the potential of assets which exist20 It is natural in the planning of towns to concentrate on problems, for these are the focus of remedial plan proposals. But there are also opportunities were potential is not being fully used, and which could be so used in advancing the plan's objectives. These are 'amenities' which are developable assets. Some examples are: the cultural institutions which exist; buildings giving particular character, whether recognised as part of the CBH or not; special traditions and activities for which the town is noted; natural features (hills, rivers, gardens, etc.) which can become foci of

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attraction. Since by definition much of the assets tend to be seen in the historic centre of the town, this becomes a special focus.

Deferment of obsolescence As indicated above (3.3) planning has a role in deferring obsolescence in general, including for the CBH. For this regard would be had to the special information derived from the economic screening for obsolescence (11.3.3) in order to see whether proposals can be devised for slowing up or averting obsolescence.

Helping rehabilitation by enhancement of use value Whereas for the non-CBH the renewal alternatives available in tackling obsolescence can include comprehensive redevelopment, in the CBH the presumption is that this option is by definition precluded, if at all possible. That is the essential purpose of the plan's conservation strategy. If for example it is the immediate environment of a historic building which leads to difficulties in finding suitable occupiers who will conserve it then it is the possibility of improvement in that environment that needs to be studied. This is but one example of an array of proposals which can enhance the use values of the CBH and so encourage rehabilitation. Other instances abound in proposals aimed at urban regeneration in social, economic, physical and environmental terms. 21 Particular attention could be given to whether transportation proposals and policies could be steered to enhance the use values of the heritage. Examples are: is the concentration of traffic and parking in a particular area adding to environmental nuisance, so discouraging the use of the CBH, or is such an area languishing because of poor accessibility to potential hotel or shop customers?

Steering demand for accommodation into the supply of CBH An element of the economic studies for any plan is the assessment of the increase in demand for accommodation in the study area and the means of supply for meeting this demand. By definition, the supply can be made up either of existing stock (as it is or rehabilitated in some way) or new stock. The alternative ways of matching the two, with choice of the best, is a typical feature of plan making.

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The essence of the demand study is to identify the variables which will influence the future demand. These are not the same for all uses. Clear examples in relation to housing are the expected increase in population, demographic change in population structure, prospective family formation, increase in purchasing power through increase in economic prosperity, etc. In respect of offices it is the predicted growth in the white-collar sector of the economy. In hotels it is the expected increase in visitors, tourists, etc. Because of these variations, the methods and techniques of forecasting for economic demand vary from use to use, as does the robustness of the conclusions which can be drawn from the forecasts. In each sector the macro estimates of demand for particular uses must be matched in the first instance against the supply offered by the existing stock. In this matching the CBH competes with its special characteristics: in the higher cost of upkeep of the historic buildings and greater restriction on freedom of alterations, and the compensating attraction of the quality of the heritage buildings when compared with others. Thus where there is a significant supply of CBH in an historic town, conservation can be advanced by limiting in the plan the supply of new stock to meet any particular demand, in order to attempt to channel such demand into the CBH. This requires in combination a restrictive policy of limiting the relevant supply of new stock with the positive policy of attempting to enhance the quality and value of the CBH.

9.5

Economic feasibility of plans for conservation of the CBH

One step in the conventional urban and regional planning process is the testing of alternative strategies, policies, planning proposals or particular projects for feasibility (i.e. broad practicability or possibility) prior to their comparative evaluation as a basis for choice. Such tests can cover a wide array.22 It is the economic tests which are our concern here, at the macro level. First comes economic feasibility: will the proposals be practicable under the prevailing or foreseeable economic climate. Here the paradox arises: the more successful the conservation of the CBH, the more will the socioeconomic activities of the town be carried on in the buildings which have by definition a greater degree of obsolescence than the occupiers would choose, given the freedom to do so. The buildings will be older than the

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typical; their internal arrangements will not be as functional as those designed more recently; there could be more locational and environmental obsolescence than the typical. And all these tendencies will have greater significance where the conservation in question applies to a large area, as in the centre of historic towns, rather than individual buildings. Given success in conserving the CBH, the question thus arises: will the socio-economic base of the town be adversely affected, or even in the extreme case, eroded through constraints on the use of the CBH stock?23 Will the residential stock be so expensive to maintain (because of structural or functional obsolescence) that the occupation becomes a drain on the household incomes? Will the buildings to be used in offices, hotels, shops, etc. be inefficient for their purpose? And will such increased costs be offset or not by the additional value to occupiers that comes from using buildings which have the distinction of the heritage, as opposed to the contemporary and typical? And will the town find that potential occupiers (residents, businessmen, etc.) are deterred from moving to it by the nature of the CBH and the restrictions on its alteration? Or will they be attracted to it for that reason? And, by the same token, will investors find the town attractive or otherwise compared with towns without heritage buildings? Within these major questions there will be more particular ones. First, given a planning strategy of diverting some of the demand to CBH buildings, will there be sufficient demand for the accommodation so earmarked compared with demand for the non-heritage, in that town or another? Second, given a major programme of rehabilitation of the CBH, will there be available appropriate skilled building labour and contracting firms to carry out the necessary work at reasonable cost? Third, is there the expectation of financial viability (worthwhileness) which will attract the necessary investment funds? For example, will there be available for the CBH programme the financial resources from central or local government (as direct subsidies in rehabilitation or in effecting environmental improvements, etc.)? And where there is a financial shortfall, could supplementary sources be found, as for example direct taxation of the visitors/tourists who benefit from the conservation (12.6)?

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Economic evaluation of plans for conservation of the CBH

In the formal planning process, the preceding steps will have resulted in a short list of alternatives which are presented for choice by the decision makers, as a basis for implementation of the conservation strategy, plan, etc. It is to aid judgements in such choice that formal evaluation analysis is undertaken, as a means of comparing the alternatives in a way which is meaningful to the decision makers. Such evaluation is no different from that carried out for general plan making. It raises the classical question: how can the limited resources be allocated to competing projects so that the priorities observed produce the best 'value for money' in conservation quality? When applied to the CBH it must reflect the relative heritage values which would be achieved in the alternatives (Chapter 10). In making their choice the decision makers could have a variety of criteria, implicit or explicit. Following are some examples. Which can be achieved at the lowest capital and operating costs to the government and would therefore be the least burden on rates and taxes? Which gives the maximum conservation of the CBH without regard to cost? Which would least damage the economic base of the community? Which gives the maximum amount of space which is conserved for the least cost? The choice criterion clearly needs careful selection for it affects the outcome. Least cost ignores the possibility that low cost projects may have also low heritage value. Equally well, priorities in terms of the highest heritage value in projects, without regard to cost, would ignore the possibility that greater returns in conservation could be obtained by spreading out the limited resources over a large number of lower value projects. And which costs are to be used: upon the taxpayers as a whole, on particular sections of the community (e.g. the CBH property owners) or on the economic base, etc. Given such questions and the context for them, there then must be used the appropriate economic evaluation methods aimed at answering them. To these we return below (Part IV).

9.7

Economics in the CBH conservation programme

In discussing management and planning in the conservation of the CBH we saw that the culmination of the process should preferably be a programme for conservation which will be the basis for implementation (6.5). We also saw that the nature of the programme would vary with the kind of 'plan',

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ranging from conservation policies through to strategies or a series of detailed conservation projects. In the implementation of any such programme there will, as always, just not be adequate resources available to achieve all the CBH conservation objectives in any particular town and, if viewed nationally, in any particular country. There thus arises the need for some assessment of the costs that would be involved and the benefits to be achieved in conservation terms, so that the total resources available can be used to 'buy' as much conservation as is practicable within the limited resources. In essence we are seeking 'value for money' in conservation, to which we return below (Chapters 10 and 14). Such economic assessment is clearly the most practicable when the conservation projects have been defined, so that the estimate of the costs and benefits involved is facilitated. This falls within the field of project evaluation or appraisal.24 But in its application to the cultural built heritage certain well recognised difficulties arise. For one thing the 'heritage value' to be aimed for cannot be readily translated into money terms in order to achieve a numerical benefit cost relationship (Chapter 10). For another, even so, the benefits/disbenefits to be derived must reflect not simply those that would accrue to the property owners but also to the government in introducing 'heritage tenure' on behalf of posterity, and to the contemporary community at large. To this we return below (Part IV). However, in the nature of conservation practice a plan may not result in a clearly defined comprehensive programme of conservation projects. Indeed the projects could emerge at random. Some will be initiated by local or central government on property they own. Some will be in areas in which government proposes to invest public resources, as for example in environmental improvements. A large number typically arise when there is a threat from the public or private sector to a conservation item that is included within the official list. Some will be identified from urgent rescue action initiated by the conservation authorities on heritage buildings which are being neglected. But however random, in effect the items amount to a conservation programme, in which there is competition for resources. Thus the same approach will be used as in the assessment of the conservation programme, just described, but necessarily on an ad hoc basis relating to the circumstances as they appear at the time. In all cases the economic aim will be to achieve the maximum heritage value with the use of the least resources possible, whether falling on the private sector or the public, consistent with the economic viability of the project itself.

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In this we return to the nature of this heritage as a commodity (4.5). The cultural quality represents value to the contemporary society as a whole, which it wishes to pass on to future generations. Its cost is in the additional resources (capital and operating) falling on the promoters/occupiers because of their need to protect the heritage, subsidised perhaps in part by government to assist in the financial viability of the rehabilitation project aimed at securing continuation of the heritage. The protection and provision of the cultural heritage is thus part of a development project which has its commercial dimensions. This could be out of accord with an architectural aim of achieving maximum heritage quality without regard to cost or value of the works to the relevant property itself. But since the conservation decisions are social decisions, made by public authorities, it is also possible for them to perceive the costs and benefits in a wider sense, that is those falling on the community as a whole outside the particular property boundary for which the project analysis is being carried out; these will include externalities, that is those costs or benefits falling on sectors other than the promoters or occupiers (Part IV).

9.8

Priorities in the conservation programme of CBH

Whether the CBH items emerge as a comprehensive or random programme, the economic assessment for projects just described will enable each to be ranked in terms of the heritage value to be achieved for the resources to be used. This will permit that other well known feature of project evaluation, namely the assessment of priorities as between projects which are competing for scarce resources. Leaving aside for the moment the complexities of establishing the value in money terms (considered in Chapter 10) it is possible to devise a programme based on priorities, on the approach illustrated in Diagram 9.1. Here for each element of the conservation programme is shown the benefit in terms of heritage quality which would be achieved against the resources required to achieve it. The essence of the exercise is to find that combination of projects which will match the total resources available for conservation while maximising the heritage value. To answer the question in accordance with the principles of cost benefit analysis (Chapter 14), each conservation project would be ranked in terms of a given criterion, e.g. net value (Diagram 9.1), or benefit-heritage quality/cost ratio. 25 Measuring this quality in money terms would lead to a

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2

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3

•

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HERITAGE QUALITY/ BENEFITS/ IN P O I N T S

nnnnD RESOURCES/ COSTS

PRIORITY IN NET BENEFITS

SHARE OF COSTS IN FIXED BUDGET BY PROJECTS IN PRIORITY

COSTS TRANSPOSED ON BENEFITS, TO SHOW NET BENEFITS

Diagram 9.1 Assessing priorities of conservation projects in fixed budget ranking of priority in heritage value for money. Taking the list of projects in sequential ranking of net benefit (heritage quality minus cost) to the point of exhaustion of the given resource budget, achieves the maximum conservation Value for money' of that budget, in surrogate terms. Within such a ranking will need to be considered the problem that does not exist with priority ranking in other fields (e.g. new roads, etc.) namely that the conservation objects by definition are old and typically in need of some repair which, if let go too far, would erode the object itself to a point where it would need demolition. The consequences are serious, for the object is then irreplaceable. This consideration requires that a part of the funds be allocated to a 'fire fighting' programme. In this the 'value for money' criterion must still be applied. 26 Is the cost of emergency treatment

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so small that the question of value for money could be postponed on this score? Having regard to different levels of repair, would the physical life of the object be sufficiently extended so that it could take its place amongst the generality of objects to await its conservation turn? Would the conservation quality to be obtained on full conservation works justify the cost of repair? Or would this be so low as to justify using the repair resources for conservation of other objects? All this requires that the question of the heritage value of the object be considered even at the time of its need for emergency repairs. There is another reason for departing from the strict 'value for money' criterion across all projects. By definition, objects having values of quite different origins (history, culture, architecture, etc.) are being compared; objects in certain towns containing a great abundance are being compared with other towns in which they could be rare, and therefore have the additional 'value' of local scarcity; objects having national significance are compared with those of local significance, with the result that the latter would be downgraded in comparative value. Faced with this situation a quite different approach would be to make some prior selection of groups, for example by category of heritage value, or location, or national, regional or local importance. For each group there would be allocated a division of the budget, on some judgemental ends. Then within each such group the 'value for money' criteria would be applied to give the ranking. In this way the resources to be spent will result in objects being conserved over a broad front of categories as opposed to being confined to objects of 'heritage excellence'. In all this the aim of the conservation strategy and policy must be borne in mind: the resistance to significant alteration or removal of any identified element of the heritage, in order to prevent damage which is irreversible and loss of stock which is irreplaceable, so that the conservation quality can be improved into the future on a sound footing.

9.9

Economics in project implementation

For conservation to be achieved in practice the projects need to be implemented on the ground. The process for the CBH is little different from that in other projects, be they for new development or renewal; they will be carried out by the development process (2.5). In this process, the use of economic principles will clearly vary with

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criteria of the implementation agency. A public authority, in offering grants, etc. will be concerned with the net financial costs compared with the heritage values to be achieved. The approach of a non-profit conservation agency (the third force) will be similar except that they will not be dependent on profit to be made, excess of money value over cost, but will typically be content to recoup costs (excluding government subsidy) by sales. The private entrepreneur will equally be concerned to attract as much subsidy as he can from government wishing to enhance heritage value, but will certainly wish to gain profits in the excess of value over cost in the development project. It is in respect of all such projects that the government will be exercising regulatory controls (typically under planning legislation) in the interests of achieving maximum conservation value. Where this will undermine profitability to the extent that the private entrepreneur finds the project non-feasible, so that he does not proceed, not only will the maximum conservation value be lost but also any conservation at all, short of public purchase. It is in the 'bargaining' which proceeds that 'value for money' analysis needs to be used on both sides. 27

10 Valuation of the cultural built heritage

10.1

The issue

Throughout the preceding the concept of heritage value has been omnipresent. The CBH becomes identified as such only because its heritage quality is valued by the contemporary generation, both for itself and for passing on to the future. This led to questions as to why that value is held (4.6). We then saw that in order to identify the CBH which is of value there needs to be an inventory (5.1); and that in its preparation specific criteria must be introduced as to the kind of artifacts to be included; whether or not particular items which rank for inclusion have enough heritage quality; and how to grade the heritage quality of such items (5.2). More particularly, in introducing economics into evaluating programmes and priorities for conservation (9.6-9.8) we saw the need to estimate the amount of such value. Such estimate must be in quantity of stated units. Where the units are in terms of money, the common measuring rod in an exchange economy, the estimating is called valuation. How far this can be achieved for heritage quality is the subject of this chapter.

10.2

What is value?

Since the valuation is an estimate of the amount of value we need to first comprehend that elusive concept, value. Following is a summary from contemporary neo-classical value theory. 1 All goods and services have intrinsic or inherent qualities, associated with 'value in use'. Some are common with others (one of the 1986 batch of Rover cars), while others might be literally unique (the location, elevation, slope, etc. of a building site). As such, these goods and services are

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resources in that they potentially provide the means to give rise to an activity which can favourably satisfy a human need, want or desire (1.3). As such they could have a value to man, which is not necessarily an intrinsic or inherent value; what is the value of a motor car stuck in some inaccessible desert or the building site in a jungle? Thus the estimate of amount of value is directly related to the potential of goods and services to favourably satisfy human needs, wants or desires. In economics this potential to satisfy is called utility, a term often used interchangeably with satisfaction, happiness, welfare, economic welfare. Utility, and its value, are entirely subjective to the individual; it depends on his physiology, psychology, environment, social relationships, etc. This total utility he cannot objectively measure. But what he can assess is his willingness to pay (WTP) for a marginal increase in his total utility. This is done by reference to the opportunity cost of that payment, namely the price of the other goods and services that he is willing to give up to achieve that marginal change in utility (10.9). But while the individual would in certain circumstances be able to obtain the marginal utility without cost, for example opening a window at negligible cost for additional fresh air in a stuffy room, he could typically do so only by incurring marginal costs, that is disutility. Here again the valuation can be made in terms of the opportunity cost of the goods and services involved. Thus the value to the individual of particular goods and services is the opportunity cost of its utility (the benefit) minus the disutility of obtaining and using it (capital and operating costs). The value is the net utility. Such estimates are not however made in the abstract but in relation to the real world. Accordingly there is the need to consider the following in respect of the CBH.

10.3

What is being valued in the CBH?

Prices for fine art and rare books are regularly established at auctions and gallery sales, reflecting their exchange value in the market place, although not necessarily their objective artistic or cultural value. This dichotomy arises with the CBH, but in a more exaggerated way. By definition the cultural value is attached to an object in the built environment, whose primary value derives from its use and not cultural quality. For example, a listed Georgian house in everyday use as an office

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could have a considerable market value relating to that use; but its cultural value is only partly reflected in the market price. Conversely, former cotton mills have significant cultural value as industrial archaeology but may have no market value as property, since they are no longer useful for their original function; are not functionally suitable for new uses; and because of their size require considerable annual expenditure on their upkeep. While the market value could be small (perhaps negative), the cultural value is significant. And the point is further emphasised in considering the contrast between the negative market value of a ruined castle, which must be kept that way because of its considerable heritage value, and thereby involves the government in considerable sums in maintenance and management, so producing negative exchange value. In brief, what is being valued is an intangible quality, which society currently treasures and wishes to pass on to future generations, but which is attached to a man-made object, which is property, public or private, whose exchange value to the owner could be positive or negative. There will be no direct correlation between exchange and heritage values. This dichotomy comes into sharp focus where renewal is being considered for an obsolescent building in the CBH. Then the contrast is in exchange value for the object/building and a series of marginal works to it, and a corresponding series of marginal changes in heritage value, each related to the particular renewal option (7.5). In the choice of option the two critical parties are bargaining for primarily different values: the owner/developer for most financial surplus (tempered perhaps with psychic and patronage considerations) and the conservationists for heritage quality. The question therefore arises: how can the heritage quality be valued? Since the value is in the 'eye of the beholder', we pursue the question (10.4) in relation to the various parties concerned: an individual who is not the owner/occupier of the property to which the cultural value is attached, and then one who is; a group who are not the owners of the property but nonetheless value its heritage qualities (for example, a specific conservation society); society on whose behalf government decides; and government, which in the ultimate is charged with taking the decision for conservation on behalf of contemporary society and future generations.

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10.4

By whom is the valuation being made?

10.4.1

An individual

Non-owner/occupier The starting point is the recognition that the value of the cultural quality to the individual will be, as in any other object which is valued, the utility he can derive from it. Against this value he would put the costs to himself of enjoying that utility in order to decide whether or not he would obtain value for money in buying it. As to costs, since he is not the owner or occupier of the property he would have no direct costs, although there could be indirect costs if the conservation of that element of the heritage were being subsidised by public funds, falling on him as taxpayer or ratepayer. As to the utility, he cannot put a money price on the value to himself of the 'capacity to make a favourable change to his life'. But what he can do, if he can bring the object of his valuation into a preference relationship with other objects, is to equate that value to the price he is willing to pay (WTP) for the privilege of having it: i.e. the highest value of the goods and services that could be bought with that price: the opportunity cost (10.9), and so make a comparative judgement on the utility to him. This identification is made more difficult in the CBH because of two factors. First, the utility does not simply relate to himself. For one thing there is the value to others in contemporary society. He might for example consider that he himself would derive little utility; but he would recognise that others could do so, and would make his vote for the heritage retention on behalf of those others. Second, while he might make such a vote in respect of non-heritage goods (e.g. a playground for children even though he is childless) his vote for the CBH carries with it the pledge to conservation on behalf of future generations. In this regard, he cannot clearly place a value on that utility to those generations. He does not know them, nor their number, nor whether indeed they will have a similar approach to the value of the heritage item as himself and the contemporary generation. He will not even have the possibility of considering such value as though the future generations were his descendants. But he will make some judgement about their preference, even if only by guess or assumption.

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Owner The individual who owns the CBH property in question would be in the same position as one who does not, except for the major obvious difference: on him would fall the extra costs of dealing with the property owing to the conservation constraint. It is this extra which he would need to trade off in terms of opportunities foregone.

Occupier The individual occupier would be in the same position as the owner: except that his extra costs would relate to those of occupation not unrestricted, net of any reduction in rent.

10.4.2

A group

Group valuation of the CBH is more common in practice than is that of the individual, outside the owners/occupiers of the property directly involved. Such groups are found in the civic societies, etc. which have been formed to act as guardians and watchdogs of the heritage (at the national or local level) and who on a daily basis engage in controversy and activity for particular items. In this respect, the group is no more than a collection of individuals, each of whom will address the subject of value in the manner indicated above (10.4.1). Their group valuation is the sum of the individual valuations. They are unlikely to have similar valuations. Then when the group needs to demonstrate its group valuation of the heritage, the individuals will influence each other: there will be an exchange of opinion and information, which in itself could mean that certain individuals will raise or lower their sights on the topic, or go along with the values of others to achieve a concerted view. This aspect of the valuation takes on particular significance when the group concerned approach the subject as experts in the field, for then they will have special information, insight, etc. into the heritage quality of the particular item compared with others in their field. But while the discussion and appraisal will be better informed, the conclusion may be more difficult simply because in the nature of the CBH the experts will come from different sources (history, art, education, archaeology, etc.) giving rise to the additional difficulty of cross-cultural comparison of the quality.

172 10.4.3

Economics in urban conservation Society

We distinguish above (10.1) between the facts relating to the heritage and the value that might be placed on that heritage by the contemporary generation. Whatever the facts it is only when values are attached to the heritage by the contemporary society that it begins to take an interest in its protection, conservation and perpetuation, an interest which could be sharpened when they see the heritage disappear.2 Clearly such values are not always of esteem leading to the urge for conservation. It could be quite the contrary, e.g. traditions in over-feeding, smoking, drug taking, sex, worship, etc. which are thought to be unsuitable in the contemporary society and therefore should be the subject of erosion and not conservation. The attitude towards religion in Soviet Russia or in Khomeni Iran are two cases in point of diverging views towards the one theme, traditional religions, and illustrate that values in relation to the heritage will differ as between countries and cultures, and whether these are in the First, Second or Third World. We are thus led to consider the way in which any particular society values its heritage, and the action that any particular generation proposes in respect of the heritage. This could range from rejection through indifference to treasuring for conservation. This range will not be uniformly applied. There could be, for example, rejection of religion and monarchy, while treasuring their historic artifacts, as in the Soviet Union; or treasuring the artifacts of the national religion but not of others, as with Jordan in its occupation of the Old City, Jerusalem, between 1948 and 1967. Furthermore, not only will the valuation be of varying kinds in a particular generation but it will change from generation to generation, and indeed over the lifespan of a particular generation. Such fluctuations are of interest not only for themselves but also for understanding the differences in stance taken by particular generations. For example, a previous generation may have neglected a particular art form (e.g. ballet dancing) while the contemporary generation does not. By contrast, a previous generation may have been concerned with the protection of an element of the heritage to th'e degree that the later generation considers 'over protective'. The protection of agricultural land in Western Europe is perhaps one such example; often sufficient consideration has not been given to the fact that the contemporary society is predominantly urban as opposed to rural, that urban land needs must be satisfied and that agricultural efficiency can offset to a degree the diminution in agricultural land supply.

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Equally there are variations as between generations as to how any particular one considers the interests of its successors. While it cannot predict how these will value their heritage, the contemporary generation knows that they will have their own valuation of it. Accordingly future generations must be left the freedom to exercise their own judgements on conservation. Since these cannot be predicted it becomes important that they are able at least to exercise the judgement; in brief, they must have the option of the opportunity of inheriting the heritage as a basis for the conservation. This could lead to conserving buildings which, while not particularly valued today, could conceivably be treasured tomorrow. But clearly future generations cannot be given the opportunity to exercise their judgement in favour of all the heritage which currently exists, because this would impose burdens on each succeeding generation in the protection of the ever growing heritage. There accordingly arises the strategy of offering choice. Instead of attempting to keep what the current generation thinks of as 'best', it chooses a selection from across a wide range (type, use, area, etc.) to maximise the opportunity of satisfying future generations. All this therefore leads to questions such as how any particular generation makes its valuation of the heritage, what are its priorities in conservation, how it devotes its necessarily limited resources to ensuring the transference of a maximum quantum of the heritage. Not only are such questions inherently difficult to answer for any individual but they become particularly difficult on behalf of society. This arises because variations as between segments of society can be expected in, for example, the following: (a) majority and minority views; (b) the old, middle-aged and young; (c) the wealthy and the poor; (d) by religion, in a multi-religion society; (e) by ethnic groups, in a plural society; (f) by breadth of horizon: is the concern equally with the heritage which is of importance to the nation, region or locality; and is there loyalty for the heritage which happens to be in its country but is valued internationally, and indeed by religions or ethnic groups other than those of its state?

174 10.4.4

Economics in urban conservation Government

From the preceding section it is apparent that since society as a whole is not of the scale and constitution of a New England town meeting or Israeli kibbutz, it can hardly use their means to answer the questions raised on the heritage. Thus it sets up an institution, government, to do so on its behalf. While government itself is also a group, it is of quite a different kind to the above (10.4.2), for reasons such as: (1) whereas the previous group is typically self appointed and may represent only themselves, government is elected to represent a community, local, regional or national; (2) the purpose of government is not so much to provide a group expression as to take social/collective decisions on behalf of its electors, simply because of the difficulties of that group making decisions on its own; (3) in the making of such decisions, government is acting on behalf of the totality of people, including those not qualified to vote and those (not necessarily a minority) who would have chosen an alternative government; and also those unborn. In so doing they must recognise not simply the conservationists but also those who claim that conservation is a brake on economic progress; and future generations who will benefit or suffer from conservation; (4) despite all the complexities, government is nonetheless forced into making decisions, because 'the buck stops here'..To them conservation of the heritage is more than a discussion on quality and attempt to reach consensus on that quality. It is part of the machinery for conserving the heritage which involves, as with other areas of government, day to day decisions. But since government cannot make the social valuation itself (because the utilities created are to individuals) how can it make the public or collective choice on behalf of this totality of individuals? It would be pleasant to think that it attempts to do so as a disinterested agent of society as a whole, attempting to express the 'public interest'. 3 But even if it did so the methods and techniques it could adopt for the purpose are elusive.4 And in the nature of politics in a society in conflict it hardly attempts to do so. And what approach to the answers it does adopt (positive) or should adopt (normative) is in itself the subject of considerable literature. 5 For our

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purpose we can but recognise as a starting point the facts from the machinery set up for identifying cultural value by the preparation of the inventories (Chapter 5); thereafter we are in the politics of conservation.6

10.5

Market value and the CBH

In economic life the first attempt at identifying value is recourse to the market: at what price does the object exchange in money terms? But as with many goods in the economy, the market price is of little help in establishing the value of the CBH. There are two groups of reasons: general for all market values and specific to the CBH. On the first, the market price reflects the level at which the generality of buyers and sellers at that moment in time wish to exchange some good or service. As such, in the theory of price, 7 it reflects 'marginal utility' of the marginal buyer and seller. From this it follows that there will be many buyers who value the object more than the price they need to pay at that moment in time: they have consumer surplus. It is the price plus consumer surplus which will measure 'total utility' or 'use value'. The second group relates not to the generality of market prices but to the particular phenomenon of the cultural built heritage. The market price reflects the value of the property in which the heritage element is to be found, and not that element in itself. For example, there will be no market and therefore no market price and value for a ruined castle or a selfstanding column (since there is no profitable use for them and they have considerable costs of upkeep) and yet their cultural value could be very considerable. At the other extreme a period house could have a very high value which is contributed to in part only by its architectural and historic qualities. It is this integral intangible cultural value which we are estimating: integral in being inseparable from the property itself and intangible in the sense of elusive of definition, measurement and valuation. Since the cultural quality is integral with the property, it would be possible to disentangle its value from the market price by regression analysis.8 But this is not practicable where the cultural value is an externality, for tourists or future generations, for then there is no price. In this regard, the cultural heritage is not an isolated phenomenon. Such intangibles abound in economic life: the value of a beautiful scenic landscape for passers by, of a view from a house, of a nuisance from aeroplane noise, etc. In some instances they are bought and sold with the

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good in question (the difference in prices when buying a noisy or non-noisy house) and in others they are not, being externalities (the landscape view to a passing motorist). But in all cases they come under the category of 'incommensurables', that is, lacking a common basis of comparison; or extra market goods in not being exchanged in the market and thereby 'unpriced'. 9 But although incommensurable and unpriced, the need to estimate a value for such goods and services becomes of central significance in those areas of economic analysis which, by definition, need to have regard to them, mainly in the areas of public sector economics where the decisions need to take account of the values even though unpriced. Here there is a vast body of literature 10 within which we now review approaches to the valuation of the cultural built heritage.

10.6

Approaches to valuing the CBH

In the general debate on conservation there are arguments for and against (1.7-8). In this controversy there is often the need to show that conserved buildings are a resource of benefit to society so that their erosion would result in socio-economic loss. This leads to the search for a means of making this assessment. In this regard we are fortunate in having the review of the problem by Fusco Girard, 11 who introduces the work of Carlo Forte. 12 For the direct value (private utility) Carlo Forte looked to the market. For the indirect value, which he termed 'social surplus value', he sought to place a money value on the attributes of the externality, by following four procedures: (a) contribution to the national income in the form of benefits from the tourist economy, by capitalising the annual net increase; (b) value based on 'willingness to pay' for a series of intangibles, including the direct visits to the cultural heritage itself; (c) the capitalisation of the annual conservation, maintenance, custody, etc. expenses of the cultural heritage items, on the proposition that the value of such resources must be at least such as to justify their earmarking for this purpose; (d) the value of resources saved in providing a new building because of the use of the cultural heritage item for the purpose.

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In essence Carlo Forte was suggesting that the economic value of the conservation object was to be found by summing its direct value by the market and its social surplus value through the money valuation of the externalities. From this vantage Fusco Girard suggests that the value of the heritage can be seen in two parts: 13 not only the utility of the resources for the direct uses, but also a more complex utility, as capacity to satisfy multiple and heterogeneous needs of man in his free time, in his cultural, productive activities and so on. In amplification he suggests14 that the components of the total heritage value can be summed from: (a) willingness to pay for direct visits, valued by simulation in a surrogate market; (b) indirect benefits or costs to those nearby who are impacted by the conservation (e.g. increased trade for hotels, shops, transport and car parks); (c) potential users who have the option to visit from the continued existence of the heritage; (d) benefits and costs to future generations whose option for utility from the heritage is left open. The third and fourth of these values can be termed 'option' and 'bequest' value, terms used in environmental economics, especially as relating to wildlife, to which can be added, for example, altruistic, vicarious or ideological values.15 As such they come into the category of utility, in that their expression will satisfy some human need, want or desire. The value to the individual or the group however complex can thereby be determined on the willingness to pay for the utility.

10.7 Approaches to grading heritage quality in preparing the inventory/list But how can the individual or group assess the utility of the heritage quality? Here we can learn from the preparation of the inventory (5.2). Once the kind of object has been decided upon for inclusion in the inventory the decision must be taken as to quality of the heritage, both as to its inclusion or exclusion and, once included, its cultural grading. As such the task falls ultimately to the government which sets up the list with a view

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to its protection, but it can be contributed to by anyone concerned (e.g. conservation societies, historians, etc.). The estimate of value here relates to the inherent and intrinsic qualities of the CBH. This can be attempted in an entirely judgemental way by the individual concerned. This is adequate for any decisions which he can control, for example in planning studies. Limitations soon arise when there is the need to obtain group valuation of any objects, as when it is necessary to grade conservation quality in the study of historic centres or to select buildings or groups for the purpose of the inventory or list. Here something more formal is required. Methods for the purpose, based on more than individual judgement, have evolved over recent years, 16 relying on methods that have been developed in parallel over a range of disciplines: physical sciences, social studies, economics, environmental psychology, impact assessment, architecture, landscape and urban and regional planning. 17 The methods have a common feature. In essence it is to recognise the difficulty of assigning a single value (utility) to objects with complex attributes (such as the cultural heritage) and therefore to break this value down into a large number of sub-elements within which the area of assessment, judgement or valuation can be narrowed. By then aggregating the values in each sub-element a total single valuation is derived. In illustration we present one such method which has been well articulated in Canada for valuation of the cultural built heritage, 18 designed to contribute to the formulation of plans and policies for historic buildings, individually or in groups. The process has three components: (1) on site survey (inventory) of buildings which are to be assessed; (2) judgement or valuation (there called evaluation) to analyse the cultural quality of the buildings, etc. in the survey; (3) formulation of conservation plans, with appropriate controls, incentives, etc. which can be integrated into the urban plan. We here consider in further detail only the second step, by reference to Diagram 10.1, which illustrates the core of the method. On the left are shown supply criteria (A-E), each with sub-criteria (totalling twenty) each of which has four sub-divisions. There are thus eighty items for assessment of value for any building. Each attracts its own score in points, allocated within a predetermined maximum, as follows. The five basic criteria are allocated a maximum of 100, the allocation

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Building Evaluation Sheet

Name Location Reference Number A Architecture

(Maximum 35) 10 20 8 15 5 10 4 4

1 Style 2 Construction 3 Age 4 Architect 5 Design 6 Interior B History

(Maximum 25) 25 10 5 25 10 5 20 10 5

7 Person 8 Event 9 Context C Environment

(Maximum 10) 10 5 2 5 2 1 10 5 2

10 Continuity 11 Setting 12 Landmark D Usability 13 14 15 16 17

(Maximum 15)

Compatibility Adaptability Public Services Cost

E Integrity

(Maximum 15) 5 3 1 5 3 2

18 Site 19 Alterations 20 Condition

Evaluated by Recommendation Reviewed by Comments Approved by Comments

Total Score Group Date

5

3

A

B

Date Date

An evaluation sheet appropriate for evaluating with fixed numerical scores Diagram 10.1 Evaluation of cultural quality in buildings by points scoring Source: Kalman (1980) where the reference is to a building evaluation sheet

0

C

D

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reflecting the purpose of the evaluation. This is illustrated in Diagram 10.1, which shows how the respective weights can differ, for example between the commemoration of history or protection for the future. Maximum points in score Future Historical

Architecture History Environment Usability Integrity

A B C D E

40 45 5 0 10

35 25 10 15 15

100

100

Each of the sub-criteria has a range of points (as shown) each of which is graded to represent the following four conditions which show a geometric rather than arithmetic progression in order to distinguish more sharply between the different qualities: E VG G F/P

Excellent Very Good Good Fair or Poor

The final step is the evaluation of the meanings of the scores. In this regard is had to the following: the purpose of the evaluation; the weightings between criteria and sub-criteria which have been built in; and the significance of the conclusion for the conservation policy and plan itself. This particular approach goes a considerable way to establishing the value of cultural quality in the hierarchy of scaling techniques. 19 It expresses total value in points over a stated range at known intervals from a common origin, thus being an 'interval scale'. As such it contains the information which would be included in a 'nominal scale5 (just numbers) or in an ordinal scale (greater or less). But it is not a 'ratio scale', in that the common point of origin is not fixed, either by assumption or by observation (e.g. that water freezes at 0 degrees centigrade). Thus while there is a relative measure of quality it cannot be absolute. This contrast can be compared to the distinction in economics between 'ordinal' and 'cardinal' utility. The former is sufficient to enable the preference to be known between two alternatives. The latter enables the 'intensity of preference' or the 'amount of preference' to be established.20

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Another rich feature of the method is the ability to weigh between the five main categories, the 20 sub-categories and the four sub-divisions in each. While arbitrary, this ensures some conscious assumptions by the individual surveyor, and the possibility of achieving some comparability amongst many surveyors, operating over a large area or period, by setting up an agreed basis for the comparative weights. This approach gives a grasp of the total value of heritage quality (and other similar intangibles) by breaking down the problems. But as a method it can be improved upon by introducing more analytical and statistical rigour.21 But even the introduction of rigorous methods can falter on one basic weakness:22 they assume that the sub-criteria selected for independent measurement are indeed independent in practice. Clearly they are not so; in a building style, construction and age may well run together as do design and interior, adaptability and services. However, these interdependent attributes are less of a problem when moving from the current situation to one that is planned, in the amelioration of the obsolescence with a view to conservation, as we shall see below (10.9.2). Here what is important is the relative improvement that can be introduced towards the conservation objective. For this purpose the interdependence of the individual attributes of the building or group does not invalidate the comparison, since the interdependence can be judged in the predicted scores.

10.8

Role of economics in cultural valuation

Within the above context we now consider how economics can contribute to valuation of the cultural element in the CBH. 23 As indicated, the first task is to establish the heritage quality, using for the purpose the knowledge of the array of scholars who have information on the relevant cultural fields or domains (archaeology, anthropology, history, religion, architecture, folklore), and the comparative place of the object in them (11.2). From his discipline alone the economist cannot contribute as an expert to such cultural valuations. In this field or domain, as in others, he can register the signals on value (be they derived from buyers and sellers in the market-place or politicians/bureaucrats in relation to public decisions), i.e. what buyers are prepared to give up for the utility from the goods and services which are exchanged; or the cost of achieving that utility. From this his particular contribution is to establish the nature of the costs

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and benefits to all or particular sectors of the community which will experience them, and to assess the relationship between such costs and benefits in order to advise, on particular economic criteria, whether the expenditure of resources on that particular outlet will be worthwhile in terms of viability and whether it will represent 'value for money' compared with expenditure on other outlets. From this it follows that while the economist can register the 'price' of goods and services (what people are prepared to pay for them) he has no direct way of placing an 'economic value' on them, even for tangibles like motor cars, let alone intangibles such as the cultural heritage. 24 The purpose of the valuations is to facilitate decisions on conservation of the heritage by the various modes (restoration, etc.) that are possible. By posing the question in terms of the values established for the heritage through the appropriate cultural domains, for comparison with the opportunity costs of the proposed action established by the economist, a way forward is seen for conservation decisions. In this approach both sides of the equation cannot be expressed in money terms. If they could be, then decisions on the ranking of priorities in conservation would certainly be all the easier. And to this extent the approach of Forte 25 is certainly in the right direction: of attempting to measure in money terms the differing benefits and costs attributable to conservation of the heritage. But that is quite different from showing how decisions in conservation can be made. In this the approach of Fusco Girard is nearer the bone: of assessing the social cost of conservation.26 We now proceed to show how this can be done.

10.9 10.9.1

Opportunity cost and the CBH The concept

Both Kalman and Nijkamp attempt to establish the value, measured by points, of the cultural element of the built heritage. But given that their approach provides reasonable values, how is this to be used in economic assessment where both cost and value must be considered together? It is here that the concept of opportunity cost is relevant. In essence this starts from the statement that there is no objective way of measuring the value of a good or service to the consumer. An illustration can be given for so tangible a commodity as a motor-car. Clearly it would not be offered by the

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manufacturers unless the price to be paid (the value) exceeded the cost of production, appropriately defined. Given this, the price is dictated through the competitive interaction of supply and demand. An individual faced with the possibility of purchase will buy if the value to him of the use of the motor (travel, prestige, etc.), judged subjectively, is at least greater than the cost in money terms. But as regards this cost he will consider not simply the dollars and cents but what those dollars and cents would buy as an alternative to expenditure on the motor-car, namely their opportunity cost, i.e. their worth to him of the goods and services in the best (to him) alternative use. Indeed, having regard to this, it could be that he would pay more than the market price if he had to. The excess in price would be the measure of his consumer surplus in respect of the car. Thus the opportunity cost of the motor-car is not the money price but rather what that money could buy for him in goods and services. He is judging the satisfaction from the motor-car itself only by comparison with the satisfaction from other commodities which he could pursue with the given money. These satisfactions are entirely subjective to him. Thus he has no way of establishing the value of the motor-car. What he can say is whether or not he would be prepared to pay the money price in terms of opportunities which would be foregone. And if this reasoning applies to a motor-car it will so much more apply to an incommensurable like buying a seat for the opera or the enjoyment of a meal in a restaurant. We now apply this concept to the valuation of the cultural built heritage. 10.9.2

Private

In illustration we revert to the example used above (8.3.3) in the economics of renewal of a listed obsolete residential building in the town centre. We follow the four options there described but add the following information on the heritage quality of the building (HV) under the four options. Using the Kalman method (10.7) the building in its current condition scores forty-eight points; and using the same method to predict potential heritage quality following the works in each of the schemes, we reach the following ranking (with 1 as best). (a) (b) (c) (d)

Do minimum Rehabilitation Restoration Redevelopment

Score 48 65 82 0

Ranking in HV 3 2 1 4

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From this ranking the question arises: if heritage value is to be conserved at each of these levels, what would need to be given up in money value by the proprietor through not exercising the best commercial option (on his own or in association with a developer)? In this instance, the best commercial option is redevelopment, which would result in the maximum surplus to the land, that is sltv (7.4.3) as estimated below (13.2). This is the opportunity cost of any of the options. It is accordingly the common datum in the following comparison: (a) Do minimum. The property would continue in its present condition so that no net additional cost would be required except the essentials to keep out the weather and maintain functioning. The opportunity cost is therefore sliv from the redevelopment plus these essential costs. (b) Rehabilitation. Here it is assumed that the extra value from reconditioning of the property would be offset by the extra cost of works (including developers profit) so that the net cost of the rehabilitation would be zero. The opportunity cost is therefore sltv from the redevelopment. (c) Restoration. The cost of works will be greater than in rehabilitation and the potential after use value likely to be less. Accordingly the net added value of restoration would be minus, so that the opportunity cost would be this net loss added to sliv from foregoing redevelopment. This opportunity cost ranking can now be compared with the heritage value ranking, as follows (with 1 as best):

(a) (b) (c) (d)

Do minimum Rehabilitation Restoration Redevelopment

Heritage value ranking 3 2 1 4

Opportunity cost ranking 3 2 4 1

From this it is seen, as might be expected, that the ranking for heritage value and opportunity cost are not symmetrical. The best commercial option (i.e. least opportunity cost) results in the lowest ranking of heritage value; and the highest opportunity cost (restoration) has the highest ranking in historic value. Thus the proprietor concerned with heritage value would need to trade off the marginal difference in heritage value and opportunity cost between the options. For this purpose he would wish to

Valuation of the CBH

20

40

185

60

80

100

HERITAGE VALUE IN POINTS

Diagram 10.2 Private opportunity costs to proprietor of conservation of the heritage quantify the difference in opportunity cost. The method of so doing, using our present example, is presented below in respect of certain options (13.2). Adopting illustrative figures derived that way for sliv we have:

(a) (b) (c) (d)

Do minimum Rehabilitation Restoration Redevelopment

Heritage value points 48

65 82 0

Sllv

in£m -0.1 + 1.2 -1.0 +2.5

Private opportunity cost in £m. 2.6 1.3 3.5 0

The findings are illustrated in Diagram 10.2. The horizontal axis shows heritage value in points and the vertical the private opportunity cost in £ millions (that is to the proprietor). From the plotting of each of the four options it is seen that redevelopment has zero opportunity costs with zero heritage value, whereas restoration has opportunity costs of £3.5 million and maximum conservation quality. The other two options are between. Faced with this display what decision would the proprietor take? If following only commercial objectives he would clearly opt for redevelopment, giving him the maximum surplus of land value. But if his management objectives tempered commercial gain with the wish to maintain heritage quality, he would consider the marginal financial losses of pursuing the other options against the marginal gain in conservation quality. Of these it is likely that he would come down in favour of

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rehabilitation, where for a relative loss of £1.3 million he would achieve high conservation quality. But whether or not the proprietor includes conservation objectives, the conservation (planning) authority will. In this it will have regard to many considerations of which one could be the amount of loss which its conservation decision would impose upon the proprietor. In this regard it would look at Diagram 10.2 from the other end of the telescope than the proprietor. It would wish to avoid the Do Minimum situation and encourage conservation works, and so be strengthened in the knowledge that the Do Minimum option would give the proprietor high opportunity costs. But if it wished to pursue the purest restoration line, it would reflect that this option would cause even higher opportunity costs (i.e. loss of potential development value) to the proprietor. Thus it would be reasonable to settle for rehabilitation in the knowledge that this would achieve high conservation quality with not unreasonable opportunity cost. Provided this option would be financially viable to the proprietor (13.2 below) this option could well be the basis for the bargain to be struck by proprietor and authority in pursuing their individual objectives.

10.9.3

Social

In the bargain just described the proprietor is concerned with a private good (his property) and the authority with a public good, even though impure (heritage quality attached to the property). In this situation, if the authority were concerned only with conservation it might enter the bargaining process as just described. But where it is also the planning authority (integrated conservation in 6.2) it would be pursuing planning as well as conservation objectives. While these are somewhat diffuse they can be acceptably described as having regard to the public interest in the evolution of our towns and regions (3.1 above). The criteria for achieving such public interest are notoriously difficult to both define and follow. One such criterion which is central to our focus has been introduced: just as the proprietor is concerned with his opportunity cost (10.9.2) in the conservation objective so should be the community. Thus the planning authority is concerned to identify the opportunity costs to its community (the public) of alternative courses of action, in this case of the conservation options. In this analysis it is necessary to have regard to total costs and benefits to the proprietor, the conservation authority and also all other externalities (7.2). This we call the social opportunity cost.

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4-

O

o > z DC

2

2_

I

20

40

60

80

100

HERITAGE VALUE IN POINTS

Abbreviations: DM : Do Minimum RH : Rehabilitation RS : Restoration RD : Redevelopment

Diagram 10.3 Social opportunity costs to community of conservation of the heritage In essence the analysis needs to predict the value as far as possible of the costs and benefits falling not only on the proprietor but also on the remainder of the community. A method of so doing is presented below (Chapters 14 and 15) and also applied to conservation (12.4 and Chapter 16). For our immediate purpose we assume that it has been so applied to our options. But since so many of the costs and benefits are unpriced and non-measurable (10.5) we cannot show the opportunity cost in money terms but only by some points system. This is presented for illustration in Diagram 10.3 with the ranking (1 is best) brought out in the following table: Heritage value Socialopportunity in points cost in ranking (a) Do minimum 48 3 (b) Rehabilitation 65 1 (c) Restoration 82 2 (d) Redevelopment 0 4 This ranking it will be seen is different from that derived in terms of private opportunity cost. That indeed is the conclusion from the case studies below (Chapter 16). This demonstrates what is apparent: that the opportunity costs of conservation of the heritage will differ according to the parties whose costs and benefits are considered, and so would vary between

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them. This can be of practical significance in conservation issues. A common example arises where the benefits to be derived from conservation fall upon the visitors and tourists but the costs on the local community and taxpayer. The opportunity cost to the latter is therefore very much larger than to the former (12.7). Thus a similar analysis of any or all of the sectors which are impacted would enable the distribution of costs and benefits throughout the sectors to be seen so that a judgement can be formed in terms of the equity of the consequences of the conservation decision (12.4). In conclusion we return to the discussion above on the measure of value of conservation to society (10.4.3). We see that it is not the economic value in itself which is critical but the opportunity cost. We accordingly can conclude with Fusco Girard: in order to measure differences in value to society of the cultural heritage, that would come from optional conservation decisions, we need to assess the social cost of the achievement of the differences.27

10.10 How can economics help in the social decision on conservation? In the previous section is shown that the role of the economist in conservation is the identification of the opportunity costs rather than the cultural value. But economics can go further than this. All decisions made with regard to the use of resources, whether by private agencies or governments, and whether based on economic analysis or not, result in the allocation of resources for the implementation of the decisions and the distribution of the product of those decisions as between different individuals and groups. In the former, since resources are scarce in relation to human needs, society is concerned that they secure maximum output in order to maximise the satisfaction of needs. This relates to the 'efficiency' aspects of decisions. And since civilised society works on the presumption against at least great inequality, it is concerned to see at least some 'equity' and 'social justice' in distribution. This relates to the 'equity' aspects. Given this situation, the role of economics is to offer advice and views on the best use of those resources in terms of both efficiency and equity criteria. But as a discipline and skill it is well known that economics is much more helpful in its contribution to efficiency than equity. 28 Indeed there is a view that economics can offer little on the topic and that the decisions relating to equity are best made in the political arena. 29 It is also well known about economics that its efficiency maximising tools

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are more mature in relation to decisions in the private sector, where the optimisation of the costs and benefits relate in the main to the direct interests of the agency involved in the economic activity. The reason for this greater competence is that, with the relatively recent growth in the public sector, economics has traditionally concentrated most on the private sector. This is compounded by the fact that while the private sector operates in the market place, which offers signals through prices which economists use as a basis for their analysis, in the public sector the market place is not used in the same way, and the signals are either weaker or non-existent. They are weaker where the public sector provides goods and services for exchange (as in a state industry providing coal, steel or railway services). They barely exist where public agencies provide public goods or impose public (social) control: where there is free access by any member of the public without specific payment (the 'free rider')? with the costs being met from general taxation (e.g. for open spaces, libraries or museums without charge); or where government applies policies in regulation and control, as in conservation of the CBH. While the existence of the public sector has its unassailable existence in the modern economy, the absence of price signals do lead to inefficiency, as the East Europe economies recognise. It is to remedy this situation that the 'liberal/market economists' devote so much ingenuity to 'deregulate and privatise' the public sector, and where this remains to strengthen market principles. 30 But even where the market is introduced into the public sector it cannot resolve the 'efficiency' and 'equity' requirements. For these reasons, economic analysis has been applied and cost-benefit analysis vigorously developed, over the last half-century or so, in relation to many goods and services which have no price in the market place, such as water resources, highways, public transport, education, health, defence, etc. 31 This enables economics to help in social decisions, through the adaptation of economic analysis and techniques for the problems posed. Here we are concerned only with one type of problem: accepting that there are not the resources for protecting all the CBH, for which element of the CBH should government intervene in resisting its erosion? We turn to the relevant analytic tools below (Chapter 14).

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10.11 The valuation in its decision context 10.11.1 Approach Having described the nature of value (10.2) and then the decision context (10.3 and 10.4) we now demonstrate how the valuation is in fact approached in three different situations in the conservation of the CBH. These will show how these valuations need to be adapted to the decision context. 10.11.2 Valuing conservation quality for plan and project evaluation: worthwhileness As just indicated, to assess worthwhileness it is necessary to have common values for the costs and the benefits, namely opportunity costs. As regards costs, the typical approach is to assume that the resource costs for the conservation work will be equal to their money costs in the market, for they need to be bid away from other contemporary building and engineering operations. As regards the value of the cultural quality, the opportunity cost is the value of the resources which are given up to achieve that particular heritage opportunity. How this is approached in valuation terms is described above (10.9). 10.11.3 Ranking of priority in conservation with given budget As seen above (9.6) having defined the conservation projects there is then the need by the planning or conservation authority to rank them in terms of priority for execution within an overall total or annual budget. In this case by definition each of the projects would be 'worthwhile' (10.11.2) for otherwise it would not be a candidate for the priority selection. Since the quality cannot be valued directly in money terms (10.5-10.6) it can be measured by the opportunity cost of the heritage value (10.9) based on the quality grading on the points system (10.7). Clearly the latter approach is not placing common values on the cost and benefit side but it will serve the purpose, provided that we are concerned with reasonably homogeneous cultural objects so that there could be seen to be a co-relation between the inherent or intrinsic qualities and their opportunity cost in the minds of the decision makers.

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191

Project implementation

So far we have been dealing with planning for conservation and now come to project implementation, as set out above (9.7-9.9). Here the decision relates to the carrying out of the project itself which involves decisions by the entrepreneur (private or public) and the conservation and planning authorities giving their consent. The values with which the former is concerned are those relating to the developer of the property, as sketched out above (8.3); in brief, he is concerned with the costs of the project to himself and the market values which he would derive, leading to the assessment of financial loss or gain. The conservation authority is concerned with the difference to the heritage quality which would emerge from the options available to the entrepreneur; in brief it is concerned with maintaining the maximum heritage quality which is practicable and resisting its erosion. The planning authority, in integrated conservation, would reflect the values of the conservation authority. But it might differ in attitude towards the uses which will emerge; in brief these must accord also with its other planning objectives. From this analysis of the options (either presented all at once or sequentially) the bargain will be struck, with each party striving for its best position in the light of its objectives. In this it would need to consider also the other interests with which it is concerned, for example, the developer with his financier and shareholders; the conservation authority with the pressure groups; the planning authority with the public at large.

11 Screening of the inventory or list

11.1

The issue

From the preceding (Chapter 10) it is apparent that some identification of comparative heritage value is needed if 'heritage value for money' is to be achieved in conservation. Since some such identification already exists in the preparation of inventories (for ancient monuments, archaeological areas, conservation areas and listed buildings) the question arises: does not the inventory already provide the information? The answer varies for the four items. Monuments are generally well covered because of their relative scarcity and age. There is only a small inventory for archaeological areas for, by definition, they have not all been explored. Conservation areas are intended as broad brush indicators, within which there is flexibility of interpretation. It is in the buildings and other specific objects that the real difficulty arises, for they are so numerous, are very disparate in nature and their inclusion has great significance for owners and developers, since each can be the focus of the development/conservation conflict. We therefore concentrate on them in this chapter, within the framework of British practice. To what extent is the inventory a conclusive statement of comparative heritage tenure?

11.2

Nature and purpose of the list

In practice in Britain the inventory of buildings, etc. is the basis for the official list (5.2) whose prime purpose is to convey a warning, backed by legislative teeth, to those concerned that they own/occupy a building, etc. with 'heritage tenure' which must be respected. For this purpose, compared with the approach above (10.7), a fairly crude valuation and categorisation of the heritage quality is all that is required: indeed the

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193

content of the list for any item is confined to certain particulars which are of sufficient architectural and historic interest to justify listing and do not purport to be comprehensive. The list cannot be up to date at any moment in time for the circumstances affecting its items are continually changing (e.g. condition of the building, property values, environment). Indeed the changes make necessary continuous reassessment of the list with additions and deletions, a monitoring exercise of some dimension. In practice, however, the purpose and limitations of the inventory, as just described, are often forgotten. The list tends to become sacrosanct as a weapon of the conservation policy and is treated as a bastion which must be defended against all anti-conservation erosion. The reasons for this are again clear. The development pressures against the objects on the list are heavy; and compared with the conservation authorities the development industry has considerable resources (manpower and financial) with which to press its case against conservation. This leads to the conservationists fighting resolutely for each item on the list in the hope and expectation that they will win some even if they lose others. But in such an approach the 'best is the enemy of the good'. Without the value for money approach in the definition of priorities maximum conservation values will not be achieved. Instead, energies are spent in confrontation as opposed to securing worthwhile conservation bargains. Value for money is not being achieved where the 'money' is limited as are the skills of craftsmen and the time and energy of often volunteer conservation enthusiasts. This leads the then official responsible for listing to say: The paradox emerges that a more selective attitude to what is to be preserved coupled with a greater concern for its true preservation may release resources to be spread over a wider field and a saving of a higher proportion of the true heritage. 1 and to conclude: Evaluation, then, is the key process: a reasoned evaluation that tells future generations that we have given our consideration to each item and valued it sufficiently highly in the context of our historic inheritance to be worthy of preservation. Curiously, in most stated philosophies that are accepted or preached today this vital initial process is either ignored or omitted. A mere statement that it is in the national interest that such and such should be preserved is considered sufficient. I suggest that as time passes and the heritage becomes more complex as each generation adds the products of its own particular culture this, if it ever was valid, becomes less and less so. It becomes an umbrella to shelter beneath, a mere

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screen to hide the fact that there has been no evaluation in any depth, permitting confused thinking behind the decisions to preserve.2 Given this approach the question arises: how can the inventory, prepared as a basis of the umbrella warning in the list, be screened to make it more useful in conveying realistic heritage value in the list? Three possibilities exist which are now explored.

11.3

11.3.1

Screening the inventory

Prior consultation

As brought out above (5.3) in almost all countries the owner of a building must be notified of the intention to list, in most cases his consent being required, whereas in England there is notification after the event without consultation. Furthermore, the listing process is carried on in comparative secrecy. This means that there is not available at the time of listing pertinent and relevant information which could be offered by the owner, both on the property itself and on his views and intentions. If available, it would provide an early warning system to the owner on the possibilities of listing, so that he would be alerted in his management decisions. Clearly this could open up the prospect of owners taking avoidance action (e.g. demolition) so that the notification would need to be accompanied by some interim legal restraint on their freedom. Whatever the merits of the present practice for individual properties, there clearly is some advantage in prior consultation with owners of large holdings of period buildings so that management, conservation and planning policies can be evolved in concert. 11.3.2

Planning proposals

Where the items on the inventory are seen as discrete elements in the urban area, they tend to be regarded as museum pieces, that is unaffected by the changing world around them. But given that the conservationists wish to see their policies 'integrated with planning' (6.2) such a stand is unrealistic. What becomes significant is not simply the inherent quality of the listed items, however imperfectly measured or valued, but also the proposals of the planning authorities for the future of the area within which the listed item stands.

Screening of the inventory or list

195

Accordingly the inventory should be screened by the considerations which were introduced above with regard to the macro planning of the urban area (6.4.1): for example, the likelihood of obsolescence of varying kinds being retarded or speeded up, having regard to the planned future; the array of uses which such a future might find most suitable for the listed item; the planned changes in the surrounding areas which would strengthen or weaken the future of the listed items.

11.3.3

Economics

Having refined the inventory with regard to the planned future it needs screening from the economic viewpoint. The level of such screening would be related to the macro level of planning (6.4.1) for it would be impracticable to go into considerable depth at the micro level (6.4.2). Furthermore the variables of concern (cost and value) will be liable to continuing change, so that decisions at the micro level could be premature; where there is doubt it is preferable to retain the heritage items on the list, with the presumption that they should be conserved, unless there are compelling economic reasons for their deletion. Against this background the macro economic screening would take account of the following tests, for which consultation with owners and occupiers would be desirable: 1 Specification of the current situation, e.g. description of use, occupier, tenure, owners of the activities taking place, of inter-dependence with surrounding area. 2 Investigation of the degree to which the heritage element is 'obsolete', using the framework described above (1.6) or some others. 3 Investigate the possibilities of remedying the obsolescence. This would be carried out in relation both to the current use as described, and also in respect of any reasonable potential use, which would accord with both the views of the owner of the property and of the planning authority. 4 Analyse these potential uses in terms of feasibility to occupiers and owners, on the lines described above (5.5) but in broad terms only. The aim would be to show those items on the inventory which are clearly non-viable in management terms, nor likely to be so. From the preceding would emerge conclusions as to whether or not items

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should remain on the inventory. It would have another purpose. It would point to possible conservation action, e.g. the desirability of management measures which would aim at deferring growing obsolescence, advancing priority in conservation measures, avoiding deterioration of the fabric or attracting public or private funds before the condition of the item became irreversible. In this way the list would not be just a static conservation warning but also a diagnostic planning tool. Such screening would have a useful by-product, of facilitating some macro analysis of the size of the CBH, and the types of objects, which are under the protective umbrella. This is needed because there is no measure of the amount of resources which are implicitly earmarked for the protection of the objects on the list for comparison with what is likely to be available. It is this which gives rise to the apprehension that the current generation may be too heavily saddled with the obligations for protection. No one knows whether it is or not. The apprehension is fuelled by the fact that the number of objects on the list will increase sharply: the DOE estimates that the current number of objects (368,000 in England at December 1985) could rise to about 500,000 when the resurvey of buildings is completed by the end of 1987.3 But there is a suggestion that the figures are a considerable underestimate, because they relate to entries, with one entry perhaps relating to a complete square of houses, leading to the view that the total figure for buildings could not be less than about one million and the conclusion t h a t ' . . . it is increasingly difficult to defend the whole system of historic building protection against the criticism that it is arbitrary and capricious'. 4 Furthermore, such screening could be the beginning of a monitoring and review of the list and the administrative actions taken on it.

11.4 11.4.1

Economic criteria for development affecting heritage quality The issue

A list screened even in the way described will not fully reflect the micro economics of any particular item, either at the time of screening or as predicted into the future. But since such micro economics is critically important for the economic viability of the items the shielding of the list against possible change could in certain instances undermine the very objectives of the conservation programme. Resources could be aimed at

Screening of the inventory or list

197

projects which were economically non-viable, and therefore be wasted in terms of the main objective (conserving the heritage). By the same token, such resources could not be employed in alternative projects, which were economically viable. The very act of maintaining a non-feasible objective is counter-productive; it could produce blight and waste of resources and frustration of the conservation objective. Given the decision not to apply micro-economic feasibility testing to the list when prepared (for the reasons argued above in 11.3.3), and given the desirability of doing so before commitment to implementation, the question arises: when would the right time be? Clearly this should not be later than the firming up of the conservation projects, prior to their introduction into the programme. The nature of the feasibility tests, and on whom they would fall, would clearly vary from project to project according to the agency which is visualised for the implementation: property owners, occupiers or conservation agency. Where subsidy could be involved then central or local government would be party to the analysis. But the need for the tests could arise before or after this: when development proposals are made and require permission in respect of a listed item (by the owner or perhaps by a public authority seeking to carry out public improvements). Where there is a development proposal, the line could be taken by the conservation authority (and often is) that the object is on the list and therefore refusal must be given to any works which will diminish its heritage quality. Clearly such an approach might be in order if the list itself has been prepared and kept up to date having regard to all the development, planning and economic considerations which would arise on the specific case (11.2). But equally clearly, from the discussion above (11.3) this cannot be. Accordingly it is certainly necessary, as in present practice, to consider each case on its merits at the time of the proposal to introduce change. We show how this can be done in relation to micro economics: first in respect of direct costs and benefits to the owner/developer, and then the indirect costs and benefits to the wider community. In practice these considerations, and thereby the economic calculus, would be influenced by the conditions in law affecting the grant of permission for deleting or demolishing the heritage (the listed building consent in British practice).5 But here we do not reflect them.

198 11.4.2

Economics in urban conservation The owner/developer

In the typical situation, the economic considerations at issue are those discussed above, relating to the use of the building, its degree of obsolescence and proposals for rehabilitation or redevelopment (8.3). The economic questions then become: (a) Is it economically viable for the owner to continue using and maintaining the building with the conservation quality retained? (b) If not, what adaptation would be viable, in the structure and/or uses and, given the adaptation, what heritage quality would remain? (c) If not, is there a case for financial support to ensure viability and so conserve the heritage? (d) If not, should the decision be in favour of redevelopment now, or should there be postponement in the expectation that conditions under (b) will run in favour of a satisfactory bargain? Taking each in turn: (a) If continued use is not viable (q/s is negative) then the heritage is at risk. But if such use is viable without adaptation (o/s is positive) then a claim on economic grounds (e.g. loss of potential development value) for development to erode the heritage could not be sustained. But there could be a claim for compensation or loss of development value, if accepted in the law of the country (12.5). (b) If continued use is not viable, or the owner would find adaptation more profitable (7.5.5), then there arises the trade off between the achievement of a satisfactory level of viability while at the same time not diminishing the heritage quality but hopefully enhancing it. This can be considered the trade off in terms of 'value for money', with the value being prized by the conservation authority in heritage quality and the money being that of the developer. On the value side there could arise in the minds of the conservation authority the architectural quality of the new product, particularly in a conservation area. Although providing no heritage quality, its excellence compared to that existing could in certain cases compensate for loss in heritage quality.

Screening of the inventory or list

199

(c) Having established that the best conservation bargain in (b) will not reflect adequate heritage quality the authority must consider whether it wishes to 'buy' additional quality through subsidy. Here again there is the 'value for money' trade off. (d) If the subsidy is not forthcoming, or insufficient, the owner/developer will press for permission to adapt at unacceptable sacrifice of heritage quality, or redevelop with its complete destruction. At that moment in time the economic grounds in his claim would be irresistible. But into the trade off comes an issue which is special (although not unique) to the CBH: that of irreversibility and non-substitutability. This adds another dimension where high cultural quality is at risk. To this there could be varied approaches. While the heritage quality in the particular building would be an absolute loss, is it one of a number of comparable buildings which could be saved as a substitute? If not, is it possible to add a value for irreversibility on the approach: would the loss of the heritage value in question be worth the benefits accruing from the proposal to erode it? 6 Are there elements in the valuations which have led to the conclusion (e.g. construction costs, other use values, demand for new uses) which could be expected to change in the relatively near future, so justifying a postponement of the decision? 11.4.3

The community

So far we have considered the trade off in two dimensions only: the direct costs and benefits to the owner/developer and the heritage value to the conservation authority. But there are at least three others. First, while conservation has been integrated in planning there could be divergence between conservation and planning objectives in a particular instance, which in practice could be expressed by different divisions in the local authority planning department (e.g. the adaptation of a listed building requiring for viability a use which is not favoured by planning policy). Insofar as the use preferred for conservation would be less beneficial to the community than the preferred planning policy, there is a corresponding cost to the community in the conservation option. Second, whereas the conservation issue on the particular building could be clear, there could be external repercussions on conservation issues elsewhere. For example, would the change proposed by the developer have beneficial or adverse impacts on the surrounding area where the building in question is part of a

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Economics in urban conservation

group which has conservation quality, or is part of the setting for other buildings of quality on the list? Third, in the same vein, the direct costs and benefits to the owner/ developer and conservation authority will typically exclude other kinds of indirect costs and benefits to the community. These could be 'local5 (the beneficial or adverse impact on the current use and potential use of surrounding non-conservation property); or affecting the whole urban area and its region (the undermining of the urban economy through severe conservation constraint).7 These wider dimensions clearly involve costs and benefits which are outside the direct ones to the owner/developer. Their analysis thus needs to be wider in scope than the calculus discussed so far (Chapters 7 and 8). Certain tools are available for the purpose. To these we return below (Chapters 14 and 15) with some case studies in illustration of their use (Chapter 16).

12 Who benefits and who loses from conservation oftheCBH?

12.1

The issue

As brought out above (4.4-4.5) the CBH is a singular resource. While being property which is owned and managed like other real estate, government claims via 'heritage tenure' of its cultural quality, which it proposes to conserve for the public, contemporary and prospective, means that the owners of the property can only manage it subject to constraints. But while the cultural element is taken by government in this way, the heritage is not singular in being a public good any more than the general built environment. In both the interior of the property is clearly private (one person's consumption precludes the consumption of the same unit by another) with the exterior being public (one person's consumption does not reduce its availability to anyone else) and once the good is provided to the public gaze the producer is unable to prevent anyone from consuming it. 1 The responsibility for the singularity clearly falls at the door of government, acting on behalf of the community. But government does not pick up the tab for all extra costs. Their impact falls on the property owners, private or public. Here is something of an anomaly. By definition, conservation is promoted and undertaken for the benefit of a wide contemporary public, often foreign to the country in which the heritage is to be found (visitors and tourists) and also for the benefit of the future generations. But the costs of the conservation are by comparison localised. They fall on the owners and occupiers of the property and also on the community of the administrative area in which the property happens to be. In terms of management the singularity results in: while the management objectives of the owner/occupier (private or public) of the listed building will reflect the heritage quality of the building (insofar as it has utility to them), they

202

Economics in urban conservation will not necessarily reflect the heritage value as seen by government, for current and future generations; the imposition of the 'heritage tenure' will thus constrain the management decisions of the owner/occupier. While the government is imposing its values, the owner/occupier is bearing the cost, as are other members of the community who would value the use from a replacement building rather than the listed building; where the owner needs subsidy to conserve the building for its heritage quality, he is asking taxpayers to pay for the 'utility5 to them of the conservation quality, for the benefit of current and future generations; these generations will include people who are not nationals but who value the heritage quality sufficiently to visit it, specifically or as tourists.

In this complex situation we are thus led to the following questions in relation to the conservation of the CBH: how who how who how

to assess the true costs and benefits? benefits and who loses? are the benefits and costs distributed? should pay the cost? much should he pay?

It is these issues which are discussed in this chapter, concluding with an introduction to the special case of tourism and conservation.

12.2

How to assess the true costs and benefits?

We have seen above (4.6) that the benefits from conservation stem from the stand taken by conservationists, and government in their support, that there should be continuity with change in our urban environment and activities. The beneficiaries are those who would lose if there were no attempts at conservation, that is owners/occupiers, the local community and visitors and succeeding generations. But the costs are not distributed evenly amongst these beneficiaries. On whom do they fall? It is natural to regard the costs of conservation as those extra direct money costs falling on the occupiers/owners of the property

Who benefits and loses from conservation?

203

concerned, or on government from its financial contributions. This is not quite so. The true costs of the conservation are the differences to the owner/ occupier of the financial inputs (capital and operating) between the nonconservation/conservation options against which is offset the difference in financial benefits. Assuming that both these options derive from analysis from which they are shown to be the best under the options, the difference measures what we called above private opportunity cost (10.9.2). This could be either positive or negative. We also showed above (10.9.3) that alongside the costs and benefits falling on those directly involved with any particular project there are the indirect costs and benefits falling on the community as a whole. These we called the social opportunity costs, which again can be positive or negative. In essence then the true cost of conservation is the social opportunity cost, seen from the viewpoint of those who benefit or lose from the conservation. The true benefits of conservation are the heritage values which would be lost if action is taken to erode the heritage. These are the assessment measures.

12.3 Who benefits and who loses? In order to establish who benefits and who loses we must recognise that conservation does not come about through general statements of policies, goals, or ideology, but rather through the measures in practice which impose the bite of the conservation constraint and so are the means of achieving the conservation benefits and imposing the costs. We examine these measures in turn (3.1.3). 2 (a) General influence. This measure attempts to influence owners and occupiers to adopt the 'conservation ethic' in their management where otherwise they would not do so. Since any such adoption would be voluntary on their part, they will have decided voluntarily to absorb any costs. (b) Urban and regional plan making. The provisions in plans (from policies to programmes) will influence the owners and occupiers of heritage items, to at least the degree of making it difficult for them to pursue contrary management objectives, and so impose costs. For example, if a listed building be included in a residential area, so that commercial uses are inhibited, there would be less prospects of achieving commercial values in the building to better sustain the conservation costs.

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Economics in urban conservation

(c) Designation for conservation. Where there is specific designation for conservation, e.g. through listing, there is immediate impact on the management freedom of the owner/occupier and therefore diminution of value. (d) Direct control. While the preceding two measures cause cost in the sense of diminution of value through 'blight', actual loss to the owner/ occupier is experienced when a specific refusal is given to a planning application for development. If such refusal persists (including on any appeal to higher authority) then there is an elimination of the hope value which would be contingent on the possibility of a permission and the reduction in the value of the asset, at least until hope is revived. (e) Financial intervention in the market. Such direct costs falling on the owner/occupier can be eased by financial subsidy from government. This can take several forms. Direct subsidy (grants, loans at favourable rates or tax rebates) reduces the financial costs of the works to the owner/ occupier (thus making conservation more viable) and passes it onto government (the local and central taxpayer at large). This occurs also on payment of compensation for loss of development value suffered by the owner (12.5.2). (f) Environmental improvement. Here the local authority finds it desirable or necessary to invest in improving the local environment, so enhancing the values that would be obtained by the private owners following conservation. This is an indirect cash benefit to them at local authority cost. (g) Government occupation. Where the key to the successful conservation is finding a new use for old but such uses are difficult to find, government has the opportunity of filling the gap by occupying the building for one or other of its activities. Where such occupation is not one that they would choose in the light of alternatives they are taking a second best choice, in that the occupation conditions could be inferior for the price which they are called upon to pay. In this way they are financially subsidising the owner in order to assist in the conservation. The extra financial costs would be met out of taxation, so spreading to the public at large. And the inferior occupational qualities would be a burden to the individual public servants and departments who need to cope in the less functionally efficient property. 3

Who benefits and loses from conservation?

205

(h) Government ownership. In this instance government is accepting that conservation would not ensue if left to the current owners/occupiers and that they themselves must buy in order to retain quality. The financial costs would be passed to taxpayers. (i) Government co-ordination. Since conservation battles of the various kinds are carried out property by property, it is likely that there will be lack of co-ordination. For example, government in seeking accommodation for its various departments may not have access to the inventory of property earmarked for conservation, and thereby not be in a position to elect to buy or occupy property where this would most advance the conservation objectives. Such co-ordination should make for greater efficiency than currently prevails in the conservation sub-market, so that the costs of conservation overall should be reduced to the benefit of conservation. This review of implementation measures and their benefit/cost incidence demonstrates the spectrum between the extremes of general influence and government co-ordination. There are attempts to improve the working of the conservation sub-market without significantly adding to public sector costs (a); powers of regulation (b, c, d); fiscal intervention (e); direct investment (f); government participation (g, h, i). We thus have a combination of what has been called the public use of private interest and of direct government intervention.

12.4

The sectoral distribution of the costs and benefits

From the preceding it is seen that the costs and benefits of conservation are not symmetrical in their incidence, neither on contemporary people nor between generations. We now examine this incidence more closely by reference to Table 12.1, 4 which shows a means of tracing the incidence of conservation. For demonstration we use an example where conservation (of a building, group or area) is compared with the alternative of clearance and redevelopment. Since the impact will not be uniform on the community, the table lists various sectors involved, namely the producers and operators of relevant buildings in the urban system (1,2) and those who consume the services generated (7, 8). For each of the sectors is briefly described the nature of the impact of the conservation proposal (3 and 9) and space is provided for

Table 12.1 Distribution of benefits and costs of conservation Producers and operators Impact of conservation Description Type R C

Sector

Sector

Consumers Impact of conservation Description Type R C

5 6

5

7 9 11

13 15

17

Owners of CBH property Owners of property - nearby - general Local government - on site - off site Local planning authority Local conservation agencies Central conservation authority - loans - grants Central government conservation authority Local economy - goods - services National economy - taxation revenue - taxation costs - imports - prices - maintenance

Property values

D

Property values

AF

Costs

D

Operating costs

D

Capital and operating costs

D

Capital and operating costs

D D

Operating costs

D

Employment

AR

10 2

Occupiers of property Occupation values

D

4

Occupiers of property Occupation values - nearby - general 6 Local services Occupier

AR AR AR

8

AF

Local ratepayers

Rate assessments

14 Visitors and tourists Experience of heritage AR

Economic flows

16 Local community - residents - workforce

Environment Culture Employment

AR AR

Heritage prestige Tax assessment

I AF

Opportunities for heritage

I

AR 18

20

National - citizens - taxpayers Posterity

Notes: 1 , 3 : 'Owners' include developers, financiers, etc. 6 : Local services include shops, hotels, restaurants, etc. 9 : Local conservation agencies include the local authority, voluntary bodies, etc. R : Redevelopment C : Conservation

11 12

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Economics in urban conservation

the judgement as to whether these sectors would be better off or worse off (plus or minus) when conservation (C in columns 6 and 12) is compared with the redevelopment (R in columns 5 and 11). Finally the table brings out (columns 4 and 10) that the costs and benefits are not in themselves of a uniform kind and significance, so also affecting incidence. This is achieved by distinguishing between the four types (columns 4 and 10) namely: experienced directly by the sectors; Direct (D) Indirect experienced indirectly by the sectors; (I) Associated real real costs and benefits falling on the (AR) remainder of the community; Associated financial (AF) not real but transfer costs and benefits falling on the remainder of the community. We thus have here an indication in principle of the variety of sectors who may be involved in decisions whether or not to conserve, be they directly concerned with the property in question or with impacts outside. For example, the owners and occupiers of property outside that conserved (3, 4) could get benefits from the conservation which are transfer costs (in fact other property owners would lose) but would not pay for the rise in value except perhaps through increased taxation assessment. The authorities concerned with conservation (7-13) will pay for it financially in the administrative machinery which is set up and perhaps through subsidies, to the real benefit of the local and wider community (14—20). The visitors and tourists to the locality (14) will receive the benefits from experiencing the heritage but will not be paying directly for it.

12.5

Who should pay the cost?5

12.5.1

T h e issue

From the analysis just made on the incidence of the costs of conservation, it is clear that there are two broad groups who bear the costs directly (i.e. 1 and 2): (1) the owners/occupiers of property, (2) the public at large via government from direct or indirect intervention (i.e. 5-13, 8 and 18). If these be the costs which are borne directly then the other costs and benefits shown in Table 12.1 amount to externalities, namely the costs

Who benefits and loses from conservation?

209

which cannot be recouped and the benefits which cannot be charged for. The distinction between the two in any country and at any moment in time is a matter for the law (statute, administrative law and interpretation by the courts). Clearly such law is not enduring; even written constitutions are subject to continuing interpretation and unwritten constitutions are continually amended by new laws. Thus it is practicable for a change in the law to shift the burden of costs from those who previously bore them to others who did not; it can internalise the externalities. In relation to conservation there is an analogy to the discussion on amenity rights by Mishan. 6 Given that the conservation quality is part of real property (in public or private ownership), the state in introducing legislation which creates heritage tenure is clearly taking away proprietary rights. This results in costs, which may be offset if the new law insists that the state needs to compensate for the taking of such rights, or not, if the new law does not so insist. From this it follows that any government intervention at any moment in time will result in some redistribution of costs and benefits compared with what previously prevailed. Where this redistribution would result in a situation vis-a-vis property owners which government considers to be unjust, it can make provisions for adjustment by what has come to be called compensation-betterment in Britain. In this they answer the question in relation to the new conservation measures: who should pay? As regards (1), should the state compensate those property interests which suffer from social control aimed at conservation? As regards (2), since there are direct beneficiaries from conservation (as opposed to the general beneficiary of the community at large and its descendants) should the state seek to collect from them via betterment towards the costs of conservation? The answers to the questions will have consequences for conservation policy as a financial feedback on the costs to the various parties concerned. Underlying the answers to the questions are principles of ethics, political ideology, etc. 7 Some are: owners of heritage property should not be denied the rights available to others, so that any loss incurred should be compensated by the rest of the community; but where this loss is accompanied by increase in value to other owners, a betterment charge should be levied, to offset the burden on the rest of the community; since the benefit is for posterity, the community finding the

210

Economics in urban conservation compensation should be that of the future, so that the cost to the contemporary generation should be met out of long-term loans to be paid off by future generations.

It is such principles we now discuss.8

12.5.2

Compensation

Burdens on the owner could arise, and thereby a claim for compensation, if the conservation proposal for the particular property was restoration to a historical kind of use for which contemporary demand was absent. But insofar as government would accept a use for which the property is suited, provided the fabric is conserved, then no compensation need arise, if the owner still has a surplus of benefit over cost. Indeed, this is the general position that government tries to reach, since the objective of conservation without public subsidy can only be achieved if the users of the property are able to generate sufficient income to cover the costs of conservation. But another situation arises where the rights in question relate to development as opposed to current use. At stake here are the development rights which the owner would otherwise enjoy, e.g. in building around the property (and so damaging its character and eroding the heritage) or pulling it down for redevelopment. Such sterilisation of an archaeological site for building, or denial of the full development value of the site, could give rise to financial loss. But by the same token, if this is to be fully compensated then the financial costs falling on government would be very heavy and so very inimical to the conservation programme. And this is made worse by the normal situation whereby under planning legislation it is the local authority which needs to bear the compensation costs whereas by definition the protection of the heritage is generally for the nation as a whole. Accordingly, the state's attitude to this situation is critical, since different attitudes will produce different answers for conserving the CBH, as the following will show. On the one hand the state could say that even though the property is part of the built heritage the owners should retain the freedom tQ buy and sell as they wish, so that if 'tenure heritage' is to be exercised compensation must flow. Alternatively it could take the view that because of the 'public interest' in conserving the heritage, the owner is restricted in his freedom and should take on the role of guardian of the heritage, must accept the financial penalties which flow from it and have no compensation for loss of

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211

rights. In such a case the conservation objectives are being achieved at the cost of the owners and not of the state, that is the public at large. Two examples will illustrate the contrast. In Britain in respect of development rights a distinction is made between those which can be enjoyed in relation to the 'existing' or 'current' use (a term which is less a matter of fact than of legal definition) and those which could be enjoyed were the property to be developed (that is having a material change in use, with or without the introduction of physical development). 9 In broad terms, the former rights (what exists) cannot be infringed without compensation, but the latter rights are considered to be the property of the state and can accordingly only be enjoyed on a specific permit of local or central government. From this it follows that if the 'development rights' are resisted by the state then no compensation is payable. Thus refusal to allow the alteration or demolition of buildings in the CBH, for the use of the development rights, does not attract compensation; despite the financial loss the owner bears these costs of conservation.10 In the United States, a simple interpretation of the law relating to this issue would appear to lead in the same direction. It has been established that the state (federal, state and local levels) have 'police power', which enables it to exercise control over property in the public interest without compensation. Taken on its face value, this would appear to give the state the right to insist that heritage quality in property be protected without compensation. However this is not so clear. Where there is a 'taking' of property then 'just compensation' is payable under the Fifth and Fourteenth Amendment of the Constitution. The dividing line between those cases where the regulation is valid without compensation, and where it constitutes a taking and is therefore compensatable, is elusive: 'a definition that will satisfy most everyone in close cases has eluded consensus'. 11 In practice it is recognised that attempts to preserve the CBH (landmark buildings) is liable to compensation. This principle is demonstrated by a ruling of the U.S. Supreme Court when the Penn Central Transportation Company wanted to build a five-storey office tower above a landmark building, the Grand Central Terminal in New York. The Court decreed that the protection of the Station under the New York City's Landmarks Preservation Law was a valid exercise of the local governments police power and that like zoning legislation it did not amount to a 'taking' that would require just compensation. However, one consideration in the ruling was that under this Law the owner could transfer and so sell the denied development rights to other properties. 12 These, in New York, must be

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Economics in urban conservation

adjacent but for example in Chicago they can be in any other designated area. This way the landmark can be protected without local financial burden, as can indeed other land needing protection (e.g. open space in New Jersey, or ecological resources in Puerto Rico). Thus in fact the 'police power' control is compensatible in this way.

12.5.3

Betterment

As in any development project, there are parties outside the conservation project itself who receive benefit, alongside others who suffer cost. The question thus arises: can such benefits be taxed directly by the conservation/planning authority, in what is generally referred to as 'betterment' or 'windfalls'? Examples of the beneficiaries are the immediate occupiers, residents and users of the conserved area who have an environment which is not the conventional; adjoining owners and occupiers whose property have higher values because of the conserved environment; visitors from the country and tourists from abroad who have access to culture; those who gain from the trade so generated, in transportation, shops, hotels, etc. leading to increase in local taxes based on property value, sales, etc. Identification of beneficiaries is only the initial step in the devising of an appropriate taxing policy for recoupment of the benefits. This, as with taxation generally, must be practicable: the costs of collection must not be significant in relation to the expected income; regard must be had to the capacity of the beneficiaries to pay; there must be clear advantage in specific pricing as opposed to general taxation.13 If a charging system can be devised there follows the question: can the revenues so collected be earmarked in national and local budgeting for the implementation of the conservation which gave rise to it, or must it go into the general fund? But whether or not the specific earmarking be accepted, if additional revenues directly flow from conservation charging, then the case can be more readily mounted for allocations from government budgets for implementation of conservation.

Who benefits and loses from conservation? 12.6

213

How much should be paid? - pricing for conservation

In the preceding sections we have seen the difficulties of earmarking some of the benefits from tourists via betterment taxation to the benefit of the cultural built heritage itself. As part of this issue there is another: to what extent can specific charges be made to those who enjoy the heritage? One of the difficulties that emerged above (12.1) was that conservation is not a pure but an impure or mixed public good, with the inside of the buildings in question being private and the exteriors being public. Since the mass of visitors and tourists are content with the exteriors, for it is this which gives the charm and atmosphere they enjoy, they cannot be charged. The hope instead, of those who need to bear the costs of conservation, is that the visitors are attracted to enter the conserved premises and so become susceptible to charge: directly for museums and indirectly via taxation for shops, restaurants, hotels, etc. But even where conservation thus becomes a private good, the issue is not settled. While government and conservation motivated groups are conscious and vociferous about the value of conservation, the general public are typically less so, not only in relation to the built environment but to other aspects of the general heritage. This combination has led to a tendency for low pricing where elements in the cultural heritage are open to the visiting public, notably museums. 14 At one extreme, the line is taken that the whole purpose of conservation is to pass on the cultural values which have been conserved to the people and there should be no price constraint against their enjoyment; since charging would reduce in some measure the public's interest it would be counter productive in advancing culture and education. At the other extreme is taken the view that zero pricing means not only the necessity for finding costs out of general revenues but also offers no means of identifying the values which the visiting public in fact attach to the heritage which has been conserved. The response to prices would be a measure of willingness to pay for the value and thereby give some empirical guidance in the formulation of conservation policy as between different possibilities. Linked with this viewpoint there is another: since zero pricing must of necessity mean larger numbers of visitors (indeed one of its objectives is to attract as many as possible) the increased numbers could provide consequential costs, in terms of wear and tear of the site or building being visited (e.g. the floor of the Parthenon), the need to accommodate nearby a

Economics in urban conservation

214 (A)

TOURISM INDUSTRY

_L FIRMS

CENTRAL GOVT

LOCAL GOVT

PROPERTY OWN/OCC SPENDING ON TOURISM RELATED ACTIVITY

TOURISM SERVICES -| RESIDENTS/WORKERS TOURISM ACTIVITY

WORK COMMUTERS

(B)

-| SERVICES COMMUTERS VISITORS TOURISTS

(C) BENEFITS DIRECT JOBS INDIRECT JOBS

L

DISBENEFITS COSTS Traffic, Parking, etc.

X

WHO BENEFITS FROM TOURISM AND WHO PAYS

IMPACT ON CONSERVATION

Diagram 12.1 Schematic model of circulation of spending on tourism related activity greater number of cars and coaches and shops, etc. catering for the public; and the congestion costs of large numbers of people interfering with individual enjoyment.

12.7

Conservation and tourism

In Table 12.1 tourists are picked out as one consumer sector (No. 14) which affects the local economy. They are truly a singular sector and as such merit special comment. Just because tourism offers this critical mass in its impact on the heritage of the country of visit, it sharpens the focus of all the benefits and costs relating to conservation discussed in this chapter.

Who benefits and loses from conservation?

215

Tourism is singular in relation to conservation for a number of reasons. It is a huge industry, involving millions of people who spend millions in money each year. It is a growth industry, in numbers, spending and adventurousness of destination in terms of world travel. It represents a major element of the economy in many countries, bringing foreign exchange and stimuli to national and local economies. Its impact can be seen more specifically by considering Diagram 12.1 which seeks to trace the flow of spending on tourist related activity within a local economy which attracts tourists. At A is shown the tourism industry which generates tourism activity in response to spending from various sources at B, of which visitors and tourists are part. The activity generates benefits and disbenefits at C, leading to two critical questions: who benefits from tourism and who pays, and what is the impact on the conservation of the built fabric and life-styles which the tourists come to visit and see as part of the attraction of the locality? While the purposes of the travel can be very varied tourists also are interested in the heritage of the countries they visit including the cultural built heritage. But they bring not only benefit. The very mass of tourists can create significant costs to the local communities where they participate in the heritage, both the built (access roads, car park, policing, etc.) and the way of life (culture shock, commercialisation, etc.). In certain instances they introduce damaging changes in the economy and society.15 Thus while undoubtedly offering a stimulus to the economic base of the cultural built heritage in many localities, so making rehabilitation for adaptive use more feasible and viable, tourists nonetheless attract costs of various kinds on the community affected. Since as indicated the level of the benefits and the costs are both high, and the beneficiaries from the tourism are not those who meet the costs, it follows that there is the need to find a balance between the two. A means of analysis for so doing is introduced below (Chapter 15).

Part IV Selected tools of economic analysis for project evaluation

Selected tools of economic analysis

219

Introduction In Part III we explored the role of economics in the conservation of the built environment and in particular the cultural built heritage. To advance that role we need to use the appropriate tools of economic analysis. As was seen, many are involved, such as forecasting and feasibility analysis. Within these there is one family of tools of particular relevance, namely project evaluation or appraisal.1 This is now introduced. This family comprises a huge variety of tools,2 which are devised to answer a variety of questions.3 We need therefore to select those which are relevant to the issues raised in this study, namely those which aim to predict, estimate and value the costs and benefits and their distribution amongst the parties involved and affected in particular projects. As brought out in Part III, there are three in number, viz:4 Financial and social financial analysis (FA and SFA). Cost benefit and social cost benefit analysis (CBA and SCBA). Community impact analysis (CIA). These are considered respectively in detail in Chapters 13-15. As a preliminary we introduce here (a) some common features of the three and then (b) some differences. (a) Some common features Our central concern is with any development project (including for renewal and conservation) which is an injection into the urban and regional system (1.1). By this injection the development project aims at using resources (inputs) to produce change (outputs) into that system. To evaluate/appraise the project we need accordingly to specify the inputs and the outputs. This is assisted by the analysis in Table IV. 1 As will be seen, the first column specifies the project elements, both 'on site' (1) and 'off site' (2). It is in respect of the former that the project costs (resources) are required, for the physical fabric and the activities/uses that will be carried on by the population within it. Such costs could also be required* from the promoters in respect of the off site elements, as for example contribution to roads and utility services or the need to ameliorate off site effects, such as environmental impact. As regards (2), off site, the balance is different; there will be a greater weight in the effects of linkages, and in impacts on the economy, cultural quality, environment, etc. The enumeration of project elements assists in the definition in the

Table IV. 1 Framework for change visualised by a development project

Project elements

1 On site (a) Population

Living Working Visiting (b) Physical fabric Land Natural resources Utilities Transportation Telecommunications Buildings and sites Open space (c) Activities/uses Residential Production Distribution Consumption

Current

Project without

Blight

Displaced

Retained

Construction

Change Completion 7 - 1 or 7 - 2

2 Off site (a) Linkages Utilities Transportation Telecommunication Urban services (b) Effects!impacts Economic Social Cultural Linkage Environmental Risk hazard Source: Lichfield and Schweid (1986). See Tables 15.3 and 15.4 below for worked example.

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columns of the change from the current situation (1) that will occur 'with' the project. This is the project's output, or, more strictly, the output should be derived from the situation as it would be if the project were not undertaken ('without' the project (2)). Pending the commencement (?) of the project there could be 'blight': the suspension of economic activity pending the introduction of the project (3), or displacement in a redevelopment project (4), or retention (5), or effects during the construction (6). Finally there is the result arising from the project upon completion (7) and its net change from the 'current' or 'without' situation (8). An example of how the table was used in a specific case is shown below (Tables 15.3 and 15.4). It is the changes in cols. 4-7 which comprise the development, and the subject of the evaluation of the project: the appraisal/assessment of the relationship of the output (benefit) to the input (cost), in general terms the rate of return of benefit to cost. In projects generally, the cost and benefit will vary as between options. But situations can arise where the output or benefits, or the input or costs, are constant. In this case the methods used are the same but are better termed respectively cost minimisation (for the common output) or cost effectiveness (for the common input). 5 In such appraisals the question posed could be: why do the project at all? For this the datum is the situation at some point in the future if the project be not carried out (without the project or do nothing option) for comparison with that arising if it were (with the project). In the without situation it may be necessary to take into account works which cannot be avoided even if there be no project (e.g. provision of utilities). Then we have the do minimum situation. This necessity for considering what would happen in the without situation must be extended to all changes which can be predicted, as for example deterioration in the buildings (costs) or in the quality of urban services, as where the closing of a school makes residential accomr* dation less desirable for prospective residents (value). The answer relates to the absolute worthwhileness, and the result can be compared with some standard as a point of reference, e.g. the rate of return on comparable investments in the market. Thus, with and without is not the same as before and after. The question posed could be: why do the project this way? Here the appraisal/assessment relates to the differences between alternative outcomes compared with the common projection without the project, adopting one of the futures as a datum. This permits of a comparison of differ-

Selected tools of economic analysis

223

ences in the outcomes of all options. But in this case there will be no absolute 'rate of return' for comparison with the standard in the market. Another common feature is the need to take account of time in the cost benefit predictions. This has been introduced above (7.7). It answers the question: why do the project now?

(b) Some differences Certain of the differences will emerge in Chapters 13-15, as for example on discounting practice between appraisal for the private sector and the public (14.4). But here we concentrate on one major difference between the three evaluation methods. This stems from the fact that, while each method of evaluation aims to assess the relationship with cost and benefit, it does so by reference to questions which are either expressly posed or are implicit in the method. 6 In these three instances the questions relate to: Financial and socialfinancialanalysis (Chapter 13) The financial implications for only the promoter of the project (FA) or also including other parties directly involved in the project, e.g. the consumer (SFA). Cost benefit and social cost benefit analysis (Chapter 14) The implications for the use of resources in the economy only by the promoter of the project (CBA) or also by other promoters who are affected (SCBA). Community impact analysis (Chapter 15) The implications for all sectors of the community who are impacted by the project (CIA). The application of the methods for these varying questions brings out the following differences, shown in Table IV.2. On site/off site FA, SFA relate only to direct impacts on the project site, whereas CBA, SCBA and CIA also look outside. Sector FA and CBA relate only to one particular sector which is directly involved in the project, the promoter and related consumers, whereas SFA, SCBA and CIA go beyond.

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Table IV.2 Difference between the tools for analysis of costs and benefits

FA

SFA

CBA

SCBA

Socio-economic CIA

V

V

V V

V V

V V

V

V V

V

V V V

V V V V

V

V

V

V V

V V V

Financial

Economic

Site

-on -off Sector - promoter - on site - off site - all relevant Costs and benefits - direct - some indirect - community

Source: Lichfield (1983) SFA relates to all parties directly involved in a project and not only the promoter. SCBA takes into account, in addition to the promoter, selected sectors who are not impacted. CIA relates to all relevant sectors. Costs and benefits FA, SFA take into account only direct costs and benefits. CBA and SCBA take selected indirect costs and benefits into account whereas CIA attempts also to cover all of the relevant community. These differences can be brought out also in relation to Table IV. 1 FA and SFA: will evaluate on site changes under (a), (b) and (c). CBA and SCBA: will evaluate the same on site changes and selected off site under (a) and (b). CIA: will evaluate all on site and all off site elements which are relevant. These differences are more sharply brought out in Table IV.3 which contrasts the application of social cost benefit analysis and community impact analysis to one specific transport mode: public transport in buses. 7

225

Selected tools of economic analysis Table IV. 3 Comparison of inputs of Department of Transport social cost-benefit analysis with community impact model (1)

Sector Passenger transport executive

Passengers in: -Bus

-Rail

-Car/Lorry

(2) Department of Transport social cost-benefit analysis Cost Benefit Operation cost

(3) Community impact Cost

Operation cost Fares plus subsidy from passenger transport executive plus subsidy from Department of Transport

Fares plus quality (level) of service

-

Operation cost plus quality (level) of service Operation cost plus quality (level) of service

-

-

Benefit Fares plus subsidy from passenger transport executive plus subsidy from Department of Transport

Fares plus Trip end value quality (level) of service Fares plus Trip end value quality (level) of service Operation cost Trip end value plus quality (level) of service

Source: Lichfield (1987b), p. 8.

As the table shows, whereas SCBA considers only the direct costs and benefits to the two sectors involved (transport operator and passengers) the CIA takes in also the on site (i.e. off bus) value of the trip to the passenger at its origin and destination. We now proceed to describe each of the methods in turn.

13 Financial impact: financial analysis

13.1

Context

In Chapter 7 we introduced a model for the approach to financial analysis for management of the built environment at any stage in the life cycle, and in Chapter 8 showed how this could be adapted for conservation of the CBH. We now demonstrate the use of the analysis for the central theme of our concern: the decision whether to rehabilitate or redevelop heritage buildings? But while answering this particular question the estimates can also illuminate others of relevance to conservation: what price to pay for a property subject to conservation via rehabilitation? What is the ceiling on capital costs of works which could be incurred with an eye to viability? What would be the limit on operating costs which could be incurred having regard to the rents to be realised?1 These and related questions can be answered by the application of a generic method of financial appraisal/valuation. We do not propose to reproduce here the wide array of foundation material on this analysis, but to demonstrate the principles by reference to an imaginary example.

13.2

An illustration of financial analysis2

Let us return to the 100 year old merchant house of (8.3.3) comprising 15,000 sq. ft. gross on a site of half an acre in the centre of town. It is located in the business area but has been kept in residential use until recently by the last descendant of an old family who has died. As it stands the property is worth £700,000. This is clearly below potential value and the executors for the estate must obtain the best value. The house is clearly functionally obsolete for its original purpose and is also physically deteriorated. It is furthermore locationally and functionally

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Table 13.1 Development appraisal Refurbishment of listed building within constraints £ (a)

(b)

(c) (d)

(e)

(f)

Capital value on completion 187,000 Rent £17 per sq.ft. on net of 11,000 sq.ft. Capitalise at 6%/16.7 y.p. 3 ,117,000 86,000 say Less purchase costs 2.75% Deduct building costs Construction: gross of 15,000 sq.ft. @ £46 690,000 per sq.ft. 86,000 Professional fees: Finance costs: 1 year 2 months @ 14% p.a. 65,000 building and professional fees 8,000 Legal fees: Agents: Letting 19,000 Sale 46,000 Promotion 15,000 80,000 Gross margin [value (a) minus cost (b)] Deduct developers costs Finance on building 1 year 10 months 335,000 30,000 Acquisition costs Developers profit at 20% on cost 520,000 Maximum price which can be paid for existing building [Gross margin (c) minus cost (d)] say Profit to estate Surplus in (e) over value of property in current use

£

3,030,000

929,000 2,101,000

903,000 1,198,000 1,200,000 500,000

Notes to Tables 13.1-13.4: Derivation of certain common items Item (a) Purchasers costs: Agents fees on acquisition: 1% Stamp duty: 1% Solicitors costs: 0.5% plus VAT Item (b) Professional fees: 12.5% to cover architects, structural and other engineers and quantity surveyors. Finance costs: Assumed that the building costs will rise by equal amounts throughout the period of contract. Therefore interest on total cost for half the period. Legal fees: 0.25% on sale price. Agents fees: 10% of rent Sale costs: 1.5% of value Promotion: Assessment Item (d) Finance costs: As in item (b). Acquisition costs: Stamp duty: 1% Agency : 1% Legal : 0.5%

Financial impact: financial analysis Table 13.2 Development

229

appraisal

Refurbishment with listed building consent outside constraints £ (a)

(b)

(c) (d)

(e)

(f)

Capital value on completion Rent £17 per sq.ft. on net of 12,000 sq.ft. 204,000 3,400,000 Capitalise at 6%/16.7 y.p. Less purchase costs 2.75% 93,000 say Deduct building costs Construction: gross of 15,000 sq.ft. @ £40 per sq.ft. 600,000 Professional fees: 75,000 Finance costs: 1 year at 14% on building and professional fees 48,000 Legal fees: 9,000 Agents: Letting 20,000 Sale 50,000 Promotion 15,000 85,000 Gross margin [value (a) minus cost (b)] Deduct developers costs 358,000 Finance on building, 1 year 6 months Acquisition costs 38,000 567,000 Developers profit at 20% on cost Maximum price which can be paid for existing building say [Gross margin (c) minus cost (d)] Profit to estate Surplus in (e) over value of property in current use

£

3,307,000

817,000 2,490,000

963,000 1,527,000 1,525,000 825,000

See notes following Table 13.1. obsolete for residential purposes and is acceptable by the planning authority for office use. But since the building was listed Grade II there would be resistance to redevelopment and also to alteration which would affect the character of the building. The executors are thus faced with four possible courses of action: (1) to sell the property as it stands; (2) to refurbish within the constraints of the listing; (3) to seek listed building consent to refurbish outside these constraints; (4) to seek listed building consent to demolish and rebuild for offices, at the plot ratio of 1:1 which prevails in the business area.

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Economics in urban conservation

Table 13.3 Development appraisal: redevelopment £ (a)

(b)

(c) (d)

(e)

(f)

Capital value on completion Rent: £20 per sq.ft. on net of 16,000 sq.ft. 320,000 5,818,000 Capitalise at 5.5%/18.18 y.p. Less purchase costs 2.75% 160,000 say Deduct building costs Construction: gross of 20,000 sq.ft. @ 1,200,000 £60 per sq.ft. 150,000 Professional fees: Finance costs: 1 year at 14% on building and professional fees 96,000 15,000 Legal fees: Agents: Letting 32,000 Sale 87,000 139,000 Promotion 20,000 Gross margin [value (a) minus cost (b)] Deduct developers costs Finance on building: 1 yr. 6 mts. @ 14% 676,000 61,000 Acquisition costs: Developers profit: 20% on cost 970,000 Maximum price which can be paid for existing site say [Gross margin (c) minus cost (d)] Profit to estate Surplus in (e) over value of property in current use

£

5,660,000

1,600,000 4,060,000

1,607,000 2,453,000 2,500,000 1,000,000

See notes following Table 13.1. To inform themselves as to the potential difference to the estate, the executors have asked for an estimate of the sale value of the property under the three development options in (2)-(4). The appraisals/valuations are shown in Tables 13.1-3, in each case in response to the question: what would a developer pay for the building if able to take advantage of its potential value beyond that for current use? The tables are prepared on a consistent basis, following the residual method of valuation (7.5.2), so that the differences in the variables in the estimates can be seen. In essence they each display:

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231

Table 13.4 Effect on viability of listed building refurbishment (Table 13.1) on revised assumptions on significant items Revision from Table 13.1

(a)

(b)

(d)

(e)

(0

£ Capital value 140,000 Rent £14 per sq.ft. on 10,000 sq.ft. 1,960,000 Capitalise at 7%/14.2 y.p. Building costs Gross area of 15,000 sq.ft. @ £50 per sq.ft. 750,000 Finance on construction costs 69,000 Developers costs Developers profit on construction cost 580,000 Maximum price which can be paid: £1.20 million Table 13.1 Less: Table 13.4 £1.19 million Equals Profit to estate over value of property in current use

Reduction in value (increase in cost) on Table 13.1 £ 1,070,000

60,000 4,000 60,000 1,194,000

0 700,000

See notes following Table 13.1.

(a) capital value of the building on completion of works, derived from the net rental value of the lettable floor space capitalised at an appropriate rate of interest (years purchase) less purchaser's costs; (b) the gross building costs of achieving the completed development, to be deducted from the capital value on completion. This is made up of construction and financing costs and professional, legal and agency fees; (c) the gross margin available when deducting the gross building costs from the capital value; (d) the allocation of that gross margin between developers costs, i.e. raising finance on the building acquisition costs and developers profit; (e) the residue when the developers costs are deducted from the gross margin, to give the price which the developer can afford to pay for the building in order to refurbish in the first two circumstances, or demolish for redevelopment in the third;

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(f) the excess of this residue over the value of the property as it stands (£700,000), i.e. the profit to the estate owner. The conclusions from these three appraisals follow.

13.2.1

Where the refurbishment is viable The executor: owner/developer or purchaser 1 The effect of conforming to the listing constraint on refurbishment results in a reduction in sale price from £1.52 million to £1.2 million (Tables 13.1 and 13.2). The difference (£0.32 million) represents the potential gain in sale price for success in obtaining the listed building consent for refurbishment outside the listing constraints. From the tables it is seen that the reasons for the difference in value relates to the lesser area of lettable floorspace in the listed building; the higher costs of refurbishment; the consequential differences to the remainder of the on-costs (fees, financing, profit, etc.). 2 When either refurbishment option is compared with redevelopment (Table 13.3) there is clearly a considerable shortfall: of £0.975 million if the constraint be lifted and £1.3 million if not. The essential difference here lies in securing a much larger lettable floorspace in the new building through the increase in density of the site; the higher years purchase for capitalising rents in the new building as compared with the old; the higher net lettable floorspace of the new design. Of significance is the increase also in the prospective developers profit, from around £0.5 million to £1 million. It is this, plus the higher value of the existing property under these three options, which provides the commercial stimulus to combat conservation. The conservation authority

Given the heritage quality of the Grade II listed building, is it reasonable for the authority to resist the listed building application and so seek to deny the owner refurbishment without constraint, or redevelopment? On the basis of the above valuations the answer would appear to be yes, since: (1) with constrained refurbishment (Table 13.1) the owner would

Financial impact: financial analysis

233

be making a considerable profit on sale (£500,000) and the developer would have a positive value on purchase (£1.2 million), not negative value; (2) since the net income obtainable for the refurbished listed building is positive (£17 per sq.ft. net of occupation expense), it cannot be argued that there would be insufficient income to maintain the property and so maintain the heritage quality; (3) in the situation described there will be no call for public subsidy to give financial viability to the maintenance of the listing constraints.

13.2.2

Where the refurbishment is non-viable

The appraisal in Table 13.1 shows that even despite the conservation constraints the refurbishment of the listed building would be financially viable. But, the appraisal shows, it would take only some more pessimistic assumptions relating to the conservation constraints to make the refurbishment non-viable. This is illustrated in Table 13.4, in which we do not go through the whole calculation but merely pick out three significant items, showing both the result of the revised assumptions and the reduction in value from Table 13.2. (a) Capital value The net lettable space is reduced to 10,000 sq.ft.; the rental value is lower at £14 per sq.ft.; and the inferior building would capitalise at the higher percentage of 7 per cent. The resultant fall in capital value from Table 13.2 is £1,070,000. (b) Building costs The construction costs would be greater at £50 per sq.ft. on the same gross area. Because of the reduced investment security of the building, raising the finance would be more expensive. The increase of £64,000 would be offset from the completion value of the building. (c) Developers costs The developer would require a higher developers' profit. The additional cost of £60,000 would be offset against the completion value.

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Economics in urban conservation The executor: owner/developer or purchaser

Comparing the positive value of £1.2 million in Table 13.1 with the reduction of £1.19 in value from Table 13.4, we see that the price which can be paid for the existing building as a basis for refurbishment is zero. This means that the estate would lose £700,000 if the property were sold to a developer at his price, which would be calculated to show a developer's profit. If the non-significant items are also reckoned then the loss is likely to be greater. In such a situation the developer would clearly attempt to improve the viability of the scheme (revised layout, reduction in costs, etc.), in the process no doubt attempting to whittle away at the conservation constraints. But let us assume that he cannot make the improvement. There then arises the possibility of attracting financial aid from one or other of the sources described above (12.3). The analysis described so far (in simple terms) would be the basis for the case to the authorities for grant or loan. The conservation authority Faced with the conclusions in Table 13.4, the authority before deciding would wish to test the figures, with advice as necessary. Should they accept them then they must conclude that refusal of listed building consent would result in the property not being occupied nor refurbished, with the consequential inevitable deterioration. Therefore they would seek to compromise on some of their constraints (e.g. in allowing alteration which would undermine to some degree the heritage quality, or redevelopment with retention of the facade, or allowing some new office building of a sympathetic character within the curtilage). If this did not produce viability they could hang on hoping, for example, that the office rental values would rise sufficiently to provide viability.

13.2.3

Effect of taxation relief on financial viability

So far we have not included in the appraisal any reference to the relief from taxation which would be available in the possibilities outlined. This is consistent with development appraisal practice which ignores taxation at the outset and then applies it, on the simple proposition that the taxation burden and relief outcome is different for every scheme, development company, individual, etc.

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235

No assumption is made here on the individual circumstances. But speaking generally it is apparent that relief either on a capital or annual basis will contribute to reducing costs to the promoter and thereby enhancing the potential viability of any refurbishment scheme.

13.3

Social financial analysis

In the example discussed so far we have been concerned with appraisals seen from the viewpoint of the developer. In this, his income from net rent from the occupiers is his net benefit. But this net rent is a cost to the occupier, to which he must add also the operating costs of the occupation. Thus, as pointed out above (7.2), while sharing common objectives in property development and investment, the different parties have distinctive interests. It follows that in the economic analysis relating to management decisions the outcome would depend on just which interest is concerned. Since the interests are in conflict any decision will have repercussions on the others: a higher market value, rent or capital, to the landowner, is a cost to be paid by the occupier, his benefit being the higher quality value. These repercussions on interests other than those directly involved in the decision, whose costs and returns do not have to be reflected by the decision maker, are termed 'social' following the conventions of economics which distinguishes between private and social (externality) costs and benefits (14.3). From this it follows that any comprehensive financial appraisal for management decisions should show the repercussions on all the interests affected in the decision, and not simply those of the decision makers. While this may not be of immediate importance in making the decision, it is nevertheless of concern. While in his investment appraisal rents are his benefits, the developer is concerned also to consider the rents as costs to his tenants, for on this rests the security of his investment. In conservation projects the social financial analysis is certainly of interest to government. It brings out the financial viability of the conservation project to each of the parties directly concerned, upon whom the implementation of the conservation project will fall. If there is imbalance in cost and return between the parties then some adjustment might need to be made in order to smooth the path of implementation. And the analysis would show who would be bearing the cost of implementation which could give rise to need for subsidy or to compensation.

Table 13.5 Social financial analysis Option in tables

Cost/benefit items

Developer

Landowner

Contractor

Financier

Professionals

Occupier

Conservation authority

1

2

3

4

5

6

7

8

9

13.1

Cost Benefit Surplus/loss Cost Benefit Surplus/loss Cost Benefit Surplus/loss Cost Benefit Surplus/cost

2,510 3,030 520 2,740 3.307 567 4,690 5,660 970 1,960 1,900 (60)

700 1,200 500 700 1,525 825 700 2,500 1,800 700 0 (700)

620 690 70 540 600 60 1,080 1,200 120 675 750 75

400 400 0 406 406 0 772 111 0 _ 0

+ 174 174

187 + V p 204 + V p 320 + V ? 140 + V ?

13.2

13.3

13.4

+ 169 169

+ 304 304 _ 0

o/c

o/c

o/c + o/c

_ H/V H/V — H/VH/V_ 0 0 Sub H/V H/V-Sub

Notes: Col. 3 Developer. Cost made up of (b) and (d), less developer's profit which is shown as surplus/loss. The benefit is (a). 4 Landowner. In each case the cost is the value of the property as it stands and the benefit is (e), with the surplus being (f). 5 Contractor. The benefit is the contract price, the construction costs in (b), against which must be found the cost to the contractor leaving a surplus, assumed here at 10% of contract. 6 Finance. The benefits here are the financing costs to the developer in (b) and (d), with no provision made for longer term finance when the development is completed. Since the money tied up could presumably have been lent at comparable rates elsewhere, it is assumed that the cost to the financier equals the benefit, leaving zero-surplus/loss. 7 Professionals. Here the benefits are the fees earned (professional, legal, agent) in (b) and acquisition costs in (d). For this time must be put in as costs, leaving the net position as zero (with partnership, etc. profits being seen as remuneration of partners). 8 Occupier. The cost of the net rental values and the occupation costs (not estimated). As against this are the values for occupation of the premises (v). Assuming an open market situation the surplus/loss would be zero with gross occupation costs equalling gross occupation value. 9 Conservation Authority. The intangible value of the heritage quality in the building is shown as H/V in option 1, with a reduction in option 2 and zero on redevelopment in option 3. There would be no direct costs to the conservation authority except for the subsidy payable in option 4 to avoid the redevelopment and the destruction of the heritage quality.

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13.4 Illustration of social financial analysis In illustration we present in Table 13.5 an adaptation of the financial analysis for the developer which is shown in Tables 13.1-4, in order to bring out the complementary relationship of the various parties who would be concerned with the conservation project. In the rows are summarised the critical items of cost, benefit and surplus/loss for each of Tables 13.1-4. In column 3 these items are picked out for the developer (the focus of Tables 13.1-4) and then for the remainder of the affected parties in columns 4-9. The following conclusions can be drawn: 3: Developer There is increasing capital investment in options 1-3 leading to increase in capital value with increase in margin of developer's profit, which is shown as the cost of enterprise, risk, etc. 4: Landowner The cost to the landowner in all cases is the £700,000 value of the current investment. In options 1 to 3, his benefit would rise with the increase in residue from the increasing profitability of the project, but would fall to zero in option 4, leading to loss equal to the current value should he dispose of the property. 5: Contractor Here the benefit would vary with the amount of the contract in each case. This figure would be offset by the construction costs (c) leaving a contractor's profit in each case, taken at 10 per cent, as a reward for cost of management, risk, etc. 6: Financier The benefit, amounting to the financing costs, would vary according to the size of the borrowing. In each case it would be offset by the opportunity cost of the capital, provisionally assumed to be equal to the interest earned, leaving the net position at zero.

Financial impact: financial analysis

239

7: Professionals Here again the fees would vary with the capital invested, not only on construction but also law, acquisition and disposal. As an offset to the benefit would be the skill, time, etc. of the professionals whose opportunity cost is assumed equal to the fees charged.

8: Occupier The costs to the occupier would be the net rent together with the occupation costs (not estimated). For this the occupier would receive the value of the premises. This is assumed to be common for the rehabilitated building and more for the redevelopment building. The net outcome is not identified. 9: Conservation authority In options 1 to 3 the authority is not faced with the cost subsidy to the project. In option 1 it has the benefit of the heritage value (hlv) which is less in option 2 and zero in option 3. In option 4 it would retain the same value as in option 1 but at the price of the subsidy.

Overall It is seen that each option contains its unique distribution of costs, benefits and surplus/loss across the parties involved. In simple terms, in options 1-3 the fortunes of the developer, landowner, contractor, financier, professionals, are linked together because of the arithmetic of the calculation. But this does not apply to the occupier because in addition he has the occupation costs and value to contend with. And it applies even less to the conservation authority, which stands to receive diminishing heritage values in options 1-3 as the profitability to the others increases, while to retain the same position in option 4 as in option 1 it must find the subsidy to meet the shortfall of profitability to the developer and landowner.

14 Economic impact: social cost benefit analysis

14.1

Context

In tracing through the economic decisions in the life cycle of the cultural built heritage (8.3) we saw that while heritage quality was intimately associated with the property, it could not be equated with the value of the property itself; it is one of its attributes. We therefore pursued the question: how can such heritage quality be valued? (Chapter 10). This question is of more than just academic interest for we also saw that in conservation as in economic life generally it is necessary for government to seek value for money in the use of resources seen from the national viewpoint. This kind of search is but one of many facing government in its attempt to estimate worthwhileness and priority of projects emanating from the public rather than the private sector (highways, water, defence, etc.). In this they find, by definition, they need to address the question from the viewpoint of society as a whole, rather than the market-place. For example, in relation to a project involving rehabilitation or redevelopment, it would be legitimate to take account of such factors as rehabilitation being more labour and less capital intensive than redevelopment, and thereby saving energy and producing more employment. Given this it is found that the method of financial analysis (Chapter 13) is not adequate for the purpose. 1 The reasons are varied. By definition public sector goods and services are often not exchanged in the market (schools, roads or amenity open space) and thus have no market price as a basis for estimating return or benefit, so that surrogate methods of value measurement need to be found (10.5-6). On the cost side, the public sector is concerned not so much with financial costs (which include transfer costs such as land price, interest, taxation, etc.), but the real cost to the economy. In this it is necessary to take account not only of the direct costs and benefits on the

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promoters but also those falling on others, that is the spillovers or externalities.

14.2

Origins of method

It was to reflect such needs that cost benefit analysis (CBA) was developed for a whole range of public sector decisions on projects relating to the investment of public resources for goods and services which have no market price (highways, education, water, defence, etc.)- 2 It has conventionally attracted the prefix social (SCBA) when the analysis is concerned not simply with the economic costs and benefits falling on the particular promoting agency but also on others who are not the promoters, but whose activities will be affected by the project: as where the repercussions on road traffic of improvements in underground railways are taken into account by the railway promoters. Since in this study we are concerned with the effect of action by the developer or the property owner on the promotion of conservation by the authority concerned with the cultural heritage, we use social cost benefit analysis.

14.3

Method and technique of SCBA

The features of SCBA which are common to and different from the other evaluation methods under review were introduced above (Part IV, Introductory). But although the literature, and its application to projects in practice is vast,3 there is no simply stated method which would be acknowledged by all. However the following would be accepted as an indication: (a) specify the project and its options; (b) specify the inputs and outputs of the project and options, both off site and on site (Table IV-1), and accordingly the changes that would be introduced under the options; (c) estimate and value the costs and benefits from the viewpoint of the project promoter, and other related promoters; (d) adopt a datum for the comparison of options accordingly; (e) carry out a comparison on the with and without principle; (f) choose between the options on stated decision criteria, taking account of the appropriate discount rate, uncertainty, etc.

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In certain cases the costs might be stipulated, and in others the benefits. Then the options would be tested on the maximum benefits for the given cost or minimum cost for the given benefits. These methods, respectively known as cost effectiveness or cost minimisation, follow the same rules as cost benefit analysis, where there are the two variables (p. 222). While these particular steps may seem simple enough, they are quite complex in theory and application, the literature showing differences in treatment and emphasis. But it has nonetheless a solid, common foundation. Since its treatment is exhaustive, and cannot be readily condensed, we do not (as with financial appraisal, Chapter 13) attempt to display the general method. Instead we concentrate on certain elements which bring out the particular application to conservation of the cultural built heritage and the economic as opposed to financial approach. 4

Nature of costs in conservation The nature of the costs involved in conservation have been presented above (Part III, in particular Chapters 7 and 12). While these costs are of a varied nature, in SCBA it is only the resource costs to the economy which are relevant for judging value for money. This distinction is brought out in comment on the enumeration by Realfonzo of the varied costs that are encountered in any conservation project.5 (1) between costs on structures and those involved with people (e.g. housing); (2) between the conservation property itself (direct) and those outside (indirect); (3) between those which draw on economic resources (restoration) and those only on financial resources, which are transfers (acquisition cost of property, interest on capital, etc.); (4) in relation to the conservation property itself and to the physical environment, aimed at enhancing the conservation value of the property; (5) as between the private sector and the public sector, whose contributions are both needed towards the conservation. Not all these are resource costs to the economy. For example, the acquisition of the property for conservation would exclude the land which is a sunk cost (since it cannot be put to alternative use with the building existing on it); and also the property (since the price would be a financial

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transfer between owners and not call upon new economic resources). But it would include the construction (the resources used by the building industry) together with the professional fees and developer's profits, the cost of professional fees and entrepreneurial manpower, but not the financing charges, which is a transfer between owners of capital and will not involve new resources. To this would be added the expected recurrent maintenance costs of the fabric.

Nature of benefits in conservation The benefits from conservation have been described above (Part III, in particular Chapter 12). They, it is seen, can be very widely distributed. From these the selection must be made for SCBA in terms of promoters. One possibility is that the planning authority be linked with the conservation authority, since the options for conservation can have implications for the uses and activities in the objects to be conserved and their surroundings, and thus for the planning benefits to be derived. As to the sectors who benefit (Table 12.1), the choice can range from the very narrow (simply the benefit of conservation quality to the conservationists) to the wider (which would include benefits to the economy from tourism, etc.).

Valuation of costs and benefits In SCBA both costs and benefits are seen in terms of 'opportunity cost' (10.9). Thus the costs of a project are those that would be incurred in the project but valued at the best opportunities foregone by not using those resources elsewhere. For simplicity this is typically taken at the market value of those resources. But this simple rule will not apply if the market value is distorted through government intervention as with monopoly markups, indirect taxes, import duties, etc. which are in the nature of transfers rather than real costs. For these 'shadow prices' are adopted. A particular difficulty in the evaluation of benefits is that there is no market price for the cultural value as a starting point (10.5). And another is the irreversibility attached to a decision to erode the cultural heritage, either through works of rehabilitation or more decidedly through demolition. In the cost benefit literature this problem has been most rigorously tackled in relation to destruction of the natural environment in a wilderness. 6 Using that approach, the question is posed: what would the current generation be willing to pay to retain the option of having the current

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cultural quality (bearing in mind the cost of maintaining it) into the indefinite future? (the option value). This question would clearly need to take into account the opportunities foregone in the development project which would be the source of the potential erosion of the cultural quality. This approach can be taken further by recognising one feature of the CBH which is distinct from that of the wilderness or rural landscape. Since the cultural quality is attached to bricks and mortar, it is practicable in certain structures to move the building as a whole or, where this is not possible, to rebuild the object in facsimile on another site. In itself, this will clearly be less valuable than the original to the purists in preservation. But in many cases additional value is achieved if the setting of the buildings, etc. is improved over the original (as in the common case of a conserved building being surrounded by unsuitable and overshadowing structures in the centre of the city). For this possibility a resource cost can be estimated. The willingness to pay question can then be directed to this rather than the hypothetical cost.

Distribution of costs and benefits Cost benefit analysis set out traditionally to select projects on the criterion of efficiency, therefore choosing those which had the maximum surplus of benefit over costs. For this purpose all benefits were included to whomsoever they accrued, and double counting was avoided in order to ensure that it was net benefit to the economy as a whole which was being measured. It was recognised that not all sectors of the community were gainers, but the assumption was that the greater the surpluses the more resources were available to compensate those who lost. The criterion then became: total net benefit provided that no one lost; and no member of the community worse off and at least one better off.7 This became refined to the compensation test: total net benefit provided the losers could be compensated, even if not compensated.8 A clear flaw here is the uneven distribution of income between the beneficiaries and thereby uneven distribution of utility to them: the higher the income group the lower the marginal utility of a dollar gain or loss. From this it followed that a project ranking first among options in terms of efficiency could rank lower in terms of fairness of distribution or equity. One way round this is to translate the benefit into utility and not money terms, leading to selection of the project which showed maximum surplus of total utility over cost.9

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Another consideration in distribution is to take into account the transfer payments between groups which clearly were relevant in terms of incidence and distribution, but which had been ignored on the efficiency calculation, since it was only real costs which were of interest. However this kind of 'incidence analysis' has not been fully explored in traditional cost benefit analysis. It is a feature of community impact analysis to which we come below (Chapter 15).

Decision criterion for the relation of costs and benefits From this basis it is possible to set up a schedule of comparative resource costs and benefits for the alternative conservation projects. This will enable consideration to be given to the marginal change in heritage value against marginal change in costs. Because the two sides would not be in similar units of measurement (money) we cannot adopt the conventional SCBA criteria of cost-benefit ratio, net present value or internal rate of return. But while there would be thus no absolute level of 'conservation viability' it would be practicable to compile an index of benefits measured by say a points system (10.7) as against resource costs, which could indicate relative 'value for money' and be meaningful for conservation objectives.10

Rate of discount When introducing above (7.7) discounting for the private sector we left for consideration here the more important question for our study: assuming that the arithmetical discounting by reference to a loan rate of interest is acceptable for the private individual, is it relevant for a group? In conservation, this question is more far reaching than simply finding the approximate rate of interest. It goes to the heart of conservation: how should the values of the current and future generation be compared and inter-related? It is therefore now given fuller treatment.

14.4 The social rate of discount Many arguments have been introduced against the logic of following in public sector decisions the market rates for discounting. Even in the simplest terms: would this apply to parents investing for the future with their young children in mind? Would parents discount at the same rate if

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they had no children and did not expect any? In brief, why should the 'social rate of discount' follow the private, in principle and practice? For example, whereas the individual faces a cost in the interest on a bank loan, the banker receives a benefit, and society should not be concerned with transfers; and the individual cares about after-tax return whereas society cares about pre-tax return. 11 Why should society have a discount rate which is a reflection of interest rates in the market place, which is made up of the interplay between an enormous number of investors, speculators, gamblers on futures, etc. who are looking in the main to the short term only.12 In the short term, how can individual investors reflect changing values in time over the future, particularly when the future must be seen over a long life cycle in natural resources or the built heritage? But these reservations on discounting for the public sector go beyond the question of the appropriate social rate of discount and social time preference. There is reaction against the arithmetic of the discounting technique, particularly when using the rates of interest typical of recent times, of the order of 10-20 per cent. For example, at 10 per cent the present value of regular annual payments of £1 would be £9.77 after twenty-five years but only £9.999 after 100. Thus the present value of the benefits beyond twenty-five years are arithmetically worth very little, thereby discouraging the longer-term view, as in conservation. While this might be acceptable for the shorter-term horizon of the private sector it is hardly credible in the public sector, where decisions need to be taken for future generations. On this 'It seems fair to say that there is no consensus at all on what to do about this aspect of CBA'. 13 Thus the search has been made for a more coherent alternative to simply reflecting market rates. One possibility has been the long-term borrowing rates for government, which do take a longer-term view than the market, but not all that long because government must compete in investment for borrowing savings with the private sector.14 Another is to ignore discounted values of the current generation, beyond say twenty years. Another is to assume a particularly low social rate of discount, perhaps 2-3 per cent, which implies that society values the future considerably higher than do individuals in the current generation. This retains the principle of the future being less important to the current generation than the present, without reflecting the prevailing conditions in the money and investment markets, which are due to quite different considerations. This approach is clearly of great relevance in relation to the conservation of the cultural built heritage. By definition contemporary government is taking a decision reflecting the values of distant future

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generations which runs counter to the shorter-term values of the real estate, investment and development markets in relation to the property in question. In parallel with the attempt to find a pertinent social discount rate there have been a series of robust attacks by very distinguished economists on the use by society of discounting at all. For example, 'there is no excuse for treating generations unequally' and to discount later enjoyments in comparison with earlier ones is 'a practice which is ethically indefensible and arises merely from the weakness of the imagination':15 . . . this preference for present pleasures does not - the idea is self-contradictory imply that a present pleasure of given magnitude is any greater than a future pleasure of the same magnitude. It implies only that our telescopic faculty is defective, and that we, therefore, see future pleasures as it were, on a diminished scale ... 1 6 We are interested in tomorrow's satisfaction, not in today's assessment of tomorrow's satisfaction;17 pure time preference is 'a polite expression for rapacity and the conquest of reason by passion'; 18 and 'there is no way to collect bids and offers from everyone who will ever live. In the markets that actually do take place, future generations are represented only by us, their eventual ancestors.' 19 This view is in contrast to 'whatever else democratic government reflects only the preferences of the individuals who are presumably members of the body politic'. 20 Whether or not these considerations should lead to adopting a zero social rate of discount, so that consumption per head would be 'constant through time so that no generation is favoured over any other .. .', 21 the general effect is for the social rate of discount to be lower than the private, resulting in benefits and costs for the future having greater weight than would be seen simply from using contemporary market rates of interest. Some reasons are: contemporary society should take the longer view than contemporary individuals or organisations; there is a bias towards underestimating cost in the magnitude of damage to resources and the environment; since we have no way of knowing the values of future generations it is wise to be cautious and assume that their values will be higher than those expressed in today's market-place or in government policies; it is wise also to recognise that since decisions on investment could well prove to be wrong in the future22 it is necessary to build into the analysis the irreversibility of particular decisions (building on gravel or farmland, destroying a view, etc). 23 Just what the particular discount rate should be in particular circum-

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stances comes in the end to be a matter of judgement by those taking the decision, reflecting the values they wish to adopt in this inter-generation comparison. In making the judgements, it is useful to recognise the practical implications of the various rates that could be followed, by using sensitivity tests on the outcome for society. A low social discount rate means favouring the public sector projects, so leading to more public sector projects, perhaps at the expense of squeezing out those needed from the private sector, and higher contemporary taxation, etc. in order to finance them. A high social rate of discount could result in a level of investment too low to make adequate provision for future generations, so highlighting the critique of our present urban system that we have 'private affluence and public squalor'. 24 Applying the above to conservation of the cultural heritage (built or otherwise) our general experience suggests that the pertinent social rate of discount is not adequately considered. Developers concerned with the built heritage are discounting costs and values at market rates, as in other property transactions. Since the heritage quality is a non-detachable attribute of the property, its value is also discounted at this rate. But on the above logic it should be discounted by society (i.e. government in this instance) at a lower rate or not at all. This would make for difficulties in the valuations. But it would provide a logic for government subsidy on behalf of future generations.

15 Community impact: community impact analysis

15.1

Context

We introduced above (Introductory, 13.3 and 14.2) the term 'social' to reflect that financial and economic analysis was concerned in each case with repercussions on sectors other than those who were promoting the project under consideration. But even under this connotation the range of the sectors brought in is only partial. For example in social financial analysis they exclude off-site costs not borne by the promoters; and while social cost benefit analysis is capable of handling the sectors which are indirectly affected,1 it typically does not set out to do so. But there are decision situations in which consideration of the impact on the whole community is essential, as in urban and regional planning, where the 'public interest' requires that decisions take into account the impact on all relevant sectors of the relevant community. Thus a full analysis is required which will encompass all the off-site linkages and effects which were introduced in Table IV. 1, thus including all relevant externalities and spillovers. Thus a fully social form of analysis is required. This is provided by community impact analysis. But even if social cost benefit analysis were to attempt to cover the whole range of sectors and externalities involved, it typically has the following limitations. Being founded in economic analysis it tends to have regard primarily to economic impacts and thus ignores others which are relevant, such as social and environmental, which come outside the 'measuring rod of money' and are not in the economic content of national income accounts. Being concerned with the economy, cost benefit analysis concentrates on the net change in economic output from the project and thereby

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rightly eliminates 'double counting'. It is not concerned with the distribution of the costs and benefits between the sectors. That this wider approach is entirely relevant for conservation was seen above in considering who benefits and who pays for conservation (12.3).

15.2

Evolution of the method of PBS A/CIA

The method originated around 1956, in the attempt to find a more satisfactory way of evaluating and choosing between alternative urban and regional development projects and plans as an aid to decision making. 2 Following a review of current methods which were found to be lacking for the purpose, the cost benefit approach was favoured.3 But CBA proper was found to be inadequate for urban and regional planning (relating primarily to a single sector, lack of interdependency between projects) and while social cost benefit analysis was reaching out in the right direction it was lacking as just described (15.1). Accordingly CBA was adapted into planning balance sheet analysis (PBSA) which retained the theory and principles of CBA.4 It was not until the subsequent growth of impact prediction and assessment (IA) in the seventies (which went beyond the economic impacts of cost benefit analysis to the social, natural resource, environmental, etc. impacts)5 that it was appreciated that PBSA had in fact been attempting to evaluate not costs and benefits per se but the costs and benefits flowing from this array of impacts, i.e. repercussions from the injection of the project into the system. The process of impact analysis within PBSA was somewhat in the 'black box'. PBSA was accordingly adapted and renamed community impact analysis (CIA), both in order to show that it is more comprehensive than other kinds of impact analysis (e.g. energy, transport, economic, social) and also to show that it is not simply the impact as output which is important (as in IA) but the effect of that output on people. Furthermore, since the end purpose of the impact analysis is not just assessment but also evaluation, CIA is seen as a step towards aiding choice in alternatives, that is towards community impact evaluation (CIE). 6 This distinction between analysis and evaluation is ignored in using the terms cost benefit analysis, social cost benefit analysis, or planning balance sheet analysis, even though it be understood that the purpose of the analysis is the evaluation without registering the need for the distinctive names. The distinction is thought useful in CIA/CIE.

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15.3 Some features of CIE We saw above (Introductory) features which CIE has in common with SCBA. We now turn to some of its special features. As indicated, CIE has antecedents in both cost benefit analysis and impact assessment and relies on the literature and practice in each. The two are brought together into community impact evaluation in the following way: 1 Planning balance sheet analysis follows social cost benefit analysis in aiding a choice amongst options on the criterion of the relationship between benefits (outputs/impacts) and costs (resource inputs). 2 But in contrast to SCBA, PBSA pursues the question over all relevant sectors of the relevant sectors of the relevant community, with the aim of producing a set of sectoral 'social accounts'. This necessarily involves apparent 'double counting', as in conventional book-keeping and social financial analysis. 3 In these accounts, PBSA is concerned not only with the economic impacts of SCBA but with all impacts affecting the welfare of that community, thus embracing as well social, natural environment, hazard, etc. 4 But while borrowing from the techniques of impact assessment, the purpose in CIE is different. Whereas IA is generally concerned with comparing the predicted impact with some standard as a measure of significance, CIE is concerned with evaluation in the cost benefit sense. Thus an impact of considerable significance in terms of IA might be of no significance at all in CIE, if its repercussions on people be trivial, or the differences in the repercussions as between options be only marginal. 5 In the evaluation CIE differs from SCBA in one critical respect. In the latter the impact is seen as a totality on the economy (on whomsoever the costs and benefits fall). In CIE on the other hand it is necessary to disaggregate all relevant sectors from the outset in the attempt to identify, predict, assess and measure the difference as between the options in welfare on that community sector. 6 In this regard CIE has the economic approach of SCBA in

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Economics in urban conservation that the difference in welfare is seen from the viewpoint of the community sector's own objective and not those of the analyst, decision maker, etc. 7 But just as impact prediction and assessment provides a better definition with measurement, so does impact evaluation. Accordingly while the costs and benefits must be included whether measured (or indeed measurable) or not, they should be measured where practicable. But the measurement is different from that in impact assessment where it is the magnitude and scale of the output which is generally in question, measured in some scientific terms for comparison with standards. In CIE it is the benefits or costs to people, as perceived by them, which must be measured and, if practicable, valued. 8 But unlike the usual practice in impact assessment, measurement is carried out in two cycles. In cycle 1, the impacts are measured only in respect of the data which are readily available. This may be adequate for a reasonable conclusion on evaluation. If not, from the conclusions and the feel of the analysis which has been obtained, the impacts are selected which would appear to be critical for choice between the options. It is these which are measured in cycle 2. This process thus ensures that measurement is carried out only on those impacts which are relevant to the evaluation.

15.4 Concepts of efficiency, equity and trade off in community impact evaluation Efficiency The conventional criterion for economic efficiency (net benefit or benefits minus costs) assumes that any decision unit would choose between options on its sectoral objective of maximising net benefit. This concept is applied in community impact evaluation by posing for each of the community sectors its sectoral objective, and judging which of the options they would prefer on that basis. That option is the most 'efficient' for them. It follows that if all the community sectors preferred the same option then, on the judgements made, that particular option would be the most efficient, even though the excess of benefit over cost had not been

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measured. But where sectors differ in their preference for a particular option (as they usually do) the conclusion is not clear. If we were able to measure all the impacts we could compare the actual amount of benefit less cost for all the sectors, and therefore derive aggregate efficiency for the total community. But, it is only for a limited array of costs and benefits that comparative indices in money terms can typically be obtained. For others, but not all, measurement without money valuation, or only ordinal statements, can be made. This clearly inhibits reaching conclusions on efficiency. But it does permit of comparative and perhaps ordinal rankings on efficiency, by comparing marginal outputs with marginal inputs, even though not valued or even fully measured. Equity in distribution of costs and benefits Whatever the project, its choice and implementation will result in an allocation of resources and, inevitably, as in all economic activity, a distribution to the various sectors of the costs and benefits arising from this allocation. This will have certain 'social justice' or 'equity' implications which representative bodies must consider alongside 'efficiency'. In doing so, it is useful to recognise that in urban and regional planning generally the nature of the distribution is three-fold. We illustrate by reference to transport. First comes the 'geographic' or 'horizontal'. Because the activities of the town are spread over an area, it is not possible for them to be evenly accommodated in the level of service offered. For example, some residents will have long walks to bus stops and infrequent services and others will not. Thus in choosing where to live the household will trade off the various attributes of different locations, of which accessibility by transport is one (others being proximity to countryside; availability of schools, shops, etc.; local environmental amenities). And in the trade offs, each may value differently the individual attributes of the package and its totality. And the total will be traded off against price. In this trade off comes the second aspect of distribution, 'income' or 'vertical'. In the evaluation of the package, the town's residents cannot compete evenly, because of varying income and wealth levels, access to information and professional help, etc. Accordingly low income families are disadvantaged in the competition. This leads to the third aspect where 'needs' for public transport vary. Some groups (young, elderly or infirm) are disadvantaged in that they are

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incapable of driving a car. Even if they could afford a car, this reduces their mobility and accessibility compared with a car-owning neighbour. Faced with these inevitable inequalities in distribution of costs and benefits, the authority must have regard to the issues of 'social justice' or 'equity' which arise, and the degree to which they wish to trade off conflicting efficiency and equity considerations, when making their decisions. In essence they must consider not simply value for money, but 'whose value' and 'whose money'. In seeking the help of analysis for this purpose an authority will however find that the methods of evaluating 'equity' are inadequate compared with those of efficiency. And there is comparatively little movement in them in the literature. 7 But whether the method be there or not, decision makers must necessarily reach conclusions on these aspects in their decisions; to ignore distribution and equity is also reaching a decision on them. For this, there is no general agreement on what constitutes social justice or equity, nor any method of advising confidently on the topic (as there is in efficiency); there is no universal weighting system. Some would argue that needs must be brought into the balance, some would argue for merit and some for deserts. 8 Thus decision makers must use their judgement, in accord with their own concepts of social justice. These are matters of ethics, which will vary between localities and political parties, and over time even with given parties. For the decision makers to do this, they need to know the incidence of the costs and benefits amongst various sectors of the community. On this, CIA can assist by displaying the costs and benefits on the array of sectors that are pertinent. Faced with such a display the decision makers can consider the costs and benefits by sector, and the question of whether and how they wish to trade off the option with the greatest efficiency against less efficient options which will provide a more equitable distribution, in accordance with their concepts of social justice. As indicated they cannot do so by any accepted weights, even in SCBA where the costs and benefits are all measured in money terms (14.3). It is more difficult where there are non-measurables, as in CIA. But at least they will be able to readily recognise the existence of inequality (which is inevitable) and make adjustments towards less inequality, in accordance with their individual criteria on equity.

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Trade off between efficiency and equity Having reached conclusions on efficiency and equity it is then necessary to trade off between the two in reaching the final conclusion on choice: which option would give the best mix of efficiency and equity? But since the criteria for equity are unsure, the trade off becomes unsure. This is particularly so in CIE, where the efficiency conclusion can only be indicative, because of lack of measurement and valuation. What guidelines can be offered? In the simplest case, the preference for efficiency and equity could be symmetrical, and so enable a choice to be made which would have good features for both. In practice, however, this is unlikely. Accordingly there would need to be some trade off as between the two. The simplest approach to the trade off would be to adopt provisionally the option proved best on efficiency and then consider the implications on equity. This would then lead to judgements as to whether a less efficient more equitable option might be chosen instead, bearing in mind the opportunity cost in resources and equity. But it is possible to work from equity towards efficiency. Here the choice would be made on equity, and then consideration be given to the opportunity costs in dropping from the preferred option to one of the others. In many instances, with so little certainty in the conclusion on either equity or efficiency, no recommended choice can be seen. But the CIE display would enable the decision makers to consider the implications of their choice and so reach a judgement on their preferred option.

15.5

The method of CIE

PBSA/CIE has been used over some twenty-five years to evaluate a large number of actual projects and plans in urban and regional transportation development planning. Appendix 15.1 to this chapter gives a selection unpublished and published. In this work the approach has in general been consistent and standardised, the major change being the introduction of impact assessment as just described. But it has been necessary to adapt the general method to the specific study because of variations such as the following as listed in Appendix 15.1: (1) the need to treat projects differently from plans; (2) the scale of plans (from the regional to the local);

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(3) the kind of plans (from strategy or policy to plan); (4) the content of the plans (a new town, renewal, road building); (5) different aspects of a particular kind of content (private motor-car, public transport or pedestrian crossing); (6) time and money resources available for the study (in depth to rapid assessment). Since the actual method of CIE has varied from study to study, it is not practicable to put forward a standard method, just as it would not be in respect of financial or social cost benefit analysis. But we do have the need here to put forward the method in greater detail than in financial or cost benefit analysis, simply because there currently is, outside the actual case studies, no comparable bank of readily available literature on the subject. Accordingly what is introduced is the actual method, adapted from the generalised approach, which was adopted in a recent study in conservation, in Jerusalem.9 This is one of the case studies presented below (16.3). There all three methods of analysis (Part IV, Introductory) were used. Here we show only the CIE.

15.6

15.6.1

The method applied

The case

The Old Sha'arey Tsedek Hospital was built at the close of the last century on the outskirts of Jerusalem, in what is now the centre of the city, and was used for that purpose until a replacement hospital was built elsewhere in Jerusalem, opening around 1970 (Plan 15.1). The old building was then surplus to requirements and the Hospital Board as owners wished to sell at the best price, as a contribution to the heavy costs of the new hospital. For this purpose they entered negotiations with a development company, who proposed to demolish and use the site for flats. However the Municipality of Jerusalem wished to see the building conserved because of its importance in historical terms in the growth of Jerusalem and its modest qualities as an example of the then contemporary Turkish architecture. As a result of these two conflicting pressures, protracted negotiations have taken place between the landowners/developers and the Municipality, with several options being designed which would leave the Hospital building for another use (bank, hotel, museum), and enhance it by means of surrounding open space, with the remainder of the site being available for flats.

Plan 15.1 The old Sha'arey Tsedek Hospital: Jerusalem: location plan

Plan 15.2 The old Sha'arey Tsedek Hospital site: Jerusalem: rehabilitation scheme Note: Based on design by Y. Allon

M

New Building - Residential

Plan 15.3 The old Sha'arey Tsedek Hospital site: Jerusalem: redevelopment scheme Note: Based on design by Y. Allon

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Table 15.1 Comparison of land uses in Sha'arey Tsedek: Options A and B Dunams

A Total land area 3.9 Less road widening Less new N-S road 3.0 Hospital building 3.0 Open space 3.5 Total For residential purposes On which residential development (in thousand m2) On which density Floor area index (FAR )is

(4 dunams to 1 acre) B 24.6

24.6

3.9 3.0 2.94 13.5 11.1

(55%)

9.84 (40%) 14.76

24.0

29.0

216.0

200.0

While based on the above facts, the study presented here was not commissioned by the parties but used as part of wider research. The planning and real estate aspects of the case are naturally grounded in the complex Israeli practice. But this for our purpose need not concern us.

15.6.2

The options

For the purpose of demonstration of the analysis of rehabilitation/redevelopment issues two options were formulated (Plans 15.2 and 15.3): A: retention of the hospital building and grounds with adaptation to a municipal Natural History Museum and provision of high rise apartments on the remaining land; B: demolition of the building with the retention of some open space by the City with the remainder of the site covered by flats. The resultant land uses are as shown in Table 15.1

15.6.3

The method in summary

The CIE method is presented below (15.6.4) by reference to a series of tables, 15.2 through 15.10. These show the sequential steps leading to the evaluation itself (15.9) and its summary (15.10). In order to assist the somewhat complex presentation, we here show in a master table (15.2) how

Table 15.2 Master table ofCIE showing source of input to Table 15.9 Ranking Option B compared Project Impact Impact Sectoral Unit of with Input • table No. Description No. variable type description objective measurement option A Community sector

Preference against Preference sectoral for sector/ Nonobjective sub-sector Probability significance 10

15.3 15.4 15.5 15.6 15.7 x 15.8 x

X X

X

X

X

X

X

X

X

X

X

X

Notes: The x shows the input from tables at left.

11

12

13

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Economics in urban conservation

the evaluation Table 15.9 is made up by inputs from the preceding tables. Table 15.2 itself follows the form of Table 15.9. In the first column are listed the intervening six tables, with an (x) in each of the other columns as appropriate to show how these tables are fed into the final evaluation Table 15.9. 15.6.4

The community impact analysis and evaluation

Framework for change Tables 15.3 and 15.4 follow Table IV. 1 in summarising what currently exists on the site and what will exist on the completion of the project. The tables enable us to explore the wider ramifications on and off site for rehabilitation and redevelopment respectively. They show the project elements in the rows (categories 1-4) and in the columns the current situation (1) and the three stages of the development process (displaced, construction and on completion) (2-4) and then the changes from the current situation (column 1) of those sectors (columns 5, 6, 7). The (x) indicates where appropriate entries are made in the columns, with a dash (-) in the change columns to indicate 'no change'. What exists on the site, and will exist on completion of development, are shown in the rows under category 1 of the project elements (on site) and in rows 1 (current) and 4 (completion). Entries for the remainder of the columns and rows show the remainder of the repercussions. In category 2 there is the on-site activity; this is zero for the current situation (the hospital having been vacated) but with activity under each of the items on completion, namely total population on the site, those concerned with production in the Museum, those concerned with consumption in the flats, Museum, open space, and in visiting the cultural heritage. These activities have off site linkages in category 3, being the relationship of the site to the remainder of the city in terms of transport, communications, utilities and urban services. And these activities and linkages will have off-site effects, in category 4, such as economic (creation of employment); social (educational facilities); movement (generation of traffic); environmental (acting as a fresh air lung and offering visual impacts); and risk/hazard (arising from the traffic). In addition to columns 1 and 4 there are two intermediate situations. The first, in column 2, describes the elements in the four categories which would be displaced from the site because of the new project. And in column 3 is the construction that would take place on the site, in relation to each of

Table 15.3 Framework for change Option A (rehabilitation) Project elements

1. On site Land Buildings: Hospital Huts Flats/car parks Roads Infrastructure 2. On site activity Population Production Consumption F - Residents NHM - Visitors OS - Visitors NH - Tourists 3. Off site linkage Transport Communications Utilities Urban services 4. Off site effects Economic Social Movement Environmental Risk/hazard

Current (post hospital)

Change from current 2-1 3-1

Displaced

Construction

On completion

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

-

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

4-1

X

X

X

X

Notes: x : entry in table showing project ramifications. - : no change in change columns 5-7. A blank conveys 'no ramification'.

X

Table 15.4 Framework for change Option B (redevelopment) Project elements

1. On site Land Buildings: Hospital Huts Flats/carparks Roads Infrastructure 2. On site activity Population Production Consumption F - Residents NHM-Visitors OS - Visitors NH -Tourists 3. Off site linkage Transport Communications Utilities Urban services 4. Off site effects Economic Social Movement Environmental Risk/hazard Notes: x

Current (post hospital)

x x x x

4—1

x x x

x x -

(-) x x x

(-) x x x

x x

x () x () x ()

-

x (-) x (-) x (-)

x (-) x (-) x (-)

x x x

x x x x

-

x x x -

x x x x

x

x x x x x

x x x x x

x x x x x

Construction

On completion

(x)

(x) x x x x

()

x x

x

Change from current 2-1 3-1

Displaced

x

entry in table showing project and its ramifications. no change in change columns 5-7. where entries differ from those in Table 15.3 (in nature of impact, not type).

x x x

x

Community impact: CIA

265

the project elements, following displacement through to completion of the finished project. This leads to the identification in the final three columns of the changes from the current situation, column 1, which the project will bring about: through displacement (5); through construction (6); and on completion of the new project (7). In Table 15.4 we have the same picture presented for Option B, redevelopment, as for Option A, rehabilitation. As can be seen, in most essentials the entry in the cells is the same. But there are differences in respect of elements in group 1 and 2, which are shown in brackets, for ease of identification. Impact identification from the project variables Tables 15.3 and 15.4 present a snapshot picture of the repercussions of the two Options A and B. But they do not convey just how these are brought about. This is presented in Tables 15.5 and 15.6. In the left hand column of each table is itemised the three project variables, namely the elements in the completed projects which will introduce change from that which exists. These elements are new roads (1), current buildings and spaces (2), and new buildings and places (3). Against each of these elements is shown by a cross (X) where the impacts will be experienced through displacement, construction or operation (following completion). The impacts themselves are divided into four (as in 15.4 above): (1) Direct (D) on the site itself; (2) Indirect (I), as where a tall building will rob light from an adjoining site or provide noise on it; (3) Associated Real (AR) where the project will give rise to real (technological) increases or decreases which change total volume of activity (e.g. generated factory or tourist employment adjoining a new road or a risk/hazard from an airport which would discourage nearby activities through fears for safety); (4) Associated Financial (AF) where the activity of the proposal will diminish the activity from elsewhere without increasing or decreasing total volume of activity and so result only in a financial (pecuniary) change. A perusal of the tables brings out the incidence and range of impacts from

Table 15.5 Impacts from project variables: Option A

(conservation) Impacts from Displacement

Project variables

1.

Roads:

2.

Current buildings and places:

3.

New building and places:

Widening New Huts Hospital as NHM Grove Flats and car parks

D

I

X X X

X X X

Notes: X shows cells where there are impacts. (X) shows cells where there are impacts not common with Option B.

AR AF

Construction D

I

X X X X

X X X X

X

X

AR AF

X

Operation D

I

X X

X X

AR

AF

X X

(X) (X) (X) (X) (X) (X) X X X X

Table 15.6 Impacts from project variables: Option B

(redevelopment) Impacts from Displacement

Project variables D 1.

Roads:

2.

Current:

3.

New building:

Widening New Huts Hospital as NHM Grove Flats and car parks Open space

I

X X X X X X (X) (X) (X) (X)

Notes: X shows cells where there are impacts. (X) shows cells where there are impacts not common with Option A.

AR

Construction

AF D X X X X

I

AR

X X X X

X X X (X) (X)

Operation

AF D X X

I X X

AR X X

X X X X (X) (X) (X)

AF

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Economics in urban conservation

the project variables. And a comparison brings out the differences (shown by ()), stemming from the differences in the elements and the options. A major instance is the displacement of the hospital, and the absence of the Natural History Museum, in B.

Identification of community sectors Having identified the impacts from the project variables, we now need to show the community sectors on which they will fall, in either Option A or B. These are presented in Table 15.7. There could be several ways of enumerating the relevant community sectors. The approach favoured here is to ensure comprehensiveness in the enumeration by distinguishing between those who are responsible for producing and operating the development in question and those who will be concerned with consuming the services which it creates. Based on this approach, the table enumerates the producers/operators on the left hand side (with odd numbers) against which are paired (as far as practicable) the consumers on the right hand side (against even numbers). It will be seen that sectors 1-7 are producers/operators on the site itself, whereas sectors 9-15 are those concerned off site. This is paralleled by the consumer sectors, with sectors 2-8 being on site and sectors 10-16 being off site.

From this table it is apparent that functionally the impacts are very widespread. They are made up of at least the following: (a) the central area of Jerusalem, since the site adjoins the central area; (b) the City of Jerusalem as a whole, since its people will come as visitors to the Natural History Museum and also to the open space to be provided; (c) nationally and internationally, since the Museum will be visited by those concerned with the Israeli cultural heritage. From the preceding it follows that it is not possible to define a geographical boundary to the community which is affected by the development of the hospital site. It is a functional rather than a geographical community. But nonetheless there is a geographical definition to the decision maker who is concerned with the development and planning implications of what happens on the site, including the conservation of the heritage and the payment of betterment tax. This is the Municipality of Jerusalem in the

Table 15.7 Community sectors and options in which they are involved

No. 1 3 5

7 9 11

13

15

Producers/operators

Consumers

Sector

Sector

Description

Option

Current landowner on site Developer/financier: Flats/car parks Municipality on site: (1) roads/utilities (2) NHM (3) Grove (4) open space Government on site: National heritage Municipality off site: roads/utilities Other landowners: (1) adjoining (2) elsewhere Jerusalem economy: (1) employers/firms (2) urban services Government budget

AB AB

No. 2 4 6

AB A A B A

8 10

AB 12 AB AB 14 AB AB AB

16

Description

Option

Current occupiers of site Residents in flats Users of site: (1) traffic on site (2) visitors to NHM (3) visitors to Grove (4) visitors off site (5) passers by Tourists and visitors to NHM Traffic: (1) to site (2) general Other occupiers: (1) adjoining (2) other Jerusalem economy: (1) labour (2) nearby residents - air - visual (3) downtown users (4) users of urban services Taxpayer

AB AB AB A A B AB A AB AB AB AB AB AB AB AB AB AB

Table 15.8 Summary of impacts on completion of Options A and B Sector

Summary description of impact

Project

Impact

variables

type

No.

Name

Option A

option B

1

New roads

D AR AR AR D AR AR AR

2

Current buildings

5(1) 9(1) 11(1) 13(2) 6(1) 10(l)&(2 ) 12(1) 14(4) 5(2) 5(3) 5(4) 7 13(1) 15 6(2) 6(3) 6(4) 8 14(1) 14(2)

Municipality on site Municipality off site Adjoining landowners Urban services Users of site Traffic Adjoining occupiers Users of urban services Municipality on site Municipality on site Municipality on site Government on site Jerusalem employers/firms Government Visitors to NHM Visitors to Grove Visitors to open space Tourists/visitors to NHM Jerusalem workforce Nearby residents

More roads More accessibility More accessibility More accessibility, more users Traffic noise More accessibility Increase in accessibility Increase in accessibility New museum New Grove New open space Retain CBH More business

v= v= v= v= v= v= v= v= -V

DAF D D D AR AF AF D D AR AR I

Change in

Enjoy new NHM Enjoy Grove Enjoy open space Enjoy national heritage Jobs in NHS and space Enjoy fresh air and visual impact

-

v+ V V V-

3

New buildings

D D AF AR AF AF AR I AR

1/2 3 5 11(1) 11(2) 12(2) 13(2) 4 14(1)

Landowner and occupier Developer Municipality on site Landowners adjoining Landowners elsewhere Occupiers elsewhere Jerusalem urban services New residents Jerusalem workforce

I AR

14(2) 14(3)

Nearby residents Downtown users

AF

14/16

Government/taxpayer

Notes: Change of impact in Option B shown: V = : same kind V - : less V+: more V : new none

Increase site value Increase profit Betterment tax Increase land value Increase land value Maintain value of flats Increase business locally New access in central location Increase employment in flats and servicing cars Increase environmental attraction Increase enjoyment through activity at night Increase income from Sha'arey Tsedek Hospital site

v+ V-

v+

V-

v+ v+ v+ VV-

v+

Table 15.9 Evaluation of options (on completion) Community sector Impact type

Sectoral objective

Units

B-A

Preference for Subsector Sector

No.

Description

No.

Project variables

1

2

3

4

5

6

7

8

9

10

1,2,3

D

£

—

A

A

3

D

Increase land value (net of betterment tax) Increase development profits

£

+

B

B

1 2 2 2 3

D D, AF D D AF

More municipal services -do-do-doMore betterment tax

0 -

= A A B A

1 3

5

PRODUCERS/OPERATORS Current landowner of site Developer/financier Municipality on site (1) Roads/utilities (2) NHM (3) Grove (4) Open space (5) New flats

£

+ +

Preference for Sector 5

7 9 11

Government on site National heritage Municipality off site Other landowners (1) adjoining (2) elsewhere

2 1

D AR

Conserve heritage Reduce traffic congestion

3 3

AR AF

Increase land value Increase land value

£ £

0

A =

0 —

= A

0 -

A = A B

A A A =

Preference for Sector 9

13

15 2

Jerusalem economy (1) Employers/firms (2) Urban services

2,3 1 2 3

AF

Government budget CONSUMERS Current occupiers of site

AR AR AR AR

1,2,3

D

More business More accessibility More business More business Preference for Sector 15 Greater financial contribution to Sha'arey Tsedek Hospital from landowner Minimise disturbance

+

N/C A

4 6

Residents in flats Users of site (1) traffic on site (2) visitors to NHM (3) visitors to Grove (4) visitors to open space (5) passers by

Secure flats in good location 1 2 2 3 3

D AR D D F

2

AR

Enjoy the cultural built heritage

AR AR

Reduce congestion Increase accessibility

Minimise traffic nuisance Enjoy NHM Enjoy Grove Enjoy new open space Enjoy new view over town

A A B B A A

Preference for Sector 6

8 10

Tourists and visitors Traffic (1) to site (2) general

Preference for Sector 10

12

Other occupiers (1) adjoining (2) elsewhere

2,3 2,3

AR AF

Increase occupation value Maintain occupation value Preference for Sector 12

14

Jerusalem economy (1) workforce (2) nearby residents air/visual (3) downtown users (4) users of urban

2,3 2,3

AR F

2,3 2,3

AR AR

2,3

AF

Greater number of jobs Greater environmental attraction Greater interest Greater accessibility Preference for Sector 14

16 Notes:

Taxpayers Col. 7 8

: :

9 9& 10

: :

the gap shows measurement other than in £ +, B is better than A —, B is worse than A 0, B equals A ?, non-certain A & B are equal N/C, preference not certain

N/C A A B N/C A

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Economics in urban conservation

first instance, with the State of Israel in the background. The latter comes in on at least three respects: a It has a stake in the definition of the nature of the cultural heritage in the country and would have views on the justification for including the Hospital in the inventory of the cultural heritage, b Insofar as it provides the bulk of the finance for the Municipality of Jerusalem, it is concerned with the financial repercussions on the Municipality of its decision, c As a provider of funds for the move of the hospital from its former site to its present new building, the government is interested in seeing the Hospital Board realise money from the site as a contribution towards the debt incurred by the hospital move.

Summary of impacts on community sectors In Table 15.8 is summarised the predicted impacts by type, from the project variables'by type, which are drawn from the impact analysis (which is not included here). Each impact is related to the community sector on which they fall, indicated by number and name (from Table 15.7). From the table heading it is seen that only the impacts in the third phase of the project (operation following completion) are shown, and not those relating to displacement and construction. That is because in this case the displacement in the two options is similar, except for the significant difference of the hospital which is retained in Option A and removed in Option B (the grove and open space in the options respectively are largely substitutes); and there would also be great similarity in the impacts in the construction phase, in character and volume. Accordingly, the impact description and evaluation for these two phases would only complicate the description without adding much to the evaluation. A summary is given in the table for Option A. As regards Option B, the difference in the impact is presented by a notation showing whether it is of the same kind (and equal, less or more in size); whether it is a new impact; and whether there is none at all.

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275

Impact analysis and evaluation (on completion of project) All the preceding analysis is a preliminary to the critical next step, which is the evaluation of the impacts, presented in Table 15.9. This is introduced only for that third phase of the development, completion. The table follows the conventional form of community impact analysis by showing from Table 15.7 separately for producers/operators and consumers the community sectors (columns 1 and 2) with a third column to indicate the number of individuals in each community sector where this is relevant (not shown here). For each sector is picked out in column 4 the project variables and in column 5 the impact type (from Tables 15.5 and 15.6). In the master Table 15.2 the next column is impact description. This, for ease of presentation, is read from Table 15.8, which in itself is a summary of the relevant impact analyses (which are not presented here). It is in respect of these impacts that column 6 introduces the objectives of that sector. These are presumed by the analyst, from common knowledge, to be the objective by which each of the sectors will judge its preference as to the impacts produced as between the options. They are adopted in this way as hypotheses simply because to establish them with more authority would require a considerable amount of survey and investigation, which would hardly be justified on this project. Column 7 shows the units by which the impacts have been measured. Column 8 is the heart of the evaluation. For each option, each sector is notionally asked the same question: how would the particular community sector (column 2) judge, according to its sectoral objectives (column 6), the impacts on that sector (Table 15.8) which come from the project variables (column 4)? In each case the question is asked by comparison of the state on completion of Option B with completion of Option A. Where the sector is reckoned to perceive an improvement the result is shown by a (+) (better), where a deterioration by a minus ( - ) (worse), and where no difference by a zero (0). The reasons for the conclusions in column 8, and how they are derived from the preceding columns, is presented in an explanatory text. Because of its length it is not reproduced here. The conclusions from the scorings in column 8 lead to the indication of the preference for the option in column 9. This is shown as A or B, or by an equals sign (=) where they correspond, or a non-certainty (N/C) where the comparison leads to no clear result in that particular instance. In this way

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Economics in urban conservation

Table 15.10 Conclusion on options from Table 15.9 (completion) PROD UCERSIOPERA TORS 1 3 5 7 9 11 13 15

Landowners Developer/financier Municipality on site Government: national heritage Municipality off site Other landowners Jerusalem economy Government budget

A

B

V V V V V V

CONSUMERS 2 4 6 8 10 12 14 16

Current occupiers on site Residents in flats Users of site Tourists and visitors Traffic in general Other occupiers Jerusalem economy Taxpayer

-

V

V V V V

Notes: V , preference from Table 15.9 - , A & B equal ?, preference not certain.

the conclusions on the options are shown for each sector. But in some cases, where more than one project variable affects a particular sector, there will be differing entries (e.g. sector 5, municipality on site). Here a summary is attempted in column 10.

15.6.5

Conclusions on efficiency Efficiency

A perusal of Table 15.9 shows that in the preference column 9 there are many scores for each of Option A and Option B, with some shown as N/C. Thus it is not easy from this table to form a clear conclusion as to the preference between the options. Accordingly a summary table is prepared, Table 15.10. This is a simplified version, listing the various sectors under producers/operators and consumers and then transferring, in two columns for Option A and B, the conclusions from column 9 of the previous table. The preferences are shown by a tick (V), the neutrals by a dash (-) and the non-certains by a question mark (?).

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277

A perusal of this table enables the following conclusions to be drawn on the evaluation of the options at the completion stage. These are: producers! operators

For Option B the only advantaged sectors are developer/ financier (3). This apart, all the others would favour Option A, except for neutrality of the Municipality off site (5) and the uncertainty of the Jerusalem economy (13). consumers

The only sectors favouring Option B are the new residents in the flats (4). All the others would favour Option A, apart from the current occupiers of the site (2), who are neutral (since the site is vacant) and again the Jerusalem economy (14). In summary, leaving aside the uncertainty of the Jerusalem economy (13 and 14) those who would favour Option B would have a financial advantage (3) and potential residents in the flats would favour the larger number (4). As against these sectors we have the large number of producers and consumers who would favour Option A. Thus the question arises: Do their preferences outweigh the preferences of those in favour of Option B? The financial implications for the developer and financier (3) of adopting Option A are in themselves not of material significance. While they would lose the possibility of maximum investment (and profit) on the site, their profit margin would be of the same ratio. And presumably the shortfall in absolute profits would be made up by other projects. Equally, while the residents of the flats (4) would lose some (but not all) choice of flat on this site, with the given demand the losers could be accommodated elsewhere, although perhaps not in such a central location. On the whole, the advantages lost to potential beneficiaries of Option B through pursuing Option A would not appear to be so great as to outweigh the advantages to the more numerous sectors who could obtain benefit from Option A. Of the 'certain' sectors, Option A is preferred to Option B. We now come to the uncertainty of the Jerusalem economy (13 and 14). This is shown uncertain because of the countervailing preferences for Options A and B between the different items shown. Greater precision could be obtained on this item were further research work to be undertaken, in terms of more precise identification and measurement of the impacts from the project variables. Indeed this example illustrates the role described above (15.3) of such research and measurement in community impact evaluation: readily available data are used and no further survey is

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Economics in urban conservation

carried out at the outset of the analysis. This is done when the provisional conclusion reveals certain impacts from which judgements cannot readily be formed, which are significant for the conclusion, on which therefore further research in terms of time and money is justified. In this case the judgement is made that since this project is but a small one in the totality of Jerusalem economic and social life, differences one way or the other would not be material and are not sufficient to overturn the conclusions just drawn as to the preference for Option A. The evaluation so far has been in terms of the preference of the individual sectors for the option of advantage to them seen in terms of their sectoral objectives. This can be interpreted as the option which gives them the greater net benefit in terms of their sectoral objectives. In these terms, Option A has the greater efficiency.

Equity However, this conclusion does not give an answer in terms of equity, that is in accordance with the principles of social justice which should be also considered by public authorities alongside the conclusion relating to efficiency. But whereas with efficiency there are well known rules for analysis and recommendation (generally speaking the greatest margin of outputs to inputs, or net benefit) there are no such readily accepted rules for equity (15.4). And thus the equity rules which prevail are very much a matter of political persuasion of the decision takers at the time, which can clearly vary from place to place and from period to period. In the absence of such rules reliance must be placed upon the judgement of those concerned with the decision, in accordance with the principles of social justice which they adopt for the problem and situation in question. In these circumstances all that the analyst can do is to present the facts, to bring out the equity implications of the efficiency judgements, or just leave the decision on equity to the decision makers. On this the facts are apparent from Table 15.9. The community preference on efficiency is clearly for Option A, namely conservation. This would leave at a disadvantage only the two sectors picked out in the table as favouring Option B, namely the developer/financier (3) and the residents in the flats (4). The question thus arises: would the inequity to these sectors for adopting Option A be so great as to outweigh the conclusion in favour of Option A in terms of overall efficiency? On this the answer has been suggested above in considering the

Community impact: CIA

279

conclusion on efficiency. The loss to the developer/financier (3) is in not being able to make as much profit as could be obtained in Option B on this particular site; and whereas the developer/financier could understandably wish to maximise profit on any site on which he secures the appropriate permissions to proceed, this is hardly a severe hardship in community terms. And equally with the residents of the flats on the site (4). The fact that under Option A they would obtain 5,000 sq. metres less than the provision in Option B, can hardly be regarded as a hardship, since the frustrated individual families can certainly obtain alternative flats in appropriate places elsewhere in Central Jerusalem.

Trade off between efficiency and equity This is a situation where the more efficient solution is also the more equitable. Put another way, were Option B to be adopted rather than Option A, there would clearly be not only a less efficient solution but also a less equitable.

Overall This is given below (16.3) where the conclusions also from the other three methods of analysis are introduced (Chapters 13 and 14).

Appendix 15.1 Selected published examples of planning balance sheet/community impact studies The studies are grouped by name according to the categorisation introduced above (15.5). Their bibliographic references then follow, indicating in the margin the authorship and the date of publication:

(1)

(2)

NL Nathaniel Lichfield NLA Nathaniel Lichfield & Associates NLP Nathaniel Lichfield & Partners Plan Israel West Midlands Limerick Edgware

1971 1971 1967 1968

Project Nottingham Third London Airport Morocco

1967 1969 1977

Scale of plan National Regional Local

Israel West Midlands Ipswich Barnstaple

1971 1971 1970 1981

281

Community impact: CIA (3)

Kind of plan Strategy Policy Plan

(4)

Content New Towns Urban renewal Roads

Conservation

Shopping

(5)

Different aspects Transport Modes Airports

of

Israel Scotland Dublin Limerick Edgware Barnstaple

1971 1978 1980 1967 1968 1981

Ipswich Peterborough San Francisco York Nottingham Worthing Barnstaple Jerusalem Jerusalem Cribbs Causeway Stonebridge

1970 1969 1962 1974 1967 1966 1981 1986 1986 1971 1973

a

particular

Third London Airport East Midlands York Manchester

Motor-cars Public transport Public vs. private transport Stevenage Pedestrian crossing general Accessibility and environment in redevelopment Newbury (6)

Time and resources Within one month In depth over three years

kind

Ipswich Manchester

of

content 1969 1980 1974 1983/84 1969/71 1980 1963

1970 1984

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Economics in urban conservation

NL

1962

NL

1963

NLA

1966

NLA

1967

NLA

1967

NL

1968

NLA

1969

NL

1969

NLA

1969

NL

1970

NL

1971

NLA

1971

NLA

1971

Cost-benefit Analysis in Urban Redevelopment: Research Report 20. Real Estate Research Program, Institute of Business and Economic Research (Berkeley: University of California). (with Crompton, D. H.) Cost benefit analysis and accessibility and environment. Traffic and Towns (Buchanan Report) Appendix 2 (London: HMSO). Worthing: Cost Benefit Analysis of Alternative Road Proposals (Unpublished). Alternative Strategies, Report and Advisory Plan for the Limerick Region, Vol. 2, Part XII (Dublin: Stationery Office, 1967). E. Mitchell & Sons and Arthur Ling & Associates, Nottingham: Cost Benefit Analysis of Alternative Sets of Road Proposals Affecting Plans for Redevelopment, Vol. 1 (Unpublished). (with Chapman, Honor) Cost-benefit analysis and road proposals for a shopping centre: a case study: Edgware. Journal of Transport Economics and Policy, 2. Cost benefit study, Commission on the Third London Airport: Evidence Submitted at Stage HI to the Roskill Commission by Cambridgeshire and the Isle of Ely, Essex and Hertfordshire County Councils, ch. 14. Cost-benefit analysis in urban expansion: a case study: Peterborough. Regional Studies, 3. Stevenage Public Transport: Cost Benefit Analysis, Vols. 1 & 2 (Stevenage: Development Corporation). (with Chapman, Honor) Cost-benefit analysis in urban expansion: a case study: Ipswich. Urban Studies, 7. Evaluation of the hypotheses, in Israel's New Towns: A Development Strategy, Vol. 1, Ch.ll (State of Israel, Ministry of Housing). Cost benefit analysis (planning balance sheet) evaluation of alternatives, in A Developing Strategy for the West Midlands: Report of the West Midland Regional Study, Technical Appendix 5 (Birmingham: The Study). Comparative planning analysis with and without Severndale: Proof of Evidence submitted to Local Planning Inquiry

Community impact: CIA

NL

1971

NLA

1973

NL

1974

NLP

1977

NLP

1978

NLP

1980

NLP

1980

NLP

1980

NLP

1981

NLP

1984

NLP

1983

NL

1986

283

on the Proposed Severndale Shopping Centre, Cribbs Causeway, Bristol (Unpublished). (with Chapman, Honor) The urban transport problem and modal choice. Journal of Transport Economics and Policy, V. Comparative planning analysis with and without the Stonebridge Shopping Centre. Proof of Evidence, submitted to Local Planning Inquiry into the Proposed Stonebridge Shopping Centre, Bickenhill, Warwickshire (Unpublished). (with Proudlove, A.) A planning balance sheet analysis of six alternative routes in Conservation and Traffic. Appendix B (York: Rowntree Trust). (with W. S. Atkins & Partners) Costs and benefits of the programme from a national viewpoint in Morocco: Economic Opportunities Associated with the Steel Complex (Unpublished). Planning Balance Sheet Analysis of Alternative Oil-Related Industrial Strategies, Scotland (Unpublished). Towards a Shopping Policy for the Dublin Sub-Region (Dublin City Centre Business Association). East Midlands Airport Runway Extension: East/West: Assessment and Evaluation of Environmental and Economic Impacts (Unpublished). (with Department of Civil Engineering Transport) Imperial College, Pedestrian Crossing: Application of Social Cost Benefit Analysis (Unpublished). Barnstaple Town Centre Study: Evaluation of the Strategic Elements of the Options (Barnstaple: North Devon District Council). Achieving Value for Money in Public Transport: Community impact evaluation in the GMPTE Second Three Year Public Transport Plan: Report No. 6 (Greater Manchester Transport). Achieving Value for Money in Public Transport: Report No. 2: Trafford Park Case Study, Vol. 1, 2 & 3 (Greater Manchester Transport). (with Schweid, Joseph) Case study: the Old Sha'arey Tsedek hospital, in Conservation of the Built Heritage, Part

284

NL

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III (Jerusalem: The Jerusalem Institute for Israel Studies) (Hebrew). (with Schweid, Joseph), Case study: Nahalat Shiv'a in Conservation of the Built Heritage, Part III (Jerusalem:

The Jerusalem Institute for Israel Studies) (Hebrew), 1986.

PartV Case studies in the economics of conservation of the CBH

Case studies in the economics of conservation

287

Summary In this part we present a summary of a number of actual cases in the conservation of the CBH, in which the tools of economic analysis described above (Chapters 13-15) have been applied as an aid to reaching decisions on the conservation project. From amongst the welter of property involving conservation issues, both in plan preparation and also in project development, four have been selected on the following criteria: (a) well documented, and therefore providing data in the studies; (b) familiarity with the issues; (c) illuminating a variety of conservation issues which are of significance for this book, in some logical sequence as follows: (1) Central Buildings, Southwark, London, a mid-nineteenthcentury hop auction market. This shows how financial analysis can be used to test the financial viability of continuing occupation of a historic building while retaining the heritage quality. (2) Royal Holloway Sanatorium, Surrey, a late nineteenth-century hospital. This starts with a decision that continued occupation for the current use was not viable, so that it would be necessary to adapt the building to a new use. The issue is then how to test through financial analysis the viability of alternative uses that are proposed, in order to show which have the economic potential for sustaining continued life in the building. (3) Sha'arey Tsedek Hospital, Jerusalem, a nineteenth-century hospital. Based on the case details introduced above (15.6) the issue is discussed: how to decide between redevelopment or rehabilitation. The answer to the question was sought through four kinds of tests: financial analysis to the prospective developer; social financial analysis for all parties directly involved; cost benefit analysis in terms of real resources; community impact analysis for repercussions on the community. (4) Covent Garden, London, an area of some 100 acres. Here comprehensive redevelopment was justified by financial analysis, with piecemeal redevelopment being less attractive to the promoters. But it was shown by planning balance sheet

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analysis, the earlier name for community impact analysis, that area-based rehabilitation was more beneficial for the community as a whole. Each study is presented in turn with some but not complete consistency, to show the: (a) case; (b) issue; (c) analysis adopted; (d) findings from analysis; (e) conclusions of relevance for conservation.

16 The case studies

16.1

Case study 1: viability for occupation1

The case Central Buildings, Southwark, London, was built around the middle of the nineteenth century, in twelve storeys including a double basement. It was originally used as a hop auction market, containing for the purpose a domed balconied well from ground floor to the roof, rising 115 ft. through the full ten floors above ground. Around 1920 it suffered severe damage by fire, and in World War II from bombing. As a result of the demolition following the fire and the bombing there were only between four and six floors left, including the double basement. As a result it had lost much of its original architectural quality. The issue Around 1970 the owners were faced with a problematic building. There was no longer any call for the original use; the fire, bombing and subsequent adaptation had resulted in a large central gallery with small suites of offices situated around its remnants; the cellars were of little use in contemporary conditions; maintenance costs were high, because of age, fire, wartime bombing and running sand and water 12 ft. below pavement level. As a result the owners were considering redevelopment. But in March 1970 the building was spot-listed as Grade II, with particular reference to its facade, internal galleried court and ironwork. This reinforced the powers of control against redevelopment already afforded by the inclusion of the building in a conservation area. Redevelopment was accordingly resisted by the authorities.

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Economics in urban conservation

The study The owners commissioned reports from consultants into the following alternative courses of action: (1) retain all features of historic and architectural interest, repair and modernise and add three floors at the western end of the building; (2) rebuild behind the existing facade, to comprise a new office building with ground and five upper floors, and basement car park; (3) demolish and rebuild to provide accommodation similar to option 2. Amongst the studies only one is of relevance here: relating to the economics of continuing to use the existing building. In this inputs were provided from the other consultants, the architects, quantity surveyors, structural engineers and estate agents and valuers. In essence the report investigated the following: the actual expenses and rents in the years 1968-72; the forecast expenses and rents from 1973 to 1990, on three alternative assumptions on rent rises (3 per cent, 6 per cent and 10 per cent). The expenses included depreciation and insurance of equipment, rates, repairs, staff wages and insurance, general expenses, heat and light, administrative and professional fees (all net of those which could be recovered).

Findings In essence the study showed that while for the years 1968-71 there had been a surplus of rents over expenses, there was an actual loss in 1972 and predicted loss from then on. To put the options on a comparable basis, the total losses before tax (discounted to 1972 at 1970 prices) were estimated, amounting to £50,000 on the assumption of 10 per cent increase in rents, £115,000 at 6 per cent and £155,000 at 3 per cent. Accordingly, even taking the most favourable profile for rent increases, the building would steadily and increasingly cost more to run than the rent income. From this it was apparent that no authority could expect an owner to maintain the building from 1972 onwards in its then condition. If they did

The case studies

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the owner would be forced to abandon it to avoid a steady financial drain. By so doing he would not be keeping the heritage qualities of the building in existence, so that there would inevitably be some absolute loss to the heritage. This would also come about if Option 3 were pursued, namely demolition. Thus there was a trade off between the greater or lesser retention of the heritage qualities in Options 1 and 2. In the event, permission was given for new floorspace which enabled the interior of the building to be kept as well as the facade (Option 1).

Relevance to conservation To establish that a heritage building is non-viable as it exists, and therefore requires financial support, it is necessary to show that its continued use without support could only be run at a loss, not only at the time but in the future; and that a development option existed which could produce viability while retaining quality.

16.2 Case study 2: the Royal HoUoway Sanatorium, Virginia Water, Surrey2

The case The Royal HoUoway Sanatorium was built in the 1880s and opened in 1884 for the treatment of mental illness. Tremendous care and study went into its design, so that it is an exceptional example of late Victorian architecture, standing in some 23 acres (Plan 16.1). In 1981 the original buildings were listed Grade I, that is 'of exceptional interest' (5.2.3), there being (1985) only 5,750 in England and Wales out of a total of some 368,000 listed buildings.3 Most but not all of the remaining buildings are subsequent and inferior in character and so dispensable. To the south of the main building lies a cricket ground and gardens which provide a splendid setting for it.

The issue In 1980 the owners of the Sanatorium, the South West Thames Regional Health Authority, decided to discontinue its use for the purpose, in accordance with the reorganisation of the National Health Service, and gave instructions for its disposal. Since there was clearly no market for the

Site Boundary Retained Buildings Demolished Buildings

?m

New Building

USES A

Office

B

Residential

P

Parking

_-•.—-

10

10 0

Plan 16.1 The Royal Holloway Sanatorium, Virginia Water: current block plan : Based on drawing prepared by Hunter & Partners

30 20

50 metres 40

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293

former use, it was necessary for the purpose of the disposal to obtain a planning consent for a new use, in order to establish the potential value. For this purpose applications were made in 1982/83 to the local planning authority. They favoured residential, by conversion of the main building and new sheltered dwellings to the north, because they feared that employment use would create pressure for housing in the local green belt. But they were aware that such use for the main building would not generate sufficient value to ensure its upkeep and maintenance into the future. They were prepared to consider offices which although against policy was the only use by which the building could be preserved. The owners identified a developer who would be willing to buy the building for such office use, with some new residential development in the grounds to the north. He made a planning application in 1982 for office use in the totality of the Grade I building, of some 65,000 sq. ft. for pure offices and the same for ancillary circulation and storage. The proposal was well received by the planning officers and an agreement negotiated. But the local planning authority refused the application because they considered the office use excessive. The prospective developers appealed. In parallel they gave evidence at the Inquiry into the Local Plan held in April 1985 by an Inspector appointed by the Secretary of State for the Environment. It is from the voluminous evidence presented at this Inquiry by expert witnesses for the developer, which was rebutted by evidence by the authority, that the following material is extracted, in particular: David Campbell Jackson, of 12th May 1985.4 Nathaniel Lichfield, of 14th May 1985.5

The decision-guidelines Under the regulations for a local plan inquiry the Inspector is appointed by the Secretary of State but does not submit his report to him but instead to the local planning authority. It is for them to accept or otherwise the Inspector's recommendation. The recommendation made by the Inspector related to an appropriate use for {he building, bearing in mind not only the land use planning considerations (residential versus office) but also the policy of protecting listed buildings against erosion of their heritage quality. In this he took account of the government guidelines for the decision criteria on alteration or demolition of listed buildings (Listed Building Consent) (Appendix 16.1).

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Economics in urban conservation

Table 16.1 Royal Holloway Sanatorium: rehabilitation: financial viability of scheme (1): office/residential Gross sale value of: Offices Residential Total Less sale cost: Offices at 3% Residential at 2.5%

£

30,255,000

825,000 68,875

Total net sales receipts

Development costs Site & purchase Site running Restoration & building Offices Residential Fees Offices at 16% Residential 14% Letting & legal Interest at 14% pa Total development costs

Developer's profit of 15%

£

27,500,000 2,755,000

29,361,125

6,000,000 400,000 10,318,000 3,251,000 1,650,880 455,140 150,000 3,908,130 26,133,150

3,227,975

The options Several options were considered of which two were tested in detail: Scheme 1 Office and residential (O/R): Conversion of main building to 65,000 sq. ft. of offices and 65,000 sq. ft. ancillary, together with 105 new residential units. Scheme Y Residential alone (R): Maximum number of units amongst sub-options: Conversion of listed buildings to sixty-two town houses or flats, fourteen new units on the northern boundary and fifty-nine bungalows on the cricket pitch.

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295

Table 16.2 Royal Holloway Sanatorium: rehabilitation: financial

viability

of most profitable residential scheme (Y) £ 15,517,500 387,940

Total gross sales receipts Less sale costs at 2.5% Total net sales receipts Development costs Site & purchase Site running Restoration & building Fees

£

15,129,560

6,000,000 400,000 16,646,000 2,330,440

Gross Interest Developers profit Total development costs Shortfall in revenue

18,976,440 9,491,760 Nil 34,868,200 -19,738,640

Essential findings

Financial analysis6 Table 16.1 shows that Scheme 1 produces a financial surplus of value over cost, to provide a developer's profit of 15 per cent. This would make it feasible for the developer to carry out the scheme and to pass on the annual operating costs of maintenance, etc. to the intending purchasers. However, the financial analysis of Scheme Y gave a different story, despite having the maximum number of dwellings amongst the residential sub-options, with bungalows on the cricket pitch being adverse to the setting of the listed building. Even allowing for no developers profit, the values show a shortfall over costs. This conclusion was subjected to sensitivity tests which showed that the sales values would need to be increased by 130 per cent to break even with costs, or 147 per cent to provide a 10 per cent development profit.

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Table 16.3 Royal Holloway Sanatorium: evaluation of office/residential and residential options

Community sectors Item Description

Sectoral objectives

Options compared with current O/R R Preference

1

3

4

5

6

Current landowner Developer/financier Local authority off site Other landowners: - Laundry - Sandhills Lane - Other

Maximising land values Maximise surplus value Minimise cost Maximise values

••

•

O/R O/R =

Built heritage L.A. rate income The economy Consumers Current occupier New occupiers: - residents luxury - residents sheltered housing - office Adjoining occupiers - Sanatorium grounds - Office use

Increase amenity:

Vehicular traffic - cars - services vehicles and visitors

Accessibility

Tourists/visitors to heritage Ratepayers General public

Availability of listed building in long term Minimise rate burden Visual enjoyment Access

2 Producers/operators

1 3 5 7

9 11 13 2 4

6

8

10 12 14

16

Workforce

•• -

—

0

-

•

-

Conserve into future Maximise Maximise growth

••

•

••

•

Attract new occupier

0

0

=

Gain accommodation

0

•

R

••

•

•

0

O/R O/R O/R

-

0

O/R R NIC

-

—

R

_

—

N/C NIC

••

•

O/R O/R O/R O/R O/R O/R

••

•

Increase jobs

•• ••

•

••

••

•

O/R O/R O/R O/R O/R O/R O/R

Notes: Cols. 4 and 5 show a method of ranking the option with the current situation.

The case studies

297

Table 16.4 Royal Holloway Sanatorium: Summary of evaluation in Table 16.3: O/R against R options Options

O/R Producers/Operators 1 Current land owner 3 Developer/financier 5 Local authority off site 7 Other landowners 9 Built heritage 11 L.A. rate income 13 The economy Consumers 2 Current occupier 4 New occupiers 6 Adjoining occupiers 8 Vehicular traffic 10 Tourists/visitors and heritage 12 Ratepayers 14 General public 16 Workforce

V V V V V V V

R

V

V V

V

N/C N/C

N/C N/C

V V V V

: V indicates preference N/C indicates non-certain.

Community impact evaluation7 The results of this analysis, carried out on the lines indicated above (15.6), are shown in Table 16.3 and summarised in Table 16.4, from which the following conclusions are drawn. Producers/Operators. The table shows that the O/R scheme scores for all sectors except (5) (local authority off site) on which there is neutrality. Consumers. The table shows that there is neutrality for sector (2) (current occupier); preference for the O/R scheme for sectors: (4) (new occupiers); (10) (tourists/visitors to the heritage); (12) (ratepayers); (14) (general public); (16) (workforce); and non-certainty in the remaining two sectors: (6) (adjoining occupiers) and (8) vehicular traffic. Leaving the neutral and non-certain sectors aside there is a decided

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Economics in urban conservation

preference for the O/R scheme. We therefore need to consider the weight of the two sectors on which there is uncertainty, namely (6) (adjoining occupiers) and (8) (vehicular traffic). The question arises, if it were possible to predict these two impacts, would a decided preference for the residential scheme in them counteract the preference for the O/R scheme in the five sectors mentioned? This would appear unlikely since the impacts from (6) and (8) are not likely to be significant compared with those on the five sectors for whom the O/R scheme clearly scores: (4), (10), (12), (14) and (16), particularly (16) in respect of employment.

Overall conclusions The closure of the Sanatorium clearly requires a new use for the property, one which is capable of generating sufficient capital expenditure for rehabilitation and revenue for maintenance to ensure conservation of the Grade I building into the future, and the maintenance of its foreground as an open setting. The analysis shows that Scheme 1 meets these requirements but not Scheme Y. In this even building houses on the foreground (affecting the building's setting) would not give financial viability. There would thus be pressure for the demolition of the listed building in order to produce a cleared housing site, so destroying for ever its Grade I heritage value. Having established that because of financial viability the office/residential scheme would better conserve the heritage it is pertinent to raise the further economic question: at what cost in terms of resources? As regards operating costs (maintenance and upkeep of the buildings and gardens, etc.) the relevant costs are much the same. As regards capital cost (construction and fees), the difference between the two options for the principal building is: Scheme 1 £12.0m. Scheme Y £ 9.1m. This means that the conservation of the listed building will be bought at the price of the extra capital costs of £2.9m. These would be borne in the ultimate not by the developers but the occupiers of the office/residential scheme, out of the sale prices. The conservation will thus be financed in the ultimate from the firm to be housed in the refurbished building. It is their extra costs which will gain the advantage to the national heritage of the

The case studies

299

conservation of the building and grounds, to a higher quality than could be obtained by the residential only option. The extra £2.9m. needed for conservation would fall initially on the developers and ultimately on the occupiers of the property. But will there be also indirect costs, falling on other sectors of the community? Just what these are can be seen from Tables 16.3 and 16.4. These show a preponderance of net benefit from conservation on the affected community sectors. Put another way, leaving the non-certainty sectors aside, no sector of the community will suffer in socio-economic terms under the office/ residential option with its greater achievement of heritage quality in the Hollo way Sanatorium; the occupiers of the office building are no exception to this, for while they will be paying the heavier purchase price they will have the accommodation of value equal to the price. This means that in Scheme O/R not only can conservation be achieved at the highest practicable heritage quality level, but also that this higher quality will be obtained not at net loss but at net benefit to the remainder of the community.

Relevance to conservation Since Royal Holloway Sanatorium is a Grade I listed building there could be little compromise in conserving its heritage quality. And since the nature of the building was such that only the high value office use could provide the necessary funds for adaptation and continued maintenance, the conservation choice lay in the direction of offices. However, in the local planning policies this was less desirable than residential, since the concern was the protection of the established character of Virginia Water, which could be undermined by the introduction of business use of the premises with its traffic on surrounding roads and pressure for new dwellings from new employees. These disbenefits of the office scheme were reflected in sectors 6 and 8 of the community impact analysis (the undermining of the Virginia Water character and impact of new residential pressure on the Green Belt being too diffuse to identify). Thus the CIE was in fact a way of testing the policy which preferred residential to protect character against the policy which preferred office for conservation. It showed the opportunity cost of each. In brief, the community impact analysis showed that office use would not leave the community worse off but better off. In other words, the conservation

300

Economics in urban conservation

objective could be financially achieved only by the office scheme; and this would not be deleterious to the community.

End note It remains to be added that the Inspector of the Local Plan Inquiry recommended in favour of the developer's scheme and that, on the subsequent submission of a planning application for conversion to offices, the Borough Council issued the planning permit.

16.3

Case study 3: The Old Sha'arey Tsedek Hospital, Jerusalem8

The case See 15.6.1.

The options See 15.6.2.

The issues The conservation issues can be posed in relation to four questions, for each of the parties in the following three sectors, i.e. (a) landowner/developer/ Municipality directly involved in the development of the site; (b) Municipality/State as conservation authority; and (c) community at large. 1 What is the conservation quality which will be retained under Option A and thus what is the conservation loss in the complete redevelopment of Option B? In this it is assumed that the maximum conservation quality will be retained in rehabilitating the building, consistent with financial constraints. 2 What is the difference in cost and benefit between pursuing Option B (commercial redevelopment) rather than A (conservation)? 3 Resulting from 2, what is the opportunity cost of pursuing

The case studies

301

conservation (A) as opposed to redevelopment (B), i.e., what do the three sectors in (a), (b) and (c), have to give up in terms of net benefit if conservation is pursued (A) rather than redevelopment (B)? 4 Is the amount of opportunity cost in 3, to the respective groups, a reasonable one to expect for achieving the conservation quality in 1? The study carried out the necessary work to answer these questions as an aid to decision makers, using the appropriate evaluation methods in each: financial viability to the parties in the development process; resource costs needed for conservation as against heritage quality, for Municipality or State as conservation authority; net benefit to the Jerusalem community at large The methods of analysis The analysis for the study was pursued by three different methods: (a) Social financial analysis, to bring out the direct financial costs and returns to each of the parties directly involved in the development project, namely the Hospital Board as landowner, the development company and the Municipality. (b) Cost benefit analysis, aimed at comparing the costs to the State in terms of real economic resources, and the benefits to the State in terms of the heritage value which would be achieved. (c) Community impact analysis, to show the costs and benefits and their distribution to all sectors of the Israeli community who would be impacted. Conclusion on the conservation issues We now present answers to the four questions presented above, in respect of the three sectors, using the three preceding methods of analysis. What is the heritage quality which would be retained in Option A and lost in Option B? In Option B clearly no heritage value would remain but some would be retained in Option A. Here the quality as a working hospital cannot be conserved in 'restoration' terms, but the rehabilitation of the building for a Museum would enable it to continue to display some of the original architectural and historic qualities.

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Economics in urban conservation

What is the difference in cost and benefit for the three sectors between pursuing rehabilitation (A) as opposed to redevelopment (B)? For (a) the landowner would lose $0.065m. (the higher development value being offset by the higher betterment tax), 9 the developer would gain a development profit of $0.03m. while the Municipality would gain $0.935m. (the higher betterment tax). The non-quantified value of the roads and open space would be common to both options. For (b) there would be greater resource costs in B ($1.88m.) and nil conservation quality. For (c) there would be a net loss in B to the major number of community sectors involved and a net benefit to only two sectors (developers/financiers and new residents on the site). Their gain would hardly outweigh the loss to all the other sectors. What is the opportunity cost of pursuing conservation in A, as opposed to redevelopment in B: what would be given up in terms of net benefit? (a) The landowner would gain the $0.965m., the developer would lose the $0.03m. and the Municipality lose the $0.935m. (b) Since the resource costs for rehabilitation would be less than those for redevelopment, the opportunity cost is zero. (c) Since the community would in the main benefit from conservation rather than from redevelopment, the opportunity cost of pursuing conservation would be negative and not positive: the community would in fact gain from conservation. Is the opportunity cost a reasonable one to achieve the conservation quality? (a) Landowner: the answer is clearly in favour of conservation; he gains financially by it. Developer: resistance might be expected; he loses a bigger site and some development profit. Municipality: although losing financially in Option A, they would gain in conservation. Thus there would be a trade off in the financial and conservation functions. The weighting is not clear. But the stand the Municipality took against the planning permit presumably implies the answer it would give: conservation even at financial loss. In summary, on financial terms alone, only the developer would oppose conservation.

The case studies

303

(b) Since there would be a saving in resource costs to gain heritage quality, the opportunity cost is reasonable. (c) In Option A, two of the sectors associated with the national heritage would gain (the Government as guardian of the heritage and the tourists and visitors who would come to see it) compared with Option B where the heritage would disappear. Now if the remainder of the community were to benefit from Option B then the opportunity cost of conserving the national heritage could be seen as the losses to them. But the reverse is apparent. In Option A, retaining the heritage, the community as a whole would benefit rather than lose. In these terms again the opportunity cost of conserving the heritage would be negative and not positive. This being so it follows that it is certainly reasonable to invite the community to pursue conservation rather than redevelopment. By doing so they would not lose in net benefit but gain, including the heritage quality.

Relevance to conservation In this case the approach of case 2 is taken further. By raising wider questions and exploring the answers to more parties, the deeper ramifications of the simple issue (conservation or redevelopment) are exposed. Since varied answers are given to the varied questions, it follows that making decisions on only selective questions (e.g. on financial profit or loss to the property owner, or heritage value of the building) could give biassed decisions. Accordingly since there are many viewpoints for any conservation decision, it is necessary to have regard to them all in order to reach a balanced and defensible decision.

16.4 Case study 4: Covent Garden, London: redevelopment or conservation over an area The case 10 Until its removal in the seventies to a new more efficient location at Nine Elms, the Covent Garden Produce Market was located on 15 acres in Central London, where it had been for three centuries, between modern London's entertainment complex to the west and the City of London

V *.

V o IHCCADILLY CIRCUS

0

o i

s

100 200 300 400 500metres

Plan 16.2 Covent Garden, London: location plan

^^M

COVENT GARDEN

• ••••

SURVEY AREA

The case studies

305

fringes to the east (Plan 16.2). Its daily functions (involving heavy collection and distribution traffic) contributed to the 'blight' of the surrounding area (some 80 acres in extent). The removal of the market would clearly be a stimulus to the regeneration of the area. A consortium of the local planning authorities concerned (Greater London Council, City of Westminster and Borough of Camden) visualised the regeneration in wholesale clearance and redevelopment, for which there were large scale opportunities, in which they would be involved also as landowners (Plan 16.3). For the purpose of preparing the redevelopment plan the Consortium set up the Co vent Garden Planning Team. Their brief included the following:11 A broad financial appraisal of the redevelopment proposals including acquisition costs, development costs and revenues; distinguishing between those of the Consortium and totals for the scheme as a whole, and including where appropriate cost-benefit studies of alternative proposals. On these aspects, the Team was to work with the Valuation Officers of the Greater London Council and City of Westminster, with consultancy advice on the methodology of financial analysis by Nathaniel Lichfield & Associates. When the Consultants were appointed in 1967 the Planning Team had prepared a Draft Plan. 12 They had comprehensive redevelopment in mind. 13 1.1 In 1972, after three centuries on its present site, the Co vent Garden market is expected to vacate the 15 acres it now occupies in the heart of London. Taken together with a bigger area of obsolete property adjoining the present market, this will provide the opportunity within the next ten to twenty years, to reconstruct up to 80 acres of the West End - an area big enough to allow breaking away from the existing urban pattern and building in a new form better adapted to modern needs. The pattern of streets and buildings has changed little from that shown in drawings dated more than 200 years ago - a pattern based on the ancient route of the Strand and extended haphazardly outwards from Inigo Jones' plans of the early 1600's for the Covent Garden 'Piazzas', the first of the London squares. It is not surprising that the pattern itself is obsolete. What is unusual is the scale of the present opportunity to make basic improvements. The Consultants then saw their contribution as carrying out a series of tests on the draft proposals in respect of:14 (1) what was the degree of economic obsolescence in the properties identified by the Planning Team as having 'opportunities for change': if the site values do not exceed the property values then the opportunities could be expensive to achieve;

306

Economics in urban conservation

Plan 16.3 Covent Garden, London: redevelopment opportunity Note: Based on Covent Garden's Moving: Covent Garden Area Draft Plan, 1969

The case studies

APPRAISAL \

SUMMAHYMAP: BEDEVELOPMENT 0PPORTBWT1ES FIG 10

307

308

Economics in urban conservation

(2) what would be the relocation costs of firms which were to be displaced: this would indicate levels of compensation for disturbance and possibly give rise to plans for relocation in the study area or outside; (3) what was the demand for future uses provided for the study area, having regard to both consumer demand and market response; (4) financial evaluation of alternative designs for segments of the scheme; (5) financial analysis of the implementation proposals having regard to the staging of the programme, which agencies should be involved and method of disposal of local authority land?

The issue The Draft Plan proposed large scale comprehensive redevelopment of large segments of the Study Area. This happened to be at a time when in Britain there was a groundswell of reaction against this form of renewal in favour of a more conservative approach of regeneration through area rehabilitation, environmental improvements, etc. with only piecemeal redevelopment. This groundswell became an organised focus at the Public Inquiry into the Draft Plan. In consequence the Secretary of State rejected the comprehensive redevelopment; while approving the general objectives of the plan and the area as suitable for comprehensive redevelopment he invited the Greater London Council to make substantial modifications to both the scale and volume of the redevelopment originally contemplated. This led to revised proposals which laid the foundation for ongoing regeneration, including retention of the Market Buildings themselves and their rehabilitation.15 This change in plan for the Covent Garden area stimulated a later study of the renewal strategy being adopted, with an evolution of the two alternative approaches: comprehensive or 'the gradual piecemeal renewal of the area and conversion of existing structures within the existing framework of roads and services'.16 This evaluation was carried out by planning balance sheet analysis after considering for the purpose and dismissing conventional cost benefit analysis and goals achievement matrix. Using both these two sources we are able then to present a comparison between comprehensive redevelopment of major segments of the area as against area rehabilitation. And furthermore we are able to compare the results produced by social financial analysis (reflecting the interests of the various parties directly involved) and planning balance sheet analysis (taking into account wider repercussions).

The case studies

309

Table 16.5 Covent Garden: redevelopment: investment costs and returns on land transaction

ITEM

Whole scheme

Initial cost of land and site engineering Ground rents Rate return at %

£m END OF DEVELOPMENT Consortium Private of three sector authorities alone

£73.2 £ 6.0 8.4%

£23.1 £ 1.4 6.0%

£50.0 £ 4.4 8.7%

Table 16.6 Covent Garden: redevelopment: annual surplus/deficit to parties on land transaction

Item

Whole

Private

Con- G.L.C. Camden sortium

(£000) Westminster

Total annual costs of land and site Engineering Net annual surplus (%) Deficit (%)

5.629 0.515 9.1 -

4.174 0.380 9.1 -

0.771 0.154 20.0 -

0.423 (0.423) (100)

0.259 0.03 1.1 -

0.383 (0.002) (0.05)

-

-

-

0.077 (0.346)

0.054 0.057 -

0.023 0.021 -

Share of Consortium surplus Net surplus Net deficit

The financial findings on comprehensive redevelopment17 The testing and iterative procedures relating to financial appraisal gave the following estimates on completion of the Draft Plan scheme: 1 The total capital costs of the whole scheme over the fifteen years would be £138 million, of which £66 million would be transfer costs of land acquisition and £72 million would be in real costs of construction.

310

Economics in urban conservation 2 Of the total cost, £55 million (40 per cent) would be in the public sector and £82 million (60 per cent) in the private. Of the public sector, £17.5 million would fall to central government and £37.5 million to the local authorities. 3 The returns to the scheme are presented in Table 16.5 in terms of the land transaction: that is, the ground rent which would be received, or the notional ground rent at which land owners would be sitting where they are freeholders. This return is compared not with the total cost figures just referred to but only with the capital cost of land acquisition and site engineering works required to create sites ready for building. Taking the scheme as a whole ground rents would ultimately show 8.4 per cent on the total initial investment of £73.2 million thus producing a surplus over the cost of borrowing on initial capital, assumed at 7.5 per cent. Thus on this criterion the scheme as a whole, taking the private and public sectors in combination, would be financially viable. But the position as between the public and private sectors would naturally vary. As the table shows, the private sector would earn somewhat above average (8.7 per cent) and the Consortium of three authorities on average below (6 per cent). 4 These rates of return for the public and private sectors do not reflect the full picture that would arise when construction costs and rack rents are taken into account. For the public sector it cannot be expected that the position would improve, for most of the investment would be non-profit earning. But in the private sector the reverse would apply. Provisional estimates show that if the ground rents were deducted from the estimated net rack rents, there would still be left a surplus over the interest on cost of construction amounting to at least as much as the ground rents alone (£4.4 million). In other words although the rate of return on the land transaction to the private sector at 8.7 per cent is only about 1 per cent higher than the cost of borrowing, when the rack rent return is taken into account the investment as a whole would be highly profitable and attractive. 5 The rate of return would vary as between the three authorities. Their position can be seen from Table 16.6 which compares for the end of the scheme their total annual costs on

The case studies

311

land and site engineering (with loan charges at 7.5 per cent) with their net annual surplus or deficit by way of actual or notional ground rents. The table shows that whereas on their own the GLC and Westminster would show an annual loss, both the Consortium and Camden would have a surplus. The surplus of Camden and the loss of Westminster would be quite nominal in relation to their expenditure but the Consortium's surplus and the GLC's loss would be significant. This position would be altered when account is taken of the sub-division of the annual Consortium surplus of £154,000 between the GLC, Camden and Westminster, in the agreed proportion of 50, 15 and 35 per cent. The net result is that the GLC would show a loss of some £346,000 whereas Camden and Westminster would each show a surplus of some £60,000 and £20,000 respectively per annum.

Implications of findings for the mode of comprehensive redevelopment18 Following this analysis some implications were brought out for the mode of carrying out the redevelopment, as follows: 1 Generally speaking the aim has been to reduce as far as possible the initial capital costs which would fall on the authorities. But there is a limit below which the obligation cannot be reduced, given the objective to carry out comprehensive redevelopment in this part of London. This limit has been decided by planning considerations: that is the blocks of land which it is essential for the Consortium to acquire in order to pool established ownerships, close streets which do not conform with the planned layout and secure multi-use development. If less land were initially acquired then it is likely that comprehensive redevelopment would not be practicable, and certainly no scheme on the lines of this Report could be realisable. 2 Once the initial land acquisition has been made, and the comprehensive redevelopment secured, it is then generally practicable to sell off freehold interests rather than retain the landownership and the debt liability. In this particular scheme however sale of freehold sites is generally not practicable, owing to the complex character of the scheme and the multi-use of sites. Accordingly, to reduce capital liability the policy is recommended of disposal of long leasehold interests by way of premium rather than ground rent, so retaining the freehold interest with the Consortium but attracting capital recoupment which will result in keeping down the outstanding loan. In effect the recoupment would act as a revolving fund for later land acquisition purposes.

312

Economics in urban conservation

3 In this way it is possible for the authorities to carry out the planning obligations implicit in the scheme; reduce to a minimum their amount of debt at any one time in promoting the scheme; and retain the freehold to the benefit of future ratepayers, both because of the possibility of obtaining proportions of increase in site value in the later years of the scheme (a factor which has not been reflected in the financial analysis) and also obtaining revision to the freehold after a long lease of say 99 or 125 years. 4 But the results of the financial analysis suggest a further possibility, which could secure all the advantages just referred to and yet further reduce the debt liability and perhaps also the revenue operating losses from public sector development. This arises because of the financial viability of the scheme as a whole, covering both the private and public sectors. As Table 16.5 shows, the total actual and notional ground rents which would be generated exceed the interest costs on land acquisition and site engineering; and furthermore when the rack rents on private sector development are taken into account the surplus of total income over total costs would be generous. Accordingly it is possible to envisage that a large scale property development company, or a consortium of several, might take over the whole of the project including the land acquisition (by agreement supplemented by use of compulsory purchase powers by the authorities). In return for a partnership agreement on these lines, the Consortium should be able to secure favourable financial terms. It is not possible from the analysis to be precise as to what these might be, but it is possible that the Consortium would be able to negotiate for the private development company to bear at least the land costs of the public sector, or secure some other contribution to the public sector liabilities. 5 In short, the financial analysis shows that this major redevelopment in Central London can be achieved on the lines set out in the report and programme without serious financial loss, and perhaps none at all to the authorities. Indeed it would not be out of the question that over the life of the project or upon completion some net revenue could be earned.

Comprehensive versus piecemeal redevelopment: findings on planning balance sheet analysis We now turn to the second study, the evaluation of the comprehensive and piecemeal redevelopments by planning balance sheet analysis. The essential results are shown in Table 16.7 below. The conclusion was: 19 The Balance Sheet showed that while the comprehensive redevelopment plans (column C) would be highly profitable in financial terms, this was no longer the case when social costs were taken into account. Moreover, many of these social costs especially displacement of housing and business - would bear most heavily on

The case studies

313

Table 16.7 Covent Garden: comprehensive versus piecemeal redevelopment: a planning balance sheet appraisal

Group

Item

Costs (£m) P C

Benefits (£m) P C

A. PRODUCERS/OPERATORS

1.0 G.L.C. and local authorities

2.0 Central government

3.0 Developers 4.0 Business in area 4.1 Business displaced 4.2 Business not displaced 4.3 New business 5.0 Business outside area

Construction and site engineering Savings on services (Ground rents) Construction and site engineering grants (Ground rents) Construction and site engineering (Ground rents) Benefits lost Disruption Loss to trade, etc. Agglomeration economics Benefits of occupation Loss of contact Total Q Benefit-cost ratio

14.6

5.2

7.0 0.4

2.8f (2.5)

49.8

29.8

31.5 5.6 m*

m* (11.4

mOJ

(6.6

-)

(25.2

13.5)

mO 102.5

m* 62.5

102.5

62.5

5.9

5.6

0.7

2.2 1.0 2.0

6.5)

14.9 0.5 mO

m** 108.9 0.98

m* 53.2 1.2

Benefit lost and disruption Loss of social contact Benefit of new environment

1.2 m**

0.8 m**

Time loss/running cost Time loss Loss of comfort Accident savings Loss of character of area Amenity of new area

7.2 3.6 0.8 m**

Loss of benefit Gain of utility Total Q Benefit-cost ratio Grand total £m Total benefit-cost ratio

m**

m*

12.7 0.5 121.6 0.9

6.5 1.7 59.7§ 1.2

B. CONSUMERS

6.0 Existing residents 6.1 Residents displaced 6.2 Residents not displaced 7.0 Future residents 8.0 Travellers 8.1 Private transport 8.2 Bus passengers 8.3 Tube passengers 8.4 Pedestrians 9.0 City population at large 10.0 Users of new facilities 10.1 Existing facilities 10.2 New facilities

2.4 1.2 2.0 m*

m*

mO

m* 6.6

mO 10.9

109.1

73.4

Note: ^Intangibles shown by letter 'm'; * *, *, 0 is an attempt to gauge magnitude (after Lichfield, 1964 etc.); 0 is an insignificant amount, though to * * very significant. Source: Alexander (1974), p. 54.

low-income residents and small business operations (items 4.1, 6.1 in the Balance Sheet), i.e., those people and activities least able to afford it. Congestion costs arising from the comprehensive scheme would also be high and, as shown under Item 8.0, would significantly worsen conditions for travellers in central London. On the other hand, if the area were redeveloped in a more piecemeal fashion (see

314

Economics in urban conservation

column P) by gradual rebuilding within the existing framework on a scale comparable to existing structures, these social costs would be significantly lower as they would cause less disruption and congestion. This led to the general conclusion: 2 0 In general terms therefore, the analysis undertaken indicates that in the case under examination the alternative of the comprehensive redevelopment is inferior in comparison to the situation produced by controlled gradual piecemeal redevelopment, in terms of its effects on the welfare of the community. Whilst the comprehensive scheme does offer the community greater benefits, these are outweighed by far greater costs (social and financial) that it involves. Furthermore these costs fall on the less well off members of the community.

Alexander (1974) then shows how the analysis can also be used as a tool for assisting in the design of a variation which should be preferred, since it would retain the features of the original plans which were shown to be healthy and attempt to ameliorate those which were not. The conclusion is: 21 Yet there are grounds for concluding that neither scheme is particularly satisfactory from this point of view of promoting the welfare of the community, since the piecemeal scheme also bears heavily on the lower income groups of the community and tends to produce an area that is dominated by activities of an intensive and profit-oriented nature at the expense of uses such as housing and public facilities.

Conclusions of relevance to conservation Both studies show that social financial analysis and planning balance sheet analysis can be applied to the plan for a big complex area as well as a limited isolated project, as in cases 2 and 3. They also show that while the analysis can be used for evaluation, it can then be employed as a design tool for making proposals of relevance to the scheme: the financial for implementation method, and the planning balance sheet for a new design.

16.5

Conclusion for all cases

In development and conservation planning, socio-economic analysis should not be regarded as just analytical tools to aid decision making but also the means of exploring possible decisions and advancing implementation.

Appendix 16.1 Criteria for listed building consent Extract from DOE Circular 23/77 In the listing of buildings the Secretary of State pays no attention to the condition of the building, or the economic feasibility of its retention, whereas these are clearly relevant criteria in assessing applications for listed building consent. This must be so, for it is evidently not practical to retain a building ad infinitum, when it is past its useful life. It is not the intention of legislation and policy on historic buildings to attempt to preserve such buildings for ever, but merely to ensure that the case for the preservation of a building is given due weight when proposals for its demolition or alteration are put forward. Thus whatever the strength of the case for listing, Circular 23/77 makes clear that the listing is not itself a reason for resisting alterations or demolition of the building (as defined above 4.1-4.2). Starting with the warning: 64. Generally, it should be remembered that the number of buildings of special architectural and historic interest is limited. Accordingly, the presumption should be in favour of preservation except where a strong case can be made out for granting consent . . . It then goes on: 65. Preservation should not be thought of as a purely negative process or as an impediment to progress. The great majority of listed buildings are still capable of beneficial use and, with skilled and understanding treatment, new development can usually be made to blend happily with the old. The destruction of listed buildings is

316

Economics in urban conservation

very seldom necessary for the sake of improvement; more often it is the result of neglect, or a failure to appreciate good architecture . . . As to the kind of 'strong case' that needs to be mounted against the 'presumption' the Circular states: 63. The following guidance on criteria may prove helpful to local authorities when considering applications for consent to demolish or alter listed buildings: (a) the importance of the building, both intrinsically and relatively bearing in mind the number of other buildings of special architectural or historic interest in the neighbourhood. In some cases a building may be important because there are only a few of its type in the neighbourhood or because it has a fine interior, while in other cases its importance may be enhanced because it forms part of a group or series. Attention should also be paid to the contribution to the local scene made by a building, particularly if it is in a conservation area; but the absence of such a contribution is not a reason for demolition or alteration; (b) in assessing the importance of the building, attention should be paid to both its architectural merit and to its historical interest. This includes not only historical association but also the way the design, plan, materials or location of the building illustrates the character of a past age; or the development of a particular skill, style or technology; (c) the condition of the building, the cost of repairing and maintaining it in relation to its importance and whether it has already received or been promised grants from public funds. In estimating cost, however, due regard should be paid to the economic value of the building when repaired and to any saving through not having to provide alternative accommodation in a new building. Old buildings generally suffer from some defects but the effects of these can easily be exaggerated; (d) the importance of any alternative use for the site and, in particular whether the use of the site for some public purpose would make it possible to enhance the environment and especially other listed buildings in the area; or whether, in a rundown area, a limited redevelopment might bring new life and make the other listed buildings more economically viable.

Notes Introduction 1 Barnett and Morse (1962), pp. 72-97. The pioneer was Pinchot Gifford (1910). 2 O'Riordan (1976), Ch. 5-8. The current concern in the United States is expressed in the work of The Conservation Foundation, founded in 1948, 'a non-profit research and communication organisation dedicated to encouraging human conduct to sustain and enrich life on earth'. Its founder, Osborn Fairfield, published in the same year Our Plundered Planet. 3 Brown (1905); Ward (ed.) (1968). 4 Barnett and Morse (1962), pp. 72-4. 5 Porritt (1974). 6 Meadows et al. (1972). 7 United Nations (1972). 8 For extreme views in relation to national resources, see Brown (1981) (pro conservation) and Goeller and Weinberg (1977) (and, on the grounds that all mineral resources are substitutable). 9 Ward (ed.) (1973); Ward (1979); Ward and Dubos (1972). 10 Cf. Barnett and Morse (1962), pp. 73-95; O'Riordan (1976), Ch. 1-4; Appleyard (ed.) (1979), pp. 8-49; Kain (ed.) (1981), pp. 6-9. 11 Clarke*al. (1980). 12 Berry (1983). 13 Williams-Ellis (ed.) (1937); Booker and Green (1973); Fergusson (1973). 14 Hirsch (1977); and Ellis and Kumar (1983); Bosselman (1978). 15 Beckerman (1974); Simon (1981). 16 Myrdal(1960). 17 Olson and Landsberg (1975). 18 Porter (ed.) (1986). 19 Barnett and Morse (1962), p. 72. 20 O'Riordan (1971). For a historical review which encompasses a number of these disciplines see the entry for conservation in Sills (ed.) (1968). 21 Pearce (1976); Bain (1973); Baumol and Oates (1979). 22 Backhouse (1985), Ch. 21. 23 Millward et al. (1983); Prest and Turvey (1965); Pearce (1968); Mishan (1975). 24 Pigou (1948); Kapp (1950); Kapp (1963); Mishan (1967). 25 Olson (1965); Buchanan (1968); Mueller (1979). 26 Backhouse (1985), Ch. 29.

318

Notes to pages 4-22

27 28 29 30 31 32 33 34

Friedman (1953), Part I; Lipsey (1983), Ch. 1. Myrdal (1958). Cole, Cameron and Edwards (1983). Friedman (1962); Hayek (1986 and 1960); Seldon (1977). Dobb(1960). Keynes (1936); Galbraith (1974). Nolan and Paine (1986). Pearce (1976); Fisher (1981); Krutilla and Fisher (1975); Baumol and Oates (1979); Bain (1973). 35 The rich literature of urban economics hardly recognises the topic. And it was only in the seventies that a leading thinker in planning tentatively advanced the concept that urban conservation had a major role to play in urban planning alongside change through development: Perloff (1980). 36 Wells (1949); Jenkins (1975); Olsen (1982). 37 See references introduced below in Parts III and IV.

I Life cycle in the urban system 1 This concept clearly has links with the literature on urban and regional systems. For systems in general see Beishon and Peters (1976); for social systems see Bredemeir and Stephenson (1962); for physical/activity systems see Wilson (1970), Wilson (1972) and Chadwick (1978). For a critical review of urban models from differing viewpoints see Sayer (1976) and Cullen (1984). 2 Webber (1963). 3 Resource seems to be one of those words which are used liberally but are elusive of definition. Following a review, O'Riordan (1971), pp. 3-4, states that ' . . . there is no satisfactory definition of a resource' and summarises the discussion by concluding ' . . . that a resource is an attribute of the environment appraised by man to be of value over time within constraints imposed by his social, political, economic and institutional framework'. 4 This simple trinity is a summary of the complexities of human attitudes and aspirations. See for example the contrast of positional goods to conventional goods in Hirsch (1977). In this there are hierarchies. For example, Maslow (1970) sees the following individual 'needs hierarchy' through which society evolves: survival; security; belongingness; esteem; and self-fulfillment or selfactualisation. And economists recognise that a particular good or service can satisfy a large number of wants arranged in a hierarchy Lancaster (1971), pp.146-7. 5 The distinction brought out in relation to consumer demand by Lancaster (1971), pp. 6-11. 6 Barlowe (1958), pp. 284-6; Ciriacy-Wantrup (1952), pp. 29-30; O'Riordan (1971), p. 5; Pearce (1976), pp. 142-7. 7 For a somewhat different enumeration see Harvey (1973), pp. 157-60. 8 Fries and Crafto (1981). 9 For a fuller account see Marshall et al. (1964). 10 Packard, Vance (1981). II Nun etal. (1976), p. 5.

Notes to pages 22-38

319

12 Nutter a/. (1976),Ch. 2, based on Cowans al. (1970). See also Sim (1982), Ch. 2. 13 Nutter a/. (1976). 14 Nathaniel Lichfield & Associates (1968). Another formulation for the typical life cycle of a building related to rehabilitation is given in Eley and Worthington (1984), p. 20: Birth, expansion, maturity, redundancy and rebirth/demolition. 15 This aspect of obsolescence has been probably most researched, e.g. Feilden (1982). 16 CALUS(1986), p. 52. 17 CALUS (1986), p. 57. 18 Medhurst and Lewis (1969), pp. 61-2. 19 This aspect has been considerably researched over recent years, e.g. Perloff (ed.) (1969). 20 Nathaniel Lichfield & Partners, 1984b (unpublished). 21 See e.g. Grigsby (1963). 22 Department of the Environment (1977). 23 Gibson and Longstaff (1982), Ch. 1. 24 Gordon (1974). 25 The terminology is not standardised, and the words are used in many different ways. For a six language international glossary see ICOMOS (1977). 26 Feilden (1982), pp. 8-12. 27 For a description of change in the city centre of Manchester see Medhurst and Lewis (1969) and of Glasgow see Sim (1982). 28 World Commission (1987), p. 43. 29 See for example Marcuse (1974); and World Commission (1987). 30 Goeller and Weinberg (1977). 31 Brown (1981). 32 For a review of many such issues see Journal of Medical Ethics; and Lockwood (ed.) (1985). 33 Davis (1979). 34 Packard (1981).

2 Planning and management of urban resources 1 See Robinson (1970), Ch. 3. 2 For a review of the arguments in favour of private property ownership see Becker (1977), Ch. 5 and 6; and Denman (1980). 3 For the full argument see Denman (1978), Ch. 3. 4 McLellan (1983), pp. 45-7; Harvey (1982), Ch. 1. 5 For a review of the arguments against private property ownership, see Becker (1977), Ch. 8. 6 Polany(1956), p. 178. 7 Pearce (ed.) (1983a), p. 360; Buchanan (1968), Ch. 4 and 5. 8 Maudsley and Burn (1975), Ch. 1. 9 Denman and Prodano (1972), pp. 24-5. 10 Denman and Prodano (1972), pp. 30-1. 11 The distinction between 'private' and 'public' land policy is made by Lichfield and Darin-Drabkin (1980), p. 82.

320

Notes to pages 38-49

12 Mullins (1985), Ch. 5. 13 These differing titles are associated with degrees at the various universities and polytechnics in relation to land as a particular focus of study. See for example Stapleton (1981); Ratcliffe (1978); Thorncroft (1965). 14 Thorncroft (1965), p. 3. 15 For an early statement see Advisory Committee (1946); Wells (1949); Lichfield (1956), Part VI. 16 Lichfield (1978) in Golany (ed.) (1978). 17 Schaffer(1970). 18 These distinctions are made by Stewart (1971), p. viii. 19 Ministry of Housing and Local Government (1965); and Department of the Environment (1972). 20 Department of the Environment (1972), p. xv. 21 Nathaniel Lichfield & Associates and Imbucon/AIC (1973); Urwick, Orr & Partners with Graham Ashworth (1973); and McKinsey & Co. (1973); Department of the Environment (1973). An account of how they were fused in one London Borough, Lambeth, is given in Cockburn (1977). 22 Nathaniel Lichfield & Associates with Imbucon/AIC (1973). 23 Nathaniel Lichfield & Partners (1980). 24 Nathaniel Lichfield & Partners (1985). 25 Hayek (1986), p. 144; Butler (1983), Ch. 2. But just as the market in economic life is not the simple aggregation of independent units of economic theory, so are the 'markets' in urban life. See for their analysis in the light of urban managerialism Pahl (1975). 26 O'Riordan (1971) p. 19. 27 This topic is very advanced in the literature and practice. See for example Pearce (1976). 28 For a range of methods see Pearce (1976), Ch. 5. 29 For a review of the contribution of sociology to planning see Buttimer (1974). 30 Lichfield (1974). 31 Olson and Landsberg (eds.) (1975). 32 There are many accounts of the physical development process. See for example Lichfield (1956); Hall et al. (1973); Leonard and Davidson (1976); Lichfield and Darin-Drabkin (1980). 33 E.g. Waterston (1968); Seers (1968). 34 Schiavo-Compo and Singer (1970). 35 Stewart (1974), p. 211. 36 Ratcliffe (1978). 37 It is of interest that a major study on urban policy and planning should be called Managing Urban Change. See OECD (1983). 38 See for many illustrations Long Range Planning, Journal of the Strategic Planning Society. 39 See for a discussion from the systems viewpoint, Chadwick (1978), Ch. 14. 40 See Nathaniel Lichfield & Associates and Imbucon/AIC (1973).

Notes to pages 50-63

321

3 Planning for urban conservation 1 One reason for the view which is relevant for this study has been 'market failure'. See for example the general argument in Bator (1958); and in relation to urban and regional planning Ratcliff (1949); Lichfield (1964); Foster (1975); Harrison (1977). 2 See Bruton(ed.) (1974). 3 For a concept of a planning system see Lichfield (1975) and Lichfield (1984). 4 The British planning system was an innovation in 1948 over the pre-World War II system (Town and Country Planning Act 1947). It has evolved since (not always progressively), and been adopted in many parts of the world (not always wisely). The nature of this system is not readily grasped, for it is complex and changing. See for its evolution Cherry (1974); for its everyday practice Keeble (1969); for its formal practice Heap (ed.) ongoing; for its development plans Ministry of Housing and Local Government (1970); for its policy planning Solesbury (1974); and for a recent overall view Haar (ed.) (1984). 5 See for example Lichfield et al. (1975), Ch. 2. For an exhaustive discussion on the rational approach in planning see Breheny and Hooper (eds.) (1986). 6 For an approach to plan implementation geared to plan making see Lichfield and Darin-Drabkin (1980), Ch. 2. 7 See for example Roberts (1974), pp. 176-7. 8 Eckbo (1985); Childe (1981). 9 The following relies upon Loomis (1983), p.27ff. See for an international perspective, UNESCO (1982). For the amplification of 'community' see Willmott (1987). 10 Geddes, Patrick (1904). 11 Perloff(1980). 12 Perloff(1980), p. 123. 13 The evocative subtitle in Meier (1980), p. 128. 14 This approach was applied in Nathaniel Lichfield & Partners (1984b). Another approach is used in devising strategies for urban renewal, which require definition of areas of actual or emerging obsolescence. For a city-wide application see Gibson and Longstaff (1982) Ch. 3 and 4. 15 Perloff(1980), p. 131. 16 For example, Willmott and Young (1957); Fried (1963). 17 Lichfield et al. (1975), Ch. 3. 18 Reilly (1986); Lichfield and Lintott (1986), Ch. 15. 19 Antoniou (1984), p. 19. 20 Gulick in Jarrett (ed.) (1961).

4 The nature of the cultural built heritage 1 This section was stimulated by the writings of the conservationists. Particular mention must be made to the essays in Lowenthal and Binney (eds.) (1981); and the very rich Lowenthal (1985). 2 A detailed categorisation devised for conservation of the cultural and natural heritage is presented in Appendices 1 and 2 to this chapter.

322

Notes to pages 64-78

3 4 5 6 7 8 9 10 11 12 13 14 15

Sykes(1984),p.21. UNESCO (undated). Eban(1985),p. 1. Whitehead (1961). Loomis(1983), p.29. Faulkner (1978), p. 457. Hanna and Binney (1983). Ruskin(1889), p. 258. Morris (1877). Smiegelski, cited in Ward, (ed.) (1968), p. ix. Earl (1980); Feilden (1982b). Feilden (1982a), p. 3. Such conservation objectives affect management in the two major heritage owners in Britain. In Government there is the Historic Buildings Commission for England (English Heritage) which is responsible for managing some 400 monuments and buildings under the National Heritage Act 1983. Outside Government is the National Trust which under the National Trust Act 1907 promotes 'the permanent preservation for the benefit of the nation lands and tenements (including buildings) of beauty and historic interest'. 16 Urban Land Institute (1978). 17 E.g. Urban Land Institute (1978) and Hanna and Binney (1983). 18 This balancing between cost and value relies essentially on economic calculus, and is accordingly discussed below, Ch. 13.

5 Identification and protection of the CBH 1 The terms inventory, list and survey seem to be used interchangeably. Here inventory includes all potential candidates derived from the survey, and the list contains the objects selected for protection at law. 2 See Sykes (1984), p. 139, from which the examples are drawn. 3 Sykes (1984). 4 The practice is somewhat different in other parts of the UK. See Lichfield and Lintott (1986), which in itself is based on a large number of sources, a major one being Suddards (1982). Useful summaries, taking account of changes in 1985 and 1986, are given in Department of the Environment (1987a) and (1987b). 5 The presentation in this chapter relies upon two sources: the published survey by Sykes (1984) for UNESCO and an unpublished review carried out for The Jerusalem Institute for Israel Studies by Lichfield and Salamon (1984). Because of the considerable volume of material in this review specific footnote references are not given. While the two overlap, the first concentrates on the preparation of the inventory itself in eleven countries (not including Britain) while the latter is concerned more with the implications of the legal protection. Using both sources the analysis was made in this chapter on a comparative basis for the following: Asia: India, Australasia, Australia, New Zealand, Japan. Africa: Morocco, Zambia.

Notes to pages 79-99

6 7 8 9 10 11 12 13 14 15 16 17 18

323

Europe: Austria, Belgium, Cyprus, Denmark, East Germany, England, France, Greece, Holland, Hungary, Ireland, Italy, Norway, Poland, Portugal, Spain, Sweden, Turkey, West Germany. Latin America: Argentina, Mexico. North America: Canada, Alberta, Ontario, Quebec. USA: National Register, New Jersey, Alexandria, Charleston, Detroit, Miami, Miami Beach, New Orleans, New York City, San Diego, San Francisco, Tucson. Suddards (1982); Lichfield and Lintott (1986), Ch. 4-7. E.g. Wildlife and Countryside Conservation Acts. Lichfield and Lintott (1986), Ch. 4-7. DOE (1977), Para. 12 and Appendix I; DOE (1981), Appendix A. Lichfield and Lintott (1986), Ch. 4-7. Department of the Environment (1984a); Department of the Environment (1984b). For an account of the work in hand see English Heritage (undated a). Feilden(1986),p.221. British Archaeologists et al. (1986). English Tourist Board (1986), pp. 8-11. DOE Circular 23/77. Lichfield and Lintott, Ch. 5.7. Lichfield and Lintott, Ch. 6.5.5. Lichfield and Lintott, Ch. 7.5.

6 Management and planning in the conservation of the urban cultural heritage 1 Feilden (1982a). 2 For a brief history on which the following relies see Hinsch (1980); UNESCO (1983); Parent et al. (undated). 3 Hinsch (1980), p. 4; Parent et a/., p. 12. 4 Hinsch (1980), p. 5. 5 Hinsch (1980), p. 7. 6 Hinsch (1980), pp. 8, 11; Parent et al. (undated), p. 15. 7 Hinsch (1980), p. 8. 8 Hinsch (1980), Annexe 1; and Parent et al. (undated), pp. 137-46. 9 UNESCO (1972). 10 Council of Europe (1976). 11 UNESCO (1983), p. 195ff. 12 UNESCO (1987). 13 See for example Young and Wilmott (1957); Marris (1974). 14 Binney and Hanna (1978). 15 Lichfield and Lichfield et al (1983). 16 See for example the four historical town studies: Esher (1968); Donald Insall and Associates (1968); Burrows (1968); and Colin Buchanan and Partners (1968). 17 Urban Land Institute (1978), Adaptive Use, Part II. See also Greater London Council (1977) for a survey technique for analysing conditions in a conservation area by using indices of use, repair, decay and conservation quality.

324

Notes to pages 99-118

18 This approach follows Lichfield and Darin-Drabkin (1980), Ch. 2. 19 Berry (1983). 20 For a list of such groups and other bodies involved in conservation in Britain see Suddards (1982), Ch. 12. This includes statutory bodies and consultees; Royal Commissions; private, voluntary and educational interests (national, regional and local). A full expression of this kind of influence is seen in the work of Partners for Livable Places (1983), Washington DC, on alliance of parties concerned with liveability and the built environment. See McNuUy et al. (1985). 21 As an example of payment in kind there is the transfer of development rights. See Rose (1975). 22 For a comprehensive review of those available in England see Lichfield and Lintott, Ch. 13. 23 For relevant studies which applied to the residential GBH and not CBH see for example Taylor Woodrow Group (1964); Civic Trust for the North West (1965); Hallmark Securities (1966); Ministry of Housing and Local Government (1966); Robert Matthew, Johnson-Marshall and Partners (1971). And for redundant industrial buildings see Eley and Worthington (1984). 24 As put out for England by the Historic Buildings and Monuments Commission for England (English Heritage). 25 Feilden(1985),p.213. 26 Cf. Lichfield and Lintott (1986), Ch. 14-15. 27 The planning briefgives guidelines from the planning authority to developers; the development briefgives instructions from the developer to his development team. 28 Feilden (1982a), pp. 12-13. This authoritative work was primarily directed at the conservation architect. 29 See for example Feilden (1982a), p. 6; and US Department of the Interior (1980) reproduced in Feilden (1985), p. 216. 30 This section has benefited from the conclusions reached on dilemmas of preservation by Lowenthal (1981) in Lowenthal and Binney (eds.) (1981), pp. 213-37. 31 See Butler (1981).

Part III Economics in urban conservation 1 Davidson and McEwen (1983). 2 In Eckholm (1982), Foreword. 3 For an exploration of the issues see Pearce (1977).

7 Economics in the management of the built environment 1 Hicks (1971), p. 18. 2 Robinson (1964), p. 48. This is a controversial area of consumer demand. See Lipsey (1983), pp. 164-75. 3 Economists once thought that utility could be measured cardinally in for example 'utils'. Fleming (1952). But today only the ordering of utility is thought practicable except for risk situations where the introduction of

Notes to pages 118-142

325

probabilities provide a cardinal cultural scale. See Pearce (1983a), pp. 58, 323, 462. 4 Mueller (1979). 5 Schultze (1977). 6 Brookshire et al. (1985). 7 Lichfield (1987a). 8 English Heritage (undated a), p. 34. 9 Maudsley and Burn (1975), Ch. 8. 10 Pigou (1948). 11 McAuslan (1975), Ch. 1.5. 12 E.g. Heap (1982); O'Riordan (1976), Ch. 8; Smith (1974), Ch. 3. 13 E.g. Ciriacy-Wantrup (1952); Pearce (1976); Whitby and Willis (1978). 14 For a summary see Pearce (1983a), p. 192; and Becker (1964). 15 Lichfield tf al. (1975). 16 Baumol and Oates (1979); Pearce (1976). 17 Packard (1960). 18 See for example Darlow (ed.) (1982); Stone (1980). 19 For example Darlow (ed.) (1982), Ch. 3; and Ratcliffe (1978), Part II. 20 See for example Lichfield (1956), Part III, for examples of private and public development. 21 See for example Goldberg and Chinloy (1984), Ch. 4, 9 and 10. 22 Turvey (1957) for a discussion of how the market works. 23 American Institute of Real Estate Appraisers (1985), Ch. 11. 24 Joint Centre for Land Development Studies (undated); Haviland (1977); and Haviland (1978). 25 Stone, P. A. (1980). 26 E.g. Darlow (1983); Stapleton (1981); Stone (1980). 27 An amplification of Nathaniel Lichfield & Associates (1968). 28 Schaaf (1960); Needleman (1965); Needleman (1968); Needleman (1969); Sigsworth and Wilkinson (1967). 29 Lichfield (1956), Ch. 15; Harvey (1981), Ch. 7 and 9. 30 Lichfield (1961). 31 For the fierce controversy over the algebra of the two renewal solutions see Schaaf (1969). 32 Cf. Lichfield (1956), Part III. 33 For example Lichfield and Chapman (1970). 34 Ministry of Housing and Local Government (1969). 35 Non-market values are fully explored in the literature on cost-benefit analysis. See for example Krutilla and Fisher (1975); Lichfield et al. (1975), Ch. 6; Lichfield (1972); Sinden and Worrell (1979), Part II. 36 Royal Institution of Chartered Surveyors (1981). 37 Darlow (1982), Ch. 7 and 8. 38 Fisher (1961). 39 Pearce (1983), Ch. 4. The discounting arithmetic is in practice made with the help of tables. See Davidson (1978) and Rose (1976). 40 Sugden and Williams (1978), Ch. 3.5. 41 Pearce (1983), Ch. 6. 42 This section is a summary of Lichfield (1956), Ch. 22; and Lichfield (1979a).

326 43 44 45 46 47 48

Notes to pages 143-154

See Brownlow (1956). For a discussion see Switzer (1963). See Lichfield (1956), Ch. 24. See Lichfield (1980). Department of the Environment (1984b). See Jowell (1977a & b) for a review of actual examples.

8 Economics in the conservation of the CBH 1 This was the question explored in relation t6 Bath in Nathaniel Lichfield and Partners (1975). 2 Feilden (unpublished). 3 Cantacuzino, Sherban (1975); Scottish Civic Trust (1981). 4 For a review of aids available in England see Lichfield and Lintott (1986) Chapter 13; for Europe and North America see Council of Europe (1987). For the significance of the real property tax in the United States see Fidler and Martin (1987) and Listokin (1982); for tax relief on capital expenditure in the United States see Reynolds (1982). While tax relief on real property has been affected by the Tax Reform Act, 1986, the provisions for heritage buildings in the main remain much the same. 5 This would appear to be the situation in the United States where adaptive use is stimulated and dominated by tax relief incentives to business. 6 For the practice of English Heritage in this regard see English Heritage (undated a). 7 This is the focus of Urban Land Institute (1978) and Lichfield and Lintott (1986), Ch. 14 and 15.

9 Economics in planning for conservation of the CBH 1 2 3 4 5 6 7 8

9 10 11 12

Kirzner(1960), Ch. 6. Robbins (1932), p. 16. Hayek (1944), p. 26. Myrdal (1960), p. 3. Myrdal (1960), p. 4. For the uncertainty on the objectives of urban and regional planning see Committee of Inquiry (1986), Parts II and III. Lichfield (1964a); Denman (1964); Foster (1975); Stewart (1974); Pearce et al. (1978); Harrison (1977). Lichfield (1960); Moor (1983). Economics is not alone in claiming an identity with planning. Architecture is a clear instance. Less clear is law. See Jowell (1977). See the many and varied consultant and local authority planning studies over the past twenty years. E.g. Baumol and Oates (1979). Lichfield e* al. (1975). Bator (1958).

Notes to pages 154-178 13 14 15 16 17 18 19

20 21 22 23 24 25 26 27

327

Ratcliffe(1949). The following is based on Lichfield (1980). See footnote 7 above. Hayek (1960); and Friedman (1962). Lichfield (1968). Lichfield (1966). Since the planning process is not standardised, the illustrations refer to one typical model planning process, for example as described in Lichfield et al. (1975), Ch. 2. See MacNulty et al. (1985); and Perloff et al. (1979). See for example, Department of the Environment (1973) and (1977). See for example Lichfield and Darin-Drabkin (1980), Ch. 2. This was the question posed in Nathaniel Lichfield and Partners (1975). McMaster and Webb (eds.) (1978); O'Riordan and Sewell (eds.) (1981); Bridger and Winpenny (1983). Crompton and Lichfield (1962) for environment; Nijkamp (1975) for monuments. Fidler (1987). See Lichfield and Lintott (1986), Ch. 14.

10 Valuation of the cultural built heritage 1 The literature is vast. This section relies upon Lipsey (1983), Ch. 14; Pearce (1983a); and Sinden and Worrell (1979), Part I. For the quite different Marxian analysis of value see Harvey (1982), Ch. 1.1. 2 E.g. Booker and Green (1977); and Save Britain's Heritage (1980). 3 That government follows its own objectives and not necessarily the 'public interest' is argued, for example in Downs (1957) and Buchanan and Tullock (1962). 4 For a review see Mueller (1979), Ch. 3-4. 5 For a review of the political theory see Self (1975); and of the methods and techniques, Mueller (1979); Buchanan and Tullock (1962). For methods of establishing people's views on amenity by various techniques see Smith (1974), Ch. 7. On values in general see Arrow (1967) and Facione et al. (1978). 6 Allison (1975); Lowe (1983). 7 See for example Lipsey (1983), Part 2-3; and Stigler (1978). 8 See for example Nathaniel Lichfield and Associates (1971), p. 129ff. 9 Sinden and Worrell (1979), pp. 11-12. 10 For a comprehensive account see Sinden and Worrell (1979), Parts II and III. However, they do not cover valuation of the CBH. See also Nijkamp et al. (1985). 11 Girard (1986); Girard (1987). 12 Forte (1973a); Forte (1973b); Forte (1977). 13 Girard (1986). 14 In discussion. 15 I am indebted to David Pearce for this comparison with natural resource valuation. See Brookshire, et al. (1986).

328

Notes to pages 178-203

16 For a review of methods see Johnson (1980); Falkner (1977); Lawrence (1977); Warren (1972). 17 See Torgerson (1958); Churchman and Ratoosh (1959); Ackoff (1962); Sinden and Worrell (1979); Voogd (1983); Edwards and Newman (1982). 18 Kalman (1980). For application to environmental quality see Crompton and Lichfield (1962). For distinction in supply and demand attributes see Lancaster (1971), p. 7. 19 See Stephens in Churchman and Ratoosh (ed.) (1959), p. 24; Voogd (1983), Ch. 5; Nijkamp era/, (eds.) (1985). 20 See Dasgupta and Pearce (1972), Ch. 1. For an approach to transformation from ordinal to cardinal see Nijkamp et al. (eds.) (1985), pp. 425-47. 21 Sinden and Worrell (1979), Ch. 11; Voogd (1983), Part II; Nijkamp (1986); Edwards and Newman (1982). 22 Sinden and Worrell (1979), p. 246. 23 On this point I have benefited, in many discussions, from the sociologist-anthropological viewpoint of Eric Cohen. 24 In this the economist apparently resembles Oscar Wilde's cynic, who knows the price of everything and the value of nothing. But only apparently. He certainly knows the price. While not himself knowing the value, he knows how to establish the values held by others, through their signals in the market or, if there be no market, then through its simulation. 25 See footnotes 11-13 above. 26 Girard (1986). 27 Girard (1986). 28 Okun (1970); Kaldor (1985). 29 For varying views on this point see Kirzner (1960), pp. 137-42. 30 E.g. Seldon (1977). 31 There is a huge literature on cost benefit analysis. For a comprehensive but dated although still relevant review of practice see Prest and Turvey (1965). For something more up-to-date see Sinden and Worrell (1979); Mishan (1982); Pearce (1983a).

11 Screening of the inventory or list 1 2 3 4 5 6 7

Faulkner (1978), p. 472. Faulkner (1978), p. 473. Griffith (1986). Griffith (1986). Lichfield and Lintott (1986), Ch. 4; and Suddards (1982). Pearce (1983b), p. 98. Nathaniel Lichfield and Associates (1975).

12 Who benefits and who loses from conservation of the CBH? 1 Pearce (1983a), p. 360. 2 The categorisation is based upon Lichfield and Darin-Drabkin (1980), Ch. 2.

Notes to pages 204-241

329

3 Lichfield(1962). 4 The diagram is derived from the evaluation method of community impact analysis, which is amplified below (Ch. 15). 5 This section is an amplification of Nathaniel Lichfield and Associates (1968). 6 Mishan(1967), Ch. 6. 7 McAuslan (1980). 8 This section summarises a complex and rich field. See Hagman and Misczynski (eds.) (1978); Lichfield and Darin-Drabkin (1980); and McAuslan (1984). 9 Town and Country Planning Act, 1971, sec. 22(1). 10 See for example Lichfield and Darin-Drabkin (1980), Ch. 5. But the position is quite different for farming rights. A farmer can be compensated for agreeing not to farm a tract which should be conserved for nature, both in respect of the value of crops foregone and also in respect of the subsidies not earned. See Wildlife and Countryside Act, 1980. 11 Hagman (1971), p. 325. 12 Rose (ed.) (1975). 13 In Britain where there is a tradition of free entry to museums to encourage 'cultural education' there are pressures for departure into charging. The aim is to introduce the market mechanism into areas which have been traditionally subsidised because they are part of the arts. 14 Harris and Seldon (1976). 15 See e.g. Bosselman (1978); Cohen (1984); Cohen (1986); Heritage Trust (1985).

Part IV Selected tools of economic analysis for project evaluation 1 See McMaster and Webb (eds.) (1978); O'Riordan and Sewell (eds.) (1981); Bridger and Winpenny (1983). 2 Lichfield el al. (1975), Ch. 4. For a comprehensive review relating to transport evaluation see Lichfield (1987b), p. 84. 3 See Lichfield (1977b). 4 The family falls into the category of cost-utility (benefit) analysis, as defined in a review of rational techniques in policy analysis. See Car ley (1980). 5 The term 'cost-effectiveness' is sometimes equated with what is here called cost minimisation. See Bridger and Winpenny (1983), p. 9. 6 This is based on Lichfield (1983) and Lichfield (1987b). 7 Lichfield (1987b), p. 89.

13 Financial impact: financial analysis 1 See Thorncroft (1975). 2 The example in 13.2 is taken from Lichfield and Lintott (1986), Ch. 14.4.3. Its method is based on conventional financial appraisal, as in Darlow (1982) or Ratcliffe (1978).

330

Notes to pages 242-250

14 Economic impact: social cost benefit analysis 1 For the contrast between financial appraisal and cost benefit analysis see Sugden and Williams (1978), pp. 4-9; and Beesley and Foster (1965). 2 Prest and Turvey (1965); Peters (1973); Pearce (1983b), Ch. 2. 3 For example: for general application in Sugden and Williams (1978); Mishan (1982); Carley (1980); Pearce and Nash (1981); Pearce (1983b); Bridger and Winpenny (1983). For the vast literature on water resource cost benefit analysis, the grandfather in the subject, which presents the foundation, see for example Eckstein (1958); McKean (1958). And for particular application to the human environment, McAllister (1980); Abelson (1979); Cooper (1981). 4 For general CB A treatment of these items see for example Sugden and Williams (1978); Abelson (1979); Pearce and Nash (1981); Pearce (1983). 5 Realfonzo (1983). For costs generally see Pearce and Nash (1981). 6 Krutilla and Fisher (1975), Ch. 3; Pearce (1983), pp. 98-105. 7 This is the Pareto criterion of welfare economics. For a discussion see Sugden and Williams (1978), Ch. 7. 8 This is the test associated with Kaldor-Hicks following a large discussion in the literature. For a discussion see Sugden and Williams (1978), Ch. 7. 9 For a discussion see Sugden and Williams (1978), Ch. 14; and Pearce (1983), Ch. 5. 10 This approach was used in Crompton and Lichfield (1962) by measuring the equally intangible benefit of environmental quality resulting from urban road schemes. The value is assessed by the analyst but could be tested by social survey. 11 Solow (1974), p. 302. 12 Dobb (1960), Ch. 2. 13 Pearce (1983), p. 53. See for a discussion Dasgupta and Pearce (1972), Ch. 6. 14 Marglin (1967), p.47ff. 15 Ramsey (1928), p. 453. 16 Pigou(1948), p. 25. 17 Sen (1957), p. 746. 18 Harrod(1948), p. 40. 19 Solow (1974), p. 302. 20 Marglin (1963), p. 95. 21 Solow (1974), p. 303. 22 Hall (1981). 23 Krutilla and Fisher (1975), Ch. 3.4; and Pearce (1983), Ch. 7. 24 Galbraith (1958).

15 Community impact: community impact analysis 1 See for example the cost benefit analysis carried out by the Roskill Research Team in Commission for the Third London Airport (1971). 2 Lichfield (1956), Chs. 18-19. 3 See Lichfield (1970); and Lichfield et al. (1975), Ch. 4. 4 Lichfield (1964).

Notes to pages 250-314 5 6 7 8 9

331

See for example Clarke et al. (1980). Lichfield (1985). For a review see Miller (1976). For the difficulties in this see Okun (1970) and Kaldor (1985). Lichfield and Schweid (1986), Part III (Hebrew).

16 The case studies 1 2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21

Based on Nathaniel Lichfield and Associates (1972). Based on Lichfield (1985) and Campbell-Jackson (1985). English Tourist Board (1986). Campbell Jackson (1985). Lichfield (1985). Campbell Jackson (1985). Lichfield (1985). Lichfield and Schweid (1986), Part III (Hebrew). Owing to the fact that the retained building in option A would be given to the Municipality and thus be credited against liability for betterment tax, whereas it could not be so credited in option B. Based on Consortium (1967); Nathaniel Lichfield and Associates (1967a and 1967b); Alexander (1974). Consortium (1967). Consortium (1967). Consortium (1967), pp. 3-5. Nathaniel Lichfield and Associates (1967a). Consortium (1970), Ch. 1. Alexander (1974). Nathaniel Lichfield and Associates (1967b); Greater London Council (1968); Consortium (1970), Ch. 8.2; Consortium (1970), Appendix P. Nathaniel Lichfield and Associates (1967b). Alexander (1978), p. 62. Alexander (1974), p. 58. Alexander (1974), p. 58.

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National Trust Act 1907 Town and Country Planning Act 1971 Wildlife and Countryside Act 1981 National Heritage Act 1983 Historic Buildings Commission for England 1985

Index

Authors cited in the footnotes and bibliography have not been included in the index. accessibility: of the cultural built heritage, 107 accommodation, demand for: and the cultural built heritage, 158-9 activities, human: and change, 45-7; as heritage, 63-4, 66; and obsolescence in the built environment, 26-7; and the urban life cycle, 9, 11-13, 13-16; and urban planning, 56, 95 adaptation: of the built environment, 26; and the cultural built heritage, 69, 106; of the Royal Holloway Sanitorium, 287, 291-300; see also rehabilitation adaptive use, 72 advertising, control of: on listed sites, 87 Alexander, Ian, 314 ancient monuments: listing of, 79, 81, 88 archaeological areas, 192; listing of, 79, 81, 89 archaeologists, 84 architects, conservation, 104, 157 architectural interest, special: and CBH conservation, 78, 80, 81 architectural quality: and listed building consent, 78, 88 artistic interest: and CBH conservation, 81 arts, the; as heritage, 63, 66 Associated Financial costs and benefits (AF), 208 Associated Financial impacts (AF), 265

Associated Real costs and benefits (AR), 208 Associated Real impacts (AR), 265 benefits, see costs and benefits bequest value, 177 betterment, 212 British Property Federation, 84 buildings: and conservation, 2; use of, and economics, 126, 130-1; see also listed buildings built environment: economics in management of, 117-44; as heritage, 64; and obsolescence, 54-5; reasons for conservation, 33-4, 57; as resource, property and commodity, 36-8; and the urban life cycle, 15, 17-18, 21-9; and urban planning, 53-4, 95; see also cultural built heritage Canada, 78, 84-5, 87; Alberta, 82, 86, 87, 89; CBH valuation in, 178-81; Ontario, 85, 89 case studies: in the economics of CBH conservation, 287-314 CBH, see cultural built heritage Central Buildings, Southwark: case study of, 287, 289-91 change: framework for, in CIA, 262-5; planning and management for, 45-9; and urban planning, 54, 96 CIA, see community impact analysis CIE, see community impact evaluation commodity: built environment as,

Index 36-8, CBH as, 119-20; cultural built heritage as, 67-8, 163; general heritage as, 64-5; human resources as, 35-6 communities: costs and benefits to, 188, 209-10; and inventory screening, 199-200; and urban planning, 53, 54, 56, 95-6 community impact analysis (CIA), 223, 245, 249-79, 280-4; in case studies, 256-79, 287, 299-300 community impact evaluation (CIE), 251-79; in case studies, 297-8, 299 community sectors: in community impact analysis, 268-74 compensation, 209, 210-12 conservation: arguments for, 29-30, 30-3; arguments against, 69; evolution of, 2-3 conservation areas: listing of, 79, 81, 88-9 conservation authorities: and financial analysis, 232-3, 234; and social cost benefit analysis, 243; and social financial analysis, 236, 237, 239 conservative surgery, 53 consolidation: of the built environment, 26 construction: in community impact analysis, 265-8 consumers: in community impact analysis, 272-3, 276, 277, 297-8 consumption: and economic life, 117-18 contractors: and social financial analysis, 236, 238 cost benefit analysis (CBA), 189, 241, 244, 249-50, 251, 287, 301; and CBH programme priorities, 163-4; social cost benefit analysis, 223, 235, 240-8 cost and benefits: in case studies, 29, 328-9; and the cultural built heritage, 71, 103, 201-15; in discounting, 138; in human resources, 123; and planning, 153-4; of property interests, 136-7; sectoral distribution of, 205-8; see also financial analysis

355 Covent Garden case study, 287-8, 303-14 cultural built heritage (CBH), 45, 61-109; definition of, 66-7; economics in conservation of, 145-51; economics in planning for conservation of, 152-66; identification and protection of, 77-90; management and planning for conservation of, 91-109; nature of, 63-72; as property and commodity, 67-8; reasons for conservation, 68-9; and social cost benefit analysis, 248; valuation of, 167-91; w« also listed buildings cultural conservation, 53, 96 cultural evolution, 53 cultural fields, 181 cultural interest: and CBH conservation, 81 cultural heritage, 65-6; description of, 73 cultural quality: and the CBH, 72; evaluation of, 178-81; and social cost benefit analysis, 244 cultural value, 168-9; of the CBH, 77, 80 culture conservation, 53 Cyprus, 85, 87 dates, adoption of: and CBH protection, 81 Denmark, 82, 84, 87 Department of the Environment (DOE), 41,80, 84, 88, 196,315 deterioration of buildings: and economics, 148; prevention of, 26 developers: and community impact analysis, 269, 271, 276, 277, 278-9, 302; and inventory screening, 198-9; and social financial analysis, 236, 238 development: and change, 45-7; and compensation, 210-12; of urban resources, 29-30 development planning, 42, 43, 49; and CBH conservation, 102 direct conservation: of the built environment, 26

356

Index

direct control: and costs and benefits, 204; and urban planning, 100 direct costs and benefits (D), 208 direct impacts (D), 265 direct value, see private utility discounting, 138-9; and social cost benefit analysis, 245-8 displacement: in community impact analysis, 265-8 economic life: and conservation, 113, 117-20 economic obsolescence: of buildings, 126, 131-2, 150 economics: in CBH conservation, 145-51; and cultural valuation, 181-2; and the evolution of conservation, 3-5; and inventory screening, 195-6; in managing the built environment, 117-43; and planning, 152-3; in planning for CBH conservation, 152-66; in urban conservation, 113-215 efficiency: and community impact analysis, 276-8, 279; and community impact evaluation, 252-3, 255; and cost benefit analysis, 244; and equity, 154, 188-9, 255, 279 England: CBH listing in, 79, 80-1, 82, 83-4, 86, 88-9 environment: improvement of, costs and benefits, 204; physical, and the urban life cycle, 9, 11, 12, 13-16; of conservation projects, 165; environmental obsolescence, 23-4, 25, 26, 27-9, 101, 131, 143 equity: and community impact analysis, 278-9; and community impact evaluation, 253-5; and efficiency, 154, 188-9, 255, 279 estate management, 39-40 ethics of conservation, 99, 104—5, 203 exchange value, 135-6 FA, see financial analysis filtering down process: and obsolescence, 25 financial analysis (FA), 223, 227-39; in

case studies, 287, 295-7; see also social financial analysis financial assistance: and CBH conservation, 100, 148-50; and CBH listing, 86; and development, 130; implications of borrowing money, 137-8; and plan implementation, 100 financial intervention: and costs and benefits, 204 financiers: in community impact analysis, 276, 277, 278-9; and social financial analysis, 236, 237, 238 folkways (community patterns): and urban planning, 53, 96 Forte, Carlo, 176-7, 182 France, 78, 82, 84, 85, 86, 87, 89 freedom failure, 154, 155 functional obsolescence: in the built environment, 23, 24, 26, 27-9, 131, 132; and the cultural built heritage, 148, 160 Geddes, Patrick, 53 gentrification, 27 Girard, Fusco, 176, 177, 182, 188 government: co-ordination by, 205; costs and benefits to, 201, 204-8, 209; economic life and conservation, 119-20; failure, 154, 155; and heritage tenure, 67-8; identification and protection of the CBH, 77-90; intervention, 3, 4, 65, 97,' 166; occupation by, 204; ownership of CBH, 205; and plan implementation in CBH conservation, 99-102; and social cost benefit analysis, 246; valuation of the CBH by, 174-5; see also conservation authorities; local authorities Greece, 69 group valuations: of the CBH, 171, 178 growth: and CBH conservation, 98; and conservation, 3; and development, in urban resources, 29-30; and urban planning, 56 Hayek, F. A., 152 heritage: cultural and natural, 7 3 ^ ;

Index general, and the cultural built heritage, 63-6 heritage quality, 136, 150-1, 163; development affecting, and economics, 196-200; grading of, in list preparation, 177-81; in the Jerusalem case study, 301; valuation of, 169, 192, 240 heritage tenure, 67-8, 119, 120, 146, 162, 192; costs and benefits, 201, 202 heritage value, 161, 162-3; and conservation programmes, 165, 166; and the cultural built heritage, 167; economics of, 119-20, 134; and opportunity cost, 190 historic buildings, 2, 5, 66 Historic Buildings and Monuments Commission, 80, 83 historic interest: and CBH conservation, 78, 80, 81 human activities, see activities, human human resources: as commodity, 35-6; and economics, 122-3; reasons for conservation, 31-2; and the urban life cycle, 9, 17, 20; and urban management, 44-5 ICCROM (International Centre for the Study of the Preservation and Restoration of Cultural Property), 93 ICOM (International Council of Museums), 93 ICOMOS (International Council on Monuments and Sites), 93 IMCA (International Congresses on Modern Architecture), 93 immoveable resources: and economics, 123-4; as heritage, 63; reasons for conservation, 33-4; and the urban life cycle, 18,21-9 impact assessment (IA), 250 India, 78 indirect conservation: of the built environment, 26 indirect costs and benefits (I), 208 indirect impacts (I), 265 indirect value, see social surplus value

357 individual valuations: of the CBH, 170-1 inflation, effects on price levels, 140 infrastructure of services, 40, 47 internationalism, cultural, 93-5 inventory of buildings, see listed buildings Israel, 85; see also Jerusalem Japan, 64, 78 Jerusalem, 69; case study in, 256-79, 300-3 Kalman, Harold, 182 knowledge: as heritage, 63, 66 land, development on unbuilt: economics of, 125-6, 128-30 land, use of open: economics of, 125, 127-8 land administration, 40 land economy, 40 land profit, 129 land units, 18 land use, and life cycles: in the built environment, 140-1; in the cultural built heritage, 150-1 land value, see land use, and life cycles landowners: in the built environment life cycle, 140-1; and community impact analysis, 269, 271, 276; in the Jerusalem case study, 271, 276, 302; and social financial analysis, 236, 238 leased property: economics of long leases, 142-3 legal obsolescence, 23 legislation: on CBH listing, 84 life, sanctity of: and human resources, 31-2 life cycle: of the built environment, 124-7, 140-1; of the cultural built heritage, 146-51; of the urban system, 11-34 life expectancy, 20, 31-2; of the CBH, 67 listed buildings: criteria for consent, 315-16; financial analysis of refurbishment, 227-35; grading

358

Index

heritage quality, 177-81; identification and protection of, 77-90; screening of list, 192-200 Livable City, The (Davidson and McEwen), 113 local authorities: and compensation, 210; corporate planning and management for, 40-3; costs and benefits to, 205-8; and management, 47 locational obsolescence, 23, 24, 26, 27-9, 131 macro planning: and CBH conservation, 96-8, 102-3, 195 maintenance: of the cultural built heritage, 70, 87, 107 man-made resources: and economics, 123-4; as heritage, 63, 65-6; as property, 35; reasons for conservation, 3 2 ^ ; and the urban life cycle, 9, 17-18, 20-1; and urban management, 45 management: of the built environment, economics in, 117-44; and conservation of the urban cultural heritage, 91-109; and planning, 47-9, 91; of urban resources, 35-49 market, the: and economics, 189; and planning, 153-5 market failure, 97, 154, 155 market value, 135-6; and the cultural built heritage, 175-6 Marx, Karl, 36 Mexico, 78 micro planning: and CBH conservation, 98-9 Mishan, E. J.,209 mixed economy, 4 monitoring: of plan implementation, 52 monuments, 2, 192; listing of, 79, 81, 88 Morocco, 64, 78 Morris, William, 68 moveable cultural property, 75-6 moveable resources: and CBH listing, 85; and the cultural built heritage, 78; and economics, 123; as heritage,

63, 65; reasons for conservation, 32-3; and the urban life cycle, 18, 19, 20; and urban management, 45 Myrdal, Gunnar, 152 Nairobi Charter (1976), 94-5 natural heritage: description of, 73-4 natural resources: and conservation, 2; and economics, 122; as heritage, 63, 65; as property, 35, 36; reasons for conservation, 30-1; and the urban life cycle, 9, 15, 17, 19-20; and urban management, 44; and urban planning, 53, 57 New Town Development Corporations, 40 new urbanisation, 16 new use for old, 72, 148 New York, 86, 90 Nijkamp, Peter, 182 Norway, 85, 89 objectives of conservation: and the cultural built heritage, 106, 109 obligations: in the built environment, 37-8 obsolescence: and the cultural built heritage, 69-70; deferment of, and planning, 158; economic, 126, 131-2, 150; and economic feasibility of CBH conservation plans, 159-60; and economics, 137, 141, 142, 143, 147; and inventory screening, 195, 198; in man-made resources, 33; and plan implementation in CBH conservation, 100, 101; role of planning in deferring, 54—5; and the urban life cycle, 18, 21-9; and urban management, 45; and valuation of the CBH, 169 occupation, viability for: case study of, 287, 289-91 occupation value of property, 72 occupiers: and CBH conservation, 99-102; and CBH listing, 83; in community impact analysis, 269, 271, 276; costs and benefits to, 201-3; and the cultural built heritage, 72; and economics, 121, 128, 129, 130-1, 133-4,137;and

Index inventory screening, 195; and social financial analysis, 236, 237, 239; valuation of the CBH by, 171 operation: in community impact analysis, 265-8 operational planning, 42, 49 opportunity costs, 182-8, 190, 203, 243, 302-3 option value, 177 owners of property: and CBH conservation, 99-102; and CBH listing, 83, 84, 85, 91; and the cultural built heritage, 72; and compensation, 209, 210-12; costs and benefits to, 201-3, 205-8, 209; and economics, 121, 128, 129, 130, 131, 137; and financial analysis, 232, 234; and inventory screening, 194, 195, 198-9; valuation of the CBH by, 171; and urban management, 39-40; see also landowners partnerships, public-private: and CBH conservation, 101 Perloff, Harvey S., 54, 56 physical environment, see environment physical (structural) obsolescence: in the built environment, 23, 24, 26, 27-9, 131, 132, 148, 160 physical planning, 51 physical stock: and change, 45-6; as heritage, 63; and urban planning, 53-4, 56, 95 plan implementation, 50, 51, 52, 57, 93; and CBH conservation, 99-102, 162 plan making, 50, 51, 56; and CBH conservation, 96-9, 157-9; and costs and benefits, 203; economics in CBH conservation, 157-9 planning: and conservation, 3; and economics, in CBH conservation, 152-66; effect of planning control, 143-4; and inventory screening, 194-5; and management, 47-9, 91; and social opportunity cost, 186; for urban conservation, 50-7, 91-109; or urban resources, 35-49 planning balance sheet analysis (PBSA), 250, 251, 255; in the

359 Covent Garden case study, 287-8, 312-14; examples of studies, 280-4; see also community impact analysis planning gain, 144 Poland, 78 policies: in urban and regional planning, 99-100 pollution: and the management of natural resources, 44 Portugal, 87 preservation: of the built environment, 26; and urban planning, 56-7 price level, changes in, 139-40 pricing for conservation, 213-14 private land policy, 38 private opportunity costs, 183-6, 203 private sector: and the built environment, 36; and conservation projects, 166; and discounting, 138-9, 245; and economics, 117, 134-5, 189 private utility (direct value): and CBH valuation, 176-7 producers/operators: in community impact analysis, 272, 276, 277, 296, 297,313 professionals: and social financial analysis, 236, 237, 239 programmes, conservation: CBH, and economics, 161-3; CBH, priorities in, 163-5 project evaluation, 190 project implementation: CBH, economics in, 165-6; and CBH conservation, 103-5; and CBH valuation, 191 projects, conservation, 162 property: built environment as, 36-8; cultural built heritage as, 67-8, 146; heritage as, 64-5; life of, and economics, 141-3; management, and the CBH, 71-2; urban resources as, 35-6; see also occupiers; owners of property proprietary interests in conservation: economics of, 120-2 proprietary land unit, 37, 39-40 protected monuments, 81 public land policy, 38 public sector: and the built

360

Index

environment, 36-7; and conservation projects, 166; and discounting, 245, 248; and economics, 117, 134-5, 189; and social cost benefit analysis, 240-1 quality of conservation: grading of, 82-3 quality of life, 32 Realfonzo, Almerico, 242 reconstruction, 21; of the built environment, 26; and economics, 141 redevelopment, 21; case studies of, 287, 289, 300-14; and community impact evaluation, 260, 262, 264, 265, 267; and the cultural built heritage, 70; economics of, 127, 133-4, 135, 136, 147; financial analysis of, 229, 230; and inventory screening, 198; and opportunity cost, 183-6, 187-8; versus rehabilitation, 134 regional planning, 41, 50-2, 95, 99-100; effect of planning control, 143-4; role of economist in, 155-7 rehabilitation: of the built environment, 26; and community impact evaluation, 260, 262, 263, 265; and the cultural built heritage, 70, 72, 160; economics of, 127, 131, 132-3, 135, 141, 142, 148; enhancement of use value, 158; and inventory screening, 198; and opportunity cost, 183-6, 187-8; versus redevelopment, 134 religion: as heritage, 63, 66 religious buildings, 79, 107 renewal: and the cultural built heritage, 69-70; and economics, 137, 141, 147-8; and the urban life cycle, 21-9; and valuation of the CBH, 169 replacement: of the built environment, 26; and the cultural built heritage, 69 reproduction: of the built environment, 26 resource: the cultural built heritage as, 145-6

resource costs, 242-3 resource management, 43 restitution: of the built environment, 26 restoration: of the built environment, 26; and CBH listing, 87; and the cultural built heritage, 70, 106; and economics, 141, 147; and opportunity cost, 183-6, 187-8 rights: in the built environment, 37-8 Royal Hollo way Sanitorium, Surrey: case study of, 287, 291-300 Robbins, Lionel, J52, 153 Ruskin, John, 68 sanctity of life, 31-2 SCBA, see social cost benefit analysis scheduled monuments, 81 sectoral planning, 92 services: and the urban life cycle, 18 SFA, see social financial analysis signals on value, 181 social cost benefit analysis (SCBA), 223,235,240-8,249,250,251 social decision on conservation: and economics, 188-9 social financial analysis (SFA), 223, 235-9, 249; in case studies, 287, 301, 308, 309-12 social opportunity costs, 186-8, 203 social surplus value (indirect value): and CBH valuation, 176-7 society: valuation of the CBH by, 172-3 socio-economic development, 46-7 special architectural and historic interest, buildings of, 80, 81 Standing Conference of Archaeological Unit Managers, 84 state, the, see government structural deterioration, see physical obsolescence sustainable development, 29 Sweden, 79, 84 Switzerland, 79, 84, 89 tax relief: and CBH conservation, 149-50; and financial analysis, 234-5 taxation, 204, 212

Index technological changes: and locational obsolescence, 24 time orientated planning, 54, 56 tourists, 109, 160, 176, 213; and benefits, 188; and conservation, 214-15; problems of, 107 town planning, see urban planning Turkey, 85, 89 UNESCO (United Nations Educational, Scientific and Cultural organisation), 93; on moveable cultural property, 75-6 United Nations, 2 United States, 2, 3, 79, 81-2, 84-5, 86, 87, 89; and compensation law, 211; New York, 86, 90 urban: definition of, 1, 11 urban cultural heritage: management and planning in conservation of, 91-109 urban management, 39-43 urban planning: and the cultural heritage, 95-6; effect of planning control, 143-4; role of CBH in, 91-5; role of conservation in, 52-4; role of economist in, 155-7 urban renewal, 25 urban resources: life cycle of, 16-21; planning and management of, 35-49 urban system: life cycle in, 11-34; role of planning in, 50-2

361 utility, 118, 119, 120, 168, 170 valuation: of the cultural built heritage, 167-91; and social cost benefit analysis, 243-4 value: of the CBH, reasons for, 105; definition of, 167-8; of land, and the built environment life cycle, 140-1; in the market, 135-6 value for money, 118, 162; and CBH listing, 193; and conservation programmes, 166; of conservation projects, 164, 165; and cultural valuation, 182; and heritage value, 119-20; and inventory screening, 198 Venice Charter on International Restoration, 93 visitors: and benefits, 188; and the cultural built heritage, 160; pricing of, 213-14; problems of, 107 Ward, Barbara, 113 Washington Charter (1987), 95 Webber, M., 11 West Germany, 84, 85 World Cultural and Natural Heritage, 73 World Heritage Convention, 94 World Heritage List, 82 WTP (willingness to pay), 168, 170, 176, 177