Heritage and the New Economy

“The success of preserving our global cultural patrimony is not merely a function of financial or economic investment, but requires implementation of a methodology encompassing several essential and inter-related factors that lays the foundation for long-term sustainability.”

“Over time, the challenge is not just the implementation of world-class conservation, but to invest in local conservation and economic capacity.”

The above quote from the Global Heritage Fund’s 2008 white paper “Sustainable World Heritage Preservation in Developing Economies” epitomizes the 21st century approach to heritage conservation (historic preservation) that combines earlier curatorial and architectural standards with an advanced understanding of political and social economy. This advanced understanding is one of the reasons I was pleased to accept the role as Chair of the Senior Advisory Board of the Global Heritage Fund this fall.

Yet there is a still a steep learning curve for many who see heritage conservation and economic development as separate or even oppositional realms. The stereotype of the preservationist standing in front of the bulldozer or trying to craft a museum out of the town’s oldest house dies hard for many. Preservationists are motivated by history and architecture and other ennobling attributes unrelated to how our economy works. They stand in the way of progress.

Of course, this has changed over the last fifty or sixty years. For 35 years we have had tax credits for preservation, which has won over much of the private development community. Indeed, the last 20 years those of us who want to save buildings have generally had more to fear from billion-dollar not-for-profit universities and hospitals. The big Chicago preservation issue – Prentice Hospital – for the last two years is a classic example: demolition is being pushed by one of the best capitalized entities in the state (a billion in cash!) on a site two blocks from the most expensive real estate between Manhattan and San Francisco that they DON’T PAY TAXES ON.

is that another vacant block in front? And another behind?
But see what I just did? I made an economic argument. I didn’t say a thing about architecture or history or beauty or character. I’m not an economist (although my 2008 blog on teardown economics was lauded by those in the know) but I study it and I consult with economists regularly on heritage conservation issues.

I don’t do this because I fell in love with old buildings and slowly but surely learned that I needed to make economic arguments. I did it from Day One, which I seem to recall was February 22, 1983 when I got my first job in “historic preservation” and that day the entire Illinois Congressional delegation introduced the first heritage area bill to the U.S. Congress, a bill which had NO REGULATION and defined its goals as a COMBINATION of preservation, economic development and natural area conservation. Saving buildings has been an economic enterprise and economic imperative ever since, so excuse me if I don’t “get” the people who don’t “get” that.

But it occurred to me recently in discussions with GHF economists and staff about metrics for our international heritage conservation projects, that the world has seen the evolution of a new mode of heritage and economy over the last thirty years. Donovan Rypkema has been one of the outstanding voices in this discussion for the same period of time.

With the advent of the National Trust’s Main Street program in the late 1970s and heritage areas in the early 1980s, a movement that HAD BEEN heavily inflected by curatorial ideas about history and architecture recognized the nature of the social economy and thus learned to balance – and enhance – their desire to save buildings with political and economic reality. Preservation was one-quarter of the Main Street formula, and a similar fraction of the heritage area formula.

For the purist, this seemed a retreat, but in fact it was a massive gain because it made heritage conservation a legitimate form of economic development. And so it has been for my ENTIRE CAREER. And it isn’t just tourism – heritage conservation brings real, local economic development: you can’t outsource construction and building maintenance jobs, for example. I’ve blogged endlessly about the incredible investment my community makes in rehabilitating historic buildings because it enhances property values and tax revenues. Sure we get tourism, but there is an economic rationale to preserving buildings that is not dependent on tourism – and it is a longer-lasting benefit than a strip mall or most corporate relocations.

But there is still cognitive dissonance out there, partly because it flouts traditional models studied by economists and business schools, not to mention architects and conservation professionals. The traditional not-for-profit model relies on philanthropy and membership. The traditional business model relies on capital and revenue streams, inventory, distribution and even research and development.

Of course, today many not-for-profits have massive revenue streams, whether they are museum gift shops, tuition, Medicare payments or sponsored events. But the fundamental model has never been adjusted despite the fact that for three decades, all over the world, we have a newly emergent model that is neither pure philanthropy nor pure business. It is heritage-focused and it is perhaps an inextricable aspect of the post-industrial consumer economy.

Heritage conservation preserves unique aspects of place and in the process can monetize those characteristics for a consumer economy both as an attraction for visitors and also – more importantly – as an impulse for ongoing, place-based investment of human energy and capital. Traditional metrics have become more sophisticated in terms of tourism, and we can quantify the spin-offs of significant investments in local infrastructure, including buildings. For over 15 years I have shown students the work that David Listokin did at Rutgers where he demonstrated how preservation kept DOLLARS local, especially in contrast to projects like highway construction. Main Street economists have been showing the same thing for decades: heritage conservation investment penetrates local jobs, income and tax revenues deeper and longer than franchise development that effectively “keeps” a bigger piece of each capital investment away from the local economy.

Despite political rhetoric, there is a governmental aspect as well, since government has always been inextricable from economics. There would be no University of Phoenix or other for-profit schools without government student loans. There would be no strip mall investment without government roads. Heritage conservation is similar, and part of it is regulatory.

Consumer economies are middle-class economies, driven by people who think they know what they want and deserve. Most obviously this social economy is manifest in simple acquisition: iPads, automobiles, deodorants and shoes. But the physical environment itself is a consumer product as well. Again, we have the obvious impacts, like big kitchens and stainless appliances and granite countertops. But we also have ones that require regulation, like clean air and tolerable amounts of mercury in our food. Middle class people expect to be able to choose those things as well. And they often choose historic buildings. I live in Oak Park, which doesn’t allow you to demolish historic buildings. The result of that regulation? One of the most popular neighborhoods to live in in the United States, as shown here. Despite February.

Any industry that can beat Chicago February is a viable industry. So the regulation works as an investment in the consumer economy. Most diatribes against regulation are actually diatribes against “new” regulation because the key to any successful capitalist endeavor is limiting uncertainty. Long ago industry got used to figuring out how to get coal out of mile-deep seams WITHOUT ten-year olds. It just requires an updated business model and sense of certainty about costs and revenues. Which is the same calculation the Oak Park homebuyer is making.

Heritage conservation offers a kind of 21st century consumer-based economy that is more certain and predictable than those dependent either on the revenue of novelty that so often drives the private sector or the revenue of charity that so often drives the philanthropic center. Here is how it works: a seed charitable grant starts up a conservation project, which injects a sense of certainty and purpose into the local economy and environment. The investment attracts other investment, and the character of the investment – long-term; identity-defining; culturally significant – works to limit the kind of short-term investments that can short-circuit long-term development goals by playing pop and fizzle.

Heritage conservation allows a community to identify key significant aspects of its character and invest in those aspects for the long term and it does so through a combination of governmental, for-profit and not-for-profit entities. Many not-for-profits today – and for the last thirty years – are effectively spurs to redevelopment. We are familiar with neighborhood development organizations (where I started my job search in 1983) and chambers of commerce and tourism boards that serve this function. In fact, heritage conservation organizations are increasingly occupying this essential economic and community development role, because their model for development is inherently more sustainable at both the micro (nothin’ greener than the building already there) and macro (development in line with local character last longer than development in contrast to local character) levels.

More importantly – and this takes us back the GHF quote at the beginning – heritage conservation effects a kind of local economic restructuring that is more sustainable. Analagous to the “economic restructuring” pillar of Main Street, investments in conservation develop local skills. We had a great example of this when I met with the community in Las Cruces four weeks ago: they proposed creating a center of local adobe expertise – they have one of the international experts – and training, meaning that the effort to preserve local heritage creates doesn’t just create jobs and investment. It creates capacity and knowledge – the true foundations of 21st century economy.

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Tags: David Listokin, Donovan Rypkema, Global Heritage Fund, heritage economics