Professional Documents
Culture Documents
Economics in
urban conservation
Nathaniel Lichfield
New Rochelle
Melbourne
in association with
Jerusalem Institute for Israel Studies
Sydney
Contents
List of diagrams, tables and plans
page xi
Preface
xiii
Acknowledgements
xv
Introduction
11
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13
16
17
17
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Contents
1 8 3 Man-made
1 8 4 Overall
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Contents
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Part III
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viii
Contents
7
7
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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
10
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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
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175
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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
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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
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1
2
2
2
Context
An illustration offinancialanalysis
1 Where the refurbishment is viable
2 Where the refurbishment is non-viable
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
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240
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14
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14
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1
2
3
4
Context
Origins of method
Method and technique of SCB A
The social rate of discount
249
15-1
15 2
15 3
15 4
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15
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15
5
6
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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
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276
287
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314
315
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354
Diagrams
1.1
1.2
1.3
2.1
9.1
10.1
10.2
10.3
12.1
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
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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
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Plans
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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
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
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.
Introduction
Introduction
Introduction
Introduction
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
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
Life cycle
in the urban system
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
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
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
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
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
15
16
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
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.
17
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
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
19
1.5.
1.5.1
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
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
21
1.6
1.6.1
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
(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).
23
24
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;
25
1.6.3
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
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
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
Environmental
Diagram 1.3
Obsolescence, renewal and conservation in the life cycle of urban fabric
29
1.7
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
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
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
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
Man-made
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
Overall
Planning and
management of urban
resources
2.1
2.1.1
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
2.1.2
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
37
38
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?
39
2.3
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
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
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2. identification
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3. assembly of
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Diagram 2.1
Development plan/operational plan relationships
Source: Reference 39
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
Focus
44
2.4.2
Natural resources27
Human 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
2.5
2.5.1
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
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-
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
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
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
2.5.4
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
49
3.1
3.1.1
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).
51
Plan making
52
3.1.3
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
3.2
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).
53
54
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.
55
3.4.
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
56
57
Part II
Conservation of the
cultural built heritage
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
62
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;
64
4.2
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,
65
4.3
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
66
4.4
67
4.5
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
68
69
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.
70
71
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
72
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.
74
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.;
76
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
78
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
5.2
5.2.1
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
79
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
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?
80
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.
81
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
82
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.
83
5.3
5.3.1
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;
84
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
85
5.4
86
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.
87
88
5.5
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
89
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
90
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.
6.1
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
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
92
94
6.3
96
6.4
6.4.1
Macro planning
98
Micro planning
6.5
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
100
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.
102
6.6
6.7
104
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.
106
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).
108
Part
Economics in urban
conservation
113
Introduction
The opening paragraph of a recent report with the compelling title The
Livable City stated:1
1
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.
114
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
115
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
116
7.1
7.1.1
Economics in the
management of the built
environment
118
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
119
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,
120
7.2
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
121
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
122
7.3
7.3.1
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
123
7.3.3
Man-made resources
124
7.4
7.4.1
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
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).
125
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
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
126
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/vd/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
127
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 (rehlvrehlc)
- 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
128
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 (oclvgoclc).
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
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
129
130
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
131
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
132
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
133
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
134
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
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
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
135
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.
136
100
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
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
137
7.6
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
138
7.7
139
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.
140
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.
141
7.9
Life of property
142
143
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
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
144
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).
8.1
Economics in the
conservation of the CBH
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).
146
8.2
8.3
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
147
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
8.3.3
Economics of renewal
148
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
8.3.5
149
150
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
151
Economics in planning
for conservation of the
CBH
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
153
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
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
154
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
155
9.3
156
157
158
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.
159
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
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
160
161
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
162
163
9.8
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
164
PROJECT No.
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
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
165
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
166
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?
168
10.3
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
169
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.
170
10.4
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.
171
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
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.
173
174
10.4.4
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
175
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
176
10.6
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.
177
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.
178
179
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
Date
Date
180
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
181
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
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
182
10.9
10.9.1
183
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
Do minimum
Rehabilitation
Restoration
Redevelopment
Score
48
65
82
0
Ranking in HV
3
2
1
4
184
(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
20
40
185
60
80
100
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
inm
-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
186
10.9.3
Social
187
4-
o
>
z
DC
2_
20
40
60
80
100
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
188
189
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).
190
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
11.2
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
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
194
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
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.
195
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
196
11.4
11.4.1
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
197
198
11.4.2
199
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
200
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).
12.1
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
12.2
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
203
204
205
12.4
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
Sector
Sector
Consumers
Impact of conservation
Description
Type R C
5 6
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
Property values
AF
Costs
Operating costs
Capital and
operating costs
Capital and
operating costs
D
D
Operating costs
Employment
AR
10
2
Occupiers of property
Occupation values
- nearby
- general
6 Local services
Occupier
AR
AR
AR
AF
Local ratepayers
Rate assessments
Economic flows
16 Local community
- residents
- workforce
Environment
Culture
Employment
AR
AR
Heritage prestige
Tax assessment
I
AF
Opportunities for
heritage
AR
18
20
National
- citizens
- taxpayers
Posterity
11 12
208
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 (1420). 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
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
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
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
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
212
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
213
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
DISBENEFITS
COSTS
Traffic,
Parking, etc.
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
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.
215
Part IV
Selected tools of
economic analysis for
project evaluation
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
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.
222
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-
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?
224
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
Financial
Economic
Site
-on
-off
Sector
- promoter
- on site
- off site
- all relevant
Costs and benefits
- direct
- some indirect
- community
225
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
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
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
13.2
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
228
(a)
(b)
(c)
(d)
(e)
(f)
3,030,000
929,000
2,101,000
903,000
1,198,000
1,200,000
500,000
229
appraisal
(a)
(b)
(c)
(d)
(e)
(f)
3,307,000
817,000
2,490,000
963,000
1,527,000
1,525,000
825,000
230
(a)
(b)
(c)
(d)
(e)
(f)
5,660,000
1,600,000
4,060,000
1,607,000
2,453,000
2,500,000
1,000,000
231
(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
232
(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
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
233
13.2.2
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.
234
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
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.
235
13.3
Cost/benefit
items
Developer
Landowner
Contractor
Financier
Professionals
Occupier
Conservation
authority
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.
238
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.
14.1
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
241
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
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.
242
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
243
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.
244
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.
245
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.
246
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
247
248
15 Community impact:
community impact
analysis
15.1
Context
250
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
251
252
253
254
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.
255
15.5
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);
256
15.6
15.6.1
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
Plan 15.3
The old Sha'arey Tsedek Hospital site: Jerusalem: redevelopment scheme
Note: Based on design by Y. Allon
260
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
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
11
12
13
262
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
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)
Displaced
Construction
On completion
4-1
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
41
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
Displaced
x
x
x
265
(conservation)
Impacts from
Displacement
Project variables
1.
Roads:
2.
3.
Widening
New
Huts
Hospital as NHM
Grove
Flats and car parks
X
X
X
X
X
X
AR AF
Construction
D
X
X
X
X
X
X
X
X
AR AF
Operation
D
X
X
X
X
AR
AF
X
X
(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
X
X
X
X
X
X
(X) (X)
(X) (X)
AR
Construction
AF D
X
X
X
X
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
268
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.
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
AB
AB
No.
2
4
6
AB
A
A
B
A
8
10
AB
12
AB
AB
14
AB
AB
AB
16
Description
Option
AB
AB
AB
A
A
B
AB
A
AB
AB
AB
AB
AB
AB
AB
AB
AB
AB
Project
Impact
variables
type
No.
Name
Option A
option B
New roads
D
AR
AR
AR
D
AR
AR
AR
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
v+
V
V
V-
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)
I
AR
14(2)
14(3)
Nearby residents
Downtown users
AF
14/16
Government/taxpayer
v+
V-
v+
V-
v+
v+
v+
VV-
v+
Sectoral objective
Units
B-A
Preference for
Subsector
Sector
No.
Description
No.
Project
variables
10
1,2,3
1
2
2
2
3
D
D, AF
D
D
AF
0
-
=
A
A
B
A
1
3
PRODUCERS/OPERATORS
Current landowner of site
Developer/financier
Municipality on site
(1) Roads/utilities
(2) NHM
(3) Grove
(4) Open space
(5) New flats
+
+
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
A
=
=
A
0
-
A
=
A
B
A
A
A
=
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
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
D
AR
D
D
F
AR
AR
AR
Reduce congestion
Increase accessibility
A
A
B
B
A
A
8
10
12
Other occupiers
(1) adjoining
(2) elsewhere
2,3
2,3
AR
AF
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
16
Notes:
Taxpayers
Col. 7
8
:
:
9
9& 10
:
:
N/C
A
A
B
N/C
A
274
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.
275
276
Landowners
Developer/financier
Municipality on site
Government: national heritage
Municipality off site
Other landowners
Jerusalem economy
Government budget
V
V
V
V
V
V
CONSUMERS
2
4
6
8
10
12
14
16
V
V
V
V
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 (?).
277
278
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
279
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
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
particular
Motor-cars
Public transport
Public vs. private
transport
Stevenage
Pedestrian crossing
general
Accessibility and environment
in redevelopment
Newbury
(6)
kind
Ipswich
Manchester
of
content
1969
1980
1974
1983/84
1969/71
1980
1963
1970
1984
282
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
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
284
NL
1986
PartV
Case studies in the
economics of
conservation of the
CBH
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
288
16.1
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.
290
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
291
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.
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
Residential
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
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).
294
30,255,000
825,000
68,875
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
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.
295
viability
15,517,500
387,940
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.
296
Community sectors
Item Description
Sectoral objectives
Options
compared
with current
O/R R
Preference
Current landowner
Developer/financier
Local authority off site
Other landowners:
- Laundry
- Sandhills Lane
- Other
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
10
12
14
16
Workforce
Gain accommodation
O/R
O/R
O/R
O/R
R
NIC
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.
297
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
V
V
N/C
N/C
N/C
N/C
V
V
V
V
: V indicates preference
N/C indicates non-certain.
298
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
299
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
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
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
301
302
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.
303
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.
V *.
V
o
IHCCADILLY
CIRCUS
o i
Plan 16.2
Covent Garden, London: location plan
^^M
COVENT GARDEN
SURVEY AREA
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
Plan 16.3
Covent Garden, London: redevelopment opportunity
Note: Based on Covent Garden's Moving: Covent Garden Area Draft
Plan, 1969
APPRAISAL
\
SUMMAHYMAP:
BEDEVELOPMENT
0PPORTBWT1ES
FIG 10
307
308
(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).
309
ITEM
Whole
scheme
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%
Item
Whole
Private
(000)
Westminster
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
-
310
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.
312
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.
313
Group
Item
Costs (m)
P
C
Benefits (m)
P
C
A. PRODUCERS/OPERATORS
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
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
1.2
m**
0.8
m**
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
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
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.
16.5
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
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
27
28
29
30
31
32
33
34
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).
320
321
322
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.
6
7
8
9
10
11
12
13
14
15
16
17
18
323
324
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
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).
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.
328
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).
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).
330
331
10
11
12
13
14
15
16
17
18
19
20
21
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List of statutes referred to:
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
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
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
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
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