Estimating the Economic Value of Historic Properties for Purposes of Mitigation under Section 106 of the National Historic Preservation Act
Historic Preservation/Cultural Resources
Community & Cultural Concerns
Research Idea Scope
Mitigation for the adverse effects to historic properties under Section 106 of the National Historic Preservation Act often entails an “economic” exercise of trying to estimate the value of the historic property adversely affected, and taking an action commensurate with the loss. Unfortunately, the value of an historic property is difficult to estimate. The real estate value of a historic building might be low, due to the location and condition of the building, but the historic value of the building might be great insofar as many people might see a strong connection between the building
and their personal history.Similarly, with archaeological sites, the historic value of the site is calculated as the cost of recovering the important information that might be lost; however, this presumes that the conducted work will recover that information. Also, it presumes that the archaeological site has no other intrinsic value, such as the presence of ancestral burials. For historic bridges, the economic value of the bridge might actually be negative. The cost of rehabilitating the bridge might greatly exceed the cost of simply replacing the bridge and selling the old bridge for scrap. Yet many of us are emotionally attracted to an old metal truss bridge and would wish it to be preserved. And indeed at many locations, state transportation departments make a decision to rehabilitate a historic bridge knowing that on pure economics a replacement would be better. Section 4(f) recognizes the historic value of a bridge or other historic property and requires that preventing the loss of the property entail extraordinary costs.
As historic preservationists and cultural resource managers, we routinely have to deal with the loss of a historic property, i.e. an adverse effect. Each and every time, we have to devise or divine an appropriate mitigation that “makes up for” the loss of the historic property. For archeology, the
easiest approach is to estimate the cost of conducting archaeological research. However, that cost is subject to variation since all archaeological research is a matter of sampling and methodology. A site could be mitigated at 0.5% with a backhoe or mitigated at 5% with shovels and spoons. The costs could vary by a magnitude or more, yet each could be defended as recovering the important information. For historic buildings and for bridges, we record them to HAER standards and we move them to a different location. We buy easements and do historic research, and popular outreach. In each case we say that the effort mitigates the adverse effect, with the presumption that the effort was commensurate with the loss. But we have no way to confirm that.
To establish a consistent methodology for assessing the economic value of historic properties, including archaeological sites, taking into account historic values. It would be expected that
this research would be conducted in two phases. The first phase would be a survey of the costs of common mitigation actions across different states to establish a record of common practice regarding valuation. The second phase would be to survey different methodologies for valuing historic properties such as contingent valuation methodology, willingness to pay models, cost of
production (similar to what occurs on archaeological sites), etc. Different methodologies would be compared against each other to provide a replicable and understandable and consistent approach to valuing historic properties. Finally, results modeled from a methodology would be
compared against actual surveyed costs to begin to answer the question of whether agencies are overpaying or underpaying for their mitigations.
Urgency and Payoff
The traditional approach to mitigation is a barrier to more creative efforts, such as treating mitigation programmatically, the pooling of mitigation efforts, or the creation of a mitigation bank. In order to conduct the proper accounting of a pooling effort or a banking effort, there
must be a consistent method for assessing the loss of the historic resource and a way to estimate the value of improving the historic environment. The case-by-case, sit-around-a-table-negotiation precludes any systematic approach. In addition, discussion of mitigation usually occurs at the end
of the Section 106 process and becomes the hold-up for the project. The lack of analysis and data often leads historic preservation advocates to undervalue their resource in the face of the urgency of the project as presented by the transportation agency, thereby shortchanging our history and
ADC50 - Historic and Archeological Preservation Committee (From RNS)