The Internal and External Impact of Historical Designation on Property Values

Abstract

Designation of historic properties and historic districts is increasingly used as a means to revive central city neighborhoods and to promote urban economic development. While preservation activities are thought to generate positive externalities for surrounding neighborhoods, these external effects have been difficult to quantify. Using a database of tax appraisal records for residential properties in Abilene, Texas, this study demonstates that there are significant, positive externalities associated with historic designation. We perform simple cost-benefit calculations and find that the internal and external benefits more than outweigh the (non-zero) costs associated with historical designation. Moreover, from the city of Abilene's perspective the property tax incentives provided to historic reinvestment are outweighed by the added property tax revenue created by the increased value.

Keywords: historical designation, property values, neighborhoods