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Diner Owner Shouldn’t Have to Foot the Bill for “Historic Preservation”

August 6, 2019

August 6, 2019
By Christina Sandefur

For the past 20 years, Tom Messina has owned and operated a popular 24-hour diner in Denver, Colorado. He had always planned to pay for his retirement by selling his restaurant. Tom just turned 60, and he was looking forward to following his lifelong plan and spending time with his family. The prospective buyer planned to build apartments and shopping on the property, which fit well with the neighborhood’s mixed-use urban zoning plan.

Then a handful of neighbors decided they’d rather see the restaurant stay as-is. As reported by Reason last week, a small group of community members filed paperwork asking the city to deem Tom’s restaurant “historic,” meaning the small business owner would be prohibited by law from redeveloping the property. Such a designation would destroy the property’s value and ruin Tom’s retirement plans. It would also exacerbate Denver’s housing problems, since it would prevent much-needed additional housing from being built.

Unfortunately, there are copious examples of “historic preservation” ordinances devastating property rights throughout the country. Earlier this year, we blogged about why the owner of Strand Book Store in New York City opposed the government’s attempt to designate her building a city landmark because doing so would make it nearly impossible for her to sell, alter, or even improve or repair the building. (Since then, New York City did indeed designate the Strand as a city landmark—something its owner calls “a punishment.”)  

In 2006, Arizonans overwhelmingly approved Proposition 207, written with help from the Goldwater Institute. By far the strongest protection for property rights in the nation, the Property Ownership Fairness Act requires government to pay owners when its regulations eliminate their property rights. In other words, while owners can be barred from polluting, maintaining dangerous conditions on their property, or using their land in ways that violate the rights of their neighbors, they can’t be prohibited from renovating, improving, or developing their property unless the government pays them for taking way those rights.

By forcing officials to consider the costs of regulations that aren’t necessary to protect the public’s health and safety, the Act has sent a message that governments can’t take away people’s property rights to serve special interests. Only two years after Arizonans enacted Prop 207, Arizona’s largest county, Maricopa County, issued a moratorium on building permits for properties near Luke Air Force Base. The suspension had a devastating effect on property values: The value of newly zoned vacant residential lots dropped 95 percent, while existing home values were halved.

Property owners suddenly found themselves barred from renovating their properties, forbidden to install pools in their yards, mount solar panels on their roofs, or undertake urgent electrical and plumbing repairs. Building new homes was out of the question. Air Force veteran Robert Landers was told he could not install the therapeutic spa his doctor had prescribed to him to help recover from surgery. As a result of the moratorium, more than 175 property owners filed nearly $20 million in claims for compensation. The county, faced with the true costs that its regulation had imposed, rescinded its freeze on permits.

Changing the rules in the middle of the game unfairly prevents property owners like Robert Landers in Arizona and Tom Messina in Colorado from pursuing their plans and leaves them with plummeting property values. That’s because costs of regulation are always eventually borne by somebody.

Proponents of restrictive zoning policies talk of the importance of “preserving neighborhood character.” But using the heavy hand of government to “militantly preserv[e] their way of life and physical surroundings” imposes immense costs on neighborhoods and individuals who lack the resources or political aptitude to fight back.

States should follow Arizona’s example and adopt commonsense protections for property rights, fairness, and the rule of law. If there is sufficient community interest in “historic preservation,” then the public should pay the property owner for the costs of imposing those aesthetic preferences. If the price is too high for the community, then it certainly shouldn’t be borne by the property owner alone.

Christina Sandefur is the Executive Vice President at the Goldwater Institute.

(Photo courtesy of YouTube.)



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