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The cost-benefit of building rehabs… beneficial both environmentally and economically
Rehabilitation makes environmental and economic sense (Photo credit: JWSherman)
A recent study published by the National Trust for Historic Preservation titled, The Greenest Building: Quantifying the Environmental Value of Building Reuse, has inspired a great deal of discussion. One discussion in particular, an article by Blythe Lawrence published in The Seattle Times (Seattle, WA USA), provided a follow-up comparison of the environmental value and the economic value of rehabilitating an existing building versus constructing a new one. The study looked at the effects a building has on the environment (such as runoff) and the use of nonrenewable resources (like fossil fuels) as well as energy and and resource extraction, and found that “even the most energy efficient new buildings have to stand as long as 80 years before their energy savings offset the negative impacts of constructing them,” as summarized in The Seattle Times article. The article continued to note that, “from an environmental perspective [building reuse is] a no brainer.”
Going one step further, the article noted that if an existing building has a good envelope the cost of rehab is about the same as the cost of new construction for a similar-sized building. If an existing building needs to be demolished as part of a new construction project, in order to clear the property for a replacement building, the economic and environmental costs increase exponentially. Though many, including developers, are often reluctant to accept or acknowledge the viability of rehab projects, the article sums up the reality of the situation stating that “development is about obtaining the maximum return from a piece of property. You don’t have to build a new building to make money.”
UK tax code change could hurt historic preservation
The recently announced Chancellor’s Budget in the UK includes a proposal to increase the VAT from 0 to 20 percent for the alteration and maintenance of listed buildings. This will put a heavy financial burden on those that own or maintain historic listed buildings.
While not every building alteration on a listed building requires specialized historical preservation skills, many projects do for at least some aspects. An increase of 20 percent for project costs may cause some repair projects to be postponed or shelved. This in turn may have a knock-on effect for those employed in the historic preservation sector. It may also hurt other sectors such as heritage and museum management. Sites and museums would see their maintenance costs increase forcing them to reallocate funds from other areas of their budgets. Though these results are hypothetical, and it is unknown at the moment what problems the tax increase might bring, the Council for British Archaeology is “urging its members to make their views on this known and also to sign the online petition.”
Full details can be found at the HM Revenue & Customs website and consultation on the proposed changes has been put up by the CBA (p. 23), which is open until 4 May 2012.
Historic preservation creates jobs
Job-producing rehabilitation to a historic building in Chicago
In an HBJ post from February (6 February 2012), Christopher Dore noted a recent report from Colorado that summarized the economic impacts of preservation on local and national economies. Reports like this have become increasingly common as many become more aware and accepting of the positive benefits of preservation. Just during the recent economic slump in the U.S. economy, similar reports have emerged out of Nebraska, Washington state, and Pennsylvania, to name a few, followed in November 2011 by a report from the Advisory Council for Historic Preservation (ACHP), an independent federal agency.
One of the conclusions that emerges from these types of studies, which is particularly relevant in the current economic climate, is that historic preservation activities creates jobs, a point consistently made by Donovan Rypkema, an economist and preservationist and one of the lead authors of the ACHP report, who generalizes that spending for new construction is split about half and half between labor and materials, while between approximately two-thirds and three-quarters of rehabilitation spending goes toward labor and the remaining to materials. This means that rehabilitation projects not only produce jobs and employ local labor, but it puts the money into the hands of those that live in the community rather than sending it outside, which is what typically happens when money is spent on materials. Additionally, small businesses are responsible for creating the vast majority of new jobs in America, and historic buildings often provide the ideal location out of which to run a new or small business carrying on the domino effect of the positive economic benefits of preservation. Read more…
Heritage Business Journal 