Historic Designation and Residential Property Values

Andrew Narwold (), Jonathan Sandy () and Charles Tu ()
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Andrew Narwold: Professor of Economics, School of Business Administration, University of San Diego, 5998 Alcala Park, San Diego, CA 92110
Jonathan Sandy: Professor of Economics, School of Business Administration, University of San Diego
Charles Tu: Associate Professor of Real Estate, Burnham-Moores Center for Real Estate, University of San Diego

International Real Estate Review, 2008, vol. 11, issue 1, 83-95

Abstract: The State of California enacted the Mills Act in 1972. This act allows local municipalities the option of setting up a historic designation program. The main feature of the program is to allow the owners of historic buildings a reduction in their property taxes in return for an agreement to not alter the exterior façade of the designated building. This paper uses hedonic regression analysis to estimate the impact of the historic designation on the value of single-family residences in the City of San Diego. The results suggest that the designation creates a 16 percent increase in housing value. This is higher than the capitalization of the property tax savings would suggest, implying market value in the historic designation itself. The Mills Act represents an innovative approach to historic structure management and may provide guidance to governments elsewhere in the U.S. as well as internationally when designing historic preservation programs.

Keywords: historic designation; housing values; hedonic model (search for similar items in EconPapers)
JEL-codes: L85 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (7)

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