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Historical Designation and Residential Property Values

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  • Andrew Narwold

Abstract

The State of California enacted the Mills Act in 1976. This act allowed local municipalities the option of setting up a historical designation program. The main feature of the program was to allow the owners of historical buildings a reduction in their property taxes in return for an agreement to not alter the exterior facade of the designated building. The extent of the property tax deduction runs anywhere from 40 – 80 percent. This means that for a $1,000,000 house, the tax benefits may run to $8,000 per year. Theory suggests that the value of this tax benefit should be fully capitalized into the price of the home. The degree to which it is not may suggest the cost to the homeowner for agreeing not to alter the building. This paper uses hedonic regression analysis to estimate the value of historical designation to single family residences in the City of San Diego.

Suggested Citation

  • Andrew Narwold, 2006. "Historical Designation and Residential Property Values," ERSA conference papers ersa06p245, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa06p245
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    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa06/papers/245.pdf
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    References listed on IDEAS

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    1. Donald A. Coffin, 1989. "The Impact of Historical Districts on Residential Property Values," Eastern Economic Journal, Eastern Economic Association, vol. 15(3), pages 221-228, Jul-Sep.
    2. Coulson, N Edward & Leichenko, Robin M, 2001. "The Internal and External Impact of Historical Designation on Property Values," The Journal of Real Estate Finance and Economics, Springer, vol. 23(1), pages 113-124, July.
    3. Asabere, Paul K & Hachey, George & Grubaugh, Steven, 1989. "Architecture, Historic Zoning, and the Value of Homes," The Journal of Real Estate Finance and Economics, Springer, vol. 2(3), pages 181-195, September.
    4. David E. Clark & William E. Herrin, 1997. "Historical Preservation Districts and Home Sale Prices: Evidence from the Sacramento Housing Market," The Review of Regional Studies, Southern Regional Science Association, vol. 27(1), pages 29-48, Summer.
    5. Paul K. Asabere & Forrest E. Huffman, 1991. "Historic Districts and Land Values," Journal of Real Estate Research, American Real Estate Society, vol. 6(1), pages 1-8.
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