When the Carrot Becomes the Stick: Who Will Preserve San Francisco's Heritage?

By: Jason Yots[1]

I recently spent a week with my family in San Francisco, my first visit since 1999.  At that time, the city’s real estate market was heating up as a result of the late 1990s tech boom in nearby Silicon Valley.  If the market was hot back then, it’s absolutely scorching today, for largely the same reason.  Conversations on streetcars, at parties, and in shops and restaurants - among recent and long-time residents alike - centered on $3,500 one-bedroom apartments and cash-purchases of million dollar townhomes.[2]  Even the unprecedented California drought (entering its fourth year) and the city’s alarming homeless crisis (approaching 8% of its residents) took a backseat to real estate chatter.

During my visit, I was reminded that 80% of the city’s buildings were destroyed during the unmatched earthquake of 1906.  As a result, the city has a relatively “young” building inventory when compared to the 18^th and 19^th century cities in places such as the American northeast, and to the even older building stock that exists in European cities.  Nonetheless, many buildings are older than the 50-year-old measuring stick applied by U.S. preservationists when assessing eligibility for listing in the National Register of Historic Places (and, by extension, for rehabilitation tax credits (RTCs)).

Building renovations and “tear downs”[3] abound, with seemingly little consideration for historic (or even civic or cultural) significance.   Pre-war structures are routinely masked by character-shifting facelifts, creating increasingly homogenized streetscapes in many neighborhoods.  In commercial districts, storefront openings are scraped clean, replaced by less appropriate new commercial units.  While there certainly are plenty of solid examples of urbanism throughout the city (my family did not use a car all week), its 20^th century architecture is under siege, and no one seems much bothered by it.  Out with the old, in with the luxury.

The federal RTC - a critical budget-gap-filler in places like Rust Belt cities – would be a mere windfall in San Francisco[4], with residential rents rivaling stratospheric New York City’s and downtown office rents approaching $100 per square foot.  At those rents, a building will pay for its own renovation costs, without resorting to government incentives.  And therein lies the rub for preservationists: when their most effective “carrot” - the RTC - is more of a hassle than a feasibility indicator, how do you prevail upon developers and homeowners to honor the historic significance of their buildings?

The simplest answer may be that you don’t, at least for now.  When the carrot becomes the stick, even the silliest rabbit will avoid it.  But if the drought endures, and the tech market crashes (again), and the homeless population reaches a tipping point, and healthy urban density becomes overcrowding, then people will leave the city, and rents will drop correspondingly.  And then rehabilitation activity that once paid for itself will require the same incentives currently relied upon by San Francisco’s less affluent American counterparts.

Are preservationists being reduced to ill-wishers, hoping for the economic demise of a place just so that we can regain some influence over the direction of its historic resources?  I certainly hope not, but what alternatives are there to preserve and honor beautiful, historic cities like San Francisco?  Stand-by preservation tools – historic districting[5], preservation ordinances, conservation easements[6], civic responsibility/shame – likely will be ineffective in those places, where demand for shelter far outstrips its supply.  Until the carrot returns to being the carrot, preservationists may, in fact, be reduced to hoping against hope.

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[1] Jason Yots is a tax credit attorney and the President & CEO of Preservation Studios, a Buffalo-based historic preservation consulting firm. www.preservationstudios.com

[2] Almost impossibly, the city has added nearly 95,000 new jobs, but only 10,000 new housing units, in the last five years, creating ever-increasing pressure on commercial and residential rents and on home prices.

[3] The phenomenon of acquiring a serviceable building, tearing it down and replacing it with a much larger new building.

[4] If it’s even accessed at all: in 2014, only four “Part 2” approvals (the government’s indication that a project’s design is RTC-worthy) were issued in the entire state of California.

[5] There are several local, state and National Register-listed historic districts in the city.  Based on the RTC statistics, the NR districts are not generating RTC activity (they otherwise have no teeth).  Local districts afford cities and citizens the most participation in historic resource decisions.  I could not locate (low-hanging) data indicating whether San Francisco’s are largely honorific, or if their preservation laws are actively enforced by a (staffed) commission with (binding) jurisdiction.

[6] San Francisco Heritage, the city’s preservation advocacy charity, has collected only 60 preservation easements since 1974.  Not shabby, but not game-changing in a city the size of San Francisco.