Wellington’s Heritage Buildings – Who Benefits? Who Pays?

Peter Dowell is a Heritage Building Owner and Developer with first hand day-to-day working knowledge of Heritage Buildings.  In this insightful article, Peter makes the case for retaining our heritage buildings, outlines the problems and suggests remedies so that everyone benefits including the Owners!There are more than 600 Heritage Buildings and structures listed on the District Plan in the Wellington region.  Every one of these buildings is an important part of the history, cultural identity and vibrancy that is the Capital city of New Zealand. It is critical for the people of Wellington, and all New Zealanders, that we protect these reminders of our past, for future generations to appreciate and enjoy.

As a nation, New Zealand has embraced past generations that have served “King and Country”.  This is recognised every year on ANZAC day, as our country comes together to remember wars of the past.

Like ANZAC Day, our Heritage buildings represent the stories, events and histories of past generations, and the places they have lived and worked in.  They will enable future generations to understand where we have come from, and to appreciate the history in the vibrant streetscape of Wellington city today.

Wellington’s streetscape is a melting-pot of different architectural styles and construction from the Victorian days in the early 1900s, through the Art Deco period in the 1930s and to the more modern types of design of today.  If we lose these iconic gems, the city loses some of its historical, cultural and aesthetic values that make it what it is.

Prospective owners invest in Heritage Buildings not only for the economic return but often also for a real love and passion for saving our Heritage. But every investment has to make financial sense. The economic value is the overriding factor in any property investment, and unless the financials stack up for the new owner they are more than likely to look elsewhere.

First-time owners soon find out that the operating expenses associated with Heritage Buildings can be much higher than for more modern buildings. These extra costs come primarily from insurance (earthquake premiums) and a higher level of ongoing maintenance that can be required.  Cost-effective insurance for Heritage Buildings is becoming harder to find, and the capacity among insurers to provide earthquake cover in the Wellington region is tight. These costs - along with council rates – can account for as much as 65 per cent of a Heritage Building’s operating expenses.

Unfortunately, that means that demolishing Heritage Buildings can be an option that many owners have to consider.  High land values often mean that the highest and best use of the site appears to be demolishing the current building and developing the site to the maximum height allowable under Wellington’s district plan.

Through the 1970s and 1980s Wellington lost many of its prized heritage buildings due to the speculative nature of the property market at that time. Thirty years on, the biggest threat we face is the physical deterioration of these buildings caused by the elements.

Unless the Government and territorial authorities can incentivise building owners through various rates based tools, then we are likely to lose more and more of these treasures over time.

The Wellington City Council is currently reviewing its Earthquake Prone Building Policy and has moved the timeframes for owners to strengthen their buildings from 5- 15 years out to 10-20 years. This could be associated with the fact that the Wellington City Council realises that the cost to strengthen their own buildings is likely to be very expensive and the policy requires further research and assessment!

This ongoing research and assessment should include considering potential benefits and cost-offsets for Heritage property owners – in the form of rates relief, deferment, transferable property rights (air space) and higher depreciation rates from tax based incentives for owners.

To attract continued investment, and avoid demolition, Heritage Buildings need to be able to compete with other products in the market and match other asset classes in the returns to their owners.

Benefits to the City

The social benefit of our Heritage Buildings to Wellington city is extremely hard to quantify, but the Spargo Report (Nov 2007 – Built Heritage Management in Wellington City) calculated the value of tourism dollars alone to be approximately $40 million a year.

It’s not hard to see that it is in the city’s best interests for Wellington City Council to be looking at innovative ways to help retain our Heritage Buildings.

While it is important to ensure Heritage Buildings remain an investment choice for years to come, there are other forms of value this asset class provides that are extremely difficult for prospective owners to place a value on.  These include:

Cultural Value – Who we are as a community, city and nation.
Historic Value – Include sites, places and locations of built or social history within the District.
Aesthetic Value –An important part of how the city looks and feels for us to live in.

Our Historic buildings represent who we are, where we’ve come from and what we value.  The benefits of retaining Wellington’s Heritage buildings far out-weigh the costs to the city of loosing them for ever!
In summary the benefits of retaining Wellington’s Heritage buildings by far out weighs the costs to the city of loosing them for ever!

Peter Dowell Heritage Building Owner/ Developer is a Historic Places Aotearoa Executive Member and the current Chair of the Wellington Branch Committee of the NZHPT (The Branch is making arrangements to transition to Historic Places Wellington). This piece was written for an article in October 2008 and we are grateful for his permission to publish.

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