An adobe house in a historic neighborhood in Springvlile.
Zoning and Special Designations: Local Historic Districts
A city or town can designate local historic landmarks or historic districts.
While a property listed on the National Register of Historic Places does not restrict the owner's actions at all, a local government can decide to create its own local landmarks or local historic district. It can then place restrictions on these properties.
Because of these restrictions, local designation is an effective way to preserve properties.
Salt Lake City is one municipality that has buildings listed on the National Register as well as its own locally designated historic buildings--The Salt Lake City Register of Cultural Resources.
Properties listed on the Salt Lake City Register of Cultural Resources have certain restrictions. The city can deny demolition, and it must approve changes to the exterior. Get more information on SLC's register.
Will these restrictions hurt property values?
No! Many studies have shown that restrictive local historic districts create a BIG increase in property values.
Why? When a resource is scarce, and when a potential buyer can be assured that its surroundings will be protected--that someone can't put up an apartment building next door, for instance--then that resource becomes more valuable. "Scarcity and certainty create value." See a discussion of some of these studies.
When thinking about property rights, remember that a property's value is almost always based on its context. (Location, location, location!) For instance, land in a city with utilities available right next to it is almost always much more valuable than the same size parcel miles away from utilities.
And a beautiful historic house surrounded by other charming historic houses will be worth more than the same house surrounded by cookie-cutter subdivision homes or commercial sprawl.
A local district simply seeks to preserve that context for the benefit of all the owners.
As Donovan Rypkema has said, McMansions built in historic areas are like parasites in deriving their value from the historic homes and not vice versa. (See his book, The Economics of Historic Preservation, for more details).