Effective incentives are essential for achieving the preservation of historic heritage for present and futuregenerations. Incentives can be regulatory or non-regulatory, and may include a wide range of policies and methods. Incentives are a key aspect of the economics of historic heritage.
Donovan D. Rypkema is a leading international authority on the economics of heritage buildings. Rypkema visited New Zealand in November 2010 and gave a series of lectures on the economic value of heritage conservation. Rypkema emphasised the critical role of incentives in heritage conservation in ‘bridging the market gap’ which refers to the gap between the costs and value of a property or business. While costs involve the acquisition of the property, cost of the retrofit works and other associated expenses, value relates to operation (rent, vacancy, etc), financing amount, rate, return), equity (risk, alternatives, tax benefits) and the market return.
In simple terms, an economic market rate of return is calculated by identifying the costs and considering if the value of the property or business outweighs them. If the cost is in excess of value, then the property or business is unlikely to result in a commercial rate of return. The high cost of earthquake strengthening influences the market gap.
Not all heritage buildings are, however, commercial buildings. Community halls, churches, schools, apartments and dwellings operate on a non-commercial basis involving both private and public sources of funding. These places can also suffer from a gap between the cost of acquisition and maintenance of the building and available income and funding support.
This guide provides a toolkit of available heritage incentives in New Zealand. It also promotes the adoption of incentives for historic heritage. The guide provides information about regulatory and non-regulatory incentives.
Incentives for Historic Heritage Toolkit