Historical Buildings – Are They Really Worth More?

In the not so distant past it was assumed that as soon as a building was declared an historical building slated for preservation its value was enhanced. The reason for this is that as soon as the building is labeled as a building that is to be preserved and protected this gives the building a special, high quality label.  It was declared historical because it has special architecture, a special historical event took place there or a famous person lived there. It was believed that this label enhanced the worth of the property.

In 2008 the Tel Aviv Municipality passed a town plan for the preservation of historical buildings. Over 1000 buildings in what is called historical Tel Aviv (or the “White City”) were declared historical buildings that were slated for preservation. This means that the building cannot be demolished and its renovation is governed by strict rules that limit the owner as to what he can and cannot do with his own property.  Indeed, there is now a debate as to whether or not an historical building should be taken from an owner who does not preserve the building as set out in the law.  Needless to say this type of preservation work is very expensive.

As with all new town plans, the owner of the property is subject to a Betterment Tax when he sells or asks for a construction permit.  If the worth of the property is enhanced as a result of the new town plan then the owner will pay a hefty Betterment Tax. However, the law stipulates that if the worth of a property is damaged as a result of the new town plan then the local municipality will have to compensate the owner for this loss.

In a recent decision concerning a building slated for preservation in Tel Aviv the national appraiser found that the worth of the building was not only not enhanced by the new town plan for the preservation of historical buildings, he found that the worth of the property would be worth 4,000,000 NIS more if it was demolished and rebuilt.  If this is the case then we may see a flood of claims for damages from owners of historical buildings in Tel Aviv against the Tel Aviv Municipality.  According to the law the statute of limitations for the submission of these claims will end in about a year so if any of these owners intends to sue it will have to be done so soon.

The question is what this will do to the city of Tel Aviv in the long run?  Tel Aviv was originally established in 1909 as a bedroom community to the older city of Yaffo. Despite many difficulties Tel Aviv eventually evolved into a large vibrant city.  Some call it the city that never sleeps or the White City.  The architecture of its first buildings is predominantly in the eclectic style but during the 1930’s and later the many buildings were built in the Bauhaus style.  Tel Aviv has the highest number of buildings built in the Bauhaus style in the word and therefore UNESCO declared Tel Aviv a World Heritage Site.  All these buildings are located in what is called historical Tel Aviv.  Each building has its own story and architectural style.  Each building tells the story of a strong brave people who built one of the first modern, Hebrew cities. Many people feel that this history and heritage is something worth preserving.  During the years that followed Tel Aviv’s star dimmed.  Not much thought was given to the preservation of its historical buildings and many beautiful buildings fell to ruin or were demolished.

 In the 1960’s a beautiful building called Gymnasia Herzliya (the first Hebrew High School) was demolished to make way for the first sky scraper, Migdal Shalom.   After this, there was a policy shift and many people began to understand that if these buildings are not protected they would be gone in a matter of years.  Gone too would be the stories and the history of the people who built Tel Aviv from sand dunes.

If the municipality is to be made to pay damages to the owners of these buildings this may deter the Municipality of Tel Aviv and indeed other municipalities from enforcing programs for the preservation of historical buildings.  Where would the old cities of Jerusalem, Yaffo, Acre or Zefat be today without preservation?  Where would neighborhoods such as Neve Tzedek, Yemin Moshe or Nachlaot be?  One only needs to walk around these neighborhoods or Tel Aviv today and observe the many buildings that have been renovated and preserved and turned into museums, hotels, apartments and shops to see the effect this has on the neighborhoods where this work is taking place. 

In the short run, preservation is a burden on the owners.  In the long run everyone, including the owners reap the rewards of preservation.

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