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Does historic district zoning negatively impact property values?
This was the question that the Denver, Colorado City Council sought to answer in 1988 when it designated the Lower Downtown Historic District.
More than 75 percent of the area's property owners initially opposed the historic district. They feared a loss of property rights and a further erosion of property values. Today, the opponents are believers in the value of historic district zoning.
Before designation, the once thriving commercial area on the edge of downtown had a vacancy rate of 40 percent -- and 30 percent of the properties had been foreclosed. Blighted conditions triggered precipitous decreases in property values. By the summer of 1995, vacancy rates in Lower Downtown had dropped to less than 10 percent. The last foreclosed property was sold to a private developer in 1993. The area is now home to 55 restaurants and clubs, 30 art galleries, and 650 new residential units. Property values have doubled and private investment not including Coors Field -- the new home of the Colorado Rockies baseball team -- has exceeded $75 million.
So how did historic district zoning contribute to Lower Downtown's success? The answer is simple: scarcity and certainty create value. Small businesses and entrepreneurial investors were lured into the area by its charm and historic character -- and by the knowledge that it would remain that way.
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