The economic value of Hamilton’s built heritage

By Paul Shaker

Heritage buildings are often the subject of vigorous debate in Hamilton. Our built heritage is an inescapable part of who we are as a city. It defines us to ourselves and to others simply by the fact that it is a large physical part of the community that we interact with on a daily basis. Some hear the word “heritage”, and think of red tape: a regulatory nuisance to be overcome on the road to building something new.

Others view heritage buildings as having incalculable value that bring variety and character to the landscape. While we perennially debate this issue in Hamilton, the broader understanding of the value of built heritage to cities has significantly evolved.

It is increasingly recognized that heritage buildings are important elements of an urban landscape from the perspective of attracting certain sectors of the knowledge-based and creative industries. In other words, they are infrastructure for certain economic sectors in the same way that a suburban business park, accessed by arterial roads, is infrastructure for other sectors. The Centre for Community Study’s creative industries research and mapping has shown this to be the case locally. Just think of the creative districts in the downtown of Hamilton and along James North and South. Most of the major creative businesses are located in older heritage buildings – including two new animation studios that have moved to Hamilton recently. This is not a coincidence. This is an economic trend, and if Hamilton wants to prosper further, it should take note. Viewed from this perspective, heritage buildings are an economic asset that should be protected and invested in.

However, there is a persistent perception that heritage structures are an economic drain and that without massive subsidies, markets are dictating that they be demolished. Further, there is a perception that a heritage designation reduces the property value for the owner. It is important to look at the validity of these assumptions, particularly within the Hamilton context where there are approximately 700 designated heritage properties and about 6,800 listed properties of historic interest.

What is a Heritage Designation?

A heritage designation is a status a property or district receives when it is deemed to have significant historical attributes. The process of designation involves a systematic evaluation of a property using several criteria. In essence, a heritage designation does not restrict what you can and can’t do to a property. Rather, it alters how you go about any changes. In general, if a property owner wants to add an addition to a house, a building permit is required. In the case of a designated building, a heritage permit is required as well. Proposed changes are looked at in the context of the historic features of the overall structure to ensure that they are relatively compatible. How does designation impact property value?

To determine how designation impacts property value, a look at the Heritage Conservation Districts (HCD) in the amalgamated city is useful. There are seven HCDs spread around the city. These are clusters of buildings, typically residential, that are collectively designated as having heritage significance. If you compare the average assessed housing values for all the structures within HCDs to the average assessment value of the municipal ward in which they are located, the results are informative (See Table 1).

This analysis demonstrates that residential properties within heritage districts tend to have significantly higher assessed property values (double, +103%) as compared to the average assessment value of other homes in the ward in which they are located. The exception appears to be the Mill Street Heritage Conservation District in Flamborough, an area which has seen significant new suburban residential development in recent years and is adjacent to the comparably more expensive housing market of the Halton region.

So what does this all mean? How do these results explain the state of a number of prominent buildings such as the Royal Connaught? The lesson learned is that districts of heritage structures that are collectively protected and cared for by the property owners tend to yield higher value for all owners in the district.

Translate this to a space such as Gore Park in downtown Hamilton, with its myriad of heritage buildings that could be collectively protected, improved, and maintained in a district. The higher assessment values for the buildings would not only benefit the owners, but it would also increase property tax revenue for the City.

Further, bringing the argument full circle, such a district would create an economic environment conducive to further attracting businesses in the knowledge-based and creative sectors.

Fundamentally, this is about establishing a cycle of wealth generation that begins with the recognition of the value of built heritage and then proceeding to harness that value rather than eliminate it.

PAUL SHAKER is a senior planner and co-founder of the Centre for Community Study, a Hamilton based urban research firm. He has worked at the federal and municipal levels of government most recently with the City of Hamilton including serving as a policy advisor in the Office of the Mayor. Paul is a member of the Canadian Institute of Planners and a Registered Professional Planner in Ontario.

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