Stephen Whalen

In Massachusetts, the inherent conflict between development and preservation is stark. Most of its municipalities are filled with buildings that date back centuries and have taken on countless personalities. In Boston, the city must grapple with its need to be the thriving hub of a modern city with its desire to hold onto its Colonial-era charm. In its surrounding suburbs, a desire to maintain a bucolic past can run counter to the need to affordably house a growing population. 

This natural struggle can take many forms. A single-family house located on a larger lot that made sense in a town’s rural past but would now be more valuable to the community than multiple units or homes. It can be an older commercial building that can’t easily be converted for modern use or is much smaller than the current market demands. Sometimes, it’s simple economics, as rehabbing historic properties often costs significantly more than building something new from the ground up.  

To date, most municipalities have chosen the “stick” approach to ensuring historic preservation. They utilize landmark status to legally restrict a property owner from demolishing a structure. Or if landmark status isn’t possible, they impose severe demolition delays to make any development even more costly and potentially economically infeasible. While some incentives for preservation exist, such as historic tax credits, these resources are limited, only applying to certain development of certain properties and can be very costly and complicated to pursue. 

Clifford Kensington

These communities see restrictive, low-density zoning and strict demolition boards as their only path to maintaining their town’s historic character. But what if the best way to ensure their town maintains its aesthetic was instead to loosen zoning laws? 

Apply a Familiar Concept 

By utilizing zoning reforms and density bonuses applicable only to lots containing historic or architecturally significant structures, municipalities could boost their housing supply without sacrificing their past. Many communities already offer some form of bonus to new developments that offer recognized public benefits, such as affordable housing or public open space, so why not open it up to include an equally valuable benefit like preservation? 

Imagine if zoning reforms made it so that a developer could build more on a lot with the existing structure in place than they would be able to with just a vacant lot. This could come with an increase in allowable square footage, or an exemption of the existing structure from the floor area ratio calculations. It could also take the form of improved density by allowing more structures per lot or more units per structure than would otherwise be allowed under the base zoning.  

As a hypothetical example, say you had an aging but classic 3,000-square-foot Victorian house on a 1-acre lot in an affluent suburb. Under most zoning in towns like this, that lot is capped as a single-family home no matter what, so a developer is incentivized to make that one single-family as valuable as possible. The best prices go to the biggest and newest homes, so this incentive structure would likely result in this existing house being torn down and replaced with a brand-new, top-of-the-line 6,000-plus-square-foot luxury home that sells for $4 million.   

Win-Win Solution 

Now imagine if instead, the zoning allowed this same developer to build two brand-new 2,000-square-foot townhouses in the backyard – hard to see from the street – as long as they maintained the existing 3,000-square-foot historic house. The cost of the existing home renovation and construction of two modest townhomes will likely the be the same, if not less, than building a single-brand-new mansion designed to attract the top of the market. And now, instead of trying to sell one house for $4 million, the developer is selling a renovated historic home for $1.8 million and two brand-new townhouses for $1.25 million each.  

This development’s gross sellout has increased $300,000 on an equivalent cost basis. The project is also quicker to build without a demolition delay period and less risky, as it’s divided across more units and delivering a product with a much larger buyer pool. Any rational developer would much rather pursue this project than the teardown and brand-new build.   

This scenario not only incentivizes the restoration of older properties without the need for tax credits or grants, but it also generates much-needed new housing supply at a more attainable price point than the single new house would’ve required.  

With creative regulations and flexible design, there is no reason for development and preservation to be in conflict. By implementing some simple incentive structures, Massachusetts can remain an appealing mix of old and new for centuries to come. 

Stephen Whalen is managing partner and Clifford Kensington is director of acquisitions at Boston-based developer City Realty Group.