Historic Preservation for Strip Malls?

A fundamental right in any free society is that of property ownership. Life, liberty, and the pursuit of happiness could hardly be served if special interest groups or government were permitted to aggress against the person or property of others.

Detroit’s Lafayette Park neighborhood is Michigan’s latest battleground for a debate on private property rights. The Lafayette Towers Shopping Center, near Greektown, was scheduled to be closed in August 2002, with no future plans identified for the 4.5-acre property. However, the strip mall’s commercial tenants rejected the center’s proposed closing and have invoked a motion to have the property declared a historic district in order to halt the closing and demolition. Under the Michigan Local Historic District Act, such a declaration would paralyze the ability of the property owners to plan any redevelopment that could prove profitable to its owners and otherwise serve to revitalize the area.

No doubt the tenants want the Center to stay open in part because of cut-rate rental costs, subsidized in part by the owner, Lafayette Towers, L.P. According to an Aug. 16, 2002 Detroit News story, the tenants are said to be paying month-to-month rents of $3 to $12 per square foot, whereas the center’s owners place the market value at closer to $15 to $20 per square foot.

The outcry from tenants has spurred area residents to dispute the closing as well, on grounds that there is little other retail shopping available in the immediate neighborhood. However, the current retail operation at Lafayette Towers produces a loss every year, and is no longer a worthwhile investment in this urban area beset by economic blight.

What happens when a retail venture becomes a losing proposition for its owners? They restructure or close the unprofitable undertaking and redirect their financial resources to cost-effective projects. Surely, no property owner can be expected to underwrite the private operations of tenants who are running fledgling businesses that may not be able to survive in the marketplace of supply and demand.

Detroiters are proud of their city, one that is rich in cultural heritage and architectural grandeur. However, labeling the 1960s-era Lafayette Towers property a historical district is not about historical preservation, but instead, about special-interest demands and the use of coercive regulation to intimidate property owners. No objective or meaningful evidence exists that justifies the “historic” claim that has been brought forth.

Allowing special interests and government the power to appropriate the property rights of individuals via the exploitation of the Local Historic District Act could lead to widespread abuses. Local laws passed under the Act, in essence, permit groups of bystanders to decide that someone else’s home or business has a charming feel or a higher purpose to serve, and to force the property owner to comply with the Act’s edicts.

In December 2000 in Owosso, Michigan, the City Council passed the “Oliver Street Historic District and Environs” ordinance, a measure that severely limited the ability of some homeowners to revamp their properties. Within eight months, after enduring the various costs and limitations associated with the ordinance, dismayed Owosso residents overwhelmingly voted to repeal it.

Bureaucracies regulate and expropriate, and often run roughshod over private property rights in the process. The preservation of prized buildings is a task better suited for private individuals and voluntary organizations that fund the peaceful purchase of property worth preserving.

A fine example of this is magnificent Marshall, Michigan, where residents once rejected the passage of an ordinance for establishing historic districts. The preservation of Marshall’s renowned historic district is due to the cooperative efforts of diligent citizens working together to preserve the town’s splendor through voluntary efforts and private funding.

Without private property rights, Michigan could not have become the commercial and entrepreneurial powerhouse that it is. We should think twice about eroding those rights through contrived “historic district” fiat, or any other devices.

(Karen De Coster is a certified public accountant, freelance writer, and adjunct scholar with the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. More information on property rights is available at www.mackinac.org. Permission to reprint in whole or in part is hereby granted, provided the author and her affiliations are cited.)