Old Cities, New Assets: Preserving Latin America's Urban Heritage by IDB

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Preserving La fin America's Urban Heritage

Eduardo Rojas

Published by the Inter-American Development Bank Distributed by The Johns Hopkins University Press 1999

OLD CITIES, NEW ASSETS

1300 New York Avenue, N.W. Washington, DC 20577 Produced by the IDE Publications Section. Views and opinions expressed in this publication are those of the author and do not necessarily reflect the official positions of the Inter-American Development Bank.

To order this book, contact IDB Bookstore Tel: (202) 623-1753 Fax: (202) 623-1709 E-mail: idb-books@iadb.org Cataloging-in-Publication data provided by the Inter-American Development Bank Felipe Herrera Library Rojas, Eduardo. Old cities, new assets : preserving Latin America's urban heritage / Eduardo Rojas. p. cm.

ISBN: 1886938628 1.Historic preservation-Latin America-Finance. 2.Historic preservation-Latin America-Government policy. 3.Architecture-Latin America-Conservation and preservation. 4.Historic buildings-Colombia-Cartagena-Conservation and restoration. 5.Historic buildings-Brazil-Recife-Conservation

and restoration. 6.Historic buildings-Ecuador-Quito-Conservation and restoration. I.Inter-American Development Bank.

363.69 R75-dc21

99-73660

ÂŠ1999 Inter-American Development Bank

For CrisNna, Francisca, Diego and Jimena

he case studies reported in this

Marino de Posada also collaborated on the

efited from the information and insights

book were part of a research

comparative analyses. Alexandra Pineiro pre-

provided by Teodoro Pena, Paulina Burbano

project financed by the Sustain-

pared the graphic material. The author is

de Lara, Monica Moreira, Cristina Pena,

able Development Department of the Inter-

grateful for the information provided by the

Pedro Jaramillo, Eduardo Barrera and Scal-

American Development Bank. The data for

District Government of Cartagena, the Mu-

ing Leon. Finally, thanks to David

the studies were collected by Juana Marino

nicipality of Recife, the Planning Division of

Mangurian, Silvio Mendes Zancheti and the

de Posada for Cartagena, Silvio Mendes

the Municipality of Quito, and the Empresa

Fondo de Salvamento del Centre Historico

Zancheti and Norma Lacerda for Recife, and

del Centre Historico of Quito. In drafting

de Quito (FONSAL) for contributing photos

Francesco Lanzafame for Quito. Juana

the conclusions of the work, the author ben-

to this book.

Rchnoiuledyments

he unique and varied cultures

more pragmatic objectives, such as maximiz-

that enrich Latin America and the

ing the use of centrally-located and poten-

Caribbean do more than just de-

tially valuable buildings and public spaces.

fine regional and national identities-they

Just as attitudes toward urban heritage

also constitute a valuable asset for socioeco-

have evolved in Latin America, so has the

nomic development. Valuing a common

role of the Inter-American Development

past furthers social cohesion and enhances a

Bank in supporting urban heritage preserva-

society's capacity to build a shared future.

tion. With its 1994 loan to Ecuador to help

And in today's global economy, cultural

preserve the magnificent historic center of

heritage attracts international interest and

Quito, the IDB became a pioneer among

opens access to expanding markets for cul-

multilateral development banks in urban

ture-based products and activities.

heritage investment. Other projects soon

National and local governments in-

followed, including an innovative program

creasingly recognize the potential contribu-

to rehabilitate Montevideo's historic central

tion of culture to development and are

railway station, and a loan to Brazil to

moving to protect and promote the different

strengthen national support for municipali-

expressions of their local culture. One such

ties and states carrying out local preserva-

expression is urban heritage, the complex

ing restored and revitalized by enlightened

and varied array of historic buildings and in-

communities that are discovering its histori-

frastructure that form the core of cities and

cal value and economic potential. Preserva-

ing Latin America's vast urban heritage is

towns throughout Latin America. Neglected

tion and development efforts are even

clearly beyond the scope of the limited re-

for many years, urban heritage is finally be-

moving beyond the promotion of tourism to

sources available from the public sector or

tion programs. The magnitude of the task of preserv-

Foreword

Bank conducted studies of Latin American

approach to preserving urban heritage. Its

has emphasized the need to involve all

urban heritage programs with successful pri-

objective will be achieved if it stimulates in-

stakeholders in urban preservation, includ-

vate involvement. The results, as reported in

terest in historic preservation among private

ing civil society and-most importantly-pri-

this book, are encouraging. Local govern-

entrepreneurs who perhaps had not consid-

vate real estate investors. International

ments in Cartagena, Recife and Quito have

ered investing in historic city centers, and if

experience strongly suggests that urban heri-

established productive working relationships

it prompts governments to design inclusive

tage preservation is sustainable only when

with private investors who are rehabilitating

preservation initiatives that incorporate all

the whole community is involved, with each

historic buildings. It was also found that

of the stakeholders necessary for successful

stakeholder participating in the capacity in

conditions exist for sustaining private inter-

and sustainable programs.

which it is most efficient.

est in historic preservation.

Of particular interest to the Bank is

The purpose of this book is to draw

private sector involvement in urban heritage

the attention of governments, investors, citi-

preservation. As part of its efforts to iden-

zens and nongovernmental organizations to

tify sustainable preservation processes, the

the development potential of a collaborative

Enrique V. Iglesias, President Inter-American Development Bank

the IDE. In all of its programs, the Bank

INTRODUCTION Old Cities, New Assets page 1

CHAPTER 1 Latin America's Urban Heritage page 5

CHAPTER 2 The Private Sector Role in Preserving Urban Heritage page 27

CHAPTER 3 Cartagena: Converging Interests of the Elite page 41

CHAPTER 4 Bringing New Life to Bairro do Recife page 61

CHAPTER 5 Quito: A Public-Private Partnership page 81

Table of Contents

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- Italo Calvino, Invisible Cities

"The city does not fell its past, but contains it line the lines of a hand..."

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J Nl 7 K. O 1 } U C 7 j O M

Old Cities, Hem ftssefs

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American cultures. In terms of architectural

benefited from the meeting of cultures in

walk on their history every day.

heritage, the outcome was sometimes nega-

Latin America's cities. Indian crafts incorpo-

Living amidst the legacy of one of

tive, as when churches or public spaces were

rated European themes imported through

history's most remarkable periods of urban

built on the sites of Indian temples de-

the Catholic religion, and music blended

settlement, city dwellers work, trade, learn,

stroyed to erase the symbols of indigenous

these traditions with those of African slaves.

pray, debate or simply relax, all the time

religions. However, most interaction was

Successive waves of immigrants who arrived

surrounded by reminders of their Indian

more positive, and its legacy forms the core

in the 19th and 20th centuries added their

and European ancestors.

of today's urban heritage in Latin America.

own contributions to the cultural melting

The blend of the Baroque style imported

pot.

In the short span of some 50 years, starting with the founding of Santo th

from Europe with the skills and fertile

In short, the mixed culture of today's

Domingo at the end of the 15 century, the

imaginations of local craftsmen spawned the

Latin America was born in the region's cit-

Spanish and Portuguese conquistadors estab-

unique form of Baroque architecture, sculp-

ies and flourished there. The physical mani-

lished most of the cities that today are the

ture and painting in Latin America's historic

festations of urban heritage that

cornerstone of Latin America's urban struc-

churches, convents and palaces. Housing

remain-religious and civic buildings, fortifi-

ture, including most modern capitals. Fol-

designs brought from Spain and Portugal-

cations and barracks, public spaces, and pal-

lowing the dictates of good sense and the

which had evolved over centuries from old

aces and residences-show how this cultural

experience of many military campaigns, the

Roman and Arab models-were enhanced

mix evolved and, in their splendor, reaffirm

conquistadors founded the cities in or near

and adapted to local climatic conditions

the distinctive identities of Latin America's

Indian settlements, taking advantage of fa-

and materials. Palaces and houses of the co-

diverse societies.

vorable climatic conditions and abundant

lonial bourgeoisie were built around patios

land and water. The proximity of the local

in the Mediterranean tradition. Facades

population still lives in cities founded in

population also provided labor and subjects

decorated with locally carved stone en-

the early 16th century. Yet the very defini-

for evangelization.

trances and window lattice were designed so

tion of these urban areas has changed dra-

that cool breezes could flow through.

matically in recent times. Rapid

The interaction of the newly arrived with the original dwellers made the new cities the meeting place of European and

Architecture was of course but one aspect of art and culture that changed and

Today, most of Latin America's urban

urbanization over the past 50 years expanded metropolitan areas well beyond the

n Latin American cities, people

Although these efforts have saved

private sector is involved in urban heritage

housed urban life for more than four centu-

many landmark sites, there is mounting evi-

preservation. The cities studied-Cartagena,

ries. Downtown areas lost importance and

dence that preservation of Latin America's

Colombia, Recife, Brazil and Quito, Ecua-

presence in city life. As cities burgeoned

vast urban heritage is beyond the capacity

dor-were chosen not because they are repre-

outward, their historic centers deteriorated

of governments, which have many compet-

sentative of preservation efforts in the

and were abandoned. In an age of modern-

ing demands for their scarce resources. Suc-

region but because they have used different

ism, historic centers and their urban heri-

cess stories in heritage preservation have

approaches to engaging stakeholders, rang-

tage came to represent all that was

shown time and again that the task requires

ing from uncoordinated interventions by

traditional and backward. The high-rise

the involvement of all social actors-not

public and private actors in Cartagena, to

building and the highway became the sym-

only public institutions but also civil soci-

operation of a mixed-capital corporation in

bols of modernity on whose behalf large

ety organizations concerned with preserva-

Quito and government-induced private in-

portions of urban heritage were destroyed.

tion, private investors and developers, and

vestment in Recife. The experiences of these

residents themselves of historic city centers.

three historic Latin American cities can pro-

Fortunately, enlightened individuals and organizations stepped forward to press

The key to involving all these stake-

vide significant clues about the conditions

for preservation by promoting legislation and

holders is to strike an effective balance be-

under which private investors get involved

public investments. Governments became

tween the interests of historic preservation

in preservation, which is key to maintaining

more active in protecting urban heritage and

and the profitability of investments. This

the momentum of heritage preservation ef-

there are now any number of public institu-

book explores the practical implications of

forts in the region.

tions devoted to historic preservation.

this thesis and examines cities where the

limits of the historic city centers that

CHAPTER 1

Lafin HHierica's Urban lerlage

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of their value and charm are threatened by

sionary settlements of Mexico

contemporary urban development. Many

City and Quito, to mining towns

historic buildings have never been adapted

LATIN AMERICAN CITIES DESIGNATED AS UNESCO WORLD HERITAGE SITES

like Potosi and Ouro Preto, to ports that

for modern use. Others are simply falling

Potosi, Bolivia

Sucre, Bolivia

were gateways to wealth such as Cartagena

apart.

Brasilia, Brazil

Olinda, Brazil

Ouro Preto, Brazil

and Recife, the rich urban legacy of Latin America is a blueprint of history and a bea-

Debate on the most effective approaches to preserving Latin America's

Salvador da Bahia, Brazil

Sao Luis, Brazil

Cartagena, Colombia

con of regional identity. Graced with

urban cultural and historical treasures has

priceless historical buildings, monuments

led to consensus on at least one point: the

Mompox, Colombia

and public spaces dating from the colonial

task is beyond the sole capacity of the pub-

10.

Havana, Cuba

era to the early 20th century, historic cities

lic sector, which over the years has

11.

Santo Domingo, Dominican Republic

or urban centers from throughout the re-

attempted with only limited success to

12.

Quito, Ecuador

13.

Antigua, Guatemala

gion have been named World Heritage Sites

shoulder the burden. For all the legislation

by UNESCO.

enacted and institutional experiments at-

14.

Guanajuato, Mexico

15.

Mexico City, Mexico

16.

Morelia, Mexico

tempted, the region's vast urban heritage is

17.

Oaxaca, Mexico

steadily deteriorating.

18.

Puebla, Mexico

19.

Queretaro, Mexico

20.

Tlacotalpan, Mexico

tural elite to protect urban heritage through

21.

Zacatecas, Mexico

is gradually finding its way onto the policy

legislation rescued a number of sites from

22.

Panama City, Panama

agendas of central and local governments,

the ravages of rapid urban growth. But it

23.

Cuzco, Peru

24.

Lima, Peru

and preservation programs are being carried

also had the perverse incentive of encourag-

25.

Colonia de Sacramento, Uruguay

26.

Coro, Venezuela

An increasingly broad coalition of public and private interests are working to preserve and restore these areas. Once a concern only of a cultural elite, preservation

out by nongovernmental organizations. Despite these efforts, however, Latin

An initial effort by the region's cul-

ing private owners of historic buildings to abandon them, in the hope that the result-

America finds itself in a race against time.

ing disrepair would enable them to evade

The traditional patterns of streets and pub-

the restrictions imposed on developing the

lic spaces that give historic centers so much

buildings under preservation laws.

rom the administrative and mis-

Furthermore, the experiences of simi-

ervation process, governments began

need to involve the private sector in efforts

lar efforts throughout the world show that

investing in historic city centers, creating

to preserve urban heritage. Sustainable,

urban heritage can be preserved only by re-

specialized institutions and implementing

long-term preservation of the multitude of

versing the pattern of deterioration and

demonstration projects. The preservation of

monuments, historic buildings, public

abandonment of historic centers. This re-

the Pelourinho in the old city of Salvador

spaces, and residential and commercial

quires revitalizing the local economy by

in Brazil and restoration of the city walls of

structures that make up Latin America's ur-

attracting private investment, but imple-

Old Cartagena in Colombia bear witness to

ban heritage can only be achieved with the

menting such an approach involves coordi-

many dedicated efforts by the public sector,

support and participation of property own-

nating a broad range of public and private

which often had to carry out such programs

ers, communities, real estate investors and

sector stakeholders, often with widely differ-

amidst major budgetary constraints.

private philanthropists.

ing agendas. The public sector has an indis-

These few success stories notwith-

"Sustainability" in this context refers

pensable role in developing the institutional

standing, a strategy that makes preservation

not to fossilizing a historic site in time but

mechanisms needed to balance these inter-

strictly a government endeavor clearly is un-

to a dynamic process in which urban

ests and promote collaboration among the

equal to the task of protecting Latin

heritage is preserved by the social and

many different players. The challenge is to

America's vast urban heritage, only a frac-

economic activities that make use of it. In

ensure that government does not end up

tion of which has been preserved. There are

operational terms, preservation is sustain-

taking on tasks that can be carried out more

no assurances that such efforts will be sus-

able when buildings or public spaces

efficiently by the private sector.

tainable over the long term without

permanently retain their structural, stylistic

continuous infusions of public funds. In ad-

and functional characteristics without

ous stakeholders in the preservation process

dition, this form of public expenditure is

requiring new investment in rehabilitation.

to assume responsibilities for which it has

highly regressive, since governments recover

In practical terms, this is more likely to

the greatest comparative advantage. The

little of their investments and the beneficia-

happen when historical sites are devoted to

public sector can establish a regulatory envi-

ries are mostly affluent property owners.

social and economic uses capable of under-

ronment that is attractive to private sector

taking their proper routine and preventive

investors while protecting the public inter-

maintenance.

est. Existing or new businesses and

Because of these limitations and the

gion, a consensus has been forged on the

magnitude of the challenge facing the re-

The goal, then, is for each of the vari-

During a subsequent stage of the pres-

erate demand for the stock of residential and commercial real estate, thus supporting its maintenance. By rehabilitating buildings for commercial and residential uses, real estate investors can take advantage of the business opportunities afforded by historic centers, which offer their clients exceptional location graced by unique heritage treasures.

Modern Stresses on Old Designs The downtown layout of most Latin American cities today is virtually unchanged from colonial times. In the cities established by Spain, this urban structure (dating from the

Garcia Moreno Street, Quito.

late 15th and early 16th centuries) is based on a strict gridiron pattern. The practice of establishing the settlements on the basis of

castrum and was later codified in the Leyes de

sance ideal of achieving beauty through

square blocks surrounding a central square

Indias, produced what some authorities con-

regular forms and classic proportions.

can be traced to the military settlements es-

sider the only true Renaissance cities ever

For their part, colonial cities founded

tablished in Spain in the 15 century to

built. The regular pattern of square blocks

by the Portuguese generally inherited a tra-

consolidate the territory gained from the

centrally organized around the main square,

ditional organic pattern of streets and pub-

Arabs during the reconquhta wars. This prac-

and the regular placement of the main

lic spaces that evolved over the years

tice, which traces its origins to the Roman

buildings in that square, reflect the Renais-

according to the growth of settlements, de-

households in historic city centers can gen-

vents, hospitals, military installations and

ment and degradation of these assets.

stresses have affected these cities in ways

defense perimeter walls throughout the re-

Implementing these changes requires clari-

similar to those built by the Spanish.

gion are fine examples of Baroque and

fying the rationale for investing public

neoclassical architecture and colonial mili-

funds, defining priorities, identifying the

ited colonial structure of streets, squares and

tary engineering, while many railway

most efficient types of interventions, deter-

residential lots that accommodated urban

stations and port facilities are examples of

mining who should bear the cost of

Throughout Latin America, this inher-

growth for more than 400 years is showing

industrial architecture of the late 19 cen-

renovation, and identifying viable means

signs of stress and is increasingly incapable

tury. Still, on a practical level, these historic

of cost recovery (see Box 1.2). Underlying

of absorbing the demands of urban life in

buildings have not been adapted to accom-

these policy and financial issues is the

the late 20 century. Narrow streets are con-

modate households and firms comfortably

broader question of the division of respon-

gested and polluted by vehicular traffic,

and efficiently in today's world. This obso-

sibilities between the private and public

public spaces are invaded by informal street

lescence reduces demand for these

sectors, a key concern when defining effi-

vendors, subdivision of land constrains rede-

buildings, lowering their market value and

cient strategies for promoting the

velopment of the parcels, and aging

leading to depressed real estate markets in

preservation of urban heritage.

infrastructure cannot provide needed basic

historic centers (see Box 1.1).

The market itself may allocate consid-

services. As a result, the most dynamic urban

erable resources to preserving urban

economic activities and high-income house-

heritage, particularly when households in

The Preservation Process

historic centers care for their own proper-

Reversing the deterioration of historic city

the United States, functional historic cen-

centers in Latin America requires signifi-

ters often become fashionable, attracting

chitecturally significant buildings contained

cant changes in the social valuation of

high-income homeowners who restore

in the historic centers of Latin American

urban heritage, in government policies and

buildings as permanent or temporary resi-

cities are caught in a similar cycle of dete-

practices, and in the prevalent trends and

dences. Communities also invest in

rioration or abandonment. Many

fashions of the real estate industry-all of

preservation to safeguard their history and

government buildings, churches and con-

which at present promote the abandon-

cultural identity, and tourism promotion is

holds often have abandoned the historic centers, leading to the further deterioration of public spaces and buildings. The vast array of historically and ar-

ties. As seen in certain cities of Europe and

fense needs and topography. Still, modern

Functional, physical and economic obsolescence

buildings to the point where they cannot accom-

lie at the core of the urban heritage preservation

modate the functions they house. Usually the

problem because they generate the process of

outcome of poor maintenance, physical obsoles-

deterioration of historic buildings and their sur-

cence may also result from natural disasters or

rounding public spaces. With the march of time,

the sustained effect of weather or changes in ur-

it is a problem difficult to avoid and even more

ban activities (for example, vibrations generated

difficult to reverse.

by vehicles). Regardless of its cause, physical obsolescence leads to abandonment, since buildings

Functional obsolescence of buildings and public spaces occurs when they become inad-

can no longer be used for the economic, cultural

equate for the functions for which they were

or residential activities for which they were in-

originally designed. The traditional houses of

tended.

wealthy families in historic centers of cities of

Economic obsolescence occurs when it is no

Spanish origin are a classic example. These

longer profitable to continue operating the build-

buildings accommodated the domestic activities

ing given its physical characteristics. If the land on

of extended families well into the 20th century,

which the building sits increases in value, for ex-

when changes in fashion and the desire for

ample, there may be increasing pressure to tear it

modern amenities made suburban dwellings

down and put the land to the market's best and

more desirable. Once wealthy homeowners left

highest use. A typical example of economic obso-

the historic core of the city, the neighborhoods

lescence is the tearing down of single family

were turned into overcrowded slums, with what

homes to use the land for high-rise housing or

were once single homes often occupied by sev-

office buildings. Although this phenomenon

eral families. The poor benefited by being

mostly occurs in areas undergoing rapid changes

centrally located, and landlords by extracting

in land use, it also affects heritage buildings and

rental income from otherwise useless real es-

traditional homes in historic districts, particularly

tate. A similar pattern of functional

Abandoned homes in Old Cartagena.

those close to expanding office or commercial centers. Efforts to preserve historic and culturally

obsolescence affects other types of historic buildings: old hospital buildings that become obso-

stations no longer used, or convents and churches

important buildings and public spaces must counter-

lete as a result of new medical technologies, old

that communities can no longer support.

act speculative real estate pressures-a difficult task

libraries incapable of accommodating modern-sized book stocks or new information technologies, railway

Physical obsolescence refers to the deterioration of the structure, installations or finishings of

indeed, as seen by the rapid disappearance of historic buildings in city centers throughout the region.

BOX 1.1. PATTERNS OF OBSOLESCENCE

Designing an effective program to preserve urban

ties that may emerge as the preservation process

heritage sites requires careful analysis of priorities, ac-

evolves.

tivities already in progress, the regulatory

involvement by the private sector through investment incentives, household subsidies, or incentives that

environment, private sector willingness to participate,

and local institutions that must work together for ef-

complement regulations. Investment incentives in-

and the capacity of a country's institutional structure

fective urban preservation in Latin America generally

volve governments luring investors by reducing risks

to take on the preservation tasks involved.

have many technical, operational and financial weak-

through guarantees, monetary transfers, or other ser-

nesses. An institutional audit provides early detection

vices that make heritage preservation projects as

magnitude of the preservation problem. Knowing the

of these constraints and technical input into the de-

attractive as alternative investments in other areas of

number, cultural value, condition and location of

sign and costing of the institutional reforms required.

the city. Guarantees may involve assurances of pur-

Definition. The first step is to determine the

monuments, buildings or public spaces is key to the

Regulatory framework. The success of a pres-

chase or lease of space by public entities. Monetary

decision-making process. As an example, countries

ervation strategy often hinges on existing regulations

transfers may take the form of direct subsidies for

with a large number of monuments scattered in

and policies. Two levels of preservation-related laws,

capital investment, that is, tax credits applicable to

many localities may find it more convenient to decen-

ordinances and practices need to be investigated and

preservation or transferable to other projects or to the

tralize urban heritage preservation activities to local

reformed as needed. First are those directly aimed at

financing partners. Services such as parking or im-

authorities rather than promote centralized manage-

promoting preservation. The golden rule is to balance

proved public transportation can be provided to the

ment better suited for countries with fewer and more

the restrictions imposed on private development

developer. One-stop window processing for the nec-

concentrated sites. If heritage sites are severely obso-

rights with monetary or nonmonetary (prestige and

essary permits and registrations is another incentive

lete, proactive intervention may be more efficient

social recognition) incentives. Second are indirect

for developers. Household subsidies may be needed

than the loosely organized, community-based and

regulations that affect preservation. Land use ordi-

to retain a mix of households from different income

adaptive approaches suitable to preserve sites already

nances can open opportunities for preservation by

levels in the historic centers, since purchasing and

allowing transfer of the development rights of pro-

maintaining residential space in heritage buildings is

tected property to other locations in the city. If these

usually more expensive than in new buildings. Direct

in acceptable condition. Priorities. Setting priorities for urban heritage

Institutional audit. The public, private, national

Subsidies. Public funds can be used to induce

preservation can be both complex and highly sus-

rights can be applied to high-growth areas, and are

up-front subsidies that reduce the initial cost of pur-

ceptible to political manipulation and professional

tradable, the benefits of the sale can compensate the

chase are preferable, but they are onerous for public

and local bias. The legitimacy of the preservation ef-

owners for the development restrictions imposed by

entities, difficult to target, and better financed with lo-

fort rests on setting priorities through consensus.

preservation ordinances without burdening the public

cal taxes and contributions. Intergovernmental

The whole community must be convinced that pri-

budget. Softening tenant protection regulations pro-

transfers can also be an efficient source for financing

orities as defined represent their wishes, or that they

motes a market for rental housing that can foster the

the subsidies. Incentives that complement regulations

at least are the result of a reasonable compromise

rehabilitation of heritage buildings. Finally, the tax

can also be used to induce both preservation and

with other stakeholders. Strategies should also be

code can be amended to provide tax credits for in-

maintenance of urban heritage by private owners, de-

flexible enough to accommodate changes in priori-

vestors willing to rehabilitate buildings.

velopers or other users. Estimating the correct

BOX 1.2. KEY ELEMENTS OF THE PRESERVATION PROCESS

Pasaje Baca shopping arcade in Quito.

incentives poses a significant technical problem, par-

operational capacity of these institutions before com-

vicious cycle in which housing finance institutions

ticularly in areas under pressure from real estate

mitting resources for institutional development. Staff

redline historic districts, citing the high commercial

developers. Further investigation is needed to deter-

training and new procedures and technical practices

risks involved in costly rehabilitation and uncertain

mine whether the incentives should compensate

are often needed. The best option may be to reorga-

valorization. This in turn blocks other sources of fi-

landowners for lost rents or simply promote preserva-

nize regulatory institutions or downsize them in order

nancing for developers, as banks perceive this

tion by retaining current uses of the buildings.

to transfer operational capacity to new organizations

reluctance of housing institutions to be an additional

Institutional framework. As with legislation, at-

such as mixed capital companies. The key is to en-

risk for construction loans for preservation. Govern-

tention must be paid both to institutions directly and

hance institutional capacity to deliver an innovative

ment guarantees on mortgages for historic buildings

indirectly linked with urban heritage preservation.

product in collaboration with the private sector. For ex-

reduce this risk, while direct, up-front subsidies for

Policymakers need to define the roles and enhance the

ample, creative approaches are needed to break the

households compensate for high rehabilitation costs.

Restoration work on the

real estate development pressures.1 Typical of

times intentionally allow their property go

Finally, a business rationale can come into

this stage are projects to preserve individual

into decline, with the expectation that if the

play when the historic heritage of buildings

buildings of historic or architectural signifi-

property is in poor or dangerous condition,

is used as a marketing device for commer-

cance. Funding usually comes from a variety

local authorities will be forced to order its

cial development.

of public and private sources, the scope of

demolition. This opens the way for owners

the project is limited, and the heritage site

to make more profitable uses of their prop-

ban heritage preservation must not only

being preserved is usually devoted to some

erty, even as parking lots. While waiting for

rehabilitate the physical fabric of the his-

public use. At this stage, the sustainability of

physical deterioration to run its course,

toric centers, but also stimulate the social

preservation efforts rests mostly on the en-

property owners sometimes subdivide large

and economic processes that can make effi-

ergy of certain individuals from the cultural

buildings according to market demands

cient use of historic buildings and

elite. Consequently, investments are often

(low-income housing, warehousing, repair

infrastructure and maintain them properly.

lost due to lack of continuity.

shops), thus contributing to the degradation

Above all, effective intervention in ur-

Experience with urban heritage preservation

of historic buildings and the deterioration

has shown that the process generally

legislation aimed at protecting historic

progresses through three identifiable stages:

buildings from the ravages of real estate de-

isolated interventions led by concerned

velopers. The net effect of this approach is

groups, structured government action, and,

mixed. In many cases, legislation has pre-

finally, preservation as a shared concern of

vented the destruction of historic buildings

both public and private stakeholders.

by buying time while more efficient ap-

A second stage emerges in the preservation

proaches could be developed. But by

process when governments adopt more pro-

limiting development options available to

active approaches, passing legislation and

the owners of historic buildings, and pro-

creating heritage preservation boards and

viding no incentives for proper maintenance

specialized institutions. However, when

Stage One: Preservation as a Concern of o Cultural Elite

This stage often sees the enactment of

Initial preservation efforts are generally led

by owners and tenants, well-intentioned leg-

by a cultural elite concerned about losing

islation can end up having the opposite

historical monuments and areas because of

effect of what was intended. Owners some-

of the area.

Stage Imo: Unsustainable Government Interventions

The notable exception is Mexico, where the state was the early leader.

often invoked to justify public investment.

The Recovery Program for the Historic District of

significant cost to the public budget. It is yet to be

Combining public investment in infrastructure and

Salvador (the Pelourinho, a UNESCO World Heri-

seen whether the effort will be sustainable over the

building rehabilitation with strict enforcement of

tage Site) adopted the strategy of heavy public

long term.

regulations on preservation, the program succeeded

intervention in a reduced section of the downtown

In Santo Domingo, the Government Office of

area. Since 1993, a public entity, the Cultural and

Heritage Preservation followed a similar approach

Historic Heritage Institute of Bahia, with financing

toward rehabilitating the downtown historic area.

in reconstructing the monument section of the colonial city as it might have looked in the 17th century. But although it has been successful in reha-

from the state government, has rehabilitated more

bilitating landmark buildings and establishing

than 300 buildings located in 16 downtown blocks

first-class museums, the endeavor has had difficulty

of Salvador. Using the city blocks as rehabilitation

attracting the private investment required to diver-

units, the institute has undertaken all the works on

sify the area economy. Private investors cite the

both public and private properties, offering tenants

regulations that limit the uses of the buildings and

the option to stay or collect a monetary

problems with vehicular access as the major con-

compensation and move.

straints preventing the flow of investment into the area. Inefficient electricity and drainage facilities

While the program has succeeded in rehabilitating buildings and supporting tourism, cost

also hamper development, as do the complex insti-

recovery has been weak and little diversification of

tutional arrangements for development control currently split between several entities. Upkeep of

residential and economic activities has occurred. In fact, recreational and tourism activities have dis-

the restored buildings and public spaces falls en-

placed many residents and craftspeople who worked

tirely under the purview of the central government,

and lived in the historic center, to the detriment of

an arrangement that neither ensures sustainability nor provides for the equitable distribution of costs

diversification. The program's top-down approach achieved impressive physical results, unfortunately at

A restored city block in the Pelourinho, Salvador.

among beneficiaries.

confronted with other pressing social needs,

technical skills often compound the ill ef-

this approach include Salvador (Brazil) and

most governments find it difficult to sys-

fects of insufficient funds. Further, in most

Santo Domingo (Dominican Republic) (see

tematically mobilize taxpayer funds to pay

cases, the interventions do not achieve the

Box 1.3), where public intervention ended

for the rehabilitation and upkeep of urban

right balance between the roles played by

up narrowing the scope left to the private

heritage sites. Weak institutions and lack of

the public and private sectors. Examples of

sector to conduct business and make real es-

BOX 1.3. REHABILITATION OF URBAN HERITAGE IN SALVADOR AND SANTO DOMINGO

for a variety of economic activities. At this

cases, a well-intentioned but excessively pro-

stage of development, the most critical is-

active public sector not only crowded out

sues confronting urban heritage preservation

potential private investment, but also un-

are solved through the collaborative efforts

dertook the impossible task of operating

of different actors. Critical to reaching this

and maintaining a vast array of buildings

stage of development is reaching a consen-

and public spaces with limited resources.

sus in the community about the social and economic value of historic heritage itself, a process that can be promoted through pub-

Sfage Three: Preservation of Urban Heritage as a Social Concern

lic education and information campaigns.

tentrificfltion

Under this more advanced stage of preservation-still to be achieved in Latin

Preservation of urban historic centers

America-the preservation of urban heritage

generally involves gentrification, with

becomes a concern and responsibility of a

higher-income residents and economic ac-

wide variety of social actors. As such, it de-

Madre de Deus Church, Recife.

tivities supplanting poorer ones. How

rives momentum and dynamism from the

effectively the positive and negative conse-

interplay of different interest groups and

quences of gentrification are dealt with can

the real estate market. Private philanthropy,

tract private investors. As communities in-

have an important impact on the viability

civil society organizations and local com-

crease their appreciation for urban heritage,

of the preservation process.

munities become involved in the process

the commercial value of historic buildings

with clear and complementary roles. The

and areas increases. Preservation then be-

tation of historic districts attracts new

public sector provides the regulatory envi-

comes a relevant commercial concern,

residents and economic activities, boosting

ronment and invests in the rehabilitation of

attracting private investors who rehabilitate

land and building prices. This market-driven

public spaces and the infrastructure to at-

buildings to satisfy the demand for space

process generates positive externalities for

On the one hand, successful rehabili-

tate investments in historic centers. In these

One Latin American success story in

beyond the second stage. Historic centers in

economic activities interested in locating in

the making is the preservation of the historic

most colonial cities have been abandoned

historic centers, increasing demand for

city center of Quito. Through an ambitious

or are in serious disrepair, and efforts to re-

space and contributing to the long-term sus-

residential building rehabilitation program,

vitalize them are still plagued with

tainability of the preservation effort.

the city is working to keep current city center

inefficiencies and gaps in coverage, particu-

residents in the area. In one renovated build-

larly regarding preservation of monuments

municipalities and landowners, it tends to

ing, the program succeeded in retaining 75

and public buildings. The limited preserva-

expel low-income families and less profit-

percent of the original occupants by working

tion programs underway are still being

able economic activities from the area. The

with the community and strictly controlling

shouldered by governments, whose budget-

poor lose access to cheap housing and to

costs, and with financial assistance from the

ary constraints prevent them from making a

the economic and social opportunities of-

central government in the form of direct sub-

noticeable dent in what needs to be done.

fered by a downtown location. Efforts to

sidies. Plans are to extend this approach to

Institutions created to promote preservation

mitigate this social inequity caused by

several other buildings set for rehabilitation

face chronic shortages of resources and

gentrification often include low-income

over the next two years. The program recu-

manpower, and the regulations put in place

housing and microenterprise programs sup-

perates its investment from the beneficiaries

to promote preservation tend to have nega-

ported by national or local governments.

who pay for the homes with their own sav-

tive side effects that in fact impair it.

ings, bank mortgage loans and government

Further, public resources that are allocated

subsidies.

to the task are not being used efficiently, as

However, while gentrification benefits

Side effects of gentrification may be so significant as to jeopardize political support for preservation. There are but a

evidenced by the lack of sustainability of

handful of cases-Bologna and Barcelona are

many publicly-financed preservation

Preservation Challenges and Strategies for Latin America

projects.

involved significant central government

In terms of the three evolutionary stages of

third stage-that is, to a sustainable level in-

subsidies, a price not many countries can

urban heritage preservation described above,

volving the various public and private

afford.

Latin America in general has not progressed

stakeholders. Several strategies can be fol-

examples-where this problem has been mitigated to the satisfaction of local residents. In all successful cases, interventions

The challenge for Latin America is to propel urban heritage preservation to the

commerce, tourism, recreational and other

visitors nor users of these areas. When tour-

tions involve the public sector defining pres-

immediately and others as preservation pro-

ists do come, there is the danger that

ervation regulations and either hoping pri-

cesses progress.

historic centers unprepared for such an in-

vate landowners will comply or forcing them

Societies invest in the preservation of

flux will be overrun, causing deterioration.

to. Providing incentives promotes preserva-

urban heritage for a variety of reasons. Lob-

The private sector also invests in pres-

bying by pressure groups may bring

ervation, albeit for different reasons.

erties. A more proactive intervention is to

government intervention, or international

Businesses occasionally choose historic build-

promote private-public partnerships in urban

concern for cultural artifacts may promote

ings as their headquarters for prestige or

heritage preservation projects. Finally, at the

the establishment of institutions devoted to

public relations. In such cases, the building

extreme end of the public-private continuum

preservation. Once consolidated, these insti-

is usually a well-known landmark, and its

are direct government investments, under

tutions develop their own agendas and seek

preservation can be presented as an enlight-

which the public sector bears the entire bur-

resources. But in Latin America, where pri-

ened investment in the community. The

den of intervention.

vate philanthropy is not well developed,

historic center of Cartagena has become a

these institutions usually end up being sup-

fashionable location for high-income resi-

ported by national budget allocations that

dents who restore buildings as permanent or

almost always are insufficient for them to

temporary residences. Sometimes the heri-

The preservation of individual buildings

fulfill their preservation mandates.

tage of buildings is used as a marketing

focuses primarily on restoring or rebuilding

device for commercial development, as with

a cultural landmark. Historic accuracy is

heritage preservation into their political

Quincy Market in Boston and the Cannery

paramount, and the building is often de-

agendas in order to foster local pride and

in San Francisco in the United States.

voted to public use or used as a prestigious

Local governments incorporate urban

identity, or to promote tourism. However,

tion investments by owners of historic prop-

Experiences in the preservation of ur-

Preservation of Landmark Buildings

setting for a private institution. Such an un-

the economic rationale for public invest-

ban heritage vary according to the scope of

dertaking can play a significant role in the

ment in urban heritage for tourism needs

the interventions (individual buildings, his-

early stages of a preservation effort, particu-

careful analysis on a case-by-case basis.

toric areas, and preservation as part of

larly when small groups of citizens struggle

Tourists do not always flock to historic cen-

broader urban renewal) and the type of inter-

to preserve important buildings from real

ters, and often are neither the principal

vention. Command and control interven-

estate speculation. However, this approach

lowed to achieve this end, some applicable

mechanisms through which a community can express a preference on heritage issues. Further, this approach does not ensure the long-term viability of the preservation effort, since, more often than not, the deteriorated surroundings of the building conspire against the sustainability of the investment. This also makes this approach unsuitable for private commercial investment, since it does not remove the central risk of investing in deteriorated areasnamely, the uncertainty of demand for the preserved buildings. Thus, while this approach may be valid for preserving a few landmark buildings that

San Francisco Square and Convent, Quito.

communities hold in great esteem, it is not sustainable on a large enough scale to preoften leads to public projects that rely

ingness of the population to devote re-

serve the vast array of decaying historic

heavily on public funding and subsidies,

sources to make sure that the site can be

buildings and sites in Latin America. Neither

not only for the preservation effort but also

used or seen in the future (existence value),

is it sufficient to sustain preservation efforts

for operation and maintenance of the

or to ensure the option to use or see it (op-

over the long term. Rather, it is a transitional

building.

tion value). The rationale for devoting pub-

strategy that can be used in the absence of

lic resources to these investments is difficult

the social consensus and institutional matu-

mally based on the "existence" and "option"

to evaluate, however, because instruments

rity that characterize later stages in the

values of the building expressed in the will-

to measure individual and community pref-

evolution of preservation efforts.

Justification for the investment is nor-

erences are limited, and there are no clear

blocks of downtown Warsaw were painstakingly reconstructed using old maps, plans,

A broader strategy overcomes the limitations

drawings, photographs and, notably, works

of preserving one building at a time by fo-

by the Italian painter Tintoretto. Preserva-

cusing on the preservation of a coherent

tion of historic centers in Salvador (Bahia)

functional or historic area that includes

and Santo Domingo also used direct public

several buildings and public spaces. Imple-

sector intervention and financing, but with

mentation of this type of project usually

mixed results (see Box 1.3).

requires the commitment of significant fi-

Public-private partnerships. Barcelona at-

nancial resources-mostly public funds,

tracted international interest for its

although public-private partnerships are

public-private partnership approach to reha-

sometimes forged. The interventions are gen-

bilitating and preserving depressed sections

erally justified on the basis of the existence

of its historic center. As part of a major

value of the site, although the impact on

modernization drive, the municipality imple-

tourism is also stressed. The economic ratio-

mented a strategic plan to work with the

nale is difficult to ascertain, however, given

community and the private sector to reha-

the diffused (although not necessarily small) benefits generated by such projects. Effective

Building rehabilitation in Recife.

coordination of numerous public agencies is also important because the diversity of actors

bilitate deteriorated neighborhoods in and around the historic center. The approach was based on the impact of key public invest-

Direct government investment. This ap-

ments on private investment, since

involved and the extended period of time

proach is much favored in Europe, where

improvements in urban services and public

during which the investments take place pose

governments have taken the leading role.

spaces generate externalities that attract in-

significant institutional challenges. The para-

A striking example is the reconstruction of

vestors. Whenever possible, urban services

graphs that follow outline examples of

the historic core of the city of Warsaw, Po-

were housed in rehabilitated historic build-

preservation programs for historic areas ac-

land, which was destroyed during the Sec-

ings, and assistance was given to private

cording to the type of intervention.

ond World War. In the early 1950s, several

owners to rehabilitate their historic proper-

Preservation of Historic Ureas

urban services. It then turned to restoring

built before 1936. The tax incentives can be

mixed capital companies to promote joint

buildings for residential and commercial

traded, thus turning them into cash contri-

ventures with the private sector, the munici-

uses, initially with public funds, but later by

butions to the developers allocated through

pality embarked on a program to upgrade

entering into partnerships with landlords.

a market mechanism. The program has suc-

living conditions in the historic center. Pri-

The municipality would finance part of the

ceeded in attracting private investment to

vate partners brought capital and real estate

rehabilitation of residential and commercial

the rehabilitation of historic buildings listed

development expertise into the mixed capital

buildings of historic significance in ex-

in the National Register of Historic Places.

company, while the municipality contributed

change for commitments from landlords to

land and its coordination powers. Participa-

retain existing tenants and economic activi-

historic areas, the public sector grants tax

tion in the joint ventures allowed the

ties. This helped make Bologna one of the

exemptions, direct subsidies or special rights

municipality to capture part of the better-

few cities where the rehabilitation of a his-

to the owners of the affected buildings at

ment generated by the rehabilitation effort.

toric center managed to retain a significant

the same time that it establishes regulations

Using resources from existing national and

number of the original occupants.

to protect buildings of interest in a target

regional low-income housing programs, the

area. The subsidies compensate owners for

mixed capital company managed to retain a

Regulations and incentives. This approach can be used to promote private

significant portion of both poor and middle-

preservation or as a preventive approach to

income residents in rehabilitated areas.

deter the decay of historic areas. As a

volved in complying with preservation regulations. The special rights include the

Restored buildings also provided space for

mechanism promoting private preservation,

option to transfer the development rights of

craftsmen and small merchants, financed

tax incentives have been widely used in the

the protected building site to other parcels

partially with cross-subsidies from fully com-

United States. The Federal Historic Preser-

of land. This reduces the pressure to rede-

mercial ventures. These efforts allowed the

vation Tax Incentives Program provides a

velop sites containing heritage buildings.

retention of some of the original occupants.

tax credit equivalent to 20 percent of

However, the approach is demanding in

precertified expenditures made in the reha-

terms of the institutional resources needed

first adopted a preservation plan for the

bilitation of certified historic structures, and

to devise and implement the regulations,

city's historic center and then invested

10 percent of expenditures in the rehabilita-

and burdensome to the public sector that fi-

heavily in rehabilitation of public areas and

tion of nonhistoric, nonresidential buildings

nances the subsidies.

The municipality of Bologna, Italy

In terms of deterring deterioration of

the loss of revenue or the extra expenses in-

ties. Drawing on its experience in operating

the city of Edinburgh in the United Kingdom succeeded in preserving the Georgian New Town. Owners of registered historic buildings are prevented from making structural and cosmetic changes to the buildings. In compensation, they receive free technical assistance and tax reductions from the city. These actions complement direct investment in specific historic buildings undertaken by the National Trust, a privately funded nongovernmental preservation organization. In this case, the combination of regulations and subsidies has succeeded, aided by such factors as reduced real estate development pressures on the historic center, sufficient resources to

Cartagena's bustling Barrio Centre attests to the historic center's ongoing economic role in city life.

cover the subsidies, and sustained public support for the protection effort. As Cartagena turned into a fashionable re-

straints have discouraged private investment

municipality of Cartagena implemented an

sort, the private demand for historic houses

in the fashionable sections of the walled

elaborate preservation plan for the historic

attracted unsubsidized private investment to

city. And at the same time, those regula-

buildings within the walled city. The plan,

restore many buildings in the historic center

tions have until now successfully preserved

geared to regulate private investment, was

as residences or tourist facilities. Although

the character of the historic area, including

complemented by public investment to re-

investors often resent the rigid building

buildings housing middle-income local

habilitate walls and preserve public spaces.

regulations, it is unclear whether these con-

families.

Command and control regulations. The

Combining regulations and incentives,

The most current approach to protecting ur-

of a private sector style of decision-making

a comparative advantage in performing this

and risk-taking in the use of public funds.

function.

Using an approach like that of

An important feature of this approach

ban heritage emphasizes the role that it can

Barcelona, the Municipality of Quito is en-

is that it takes advantage of synergies be-

play in promoting the revitalization of areas

gaged in both preservation and urban

tween heritage preservation and urban re-

where historic buildings are located. This

renewal of its city center. The dominant

newal. While preservation of urban heritage

provides an additional justification for the

feature is public intervention as a catalyst

improves the chances of successful urban

expenses involved in preservation. The ap-

for private investment. A clearly defined

renewal, the economic and social benefits of

proach pivots on the restoration and

master plan along with public investments

urban renewal support expenditures for

adaptation of historic buildings for public

give clear signals of the government's com-

preservation. In turn, the rehabilitation of

or private uses, complemented by improve-

mitment to long-term rehabilitation of the

historic areas improves the city's functional

ments in public spaces and infrastructure.

area, a key element in attracting private in-

efficiency, maximizing use of physical capi-

This in turn generates positive externalities

vestment. The master plan also provides

tal and reducing transportation costs.

that attract economic activities into the tar-

assurances about the nature of future de-

get area, propelling the rehabilitation

velopment, easing private sector fears that

process into a self-sustained stage. Preserva-

it could jeopardize the future value of real

tion of heritage buildings is financed either

estate. This is a concern not only of buy-

with public funds or through joint ventures

ers, but also of lenders who worry about

with private investors.

the value of loan collateral.

Effective implementation of this ap-

Corporations or mixed capital com-

Moving flhead iiiifti Urban Heritage Preservation in Latin America Experiences with urban heritage preservation suggest moving along three major

proach requires long-term commitments on

panies assume part of the business risk,

fronts in order to push the process into a

the part of the public and private investors,

which tends to be high in the early stages

sustainable stage in Latin America.

as well as development of effective private-

of the rehabilitation process. Further, these

public partnerships. Cofmancing also de-

entities also perform land-banking services

involve the widest possible variety of social

mands changes in traditional approaches to

by assembling developable parcels, a fea-

actors. This will encourage the general pub-

public financing, including the acceptance

ture attractive to private investors who lack

lic to perceive and value the relationship

First, the preservation effort should

Preservation as Part of Revitfllization

monuments, buildings and public spaces will

will not take place spontaneously. There is a

vation of its urban heritage. Leading roles

retain their structural, stylistic and functional

development task to be undertaken by local,

must be played not only by government

characteristics without requiring new invest-

regional and central governments. The pub-

agencies and the cultural elite, but also by

ments. Full involvement of the private sector

lic sector is the only actor in the

community organizations, NGOs, civic alli-

in setting priorities, defining preservation

preservation process capable of maintaining

ances, political parties, real estate investors

plans, financing and carrying out preserva-

the long-term perspective required to con-

and the general public.

tion works, and even operating and

ceive and implement change and induce the

maintaining some heritage sites, guarantees

private sector to take a larger role.

Second, governments must take advantage of the synergies that exist between

sustainability of the preservation effort and

heritage preservation and urban renewal.

relieves the government of many of the bur-

by a better understanding of the conditions

Using preservation as a catalyst for urban re-

dens associated with long-term preservation.

under which the private sector ventures into

newal expands the development impact of

urban heritage preservation. Because experi-

preservation, fostering its legitimacy and

place in Latin America in the direction of

ences in Latin America are limited, available

sustainability. The complementary nature of

socially shared and more sustainable forms

studies concentrate on Europe and North

these investments makes this approach ap-

of urban heritage preservation-as described

America, where market circumstances are

pealing to governments, communities, real

in the chapters that follow on preservation

significantly different. By examining preser-

estate investors and lending institutions.

programs in Cartagena, Quito and Recife-

vation processes in Cartagena, Recife and

the overall sense is that the region is in

Quito, this book aims to identify factors

operational reforms needed to ensure the ef-

need of change, in need of a different out-

that can induce private investment in his-

ficient allocation of public resources and the

look on the role that the preservation of

toric city centers in Latin America.

sustainability of preservation efforts, priori-

urban heritage can play in cultural identity

ties should shift from government-financed

and urban development. It also needs insti-

preservation of individual buildings and

tutional and operational reforms to increase

monuments to preservation of historic areas,

the efficiency with which public resources

with private sector participation. This strat-

are spent and to ensure the long-term sus-

egy greatly increases the chances that historic

tainability of preservation. These changes

Third, to promote the institutional and

Although some progress has taken

Public policy design can be enhanced

between its cultural identity and the preser-

In Cartagena, the private sector rehabilitated and preserved residential buildings in the historic center by building on the

as on continued investment in preserving public buildings and spaces. In the Bom Jesus area of Recife, the

Although the urban heritage preservation

success of both the central government,

municipal government spearheaded revital-

programs described in this book do not

which had rehabilitated the city's magnifi-

ization of the city's founding site, attracting

constitute a representative sample of current

cent walls and monuments, and the munici-

the private sector with pioneering invest-

efforts in the region, they do show a variety

pal government, which had upgraded city

ments in rehabilitation and promoting the

of options for increasing private sector

center infrastructure and public spaces as

area as a new recreational and cultural

participation, ranging from the externally-

part of a bid to promote the city as a tourist

center.

generated participation of the private sector

destination. Colombia's economic elite, mo-

Quito showcases yet another

in Cartagena, to the government-induced

tivated by the prestige associated with reha-

approach-partnership between the public

role of the private sector in Recife, and to

bilitating vacation homes in the historic

sector and private owners and investors

the establishment of a semi-public develop-

center, invested on their own, without much

through the activities of a semi-public cor-

ment corporation in Quito. All three cities

intervention needed from the public sector.

poration established specifically for this

have achieved some degree of success in

The government's involvement focused in-

purpose.

preserving their urban heritage with private

stead on regulating private real estate devel-

sector assistance, yet each has had its prob-

opment in order to maintain the historic

lems as well.

and spatial values of the city center, as well

Preservation in Progress: Cartagena. Recife and Quito

This page intentionally left blank

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The Private Sector Role in Preserving Urban Heritage

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process is still subject to external factors, in-

mand for space in historic city centers is the

invest in urban heritage preserva-

cluding the performance of Colombia's

best guarantee of sustainable preservation.

tion has proven to be a difficult

economy and the continued preference of

Ultimately, only private investors and con-

but not impossible task. The experiences of

high-income groups for vacation homes in

sumers can provide the necessary stability

Cartagena, Quito and Recife show the im-

Cartagena. The city would benefit from a

for this process.

portance of sustained commitment by the

management plan for its historic city center

public sector, which must play a leadership

to coordinate the activities of the various lev-

to involve private investors through joint

role in reversing the complex patterns of ob-

els of government, facilitate private invest-

ventures to rehabilitate a historic city center

solescence associated with the deterioration

ment, and encourage diversification of

that had been declining. The sustainability

of urban heritage. The result-unsubsidized

services and real estate endeavors. Such steps

of this effort may be less volatile than in

private sector investment in the preservation

would make the preservation process more

Cartagena because the Quito preservation

and adaptation of historic buildings to make

stable by reducing dependence on a limited

program is based on more diversified activi-

them viable for modern use-takes time to

number of participants and investors.

ties. The involvement of efficiently man-

materialize and is difficult to sustain over the

In Recife, the public sector has spear-

In Quito, the public sector has sought

aged institutions with clearly defined

long term. Government support is particu-

headed efforts to revitalize the Bom Jesus

mandates also raises hopes for the long-term

larly important in reducing investor and cli-

area of Bairro do Recife, the historic city

viability of preservation in Quito. These in-

ent uncertainty about the medium and

center that had become marginalized from

stitutions ensure the continuity of the pub-

long-term return on investments.

modern city life. The sustainability of this

lic sector's role, which in turn reassures

effort is still uncertain and will depend on

private investors.

In Cartagena, the situation is encouraging. For reasons essentially unrelated to gov-

the continuity of the municipal govern-

ernment intervention, private investment has

ment's efforts to revitalize other parts of

materialized following the initial efforts of

Bairro do Recife. Diversification of both ac-

national and municipal governments to pre-

tivities (recreation, culture or export ser-

serve the heritage of an historic city center

vices) and clientele (tourists and residents)

Despite their differences in location, func-

whose significance extends beyond the hemi-

should reduce the volatility of demand in

tion, size and history, the historic city

sphere. However, the sustainability of the

the local economy. Ensuring sustainable de-

centers of Cartagena, Quito and Recife have

Deterioration and Preservation 29

otivating the private sector to

drive up construction costs, making the re-

were neither earning rents nor making in-

and preservation.

habilitation of buildings uncompetitive with

vestments. In Cartagena and Quito, some

construction in outlying areas. These trends

central activities were retained, primarily

banization process that affected all three

reduce or eliminate incentives for the pri-

linked to the presence of government and

cities (and all of Latin America), along with

vate sector to make new investments in

the activities of lower-income groups. But

the spatial dispersion of urban life that came

expanding or maintaining the building stock

shifts in the demand for space also led to

with the use of the automobile on a massive

in the historic center. As the return on pri-

uses that promoted the decay of buildings

scale. In less than 40 years, the cities sur-

vate investment drops below the city

and public spaces.

passed the boundaries that had defined their

average, investors seek out opportunities for

urban identity for almost 400 years. In each

urban expansion elsewhere, leaving down-

obsolescence and decay of urban centers-

case, the space currently identified as the his-

town areas neglected.

essentially similar to what happens to down-

Decline set in with the explosive ur-

toric city center ended up accounting for a

town areas of many cities, historically

very small proportion of the geographic area

and residential activity, along with de-

significant or otherwise. The table compares

covered by the city as a whole. As these city

creased construction, reduces the tax yield.

the behavior of key urban development

centers were deserted by more prosperous

This trend, compounded by explosive

variables in historic city centers-private re-

businesses and residents, a spiral of urban de-

growth in outlying areas of the city, shifts

turns on real estate assets, private real estate

terioration began, affecting both buildings

public investment away from city centers,

investment, tax yields, public investment in

and historic monuments.

accelerating the downward spiral. As the

infrastructure, and the condition of build-

process continues, these various indicators

ings-with a theoretical average in other

ties abandon a historic center, the return

drop further and further below city aver-

growth areas of cities. The variables are

from private real estate assets decreases. As

ages, worsening the city centers' image of

shown as either above or below average dur-

the demand for space declines, the flow of

urban blight. The Bom Jesus area in Bairro

ing the different phases of urban obsoles-

income is reduced, and the speed at which

do Recife is an extreme example of this pro-

cence and preservation. The rapid and

real estate can be sold also declines. Fur-

cess. By the time government began efforts

simultaneous drop in public and private in-

thermore, preservation ordinances combine

to rehabilitate this area, the neighborhood

vestment in historic centers as private re-

with the deterioration of the buildings to

was in such a state of decay that landowners

turns drop below the city average is

When economic and residential activi-

The decline in downtown business

Table 2.1 summarizes the process of

endured similar processes of deterioration

Obsolesence

Preservation

immediately reflected in urban decay during the early stages of obsolescence. This can be reversed only after significant and sustained public effort. The table shows that the slow recovery of private investment reaches levels comparable to the citywide average only af-

Urban development variables

ter the public sector has made above-average investments over an extended period. A

Private returns i

stable preservation process is attained only when private returns and investments, public investments and tax yields for the historic center have the same behavior as for

Private investment i

other areas of the city.

Strategies

Tax yield \

The preservation strategies for the three historic city centers analyzed here have all moved beyond the initial stages described

Public investment i

in Chapter One, when efforts focused on preserving landmark buildings and implementing land use and building preservation ordinances. Preservation efforts are rela-

Condition of buildings j

tively advanced in comparison with other Latin American cities, and the private sector

Average outcome of urban development Above average Below average

is playing a recognizable role. However, in

Table 2.1. Process of Obsolescence and Preservation of Historic City Centers

buildings, and undertook demonstration in-

by a sizable public investment with similar

vestments to test the viability of

goals and patterns.

commercial ventures. Government efforts to allay the fears

The main purpose of public sector intervention in city centers has been to arrest

of private investors have taken various

the process of decline. In Cartagena, the

forms. In Cartagena, a more indirect ap-

goal was simply to protect heritage sites,

proach focused on enforcing a rigorous

while in Recife and Quito an additional ob-

preservation plan that guarantees the quality

jective was to attract private investment, in

of works undertaken by private investors on

part by reducing uncertainty about real or

properties within the walled city. In Recife,

perceived risks. Efforts have centered

the Office of Bairro do Recife helped inter-

around changing the decaying image of his-

ested investors identify property owners

toric city centers, generating externalities

willing to enter into partnerships for the re-

conducive to private investment, and dem-

habilitation and marketing of buildings. In

onstrating the viability of a variety of real

addition, special events held in the Bom

estate ventures.

Jesus area have positioned it as a cultural

The case studies highlight the various

Santa Teresa Hotel, Cartagena.

and recreational center. The mixed-capital

approaches used to address problems associ-

development corporation in Quito has gone

ated with the image of urban blight. In

even further by entering into partnerships

Cartagena, monuments were rehabilitated

and Cultural Center. In all three cities, ex-

with private investors and taking on part of

and public spaces restored. In Recife, invest-

ternalities were generated conducive to

the commercial risk.

ments were also made in rehabilitating

private investment through improvements

building frontages and promoting new ac-

in infrastructure and public spaces. Quito

the three historic centers has essentially

tivities in the city center. And in Quito,

and Recife also improved accessibility to

consisted of three phases:

public services were improved and new fa-

city centers, established partnerships with

cilities established such as the City Museum

the private sector to rehabilitate major

In short, the preservation process for

1. The public sector spearheads efforts to preserve urban heritage of city centers by

each case, private investment was preceded

velopers to rehabilitate buildings for sale on

cultural elite, who lobbied for public regula-

tion plans, and by initiating the process of

the market. Thus, private sector participa-

tions and investment, and the economic

investing in the preservation of heritage sites.

tion in the preservation process transcended

elite, who preserved and rehabilitated homes

the individual rehabilitation of homes that

and commercial buildings for tourism.

2. Government agencies invest in preserving monuments and improving the

dominated the initial phase, adding a

infrastructure and public spaces surrounding

commercial dimension to the role of the

spectrum is Bairro do Recife, where public

them. These investments not only preserve

private sector.

interventions were structured within a revital-

sites of cultural and historic significance, but also help to reverse the image of decay

ization plan that specifies types of invest-

Planning

in historic centers and generate externalities to attract private investors

At the other end of the planning

ment and priority areas. The investments made under the Bom Jesus development

The three cities studied have used different

project reflect the priorities of the plan.

approaches regarding the role of planning in

Through the Office of Bairro do Recife, the

vation or rehabilitation of historic buildings,

the design and implementation of preserva-

municipality made intensive use of coercive

but only after the preservation process has

tion projects.

instruments (expropriation) and coordinated

3. The private sector invests in preser-

achieved some degree of continuity.

In Cartagena, the public sector fi-

private investment liaison between prospec-

nanced the preservation of heritage sites

tive real estate investors and property own-

that helps improve preservation triggers pri-

without a defined plan, but adopted a regu-

ers. Projects currently being carried out by

vate sector investment in the long term and

latory framework. The municipal govern-

the municipality in the Alfandega area also

tax revenues in the still longer term. In its

ment in consultation with the National

reflect the priorities set in the revitalization

final phases, the preservation process should

Monument Board has enforced controls on

plan. In short, the strategic sequencing and

acquire its own momentum and encompass

private investments in preservation. How-

continuity of public investment have been

the entire target area, chiefly through invest-

ever, the city has no explicit plans coordinat-

key to ensuring the sustainability of preserva-

ments by private developers. Of the three

ing the activities by agencies of the central,

tion in an area that is gradually returning to

cities examined here, the final stage has

departmental and municipal governments.

its former prominence.

been reached only in Cartagena, where the

Positive results are attributable more to a for-

demand for vacation homes led private de-

tunate convergence of interests between the

Sustained public sector intervention

The case of Quito illustrates a middle course between these extremes. The munici-

enacting protective legislation and preserva-

Type of intervention Incentives

Free market Preservation activities

Traditional Private function

Public

Private

Public

Private

Association Public

Private

Public intervention Public

Private

Building management |

Marketing

Building rehabilitation Financing Land consolidation Economic development promotion

Traditional public functions

Direct subsidies Tax incentives Preservation of heritage sites Improvements to public spaces Improvements to infrastructure Revitalization plans Preservation regulations

pality designed and implemented a preserva-

approach geared toward harnessing invest-

activities, and in terms of the risks the pub-

tion plan that regulates private investment

ment opportunities as they unfold.

lic sector is prepared to assume to lead the preservation process (see Table 2.2a).

for the historic center. At the same time, the semi-public corporation established to promote rehabilitation of the historic center

Private Sector Participation

At one end of the spectrum are what could be called "free-market" strategies, in

operates according to a flexible investment

Options for public-private association in

which the roles played by the two sectors

strategy. It plays a proactive role, but it does

preserving historic city centers vary in terms

are clearly delineated. The public sector as-

not follow a rigid, predetermined invest-

of the degree of coordination or interdepen-

sumes its exclusive responsibilities: planning

ment plan, pursuing instead a strategic

dence between the public and private

urban development, improving infrastruc-

Table 2.2a. Theoretical Public-Private Relationships in Historic City Center Preservation

Type of intervention Recife

Cartagena Preservation activities

Traditional private functions

Public

Private

Public

Quito Private

Public

Private

Building management Marketing Building rehabilitation Financing Land consolidation

Traditional public functions

Economic development promotion Direct subsidies Tax incentives Preservation of heritage sites Improvements to public spaces Improvements to infrastructure Revitalization plans Preservation regulations

ture and public spaces, and preserving pub-

opment, land consolidation, and financing

tempted in a number of cities, but its sus-

lic monuments. This strategy may include

and execution of investments in the reha-

tainability has proven problematic because

incentives such as tax exemptions and direct

bilitation and preservation of buildings, as

it is almost wholly dependent on public

subsidies for promoting preservation of sur-

well as their marketing and commercial

funds. The process is thus at the mercy of

rounding buildings, since this has external-

operation.

ever-changing political support and the al-

ities on the preservation of the monuments.

At the other end of the spectrum are

The remaining responsibilities are entrusted

strategies where the public sector assumes

to property owners and private investors, in-

the entire range of preservation activities.

cluding promotion of local economic devel-

This state intervention strategy has been at-

ways uncertain availability of government resources. An intermediate strategy is to promote partnerships between the public and private

Table 2.2b. Actual Public-Private Relationships

free market model. However, it is clear that private investment would probably not have materialized (at least not on the scale observed today) if the public sector had not invested in preserving heritage sites and improving infrastructure and public spaces. The public sector also regulated the private preservation and rehabilitation efforts on the basis of a preservation plan. Although few would dispute the merits of the plan and its contribution to the quality and consistency of efforts to protect Cartagena's historic city center, many take issue with the procedures used to enforce it. For example, not all investors agree with the

Restored residences on Leon Street, Quito.

municipal government's interpretation of the regulations. This highlights the complex sectors. In these cases, the participants join

The actual strategies used to link pub-

issues involved in implementing preserva-

forces to undertake complex tasks such as

lic and private investment have varied (see

tion plans based on regulations whose

promoting local economic development and

Table 2.2b). In Cartagena, the linkage was

enforcement requires some degree of techni-

land consolidation, making full use of their

indirect, since the motivation for private

cal discretion in considering each case on its

respective skills and strengths. Such partner-

sector investment was independent of gov-

merits.

ships can also be used to facilitate the fi-

ernment intervention. Because there were

nancing of pioneering investments, with the

no public sector efforts to promote eco-

public and private investment was more di-

public sector assuming part of the initial risk.

nomic development or to consolidate land,

rect, in part because the municipality had to

In Recife, the association between

Cartagena's strategy leaned more toward the

volved in land consolidation, promotion of

the potential multiplier effects of public

by the dilapidated condition of the Bom

economic development, financing, and the

investment will materialize, which ulti-

Jesus area. The municipality purchased and

rehabilitation and marketing. The high de-

mately increases the uncertainty as to

rehabilitated buildings whose owners

gree of public sector involvement is

whether the benefits justifying the use of

showed no interest in participating in the

reflected in Table 2.2b, which shows that

public resources will be realized. At least in

preservation effort, even after infrastructure

the interaction with the private sector oc-

the initial stages of the process, the Recife

and public spaces had been improved. This

curs further up than would be expected

and Quito strategies give the public sector

allowed the public sector not only to dem-

under the pure partnership model. In its

greater control over private investment. At

onstrate the feasibility of rehabilitation, but

later stages, public sector involvement in

later stages, however, these strategies run

also to show its commitment to promote

the process is expected to decline until it

the risk of leading to excessive public sec-

historic center preservation. The public-pri-

reaches an apportionment of responsibilities

tor involvement, which could crowd out

vate partnership in Recife does not adhere

and risks characteristic of the theoretical

private investment.

strictly to a specific strategy, but rather in-

model shown in Table 2.2a.

corporates a variety of interventions

Precise conclusions about the merits

Subsidies

addressing the need to promote joint invest-

of one particular strategy over the others

ment under particularly adverse

are difficult. As a matter of theoretical

All three preservation programs studied here

circumstances.

speculation, it could be argued that

include tax exemptions in the package of in-

Cartagena's approach allows for less

centives for private investment. These range

tutional framework were designed to

control of the impact of the public preser-

from total exemption from the land tax on

promote public-private cooperation, so this

vation effort than does the public-private

investments in heritage site restoration that

case is closer to the theoretical partnership

association strategy followed in Recife or

have licenses from the National Monument

model shown in Table 2.2a. The semi-public

the partnership used in Quito. If the pub-

Board in Cartagena, to exemption from the

institution in charge of the preservation

lic sector is not involved in promoting

service tax on business activities established

process was created to implement invest-

private investment, it loses control over

in rehabilitated buildings in Recife. While

ments in partnership with the private sector.

the volume and timeliness of that invest-

there is insufficient quantitative information

As a result, the public sector has been in-

ment. It therefore cannot guarantee that

to analyze the impact of such subsidies on

In Quito, the interventions and insti-

overcome private sector uncertainty caused

by national programs for subsidizing low-

sulted in the three cities felt tax exemptions

cost housing.

had little impact on the decisions of private investors. More of an effect came from pub-

ization plan for Bairro do Recife seem reasonable, as they assume that private sec-

Multiplier Effect of Public Investment

tor resources will not be mobilized until three or four years after initiation of public

lic investments in infrastructure and public spaces that changed the decaying image of

Because the preservation experiences ana-

sector activities. However, in both Quito

the historic city centers.

lyzed here are in initial implementation

and Recife, private investments are moving

stages, multiplier effects can only be esti-

ahead faster than had been expected, sug-

Further study is needed on the role,

volume, form and sequencing of indirect

mated. The revitalization plan for Bairro

gesting the multiplier effect may be greater

subsidies in promoting preservation of

do Recife estimated an average multiplier ef-

than expected.

historic city centers through private invest-

fect of about $2.50 of private investment

ment. By way of illustration, the tax exemp-

for every $1 of public investment. No sig-

tions used in the cities studied benefit

nificant private sector participation was

investors or property owners equally, regard-

expected in the first few years, but it is as-

Increases in property values are one of the

less of the timing of their investments.

sumed there will be a sharp increase toward

effects of preserving and revitalizing historic

Strictly speaking, however, the government

the end of the program (a multiplier effect

city centers. In Quito, there are indications

should reward pioneers with greater incen-

of 3.5 in years 11-15).

that land values have increased 30 percent

tives than those received by investors fol-

In Quito, the expected multiplier

Sociol Impact of Preservation

in the last three years, reflecting expecta-

effect for the initial investments is 30 cents

tions generated by government investment.

Quito has used direct subsidies from

of private investment for every $1 of pub-

Properties in the Bom Jesus area have also

the central government to facilitate access

lic investment. These figures may underes-

increased in value since the launching of

by low-income families to ownership of re-

timate the actual multiplier effect of

the revitalization plan. This phenomenon is

habilitated homes in the historic city center.

government action, since they include only

Such incentives have a clear role to play in

those investments identified during plan-

preservation programs, particularly if, as in

ning and fail to assess unplanned

Quito, they target the poor and are funded

investments.

lowing an already established trend.

The assumptions set out in the revital-

The data needed to conduct such an analysis for Cartagena are not available. The data for Recife and Quito refer to programmed rather than actual investments.

fostering private investment, experts con-

but it can also have an adverse social im-

a housing program to diversify land uses

pact. Higher-income households or more

and attract households of varying income

profitable economic activities crowd out

levels to live in the historic center. As part

poorer households and economic activities

of this program, dwellings are rehabilitated

that previously had benefited from low-cost

for poor families who had been living in

and convenient locations in the decaying

substandard buildings. The program is based

historic city center.

on strict controls on the size and quality of

Because investments were not coordi-

the rehabilitated homes in order to mini-

nated in Cartagena, the social impact issue

mize the costs of preservation. It is funded

was neither quantified nor addressed.

through the beneficiaries' own savings and

Clearly, however, low-income households in

mortgages, as well as through subsidies un-

what were decaying buildings were driven

der a national housing program run by the

out by private investment in preservation

Ministry of Housing. It appears to be sus-

and rehabilitation. The displaced families

tainable, since the subsidies required to

may have joined others living in informal

make the program financially viable do not

settlements in outlying areas of the city or

Heritage building used by a financial institution in

exceed 25 percent of the value of the

moved to other slums in the city center.

Recife.

homes. This strategy should help to address

The problem has not arisen in Recife,

the social impact of the preservation effort.

given the virtual abandonment of the

Still, as the process continues, the value of

buildings in the Bom Jesus area. The revi-

more than a declaration of intent, as no

properties will continue to increase, which

talization plan recognizes that land use in

specific steps have been undertaken along

could make rehabilitated homes unafford-

the area should be diversified and proposes

these lines. The problem is especially chal-

able to poor families.

the rehabilitation of homes, which to the

lenging in Recife given the absence of

extent possible should retain their original

national or local programs for financial aid

residents. At present, however, this is no

for low-income housing.

Quito's development corporation has

one measure of the success of preservation,

by Colombia's economic crisis. But there

ally speculating on price increases) has an

are no clear indications of how the supply

adverse effect on the preservation program.

The appreciation of property values that

of housing will respond once demand recov-

Among the measures the municipal govern-

generally accompanies urban heritage pres-

ers. The sustainability of preservation in

ment might take to offset this trend is to

ervation-if merely speculative and not the

Cartagena will to some extent depend on

enforce strict compliance with local preser-

result of a higher return on economic activi-

the success of efforts to diversify the supply

vation ordinances that authorize the

ties or the increased incomes of

of rehabilitated homes, a process which in

municipality to expropriate the owners of

residents-can jeopardize the sustainability

turn will depend on ensuring that property

buildings under a protection order if build-

of the process. Controlling speculative be-

values do not outstrip prospective buyers'

ings are not well maintained, or if the

havior poses a challenge in each of the cities

ability to pay.

owners disregard municipal warnings. An-

examined here.

other strategy is for the municipal

in property prices will make it difficult to

government to acquire derelict buildings

by landowners during the period of peak re-

pursue housing projects for low-income

from landlords who are unwilling to join

habilitation activity soared beyond the

families. Such projects are sensitive to

the revitalization program, as was done in

reach of most families interested in purchas-

changes in the price of the buildings to be

Bairro do Recife. This sent a strong signal

ing them. The market for rehabilitated

rehabilitated, since rehabilitation costs must

that the government intended to take effec-

homes was thus limited to wealthier groups.

be kept down in order to keep the program

tive action in launching the program,

Speculative activity was curbed by a col-

affordable for poor households. In addition,

discouraging speculation.

lapse in demand in 1997 and 1998 caused

the retention of properties by owners (usu-

In Cartagena, housing prices charged

In Quito, there is concern that the rise

Urban Impart of Preservation

•L rJ A P f £ .R. 3

Cartagena: Converging Interests of the Elite

This page intentionally left blank

Colombian cities. Some 40 percent of the

Colombia is among the

city's population lives in absolute poverty

hemisphere's most successful ex-

amples of preservation of historic urban

and 8 percent in extreme poverty. Amidst these urban problems, the his-

heritage. The city was declared a World

toric center of Cartagena stands out for its

Heritage Site by UNESCO in 1982. Within

relatively good infrastructure and services

the walled city-the most remarkable system

and for having concentrated significant pub-

of fortifications in all of Latin America-lies

lic investment in the preservation of

a major collection of churches, convents

historic buildings. The presence of govern-

and private homes built over the city's 450

ment offices, specialized businesses,

years of history.

secondary schools, universities and tourist

The major pdrt trading with Spain in the colonial era, Cartagena went into deth

cline in the 18 and 19 centuries, but enjoyed something of a recovery in the latth

CARTAGENA Population (1990)

746,000

5th Largest city in Colombia

Area

5,810 hectares

Historic Center Population Area

43,297 97 hectares

% of total city population

5.8

% of total city area

1.7

services demonstrates that the historic center has retained its role as the city's hub. In contrast with the historic centers of other cities, the heritage sites and a large

ter half of the 20 century thanks to

proportion of the homes in Cartagena's

industrial and tourism development. Still,

downtown area are in good repair. This is

Cartagena has not escaped the problems

the result of a twofold process: first, invest-

faced by other urban areas. In recent de-

ments in rehabilitating monuments, infra-

cades, a wave of migrants has flocked to the

structure and public spaces by the central

coastal city seeking refuge from the violence

and local governments, with inspiration and

that has ravaged other parts of the country.

leadership from the country's cultural elite,

As a result of this rapid population growth,

who from the outset recognized the histori-

Cartagena has significant deficits in terms

cal importance of Cartagena's heritage sites;

of infrastructure and services, and its in-

and second, investments by the economic

come levels are below average for

elite from inland areas of the country, who

he historic center of Cartagena,

ments in historic buildings on the basis of heritage value, architectural type, and state of repair. While historic preservation regulations have been criticized as unduly restrictive by some real estate agents, they have not dampened private investment in the city center. At the same time, the regulatory code has succeeded in maintaining the architectural purity and consistency of restored buildings, indirectly coordinating a large number of individual investments. In sum, rehabilitation of the historic city center of Cartagena has been the result of a nearly spontaneous convergence of in-

Santa Teresa Square and Convent.

terests of powerful elite groups: the cultural elite who lobbied for government investmade it fashionable to rehabilitate colonial

with few direct incentives and under mu-

ment in the preservation of public historic

residences in the historic city center as vaca-

nicipal government regulation, has made

buildings, and the economic elite who reha-

tion homes.

sizable investments in the rehabilitation of

bilitated historic residences as vacation

buildings of historical and architectural im-

homes. With the benefits of these converg-

success in preserving its heritage is that it

portance. The municipality has had no real

ing interests, however, also come

has been achieved in the absence of any in-

estate promotion plan for the historic cen-

vulnerabilities: sustainable preservation is

stitution or plan coordinating private and

ter, let alone a comprehensive development

highly dependent on the shifting prefer-

public sector efforts. Cartagena is unique in

plan. Private investment is subject to the

ences of the most affluent segments of

Latin America in that the private sector,

rules imposed by a preservation plan

society, and on general economic condi-

A significant footnote to the city's

adopted in 1992, which regulates invest-

its attendant impact on conspicuous consumption by the rich has a direct impact on the rehabilitation process. As a result, the continued success of preservation efforts is dominated by exogenous factors, with little regard for the preferences and decisions of the local community.

Stronghold of the Caribbean Founded in 1533 by Don Pedro de Heredia, Cartagena was important to Spain's colonial empire because of its strategic location on the Caribbean coastline and its advantages as a natural harbor. The city was heavily fortified in the 16th and 17th centuries and

fined its framework of urban development

the 18th century found the city in ruins, a

prospered as a hub for the galleon fleet,

well into the 20th century (see Map 3.1).

process exacerbated by permanent suspen-

ships used in convoys that transported

Along with the prosperity of the early

sion of the galleon fleet in 1740. During the early years of the republic,

goods from America to Spain. It was during

years, however, came the scourges of the

this period that the city's historic center

era: pirates and foreign invasions. Cartagena

Cartagena lost more and more trade to the

reached the general size and characteristics

was attacked by both privateers and English

port of Barranquilla. The city's decline

it has today. The broad balustraded walls,

and French naval forces, and underwent sev-

worsened when Colombia's economic and

construction of which began in 1594, gave

eral cycles of destruction and reconstruction

political center of gravity shifted inland to

the city its distinctive urban shape and de-

over the centuries. After repeated attacks,

the center of the country, with which

Map 3. /. Historical Evolution of Cartagena

tions in Colombia. A volatile economy and

By the turn of the 20th century, this

Map 3.2. The Walled City and its Neighborhoods

pattern of decline was to some extent reversed, and the city's economy enjoyed a modest boost as a result of the opening of the Panama Canal. The city walls were then perceived as an obstacle to urban development and portions of them were knocked down to accommodate expansion into surrounding areas, a process that went on until the 1920s. Sluggish economic development of the city center during the first half of the century ironically prevented demolition of many historic buildings, as occurred in other cities with faster-growing economies. Still, there was little investment in restoration, and a significant portion of the private architectural heritage deteriorated. along the beaches of Laguito and Boca-

that has had both direct and indirect effects

began to grow, thanks to shipping activities,

grande. Heritage sites in the city center were

on the historic city center. More than a third

the opening of the oil pipeline, and improve-

regarded merely as an added attraction, but

of Cartagena residents do not have a clean

ments in tourism infrastructure. Moderniza-

were ignored by the real estate investment

supply of water and only a little over half

tion of the city focused on areas outside the

that poured into areas of urban expansion.

have access to sanitary sewerage facilities.

In the 1950s, Cartagena's economy

historic center. In the early years of the tour-

Today, rapid growth and a burgeoning

Wastewater is released untreated into the bay,

ist boom, Cartagena portrayed itself as a Car-

population have strained Cartagena's precari-

which adversely affects tourism, Cartagena's

ibbean resort, steering real estate investment

ous infrastructure and services, a problem

principal economic activity.

Cartagena had no direct communications.

The founding site of the historic city-a

Table 3.1 Basic Data on Historic Center Neighborhoods Neighborhood

Centra

San Diego

Getsemani

Total

Area (hectares)

28.88

29.69

26.35

84.92

No. of blocks

No. of lots

344

533

581

1,458

Institutional

Residential

187

383

386

956

Cartagena with its original defensive advan-

Commercial

tages and determined its growth pattern.

Mixed

122

157

373

small island separated from the mainland by a series of channels and lagoons-provided

Urban development expanded onto what was then the neighboring island of Getsemani, incorporated into the walled area

working-class business and commercial areas.

nel known as La Matuna, which, once filled,

in 1634, resulting in the fortified city that

The historic center has been left in an off-

became the site of modern commercial de-

constitutes the current historic city center.

center location relative to the rest of

velopment (see Map 3.2 and Table 3.1).

The contemporary city developed in semicir-

modern Cartagena, but still retains its role

cular fashion outward from the historic

as the hub around which city life revolves.

center. To the southwest on a natural penin-

The boundaries of the historic city cen-

Each of the neighborhoods of the historic city center evolved over time to serve a particular role and social group. The city

sula developed the tourist areas and

ter are clearly delineated both by the walls

walls represented an impenetrable barrier

high-income residential neighborhoods of

and the bodies of water that separate it from

over the centuries that inevitably led to

Bocagrande, Castillogrande and Laguito.

adjacent islands. Although this configuration

high-density land uses, initially in San Di-

Along the coastline to the northeast are the

complicates connections with the rest of

ego and Getsemani, and later in Centre.

poorer neighborhoods of Marbella and

Cartagena, it has enabled the historic city

Crespo, the international airport, and new

center to retain a distinct physical identity.

hood, Cartagena's founding site, occupies

tourism facilities. To the southeast on the

The walled colonial city used to be divided

the extreme southeastern portion of the

mainland are the middle- and low-income

into three neighborhoods: Centre or La

walled city, an area that enjoys better venti-

residential neighborhoods that are home to

Catedral, San Diego and Getsemani. Between

lation and is relatively isolated from the rest

the bulk of the city's population, as well as

San Diego and Getsemani was once a chan-

of the city. The neighborhood was the tradi-

Centra or La Catedral. This neighbor-

The Historic Center in the Contemporary City

Barrio Centre: two-story residences with balconies.

Getsemani: narrow streets, modest dwellings.

San Diego: single-story residences with modest but ornate facades.

La Matuna: wedge neighborhood with modern buildings.

HISTORIC CENTER NEIGHBORHOODS

housed convents, schools and businesses. It

1 2

Cartagena Cathedral Palace of the Inquisition

still has some residential areas today, mixed

Santo Domingo Convent

Customs Bui/ding

San Pedro Clover Church

Santa Teresa Convent

Clock Gate

Marques de Valdehoyos Home

Las Bovedas Barracks

W Santa Clara Convent 77 San Diego Convent 12 Don Benito Home 13 Santo Tor/bio Church 14 Los Dulces Arcade 75 Proclamation Pa/ace 76 Gold Museum 17 San Roque Church

with businesses and small industry. Getsemani. Initially separated from the city's founding site by the La Matuna channel, Getsemani grew into a low-income neighborhood for servants, former slaves and seamen. It still is home to many of the city's poor. For many years, Getsemani also housed market, industrial and service activities. La Matuna. This neighborhood is a wedge in the historic city center that was cre-

18 Colon Theater

ated when the La Matuna channel was filled.

19 Cartagena Theater

Buildings in the area date from the 1960s

20 Church of the Third Order 21 La Trinidad Church 22 Naval Museum

and 1970s and are used by government institutions and private firms. Public areas are heavily used by street vendors.

tional seat of political, military, religious,

interest. The area continues today to func-

economic and social power in Cartagena,

tion as a city center, as headquarters for

and accordingly contains the greatest con-

government agencies, and as a focus of ma-

centration of monuments. It was also the

jor commercial, financial and service-related

The historic center of Cartagena stands out

home of the aristocracy, the landed gentry,

activities.

among Spanish colonial cities because of its

and the representatives of the Spanish gov-

San Diego. This area was originally

Heritage Sites many heritage sites representative of 16th

ernment. As a result, it includes residential

home to middle-class, lower-level officials,

and 17th century architecture and military

buildings of major historic and architectural

employees, workers and merchants, and

engineering (see Map 3.3). The historical

Map 3.3. Main Heritage Sites

by the fact that they are showcased in an

Map 3.4. The Walls and Bastions of Old Cartagena

urban setting that still has many superb examples of colonial residential architecture and public spaces. This gives the area added interest as a documentary record of the way of life and urban spatial organization of the colonial and early Republican periods. UNESCO's designation of Cartagena's city center as a World Heritage Site reflects the fact that its monuments have a cultural value that transcends local history and culture. The city's heritage sites can be divided into fortifications and official monuments. Fortifications include the walls and bastions encircling the old city, the fortifications of San Felipe de Barajas Castle at the base of

the Cerro de la Popa, and the forts of

1633, completing the perimeter of the

Castillo Grande, San Juan de Manzanillo

walled city. The walls consisted of a series

ings classified as official monuments,

and San Sebastian del Pastelillo outside the

of straight sections intercepted by bastions,

including churches, convents and public

walled city. The initial walls designed by

wider areas where the main defensive batter-

buildings. Religious buildings include the

Bautista Antonelli in 1586 surrounded only

ies were located. Of the original 14

Church of Santo Domingo, the Cathedral,

the Centre and San Diego neighborhoods,

bastions, those along the south and south-

the Palace of the Inquisition, the Church

the seat of Old Cartagena. A bastion was

western coast of Getsemani were

of San Pedro Claver, and the convents of

built on the island of Getsemani from 1631-

demolished (see Map 3.4).

Santa Clara and Santa Teresa. Civil heri-

The historic city center has 22 build-

and cultural value of these sites is enhanced

neighborhoods, and it also has more plazas

the Governor's Office, and the Naval Mu-

and parks, both set against the city walls

seum. The most distinguished architectural

and toward the interior of the city. In con-

sites are in the Centre neighborhood, re-

trast, San Diego and Getsemani have a

flecting its historic role in the old city.

dense urban layout, with only small parks.

Twelve of the center city's 22 heritage sites

Private Rrchitecfure

are in Centre, with five each in the San Diego and Getsemani areas.

Most individual residential buildings in the

Public Spaces

historic city center do not constitute architectural heritage sites. Rather, their historic

The organization of public spaces reflects

value lies in the fact that they are part of a

Cartagena's status as a port city. The road

cohesive spatial and stylistic setting for the

system radiates out from the triangular pla-

city's monuments and public spaces. The

zas of La Mar (now known as the Customs

residential buildings reflect the socioeco-

Building) and La Yerba (now known as Los Caches) (see Map 3.4). This radial road struc-

nomic standing of the old city neighborCartagena City Hall.

ture partly accounts for Cartagena's irregular layout, which is different from the

hoods even more clearly than do the public spaces.

The hot climate and space constraints

In Centre, the division of the blocks

standard gridiron pattern of Spanish colo-

within the walls necessitated small and

shows a more generous apportionment of

nial cities. In contrast to other Latin

shady public spaces with closed squares,

lots in terms of the frontage and depth of

American cities where the main square is

portals and narrow streets. Within this over-

properties, many of which overlook two or

the founding site in the area enjoying the

all pattern, public spaces in each

three streets (see Map 3.5). The homes, gen-

highest status, the main square in Cartagena

neighborhood of Cartagena have distinc-

erally two or three stories high with

is simply a quarter of a block left empty as a

tively different characteristics. The streets in

mezzanines for depots and warehouses, are

result of a fire in 1552.

Centre are slightly wider than in other

constructed around central courtyards to

tage sites include the Customs Building,

Map 3.5. Typical Land Subdivision and Residence Structures

culture (see Table 3.2). Lobbied by the

with preservation principles. Like the cen-

ings represent a mixture of architectural

country's cultural elite, the central govern-

tral government, the municipality's efforts

styles originating in Spain and adapted to

ment was essentially the sole player in the

were uneven and limited. Nevertheless,

the Caribbean environment by Spanish arti-

preservation process through the 1960s. Al-

taken together, the efforts of the central and

sans and engineers who had to substitute

though the major accomplishments during

municipal governments successfully reha-

materials and adapt construction technolo-

this period were limited basically to reha-

bilitated the historic center's major monu-

gies to local conditions.

bilitation of the Palace of the Inquisition

ments and created the minimum conditions

and restoration of the city walls, they laid

needed to retain the local population and

lots in San Diego, which have narrow fronts

the groundwork for more comprehensive ef-

economic activities, and subsequently at-

and deep interiors (often the result of succes-

forts later. The legislative framework for

tract private investment.

sive subdivisions), with one or two-story

protection of architectural heritage was es-

houses built around courtyards to provide

tablished, major monuments repaired, and

more heavily in the historic center in the

light and ventilation to supplement what little

institutions set up to protect Colombia's

1970s because of Cartagena's growing repu-

comes through the narrow street frontages.

cultural heritage.

tation for tourism, and because the area of-

Middle-class roots are reflected in the

Getsemani shows its origins as a low-

The government's direct intervention

The private sector began investing

fered the wealthy a refuge from the massive

income neighborhood in its narrow lots and

had little impact on the steady decline of

tourist development that had sprung up in

one-story houses with limited street frontage

the historic city center during this period,

Laguito and Bocagrande. The economic

and tiny courtyards.

attributable to the economic crisis in

elite from Colombia's inland areas began to

Cartagena and the local community's indif-

rehabilitate colonial residences in the his-

ference toward the old city. Beginning in

toric center as vacation homes because the

Preservation of The Historic Cihj Center

the 1960s, however, Cartagena's municipal

walled city was perceived as safe. This en-

authorities, under pressure from the central

abled the affluent to maintain residences

The central government initiated efforts to

government, began to take on more respon-

where they could enjoy a less constricted

preserve the cultural heritage of Cartagena's

sibilities in terms of upgrading infrastruc-

lifestyle than in their hometowns.

historic center in the 1920s, within the con-

ture, enhancing public spaces, and

text of an emerging national policy on

regulating private investment in accordance

Historic center properties were also rehabilitated during this period by commer-

provide light and ventilation. These build-

Public Historic

Public Monument

Cartagena Historic

Bonds issued for

Law commemorat-

Municipal Budget

Buildings and

Preservation Act:

Cartagena Historic

infrastructure

ing 150th anniversa-

Ordinance

Monuments Act,

official listing of

sewerage and

ry of the liberation of Cartagena allo-

promotes

monuments.

Monuments Board; tourism becomes

development;

rehabilitation of Palace of the

associated with

street

cates resources for

improvements.

monument

improvements.

rehabilitation of

Inquisition.

heritage sites.

preservation.

1918

1920

1924

1932

infrastructure

1945

1960

1965

Construction of the Club Cartagena in

National government Municipa government International Private sector

cial concerns in order to build restaurants,

developers who rehabilitated jointly-owned

ments and upgrading infrastructure and

art galleries, tourist facilities, banks and

properties or subdivided large rehabilitated

public spaces (see Box 3.1). Since the late

other businesses. However, the highly sea-

houses for sale as condominiums. More re-

1970s, the municipal government has

sonal nature of tourism in Cartagena under-

cently, luxury hotels have been built in the

strengthened its control over urban

mined the return on these investments, and

renovated Santa Clara and Santa Teresa con-

development in the rehabilitation of private

many tourism facilities and businesses in

vents, giving tourists stay-over opportunities

buildings. In 1992, Municipal Ordinance

the city center suffered from high turnover.

and thus expanding the range of city center

No. 6 was officially adopted, regulating the

users.

rehabilitation of historic buildings in the

Private investment intensified in the 1980s, when an upper-middle-class clientele

Getsemani.

While the private sector has become

historic city center (see Box 3.2). Even though Ordinance No. 6 estab-

decided that they too wished to partake of

increasingly involved in preservation of the

the exclusive atmosphere in the historic city

historic city center, the public sector has

lished incentives, they have not been

center. This demand was met by real estate

continued to invest in rehabilitating monu-

decisive in influencing private investment.

Table 3.2. Cartagena Preservation Timeline, 1918-96

Sidewalks and

declared World

Rehabilitation

incorporates Urban

and construction of Convention Center

Networks Ordinance

Hentage Site by

Preservation Plan.

eliminates aerial

UNESCO.

Rehabilitation

eliminates activities

wiring in Centro

regulations based

on architectural

conflicting with

neighborhood

on a system of

values.

tourism.

architectural typologies.

1969

1978

1981

1982

1992

1996

1970

1974

Filming of the

Tourism takes off in

Colombian socialite

Rehabilitation

Bocagrande.

Gloria zea

of individual

Widespread commercial rehabilita-

Rehabilitated

movie La Queima-

residences

tion. Residential re-

accommodate

spurs interest in his-

rehabilitates a house in the Historic

becomes popular

habilitation begins

luxury hotels.

toric center

Center, helping

in San Diego. Reha-

make the area fashionable.

bilitation of multifamily buildings.

da in Cartagena

1979

convents

Institutional Mechanisms

It can be said that public and private invest-

improve infrastructure and public spaces,

ment in Cartagena's historic center have

subsequent private investment would not

been somewhat interdependent. Initial pub-

likely to have materialized on the scale ob-

Government has used two types of instru-

lic sector investment came in response to

served today. The connection between the

ments to preserve the historic center of

lobbying by the country's cultural elite, a

two motivations for investing in the historic

Cartagena: regulations to protect heritage

pioneering effort that long preceded any in-

city center-altruism and prestige-lies in the

sites and govern private investment in reha-

volvement by the private sector. Private

timing of each one. Public investment

bilitation; and direct investment to preserve

investment, in turn, was driven by the pres-

paved the way for private investment by es-

heritage sites and improve infrastructure

tige associated with owning a preserved

tablishing basic standards for safeguarding

and public spaces. Total public investment

historic residence in Cartagena. However, it

the quality of the environment and protect-

in the historic center is difficult to calculate

can also be argued that without public ef-

ing cultural heritage, thereby attracting

because investments have been made over

forts to rehabilitate monuments and

private investors.

many decades and were not coordinated by

Demolition of Getsemani Market

renewal regulations based

Historic Center

Preservation Plan.

Municipal Development Plan

Central government. The Ministry of Culture and the National Monument Board have prepared

Individual investors. Colombia's economic elite

inland areas, who are either unwilling or unable to incur the expenses involved in restoring and main-

studies and enacted legislation to protect the city's

have competed to restore large homes in the Centra

taining a single-family home. Other examples of

heritage sites. Through the Ministry of Public Works

neighborhood. These investments are driven more by

commercial projects are two convents that have been

and the National Road Administration, the central

social status than real estate value. Real estate devel-

remodeled as luxury hotels (Santa Clara and Santa

government has also allocated national resources to

opers in Cartagena believe that many investors would

Teresa).

restore and maintain monuments and public spaces.

have a hard time recovering their investments if they

Residents of the historic city center. Owner-oc-

put these residences up for sale. Increasingly, upper-

cupiers in the historic city center make a significant

enacted legislation in the areas of regulation and

middle-class groups are also investing in smaller

contribution toward the preservation of its architec-

oversight and has invested in upgrading infrastruc-

houses in Centra and San Diego.

Municipal government. The municipality has

ture and public spaces. Direct municipal investment

Real estate developers. During the 1990s, real

tural character by maintaining their own properties. Together with the inhabitants of the rest of Cartagena

in the historic city center has come through the De-

estate developers rehabilitated old apartment build-

who converge on the city center daily to work, shop

partment of Public Works, which carries out projects

ings in the historic city center for sale as vacation

or conduct business, they are the mainstays of down-

to rehabilitate public spaces, as well as public utilities

homes to members of the upper-middle classes from

town urban activity.

any single investment plan. Moreover, most

local government agencies. The central gov-

partment of Public Works and the public

works were funded through the annual bud-

ernment also sponsored the UNESCO

utilities. The municipality regulates private

gets of several central government entities

World Heritage Site declaration. The Minis-

investment in the historic city center

and the municipality.

try of Public Works and the National Road

through the Municipal Planning Department,

Administration are the central government

which implements regulations pursuant to

through the Municipal Monument Board

agencies that have invested most in the

Ordinance No. 6 in coordination with the

(Consejo Filial de Monumentos), the local gov-

preservation and rehabilitation of heritage

Municipal Monument Board.

ernment branch of the National Monument

sites and public spaces.

The central government operates

responsible for basic infrastructure systems.

Ordinance No. 6 defines the administrative structure and regulatory procedures

Board (Consejo National de Monumentos).

Investments by the municipal govern-

This board assists in the design and ap-

ment focus on improving infrastructure and

for obtaining approval for development

proval of projects, working jointly with

public spaces and are made through the De-

projects. It also regulates public spaces, de-

BOX 3.1. STAKEHOLDERS IN PRESERVATION OF THE HISTORIC CITY CENTER

Example: two-story house with central access

TYPOLOGIES

Issue

Regulations

Objectives and contents

Norms for public spaces

Heritage site protection

Preserve characteristics of the space given its historic, aesthetic and environmental value.

Adaptation of other public spaces

Improve general conditions.

Units of intervention

Minimum area to be covered by a project to preserve the original urban units of the historic center.

Architectural typologies

Contemporary, built after 1920.

Architectural intervention

Special historic building typologies for specific religious, military or civil functions. Residences, differentiated by height and use of the lot. Additional typology, differentiated according to grouping, use mix or linking. Types of interventions

Heritage site restoration. Preservation of the original characteristics of the building. Only restoration, maintenance and adaptation are allowed. Typological restoration. Preservation of the architectural type. Modifications allowed to improve comfort and functional efficiency. Adaptation. Improve comfort and integration to urban context. New building. Allowed on empty lots. Norms regulate height, lot usage, facade and materials to ensure integration into the urban fabric.

Types of works

Maintenance, consolidation, rehabilitation, adaptation, extension and subdivision.

Building uses

Institutional, residential, economic activities, mixed uses, prohibited uses

Preserve original uses for buildings, allow complementary uses, promote desirable activities, and prohibit undesirable land uses.

Procedures

Type of permit according to the magnitude of the intervention

Licenses. Monument restoration, typological restoration, adaptation and new construction. Permits. Consolidation, rehabilitation, minor improvements, painting and advertisements. Certification of accepted use.

Incentives and penalties

Incentives. Exemption from land taxes, betterment taxes, and construction fees

Heritage site and typological restoration (100%) Facade restoration and interior adaptation (75%) General adaptation (50%) New construction (25%)

Penalties

Corrective action within three months. Fines of up to $30,000.

BOX. 3.2 PRESERVATION REGULATIONS AND THEIR APPLICATION TO ARCHITECTURAL

needs of real estate investors who must be responsive to shifts in demand. Regulations are enforced by "urban curators," private professionals licensed by the municipality to control development in the field by inspecting private sector projects and issuing permits and licenses for construction, remodeling and renovation. The municipality's Department of Urban Development subsequently verifies that the projects are being executed as approved. Investors and professionals working in the historic city center share a favorable view of the regulations, although they believe that Restored interior of a Cartagena residence.

enforcement mechanisms could be improved to facilitate investment. For example, practi-

fines architectural standards and permissable

in the face of uncoordinated private invest-

cal application of the regulations frequently

use of buildings, and establishes incentives

ment. It has also ensured that these invest-

requires interpretation, which can create con-

and penalties. Its main contribution to city

ments meet technical historical preservation

flict when decisions are taken by unqualified

center preservation has been its building-

standards. Some investors feel that the pres-

personnel who interpret the rules either too

specific regulation of private investments on

ervation regulations are excessive, consider-

literally or liberally. Another problem is the

the basis of the architectural typology of

ing the severe deterioration and alterations

processing of restoration licenses, which can

each building (see Box 3.2). This regulatory

of a number of buildings over time. Also,

take from six to 12 months. Each project

approach has made it possible to preserve

the assignment of "authorized uses" to

must be submitted to the Heritage Division

the overall consistency of the urban fabric

buildings in the interest of preserving their

of the Municipal Planning Department for

original function can conflict with the

to independent and uncoordinated deci-

served and appropriately used. Restoration

tained from the Municipal Monument Board

sions by private investors and central and

has generally been carried out with great his-

and then the Heritage Division.

municipal government agencies. So while

torical accuracy and imagination. The stock

Ordinance No. 6 has preserved the quality

of private buildings includes several large co-

nance No. 6 in the form of exemptions

of investments and the overall consistency

lonial houses that have been preserved and

from real estate and related taxes (see Box

of the city center, the preservation effort

adapted to accommodate contemporary resi-

3.2). This includes a 100 percent rebate for

still lacks the type of coordination charac-

dential or institutional activities. There are

land taxes, betterment taxes, and construc-

teristic of joint public-private preservation

also many smaller houses and multi-family

tion fees for monument and architectural

programs. The noteworthy achievements in

homes that have been preserved and rehabili-

restoration projects, 75 percent for architec-

Cartagena are instead attributable to the

tated as second homes. As a result, the urban

tural restoration of frontages with interior

fortuitous convergence of interests of the

landscape of the historic center, particularly

refurbishment, and 50 percent for general

cultural elite, as manifested through govern-

the Centre neighborhood, conveys the image

remodeling. Qualifying for these tax breaks,

ment spending, and the economic elite,

of a finely preserved heritage site.

however, requires the above-mentioned res-

who have invested in preservation as a sym-

toration license that is both expensive and

bol of wealth and prestige.

Tax incentives are granted under Ordi-

This does not mean that there are no problems. There are still heritage sites await-

time-consuming to obtain. In practice,

ing rehabilitation. Others already restored

many projects are carried out with "adapta-

have not been properly maintained and are

Converging Infers ond Susfainobilifii

in need of new investments, as in the case

The historic city center of Cartagena is today

Getsemani neighborhood has benefited only

has no specific management plan or special

in far better condition than downtown areas

marginally from private investment, and in

local agency for the historic city center be-

of most other Latin American cities. Many of

the public spaces in San Diego, power lines

yond the agencies responsible for

its heritage sites are in good condition: some

still need to be put underground and some

administering Ordinance No 6. Thus, the

have been rehabilitated for sustainable uses,

parks are in need of repair.

continuity and scale of operations in the

while others are undergoing repairs. With

area will most likely continue to be subject

few exceptions, public spaces are well pre-

tion permits," holders of which do not qualify for tax incentives. The municipal government currently

of the Palace of the Inquisition. The

Three issues should be highlighted in reviewing the long-term sustainability of

preliminary study. Approval must be ob-

the central government's political will to

Cartagena.

continue to use public funds to finance

First, the city center has never lost its

Like all luxury goods, upscale resi-

preservation of major heritage sites and

dences are vulnerable to recessions, so their

economic role and today remains the ad-

public spaces. As noted earlier, these invest-

returns depend largely on the timing of the

ministrative, commercial and service-related

ments, dating to the early part of the

investment. In a context of economic

center of Cartagena. The main users are

century, have had a catalytic effect on pri-

growth, there should be demand for a lim-

middle- and lower-income groups for whom

vate investment. The long-term survival of

ited number of ventures. The sustainability

the city center is a principal source of sup-

the institutions that have been created,

of these investments will nonetheless re-

plies and services. In spite of the deteriora-

along with the sustained allocation of re-

main contingent on such external factors as

tion of buildings, the area has retained a

sources over time, depend on political

the tourist trade, which in turn is vulnerable

sizable permanent resident population, par-

support for the preservation agenda.

to even more indirect factors such as the

ticularly in San Diego and Getsemani. This

in the Colombian economy.

Third, the sustained interest of the pri-

high cost of air travel to the city. (Despite

has helped maintain its vitality in the face

vate sector in investing in the historic city

the fact that Cartagena is linked to the rest

of the highly seasonal nature of the tourist

has played a key role in preservation. The

of Colombia by good roads, the routes pass

trade that fueled preservation of higher-

economic elite, including real estate develop-

through guerrilla-controlled areas that make

income residences. To the extent that the

ers, turned the walled city of Cartagena into

overland access dangerous.) Another factor

city center can retain this central role, it

a much sought-after vacation resort. Yet

is the high cost of utilities: utility compa-

will be easier to ensure preservation of its

while investments made by the wealthy

nies charge additional fees for city center

heritage. However, making sure this happens

themselves have had more to do with pres-

customers if the buildings in question are

requires that the municipal government

tige than with concerns about the

classified as "luxury" properties. If allowed

continue to take the necessary measures to

appreciation of properties, investments made

to continue, this policy could dampen the

oversee the use and quality of public spaces,

by those interested in making money-such

interest of the wealthy in maintaining prop-

ensure accessibility to the city center from

as real estate developers-have had mixed re-

erties in Cartagena, since many use those

other areas of Cartagena, and maintain sat-

turns. The profitability of rehabilitating and

residences only occasionally and may be

isfactory standards of service.

selling multi-family buildings in the historic

discouraged by rising costs associated with

city center has been affected by fluctuations

what is essentially a luxury good.

The second issue is the uncertainty of

preservation of the historic center in

CHAPTER 4 f

Bringing Hem Life to Boirro do Recife

This page intentionally left blank

streets and blocks. These assets are en-

cline, the Old City of Recife is

hanced by its historic status, giving Bairro

5th largest city in Brazil

experiencing a renaissance thanks

do Recife an atmosphere unique in the met-

Area

Population

to the decisive efforts of local officials. Us-

ropolitan area. The current development

ing a well-designed plan developed in

strategy is largely based on these spatial,

Population

cooperation with the state government of

structural and historical considerations.

Area

Pernambuco, the municipality in 1993 be-

The goals of the Bairro do Recife revi-

gan rehabilitation of Bairro do Recife, the

talization plan are to preserve the historic

island site where the historic Brazilian city

and cultural heritage of the area and to di-

of Recife was founded in the 1600s (see

versify the local economy through tourism

Map 4.1).

and other recreational activities. Initial in-

In recent years, Bairro do Recife had

20,900 hectares

Historic Center 600 18 6 hectares

% of total city population

0.02

% of total city area

0.09

vestments focused on Bom Jesus, one of

deteriorated to the point where it was all but

five priority development areas identified in

abandoned, despite the fact that it is home

the plan and the one with the greatest po-

to major monuments that have now been de-

tential as a tourist attraction. Bom Jesus has

clared protected sites by the federal and state

approximately 52,000 square meters of

governments (see Map 4.2). These include

built-up area, which is 10 percent of the to-

the churches of Madre de Deus and Nossa

tal built-up area of Bairro do Recife. Since

Senhora do Pilar, the Brum Fort and Station,

1993, the municipality has improved public

the Apolo Theater, Marco Zero Square, and

spaces and infrastructure along Rua do Bom

the Alfandega customs building. In 1998, the

Jesus and Rua do Apolo and their surround-

entire southern area of the island was placed

ing areas. The City Colors Project has

under federal protection.

repaired and painted frontages, and demon-

Bairro do Recife can be distinguished

3 ,168,000

stration projects have rehabilitated buildings

from other areas of Recife because of its

to accommodate recreational and cultural

eclectic architecture and the layout of its

activities. Since 1995, a number of shops

RECIFE

fter more than 40 years of de-

dated state of Bairro do Recife. The municipality had no option but to expropriate and rehabilitate strategically located properties whose owners were unwilling to participate in the revitalization effort. This sent a signal to private investors that the city was committed to the project, and demonstrated the viability of rehabilitating deteriorated buildings for new uses. Cultural events sponsored by the municipality in the Bom Jesus area brought Bairro do Recife to public attention

ational and cultural center that competes with other areas of the city because it can

once again. Sustainability of the revitalization ef-

offer a unique setting and product in a his-

fort over the long term still depends on the

toric location.

municipal government. Private investors re-

Although revitalization of Bairro do

main concerned about several problems in

Recife is a work in progress, the early suc-

Bom Jesus, with public safety, lack of park-

cess in Bom Jesus points to the potential for

ing, and inadequate water supply topping

restoring the urban heritage of severely de-

the list. And economic growth in Bom Jesus

caying downtown areas. The sequence of

will depend as well on the pace of revital-

steps taken by the municipal government

ization in the two other sections of Bairro

and businesses have opened in the area,

initially followed the classic pattern of up-

do Recife-Alfandega (already underway)

prompting private investors to rehabilitate

grading infrastructure and public spaces,

and Pilar-as well as on establishment of

buildings to accommodate growing demand.

and then offering tax advantages to private

the waterfront passenger terminal in recon-

In sum, over a period of only a few years,

investors. However, even these incentives

structed port warehouses. It is the mix of

Bom Jesus has become a specialized recre-

were insufficient at first, given the dilapi-

activities from all these areas that will en-

Map 4.7. Historical Evolution of Bairro do Recife and the City of Recife

hance the image of the new hub of Bairro do Recife.

The Largest PorMn Nie flmericas Recife was founded in the 16th century as a port for Olinda and the prosperous sugargrowing region in the interior. In the early 17th century, the boom in sugar production in Brazil's northeast was such that Recife became the largest port in the hemisphere. The historic city center of Recife includes Bairro do Recife, which is the founding site, and the neighborhoods of Santo Antonio, Sao Jose and Boa Vista across the river. Bairro do Recife occupies an island that was connected to the mainland until a canal was opened to connect the Capibaribe and Beberibe Rivers to the Atlantic. The original urban structure, influenced by the elongated shape of the island and the fact that the port faced the Atlantic, was designed with an irregular street pattern typical of Portuguese cities. During the Dutch occupation starting in 1630, the city

Map 4.2. Preserved Heritage Sites on Bairro do Recife

inhabitants and leading to changes in land

(Santo Antonio) and saw its first formal city

use. They also altered the mix of activities

planning, with urban development on filled-

that had characterized Bairro do Recife

in portions of the river and mangrove

throughout its history. The longstanding fo-

swamps. Bridges were built to Santo

cus on foreign trade shifted to financial

Antonio and Boa Vista on the mainland.

services and manufacturing.

Recife's advantages for international

The 20th century saw a dramatic de-

trade ensured its growth, and it had more

cline in Bairro do Recife as other parts of

than 7,000 inhabitants by the first half of

the city expanded. Rapid urban develop-

the 18th century. The city grew steadily

ment beginning in the 1930s and the

through the 19 century on the strength of

emergence of Recife as a metropolis in the

the cotton boom, and its port competed

1950s fostered growth of the city's outlying

with Salvador and Rio de Janeiro. Until the

areas. This decentralization process

early 20 century, virtually all the urban economy was concentrated in Bairro do

Deteriorated building in Bom Jesus.

center. The population of Bairro do Recife

Recife. Predominant land uses included

dropped from 13,000 in 1910 to a little over

sugar mills, workshops, businesses involved

500 in 1991, undermining businesses associ-

in foreign trade, warehouses, and private

south, became the country's main export.

ated with residential activities. Conflicts

homes. Santo Antonio was used for retail

Renovation of the Port of Recife from 1913-

with port operations over land use hampered

trade, government offices and private

20 to make it more competitive affected the

development of commerce and services

homes, while Sao Jose and Boa Vista devel-

urban structure of Bairro do Recife. New

geared toward the upper-income population.

oped as residential neighborhoods.

buildings went up and the linear road lay-

Modernization of Santo Antonio strength-

out was changed, with the opening of

ened it as the symbolic center of the city,

the economy of Brazil's northeast was hit

avenues converging on a new square called

further shifting the spotlight away from

by the decline in sugar and cotton produc-

Marco Zero. These reforms drove up prop-

Bairro do Recife. Continued port expansion

tion, while coffee, which is produced in the

erty values, pricing out the original

and Bairro do Recife's steady decline eventu-

In the second half of the 19th century,

prompted a population exodus from the city

expanded to include the neighboring island

other buildings made maintenance difficult.

"marginal" area of the city. The only major

There were shortfalls in water supply, and the

development occurred in the 1970s with in-

area's aging and obsolete sewerage system,

troduction of institutional activities on the

which dates to the turn of the century, could

Geography and history have determined the

Apolo Wharf on reclaimed lands.

no longer meet demand. Street lighting was

urban structure and land use patterns of

By the 1990s, the exodus of residential

also inadequate and the area lacked sufficient

Bairro do Recife, while its economy contin-

activities and the decline of local services led

parking. These infrastructure problems, along

ues to be dominated by traditional

to the abandonment of many buildings on

with restrictive zoning regulations, further

economic activities related to the port,

Bairro do Recife, while the low return on

discouraged real estate investment.

along with a few manufacturing businesses (see Table 4.1). The current street layout reflects both the renovations introduced at

Table 4.1. The Economy of Bairro do Recife

the beginning of the 20th century as well as

Number of establishments by sector Main and related activities Port, industry, warehousing, navigation, external trade, banks, customs agents

Industry Commerce 7

Large corporations, banks, insurance companies, stock exchange agents Commerce, stores, banks, warehousing, transportation, parking

Government institutions, banks, professional offices, retail, parking

Others: Transport, fuel, retail commerce, professional and technical support offices, repair shops, travel agencies, restaurants, pubs, recreation

Total

Service Institutional 2

some elements of the original linear system Total 83

166

183

conditioned by the elongated shape of the island. From the mix of developed and undeveloped areas, three neighborhoods can be clearly defined (see Map 4.3). The northern portion of the island is noteworthy for the volume of undeveloped land occupied

by the port, while the southern portion has a densely built urban fabric stemming from

204

268

the 1913-20 reforms. The central section is characterized by irregular and inconsistent patterns of construction resulting from in-

228

322

620

stitutional activities along the Apolo Wharf, and by the depreciation in property values

Bairro do Recife in the Contemporary Cihj

ally turned the island into a low-income

has both different and overlapping uses as

Map 4.4. Land Use

well, a diversity that has come to be a hallmark of Bairro do Recife (see Map 4.4). The northern section is dominated by the port, which spans the entire Atlantic coast and covers practically half the island. The most modern and heavily used port facilities are located at the island's northern tip. A narrow belt of land south of the port contains warehouses built at the turn of the century and now virtually unused. From the port facilities in the center of the island, grains are transported to the nearby Recife Mill. The central section of Bairro do Recife is used for wholesale trade and industrial establishments (the Recife Mill and Pilar Cement Plant). Wholesale trade is more a reflection of low property values than of any advantages the location might have for these activities. In the central section is the Favela do Rato shantytown located on premises belonging to the state oil company, that resulted in indiscriminate demolition

which demolished the buildings there in

and abandonment of properties.

1975 and never occupied the land. This area

Just as each of these neighborhoods is

in a different stage of development, each

plan running in a north-south direction. The southern section of the island is

has warehouses located on irregularly

densely developed, using the urban struc-

shaped blocks structured by a linear street

ture that resulted from the 1913-20

Map 4.3. Urban Structure of Bairro do Recife

Table 4.2. Condition of Buildings, Bairro do Recife (In square meters) Sector

Good

Regular

Bad

Decrepit

Total

Consolidation Revitalization Renovation

156,941 (93%) 89,010 (34%) 31,657 (43%)

11,025 (7%) 92,231 (36%) 8,925 (12%)

66,325 (25%) 18,972 (26%)

14,328 (5%) 14,032 (19%)

167,966 (33%) 261,894 (52%) 73,586 (15%)

Total

277,608 (55%)

112,181 (22%)

85,297 (17%)

28,360 (6%)

503,446 (100%)

higher-density buildings. The city's most

ture, public spaces and buildings; and a

important economic activities related to re-

renovation area on the center part of the is-

gional services and external trade are also

land where there are opportunities for urban

based here. Architectural styles range from

renewal through the introduction of new

modern to post-modern and eclectic.

land uses.

The structure of the various areas of

Urban decline is not uniform through-

Bairro do Recife and the uses made of them

out Bairro do Recife (see Table 4.2). In the

afford a variety of opportunities for devel-

consolidation area, there is little deteriora-

opment. As shown in Map 4.5, the

tion of buildings, but both land and

revitalization plan identifies three areas: a

buildings are underutilized. Both the revi-

consolidation area characterized by a stable

talization and renovation areas have

pattern of land use and property division,

buildings in every possible condition, al-

occupied by the port, the Apolo Wharf and

though the highest proportion of properties

renovations. Dominated by two avenues

government facilities; a revitalization area

in poor or decrepit condition can be found

connected with bridges and leading to

on the southern part of the island and on

in the latter.

Marco Zero Square, this area has a tight

the land around Fort Brum, which could be

structure of regular blocks that house

improved through investments in infrastruc-

Map 4.5. Revita/ization Plan Development Areas

The decline of Bairro do Recife and its potential for revitalization first began attracting attention during the 1970s. The chronology of events shown in Table 4.3 demonstrates that the municipality, with support from the state government through its Economic Development Agency, exercised the principal leadership role in the revitalization process. The federal government played a regulatory role and has occasionally intervened with specific programs. The private sector became involved in 1995, almost two years after the current revitalization plan was launched.

Private sector financed restoration of buildings in Bom Jesus.

The major events culminating in the revitalization process that began with investments in Bom Jesus included adoption of a plan for the preservation of historic

the Office of Bairro do Recife, which spear-

ties. The revitalization plan calls for invest-

sites in Recife, under which Bairro do Recife

headed initial public investments in Bom

ments to improve infrastructure, accessibil-

was given protected status, and implementa-

Jesus and established various partnerships

ity and public spaces to make them

tion of the city center revitalization

with the private sector.

attractive to modern service companies. It

The economic transformation of

also aims to attract businesses from the cul-

1986. The springboard for the revitalization

Bairro do Recife is based on strengthening

tural and recreational sectors by preserving

process was the establishment in 1987 of

and diversifying existing economic activi-

the area's heritage and enhancing its image,

program based on a plan formulated in

ReviffllizaNon of Bairro do Recife

Northeast

Recife Historic

Downtown

Establishment of

Bairro do Recife

Public Investment

Historic Cities

Sites Preservation

Revitalization

the Bairro do

Revitalization Plan.

in Born Jesus be-

Reconstruction

Plan; municipal

Program;

Recife Office;

Program

protection

Bairro do

coordination of

legislation.

Revitalization Plan

Public Investment Plan for Alfandega.

gins.

municipal investment

1973

1979

1986

1987

1991

1993

1995

1996

First recreational facilities open in Born Jesus; startup of private investment.

Private rehabilitation of buildings begins.

1997

National government State government Municipal government

These objectives are to be accom-

The revitalization plan does not pro-

plished through close cooperation between

pose major changes in the street layout or

the public and private sectors. The goal is to

the existing urban land division. The port is

ensure that reforms in zoning regulations

assumed to remain the island's principal eco-

thereby increasing its value as a tourist at-

and public sector investment have a strong

nomic focus, but the area it occupies is

traction in the metropolitan area. To

multiplier effect. Public management is thus

expected to diminish as technology devel-

broaden the range of activities in the area,

designed to generate effective partnerships

ops. The reopening of Avenida Alfredo

the plan also encourages residential occu-

with the private sector and stimulate invest-

Lisboa and the road along the Capibaribe

pancy in Bairro do Recife, with a focus on

ment in the preservation and rehabilitation

River will clarify spatial organization by

small households that can take advantage of

of heritage buildings and the development

separating port operations from the rest of

the area's central location.

of vacant lots.

Bairro do Recife and facilitating north-south

Private sector

Table 4.3. Bairro do Recife Preservation Timeline, 1973-97 ~~|

nized on the basis of a primary road system that allows for entry and exit by bridges and a local feeder system. Revitalization will also improve local infrastructure for water supply, sewerage and street lighting. To attract investors, the plan reformed zoning regulations to increase the amount of construction permitted and boost the intensity of land use, especially in the renovation area. At the same time, the spatial characteristics that make the area so

various stakeholders with interests in the

attractive will be preserved. Original zoning

area, it does not diminish government au-

regulations, designed under protectionist

thority to oversee investments made by the

policies, restricted the use and renovation

other parties. This is to be achieved by en-

of buildings and limited the volume of new

couraging the private sector to invest in

development. Built-up areas could only be

structural projects, that is, coordinated in-

increased by an average of 37 percent, and

vestments with the potential to achieve the

the resulting allowable floor space pre-

plan's goals within a short space of time

cluded profitable real estate transactions.

(see Map 4.6). In addition to the Bom Jesus

Revised regulations under the revitalization

projects, these projects will include the fol-

plan nearly double allowable development

lowing:

from 198,000 to 383,000 square meters. Although the revitalization plan for

â&#x20AC;˘ Pilar multipurpose center. The area around the Nossa Senhora do Pilar Church

Bairro do Recife is designed as a flexible

will be rebuilt to accommodate commercial,

tool to guide activities carried out by the

service-related and residential activities.

Map 4.6. Structural Projects, Bairro do Recife

access. The transportation system is orga-

Zero Square will be converted into a tourist

(In thousands of 1992 US$)

waterfront terminal for cruise ships. • Renovation of old warehouses. Port

Investment

Pul)lic

Type

Project

Public

Main roads Bridge rehabilitation

Municipality

849

State

Federal

Total public

1,516

446

2,811

Private

2,086

Squares

375

Brum Park

7.P4

Street improvements

121

Sanitation

451

506

203

Public-Private

Wharf

543

partnerships

Port warehouse recycling

640

Building rehabilitation New construction

2,749

736

5,585

11,968

3,990

295

590

Rehabilitation of Pilar

1,013

1,013 121

121

1,695

Subtotal

Subtotal Private

Total public and private

Customs wharf Wharf restaurants Aquarium Business center Subtotal

Total programmed investment

2,146

8,552

warehouses south of the waterfront passenger terminal will be transformed into a modern retail trade area. • Aquarium. To be built in association with private investors, this project aims to enhance the image of Bairro do Recife as a seaside tourist location. Implementing the revitalization plan

3,292

103

3,395

640

2,536

3,176

will require over $130 million, of which $8.5 million are exclusively public expendi-

1,472

5,891

7,363

21,543

58,247

79,790

1,475

4,423

5,898

28,422

71,200

99,622

246

1,841

21,717

23,898

23,898 132,072

tures and $28.5 million are government contributions to projects in partnership with the private sector (see Table 4.4).1 The plan identifies $95 million in private investment opportunities. These projections assume that the private sector would mobilize an average of $2.50 for every $1 of public investment. They also assume that virtually all public investment would come within the first five

• Alfdndega cultural and commercial center. This involves renovating the customs building to provide the metropolitan area with facilities for theater, cinema, concert

and conferences, along with related businesses. • Waterfront passenger terminal. One of the port warehouses located next to Marco

The figures cited in this chapter are from Revitdizafdo do

Bairro do Recife: Piano, Regulamentafdo e Avaliagdo, eds. Silvio Zancheti, Geraldo Marinho and Norma Lacerda (Universidade Federal de Pernambuco, 1998).

Table 4.4. Revitalization Investments in Bairro do Recife

municipal governments. The economic

(In thousands of 1996 US$) Type

Project

Infrastructure

Av. Alfredo Lisboa

580

Rehabilitation of Mauricio de Nassau Bridge

512

Facade wire conduction Subtotal Public spaces

Rua Bom Jesus improvements Squares City Colors project

Investment

value of fiscal revenue for the state and mu-

1,11242

nicipal governments exceeds $7 million.

106

97 9

Planned Intervention: Ihe Bom Jesus Project

The municipal government began executing

Subtotal Building

Building acquisition

214

improvements

Building rehabilitation

558

Subtotal

772

the Bairro do Recife revitalization plan in

Project preparation

231

Management plan advisory services

304

Subtotal

535

2,666

100

Combined project total

evaluation of the plan shows an internal rate of return of over 18 percent. The present

247

Administration

1993 with projects to improve the Bom Jesus area. Within four years, the quality of public spaces in Bom Jesus improved, a significant number of buildings were rehabilitated, and a wide range of businesses started operations. In short, local residents

years of the program and most private in-

outlays are required to attract private re-

and tourists had transformed the area into

vestment during the final years.

sources. Public investment serves first to

one of Recife's leading recreational and

Accordingly, private investment would be

improve deteriorated infrastructure and pub-

business destinations.

zero in the first two years and then jump to

lic spaces, and second to provide a concrete

$3.60 for every $1 of public investment by

signal of the government's long-term com-

investments in Bom Jesus focused on up-

year five. Projections are based on the expe-

mitment to revitalization. Since the plan for

grading infrastructure and public spaces, as

riences of other revitalization programs,

Bairro do Recife has a 15-year horizon, it

envisaged under the revitalization plan (see

which indicate that substantial initial public

will need the sustained support of successive

Table 4.5). However, the municipal govern-

Fifty percent of initial municipal

Table 4.5. Municipal Investment, Bom Jesus, 1993-96

Rua do Bom Jesus. Owners could have

five buildings because the property owners

their building frontages painted free of

did not want to invest in rehabilitation.

charge if they made necessary repairs. The

Administrative costs were high, but costs of

paint was donated by an international

advisory services for planning and manage-

paint company.

ment were justified by the difficulties in

Stage 3: Persuasion oj property owners. To

convincing the private sector to participate.

encourage property owners to participate in

Costs were front-loaded because projects

City Colors, the Office of Bairro do Recife

were prepared that would not be executed

established a business team to act as liaison

until subsequent stages.

between potential investors and owners of

Four stages can be identified in the

buildings in the area. The geographic area

initial implementation of the revitalization

covered by City Colors was expanded to in-

plan in the Bom Jesus area.

clude more valuable buildings. The most

Stage 1: Demonstration of commit merit.

critical decision during this stage was to ex-

The initial works were designed to show the

propriate five buildings in extreme disrepair

municipal government's commitment to re-

from owners who had clearly indicated that

habilitating Bairro do Recife. The focus was on improving public spaces (streets, drain-

they did not want to participate in the proRestored building in Bom Jesus.

age and street lighting), enhancing

gram. Stage 4: Consolidation. Upon comple-

accessibility (road improvements, public

tion of the Rua do Bom Jesus works, the

transportation and parking), and increasing

tain public squares such as Marco Zero

municipal government rehabilitated the ex-

the supply of potable water.

Square, the Navy Yard, and the Tiradentes

propriated buildings. Rehabilitation of

Square. The City Colors Project sponsored

public spaces and building frontages was

completion of the initial works, the Office

by the Roberto Marinho Foundation was

then expanded to other streets in Bairro do

of Bairro do Recife sought partnerships

launched to provide incentives for the re-

Recife. In mid-1995, the first tourism and

with private firms to rehabilitate and main-

habilitation of building frontages along

recreational businesses began operations.

Stage 2: Identification of partners. Upon

ment also had to purchase and rehabilitate

Table 4.6. Rehabilitated Areas in Bom Jesus, 1993 vs. 1997

buildings gained momentum as private investment increased along Rua do Apolo. Old warehouses were converted to tourism and recreational uses. Since that time, rehabilitation projects by private investors have continued steadily.

1993 Status Total area

Bom Jesus: sidewalks and streets have been fixed, new lighting installed, and telephone and overhead electric power cables wired

52,000

Good condition

17,700

Fair condition

18,700

Poor condition

13,000

2,600

Decrepit

Total area Good condition First floor

Revitalization has radically changed Rua do

crepit condition in 1993 (see Table 4.6).

Area

1997 Status

Public Spaces

of the built-up property in fair, poor or de-

52,000 34,400 11,900

Second floor

9,900

Third floor

7,400

Fourth floor

3,400

Upper floor

1,800

Awaiting rehabilitation

17,600

pattern of scientific restoration, focusing instead on maintaining the volume and architectural style, preserving the original frontages and roofing of buildings, and redesigning interiors to adapt them to recreational, commercial or tourism functions. A number of buildings have been only partially rehabilitated, and the upper stories of many multi-level buildings have

been left untouched. These buildings generally have single-use occupancy, that is, the

through building frontages. These improve-

entire building is used for a single activity

ments have since been extended to Rua do

pursuant to the terms and conditions of a

Apolo, and work is in progress on other

single lease agreement.

streets in the project area. The City Colors

Private Buildings

Project has dramatically changed the exter-

Building repairs have not followed a

Private Investment

nal appearance of private buildings (even

According to information available in 1997,

those not otherwise rehabilitated), giving

the Bom Jesus revitalization project had

Because information on private investment

the neighborhood a look that exudes im-

34,400 square meters of rehabilitated space,

in urban revitalization is difficult to obtain,

provement and growth. Public squares have

with another 17,600 square meters awaiting

data on amounts mobilized for the Bom

likewise been rehabilitated and are being

rehabilitation. Thus, during the first three

Jesus project from 1993-96 come from esti-

maintained through a partnership arrange-

years of revitalization, 16,700 square meters

mates of building rehabilitation investment.

ment with local businesses.

were rehabilitated, equivalent to 38 percent

This is calculated on the basis of the aver-

Within a few months, the renovation of

prices for commercial and recreational func-

The only tax revenue that did not rise

tions indicate that such investments should

was the urban land and property tax (IPTU)

be profitable. Some indication of the return

assessed on properties at rates that vary ac-

can be found in the behavior of sale and

cording to the type of building and its

rental prices. Available information suggests

location in the city. This was because of the

that the Bom Jesus project has performed

tax exemptions granted under the revitaliza-

well in comparison with other areas of Bairro

tion plan and the time lag before the

do Recife. Building sale prices in the Bom

appreciation of property values is reflected

age cost of rehabilitation (approximately

Jesus neighborhood increased by almost 70

in property assessments for tax purposes.

$170 per square meter rehabilitated) and the

percent over 1993-96, while prices elsewhere

The incentives established under the revital-

volume of construction rehabilitated (ap-

continue to decline (see Table 4.7).

ization plan include exemptions from the

Sale price (US$/m2) 1993

1996

% change

Bom Jesus

124

208

Alfandega

168

146

-13

Pilar

110

105

-5

Area

proximately 16,700 square meters). These figures indicate that the private sector

IPTU for periods ranging from two to 10

Fiscal Impact

would have invested approximately $2.8

years for rehabilitated properties, and an exemption from the 5 percent sales tax for

million in building rehabilitation, which

Receipts on two of the three taxes collected

probably underestimates the actual amounts

by the municipal government have in-

involved. Compared with public investment

creased for the Bom Jesus neighborhood

($2.6 million), the multiplier effect of pub-

during the revitalization period (see Table

lic investment was 1.0, considerably below

4.8). The operation of new businesses in the

There is no doubt that the municipality's

the average multiplier effect expected for

area spurred higher revenues for the tax on

resolute efforts have been the decisive factor

the entire revitalization plan (2.5), but bet-

services (ISS), which is a 5 percent tax on

in the successful revitalization of Bom Jesus.

ter than what the plan had postulated for

the gross value of services rendered in the

The government's commitment has been

the initial years of implementation.

project area. Increased real estate sales drove

demonstrated not only by restoration of

up receipts of the real estate transactions tax

public spaces and building frontages, but

made by private investors are also difficult to

(ITBI), a percentage tax collected on the

also by expropriation and rehabilitation of

obtain. However, calculations based on lease

sale price of real estate.

buildings whose owners were unwilling to

Figures on returns on investments

recreational and tourism activities.

Sustainobilihf

Table 4.7 Land Prices, â&#x20AC;&#x201D; Bairro do Recife, 1993 vs. 1996

Tax Revenues, Bairro do Recife vs. Bom Jesus, 1993-96

ers, tenants and consumers on the problems

Urban land and

Tax on services

Real estate

property tax (IPTU)

(ISS)

transactions tax (ITBI)

US$

Variation (%)

us$

Variation (%)

US$

Variation (%)

934,604 776,903 797,242 818,776

-17 3 3

567,273 911,373 1,910,702 3,150,438

61 110 65

58,151 40,650 31,435 30,767

and the security of private property, and in-30 -23 -2

sufficient parking. Developing other areas. Revitalization of other areas of Bairro do Recife will impact

Bom Jesus 1993 1994 1995 1996

ment and must be addressed. These include the still-deficient water supply, public safety

Bairro do Recife 1993 1994 1995 1996

that fall within the purview of the govern-

59,228 59,139 50,734 51,523

0 -14 2

66,830 70,715 132,626 117,998

6 88 -11

1,825 4,484 24,271 13,366

the sustainability of the Bom Jesus project. 146 441 -45

Investments in Alfandega and Pilar will diversify the supply of rehabilitated space and attract users, and completion of the waterfront passenger terminal will channel

participate in revitalization. The attitude

does face competition from other areas of

tourists through Bairro do Recife, particu-

adopted by municipal authorities sent a

Recife, so its long-term success depends not

larly the Bom Jesus neighborhood.

clear signal to private investors, who saw

on being a passing fad but on establishing it-

opportunities to make a profit by participat-

self as an attractive destination that is here to

proper maintenance of public spaces and

ing in the process. Available evidence

stay. It is therefore essential that Bom Jesus

the provision of quality services are crucial

indicates that these opportunities are mate-

consolidate its position as a multi-use area in

to consolidate the revitalized image of Bom

rializing, a factor that is undoubtedly

Bairro do Recife and in the city as a whole.

Jesus. This will require greater maintenance

boosting the rehabilitation process.

outlays by the municipal government. On

The future profitability of private in-

vitalization in Bom Jesus will depend on

average, maintenance costs have increased

vestment in Bom Jesus will depend on the

continued government intervention, par-

by 35 percent since the revitalization plan

extent to which the revitalized city center

ticularly in three critical areas.

was launched (from $1.185 million in 1993

can consolidate its position as an area for

To a great extent, consolidation of re-

Maintaining environmental quality. The

recreation, culture and tourism. Bom Jesus

Eliminating negative factors. There is consensus among Bom Jesus property own-

to $1.6 million in 1996), primarily for streets, sidewalks, bridges and storm drains

Table 4.8.

risks involved in pioneering investments,

objectives, but also on ensuring that revital-

tion and disposal and street cleaning (29

shared risk may be in order. One way to

ization boosts municipal finances. This is

percent).

support the process is to demonstrate the

not yet happening because tax collections

size and soundness of demand. The Office

are lagging behind increases in land prices,

Bom Jesus and expanding this process to en-

of Bairro do Recife can perform this role by

and because of generous tax exemptions.

compass all of Bairro do Recife will also

identifying and documenting demand for

Prompt action to correct these problems

require greater private investment. In areas

residential or office space in the area.

will help strengthen the fiscal rationale for

Consolidating the achievements in

of activity yet to be explored (e.g., residen-

The municipal government's contin-

tial and office space), investment projects

ued support for revitalization will depend

will have to be identified and studied. Since

not only on maintaining the political com-

private investors are reluctant to assume the

mitment to achieving urban planning

investing in Bairro do Recife and continuing its revitalization.

(120 percent increase), and garbage collec-

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CHAPTER 5

Quito: fl Public-Private Partnership

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ated perverse incentives that encouraged

Quito accommodated all of the

landlords to abandon properties.

city's economic and social activi-

In the midst of this downward spiral,

QUITOâ&#x20AC;&#x201D; Population

1,244,000

2nd Largest city in Ecuador

Area

18,997 hectares

ties, as well as all socioeconomic groups of

Quito was declared a World Heritage Site by

the population. In fact, until the 1920s, the

UNESCO in 1979. No amount of deteriora-

Population

approximately 300-block area that makes up

tion could disguise its fine examples of civil

Area

the historic city center was home to the en-

and religious colonial architecture from the

% of total city population

tire population of Quito (see Map 5.1). Only a few decades later, however,

16 , 17 and 18 centuries, or the stylings dHating from the late 19th and early 20th cen-

began suffering the classic symptoms of ur-

turies. on preserving major heritage sites with re-

search of modern comforts. High-end com-

sources from the Fund for Preservation of

mercial activities were the next to leave,

the Historic City Center (FONSAL), a mu-

followed in the 1970s by businesses and

nicipally-administered agency financed with

professionals. The space thus abandoned

provincial taxes and charged with protecting

was taken over by poor families living in

and restoring the artistic, religious and cul-

overcrowded conditions and by the busi-

tural assets of Quito. The municipality also

nesses serving them. Public spaces teemed

developed a master plan and used its own

with street vendors and open-air markets.

resources and bilateral assistance to upgrade

Government offices and schools remained,

public spaces and rehabilitate a number of

but increasing use of automobiles and a de-

historically significant municipally-owned

ficient mass transit system exacerbated street

buildings.

rent controls and preservation policies cre-

380 hectares 5.5 2

Initial rehabilitation efforts focused

residents started moving northward in

congestion and pollution. Poorly designed

% of total city area

69,535

of its residential and commercial buildings

this once-magnificent colonial city center ban decay. As early as the 1950s, wealthy

Historic Center

These measures laid the groundwork for the more important second phase of the

or over 400 years, the center of

The Semi-Public Corporation for Development of the Historic City Center (ECH) was established with multilateral support to execute investments in partnership with the private sector. This enabled Quito to expedite the rehabilitation process by creating an environment conducive to private investment. Improvements were made in public areas, parking and traffic control; flagship buildings were rehabilitated for public uses; and private buildings were restored in partnership with local owners and investors. To remove the remaining constraints on private investment, the municipality started to regulate street vending and open-air markets, and improved street

rehabilitation process, an innovative and coordinated investment effort with the private

cleaning and public safety. Finally, to preserve a mix of land uses

sector. From the beginnings of the preserva-

while minimizing any adverse impact on

tion process in the 1980s, the Municipality

poor households in the historic area, the

of Quito recognized that breaking the his-

ECH is implementing an ambitious low-cost

toric center out of its cycle of decay could

housing program that involves rehabilitation

only be achieved by involving all the stake-

of residential buildings. The results achieved

holders, including building owners, real

in a pilot project bode well for the success of

estate investors, merchants, residents and

this initiative, which will be supported by

daily users of the area.

central government housing subsidies.

Map 5.1. Historical Evolution of Quito

Santo Domingo squares also remain.

Shortly after it was founded in 1534 by

historic city center, the highest concentra-

Sebastian de Belalcazar, Quito gained im-

tion of any section of Quito. From the

mercial buildings appeared in the early 20th

portance in the Nueva Granada Viceroyalty

earliest times of the city's history, churches

century. By 1930, the city covered more

as a center of missionary activity and local

and convents built schools to provide a

than 300 blocks around the founding site,

government. The city was a bishopric before

Catholic education for the population. Pub-

and all urban activities were contained

it became a Royal Tribunal, and from its in-

lic schools were added during the period

within that perimeter. That area is recog-

ception had three convents of importance.

after independence.

nized as the historic city center of Quito

There are also some 70 schools in the

Throughout the 16 and into the 17

The remainder of the historic center

was supplemented with two-story, Frenchstyle residences with balconies. The first multifamily homes and com-

under current regulations.

century, the founding site of Quito-built

has always been occupied by residential

on the royal dwellings of Inca rulers Tupac

buildings. Buildings owned by prominent

can be traced to the rapid urbanization pro-

Yupanqui and Huayna Capac-began filling

families historically were on the streets sur-

cess that began in Ecuador in the 1950s and

up with other churches, convents and pub-

rounding the plaza, while poorer families

gained momentum in subsequent decades.

lic buildings, many of which are still archi-

lived on the fringes of the old city. Property

In addition, the changing preferences of

tectural landmarks of the city center today.

around the plaza was distributed among the

middle- and upper-income households led

The period also saw consolidation of the

204 original settlers at a rate of four lots per

to growth of suburbs, expanding the tradi-

city's street system based on a gridiron pat-

block. Subdivided by successive heirs, this

tional city limits. The city center ceased to

tern with regular blocks, approximately 100

constitutes the basis of the current land ten-

be synonymous with the city per se, and

meters squared, around the main square.

ure pattern in the historic city center. In

became instead simply one section of a

The general pattern of land use is still vis-

line with colonial tradition observed in

metropolitan area sprawling north and

ible today. The streets surrounding the main

other Latin American cities, the main

south (growth in other directions being con-

square (Parque de la Independencia) were and

houses have one or two stories and are orga-

strained by geographical factors). Today, the

still are the seats of principal political, reli-

nized around courtyards, with relatively

historic city center occupies only two per-

gious and cultural institutions. The location

closed street frontages. During the period

cent of metropolitan Quito and is home to

and general layout of the San Francisco and

after independence, this architectural style

5.5 percent of the population.

The decline of the historic city center

History

of these buildings are renowned for their artistic merit. The San Francisco convent is a remarkable blend of architectural styles imported from Europe and indigenous decorative motifs, while the facade of the Church of the Compania de Jesus is considered a masterpiece of Latin American Baroque. Historic civic buildings in the city center include the Presidential Palace, the old university building, and the San Juan de Dios Hospital, with its 17th century cloisters. Buildings constructed during the latter half of the 19th century include the Sucre Theater and the penitentiary.

Facade of the Church of San Francisco.

The core area of the historic city center is also home to a number of residential

Heritage Sites

retreats (recoletas) of El Tejar, San Diego and

and commercial buildings that provide an

El Buen Pastor; and a number of other

exceptional and stylistically-cohesive setting

Consistent with its ancestral religious role,

churches and chapels such as San Sebastian,

for the area's heritage sites. Most residential

Quito is home to magnificent churches such

El Robo and El Belen (see Map 5.2). Other

buildings are from the period following in-

as the Cathedral, the Sagrario, and the

important examples of religious architecture

dependence, while the major commercial

Church of the Compania de Jesus; the con-

include the monasteries of Santa Clara, Santa

buildings were erected in the late 19th and

vents of San Francisco, La Merced, San

Catalina, La Concepcion, El Carmen Bajo,

early 20th centuries. Having been aban-

Agustin and Santo Domingo; the monastic

and El Carmen Antiguo or Carmen Alto.

doned by their original owners and

Apart from their historic value, many

bypassed by changes in the urban economy,

area as a documentary record of the way of

structed in Santo Domingo.) Apart from be-

many of these buildings continue to dete-

urban life of the colonial and republican

ing the sites of important events in

riorate. Some are used for commercial

periods. The main city square and the San

Ecuadorian history, these public spaces are

purposes or as warehouses, craft workshops,

Francisco and Santo Domingo squares re-

decisive landmarks in the spatial structure

or low-income residences.

tain their original spatial characteristics,

of the city center.

Public spaces in the historic city cen-

although they have undergone changes over

ter also retain their original attributes,

time. (Trees were planted in the main square

thereby enhancing the overall value of the

in the 19th century, and sidewalks were con-

Map 5.2, Main Heritage Sites

age for Quito as a whole (close to 70 per-

Historical and socioeconomic factors have led

the 154 blocks around the Parque de la

to the emergence of 17 neighborhoods in the

Independencia-was used for administrative

core area of the historic city center, comprised

and commercial purposes. However, the net

of 154 blocks around the main square. Each

population density in the historic city cen-

neighborhood has its own distinctive spatial

ter (300 inhabitants per hectare) was much

and sociocultural features (see Box 5.1).

higher than the average for Quito (130), in-

cent). This is in part because a significant portion of the central downtown area-84 of

dicating that a majority of the approxi-

While the city center retained its role as a ceremonial center and seat of government, it

mately 17,000 resident families were living

came to be dominated in recent years by com-

in overcrowded conditions. Almost 75 per-

mercial and service activities for low-income

cent of residents lived in multifamily

households such as retail trade, small-scale ser-

homes, with half of them sharing house-

vices, craft workshops, and warehousing to

holds with three or four other families. Access. An estimated 75,000 vehicles

supply street vendors. These activities and

entered the historic city center daily, clog-

their clientele did not attract investment into the area by private developers. The prolifera-

ging the narrow streets and blocking or slow-

tion of street vendors created congestion and

ing access. Ninety percent of citywide mass

led to the deterioration of parks and other

traffic itineraries passed through the city cen-

public spaces, also deterring private invest-

ter, bringing the city's fleet of buses through

ment in commercial and recreational activities for other social groups. A 1989 study carried out by the mu-

La Merced Tower, Cuenca Street.

center provided the following picture of prevailing conditions.

the area incessantly. The traffic contributed to high levels of air pollution, and its vibra-

Land use. A relatively small propor-

nicipality as part of development of a

tion of the historic center (47 percent) was

master plan for preservation of the historic

used for housing, compared with the aver-

1 Municipality of Quito Planning Department, Master Plan for the Historic Center, 1989.

The Historic Center in Contemporary Quito

No.

Name

No. blocks

Total properties

Population

Total area square (meters)

Square meters used for housing

No. of families

Gonzales Suarez

537

6,934

712,619

199,533

1,665

La Loma

520

6,649

269,475

167,075

1,512

San Marcos

258

4,002

144,323

83,707

995

La Tola

230

3,392

97,057

74,734

844

San Bias

454

7,992

288,588

176,039

1,872

Vargas

173

1,975

94,332

58,486

464

San Juan

155

2,827

79,260

70,541

710

Recoleta

1,089

39,332

23,993

272

Chilena

1,399

102,682

44,153

367

El Tejar

277

4,166

142,219

86,754

1,057

El Placer

259

5,658

273,727

123,629

1,409

Aguarico

556

8,240

296,484

163,066

1,935

San Diego

168

2,640

167,792

46,982

671

Colmena

289

3,589

109,287

41,259

827

Panecillo

134

2,352

59,149

35,489

549

San Sebastian

304

6,631

170,968

112,839

294

4,463

69,535

3,047,292

1,508,279

TOTAL

1,486

16,635

tions caused structural damage to colonial

nomic activities targeting upper-income

buildings. Demand for parking was estimated

groups, which prefer to travel by car or taxi.

at nearly double (5,500 spaces) than what

Infrastructure and municipal services.

Cebollar and La Chilena), resulting in frequent flooding in the historic center. Everything from sidewalks to public toilets were in

was available (2,800). Such access problems

The sewer system was inadequate to divert

short supply, and the proliferation of street

limited investor interest in expanding eco-

runoff from northwest areas (El Tejar, El

businesses and pedestrians overwhelmed the

BOX 5.1. HISTORIC CITY NEIGHBORHOODS

safety was an issue, particularly theft. Legislation and regulations. Municipal preservation ordinances restricted the uses that could be made of buildings in the historic city center. This often encouraged property owners to abandon their buildings so that they would become deteriorated enough to have to be replaced by new structures involving more intensive use of the land. As in other cities, the preferred strategy of owners was to rent the properties to several tenants, which met the demand for small commercial and residential units but also encouraged slum conditions. Rent control ordinances limited residential rent in-

Quito's old university building, now the city's Cultural Center.

creases, inducing building owners to rent their properties for commercial or service-

cent of residential buildings in the area were

related activities not subject to restrictions.

in poor condition. While the fronts of com-

The combined effects of restrictive

mercial-use buildings were often in an

Rehabilitation of the Historic City Center

municipal ordinances, inadequate building

acceptable state of repair, their inner court-

Over 50 years, efforts to preserve Quito's

maintenance, inferior-quality construction

yards were in poor condition. The high cost

historic city center have been spearheaded

materials, and even the lasting effects of the

of rehabilitation deterred businesses from

almost exclusively by the public sector, in-

1987 earthquake contributed to ongoing de-

making the necessary repairs, since it was

cluding the central and municipal

terioration of buildings in the historic

easier for them to simply relocate elsewhere

governments and institutions such as the

center. The 1989 survey found that 25 per-

in the city (primarily in the northern zone).

Foundation of the Central Bank of Ecuador.

municipal sanitation system. Finally, public

Master Plan. First demarcation of historic areas. Protection of individual monuments.

Artistic Heritage Second Master Municipal OrdiAct emphasizes Plan incorpo- nances 1378 and protection of rates the historic 1727 dellineate individual center as an the historic cenmonuments. entity. ter, classify monuments, and regulate new development.

1943

1945

1971

1967

Creation of the Cultural Heritage Institute to oversee heritage protection. Center Bank Museum established. Identification and protection of mobile heritance

Cultural Heritage Act declares historic center as part of cultural heritage. Declared World Heritage Site by UNESCO.

Creation of the Fund for Preservation of the Historic Center (FONSAL) assigns government resources for monument preservation.

1978

1979

1987

Historic Center Formation of the Semi-Public CorDevelopment Plan. Compreporation for hensive regula- Development of tions for preser- the Historic Cenvation and ter (ECH). Pubdevelopment. lic-private partnerships for rehabilitation initiated.

1993

1994

1997 Private investors demonstrate interest in partnerships with the ECH to cofinance projects.

National government

Municipal government

International

Private sector

Limited private sector participation has

plans and municipal ordinances. The second

come through nongovernmental organiza-

phase was marked by FONSAL's more pro-

tions such as the Caspicara Foundation.

active approach, which combined actual

preservation phase, however, the private sec-

Table 5.1 identifies two phases in the

preservation projects with refinement of the

tor initially remained uninvolved. Heritage

preservation process. During the first phase

regulatory instruments instituted during the

preservation had always been regarded as a

from the 1940s through establishment of

previous phase. The municipality also began

public responsibility in Ecuador, so while

FONSAL in the 1980s, the public sector

to take advantage of depressed real estate

the cultural elite supported the govern-

used passive regulatory instruments such as

values in the city center by purchasing

ment's strategy, they were never actively in-

the Heritage Preservation Act, preservation

properties, many of which form the core of

volved in preservation activities.

the current rehabilitation process. Even during the more active second

Table 5.1. Quito Preservation Timeline, 1943-97

FONSAL and ECH-and operates in the

ties realized that the preservation process

and attracting new residents, facilitating ac-

preservation area through the Department

exceeded the capacity of the public sector

cess to public services, and promoting the

of Planning and its Office of the Historic

and decided in 1994 to launch a preserva-

proper use and maintenance of public and

City Center, along with executive agencies

tion program based on a partnership with

private buildings.

such as the Center Area Bureau and utility

the private sector. With this decision came

Given the amount of investment nec-

establishment of the Semi-Public Corpora-

essary to address the problems in the his-

tion for Development of the Historic City

toric center, the municipal government has

is administered by the municipality through

Center (ECH).

focused on the core area of 154 blocks that

a board of directors consisting of the mayor,

contain most heritage buildings. The initial

the director of the National Cultural Heri-

worked to generate externalities to attract

strategy was to concentrate on rehabilitating

tage Institute, and the president of the Ec-

private investment by improving accessibil-

selected buildings along an axis that fol-

uadorian Cultural Institute (Casa de la

ity and resolving conflicts over the use of

lowed Garcia Moreno Street. However, to

Cultum Ecuatoriana). Its revenues come from

public spaces. It is also facilitating partner-

harness the synergies that have developed

the 3 percent tax on admission to public

ships with private investors to rehabilitate

around several projects already in progress,

entertainment events held in Quito and 6

strategic buildings, thereby demonstrating

the government has since opted for a strat-

percent of the income tax yield of the prov-

the viability of commercial, residential and

egy based on focal points for radial growth

ince of Pichincha, where Quito is located.

service investments while creating an atmo-

(see Map 5.3).

FONSAL's annual revenue fluctuated

Through ECH, the municipality has

other private investors.

FONSAL was established in 1987 and

around $6 million during the 1988-93 pe-

sphere of renovation and growth to attract

Hei| Institutions

riod, but has declined in recent years. The ECH is a mixed capital corpora-

The municipal government's objective

companies.

is to restore functional importance to the

The three main public institutions involved

tion with majority ownership by the mu-

historic city center. That means not only

in preservation of the historic city center

nicipality. However, as established by

making it attractive for visitors interested in

are the municipality, FONSAL and ECH.

Ecuadorian legislation, the ECH is gov-

historic and cultural heritage, but revitaliz-

The municipal government oversees devel-

erned by private law, which means that it

ing traditional service and commercial ac-

opment citywide-including the work of

may enter into partnerships with private en-

tivities, retaining the resident population

This changed when municipal authori-

historic city center, even if they do not bring financial returns. Once a rehabilitation project is completed, the ECH expeditiously sells its assets so that it can reinvest the funds thus released into new projects to revitalize the city center.

Preservation IctiviNes Preservation of the historic city center has moved along several fronts, among them the important job of changing the area's image of decay. The public sector is investing in the preservation of religious and civil heritage sites using FONSAL resources, complemented by municipal projects to improve public spaces, accessibility and other local urban services (see Box 5.2). Rehabilitation is underway of the old university buildings (19th century) and the Royal Tribunal of Quito (18th century) located on Garcia Moreno Street facing the titles while continuing to serve as the

istrator of public property. In other words,

Parque de la Independenda. The buildings will

municipality's executing agency for projects.

it is concerned with real estate ventures that

house the municipal library, history mu-

The ECH acts primarily as a real estate pro-

are likely to have the greatest impact in

seum and, later, a museum of modern art.

moter and developer rather than an admin-

terms of promoting rehabilitation of the

The San Juan de Dios Hospital, built in the

Map 5.3. ECH Intervention Strategy for the Historic City Center

Project Public sector only Urban infrastructure Sidewalk improvements Urban signage Tourism signage

Municipality

QUITO HISTORIC CENTER INVESTMENT AMOUNTS AND LOCATIONS

ECH

Private

Project

partners

total

(In thousands of 1994 US$) $2,807 498 477

$2,807 498 477

Parking

1 2

El Tejar (rehabilitation) Montufar 1 and 2

El Cadisan

4 Bolivar Square 5 Santa Clara Urban services 6 Cultural Center 7 City Museum Complementary activities Traffic management study Social development program

253 2,567 2,375 2,278 1,890

253 2,657 2,375 2,278 1,890

2,421

2,198

180 1,800

Public-private partnership As real estate developer 8

10 11

2,209

Low-income housing

As partner in real estate development 9 Microenterprise block La Manzana Commercial Center Pasaje Baca connection

12 Trolley stops As real estate partner 13/14 Hotel Majestic and Patio Andaluz 15 Movie Complex

1,000 2,330 200 1,200

600 200 400

1,600 2,330 400 1,600

2,100

1,800 1,600

3,900 2,880

1,280

As owner 16 Pasaje Baca Commercial Arcade As operator 17

Pasaje Arzobispal

1,460

250

As promoter

Circulo Militar

Total public sector Total private sector Total public-private investment

1,000

31,863 5,600 37,463

BOX 5.2.

buildings with important architectural heri-

ica, was renovated and opened as the Quito

tage, while also diversifying economic and

City Museum in July 1998.

residential activities. Interventions are

Enhancement of public spaces in-

planned according to their ability to attract

cludes upgrading some 48,000 square meters

the greatest possible variety of commerce

of sidewalks, installing street signs according

and services. The ECH conceptualizes the

to national and international standards, and

historic center as a "mall" that needs a

improving street furniture such as benches,

minimum of commercial size and diversity

trashcans, telephone booths and kiosks.

to attract customers. Coupled with im-

Electric power lines and telephone cables

proved accessibility, these investments will

are being moved underground.

help the historic center compete with other

The key to improving accessibility to

commercial destinations in Quito.

the historic city center is construction of

Projects vary according to the extent

2,000 parking spaces in five parking garages,

to which private partners participate and the

four of which are located within the first

risks assumed by the ECH (see Table 5.2).

loop surrounding the center. Construction

The ECH can take roles ranging from a real

is underway and the lots are expected to be

Pasaje Baca shopping arcade on Espejo Street, re-

estate developer that handles all phases of

completed in 1999. The idea behind locat-

designed for pedestrians only.

the rehabilitation process to a property

ing the parking lots on the periphery of the city center is to attract visitors who prefer to travel by car, but without congesting public spaces.

manager that simply charges fees for services

Projects Involving the Private Sector

rendered to the owners.

The ECH uses various forms of partnership

vestments and shoulders all the risks. In

with the private sector to invest in building

principle, this type of venture is inconsis-

rehabilitation. The focus is on projects that

tent with the objective of a semi-public cor-

demonstrate the viability of rehabilitating

poration to form partnerships with investors

When the ECH functions as real estate developer, it makes all the project in-

1600s and the first hospital in Latin Amer-

Partner in real estate development Microenterprise block

La Manzana commercial development

Real estate partner Hotel Majestic

Real estate developer Cineplex

Low-income housing

Owner

Operator

Pasaje Baca commercial arcade

Arzobispal commercial arcade

Intervention Real estate promotion Commercial operation Building furbishing Building management Marketing Financing Construction or rehabilitation Building ownership Land ownership

and property owners. However, the ECH

tion of residential buildings at costs and on

broader mix of activities and social groups

undertakes such projects in order to demon-

terms accessible to the low-income families

in the historic city center. The demonstra-

strate the feasibility of real estate operations

who rent or occupy the dilapidated build-

tion effect of such efforts can already be

in which the private sector has shown no in-

ings (see Box 5.3). Rehabilitating such resi-

seen-since the ECH began rehabilitation of

terest. Such is the case of the affordable

dences mitigates the outpricing of

one residential building for low-income

housing program that includes rehabilita-

low-income households and encourages a

housing in 1996, a private investor has

Table 5.2. Division of Responsibilities in Public-Private Partnerships

developing part of a city block for high-

will retain ownership of the properties until

provide middle-income housing units.

density commercial uses in the form of a

real estate market conditions make it pos-

shopping center. Other partnership projects

sible to sell them without incurring a loss.

partnership with private investors for reha-

include the rehabilitation of private homes

The hotel operator is contributing the fur-

bilitation initiatives but takes on only part

and the upgrading of trolley stops. The

nishings and personnel and handling the

of the risks. The ECH provides capital and

planned investment amounts are shown in

commercial operation, paying the ECH for

technical know-how about the rehabilitation

Box 5.2.

the use of the premises.

In other projects, the ECH enters into

process, while private sector partners may

In order to achieve its public objec-

Another example is the Multicines

contribute land or buildings, as well as capi-

tives, the ECH in some cases retains

movie theater complex designed to consoli-

tal and knowledge of the market. The ECH

ownership of properties that are operated by

date commercial and recreational facilities

divests itself of these investments at the first

private partners. This occurs when there are

on Espejo Street. The ECH has negotiated

appropriate opportunity in order to recover

no investors interested in purchasing the

with private operators to have eight multi-

invested capital (and any profits) for use in

properties, yet the ECH considers their re-

plex cinemas installed in two buildings it

other innovative projects.

habilitation to be strategically important to

owns and one building owned by the opera-

development of the historic city center. The

tors. The ECH will act as real estate partner

clude the "microenterprise block" project.

period of time that the ECH remains part-

in this project, providing the two buildings

In partnership with the Banco Solidario,

ner/owner will depend on when local

as well as capital for rehabilitation, until it

the ECH is purchasing and rehabilitating

market conditions signal that the time is

reaches a 50 percent share in the project.

nine properties for sale to microenterprises

right for the ECH to sell its share. One

seeking to locate in the historic city center.

such example is the Hotel Majestic and Patio

certain properties if it is felt that market

Once the properties have been sold, the

Andaluz properties. During negotiations, the

conditions are not optimal for them to be

partners will withdraw their investments

private investor involved in the project felt

sold. Such is the case with Pasaje Baca, a

and receive a return proportionate to their

the hotels would have to be operated jointly

building being converted by the ECH into

contributions. Another project is the

in order to achieve sufficient economies of

a multipurpose center with upscale commer-

Centra Comercial La Manzana. In partner-

scale, yet the investor was not in a position

cial space, art galleries, and a food court.

ship with property owners, the ECH is

to acquire the buildings. Thus, the ECH

The ECH has entered into a concession

Examples of partnership projects in-

The ECH also retains ownership of

started to rehabilitate a building that will

Deteriorated residential buildings make up a large proportion of the real estate in Quito's historic center, and the majority of the 17,000 households in the area are working class and poor families. Quito's Semi-Public Corporation for Development of the Historic City Center (ECH) is wearing its hat as a traditional real estate developer in order to address this problem. The ECH is carrying out a lowcost housing program that will provide 1,000 housing units in rehabilitated historic buildings over a fiveyear period. Target groups are households with monthly incomes of $280-$800 that do not own their own homes but already have some savings. In order to serve this income profile, the ECH has determined that the sale value of rehabilitated buildings should not exceed $300 per square meter. The ECH is executing the project with multilateral financing and with technical assistance from PACT-ARIM 93 of France, a nongovernmental organization specializing in slum rehabilitation. The financing is recovered from the beneficiaries' own savings and from mortgages and subsidies, the latter provided by the Ministry of Urban Development and Housing. The housing units are delivered to beneficiaries under joint ownership and are mortgaged in favor of the bank that granted the loans, currently the

ernment subsidy, provides for recovery of the

state-owned Banco Ecuatoriano de la Vivienda. As

investment.

the policy on housing financing matures, the ECH

Identification of beneficiaries (in conjunction

with the Banco Ecuatoriano de Vivienda), some current tenants or occupants of the building and others

expects other commercial banks to participate. Once

estate development activities associated with this

taken from a list of applicants on file with the ECH.

mortgages have been issued, the ECH receives the

project, including the following:

The projects generally open additional capacity in re-

transfer of loan proceeds, which, together with the

The ECH is carrying out practically all real

â&#x20AC;˘

prior savings deposits of beneficiaries and the gov-

â&#x20AC;˘

Purchase of buildings to be rehabilitated if

they are not already municipally owned.

habilitated buildings because they make more rational use of space, and because not all current

BOX 5.3. LOW-INCOME HOUSING PROGRAM

under the ECH low-income housing program.

occupants meet the requirements in terms of minimum savings or ability to pay. •

Preparation of the rehabilitation project it-

self, including obtaining all necessary construction permits. Special attention is paid to costs, which cannot exceed the financing capacity of beneficiaries. •

Development of a financing plan that in-

cludes the beneficiaries' savings and individual debt,

as well as subsidies from the Ministry of Housing. •

Temporary relocation of current occupants

of a building under rehabilitation for an 8 to 10month period. •

Entering into contracts for rehabilitation

works, project supervision, and final delivery of reha-

•

Marketing of the rehabilitated housing units

to potential beneficiaries and registered applicants. • Temporarily assuming responsibility for management of rehabilitated buildings when they are first occupied. Management is subsequently turned over to the new co-owners.

bilitated buildings, including titling and connections to utility services.

Interior and exterior of building rehabilitated

date have been the political will of the mu-

tion, particularly commercial activities that

After 10 years of sustained effort by the

and nonpartisan management of the ECH.

target middle- and upper-income customers

Municipality of Quito, the program to revi-

whose patronage is key to ensuring sustain-

talize the historic city center is beginning to

the municipality through the sustained allo-

able revitalization of the historic city center.

bear fruit. An area once virtually written off

cation of resources in support of develop-

The ECH also has identified an op-

as a slum is increasingly perceived as a dy-

ment initiatives, and through promotion of

portunity to expedite rehabilitation of the

namic work in progress. The steady rise in

preservation activities-all of which has sent

city center by promoting more intensive use

land prices over the last five years suggests

a consistent message to the community re-

of previously rehabilitated private buildings.

growing involvement by private investors,

garding the value of the historic city center

Such is the case of its investment in Pasaje

and tourists are spending more time and

and the feasibility of incorporating it into

Arzobispal, a building rehabilitated some

money in the downtown area.

the urban development process.

in order to oversee establishment of certain businesses at a strategically important loca-

time ago but underutilized due to misman-

different administrations), and the efficient Political will has been expressed by

The ECH has consolidated its position

agement. The ECH negotiated with the

vestments have proven effective in fostering

as the leading institution in the preservation

owners of the building for a two-year trans-

rehabilitation of the historic city center.

process, working in coordination with other

fer against payment of rent equal to the

These investments first generated externali-

municipal and central government agencies.

current rent. During that period, the ECH

ties, including improved accessibility and

By applying business criteria to the task of

committed to making minor investments to

high-quality and uncongested public spaces,

achieving public goals, the ECH's efficient

equip the building to meet the needs of

and then rehabilitated flagship buildings.

management is attracting private investors

commercial activities, and issued a call for

That in turn has facilitated rehabilitation of

who view it as a reliable partner for invest-

bids for a private sector operator. The ECH

commercial and residential buildings, in-

ments with long return periods.

expects to fully recover its investment with

creasingly by private investors without any

the earnings from the concession, at which

assistance from the ECH.

time control of the property will be trans-

100

The combination and timing of in-

nicipality (sustained over the course of three

ferred back to the owners.

The principal reasons for the success in rehabilitating the historic city center to

The ECH has engaged in a variety of ventures and played a broad range of roles, including that of developer, partner in real estate developments, real estate partner,

Political Will end Efficient Management

with a private operator, retaining ownership

tate market is still in its infancy compel the

in land prices. An action plan is required to

each of these roles, the ECH assumes differ-

ECH to retain these properties, thereby lock-

deal with such contingencies. At least one

ent risks and costs, some closer to its

ing up its capital and reducing its capacity to

preventive measure is already in place-the

originally conceived role-developing projects

undertake new projects. The situation may

ECH's program to provide rehabilitated

with private partners and then selling its in-

become unsustainable if the ECH retains an

space at prices consistent with the return on

terests to embark on new projects-and others

investment longer than strictly necessary to

economic activities and the ability of fami-

closer to the state's traditional role as execut-

recover the capital invested.

lies to pay. Other possible measures include

ing agency or as a pure private administrator of investments made by others.

Thus, consolidation of the preserva-

taxation on underutilized or abandoned

tion process is not yet guaranteed, even

properties, and enforcement of preservation

though two phases have been successfully

ordinances in properties that have been de-

that the ECH's departures from its original

completed-the first to rehabilitate major

liberately abandoned.

role are justified by the actual conditions

heritage sites and the second to initiate co-

encountered in the real estate market. For

ordinated investments with the private

is entering a more complex stage, when the

instance, there were no partners interested

sector. But a third phase, which will start

decisive factor in determining sustainability

in rehabilitating housing for low-income

upon completion of major public works and

will no longer be public investments, but

families; nor was there any certainty that,

demonstration projects, will be most crucial

rather the degree to which the municipality

left to market forces alone, the Pasaje Baca

to sustaining the process. In this new phase,

can maintain an efficient and flexible envi-

shopping arcade would not have degener-

the municipality and the ECH must sustain

ronment supportive of private for-profit

ated into a slum as other local commercial

the confidence of real estate investors by

ventures in preservation.

centers have done.

completing pending projects to regulate

The success of its ventures suggest

The sustainability of these projects will depend on the efficiency with which ECH manages its expenditure on and income from

In conclusion, preservation in Quito

traffic and street vending and improve sanitation and public safety. Assuming that the ECH's real estate

real estate ventures. The corporation faces a

ventures achieve their desired commercial

complex balancing act. Decisions to embark

success, the greatest danger to the preserva-

on projects at a time when the local real es-

tion process is the risk of a speculative rise

101

owner/lessor, and real estate operator. In