NEW! 

• Link to National Park Service brochure, "Historic Preservation Easements: A Historic Preservation Tool with Federal Tax Benefits."
• A map of properties protected by preservation easements  is now available online in PDF format.

PRESERVATION EASEMENT POLICY

The easement program administered by the Cambridge Historical Commission provides an advantageous means by which an owner may voluntarily protect an architecturally or historically-significant property. The program encourages private investment in restoration of significant buildings with no corresponding expenditure of public funds. At the same time, an owner might benefit because of Federal and municipal tax policies.

An easement is a "non-possessory right to control what happens to buildings or land owned by others". It is voluntarily conveyed by the property owner to a qualified body such as the Historical Commission, which holds the right and enforces the terms. To be effective, the easement must protect the publicly visible features of the property from alterations without review by the Commission. It may also be drafted to allow specific development opportunities to take place, or to protect significant interior features. Easements need not freeze a building in its present appearance; however, owners may be required to upgrade a property as a precondition for acceptance. The property's use is not necessarily affected.

Enforcing the provisions of the easement is a long-term responsibility for the Commission. To this end, a cash grant is generally required when an easement is accepted. The easement program is strengthened as accumulating grants which function as an insurance pool in the event that legal action is necessary to protect a particular property.

1. Goals
   
   The Cambridge Historical Commission encourages the donation of preservation easements as a means of protecting architecturally, culturally, and historically significant properties in a manner that encourages owner investment. The Commission may request an easement in return for Preservation Grants in excess of $4,500. Easements may also be accepted when required as a condition of private sale or action by another public agency, such as a variance.
   
2. Legal Authority
   
   The legal authorities which empower the Cambridge Historical Commission to hold easement are:
   
   1. Mass. Gen. Law Ch. 184 § 31-33
      
      This legislation defines a preservation restriction as "a right . . . in an instrument executed by or on behalf of the owner of the land . . . appropriate to preservation of a structure or site historically significant for its architecture, archeology or associations, to forbid or limit any or all (a) alterations in exterior or interior features of the structure, (b) changes in appearance or condition of the site, (c) uses not historically appropriate, . . . , or (e) other acts or uses detrimental to appropriate preservation of the structure or site."
      
      § 32 authorizes government bodies [such as the Cambridge Historical Commission] to acquire preservation restrictions.
      
   2. Mass. Gen. Laws Ch. 40C
      
      This legislation allows for the creation of an historic district commission by cities and towns. Ch. 40C § 10(h) provides that, "The Commission may administer, on behalf of the city or town, any properties or easements, restrictions or other interests in real property which the city or town may have or may accept as gifts or otherwise and which the city or town may designate the Commission as the administrator thereof."
      
   3. Mass. Gen. Laws Ch. 40 § 8D
      
      This section provides for the establishment of historical commissions. According to this law, "The Commission may hold hearings, may enter into contracts with individuals, organizations and institutions for services furthering the objectives of the Commission's program; may enter into contracts with local or regional associations for cooperative endeavors furthering the Commission's program; may accept gifts, contributions and bequests of funds from individuals, foundations and from Federal, state or other governmental bodies for the purpose of furthering the Commission's program; may make and sign any agreements and may do and perform any agreements and may do and perform any and all acts which may be necessary or desirable to carry out the purposes of this section" (i.e., the preservation, protection and development of the historical or architectural assets of the city or town).
      
   4. Cambridge Historical Commission Ordinance
      
      §§ 4.101-4.106
      
      § 4.101 of the Ordinance provides the Cambridge Historical Commission with all the authority provided in Mass. Gen. Laws Ch. 40C and Ch. 40 § 8D. § 4.103 describes the powers and duties of the Commission. In carrying out these duties and powers, the Commission may "accept money, gifts, and expend the same". The ordinance also provides the Commission with all the authority and duties established in the state laws described above. Each prospective easement is subject to approval by the Historical Commission and the City Council.
      
      Also see the Internal Revenue Code § 170(f)(3)(B)(iii) and § 170(h) for possible Federal income tax considerations involved in the grant of a preservation-easement.
3. Eligibility
   
   A property is considered for acceptance of a preservation easement if it falls in one of the following categories:
   
   1. National Register Properties. Any building, structure, or site that is individually listed on the National Register for Historic Places or that is determined to be a contributing property in a National Register district. Federal tax benefits may be available when the National Park Service determines that a building meets this criteria.
      
   2. Potential National Register Properties. Buildings, structures, or sites considered eligible for the National Register by the Cambridge Historical Commission. The Commission can assist the owner in pursuing Register status, but cannot guarantee that the Park Service will approve it.
      
   3. Locally Designated Properties. Easement donations will be accepted on landmarks or properties in historic districts only when features not already protected are involved. These could include interiors or features not visible from a public way.
      
   4. Properties Receiving Preservation Grants and Work Equity Grants. Property owners may be required to offer easements on any property for which a minimum of $4,500 has been awarded under the City's Home Improvement Program. Easement Donations also are conditions when grants are made to restore houses in the Work Equity Program.
      
   5. Other Properties. other buildings, structures, or sites can be considered for easement donations if considered to be of local architectural or historical significance by the Cambridge Historical Commission.

   National Register Criteria for Evaluation:
   
   The criteria the Commission uses to determine the eligibility of a property or structure for the easement program parallel the qualifications for listing in the National Register, a summary of which follows:
   
   The quality of significance in American history, architecture, archaeology, engineering, and culture is present in districts, sites, buildings, structures, and objects that possess integrity of location, design, setting, materials, workmanship, feeling, and association, and

   1. that are associated with events that have made a significant contribution to the broad patterns of our history; or
      
   2. that embody the distinctive characteristics of a type, period, or method of construction, or that represent the work of a master, or that possess high artistic values, or that represent a significant and distinguishable entity whose components may lack individual distinction; or
      
   3. that are associated with the lives of persons significant in our past; or
      
   4. that have yielded, or may be likely to yield, information important in prehistory or history. (36 C.F.R. 60.6)

   The eligibility of a structure or property for this easement program will be based on its significance to the City of Cambridge, rather than its significance at the national level. In adopting the National Register guidelines, the Commission reserves its discretionary powers to accept or reject prospective preservation easement donations regardless of official National Register status.

4. Conditions
   
   The Commission may agree to accept an easement on the condition that certain work is carried out to rehabilitate or restore a property to its former appearance, and can impose other conditions as to use or future appearance as may be necessary to preserve its significant features. Such restrictions are determined on a case by case basis, and are based on the unique characteristics of each structure or property. Furthermore, the individual concerns of each property owner are considered when establishing these restrictions. The Commission avoids accepting easements on buildings where there has been irreversible damage to the building fabric or site, where unsympathetic, irreversible alterations have taken place, and where serious and continuing maintenance problems can be expected to develop over time.
   
5. Possible Tax Benefits
   
   Under Internal Revenue Service regulations, the value of an easement on a property listed on the National Register of Historic Places may be taken as a charitable deduction on personal income taxes. The value of an easement is calculated by taking the difference between "before" and "after" appraisals of the property, but this is an inexact science. The "before" appraisal takes into account the suitability of the property for more profitable as well as continuing uses, while the "after" appraisal should take into account the economic benefits of the donation to the donor as well as the reduced value of the property. In addition, in determining the value of an easement for donation an appraiser must consider local land use regulations. The value of the easement will tend to be greatest when there is a large difference between the current and "highest and best" uses of the property; when there are no other restrictive measures limiting the use of the property, such as zoning to current density or an historic district; when the owner is an individual investor or group of investors, rather than a corporation, and when the property has not recently been rehabilitated (or is fully depreciated).
   
   The rules for charitable contribution deductions for preservation easements are very technical. Any property owner considering the donation of an easement is strongly encouraged to consult a qualified tax advisor relative to the possible tax considerations involved. The Cambridge Historical Commission is not responsible for assuring any tax benefits.
   
   Some properties, especially commercial properties in areas experiencing strong development pressures, might be devalued by the local tax assessor if encumbered with an easement. Potential donors are encouraged to contact the Cambridge assessor's office to determine if an easement donation will result in a reduction in local property taxes. It is the responsibility,of the property owner to investigate property tax reductions with the assessor.
   
6. Rights and Responsibilities of a Donor
   
   The donor of a preservation easement generally relinquishes the right to alter a structure or property in a manner that would effect inappropriate changes to those architectural or visual elements that contribute to the property's significance. These elements are unique for each property and each individual easement specifies what structural and visual elements are to be protected. Any proposed repairs or alterations that could affect that portion of the property protected by the easement must be approved by the Cambridge Historical Commission. The donor retains all property rights, which are not restricted in the easement agreement. Any property may be freely sold subject to the provisions of the easement. No easements will be accepted on mortgaged properties unless the mortgagee agrees to the terms of the easement. The property owner is responsible for informing the mortgagee of the easement proceedings.
   
   It is the responsibility of the donor to obtain an appraisal of the value of the donation for income,tax purposes. Although the Cambridge Historical Commission is legally qualified to accept conservation easements, acceptance of an easement does not ensure a tax deduction. The Cambridge Historical Commission requires a copy of an appraisal report stating the value of the easement donation.
   
7. Preservation Administration Fund
   
   It is the policy of the Commission to accept preservation easements only when accompanied by a monetary grant to support the administration of the City's preservation programs. Such a grant is waived in certain cases. The minimum grant is 5% of the value of the easement or 10% of the value of the tax benefit, whichever is less. For properties not eligible for the Register, the minimum grant is 10% of any reduction in assessed value. In any event, subject to the exceptions noted in the following paragraph, a minimum acceptable cash grant of $1,000 will be charged for donors realizing either tax benefit.
   
   Property owners required to donate easements as a stipulation for preservation grants and work equity grants are not required to make a grant. Furthermore, the Commission may waive the grant with respect to easements donated by non-profit organizations.
   
   All grants are placed in a trust fund administered by the City Treasurer. This fund is generally available for the purpose of preservation within the City and specifically available in the event that legal defense is necessary to protect a property on which an easement is held.
   
8. Enforcement
   
   The Cambridge Historical Commission inspects each property periodically, in most cases on an annual basis. This inspection includes a site visit and a written report recording any alterations. Whenever permission is granted for alterations on an easement property, the alterations are monitored and a final inspection is undertaken upon completion of the alterations. All alterations are photographically recorded. If a property owner violates the provisions of a conservation easement, the Commission can require the owner to restore all unauthorized changes to the pre-alteration condition.