Wednesday, April 24, 2013

Easements 101: What is a Preservation Restriction?


Guest Blogger Brian Pfeiffer of Preservation Advisory Services, consultant to HBI on easement management, begins a series of four blog posts on preservation restrictions and their importance to historic preservation and their value to donors.   HBI holds seven easements, mostly on properties where the organization has made significant investments before selling to a private owner.    
                                                                                                                                                                                               
The Austin Block, one of HBI's Easement Properties

What is a preservation restriction?

At first glance, the idea of Preservation Restrictions may seem confusing.  The question arises, “How can one give away a portion of property rights?”  The idea, however, is quite simple.  We are accustomed to the arrangement by which portions or property rights are routinely granted for various purposes.  Landlords grant a portion of property rights - the right to occupy and use a defined space - to tenants for finite periods of time in exchange for payment of rent.  Similarly, many property owners are familiar with easements by which a neighbor may own the deeded right to use and maintain a driveway to provide access to his or her property which would otherwise be inaccessible.  Utility companies acquire rights to extend power lines across private properties in order to serve the larger good of the surrounding neighborhoods.  In the case of such easements, a power company may own the right to place poles and enter a property to maintain lines, while the property owner may surrender the right to build on that portion of the property but retain the right to maintain a lawn and use the space for recreation.  Such arrangements are common to provide practical, tangible benefits to communities. 

Preservation Restrictions, which are a form of easement, resemble the foregoing examples, but with several important differences.  They exist to serve a broader, less tangible public good - the public’s interest in the preservation of historically and architecturally significant buildings that enhance our communities or represent important aspects of our shared history.  Unlike private easements that benefit an abutting property (as in the case of the neighbor’s driveway), Preservation Restrictions need not be held by an abutter.  Because they serve the public interest and can be perpetual, they must be held by an organization that has historic preservation as part of its recognized mission.  Non-profit corporations that have been recognized as 501(c)(3) charities that exist to promote historic preservation, such as Historic Boston Incorporated, meet this requirement, as do governmental agencies that promote and regulate historic preservation.
Cedar Street Marble Row Houses, One of HBI's Easement Properties 

What buildings qualify for Preservation Restrictions?

To qualify for a Preservation Restriction, a building must be listed in the National Register of Historic Places, the Massachusetts State Register of Historic Places, or must be a contributing element within an historic district that is listed in either of these registers.  This requirement assures that Preservation Restrictions are placed upon buildings that have been recognized as having historic value, the preservation of which is in the public interest.  Because of the number of historic buildings far exceeds the capacity of museums and non-profits to protect them under direct ownership, Preservation Restrictions assure the preservation of such buildings while leaving them in active use.

What sorts of things does a Preservation Restriction cover?

Because a Preservation Restriction Agreement is written for a specific building, it can be tailored to protect the unique features of that building while excluding modern alterations or elements that do not contribute to the building’s historic value.  At a minimum, the entire exterior envelope of the building must be protected to meet Massachusetts’ regulatory requirements.  This requirement does not mean that every exterior element of a protected building must remain forever unchanged, but rather that any proposed changes must be reviewed by the Restriction Holder to assure that changes do not impair the building’s historic features.

Important interior elements can also be protected, ranging from fine woodwork to room layouts, chimneys, ornamental features or even unique hardware.  Massachusetts’ regulations do not require the protection of interiors, but in many cases, the most significant historic elements of a building are contained within its interior and deserve consideration.  Whether or not to protect interior elements is a decision made by the Property Owner and the Restriction Holder as they develop a mutually agreeable scope of protection for a property.

The Albany Building, One of HBI's Easement Properties 
What happens after a Preservation Restriction has been executed and recorded?

Once completed, a Preservation Restriction may exist for a defined period of years or in perpetuity.  During the term of the Agreement, the Restriction Holder and Property Owner confer periodically about the property.  The Restriction Holder visits the property periodically to confirm that the protected features remain in good condition and to help the Property Owner anticipate maintenance and repairs that may affect historic features.  The Property Owner contacts the Restriction Holder whenever a change is proposed that may affect historic features in order to confirm that proposed changes will fit within the scope of the restriction.  Routine maintenance is exempted from review so Property Owners may paint, re-roof, caulk and carry out other ordinary repairs without seeking review.

Who might give a Preservation Restriction?

There are many reasons for granting a Preservation Restriction on a property, but some of the most frequent are:

-          Homeowners who possess historically unique houses often grant Preservation Restrictions to protect fragile historic interiors for future generations.
-          Families owning large historic properties sometimes grant Restrictions to extinguish development rights and to reduce property value, thereby reducing estate taxes on the property and facilitating its descent without subdivision to future generations of the family.
-          Community Development Corporations grant preservation restrictions on real estate development projects to assure that the public benefit of a building’s preservation continues through future changes of ownership.
-          Private real estate developers grant Preservation Restrictions both to protect historic preservation projects on which they have worked and for the financial benefit off the charitable, tax-deductible donation that arises from the value of the donated Restriction.

NEXT:  WHAT DOES A PRESERVATION RESTRICTION PROTECT AND HOW IS IT CREATED?

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