New England Regional
Protecting Special Places
Conserving and preserving family real estate
As his parents aged, Rennie Little recalls, "and it became obvious that we three children could probably not afford to maintain Cogswell's Grant, even though we loved it, my parents began to talk about what would become of it." The natural solution was to donate the property to the Society for the Preservation of New England Antiquities, of which Bertram Little was director from 1947 to 1970. And so it was.
Today, SPNEA owns and operates the property as a house museum. It is open to the public, exactly as the Littles left it (medicine cabinet contents included), with the help of an endowment created by the couple before they died in 1993. The property is not only an extraordinarily beautiful piece of bucolic, riverside land with historic importance--and an American art collection preserved in the context in which it was gathered--but a prime example of the foresight necessary to protect family real estate from development in perpetuity. "This was a multidecade process," reports the Littles' longtime attorney, William B. Tyler '47 of Rackemann, Sawyer & Brewster in Boston. The Littles first placed restrictions on development on their estuarine farm and created a fund for future maintenance. Years later, they transferred the property title to SPNEA, reserving the right to live there until death. They subsequently released their life interest and then, ultimately, donated the art collection. "Philanthropic planning of this kind is based on two motivations," Tyler maintains. "First and foremost is a genuine desire to preserve and protect the property because you love it and want it never to be altered, and then there are also tax advantages that go along with it."
For those considering conserving land or preserving historic structures in New England (the birthplace of the land trust), there are well over 200 trusts, conservation groups, historic and government agencies, and other charitable organizations--as well as a cadre of legal and financial experts--poised to aid in the process. "Most people who have beautiful property that they have enjoyed care about its future, and if they can find a way to protect it, they will do it," says Wesley Ward, M.P.A. '87, director of land conservation for the Trustees of Reservations in Beverly, Massachusetts. "There is almost always a way to treat the land responsibly without a great financial sacrifice, even for people who have acquired their property principally for investment purposes."
The recent economic boom has spurred real-estate development throughout New England, especially in and around urban centers like Boston and Portland, Maine. Office parks, condominium complexes, and "McMansions" have shot up on open land along commuter corridors, sometimes surprising nearby residents and fueling concern for the future. "That's when people start to say, 'Gee, they're building stuff in places that have been open forever," says real-estate attorney Gregory P. Bialecki '82, J.D. '85, of Hill & Barlow, who has worked with the Trustees of Reservations. Often a race ensues between developers and conservationists over who will get what land. "More land is protected and preserved in those robust economic periods," he says, but, "on average, in Massachusetts, in the peak of the economic cycle, the developers are winning the race."
That's not to say the cause is lost. Overall, public participation in private and public conservation efforts has risen significantly since 1950, when, according to the nonprofit Land Trust Alliance (LTA) in Washington, D.C., there were only 53 land trusts in the United States. Today there are 1,213 such trusts, and record numbers of referendums and community groups pushing for protections of open space around the country, says LTA spokeswoman Martha Nudel.
Development on Martha's Vineyard and the future threat of a large estate tax spurred George W. Clark '49 and his wife, Charlotte (Huston Reischer), to prohibit building on 40 acres they own bordering Edgartown Pond and Meshacket Cove. "We go out at night and there are no lights visible," says Clark, professor of physics emeritus at MIT. "The place has hardly changed over the last 30 years that we've owned it. We love it, our children love it. We'd never develop it. "
The couple divided the property into four units (one includes the house they built by hand), and two years ago donated the development rights on two parcels, through a written easement, to the Trustees of Reservations. The gift lowers the marketable value of the property (which in turn lowers property taxes) and is considered a charitable deduction. Clark is taking the maximum income-tax deduction available on a charitable gift over five years, and will donate the remaining units of land, which will generate future tax deductions, after that. The easement has also reduced the estate tax his heirs will have to pay by eliminating the development value of the land.
Property owners can donate a property outright, or sell or donate an easement, as Clark did, that prohibits future development (see "Conservation Tools," page 24E, for details). Conservation groups sometimes prefer easements; they are typically less expensive than buying the property itself. The Land Trust Alliance reports that use of conservation easements nationally grew fourfold between 1988, when 290,000 acres were protected, and 1998, when more than 1.4 million were put under such restrictions. Nationwide, 4.7 million acres of land had been protected by local and regional land trusts by 1998, the last year for which figures are available.
Personal financial incentives to protect property have increased greatly since the National Historic Preservation Act of 1966, which established the National Register of Historic Places; guidelines for federal matching funds; and a review process for proposed projects that could impact historic properties or districts. That landmark act made it more attractive for landowners and agencies to engage in the protection process, says Jane Nylander, president of SPNEA. The nonprofit group owns 45 properties outright, but helps manage 65 privately owned homes through its cost-efficient stewardship program.
Not every piece of property or structure deserves protection, however, and nonprofit organizations do not take all that are offered. Generally, to be protected, a property must have some special quality valuable to the community at large: scenic beauty, or importance related to history, ecology, or archaeology, says Ward, of the Trustees of Reservations. Other properties can be donated as "trade land," given with the full knowledge that they may be sold to help fund higher-priority conservation efforts. "If the property deserves protection, we can usually find a recipient, or a structure for future stewardship," he assures. "All trade land that is given to us is studied and, if there are values of importance, those would be protected through legal means prior to the sale." Even qualified properties can be hard to save because they are quite costly, and the sometimes cash-poor organizations cannot commit to caring for them forever. Nylander says SPNEA is not taking on any new museum properties these days unless they have some sort of endowment attached to them, or the probability of setting one up.
Monetary donations to purchase land and/or easements are always needed, says Mason Morfit '62, director of planned giving for the Maine chapter of the Nature Conservancy. In 1998, the agency spent $35 million on 185,000 acres along the St. John River in the northwestern tip of Maine. "We bought it at auction and immediately had to start paying $7,000 a day in interest," he says. "That's strong incentive to raise cash as quickly as possible." A two-year capital campaign raised an unprecedented $50 million (the group's previous campaign goal was $5 million in three years), which will enable other land purchases as well.
The Nature Conservancy played a small role in the March purchase of an easement that prohibits development on 762,192 acres of forest lands in northern Maine--the largest known conservation easement in the history of the United States. Owned for seven generations by the Pingree family, the land now protected is larger than the state of Rhode Island and covers some of Maine's most glorious natural resources along the Allagash Lakes and St. John River.
The land is, and will remain, a "working forest," asserts Steve Schley, a Pingree family member and president of Pingree Associates in Bangor, Maine, the company that oversees management of the property. The family sold off the development rights to the New England Forestry Foundation, of Groton, Massachusetts, at $37 per acre, or just over $28 million. The family still owns the property and will continue to independently manage the forest, which includes reaping income from timbering and forestry products. "The difference between our forest and other conservation forests can be explained as consumptive use versus nonconsumptive use," Schley reports. "We've been practicing sustainable forestry there for 160 years, actively harvesting and regenerating trees, yet it is still highly desirable as a park or a reserve, for sportsmen and recreation. So, you really can have it all." Hikers, bikers, campers, sportsmen, and scientists benefit from use of the land, Schley says, but "no structural development not associated with the ongoing management of the forest" can be erected.
Some people thought the family was crazy not to develop the land and create a permanent revenue stream through real estate, he concedes. "But that has costs associated with it, too," he says. "The word most reflective of our position is 'stewardship.' New England families in particular, a great many of which have owned substantial acreage for generations, truly have a sense of responsibility and pride that carries through everything they do and think in response to that property. And that sometimes becomes more important than income."
Throughout New England, land and structures are generally protected through one of two means. Property owners can work through a land trust or similar nonprofit group, says real-estate attorney Gregory P. Bialecki '82, J.D. '85, of Hill & Barlow, who specializes in conservation issues. Or--and this is the less popular and less permanent option in New England--property protection can come about through zoning and other land-use regulations set by governing agencies.
"There is a New England resistance to other people, which includes the government, telling you what you can and cannot do with your land," says Bialecki. "We like to believe in a tradition of responsible land ownership. We are much more comfortable with people protecting their land through voluntary dealings like gifts and donations."
The nonregulatory approach offers a number of protection vehicles. On the rise in the last decade are conservation easements, also called restrictions, through which certain attributes of, or rights to, a property are siphoned off (e.g. development rights, rights to mine or log), and donated to a qualified charitable organization. The donor retains ownership and use of the property. Such easements can also be donated in return for a charitable gift annuity (deferred payment) or sold, for immediate pay-off, to a qualified organization. Almost all sales of easements are made at discounted rates, or "bargain sales," because selling them at market value rules out charitable tax deductions and can trigger a capital-gains tax. The flexibility of easements may be appealing, as is the retained right to bequeath the property to heirs, or sell it to a third party--who would be bound by the easements in place at the time of the purchase.
Landowners who either do not have heirs, or whose heirs cannot or will not protect the property, may consider donating land or structures either while alive or after death. Such a charitable gift may also benefit those who own property they no longer use, who wish to avoid a large capital-gains tax, or who want to stay on a property, but be relieved of management and maintenance responsibilities.
There are different legal and financial ramifications for current owners and their potential heirs, depending on the vehicle used to transfer an easement or property. Expert advice is important. Benefits can include income-tax deductions on a charitable gift or conservation easement; lower real-estate taxes; reduction in capital-gains tax; or lower estate taxes, in line with the reduced market value of the property. For income-tax purposes, the value of the easement is the difference between the value of the land with the easement and the value without it.