from NC Preservation (Spring 2007)

When Agnes Harvin describes Burnside, her home in Vance County, one of the first things she mentions is the setting. "Everyone who visits can't believe how peaceful it is. You can step into the backyard and be completely surrounded by nature." In addition to its pastoral setting, Burnside has been described as "one of the Piedmont's most elegantly finished Federal-period houses." (A Guide to the Historic Architecture of Piedmont North Carolina, by Catherine Bishir and Michael Southern). The house, listed on the National Register of Historic Places, is in a remarkable state of preservation and retains its original interiors.

Realizing the importance of protecting Burnside, owners George and Agnes Harvin worked with Preservation North Carolina (PNC) and the Tar River Land Conservancy (TRLC) to place preservation and conservation easements on their restored Federal-style plantation house (c. 1800 and 1820) and outbuildings plus over 400 acres of working farm and forestland. Agnes Harvin notes Burnside plantation once comprised roughly 2,500 acres, so it was especially important to protect its rural setting.

Over the past few decades, preservation easements have been an integral tool for preservationists looking to ensure the protection of historic resources while keeping them in private hands. Recently, partnerships between historic preservation groups and land conservation groups have formed to allow owners of historic properties to grant protective easements providing for both the preservation and conservation of their property.

This trend is particularly promising in light of the changing landscape of North Carolina. Historic places and their surroundings are being threatened more and more by development, and conservation-preservation partnerships are an appropriate way for these resources to be protected.

In December 2005, the easements on the historic Burnside Plantation represented new collaborative ground for PNC and the TRLC, a land trust based in Louisburg. Dean Ruedrich, PNC's Regional Director in Louisburg, realized that while Preservation NC was perfectly suited to protect the house and grounds, a land conservancy would be more appropriately equipped to protect the property's vast 430-acres. The Tar River Land Conservancy is an organization that has been working to preserve the natural resources of the Tar River Basin by protecting rural landscapes and riparian corridors.

Given the location of the Harvins' property and the mutual goals of PNC and TRLC, Ruedrich notes, "here was a perfect opportunity for a collaboration where both groups could do what they do best." PNC would accept an easement on the historic house, while TRLC would hold the easement on the land. The result would be a coup for both organizations: the Tar River Land Conservancy would be able to protect an important part of North Carolina's landscape and Preservation NC would be able to protect Burnside with the assurance that its historic rural setting would remain intact and preserved.

What is a preservation easement?

A preservation easement is simply a legal agreement between a property owner and a preservation organization in which the property owner agrees to preserve the historic features of the property. The parties enter the agreement for the mutual benefits of historic preservation, continued private ownership, and possible tax advantages or other compensation to the owner. Broken down conceptually:

• The property owner (the grantor/donor) promises to protect the property's historic integrity, without inappropriate alterations, additions, or demolition; and,
• The organization or public agency (the recipient/donee) is granted the right to enforce the covenants of the easement and to monitor the property.
• The owner retains the right and duty to manage and care for the property, pays taxes on it, can continue to use the property just as before, and may sell or lease it or pass it on to heirs.

How does a preservation easement work?

Easements are flexible tools. The easement should protect the historic resources on the property but can be custom-designed to meet the personal and financial needs of the landowner. Historic preservation easements are intended to protect the architectural integrity of a structure by imposing limitations on the types of alterations that may be made. In some cases, the owner may choose only to protect the exterior of the building. A preservation easement may also be designated to protect a building's interior and important elements of the property, such as outbuildings or associated archaeological remains. The extent of the restrictions placed on the property is decided together by the parties of the agreement.

This flexibility is exhibited in the Burnside agreement where Ruedrich worked with the Harvins and TRLC to develop a strategy that met the owners' needs. "While PNC can help property owners preserve the architectural value of their historic home, land trusts like TRLC can help them conserve the landscapes and context that rural properties like Burnside are often in danger of losing. It is inspiring to me that the Harvins recognize the importance of both. We are extremely grateful for their visionary stewardship," says Ruedrich.

What properties are eligible for easements and associated tax benefits?

The federal and state governments provide tax incentives for easements given only for certain qualified purposes. To qualify as a charitable contribution, and thus to earn federal and state income tax reductions, the easement must be perpetual, must be made to a qualified donee (generally, a non-profit preservation organization or a public agency), and must meet one or more of the conservation purposes, set out in the federal tax code:

• Preservation of historically important land or buildings (generally, the property must be listed on the National Register of Historic Places)
• Preservation of land for outdoor recreation or education
• Protection of relatively natural habitats of fish, wildlife, or plants
• Preservation of open space pursuant to a clearly delineated governmental conservation policy.

To whom may a preservation easement be given?

The easement may be granted to a qualified preservation organization, either private non-profit or governmental. The property owner chooses the best recipient to administer the intended preservation project. Many private organizations such as PNC, the National Trust for Historic Preservation (NTHP), and local preservation organizations accept easements. Governmental agencies such as the NC Department of Cultural Resources or local historic preservation commissions may also accept easements. In choosing, the owner should consider the size and location of the property and the kind of protection desired for its features or resources. The owner should also be sure that his or her interests and concerns are shared by any prospective recipient.

What are the tax advantages of an easement?

An owner considering granting an easement may benefit from savings in estate taxes, income taxes, and property taxes. If the IRS's rules for granting an easement are followed, a property owner may deduct the value of the easement as a charitable deduction from his or her federal income tax. An appraiser is hired by the donor to determine the value of the easement. The appraiser, following IRS guidelines, appraises the property with and without the easement. If the property appraised without an easement at $250,000 and then appraised with the easement in force at $200,000, the $50,000 difference is the value of the easement gift for income tax purposes. There are also potential property tax benefits. The county tax assessor must take into account the reduction in value caused by the easement and should tax the property at its restricted value, not at its highest and best use when development was unrestricted.

This summer, Congress passed legislation to encourage higher standards of practice for groups working with historic easements. As noted by the National Trust, "These changes constitute the first major reforms in the law relating to tax deductions for historic preservation easements in 25 years, and generally, they should be welcomed by the preservation community."

Among other things, the new reforms prohibit tax deductions for easements that protect only front façades without safeguarding the entire exterior of a property. The legislative changes also increase overvaluation penalties for donors, impose new overvaluation penalties for appraisers, and require new qualification standards for appraisals and appraisers. In light of recent controversies surrounding abuses of tax deductions for preservation easements, these reforms should encourage higher standards of practice for easement holding organizations, easement promoters, and appraisers.

The potential of future partnerships between historic preservation groups and land conservancies is very exciting. As Chuck Peoples, TRLC Executive Director, observes, "these partnerships allow us to take a more creative and holistic approach to conserving significant local resources. Together we are proving that we have more than just our ideals in common. By joining forces and applying all of the tools we have at our disposal, we can make things happen in a bigger way." PNC and TRLC have recently worked together on another project. PNC has been deeded a piece of property in Franklin County with an important grist mill, and through a conversation easement, TRLC will protect the creek, an important Tar River tributary, which runs through the property.

With the current epidemic of teardowns and land subdivision, historic preservation easements and, where appropriate, partnerships with land conservation organizations can be vital tools for the protection of historic resources remaining in private ownership. Easements serve as flexible yet powerful tools in attaining the goal of protecting and preserving North Carolina's historic resources.

Interested in placing a preservation easement on your historic property? Contact one of PNC's Regional Directors.