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Easements: Preservation or Profit

Saturday, December 18, 2004; Page A26

The National Trust for Historic Preservation believes that most of the thousands of easements in place nationally provide public benefit by protecting significant historic structures from demolition or inappropriate alteration. However, the tax incentives for facade easements can be abused, particularly if properties already are protected by strong local preservation laws. In some cases, the deductions claimed are indefensible.

Much of the problem cited in the Dec. 12 front-page story "For Owners of Upscale Homes, Loophole Pays; Pledging to Retain the Facade Affords a Charitable Deduction" has arisen in recent years with the appearance of organizations such as the National Architectural Trust that aggressively market easements. As The Post documented, these organizations sometimes channel revenues to for-profit entities, changing the underlying incentive from one of public benefit to one of private remuneration.

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Two points are worth emphasizing: First, the National Trust for Historic Preservation has no affiliation with the National Architectural Trust, an easement-promoting organization. Indeed, we have petitioned the U.S. Patent and Trademark Office to cancel that group's trademark to avoid confusion with our name.

Second, concern about the practices of some easement-promoting organizations should not undermine public confidence in, and support for, a preservation tool that is both effective and beneficial when used properly.

The National Trust supports efforts in Congress to correct or eliminate abuses and to tighten accountability standards. The IRS, too, must develop clearer guidelines for easement valuations and allowable tax deductions. Similarly, appraisers responsible for determining an easement's effect on property value should take account of any protections in place through local preservation ordinances and other regulations. Finally, property owners must be diligent in affirming the validity of claims made by organizations that promise tax breaks in exchange for the donation of an easement.

The bottom line is this: Easements are a unique and valuable preservation tool, but their effectiveness will be undermined if they are perceived as nothing more than a tax dodge for the well-to-do. America's irreplaceable architectural heritage needs all the protection it can get, but questionable tactics aren't the way to provide it.

RICHARD MOE

President

National Trust for Historic Preservation

Washington

Our easement program began more than a quarter century ago when a group of Washingtonians sought a non-confrontational way to keep the bulldozers from their midnight demolition runs, infamous events that would raze blocks of Washington's finest historic neighborhoods before anyone knew what was happening. We promoted a voluntary way to stop the destruction: Getting owners to agree to preserve their properties through conservation easements.

The difficulty, as a Dec. 14 editorial suggested, is in valuing an easement. It seems harsh to criticize easement donors or their appraisers for following the IRS's dictum that easement values should be between 10 percent and 15 percent of the value of the underlying property, a valuation range that to many observers seems too high. But in backing off, the IRS needs to avoid a swing to the opposite extreme. Some recent assertions that easements do not reduce market value are wrong. After all, would you rather buy a historic property burdened by an easement or one that is not? What the Senate Finance Committee should consider is how to retain a subsidy for easement programs without unjustly enriching its participants.

Because easements are non-cash charitable donations, their value is somewhat subjective. Valuation cases are no-win both for donors and for the tax collector. Not only do such cases involve expensive battles between experts, they have little value as precedent: Winning one case doesn't much help with the next one.


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