OLR Research Report

October 1, 2004




By: Paul Frisman, Associate Analyst

You asked for information about land banks in Cape Cod, Nantucket and Martha's Vineyard.


These land banks fund the purchase of open space land through the collection of a surcharge on local real estate property taxes (Cape Cod) or through real estate transfer fees (Nantucket and Martha's Vineyard).

The Cape Cod Land Bank, created in 1998, is funded by a 3% surcharge on the real estate property tax in each of the Cape's 15 towns. The Nantucket Islands Land Bank, established in 1983, was the first such land acquisition program in the nation. It is funded through a 2% real estate transfer fee imposed on most real estate transfers on the island. The Martha's Vineyard Land Bank, established in 1985, also is funded through a 2% surcharge on most real estate transfers.


In 1998, the Massachusetts legislature created the Cape Cod Open Space Land Acquisition Program (1998 Mass. Acts 293) to acquire land and interests in land to (1) protect public drinking water supplies and open space and conservation land, and (2) create hiking and biking trails and recreational areas. The program ends in 2020.

The program is funded by a 3% surcharge on real estate property tax bills in each town, deposited in an interest-earning land bank fund. The act authorizes each town to issue general obligation bonds in anticipation of the revenue it will receive. The act also created a $15 million state matching fund, with each town eligible annually for 50% of the amount it raised from the surcharge in the preceding fiscal year. This matching fund expired at the end of November 2002.

Residents of all 15 towns voted to participate in the program in a November 1998 referendum.

Purchase of Land

Each town designates an open space committee, responsible for recommending which lands, or interests in land, the town should acquire. A town meeting or town council must approve each purchase by a majority vote, or by a two-thirds vote if borrowing is involved.

Towns must retain the property they purchase in its natural, scenic or open condition, and must bind the land, or its interest in it, through a permanent deed restriction limiting its use to the purpose for which it was acquired.

Under the act, towns may purchase or acquire interests in the following types of land:

1. existing and future well fields, aquifers, and recharge areas;

2. agricultural lands;

3. forest land;

4. fresh and salt water marshes and other wetlands;

5. ocean and pond frontage, beaches, dunes, and other coastal lands;

6. land to protect scenic vistas;

7. land for natural or wildlife preserves;

8. land and easements for trails; and

9. land for recreational use.

A town may spend up to 3% of its land bank funds to maintain and improve property purchased with those funds. Improvements must be consistent with the purpose for which the town acquired the land. A town may delegate management of the land to a nonprofit organization, water company, water district, water supply district or fire district.

According to the Cape Cod Land Bank's website, the 15 towns had authorized the use of $93,998,051 in land bank funds to buy 3,273 acres through December 2002.


In 2004, Massachusetts adopted an amendment to the Senate's 2005 budget recommendation that allows any of the 15 participating Cape Cod Land Bank towns to opt out of the Land Bank, and switch instead to Massachusetts' Community Preservation Act (CPA). Unlike the Land Bank, to which the state stopped contributing in 2002, the CPA would continue to provide towns with state funding. This could be an advantage to towns that have already spent or bonded in anticipation of nearly all the revenue expected from the 3% surcharge.

For the Cape Cod towns, the CPA funding mechanism would be identical to that of the land bank, so that residents would see no change in their tax bills. However, unlike the Land Bank, the CPA requires that each town spend a minimum of 10% of the funds it receives on each of three types of programs: (1) affordable housing, (2) historic preservation, and (3) open space protection. A town may allocate the remaining 70% among those three categories as it chooses.

According to the Association to Preserve Cape Cod, money remaining in a land bank would be transferred to the CPA if a town decided to switch. It estimated that the Cape would receive an additional $12 million if each town switched to the CPA.

The switch must be approved by a town meeting followed by referendum. According to the association, each town has three options:

1. remain in the Land Bank;

2. drop out of the land bank program and join CPA; or

3. participate in both.

This last option means residents would pay a 3% property tax surcharge to fund the CPA in addition to the existing 3% for the Land Bank. The towns of Chatham and Provincetown have chosen this option.


The Nantucket Islands Land Bank, the first of its kind in the nation, was created by a special act of the Massachusetts legislature in 1983 (1983 Mass. Acts 669). It is funded by a 2% real estate transfer fee levied on most real estate transfers on the island. The act creates a Nantucket Islands Land Bank Commission with the authority to purchase

1. ocean, harbor and pond frontage in the form of beaches, dunes and adjoining backlands;

2. barrier beaches;

3. fresh and salt water marshes, estuaries and adjoining uplands;

4. heathland and moors;

5. land providing access to ocean, harbor and pond frontage and land for bike paths;

6. land for future public recreational facilities and use;

7. recreation land to protect existing and future wellfields and aquifer recharge areas; and

8. land to be used for agricultural purposes.

The act generally requires the commission to retain the land predominantly in its natural scenic or open condition. According to its web site, the land bank has committed more than $106 million to acquire more than 2,218 acres, with an additional 105 acres permanently protected by conservation restrictions. In 2003, the land bank processed 1,233 property transfers and collected nearly $12 million in revenue.


The Martha's Vineyard Land Bank was created in 1985 (1985 Mass. Acts 736). It is funded by a 2% surcharge on most real estate transactions in the island's six towns. The types of land the Martha's Vineyard Land Bank Commission may purchase are similar to those the Cape Cod Land Bank may acquire. According to the Martha's Vineyard Land Bank web site, more than 1,500 acres were preserved in the first 15 years of the program.