The Community Preservation Act – An Overview for Franklin
Introduction
The Community Preservation Act (CPA) is a state law that allows cities and towns in Massachusetts to raise local property taxes to acquire and protect open space, preserve historic buildings and landscapes, and create and support affordable housing. It also provides significant state matching funds to participating communities.
In order for a municipality to qualify for state matching funds, its Town Meeting or City or Town Council must vote to place a property tax surcharge of up to 3 percent on the ballot. Alternatively, the CPA may be placed on the ballot through a petition signed by at least 5 percent of the city or town’s registered voters. Once the CPA is placed on the ballot, local voters must then vote to approve it. Participating cities and towns can opt out of CPA after five years and end the surcharge.
The law went into effect December 2000. To date, 127 communities across the state, over one-third of the Commonwealth’s communities, have adopted the CPA.
Determining How CPA Funds Are Spent
If Franklin approves the CPA, it will also establish a Community Preservation Committee (CPC) that will make annual recommendations to its Town Council on how the money should be spent. Town Council will then appropriate funds from the town’s Community Preservation Fund based on these recommendations. Town Council may also reject or reduce the amounts recommended by the Community Preservation Committee. The Committee is responsible for soliciting input from the community and for presenting its findings and recommendations to the public. Community Preservation Committees have open meetings to which all residents are welcome.
Each fiscal year, upon recommendation of the CPC, Town Council must spend, or set aside for future spending, the following share of annual Community Preservation Fund revenues:
10 percent for open space
10 percent for historic resources
10 percent for community housing
Beyond these required disbursements, it is left to the residents of Franklin to decide how much of the remaining 70 percent of the funds they would like to spend on the three purposes identified above, or for recreation (ball fields, hiking or biking trails, etc). For example, a municipality could allocate the remaining 70 percent of the annual revenue to one purpose, spread it evenly among all four, or set the funds aside for future spending. Each year, the municipality can modify the spending mix for the remaining 70 percent of the fund.
Exemptions from the CPA Surcharge
Any portion of a taxpayer’s real property taxes that are already exempt are also exempt from the new CPA surcharge. In addition, Franklin’s Town Council, as part of its vote to accept the provisions of CPA, has already voted to allow the following optional exemptions to the CPA surcharge:
1) Property owned and occupied by a person who would qualify for low income housing (any family of 4 making less than $65,920) or moderate income senior housing (a person 60 or over making less than $57,680 ($65,920 for a couple)
2) The first $100,000 of taxable value of residential real estate.
Amending and Repealing the CPA
The level of the surcharge (and the optional exemptions) can be changed at any time after the surcharge is imposed, through a simple majority vote of Town Council followed by voter approval. At no time can the surcharge exceed 3 percent.
The CPA remains in effect for a minimum of five years from the date of voter approval in a municipality. After five years, it can be revoked in the same manner – legislative body acceptance or initiative petition followed by voter approval – used to approve the CPA originally.
Eligible Projects
There is a wide range of projects that could be eligible for CPA funding. Some of them, like the restoration of a historic town hall (including accessibility improvements) or the creation of new playgrounds, parks, or playing fields, may be things that the community is already planning to spend money on. By adopting the CPA, the state would pay for up to half of the cost through the CPA matching funds. CPA funds may also be used to help Franklin reach the state mandated goal of having 10% of its housing classified as affordable, by allowing the town to create affordable housing that is consistent with its character. To date, communities have spent more than $335 million on CPA projects, protecting more than 8,000 acres of open space, contributing to the creation or rehabilitation of more than 1,000 units of affordable housing, making more than 800 appropriations for the preservation of historic properties, and over 350 appropriations for the development of recreational projects.
Community Housing
Since the first communities adopted the CPA in 2001, municipalities have approved over 200 grants for housing that will create or rehabilitate more than 1,000 units of affordable housing. This funding is being targeted to municipal employees, young families, seniors and others who may live, work or attend school in a community, but find themselves increasingly priced out of the local housing market. CPA cities and towns have used the measure to fund comprehensive housing production plans, site feasibility studies, housing trusts, offices and other community-based entities to manage and develop housing, accessibility and other improvements to existing public housing, the rehabilitation of existing stock into affordable units, new construction on municipally-owned land, and roadway, septic and other infrastructure to support future housing development.
Land Protection and Public Recreation
The CPA has now protected over 8,000 acres of open space in the Commonwealth through a combination of land purchases and the acquisition of conservation and other easements to protect property in private ownership. Local communities have approved grants to acquire land surrounding municipal water supplies, to protect farms, forests, riverfront, lakes, ponds, other wetlands and wildlife habitat and to clean-up environmental contamination. In the area of recreation, the CPA has helped to create more than 150 new parks, playgrounds, and athletic fields including design and construction funds for nearly a dozen rail-trail projects. More than $2 million in CPA funding has gone to preserve existing recreational facilities that had fallen into severe disrepair.
Historic Preservation
Over 300 historic sites or resources have been preserved or restored with CPA grants since 2001. Municipalities have used this funding to revitalize aging city and town halls, libraries, schools, firehouses, commons, cemeteries, monuments, canals, bridges, lighthouses, and other municipally owned historic buildings and landscapes. CPA funded-restoration efforts include the preservation of architectural features and fabric as well as handicapped ramps and elevators, window, roof, and foundation repairs and other renovations necessary to bring historic buildings up to code. Communities have also appropriated funds for the purchase and preservation of historic properties in private or non-profit ownership such as museums, historical societies, churches, grange halls, mill buildings, commercial storefronts and streetscapes, for the completion of historical and archeological surveys, and for the purchase of preservation easements to protect significant properties from demolition or inappropriate alterations. In the 6 years since passage of the enabling law, adopting localities have approved more preservation grants than any other type of CPA funding.
Mixed Use
CPA grants may also be combined to support multiple CPA uses on a single site. For example, many initiatives have been undertaken where an historic building was adapted for affordable housing, open space protected as part of a housing plan, or all three purposes accomplished on one site.
The Cost to the Average Franklin Resident
The cost to the average Franklin taxpayer will be $90 annually, based on FY 2007 tax figures and a 3% CPA surcharge, with exemptions for the first $100,000 of taxable value of residential property and for low income families and low and moderate income seniors.
The table below shows how this cost is calculated:
Average Assessed Home Value $437,052 Minus $100,000 exemption - $100,000 Equals Net House Value Surcharged = $337,052 Times Municipal Tax Rate (per dollar) x 0.00886 Equals Amount Subject to Surcharge = $2,986 Times CPA Surcharge Rate x 3% Amount paid toward CPA Fund $90 |
The Amount Franklin Would Raise
Franklin could expect to raise $1,043,339 annually for local CPA projects. Note that this amount is just the amount raised locally. The total available for local CPA projects would be much more after the state match is received each year.
The State Match
Communities that have adopted the CPA have received a 100% match each October since the program began. This high level of funding is possible because the state’s CPA Trust Fund is a dedicated revenue source that is outside of the normal legislative appropriations process and may not be redirected to other purposes besides CPA. Over time, the match percentage will decrease as more communities adopt the CPA and have to share the fixed amount of state funding, but the match should remain high for at least the next 1 to 2 years. In 2002, $17.8 million was paid out to 34 CPA cities and towns, in 2003, $27.2 million was paid out to 54 communities. In 2004, $30.8 million was paid to 61 CPA communities, and in October 2005, $46.3 million was distributed to 82 CPA communities. In October 2006, $58.6 million was distributed to 102 CPA communities, while $68.1 was distributed to 113 communities in October 2007.
