What is the Community Preservation Act?
The Community Preservation Act (CPA) is a smart growth tool that helps communities preserve open space and historic sites, create affordable housing, and develop outdoor recreational facilities. The CPA also helps strengthen the state and local economies by expanding housing opportunities and construction jobs for the Commonwealth’s workforce, and by supporting the tourism industry through preservation of the Commonwealth’s historic and natural resources.
Over a decade of work went into the creation of the CPA; it was ultimately signed into law by Governor Paul Cellucci in 2000. The CPA allows communities to create a local Community Preservation Fund for open space protection, historic preservation, affordable housing and outdoor recreation. Since its inception in 2000, 148 cities and towns have adopted the CPA (see a map of the towns that have passed it by clicking here). It has raised over $1 billion for statewide community preservation funding and has approved over 5,000 projects. See some examples of project in other towns here.
Property taxes traditionally fund the day-to-day operating needs of safety, health, schools, roads, maintenance, and more. But until the CPA was enacted, there was no steady funding source for preserving and improving a community’s character and quality of life. The Community Preservation Act gives a community the funds needed to control its future.
How Does The CPA Work?
The CPA statute created a statewide Community Preservation Trust Fund, administered by the Department of Revenue (DOR), which provides distributions each year to communities that have adopted the CPA. Each CPA community must adopt the act by ballot referendum, which allows it to raise community preservation monies through the imposition of a surcharge of not more than 3% on property tax, with an exemption on the first $100,000 of assessed value. If it votes Yes on Question 4, Somerville would introduce a surcharge of only 1.5%. The funds raised through the property tax surcharge in each community are organized into a separate, local trust and are eligible for matching contributions from the state. These state annual disbursements serve as an incentive for communities to pass the CPA.
How Can Somerville Adopt The CPA?
In Somerville, we are proposing a surcharge tax of 1.5%, to be voted on November 6th, 2012 as Yes on Question 4. A simple majority for all voters answering “Yes” to this question will result in its passage
The Ballot Question is as follows:
QUESTION #4 Shall the City of Somerville accept Sections 3 to 7, inclusive, of Chapter 44B of the General Laws, as approved by its legislative body, a summary of which appears below? SUMMARY The Community Preservation Act (hereinafter “the Act”) establishes a dedicated funding source to enable cities and towns to: (1) acquire, create and preserve open space, including land for parks, recreational uses and conservation areas; (2) acquire, preserve, rehabilitate, and restore historic resources, such as historic community buildings and artifacts; (3) acquire, create, preserve, rehabilitate and restore land for recreational use, including parks, playgrounds and athletic fields; (4) acquire, create, preserve and support community housing to help meet local families’ housing needs; and (5) rehabilitate or restore open space and community housing that is acquired or created as provided in this section. In the City of Somerville, the funding source for these community preservation purposes will be a surcharge of 1.5% on the annual property tax assessed on real property beginning in Fiscal Year 2014, other local funds committed by the Board of Aldermen for community preservation purposes subject to the limitations in Section 3(b)1/2 of Chapter 44B, and annual distributions made by the state from a trust fund created by the Act. The Commonwealth provides these funds only to communities adopting the Act. If approved, the following will be exempt from the surcharge: (1) property owned and occupied as a domicile by any person who qualifies for low income housing or low or moderate income senior housing in Somerville as defined in Section 2 of the Act; (2) $100,000 of the value of each taxable parcel of residential real property; and (3) $100,000 of the value of each taxable parcel of class 3, commercial property and class 4, industrial property as defined in Section 2A of Chapter 59. A taxpayer receiving a regular property tax abatement or exemption will also receive a pro rata reduction in the surcharge. Upon acceptance of the Act by the voters, a Community Preservation Committee will be established by ordinance to study community preservation needs, possibilities and resources, and to make annual recommendations to the Board of Aldermen for approval on spending the funds. At least 10% of the funds for each fiscal year will be spent or reserved for later spending on each of the Act’s three community preservation purposes: (1) open space, (2) historic resources and (3) community housing in the City of Somerville.
What Money Can Be Used For?
The base requirement is that 10% of CPA funds go to each of the following areas: Open Space; Affordable Housing; and Historic Preservation. The remaining 70% of the funds can be spent or reserved for future projects in any of these 3 areas, or for funding outdoor recreation projects. CPA funds may never be directed to the general city fund; they may only be spent on the CPA core areas of open space, historic preservation, community housing, and outdoor recreation.
During the 2012 Legislative session, Governor Patrick signed into law a revised CPA Legislation, that included 3 changes that would benefit Somerville:
- Cities and towns are allowed to adopt the CPA with a minimum 1% property tax surcharge and then dedicate additional municipal revenues (such as hotel/motel excise) to their CPA fund up to the full 3% of the real estate property tax levy. This would give Somerville access to a higher percentage of the state match while keeping our surcharge tax at 1.5%.
- CPA funds now may be used for rehabilitation of existing recreational land not created or acquired with CPA funds, for both active and passive space. Prior to 2012, CPA funds could only used for acquisition.
- The legislation added $25million to the State CPA Trust Fund for FY2013, with the goal of adding $25 million annually. This will ensure higher state matches than has been possible in recent years, so it is a great time for Somerville to pass it!
Who Decides How the Money Gets Used?
Each CPA community creates a local Community Preservation Committee (CPC) upon adoption of the Act through City Ordinance. This can be a five-to-nine member board charged with making recommendations on CPA projects to the community’s legislative body (for Somerville, the Board of Aldermen) each year. There must be 5 representatives from Housing Authority, Historic Commission, Conservation Commission, Planning Board, and Board of Park Commissioners (or equivalent), with the remaining 4 positions to be determined by the community (could be through appointment or election). The Board of Aldermen reviews CPC recommendations, and has the authority to reject, approve, or reduce funding proposals for recommended projects, but cannot change the terms of the recommendations; no CPA projects can be funded without first being recommended by the local CPC and receiving a majority vote of the Board of Aldermen.
Where Does the Money Come From?
Based on 2012 Tax Assessment records, Somerville would collect approximately $1.2 million from a CPA surcharge at 1.5%. This includes all exemptions (see chart below). In addition, Somerville will become eligible for State distributions from the CPA Trust Fund, depending on number of cities and towns who have adopted CPA, and amount of money available each year from the Trust Fund. In 2012, CPA Legislation included the addition of $25 million for FY2013, which doubled existing funds, and with the goal of adding this amount annually.
Municipalities who adopt the CPA at lower than a 3% surcharge tax, have the option to dedicate additional municipal revenues (such as hotel/motel excise) to their CPA fund up to the full 3% of the tax. This would give Somerville access to a higher percentage of the state match while keeping our surcharge tax at 1.5%.
In total, Somerville will likely raise between $1.5 and $2 million per year between its local surcharge and State CPA allocations.
How Much Would The CPA Cost the Average Somerville Homeowner?
|Estimated Surcharge for Average Taxpayer at 1.5% (with first $100,000 exemption)|
|Type of Dwelling||FY13 Average Value*||Estimated Annual CPA Surcharge Based on Ave. Value|
Projected Yearly CPA Revenue for Somerville at 1.5% Surcharge with $100,000 Exemption for Residential and Commercial Properties*
$ 1,198,625 plus annual distributions from state wide CPA Trust Fund
- $100,000 of the value of each taxable parcel of residential property
- Seniors who own and live in their homes who qualify for low or moderate income housing
- Owners who live in their property and qualify for low income housing
- $100,000 of the value of each taxable parcel of Class 3, commercial property, and Class 4, industrial property
Text of the CPA Law
The complete text of the Community Preservation Act can be found here.