Q&A About the CPA
What is the Community Preservation Act (CPA)?
The CPA is a state law that provides cities and towns with the option of establishing a dedicated source of financing for community preservation projects.
How does a city or town adopt the CPA?
The voters must approve the adoption of the CPA at a regular municipal or state election. The submission of the question to the voters must either be (a) approved by a majority vote of the legislative body of the city or town (i.e., city council or town meeting) or (b) requested by a petition signed by at least 5% of the registered voters.
What are the dedicated sources of financing available to cities and towns that adopt the CPA?
Cities and towns that adopt the CPA must levy a surcharge of not more than 3% of their total real property tax levy. The surcharge percentage is determined by the vote of the legislative body or the initiative petition by which the question of adoption of the CPA is submitted to the voters. In addition to the surcharge receipts, cities and towns that adopt the CPA receive state matching funds to finance community preservation projects.
Are there any exemptions to the CPA real property tax surcharge?
Cities and towns that adopt the CPA have the option of adopting exemptions from the real property tax surcharge for any of the following types of property: (a) property owned and occupied by individuals and families with incomes less than 80% of the areawide median incomes (e.g., 80% of areawide median income for family of four in Brookline is $66,080) and property owned by seniors age 60 or over with incomes less than 100% of the areawide median incomes (e.g., 100% of areawide median income for one senior citizen in Brookline is $57,820); (b) the first $100,000 of assessed value of residential real property; and (c) commercial and industrial real property (if the city or town imposes classified tax rates). The exemptions are determined by the vote of the legislative body or the initiative petition by which the question of adoption of the CPA is submitted to the voters.
Where do the state matching funds come from?
State matching funds are paid annually to cities and towns that have adopted the CPA from a state trust fund established for that purpose. Certain registry of deed filing fees are automatically deposited into the state trust fund and are required, together with surpluses in the fund from prior years, to be distributed to CPA communities. (Based on rough estimates from Norfolk County, Brookline property owners have paid an estimated $500,000 in CPA registry of deed fees over each of the last 4 years, and they are projected to pay an estimated $350,000 in CPA registry of deed fees in future years.) Unlike most other state revenues, these registry of deed fee receipts and amounts in the state trust fund are not available for other state budget purposes and are not subject to annual appropriation by the state legislature.
What is the amount of the annual state matching grant each CPA community receives?
The maximum amount of the state matching grant a community can receive is equal to the amount it raises locally from its CPA real property tax surcharge. The first 80% of the amount in the state trust fund is distributed to all CPA communities on a pro rata basis based on the amount they raised locally. If this first distribution does not result in a 100% match, the remaining amount in the fund is distributed only to those communities that have a 3% surcharge in accordance with a formula under the CPA which favors cities and towns with lower populations and lower real property valuations.
What are the community preservation purposes for which cities and towns may spend CPA funds?
CPA funds may be expended for (a) the acquisition, creation and preservation of open space, (b) the acquisition, preservation, rehabilitation and restoration of historic resources, (c) the creation, preservation and support of community housing and (d) the acquisition, creation and preservation of recreational land. CPA funds may also be expended for the rehabilitation and restoration of open space, community housing and recreational land that was acquired or created using CPA funds and for administrative expenses of the Community Preservation Committee (see below). CPA funds may not be expended for maintenance costs.
Are there any restrictions on the amounts that may be spent for each purpose?
At least 10% of the annual CPA revenues must be expended (or reserved for future spending) for each of the following purposes: open space, historic resources and community housing. The remaining 70% of annual revenue may be expended (or reserved) for any of the permissible community preservation purposes. No more than 5% of annual revenues, however, may be spent for administrative expenses of the Community Preservation Committee.
What constitutes a "historic resource"?
Historic resources is defined to include any building, structure, vessel and real property that is listed or eligible for listing on the state register of historic places or has been determined by the local historic preservation commission to be significant in the history, archeology, architecture or culture of a city or town. (A number of schools, buildings and parks owned by the Town of Brookline constitute historic resources under the CPA.)
What constitutes "community housing"?
Community housing is housing for individuals and families with incomes less than 100% of the area-wide median income ($84,100 is the area-wide median income for a family of four in Brookline).
Who decides how to spend a city or town’s CPA revenues?
The legislative body of the city or town (city council or town meeting) ultimately must approve any CPA expenditure based on the recommendations of the Community Preservation Committee. The Committee is required to study the community preservation needs of the city or town, hold a public hearing, consult with relevant boards and committees and make recommendations to the legislative body for the expenditure of CPA funds. The legislative body may approve, reduce or reject the recommended appropriations, or it may reserve CPA funds for future projects.
How is the Community Preservation Committee constituted?
The legislative body of the city or town must adopt an ordinance or a bylaw establishing the Committee. The CPA requires that the Committee include at least 5 members from the following boards and commissions, each of whom is to be selected by the applicable board or commission: the conservation commission, the parks and recreation commission, the housing authority, the preservation commission and the planning board. The ordinance or bylaw establishing the Committee may designate up to 4 additional members and the manner in which such members shall be appointed or elected.
May a community borrow in anticipation of future CPA revenues?
Yes, the CPA authorizes cities and towns to issue general obligation bonds payable from anticipated future receipts in the CPA fund. As is the case with any other CPA appropriation, any such appropriation to be raised by borrowing must be recommended by the Community Preservation Committee, and, as is the case with any other municipal borrowing, the legislative body must approve the CPA borrowing by a two-thirds vote.
Can a city or town (a) amend its CPA surcharge rate or exemptions to the surcharge or (b) revoke its acceptance of the CPA?
Yes, a city or town may both amend its CPA surcharge rate or exemptions and revoke its acceptance of the CPA by going through the same process required in order to adopt the CPA (i.e., submission of the proposed amendment or revocation to the voters must be approved by the legislative body or requested by initiative petition and the amendment or revocation must be approved by the voters at the following municipal or state election). A city or town may not, however, revoke the CPA prior to the fifth anniversary of its acceptance of the CPA. In addition, if a city or town revokes the CPA prior to the payment of all obligations incurred under the CPA, including bonds or notes issued under the CPA, the CPA surcharge property tax must continue to be levied until such payment obligations have been satisfied.
How many Massachusetts cities and towns have adopted the CPA?
As of September 1, 2006, 111 cities and towns had adopted the. (The following are some of the communities surrounding Brookline that have adopted the CPA: Cambridge, Concord, Lincoln, Newton, Needham, Wellesley and Weston.)
How much has each CPA community received in state matching funds to date?
In each year that state matching fund distributions have been made, each CPA community has received the maximum amount of state matching funds permissible under the CPA, or 100% of the amount it raised from its CPA surcharge property tax in the previous fiscal year. The aggregate amount of state matching funds distributed to CPA communities from 2002 through 2005 was approximately $122 million. The next annual distribution of CPA state matching funds will be October 15, 2006, and, based on the amount currently on deposit in the state trust fund, every CPA community entitled to state matching funds at that time will receive a 100% match of the amount it raised through its local surcharge in fiscal year 2006. (As an example of one nearby CPA community, the City of Cambridge has received over $21 million in state matching funds to date and is expected to receive more than $6 million more on October 15, 2006.)
How many more years are CPA cities and towns likely to receive the maximum 100% state match?
Based on conservative estimates of annual registry of deed revenues and of the number of communities that will adopt the CPA in the future, the Community Preservation Coalition projects that CPA cities and towns will likely receive the maximum 100% state match for at least the next 2 years.
Where can I get more information about the CPA and how it has been implemented by cities and towns throughout Massachusetts?
The Community Preservation Coalition is an organization created by statewide interest groups for the purpose of assisting cities and towns with the process of adopting and implementing the CPA. The Coalition has a website with a lot of helpful information about the CPA, the communities that have adopted the CPA, the status of local efforts to adopt the CPA throughout the state, and the ways in which CPA communities have used CPA revenues for community preservation. The Coalition’s website is located at www.communitypreservation.org.