July 28, 2016: Governor Charlie Baker signed into law a municipal governance reform package that included two sections concerning the Community Preservation Act. Chapter 218 of the Acts of 2016: An Act Modernizing Municipal Finance and Government (H.4565) changes the ways in which CPA funds are transferred and used by Municipal Affordable Housing Trusts and also clarifies the procedure municipalities use to issue the CPA exemptions for low income households and low/moderate income seniors in communities that have adopted those two exemptions.
CPA and Municipal Affordable Housing Trusts
Many communities use Municipal Affordable Housing Trusts (MAHTs) as a tool to create affordable housing, and it is common for these local trusts across the state to receive funding from CPA. Previously, the CPA and Housing Trust statutes were not aligned in how the funding could be used, and it was not clear that all of the rules of CPA followed as the money was placed into MAHTs. In addition, it was difficult to track how much housing was created across the state with the CPA funding that had been transferred to MAHTs.
The new legislation makes the following changes to how housing trusts function with CPA funding:
- Expands the allowable uses for Municipal Affordable Housing Trust expenditures to match those of CPA. Provided that the transfer of funds is not restricted by the CPC recommendation, trusts can now expend funds for any community housing activity that is allowable under CPA;
- Clarifies that all rules and restrictions of Chapter 44b, the Community Preservation Act, remain in force even after CPA funds are transferred to a Municipal Affordable Housing Trust;
- Requires that trusts track CPA funds separately from other funding sources and annually report on the use of those funds in the municipalities' CP-3 reporting to the Department of Revenue; and
- Authorizes MAHTs to execute grant agreements. Most communities require a grant agreement between the municipality and the trust to establish conditions for the transfer of CPA funds. Trusts currently do not have explicit authority to execute grant agreements.
All CPA funds contained in MAHTs as of the effective date of the new law, and all new funds transferred after that date, are subject to the new rules. We've included the final language of the relevant sections here:
- SECTION 95. Subsection (a) of section 55C of said chapter 44, as so appearing, is hereby amended by inserting after the word “households”, in line 7, the following words:- and for the funding of community housing, as defined in and in accordance with the provisions of chapter 44B.
- SECTION 96. Said section 55C of said chapter 44, as so appearing, is hereby amended by inserting after the figure “44B”, in line 33, the following words:- ; provided, however, that any such money received from chapter 44B shall be used exclusively for community housing and shall remain subject to all the rules, regulations and limitations of that chapter when expended by the trust, and such funds shall be accounted for separately by the trust; and provided further, that at the end of each fiscal year, the trust shall ensure that all expenditures of funds received from said chapter 44B are reported to the community preservation committee of the city or town for inclusion in the community preservation initiatives report, form CP-3, to the department of revenue;
- SECTION 97. Said section 55C of said chapter 44, as so appearing, is hereby amended by inserting after the word “releases”, in line 44, the following words:- , grant agreements.
- SECTION 246. Sections 95 to 97, inclusive, shall apply to all funds held in trust under chapter 44B of the General Laws on or after the effective date of this act.
To assist trusts in reporting to the CPC, the Massachusetts Housing Partnership worked with the Coalition to create a fillable MAHT CPA expenditure report that outlines the information required in the Community Preservation Projects Report (CP-3). Since the CP-3 report is due to the Department of Revenue on September 15th, trusts should submit their report to the CPC by September 1 or another agreed upon date.
For more information on these changes affecting CPA and Municipal Affordable Housing Trusts, please contact Shelly Goehring at the Massachusetts Housing Partnership (MHP): 857-317-8525 / firstname.lastname@example.org
CPA Exemption Procedure
In this same piece of legislation, Section 100 sets submission deadlines for taxpayers who want to apply for the low income/moderate income senior exemption in communities that have adopted CPA with that exemption. The new deadline corresponds with the same deadline used by municipalities for filing abatements for property taxes. The legislation also provides a process by which taxpayers can appeal the decision of the assessors on their exemption application and cites the privacy laws that govern public access to inspection of those applications.
The text of the legislation inserts the following paragraph into subsection (e) of section 3 of the CPA legislation:
A person claiming an exemption provided under this subsection may apply to the board of assessors, in writing, on a form approved by the commissioner of revenue, on or before the deadline for an application for exemption under section 59 of chapter 59. Any person aggrieved by the decision of the assessors, or by their failure to act, upon such application, may appeal as provided in sections 64 to 65B, inclusive, of chapter 59. Applications for exemption under this chapter shall be open for inspection only as provided in section 60 of chapter 59.
The Department of Revenue provided an explanation of the new rules regarding CPA exemptions in the question and answer section of the October 6, 2016 issue of City and Town magazine:
Question: If a community has accepted the Community Preservation Act (CPA), are applications for surcharge exemptions open to public inspection? If a surcharge exemption application is denied, can the applicant appeal to the Appellate Tax Board (ATB)?
Answer: Cities and towns accepting the CPA can adopt any of four optional full or partial exemptions from the CPA surcharge. In addition, taxpayers granted property tax exemptions receive a reduction in their assessed CPA surcharges in proportion to their reduced property taxes. MGL c. 44B, sec. 3. However, the CPA does not currently contain any application deadlines or procedures for taxpayers seeking these reductions.
Amendments made by the Municipal Modernization Act and effective November 7, 2016 will give taxpayers until April 1 to apply to the assessors for a CPA surcharge exemption (or 3 months after the actual tax bills are mailed, if later). Taxpayers who want to contest the action by the assessors on their applications will also be able to appeal to the ATB in the same manner and by the same deadline as property tax appeals under MGL c. 59, secs. 64, 65, 65A and 65B. In addition, CPA applications will be exempt from public disclosure just like applications for property tax abatements or personal exemptions as provided in MGL c. 59, sec. 60.