When CPA Funds a Housing Trust, a Grant Agreement is a Must!

Appropriating CPA funds to housing trusts has become a popular way for Community Preservation Committees to help meet the housing needs of their community. As of the end of FY22, over $300 million of CPA generated or leveraged funds have been appropriated to Municipal Affordable Housing Trusts (MAHTs), other housing trusts and community development corporations.

If your Community Preservation Committee is considering appropriating funds to a housing trust or development corporation, we strongly urge that you consider having your legal counsel draft a grant agreement between the municipality (acting through the Selectmen, Mayor and/or Community Preservation Committee) and the housing trust or corporation. 

The intent of the CPA legislation is to have the rules of CPA follow the money for all appropriations of CPA funds, and this rule is now included in the amended MAHT legislation. While it is possible to grant funds to a Trust for "all CPA purposes," it is generally advisable to be more specific on the use of the funds in the grant agreement to avoid conflicts later on. At a minimum, your agreement should detail within what timeframe the funds will be used, what will happen to any excess funds, what reporting and accountability will be required (you will want to be able to show what the money was used for) and whether or not the trust will be able to pay for overhead with the funds or just direct project costs, etc.

The Community Preservation Coalition has drafted a sample grant agreement that your community can customize when appropriating funds to a housing trust. Click here to download our sample draft grant agreement. The download contains not only sample grant agreement text, but an explanation of why various issues should be included in the agreement. Of course you’ll want to have municipal counsel review this document and customize it for your community. 

If you spend the time to carefully outline all the details of the grant agreement up front, you'll avoid potential problems down the road. Plus, you will have a blueprint to follow for future appropriations to housing trusts and development corporations.

Aug. 2023