Dec. 2008: Does your community need the flexibility to purchase open space when it comes on the market, without having to obtain Town Meeting or City Council approval? Or, be able to acquire land for affordable housing without having to wait for your municipality’s legislative body to vote on each opportunity that arises? It’s important to react quickly when real estate opportunities arise or your community may risk losing the deal. One way to do this is to establish a Conservation Fund and/or an affordable housing trust, both of which can be funded with CPA appropriations.
What is a Conservation Fund?
A Conservation Fund, established by MGL c.40 section 8(c), enables a municipality to appropriate monies which the conservation commission may then spend without further action from the municipality’s legislative body. As clarified in a letter from the Department of Revenue to the Town of Duxbury, CPA funds may be appropriated into the Conservation Fund and be spent on CPA-eligible uses. The expenditure of these funds is subject to the restrictions imposed by the CPA, such as the requirement that deed restrictions be placed on properties that are acquired.
What is an Affordable Housing Trust?
There are a few different types of housing trusts: municipal trusts created by home rule petition, private-non-profit trusts, and Municipal Affordable Housing Trusts, under MGL Chapter 44, Section 55C, which was signed into law by Governor Romney in January 2005.
The CPA law states specifically in Section 5(f) that “A city or town may appropriate money in any year from the Community Preservation Fund to an affordable housing trust fund.” Such trusts can have the power to purchase, sell, lease, manage, and improve real property for the purpose of creating and preserving affordable housing.
Yes, you can!
CPA funds can be appropriated to both affordable housing trusts and to Conservation Funds as long as any ultimate expenditure of those funds is for CPA-eligible uses. Therefore, it is recommended that CPA appropriations to these trust funds be tracked separately from monies generated from other sources to ensure proper accountability of CPA funds. In addition, it's important to prepare a grant agreement outlining the terms of how the money will be spent. This is epsecially important for transfers to housing trusts, as the trust is governed by a separate Board of Trustees. The Coalition has created a sample grant agreement that communities can use for grants to housing trusts.
Who’s doing it?
Norwell: The Town of Norwell has appropriated CPA funds for both its Municipal Affordable Housing Trust and Conservation Fund. Thanks to CPA funds, Norwell’s Conservation Fund contains $100K for protection of open space. Charles Markham, member of the CPC, is glad the town has some preliminary funds available so that they can act quickly to protect open space when it comes on the market.
Norwell has also appropriated $500K in CPA funds to its Municipal Affordable Housing Trust. Norwell’s housing trust has greater oversight by Town Meeting than required by the statute. As Mr. Markham explains, “We set about creating a trust that nobody could argue about.” The Trust is authorized to purchase, rehabilitate, and resell existing housing units for affordable housing as well as to create soft-second loans for income-eligible home buyers. Outside of these powers, the Trust would need Town Meeting approval before funding other types of projects.
Harvard: Other communities have also put CPA funds into housing trusts and Conservation Funds. For example, the Town of Harvard, in Worcester County, appropriated over $250K for its housing trust and makes annual contributions to its Conservation Fund ranging from $90K to $200K.
Lincoln: The Town of Lincoln also used CPA funds for its housing trust. The town established a trust with broad powers that align with the state statute. However, when the town appropriated CPA funds to the trust, it tied the funds to a specific use (establishing a buy-down program) through a grant agreement between the CPC and the Board of Trustees.