Can CPA Funds Be Paid in Advance for CPA Projects?

After money has been appropriated for a CPA project, communities often ask the Coalition if they are allowed to “prepay” vendors or organizations before they start the work. This question typically comes up on grants to nonprofit organizations that may not have their own reserves to start the project. Regardless of the vendor’s reason for a request like this, the answer isn’t found in the CPA statute—instead, the state’s procurement laws make it clear that public funding, including CPA funds, are not typically eligible for any form of prepayment.

The MA Department of Revenue actually addressed this topic in the August 2022 edition of their City & Town newsletter. Here’s what they had to say about the topic of prepayments:

Are municipalities allowed to prepay for goods and services?
 
Generally, no. Under G.L. c. 41, § 56, all boards, committees, department heads and officers authorized to expend money must, at least monthly, approve and transmit to the accounting officer all bills and payrolls that are chargeable to the appropriations over which they have spending authority. Approval for such expenditures is given only after a determination that the charges are correct and the goods, materials or services were ordered and actually received. G.L. c. 41, § 56 provides that payment can be made only after goods have been delivered or services rendered.

In this same newsletter, DOR goes on to explain that while there are some cases in which a prepayment could be authorized, they are incredibly uncommon:

Are there any exceptions to this rule under G.L. c. 41, § 56?
 
Yes, but they are exceedingly rare. For example, DLS has opined that a progress payment may be made toward the manufacturing and customization of a fire truck as title to and delivery of what is being paid for are taken, as discrete segments of the process are completed. More specifically, we have advised that a partial payment can be made for the acquisition of title to the chassis of a fire truck before the fire truck is finished and final delivery is taken.
 
Additionally, DLS has opined that the occupancy of leased premises or a subscription which begins immediately can be paid for before the relevant time period has passed. Actual possession of the premises and the start of a subscription (first magazine arrives in the mail for example) is enough to warrant payment.

CPA projects must follow all the state’s rules and regulations regarding procurement and prevailing wage. The only exception is when a CPA community acquires a real property interest, such as conservation land; those projects are exempt from the state procurement laws. For a quick overview of how procurement laws intersect with CPA, see our technical assistance article on the state’s procurement laws. Unfortunately, the Coalition cannot answer questions on procurement or prevailing wages issues, but there is technical assistance available from your city or town’s Chief Procurement Officer, municipal counsel, or the appropriate state agency.

Further Resources:

• Do the State’s Procurement Laws Apply to CPA Projects?
• CPA and State Laws: Where to Look and Who to Call for Guidance
• Massachusetts General Laws - Chapter 41, Section 56 (Warrants for payment of bills)

Aug. 2022