The Community Preservation Act, M.G.L. c. 44B, (“CPA”) is a Massachusetts law that allows participating cities and towns to create a dedicated fund for important projects that can greatly impact a community’s character and quality of life. Communities raise money locally for the CPA through a small surcharge on property taxes (between 1% and 3%, as selected by the community). In addition to the property tax surcharge, the state provides matching funds between 5% and 100% of the funds raised by the community.
The Community Preservation Act was adopted by Medford voters on November 3, 2015. The act established a local dedicated fund, financed by a voter-approved property tax surcharge of
1.5%, and matching funds from the statewide CPA Trust Fund, to invest locally in open space, historic preservation, outdoor recreation and community housing projects.
The money comes from a combination of 2 sources:
- Medford residents pay a 1.5% surcharge on a portion of their annual property taxes. In the first year, the CPA surcharge generated approximately $1.2M. Medford’s ordinance exempts the first $100,000 of residential or commercial property value from the surcharge, and offers an additional exemption for “low income households”, or “moderate income seniors” as defined by Section 2 of the Community Preservation Act. In 2017, Medford homeowners paid an average of $47.69 per year for the CPA surcharge.
- The Massachusetts CPA law creates a Statewide Community Preservation Trust Fund which provides distributions each year to communities that have adopted CPA. The Trust Fund’s revenues are derived from fees collected at the Registry of Deeds and appropriations by the State Legislature. In 2017 Medford expects to receive $200,000 in matching funds, or 15% of local revenues.
Community Preservation funds can be used for capital projects relating to affordable housing, historic preservation, and open space and outdoor recreation. A minimum of 10% of CPA revenues each year must be spent or reserved for each program area, while the remaining 70% may be used in any program area. Up to 5% of revenues may be spent for CPA administrative costs. CPA funds are not to be used for maintenance or to replace General Fund expenditures.
City departments and nonprofit community partners can apply for funds, which must be used for a public purpose.
|Determining Project Eligibility|
|Rehabilitate and/or Restore||Yes - if acquired or created with CPA funds||Yes||Yes||Yes - if acquired or created with CPA funds|
|Source: G.L. c. 44B via Community Preservation Coalition|
Implementation of the CPA is administered by the city’s Community Preservation Committee, which is composed of representatives from the City’s Conservation Commission, Historical Commission, Planning Board, Park & Recreation Commission and the Housing Authority, along with four Medford residents appointed by the Mayor and City Council.
The Medford Community Preservation Committee, with input from the public and other City committees, evaluates community needs and priorities, and makes recommendations for funding eligible projects. As part of its responsibilities, the CPC must develop a Community Preservation Plan, outlining Medford’s needs, opportunities, resources and priorities with regard to open space, outdoor recreation, historic preservation, and community housing. The plan will be reviewed and updated annually, and will include application guidance and criteria for selecting projects.
All CPA funding appropriations must be approved by the City Council. Both CPC recommendation and City Council approval are required for CPA funds to be used.
The City can bank these expenditures for later years. For example, if a significant historic preservation project were envisioned, a portion of the Historic Preservation allocation could be accumulated for that purpose.
Similarly, a large project could be funded over a period of years, with each year’s set-aside satisfying the minimum requirement. Some communities have bonded against future CPA revenues to facilitate major eligible projects. In effect, the requirement for 10% to be allocated to each purpose area is over the long run.
The city assesses a surcharge of 1.5% on the real estate tax bill, after the following exemptions:
- The first $100,000 of assessed property value is exempted for all property owners—residential as well as commercial and industrial. So a property assessed at $400,000 would be surcharged as if it were assessed at $300,000; a $700,000 property as $600,000, etc.
- Low-income homeowners and low and medium-income senior homeowners qualify to request a full exemption from the surcharge.
- The surcharge means that for every $1 of your tax bill (after exemptions are taken into account) an additional 1.5 cents will be collected for CPA.
Medford's CPA includes every exemption allowed under the law.
Everyone qualifies for the exemption of the first $100,000 of assessed value. For low-income homeowners and low- to moderate-income senior homeowners, the income limits for full exemption are currently as follows:
|Household size||Senior (60+) maximum income||Low-income maximum income|
Qualification for income-based exemptions are based only on income; assets are not taken into consideration. These income levels are derived from annual median incomes and are subject to change over time. See the 2018 CPA Affordable Housing Income Limits for more information.
In general if you are exempt from property taxes, you are exempt from the surcharge.
For the average single family Medford homeowner, a 1.5% surcharge on the tax bill means about $53 a year:
|Assessed Value||Approximate Annual Surcharge|
You can estimate your own surcharge: take the assessed value of your home and subtract the $100,000 exemption; multiply by the current tax rate of $11.70 per thousand; and then by 1.5%
About $1 million a year. This does not include any distribution that Medford would receive each year as its share of the state Community Preservation Act Trust Fund.
The state Trust Fund is funded by charges imposed at the Registry of Deeds on every recorded real estate transaction. Since those include those in Medford, we’ve been subsidizing the projects of the communities that have already adopted Community Preservation Act!
Historically, the state match has varied from 100% in the early days of the program, to a low of about 21% in 2016. So even at 21%, Medford’s match by the state would have been around $210,000. Over the period 2014-2016, Medford's state match would have totaled over $830,000, money the citizens would have paid out, but would not have had access to receive back, had the CPA not been adopted.
There is no guarantee of the amount of the state match, which is dependent on both the amounts collected in fees, and on the number of communities participating. However, in recent years the Legislature has shown continued support for CPA by augmenting the Trust Fund with additional revenue, reflecting the success of the program and the number of constituent cities and towns participating.
Even without state matching grants, CPA will help Medford to access other state, federal, and private funds to make improvements. Seed money provided by CPA can leverage funds from other sources by providing a local match or by filling gaps in financing that can enable important projects to get off the ground.
Medford's Community Preservation Committee (CPC) will receive applications annually for a range of projects of varying size, purpose, and structure. The CPC will establish criteria and priorities to guide the allocation of funds through a public vetting process. In most cases, CPA projects are selected each year using only currently available funds. There are many important projects that CPA can facilitate with relatively small amounts of funding, which often leverage funds from other public or private sources that enable projects to be completed. In exceptional cases, should Medford wish to use CPA funds to support larger projects that will require multiple years of funding, the local revenues alone will provide a predictable stream of funding. Fluctuations in State funding will not jeopardize Medford's ability to plan for its CPA budgeting.
Yes. Once adopted, a Community Preservation Act proposal must be in force for five years. After that time, the surcharge percentage and exemptions can be amended through the same ballot-question process.
The Act can also be revoked, although no community in the state has ever opted to do so. In fact, several have voted to increase their CPA contribution after a few years of experience with its benefits.
As long as Medford does not adopt CPA in accordance with the State statute, we will not be eligible for the State matching funds. We will continue paying into the State's Community Preservation Trust Fund without receiving any distributions from it. Moreover, adopting the Community Preservation Act provides a more substantial and predictable funding stream than a voluntary contribution which may change from year to year or be eliminated at will. CPA will enable more long term planning for community investment, which can enhance the City's bond rating.
Some necessary capital improvements to City buildings, parks and facilities are Community Preservation Act–eligible. Using CPA funds would enable the City to take advantage of the state matching funds, and to complete repairs and improvements in a timely manner.
Limited funding is available to support preservation of historical assets, protection of open space, or for affordable housing. CPA can provide a steady source of funding for these community investments.
City funding for playgrounds and fields and renewal of historic buildings such as City Hall competes with demands for ongoing City services such as schools, public health and safety, and public works. Funding eligible capital improvements through CPA would provide a savings that will enable the City to commit needed funds to other programs and services, and to improve financial stability.
All recommendations for CPA projects will be reviewed by the newly created Community Preservation Committee. In the end City Council has the final word on all expenditures from CPA just as it does on all other City funds.
Property taxes are the largest source of revenues that the City uses to fund our schools, public safety departments, parks and street maintenance, and other City services. Other sources of revenue include state funds, local receipts from fees and fines and other taxes. In the interest of fiscal sustainability and equity, Proposition 2 1/2 went into effect in 1980 limiting communities to increasing the amount of revenues they raise through the property tax levy 2 1/2% each year. Over the past decade, the share of property tax revenues and local receipts has increased, as state funding has substantially declined. At the same time, state and federal funding for programs to support public facilities improvements, parks, and affordable housing have also diminished, while inflation in the cost of many of our services exceeds the rate of 2 1/2%. Recognizing the unsustainable constraints facing municipalities, the State legislature established the Community Preservation Act to allow communities to tap an additional stream of revenue to facilitate and encourage community investment with greater local control.