Friday, March 9, 2001
What is the Community Preservation Act? Tax levy plus state grant could fund affordable housing, historic preservation, and open space
The Carlisle Board of Selectmen has set April 10 as the date for a Special Town Meeting to consider whether to place a referendum on adopting the Community Preservation Act (CPA) on the ballot for the May 22 town election. At their next meeting on March 13 the selectmen will draft a Warrant article proposing the tax surcharge and possible exemptions.
The Community Preservation Act, signed into law last September, allows towns to establish a fund dedicated to affordable housing, historic preservation, and open space, financed by a property tax surcharge of up to three percent added to each year's tax bills. The incentive to adopt the act is a matching grant from the state, ranging from a minimum of five percent to a maximum of 100 percent of the funds raised by the surcharge. The total amount of state matching funds is expected to be approximately $26 million annually.
A municipal Community Preservation Committee would recommend how the CPA money would be spent. At least ten percent of the monies collected must be spent in each of the three categories (housing, preservation, conservation), and the remaining 70 percent could be spent in any category. Town Meeting would have to approve any spending from the fund. The CPA levy is exempted from the tax limitations of Proposition 21/2.
To adopt the act and authorize the surcharge, a town must pass a ballot question at its spring town elections. The referendum can be placed on the ballot either by Town Meeting, or by a citizens' petition signed by five percent of registered voters.
How much would it cost?
If adopted, CPA tax would remain in effect for five years, although the percentage of the surcharge can be changed annually. A community may select a surcharge "greater than zero and up to three percent of the local property tax." If a taxpayer's real estate taxes are $6,800 per year for the average home in Carlisle, assessed at $450,000
· a 3 percent surcharge would increase taxes by approximately $200;
· a 1 percent surcharge would increase taxes by approximately $70.
The act permits a town to allow certain exemptions, two of which could apply to Carlisle. First, the town could vote to exempt any person who qualifies for low income housing, or an elderly person qualifying for low or moderate income senior housing. In addition, the first $100,000 of assessed property value may be exempted. In this case, the the average $450K home would be treated as a $350K-assessed property and:
· a 3 percent surcharge would add about $150;
· a 1 percent surcharge would add about $50.
In addition, taxpayers who are eligible for any other exemptions and abatements (such as for the blind, disabled, veterans, or the elderly) will also be exempt from the surcharge, in proportion to the amount of the abatement.
It should be pointed out that, contrary to some expectations, the CPA does not tax the transfer of property.
How much could be raised?
Based on three percent of year 2000 property taxes, the town could raise a maximum of $348,239 annually. In addition, state matching funds could potentially double this amount in the first year. However, both the tax revenues and the matching funds would be reduced by roughly 20 percent if the $100,000 exemption is allowed.
How much from the state?
The state funds will be distributed in October of each year in two or three rounds, based on how much a community raised in the previous year. The maximum state match from all rounds is 100 percent of the total surcharge raised, and no town can receive more than that. In the first round, 80 percent of the fund will be distributed. This means that about $20+ million will be divided among participating towns. In this round, all communities will receive the same proportion of the amount they have raised, but no more than 100 percent.
If at least 36 towns adopt the Act, a second round will distribute the remaining 20 percent of the fund, but only to towns that have adopted the maximum three percent property tax surcharge. This "equity" round would allocate whatever remained after the first round according to a "community preservation rank," determined by the rank order of the "equalized property valuation" and population size of the towns eligible. If funds remain after the first and second round distributions, the remaining three percent communities, who had not received 100 percent of what they had raised, would be eligible for a third round distribution.
It is the second and third round eligibility requirements that have led selectmen and CPA advocates to explore whether the act would permit approving a three percent surcharge for the early years, in order to be eligible for the second and third rounds, and then drop to a much lower percent surcharge in subsequent years.
But will we ever see the $?
FinCom members have questioned the credibility of the promise of what selectmen chair Michael Fitzgerald had called "the carrot." A press release from the Executive Office of Environmental Affairs says this state matching incentive is "expected to be" $26 million annually.
"We're fooling ourselves if we think we're getting money from the state," FinCom member Charlie Parker said at the February 28 meeting of that group. The primary source of money for the Community Preservation Trust Fund created by the CPA will be surcharges of approximately $20 on each recording fee and $10 on the recording of municipal lien certificates, collected by the register of deeds. However, several FinCom members believe the state matching funds will not be available at all, will not be as substantial as promised, will disappear after two years, or will be divided among so many towns that Carlisle will receive little or nothing. Although no official vote was taken, most finance committee members expressed opposition to any surcharge.
Others point out that state CPA funds for FY02 have already been appropriated. Because the amount of state matching grants to towns will depend on the number of communities that have adopted the program, the selectmen believe that the town has the best chance to receive the 100 percent match this year, when presumably fewer communities will split the pot. As of February 10, only three towns Bedford, Boxford and Andover had placed an adoption question on the ballot.
Who makes the spending decisions?
Town Meeting would make the final decisions about spending the town's CPA funds, based on the recommendations of a Community Preservation Committee. How the five to nine members would be selected (elected or appointed) would be specified by local bylaw or ordinance, but membership must include one member each from the conservation commission, historic commission, planning board, housing authority, and one representative "acting in the capacity of or performing like duties" of a board of park commissioners. In Carlisle this position would likely be filled by a member of the recreation commission.
Besides developing recommendations for Town Meeting action, the committee would also be responsible for keeping accurate records of those recommendations and Town Meeting actions, and of how and where the community preservation funds are spent.
How would funds be spent?
Towns may choose to "bank" some or all of the money raised to spend in future years. Towns can also issue long term bonds in anticipation of community preservation revenue, but cannot use community preservation money for debt payments incurred before adopting the act, even if that debt meets CPA requirements.
The money must be spent for low or moderate income housing, open space and historic preservation. In addition to the requirement that a minimum of ten percent may be spent for each of the three purposes, community preservation funds may not be used for maintenance, or to replace existing operating funds. No more than five percent annually may be spent on expenses for the committee.
For housing projects, the committee "must recommend wherever possible the reuse of existing building or construction of new building on previously developed sites."
Historic preservation projects may be used to acquire, preserve, rehabilitate or restore buildings that have been "determined by the local historic preservation commission to be significant in the history, archeology, architecture or culture of a city or town," or is listed or eligible for the state register of historic places.
Land, easements or restrictions can be purchased to protect: existing or future water supply areas; agricultural, forest or coastal lands; frontage to inland water bodies; wildlife habitat; nature preserves; scenic vistas. Land bought with community preservation money can be used for active and passive recreation, community gardens, trails, "non-commercial" youth and adult sports, and park, playground or athletic fields, but not horse or dog racing, a stadium, gymnasium "or similar structure." Finally, if the town spends only the minimum ten percent for open space purposes, that land cannot be used for recreation.
Selectman John Ballantine believes that the town would spend the majority of its CPA funds on providing affordable housing and acquiring open land for conservation and recreation, as recommended by participants in the February 10 Municipal Planning Day.
More information on the CPA may be found at
© 2001 The Carlisle Mosquito