CPA tax surcharge on 16 communities' ballots Tuesday

By Colin A. Young


Voters in Hull and 15 other cities and towns will decide Tuesday whether their community ought to be allowed to levy a surcharge on property taxes to preserve open space, renovate historic structures, or build new athletic fields, among other things.

Voters here and in Amesbury, Billerica, Boston, Chelsea, Danvers, East Bridgewater, Holyoke, Norwood, Palmer, Pittsfield, Rockland, South Hadley, Springfield, Watertown, and Wrentham will be asked on a special ballot whether their community should adopt the Community Preservation Act (CPA).

“Communities that adopt the Community Preservation Act are getting a local, dedicated fund for quality of life issues that typically do not have any room in the regular town municipal budget,” Stuart Saginor, executive director of the Community Preservation Coalition, said. “A lot of the charm and tourism in New England and a lot of the livability of New England is the character of our communities, and CPA has become the go-to source to keep the character in our communities.”

Since the CPA first took effect, 161 cities and towns have adopted it, helping to raise more than $1.6 billion to finance more than 8,100 open space and historic preservation projects, including the protection of 23,400 acres and the rehabilitation of more than 9,400 affordable housing units, according to the Community Preservation Coalition.

Each community can tailor the CPA to fit its needs, so the questions on the ballots will not be uniform from town to town. The municipality determines the surcharge rate, up to 3 percent, and can also select from four pre-approved exemptions.

In Hull, the CPA surcharge has been set at 1.5 percent, a $72 hike in the average property tax bills, proponents say. Income-qualified residents will be able to apply for an exemption each year.

Supporters said the CPA would raise about $500,000 in additional revenue in Hull.

When Gov. Paul Cellucci signed the CPA into law in 2000, it was with the promise of state matching funds from a CPA Trust Fund to preserve open space, renovate historic buildings and parks, and to build new playgrounds and athletic fields.

But that partnership, during the first six years of which the state matched 100 percent of what each municipality raised by its property tax surcharge, has become more one-sided in the last decade as the real estate market took a nosedive and more communities have opted into the program, with available matching funds falling to an all-time low in 2011 and rebounding just slightly since.

Last year, $36.29 million from the trust fund was split among 156 cities or towns, so that each municipality received from the state 29.67 percent of what it collected on its own. The Department of Revenue is due to set the state match rate for 2016 by Nov. 15, Saginor said, but in an April memo to municipalities, DOR's Division of Local Services said it expects to be able to match 19 percent of what each city or town collected.

“We like to see a robust match for communities in the trust fund because communities that adopt CPA are putting their local funds into the pot,” Saginor said. “We like to see the state keep up their end of the bargain and contribute a robust match to that. It becomes a true state and local partnership when that happens.”

State matching funds are provided through a $20 fee assessed on certain real estate transactions through registries of deeds. The fee structure and match rate formula have not been changed since the CPA went into law in 2000.

Saginor said the trust fund was able to provide 100 percent matches in its first six years because the real estate market in the early 2000s–when homeowners were refinancing at a breakneck pace and flipping homes was a common practice– generated abundant deeds fees and fewer towns were taking slices of the pie.

“Six years at 100 percent, no one ever dreamed that would happen,” he said. “It was not designed to be a 100-percent matching program, but they followed the formula and it paid out at 100 percent.”

The Legislature, in recent years, has allocated surplus funding to the CPA Trust Fund as the state match rate has dropped below 50 percent in all but one of the last seven years.

In the fiscal 2017 budget signed by Gov. Charlie Baker in August, up to $10 million in potential fiscal 2016 surplus money was dedicated to the CPA Trust Fund.

Depending on results in the 16 communities voting on CPA next week and because of a 2012 amendment that made the program more desirable to cities, the trust fund could be further stressed by the time most of the voting communities could first claim a state match, in 2018.

“Clearly with the renewed excitement about CPA in the cities– and cities are larger and have a greater impact on the trust fund–the time has definitely come to strongly consider an adjustment of that fee," he said.

Meanwhile, a bill that would hike the fees collected on Registry of Deeds transactions in order to guarantee a CPA Trust Fund match of at least 50 percent has stalled on Beacon Hill this session, despite support from 19 senators and 67 representatives.

The bill (H 2587) filed 22 months ago by Rep. Stephen Kulik and Sen. Cynthia Creem got a favorable report from the Joint Committee on Revenue, but has languished in the House Committee on Ways and Means since September 2015.

Saginor said that if more municipalities adopt CPA next week, the necessity to adjust the CPA Trust Fund state-match formula will be greater than ever.

“As the number of communities continues to climb and, as the number of legislators who have a CPA community in their district climbs, certainly the need for the trust fund to be more robust becomes more apparent to more folks across the state,” he said. “We're encouraged by the fact that the Legislature has been very supportive of CPA in the past and we're looking forward to working with them next session.”