Tuesday, April 06, 2010

Community Preservation surcharge may increase

Senate Bill 90 now pending before the state legislature makes some modifications to the Community Preservation Act. The CPA went into effect back in 2002 and allows communities in the Commonwealth to vote to increase their property taxes to raise money for a variety of uses including open space and historic preservation. Any amount raised by a town is matched by the state from a Community Preservation Trust fund maintained by the state. This CPA Trust is funded by a surcharge on documents recorded at the registry of deeds. Since 2002, the surcharge has been $20 per document with municipal lien certificates having a $10 surcharge and homesteads being exempt.

SB 90 retains these surcharges with one important modification: If the state's Trust Fund has insufficient money to support at least a 75% match to the towns that opt into the act, the Commissioner of the Department of Revenue may raise the surcharge by an amount sufficient to raise the needed funds. The maximum the surcharge could increase would be to $70 ($50 for MLCs). This means that if there is an acute shortage of CPA funds and the surcharge is increased by the maximum amount allowed, it would cost $125 to record a mortgage discharge (instead of the current $75), $175 to record a deed (now $125) and $225 to record a mortgage (now $175).

As a practical matter, having the CPA surcharge change by some random amount (the reset fee is "rounded up to the nearest $1) will be disastrous for the operation of the registry of deeds. Our diverse clientele has a difficult enough time getting the current fees right even though they have been in place and unchanged for seven years. Changing the fees on a yearly basis will create recording gridlock when mail is returned, e-recordings are rejected, and customers are turned away, all because they haven't updated their registry fee chart. The objectives of the CPA are commendable, but tweaking it in the manner proposed is not without some negative consequences.

1 comment:

Jeff Welch said...

Not only that, but the CPA is a regressive tax. In my neck of the woods, residents of working-class towns like Abington, Rockland, and Brockton can't afford to adopt the CPA, so the fees that they pay are sent to wealthy towns like Duxbury and Hingham.

This map shows that Lowell and Lawrence seem to be in the same boat, along with Springfield, New Bedford, and Fall River to name a few.