Tuesday, May 08, 2018

Community Preservation Act funding increase

Here's an article I wrote for this month's Merrimack Valley Housing Report about potential changes to the Community Preservation Act. 

In the fall of 2000, the Massachusetts State Legislature adopted the Community Preservation Act (CPA) to provide a mechanism and funding source for cities and towns to preserve open space, provide affordable housing, preserve historic structures, and provide recreational space. To participate in the CPA, residents of a community must choose to impose on themselves a property tax surcharge of up to 3 percent. This decision is made by voters by referendum at a municipal election. If the CPA is adopted, the community creates a Community Preservation Committee that recommends projects to the board of selectmen or city council which have the ultimate authority over the expenditure of CPA funds.

When it was first implemented, the CPA proposed a dollar for dollar state match to any funds raised locally for CPA projects. The state’s matching fund, called the Community Preservation Trust Fund, obtains its money from a surcharge imposed on documents recorded at the registry of deeds.

Almost all registry of deeds recording fees include a $20 per document Community Preservation Act surcharge. When you record a deed, for example, the total amount you pay is $125. Of that, $100 is the actual recording fee, $20 is the CPA surcharge, and $5 is a registry of deeds technology surcharge. The exceptions are municipal lien certificates, which carry a $10 per document surcharge; and declarations of homestead, which have no CPA surcharge.

As with all funds collected, the registry of deeds transfers these fees to the Department of Revenue on a daily basis. The DOR is the administrator of the CPA Trust Fund.

One of the problems with depending on registry of deeds recording fees to fund the CPA (or anything else) is that the revenue stream is tied to the real estate market. When real estate is booming, a substantial amount of revenue is collected, but when the market slows, so does the money coming in. For example, in 2003 when the Middlesex North Registry of Deeds recorded 146,956 documents, $2.8 million was collected for the Community Preservation Act. But in 2014, only 53,584 documents were recorded. That yielded just $983,000 is CPA funds.

This decline in funding for the CPA Trust has coincided with an increase in the number of communities choosing to participate in the CPA. This increased demand for matching funds has caused the match to decline from 100 percent in the early days of the CPA to matches of less than 30 percent of the amount raised by the municipality today.

To address this issue, the Massachusetts State Legislature is now considering an increase in the CPA surcharge on registry recordings from $20 to $50 per document. Whether this change (or any other) is made should be known by the end of this legislative session in June.

As for the local impact of the Community Preservation Act, eight of the ten communities in the Middlesex North Registry of Deeds district have voted to participate in CPA since its inception. Carlisle, Chelmsford, Dracut, Tyngsborough and Westford all adopted it in 2001; Dunstable and Tewksbury in 2006; and Billerica in 2016. Only Wilmington and Lowell have failed to take advantage of it. This is especially unfortunate for Lowell since the surcharge on documents recorded at the registry of deeds for properties in Lowell since 2000 has generated $5.8 million in CPA matching funds, all of which has gone to other communities.

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