Understanding CPA - Frequently Asked Questions
Q:
What is the Community Preservation Act?
A:
The Community Preservation Act (CPA) is enabling legislation designed to help communities plan ahead for sustainable growth and raise funds to achieve their goals. CPA allows towns and cities that accept its provisions to levy a community-wide real estate property tax surcharge of up to 3 percent for the purpose of creating a local Community Preservation Fund and qualifying for state matching funds. The CPA surcharge is calculated based one’s real estate property tax and not based on assessed valuation. The Fund may only be used to acquire, create and preserve open space and land for recreational uses, to acquire and preserve historic buildings and landscapes, and to create, preserve and support affordable housing. The state will provide matching funds to communities approving CPA.
Q:
When did CPA go into effect?
A:
CPA was signed into law on September 14, 2000 and became effective 90 days later, on December 13, 2000.
Q:
What is the process for approving CPA in a community?
A:
A municipality may accept CPA through passage by the legislative body (town meeting or city council) or through a citizen initiative. In either case, CPA must subsequently be approved by a simple majority of local voters in an election.
 
Legislative:
1.
The municipal legislative body (town meeting or city council) must vote to accept, by a simple majority, the provisions of the Community Preservation Act (See sample town meeting warrant/ motion and city council order attached).
2.
The acts of the town meeting/city council are then referred for voter approval at the next regularly scheduled municipal election or general state election (November of even-numbered years), whichever comes first. A CPA referendum may not be scheduled for a special election (See sample ballot language attached).
3.
The legislative body must accept CPA and submit the ballot question to the municipal clerk at least 35 days prior to a regularly scheduled municipal election or to the Secretary of State at least 60 days prior to a general state election. Municipalities cannot submit a CPA ballot question for placement on an election ballot until it has been accepted by the local legislative body (or approved through a citizen initiative process).
4.
In many towns, regular town meeting does not take place 35 days before municipal elections (in some cases elections precede town meeting). As a result, towns may choose to call a special town meeting more than 35 days prior to the next regular town election in order to qualify for that election ballot.
 
Citizen Initiative:
1.
If a municipal legislative body fails to approve or does not consider the acceptance of the provisions of CPA 90 days prior to a local election or 120 days before a state election, citizens may circulate an initiative petition seeking to place the question directly on the ballot.
2.
The petition must be signed by 5 percent of the registered voters in the municipality.
3.
The municipal clerk (or Secretary of State for state elections) has 7 days to certify the petitions. The ballot question must be certified at least 35 days prior to the municipal election and 60 days prior to a state election. To ensure adequate time to correct problems that may be uncovered during certification, it is advisable for citizens to submit petitions in advance of these deadlines.
Q:
Are any exemptions from the CPA surcharge allowed?
A:
Yes, any portion of a taxpayer’s real property taxes that are exempt under Chapter 59 of Massachusetts General Laws are also exempt from the new CPA surcharge. In addition, the municipal legislative body, as part of the vote to accept the provisions of CPA, may alllow several additional exemptions to the CPA surcharge for:
1.
Property owned and occupied by a person who would qualify for low income housing or low or moderate income senior housing in the city or town
2.
The first $100,000 of taxable value of residential real estate
3.
Class three commercial or class four industrial properties in cities or towns with classified tax rates
 
A municipality may make changes to these exemptions at any time with approval of the legislative body and subsequent voter approval.
Q:
Who qualifies for the low income family or moderate income senior exemption?
A:
Persons and families whose annual income is less than 80 percent of the areawide median income qualify as low income. Persons of the age of 60 or over whose annual income is less than 100 percent of the areawide median income qualify as moderate income seniors. The areawide median income is determined by the United States Department of Housing and Urban Development.
Q:
Can the level of the CPA surcharge be amended?
A:
Yes. The level of the surcharge (and the optional exemptions) can be changed at any time after the surcharge is imposed, through a simple majority vote of the legislative body followed by voter approval. At no time can the surcharge exceed 3 percent.
Q:
How long will CPA remain in effect?
A:
CPA remains in effect for a minimum of five years from the date of voter approval in a municipality. After five years, it can be revoked in the same manner–legislative body acceptance (simple majority) or initiative petition followed by voter approval–used to approve CPA originally.
Q:
Who determines how the funds raised through CPA will be spent?
A:
If a municipality approves CPA, it must also establish a Community Preservation Committee that will make annual recommendations to the legislative body on how the money should be spent. The legislative body (town meeting or city council) may only appropriate amounts in the Community Preservation Fund for purposes and amounts not greater than amounts recommended by the Community Preservation Committee. The legislative body may also reject or reduce the amounts recommended by the Community Preservation Committee.

The Community Preservation Committee is established by a separate municipal ordinance or bylaw that must be passed by a majority vote of the legislative body. The bylaw or ordinance establishing the committee can be adopted at the same time that the legislative body accepts CPA, provided that the vote adopting the bylaw or ordinance should include language making its adoption contingent upon voter approval of the CPA referendum at the next election. The bylaw or ordinance can also be adopted after the election.

Under the terms of CPA, the Community Preservation Committee shall consist of 5-9 members, and must include one representative each from the local conservation, parks, and historical commissions; planning board; and housing authority. If a municipality has not established one or more of these boards or commissions, a representative serving in a similar capacity can be appointed to the committee. The other members of the committee, if any, may be appointed or elected, as provided in the bylaw or ordinance adopted to establish the committee.
Q:
Does CPA contain specific requirements on how the money should be spent?
A:
Yes. Each fiscal year, upon recommendation of the committee, the legislative body must spend, or set aside for future spending, the following share of annual Community Preservation Fund revenues (referring primarily to the property tax surcharge and state disbursements collected under CPA, as well as other sources cited under the law):

10 percent for open space (cannot be spent on land for recreational uses)
10 percent for historic resources
10 percent for community housing

Beyond these required disbursements, the municipal legislative body will be guided by the recommendations of the Committee on how the remaining 70 percent of annual CPA revenues shall be divided among the three purposes identified above and recreational purposes. For example, a municipality could allocate the remaining 70 percent of the annual revenue to one purpose, spread it evenly among all four, or set the funds aside for future spending. Each year, the municipality can modify the spending mix for the remaining 70 percent of the fund.
Q:
Are there any special provisions regarding property purchased with the Community Preservation Fund?
A:
Yes. Any property purchased with the Fund must be subject to a permanent deed restriction limiting the use of the property to its CPA-related purpose. The municipality (or the state or a nonprofit organization designated by the municipality) must enforce the deed restriction. The municipality can delegate the property’s management to a local board or nonprofit organization.

The municipality can only use the Fund to pay for land takings through eminent domain if they are recommended by the Community Preservation Committee and approved by a 2/3-majority vote of the legislative body.
Q:
Can a municipality issue bonds in anticipation of CPA proceeds?
A:
Yes. A municipality may issue general obligation bonds or notes in anticipation of the municipality’s CPA property tax surcharge revenue proceeds. Such bonds or notes must be repaid as soon after such revenues are collected as is expedient, and may be used for any of the purposes permitted under CPA, provided that the municipality is otherwise authorized to borrow for the desired purpose under Chapter 44 of the General Laws of the Commonwealth. Debt service on such bonds and notes is payable from amounts on deposit in the Community Preservation Fund (subject to the limits imposed on the use of amounts in the Fund for different purposes) and, to the extent such amounts are insufficient to pay the debt service, the municipality is required to pay the debt service from other available funds. Debt service on any such bonds or notes may be structured to result in level annual payments. If a municipality issues bonds or notes, the surcharge necessary to pay debt service must remain in effect, even if the rest of the surcharge is otherwise revoked after five years.

It should be noted that amounts on deposit in the Community Preservation Fund may only be used to pay debt service on bonds or notes approved under the provisions of CPA.
Q:
Can a municipality allocate CPA proceeds to coer operating expenses of the Community Preservation Committee?
A:
Yes, as long as such funds are used in a manner consistent with the recommendations of the municipality’s Community Preservation Committee, and do not exceed 5 percent of the annual revenues in the Community Preservation Fund.
Q:
Can money in the Community Preservation Fund be used to match state or federal grants?
A:
Yes, as long as the municipality’s Community Preservation Committee recommends such a purpose to the legislative body.
Q:
What is the relationship between CPA and Proposition 2 ½?
A:
Property taxes collected under CPA are not counted as part of a municipality’s total taxes assessed for the purposes of calculating the tax limitations imposed by Proposition 2 ½.
Q:
Are state matching funds available?
A:
Yes. Through the newly created Community Preservation Trust Fund (CPTF), the state will provide matching grants to communities that have adopted CPA. The CPTF will receive funds through a surcharge of $20 on most filings at the Registry of Deeds and land filings at the Land Court. Municipal liens will be assessed a $10 surcharge, and homestead declarations will be exempt from the surcharge. Based on filings in 1999, the CPTF’s revenues are estimated at upwards of $25 million annually.
Q:
How will state matching funds be allocated among municipalities?
A:
The state Community Preservation Trust Fund provides allocations only to municipalities in which voters have approved CPA. The Commissioner of Revenue will allocate the Fund’s proceeds annually in several distribution rounds, but the total distribution to a municipality cannot exceed 100% of the amount raised by the local CPA property tax surcharge in the prior fiscal year (a 1:1 ratio). No state funds will be allocated until the municipality accepts CPA and collects tax revenue.

During the first round, 80% of the Fund balance will be allocated equally (on a percentage basis of the amount raised by each municipality in the prior fiscal year) to all municipalities that have adopted the property tax surcharge. The match must be at least 5% but not more than 100% of the amount raised by the surcharge in the municipality.

The remaining 20% will be distributed solely among municipalities that have adopted the maximum 3% property tax surcharge. The funds will be allocated based on a community’s “preservation rank,” with communities divided into 10 equal sized decile groups. Their rank is a function of a community’s property tax valuation per capita and population. Communities with high tax values per capita and high populations will have the lowest ranking and receive the lowest grants, and vice versa. If there is money left in the state Trust Fund after a second round, there will be another equity distribution only for those that have accepted a 3% property tax surcharge.
Q:
When and how will these funds be disbursed?
A:
Every year on October 15, the Commissioner of Revenue will disburse local grants to communities that have notified the Commissioner of their acceptance of CPA. The community must also certify to the Commissioner by the preceding September 15 the amount of revenue raised through the CPA surcharge and the rate imposed in the prior fiscal year.