Malden looks to take advantage of available CPA funding

Jan. 30--The Community Preservation Act is a victim of its own success.

At least that's what advocates hope to convince lawmakers this legislative session, as the CPA fund that helps pay for certain types of local projects is now significantly underfunded.

"More and more communities have joined, which has diluted the pot tremendously," said Sen. Cynthia Stone Creem, D-Newton.

One of the new communities to adopt the CPA is Malden, which according to Community Preservation Committee Chairperson Julianne Orsino is just completing funding for their first round of projects. While new to the CPA, Orsino is firmly supports the law and the impact that it can have on a community.

"Residents want to have a say in where tax dollars are being spent and the CPA model provides an incredible opportunity for community members to work collaboratively and directly impact projects in their neighborhood," said Orsino via email. The CPC plays a critical role for every city's CPA fund usage, as they allocate and approve projects for CPA funds through reviewing citizen applications.

The law, which passed nearly two decades ago, allows municipalities to raise property taxes between 0.5 percent and 3 percent to preserve open space and historic sites, create affordable housing and develop outdoor recreational facilities.

At the same time, a $20 fee is added to most real-estate transactions and a $10 fee is added to municipal tax lien certificates. The fees, collected by registries of deeds, are deposited into a state-administered CPA trust fund, which redistributes money to match part of what participating communities have raised. The amount received by each participating community is based on how much is raised locally, favoring communities that tax the full 3 percent.

"One of the benefits of CPA to local residents is that their investment in their community will be matched in investment from the state," said Orsino. This is one of Orsino's major selling points to the Malden community, encouraging residents that this is an opportunity for residents to have a say in how their taxes are spent.

For the first round of projects in Malden, the CPC is focusing on internal improvements that are "aimed at preserving Malden's history, creating usable open space and addressing the need for affordable housing," according to Orsino.

"It's a great funding source, but just like anything else over time you need to tweak things," said Stuart Saginor, executive director of the nonprofit Community Preservation Coalition.

In Wayland, about 20 miles west of Boston, residents in 2016 voted to spend $12 million in local CPA funds to preserve Mainstone Farm, a working farm on more than 200 acres of land.

The town of about 14,000 people was one of the first communities to join the program and has since raised an accumulative $10.4 million through its local tax and received about $5.2 million from the CPA fund, according to numbers provided by the Massachusetts Department of Revenue and the Community Preservation Coalition.

Like other communities, however, CPA funds for Wayland have declined in recent years. The CPA fund grows with a robust real-estate market, which today is a far cry from what the boom-bust cycle leading up to the Great Recession beginning in 2008.

"The real estate market then was overheated," Saginor said. "We don't think it'll ever get back to that level and it shouldn't."

In 2007, the CPA fund totaled $68.1 million, which was enough to match 100 percent of the money raised at the local level. In 2018, the fund paid out $24.5 million -- 64 percent less than in 2007 -- and only 19 percent of what was raised by municipalities.

Meanwhile, as more communities adopt the CPA, there's less money to go around. Today, 175 cities and towns participate in the program compared to about 34 in 2002. And while nonparticipating communities don't receive any money from the fund, transaction fees are collected on real estate deals in all cities and towns, meaning there's no new influx of cash when a new community adopts the CPA, but demand for funding increases.

"The more communities join the more the funds are watered down," said Creem.

Though Malden is relatively new to the CPA program,

The program has been criticized in the past for favoring more affluent suburban communities at the expense of poorer cities and rural towns. But more cities started joining after 2012 when the law changed, allowing local officials to use CPA funds to pay for the rehabilitation of existing recreational facilities.

The demand for CPA funds surged in 2016 when Boston residents voted to adopt the CPA, implementing a 1 percent property tax. State officials each year determine the percent at which local funds should be matched, which is equal across all communities for the first 80 percent of the available funding.

Though relatively new to the CPA program, Malden CPC has expressed concern about property taxes role in CPA funds.

"By tying funding for the program to property tax we will always be in the mode of 'watching' the market. The property tax model makes it difficult to assist all communities equitably as property values vary greatly throughout the state," said Orsino via email.

The noticeable growth of the program has its limits, as the state is still finding a solution of how to meet each communities output.

But for municipalities with bigger tax bases, or for those that raise more money, the match will equal a greater dollar amount. Communities that tax at the full 3 percent are subsequently eligible for additional rounds of funding from the remaining 20 percent of funds.

The Boston tax went into effect this year and the capital city is budgeted to receive $3.6 million from the fund in 2019.That's $3.6 million less to go around to the other CPA participants, which is raising concerns among local leaders.

"With Boston joining the Community Preservation Act, that took a bite out of the whole thing," Weymouth Mayor Robert Hedlund told Wicked Local Weymouth in November.

The South Shore community adopted the CPA in 2005 and recently celebrated the opening of King Oak Hill Park, made possible in part by CPA funds. Hedlund said he's now concerned the completion of future projects could be delayed.

State lawmakers to date have taken a piecemeal approach to the issue, using surplus funds to boost the fund's dwindling balance. But surpluses are not guaranteed, Creem argues, and a more long-term solution is required.

"We don't always have a surplus so we can't depend on it," Creem said.

The Newton senator plans to reintroduce legislation that would raise the real-estate transaction fee to $50 from $20, which she estimates would bring the fund match to about 30 percent.

Similar legislation has been introduced each year since 2007 and it came close to passing in 2018. The Senate voted 38-0 in favor of the fee hike, but the bill was ultimately left on the cutting-room floor.

"There was an unwillingness from the House to go along with the Senate vote, so we left it on the table with plans to bring it up again," Creem explained.

Newton, Creem's hometown, was also one of the first communities to adopt the CPA. The Boston suburb has since received the second-most CPA funds since 2002, totaling $19.9 million. To date, Cambridge has received the most with $62.5 million.

CPA advocates are nonetheless hopeful this legislative session could result in some type of fix, especially considering Gov. Charlie Baker, a Republican, said during his campaign for re-election in October, "It's obvious that there needs to be an adjustment made," according to the State House New Service.

In Malden, similar optimism is expressed by those involved. "As more and more residents become involved in their local communities and governments, I believe we will see a stronger voice take hold and that voice will insist on a stable and healthy funding match from the state," said Orsino via email. Applications for the next CPA cycle open up in Malden on March 1.

It's unclear, however, if the governor's pre-election support will carry over into the New Year, and his office did not respond to a request for comment.

Eli Sherman is an investigative and in-depth reporter at Wicked Local and GateHouse Media. Email him at [email protected], or follow him on Twitter @Eli_Sherman.

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