What is the Community Preservation Act (CPA)?
The Community Preservation Act (CPA) enables Malden to create a dedicated fund for out-door recreation, open space, historic preservation and community housing. Once established, the fund will receive an additional estimated 25% from the statewide Community Preservation Trust Fund. The fund cannot be part of Malden’s general budget and can only be spent for the three purposes mentioned.
The initial funding will come from a one-percent (1%) surcharge on the local property tax supplemented by an additional estimated 25% from the state.
- First $100,000 of property value for ALL residential and class 3 & 4 commercial property owners
- Low to moderate income senior citizen property owners who apply for the exemption
- Low-income property owners who apply for the exemption
- Any property owner with a current property tax exemption
How much will it cost me annually?
- The typical single family homeowner will contribute $26, a typical two family homeowner, $34, a typical three family homeowner, $42, and a typical condo owner, $0.
- The average condo owner, with assessment of $204,777 would pay nothing.
- The average business owner, (property valued at $1,061,657) would pay an annual amount of $237.43 or $59.36 quarterly.
What are the exemption levels in Malden?
|Household size||Moderate Income Max (property owned and occupied by a senior 60+)||Low Income Max (property owned and occupied by a non-senior)|
What is an example of a contribution?
Residential property with a Total Taxable Value (stated on a tax bill) of $375,000
There is an exemption for the first $100,000. Malden residents receive an exemption equal to 30% of the average value, which is $111,677 in FY2015. So the value for CPA is $375,000-$100,000-$111,677 = $163,323.
Using Malden’s residential tax rate of $15.73 per $1,000 would calculate to $15.73 x ($163,323/$1000) = $2,569.07. The owner’s CPA contribution for that year would be one percent of $2,569.07, which is $25.69, roughly $26 per year. Note that the while the tax rate and the residential tax exemption is subject change, the 1% surcharge rate for CPA cannot be changed except by ballot of Malden voters.
Commercial and industrial properties are also surcharged at 1%
With an exemption on the first $100,000, a $1,000,000 commercial or industrial property would be subject to a surcharge on $1,000,000-$100,000 = $900,000. Using Malden’s commercial and industrial tax rate of $24.69 per $1000, the CPA contribution would be $24.69 x ($900,000/$1000) x 1% = $222.21 per year, or $55.55 per quarter.Of the total annual estimated CPA funds of $508,000, approximately $386,000 will come from the residential surcharge, and $122,000 will come from the commercial and industrial surcharge (24% of total).
What are the exemption levels in Malden?
Who decides which projects gets funded?
A local committee will be formed by a City ordinance, which by law will include one person from the each of the following: Malden’s Housing Authority, Conservation Commission, Parks Board, Planning Board, and Historic Commission and up to 4 other citizens appointed by city ordinance.
So where might the fund money be spent?
Generally, the fund can be used for acquisition, creation, and preservation of open space, historic buildings and landscapes, recreational use land, and community housing.
Each fiscal year, open space and recreation, historic preservation, and affordable housing must each receive 10% of the funding. The remaining 70% can be used in any of the CPA areas mentioned or saved for future use.
Malden can expect to create a fund of $636,000 based on contributions of $508,000 and an estimated $127,000 from the state.
Does Malden have to spend 30% of the funds each year?
The City can bank these expenditures for later years. For example, if a significant historic preservation project were envisioned, a portion of the Historic Preservation allocation could be accumulated for that purpose.
Similarly, a large project could be funded over a period of years, with each year’s set-aside satisfying the minimum requirement. Some communities have bonded against future CPA revenues to facilitate major eligible projects. In effect, the requirement for 10% to be allocated to each purpose area is over the long run.
Do CPA funds have to go toward affordable housing every year?
CPA funds do not have to go toward actual affordable housing projects every year. 10 % of the budget must be allocated for affordable funds but can be saved for another year when the need for affordable housing actually exists.
The committee charged with approving projects for CPA funding consist of up to four at-large members from the Community and city delegates from the Planning Board (1); Board of Parks and Recreation (1); Housing Authority (1); Historical Commission (1); and Conservation Commission (1). These delegates work together and represent their area of concern as projects are selected for funding. It would be very difficult for a disproportionate amount of money to go to affordable housing, as Malden has the approximately 10% affordable housing required by the state, yet Malden has the second-lowest percentage protected open space in the region (only more than Somerville). It would be very hard for a CPC to justify allocation of disproportionate funds to affordable housing over open space.
What if Malden commits to a large CPA project and the funding is not there to complete it?
Malden’s Community Preservation Committee (CPC) will receive applications annually for a range of projects of varying size, purpose, and structure. The CPC will establish criteria and priorities to guide the allocation of funds through a public vetting process. In most cases, CPA projects are selected each year using only currently available funds. There are many important projects that CPA can facilitate with relatively small amounts of funding, which often leverage funds from other public or private sources that enable projects to be completed. In exceptional cases, should Malden wish to use CPA funds to support larger projects that will require multiple years of funding, the local revenues alone will provide a predictable stream of funding. Fluctuations in State funding will not jeopardize Malden’s ability to plan for its CPA budgeting.
Can we change the plan once we adopt it?
Yes. Once adopted, a Community Preservation Act proposal must be in force for five years. After that time, the surcharge percentage and exemptions can be amended through the same ballot-question process.
The Act can also be revoked, although no community in the state has ever opted to do so. In fact, several have voted to increase their CPA contribution after a few years of experience with its benefits.
Why don’t we have a voluntary investment program instead of CPA?
As long as Malden does not adopt CPA in accordance with the State statute, we will not be eligible for the State matching funds. We will continue paying into the State’s Community Preservation Trust Fund without receiving any distributions from it. Moreover, adopting the Community Preservation Act provides a more substantial and predictable funding stream than a voluntary contribution which may change from year to year or be eliminated at will. CPA will enable more long term planning for community investment, which can enhance the City’s bond rating.
Aren’t we already funding these investments?
Some necessary capital improvements to City buildings, parks and facilities are Community Preservation Act–eligible. Using CPA funds would enable the City to take advantage of the state matching funds, and to complete repairs and improvements in a timely manner.
Limited funding is available to support preservation of historical assets, protection of open space, or for affordable housing. CPA can provide a steady source of funding for these community investments.
Can CPA help relieve our other budgets?
City funding for playgrounds and fields and renewal of historic buildings such as City Hall competes with demands for ongoing City services such as schools, public health and safety, and public works. Funding eligible capital improvements through CPA would provide a savings that will enable the City to commit needed funds to other programs and services, and to improve financial stability.
All recommendations for CPA projects will be reviewed by the newly created Community Preservation Committee. In the end City Council has the final word on all expenditures from CPA just as it does on all other City funds.
How does CPA relate to Proposition 2 1/2?
Property taxes are the largest source of revenues that the City uses to fund our schools, public safety departments, parks and street maintenance, and other City services. Other sources of revenue include state funds, local receipts from fees and fines and other taxes. In the interest of fiscal sustainability and equity, Proposition 2 1/2 went into effect in 1980 limiting communities to increasing the amount of revenues they raise through the property tax levy 2 1/2% each year. Over the past decade, the share of property tax revenues and local receipts has increased, as state funding has substantially declined. At the same time, state and federal funding for programs to support public facilities improvements, parks, and affordable housing have also diminished, while inflation in the cost of many of our services exceeds the rate of 2 1/2%. Recognizing the unsustainable constraints facing municipalities, the State legislature established the Community Preservation Act to allow communities to tap an additional stream of revenue to facilitate and encourage community investment with greater local control.
In 2012 the Community Preservation Act was made more favorable to mature and largely built-out communities. Previously, the open space funds could only be used to acquire new open space. The amendments allow for the funds to be used to improve existing parks, open space and athletics fields. Other changes to the Act over the past 15 years have improved its transparency and clarified the process for oversight and project eligibility, making CPA better fit the needs of communities like Malden.
Also, the preservation and stewardship of historic and natural resource assets such as Fellsmere Heights, Malden River, Pines River, and treasures like the oldest church community Congregational Malden Church (1640) on Pleasant St need to be considered as we tear down city hall and build up the downtown.
In addition, the Community Preservation Act (CPA) could be one resource the Fellsmere Heights project could tap as work toward purchase and planning of that area occurs.
The Community Preservation Act is a potential resource for these purpose, but the changes in the Act also give us the flexibility to address active recreational needs in our parks and playgrounds.