DLS City & Town

For these 344 communities, 276 voted for particular purposes only, 62 voted for particular purposes and to reduce the FY2018 and/or FY2019 tax rate, and six voted to reduce only the FY2018 or FY2019 tax rate.

Trend Spotting

In Massachusetts, the median population for all cities as towns as of 2018 was 10,874. In four counties located in the western part of Massachusetts (Berkshire, Franklin, Hampden and Hampshire), the median population in 2018 was 1,875 (1,868 without counting Springfield). Let’s look at whether these communities appropriate their free cash certifications to the same extent and for the same general purposes as other communities in the Commonwealth.

The following table compares “Western Mass” free cash certifications as of July 1, 2017 and appropriations for FY2018 and FY2019 to all other communities in Massachusetts:

Two percentages shown above, “% Appropriated” and “Median % Appropriated”, are the most striking. However, when removing both Boston and Cambridge certifications and appropriations from “All Others” due to their relative size, 46.1% appropriated becomes 63.6%, and the percentages for “Western Mass” communities and “All Others” become more in line. However, in median terms, after removing both Boston and Cambridge, the percentage for “All Others” remains at 92%. This shows that generally “Western Mass” communities appropriate less of their certification than “All Other” communities with or without Boston and Cambridge.

The following table compares how “Western Mass” communities appropriated their free cash compared to “All Others” communities in Massachusetts:

The percentages above show how “Western Mass” communities appropriated their July 1, 2017 certifications differently than All Others by appropriating for particular purposes only less so, appropriating for particular purposes and to reduce their FY2018 and/or FY2019 tax rates more so, and appropriating to reduce their FY2018 and/or FY2019 tax rates only more so.

Summary:

• Almost every community appropriated from its certification, some for particular purposes, others to reduce the tax rate, and still others a combination of both

• Two communities updated their annual certification

• Certifications averaged about 5.24% of FY2018 operating budgets

• Although three municipalities made no appropriation and 64 appropriated the entire amount, communities mostly appropriated between > 90% and <100% of their certification

• 276 communities appropriated for particular purposes only and 62 others combined this with an appropriation to reduce the tax rate

• About half of the total certification was appropriated and the balance returned for certification in the following year

• Measured by median, “Western Mass” communities appropriated less of their certification than the rest of the Commonwealth’s municipalities and their uses for it varied more

Please review our City & Town article on Fiscal Stress – A Diminishing Level of Reserves, December 6, 2018 for a refresher on how to improve free cash position and for policies on generating and using free cash. For FAQs on free cash, see Counting Free Cash, City and Town, December 21, 2017. Also, please checkout the DLS Municipal Finance Trend Dashboard for free cash statistics.

Ask DLS: Community Preservation Act

This month's Ask DLS features frequently asked questions about the Community Preservation Act. Additional questions about the Community Preservation Act will be featured in future editions of City & Town. Please let us know if you have other areas of interest or send a question to cityandtown@dor.state.ma.us . We would like to hear from you.

What is the Community Preservation Act (CPA)?

The CPA, G. L. c. 44B, allows a city or town to establish a special fund, the community preservation fund (CP Fund), that may be appropriated for certain open space, recreational, historic and community (affordable) housing purposes.

Under the CPA, a community establishes a property tax surcharge, the revenue from which is credited to the CP Fund. In addition to the local surcharge revenue, annual distributions from the “Massachusetts Community Preservation Trust Fund” are credited to the CP Fund. Monies distributed from the state trust fund are derived primarily from surcharges on fees charged for recording certain documents with the Registry of Deeds or Land Court.

A community accepting the CPA must establish a Community Preservation Committee (CPC) to make annual recommendations to its legislative body regarding expenditures from the CP Fund. In each fiscal year, the community must spend or reserve at least 10 percent of the annual CP Fund revenues for each of the CPA’s community preservation purposes: open space (including recreation), historic resources and community housing.

How does a municipality adopt the CPA?

There are two alternatives under the CPA that may be adopted by a city/town and both require majority approval of the city’s/town’s legislative body and voter approval at the next regular municipal or state election. A city or town may adopt either:

A.) A “traditional” CPA under G.L. c. 44B, § 3(b), where the city/town approves a surcharge of up to 3% of taxes assessed annually on real property and may adopt any of the exemptions to the surcharge that are allowable under G.L. c. 44B, § 3(e).

B.) A “blended” CPA under G.L. c. 44B, § 3(b1/2), where the city/town approves a surcharge of at least 1% of taxes assessed annually on real property and an annual appropriation of additional municipal revenues up to 2% - the surcharge and additional revenues together cannot exceed 3% of the taxes assessed annually on real property. The city/town also may adopt any of the exemptions to the surcharge that are allowable under G.L. c. 44B, § 3(e).

If the legislative body has not adopted the CPA, is there another adoption process available?

Yes. As an alternative to legislative body approval, a petition signed by 5% of the registered voters may be submitted to place a ballot question for voter acceptance of the CPA under G.L. c. 44B, § 3(h). The petition must state whether the adoption is under G.L. c. 44B, § 3(b), “traditional” CPA, or under G.L. c. 44B, § 3(b½), “blended” CPA. The petition must also state the amount of the surcharge percentage and, if adoption is under § 3(b½), the maximum percentage of municipal revenue that may be appropriated to the CP Fund. The petition must also state any exemptions to be adopted. The signed petition is submitted to the local board of registrars of voters, board of elections commissioners or local election commission. The board or commission has seven days to certify the signatures.

Are there any timing issues regarding when the CPA adoption must go to the voters?

Yes. After the legislative body accepts the CPA and adopts a surcharge plan (or after the petition has been submitted and the signatures have been certified), the acceptance question must be placed before the voters on the ballot at the next regular municipal election or state election where the municipality can comply with applicable referendum notice requirements of G.L. c. 54, § 42C. Questions to voters are required to be filed with the city/town clerk 35 days before a municipal election and, in the case of a state election, questions must be filed with the state secretary 60 days before a state election.

For example, on May 1, the legislative body accepts the CPA and adopts a surcharge or the local election commission certifies the signatures contained on a petition. The next regularly scheduled municipal election is May 20 and the next regularly scheduled state election is November 2. Because the next regularly scheduled municipal election is less than 35 days after the legislative body’s acceptance of the CPA or the certification of the signatures on the petition, the acceptance referendum cannot be placed on the municipal election ballot because it is not possible to give the city or town clerk the required 35 days advance notice of the referendum. In this case, the acceptance referendum must be placed before the voters at the next regularly scheduled state election because the city or town is able to give the secretary of state the required 60 days advance notice of the referendum.

What is the question that is placed on the ballot for voter approval?

The form of the question is stated in G.L. c. 44B, § 3(f):

''Shall this (city or town) accept sections 3 to 7, inclusive of chapter 44B of the General Laws, as approved by its legislative body, a summary of which appears below''

A fair, concise summary and purpose of the CPA provisions that are the subject of the referendum must appear underneath the question. The summary is to be prepared by the community’s city solicitor or town counsel and must include the surcharge percentage approved by the legislative body. It should also include any exemptions adopted by the legislative body and include the statute. It should also state the effective fiscal year of the acceptance and any other relevant information.

The question is approved and the statute accepted if a majority of the voters voting on the referendum vote “yes.”

Although the CPA does not provide a form for a ballot question proposed by petition, the question should be in substantially the same form as the above ballot question and the city solicitor or town counsel should prepare a fair and concise summary to be printed below the question.

Stay tuned for next month’s City & Town for Part 2 in our FAQ series on the CPA where we will discuss CPA exemptions.