UMass Donahue Institute

WHILE the state's seven-year-old Community Preservation Act has accomplished many of its laudable goals, it has done so in ways that tax the poor to benefit the rich. The law should be changed to be more equitable and transparent.

Under the law, local voters can raise their property taxes by up to 3 percent. The money, which is matched by a statewide fee on most transactions filed with registries of deeds, can only be used for affordable housing, open space, historic preservation, and recreation. The problem is that affluent communities are more likely to adopt the optional tax, while everyone pays the state matching funds. Moreover, because matching funds are linked to property values, wealthy communities receive more money than the poorer ones.

Illustratively, Boston, which generated an estimated $11.4 million of about $180 million in state matching funds distributed between 2001 and 2006, did not receive any of this money, because its voters turned down the optional surcharge in 2001. Similarly, while residents of both Springfield and Worcester generated an estimated $3 million in Community Preservation fees and residents of Brockton, Lowell, and Lynn paid an estimated $2 million in fees, none of those communities received any of the state funds because they have never even voted on adopting the law.

In contrast, Cambridge, which generated an estimated $1.6 million in fees, has received more than $27 million from the Commonwealth, while Newton, Weston, Nantucket, Westford, and Duxbury all received at least $4 million more in state grants than they generated in estimated fees. On a per capita basis, moreover, the law has greatly benefited residents of small communities with high property values such as Chilmark, Aquinnah, Nantucket, and Weston, which all received more than $485 per capita from the state fund.

Inadequate reporting requirements make it difficult to determine how communities are actually spending the state funds and whether the money is being used efficiently.

According to data reported by communities on a voluntary basis, more than 40 percent of Community Preservation Act funds spent by cities and towns between 2001 and mid-2006 were used to protect open space, and about a third were spent on affordable housing.

However, if Cambridge, which has used the majority of its Community Preservation revenue for housing, is excluded from the calculation, then more than half the spending went to open space and less than 20 percent went to affordable housing, which is greatly lacking in most the communities that benefit from the law.

The lack of spending data also makes it impossible to assess whether money is being spent efficiently. Because adoption of the Community Preservation Act and generation of revenue under the Act are correlated with wealth as measured by property values, it seems likely that projects funded by it are more expensive than a statewide average cost of similar projects. Weston, for example, spent more than $120,000 per acre when it used $3.25 million in Community Preservation funds to buy 27.5 acres of land in 2002.

The good news is that the Legislature and the Patrick administration can easily fix all these problems. An amended Community Preservation Act, for example, might end transfers of deed registry fees between counties, cap the amount of state matching funds available to individual communities, and establish a competitive process to distribute the remaining state funds among projects that efficiently meet statewide and regional goals. It also might require more spending on affordable housing in communities where such housing is lacking. And it should include mandatory reporting requirements that will make it easier to assess whether Community Preservation Act funds are being raised and spent in equitable and efficient ways.

Such steps would address the law's biggest flaws without undermining its greatest strengths.

Related Documents:

The Massachusetts Community Preservation Act:Who Benefits, Who Pays? (PDF 0.4 MB)

July 27, 2007