What CPA Could Mean for Further Development in Boston

The Community Preservation Act (CPA) is something that has been adopted by many, many communities throughout Massachusetts. In fact, nearly half of all municipalities are now involved with this 16-year old law, and many say that Boston is long overdue in adopting this program.

At its heart, the Community Preservation Act is meant to do a variety of things that make communities better. Funds can provide more affordable housing options and money has been used to build parks or preserve historical buildings — tasks that enrich communities by making them more beautiful, vibrant and entertaining.

Let’s examine the Community Preservation Act and see what it might mean for further development in Boston!

How the Community Preservation Act Works for Boston

The CPA works through a small tax surcharge on properties. Essentially, a homeowner would pay an extra $24 each year on their property taxes. Then, that money is matched by a state trust fund and poured back into the communities that are part of the CPA.

In Boston, the Yes for a Better Boston Committee wants the CPA to levy a 1% surcharge on property taxes, but there would be several exemptions. Low-income homeowners and some seniors would be exempted, and the first $100,000 in property value on both business and residential properties would be exempted. Now, that sounds like a lot, but in actuality, it means that someone with a $500,000 property would only owe an extra $25 each year.

CPA and Boston Building Development

As mentioned above, these tax surcharges go into the CPA fund, where they will be matched with money from the state. The funds are meant to do what municipalities have been unable to do, which is to develop communities beyond the absolute bare necessities. This means that in a city that is part of the CPA, communities can work together build the things that they need, whether it be more park space, affordable housing, housing for the elderly and so forth.

That’s where developers come in. If the CPA comes to Boston, then the city’s communities will need developers to make their plans come to life. Estimates show that the CPA would raise about $20 million each year for further development in Boston. In other words, if Question 5, which is the bill that would bring the CPA to Boston, passes in November, then the results could be lucrative for developers across the city. (Update: the bill did pass, read more here)

What are the Drawbacks to the CPA?

There is no denying it — the CPA is a tax hike, though a small one. But, with voters still somewhat pessimistic about the economy, tax increases are difficult to pass.

The other issue with the CPA is that as more communities join, the trust fund that provides matching funds is spread thinner and thinner. In the years between 2002 and 2007, communities received 100% matching funds. However, as more communities joined, and as the housing market took a downturn, that matching amount dwindled — down to 68% in 2008. Nowadays, because the trust fund is shared by all communities involved, that amount is even smaller. In fact, over the past 7 years, only one time has the matching fund exceeded 35%.

There is one bright point to this, however. If the CPA struggles because the state matching funds simply aren’t there, some lawmakers, including Governor Charlie Baker, are hopeful that they can allocate more money from the state budget to the CPA fund — potentially as soon as 2017.

The Community Preservation Act could mean good things for further development in Boston, even though matching funds aren’t what they used to be. But will the voters agree to a tax surcharge? We’ll have to wait until November to find out!