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Cities and towns that adopt the Community Preservation Act (CPA) generate monies for their local Community Preservation funds through the implementation of a local CPA property tax surcharge of up to 3% and through the receipt of annual matching of funds, at variable rates, from a statewide CPA Trust Fund created by the Act. Only communities that have adopted CPA are eligible to receive these matching funds each year.
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The surcharge added to property taxes can be no more than 3% of ones real estate property taxes. The town can elect a surcharge smaller than this, such as 1%. However, towns that adopt the 3% surcharge will receive a larger match from the state. Any portion of a taxpayer’s real property taxes that are already exempt are also exempt from the CPA. The town can also decide to allow exemptions for low income households or moderate income seniors, the first $100,000 of taxable value of residential real estate and for class 3 (commercial) and 4 (industrial) properties. In Dighton the surcharge would be 1%, with low-income households (up to 80% of median income) and moderate-income seniors (earning up to 100% of median income) exempt from contributing. The first $100,000 of any residential property is also exempt. The average household in Dighton would pay between $25-30 per year. In Dighton the surcharge will be 1% of the tax bill so the average resident will pay between $25-30 annually. There will also be exemptions for low income households and moderate income seniors. The first $100,000 of taxable residential property value will also be exempted.
Residential Surcharge Example:House value: $350,000Exemption: - $100,000 ___________Taxable value for surcharge: $250,000 Tax rate $11.50 per $1,000 of house value. Annual property tax bill $2,875.00Annual CPA surcharge: $2,875.00 x 0.01 = $28.57 per year
To increase the surcharge it must be put on the ballot at a town meeting. It would then be voted on at the next regularly scheduled election.
After a town adopts the CPA, a local Community Preservation Committee is formed. The committee must hold public meetings where citizens can suggest ways to spend the money. The committee will make recommendations on how to spend the money at town meeting. Here Dighton residents will be able to vote for or against the projects.
Each fiscal year the town must spend 10% of the money collected on each of the following 1) open space 2) historic resources 3) community housing. Up to 5% can be spent on administrative costs. The remaining money can be spent on the above uses as well as recreational purposes. The money collected can also be saved and spent on these areas in future years.
The town must keep the CPA for 5 years. Afterwards the town can vote to withdraw.
Cities and towns that adopt CPA obtain community preservation funds from two sources - a local property tax surcharge and a yearly distribution from the statewide CPA Trust Fund. Trust fund revenues are derived from a surcharge placed on all real estate transactions at the state's Registries of Deeds. The surcharge for most documents filed at the Registries is $50, which is immediately deposited the CPA Trust Fund held at the Department of Revenue (DOR). Municipal lien certificates are subject to a $25 surcharge. Depending upon how the real estate market is doing, the $50/$25 fees add up to approximately $60 million per year (Note: the original CPA legislation set these fees at $25 and $10 respectively. DOR tracks the receipts and posts a monthly report on these collections and they use that data to provide an estimate of the annual trust fund distribution each spring. Every CPA community receives their distribution from the trust fund at a formula-based percentage of what they raised locally.
The CPA requires that communities spend, or set aside for future spending, a minimum of 10% of their annual CPA revenues for each of the three following categories: open space/recreation, historic preservation, and community housing. The remaining 70% of the funds are undesignated, and can be used for any allowable project in any of the CPA categories. This gives each community tremendous flexibility to determine its own priorities. For more information https://www.communitypreservation.org/allowable-uses