Funding Housing Through the Community Preservation Act

New Study: More than 30 Percent of Massachusetts Communities Failing Housing Promises of Community Preservation Act Tufts Center for State Policy Analysis Finds Missed Opportunities to Address Housing Crisis

In the midst of a housing production crisis, more than a third of communities participating in the state’s Community Preservation Act are failing to meet the legal mandate that 10 percent of the assessment on -local property taxes be spent on housing, a new study from the Tufts Center for State Policy Analysis shows.

The report found that housing is receiving far less of the new funding than open space and recreation and historic preservation, which each have consistently drawn more than 40 percent of the funding, while housing projects consistently received less than 20 percent of all CPA funding.

“The Community Preservation Act can be a vital tool communities may use to increase housing production – they just need to fully use it,” Greg Vasil, CEO of the Greater Boston Real Estate Board, said. “We hope this analysis by Tufts and its recommendations shed light on ways that the CPA, a program we have supported since its inception, can be strengthened to create more housing and more meaningfully address the housing crisis.”

“Communities across Massachusetts must play their part in meeting affordable housing requirements and helping the state overcome the housing crisis,” said Kate Franco, Board Chair of the Greater Boston Real Estate Board. “By enforcing – and even strengthening – the CPA, the state has an opportunity to send a clear message that it is committed to making the Commonwealth of Massachusetts more affordable.”

The report, “Missed Opportunities: Funding Housing Through the Community Preservation Act,” analyzes how the 195 communities that have joined the CPA since it became law in 2000 are spending the program’s funds. The findings come as Massachusetts faces an unprecedented housing crisis that has contributed to the departure of more than 100,000 residents since the beginning of the COVID-19 pandemic, putting the long-term economic vitality of the region in jeopardy.

Under the program, municipalities may impose a surcharge on local property tax bills to fund – with the support of a partial state match – affordable housing, historic preservation, open space and recreation. Participating communities must commit to spend at least 10 percent of funding on each of those areas. The report found the program has worked to create affordable housing in urban and rural communities, but has been less successful in suburban areas, which have prioritized open space over housing development.

“Though the Community Preservation Act has proven incredibly popular across Massachusetts, our research reveals how serious gaps exist within the program that have dramatically impeded the creation and maintenance of affordable housing,” said Evan Horowitz, Executive Director of The Center for State Policy Analysis at Tufts University. “Our findings highlight how the state may improve the CPA to help the program reach its full potential, and make it a more pivotal tool in helping the state overcome the housing crisis.”

The report finds:

• Since the CPA took effect, less than 5 percent of projects have involved the creation of new housing, with funds primarily going towards unit upkeep and maintenance.
• When housing creation does occur, urban areas spend substantially more than suburban communities.
• Towns appear to occasionally double-count homes produced.

Dozens of communities that placed CPA funds in housing trusts - municipal bank accounts - have not reported how these funds were later used, even though they are required to do so.

To boost housing production, the report recommends:

• Offering additional state funds for cities and towns that commit at least 20 percent of their CPA dollars to affordable housing (or 10 percent to support new housing units). Municipalities meeting these higher thresholds could also be given priority access to state grants and subsidies.
• Ensuring that all municipalities are meeting the minimum requirement to devote at least 10 percent of CPA revenue to affordable housing. Cities and towns falling below this threshold may need to support additional “make-up” housing projects moving forward.
• Enforcing reporting requirements for housing trusts, including annual spending summaries and concrete project details.

The report is available for review at this new website, MAHousingsolutions.com which breaks down the findings and shows how participating communities are spending CPA funds.