CPA – Lexington’s experience


Interesting insights below into the Community Preservation Act, by Lexington’s Capital Expenditure Committee, which in hindsight rued its opposition to the CPA, given how much state money they got.

The CPA is all about getting the state matching money – because that state money in turn lowers our property taxes (if we eventually spend for open space, historic preservation, and affordable housing).

Medfield has adoption of the CPA as a question at its annual town meeting on 4/27/15, at 7:30 PM in the gym at MHS.


 

LEXINGTON CAPITAL EXPENDITURES COMMITTEE
STATEMENT TO TOWN MEETING
April 6, 2011
(edited for length)
When Lexington’s Town Meeting considered adopting the Community
Preservation Act in 2005, the Capital Expenditures Committee unanimously
recommended its rejection, primarily citing concerns about “crowding” out
future Proposition 2½ override votes. With 20:20 hindsight, the present
committee, 4 of the 5 members still being the same as 6 years ago, will be the
first to admit that we were wrong. I will have more to say on that topic in a
minute.
State Match
Clearly, the most important aspect of the CPA is the State “match”. Since
ratification, Lexington has received $6.4M in matching funds and we expect
approximately $859,000 more in the upcoming fiscal year. That yields an
effective State-match rate of about 50% over those five years. While the trend
in matching percentage has been downward since the 100% match in our first
year of adoption, the most likely scenario is that the matching funds remain
strong enough to justify continued CPA project funding in Lexington. And
because we are at the maximum surcharge level Lexington receives a higher
matching percentage rate than towns with a lower surcharge level.
Proposition 2½ Debt Exclusions
Some of the CPA projects we have funded in Lexington over the past several
years would, by policy, have been performed using Proposition 2½ Debt
Exclusions if the CPA had not been adopted here. This is because not only is
it difficult to find that much money in the “regular” tax levy, but it also
implies widespread consensus by virtue of passing a voter referendum. So by
obviating the need for debt exclusions for eligible big-ticket items like land
purchases, the CPA has provided a more flexible funding environment.
This flexibility and streamlining can be considered a positive in that it has
created a debt exclusion-free environment for CPA-eligible projects.
Regarding Lexington’s recent CPA land purchases, it is arguable that the
CPA aspect of their funding has saved the taxpayers money. Clearly there is
the obvious state match to consider. But there is also the aggressive bonding
taken by the Town with the recommendation and approval of the finance
committees. Of the three major CPA land purchases, one was cash and two
were financed with 3 year front-loaded bonds. Had any of these been funded
using debt exclusions, the bonding would almost certainly have been for a
much longer term and therefore would have cost the taxpayers tens of
thousands of dollars more in debt service.
Project Diversity
The CPA has allowed Lexington to advance several projects which would not
normally be on the Town’s agenda. For example, the Lexington Historical
Society has received funds for restoring the Hancock-Clarke House and
Munroe Tavern. And funding has been approved for several affordable
housing projects which normally would have been difficult to fund with tax
levy monies. These projects count favorably against our Chapter 40(b)
threshold.
Impact of a Reduction
CPA-related projects in Lexington would look quite different should a
reduction of our 3% surcharge prevail. A cursory scan of the projects that
have been funded over the last five years indicates that most of those would
not have been funded if the only revenues available had been from a 1%-
surcharge. Moving forward with a reduced surcharge, it is clear that large
land and affordable housing purchases will be far less likely to occur, and if
they do, they will likely require the use of long-term bonding, a policy which
contradicts our past tendency to thoughtfully use short-term bonding for CPA
monies when debt funding has been necessary. Further, a reduced surcharge
will eliminate significant contributions towards Town projects creating the
possibility of deferred or eliminated projects, and/or future debt exclusions.
Crowding
As I mentioned before, prior to Lexington’s adoption of the CPA in 2006, this
Committee had been concerned that once the taxpayers had experienced the
additional demand of the CPA surcharge, it would “crowd out” their support
of Proposition 2½ operating overrides and debt exclusions. We were wrong in
this assumption. So far, that crowding effect has not materialized. In fact,
while there was split support for the four overrides in June 2006 before any
CPA surcharge appeared on tax bills, in Jun 2007, after the CPA surcharge
appeared on the bills, there was support for both a $4 million override for the
schools and a $27 million debt exclusion for the public works facility. The
current 3% rate creates a relatively minor impact on the average tax bill and
won’t present a crowding factor. Additionally on the topic of crowding, it can
be reasonably argued that the CPA funding at the current percentage has
actually reduced the number of overrides and debt exclusions, and will
continue to do so.
Project Costs and Matching Funds
Based on the most recent State-matching funds rate, the taxpayer presently
pays only 78 cents on the dollar of every CPA project. That number is 67
cents on the dollar if you take the overall matching rate over the past five
years. Undeniably, there are some projects that have been advanced by the
CPC over the past five years that were not unanimously supported by the
CPC and Town Meeting. That’s nothing new. Very rarely does Town
Meeting show unanimous support for any given year’s capital docket.
Nevertheless, the CPA has funded many beneficial and positive projects in
Lexington. If they weren’t positive, a majority of Town Meeting members
wouldn’t have approved them. And the fact stands that Lexington has already
received $6.4 million of CPA matching funds; make that $7.3 million with
this year’s match.
Capital Advocacy
It is this Committee’s job to advise Town Meeting on matters related to
capital spending in Lexington. The Capital Expenditures Committee believes
that the CPA at the current 3% surcharge level and State match have been
beneficial to Lexington’s capital agenda and we unanimously oppose
reduction of the percent 3% surcharge.

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