Community Preservation Act S. 1513
Affordable Housing Uses for Community Preservation Fund
The Community Preservation Act is a funding mechanism for cities and towns. A minimum of 10% of the funds collected through the real estate transfer tax or property tax surcharge must be used for capital or loan expenditures associated with providing community housing. Funding decisions are made by the community though funds must be allocated according to an agreed-upon master plan. This assures that the community will establish appropriate and sustainable growth patterns. The money can be used for capital projects or as a match for programs that fulfill these goals. Communities can use these funds as they work to fulfill their 40B requirements:
Home Ownership
- CPA funding can be used for down payment assistance or to finance low-interest loan programs for income-eligible first-time homebuyers (modeled after grant and deferred loan programs in Boston and many other Massachusetts communities).
- CPA funding can be used as a subsidy to write down interest rates for first-time homebuyer programs such as the Massachusetts Housing Partnership’s Soft Second Program or the state’s Self Help Program which has specific matching requirements. This subsidy makes the Soft Second Program the most affordable mortgage in the state.
- CPA funds can be another source for gap funding for non-profit community development corporations and for-profit developers in acquiring, rehabbing, or building affordable homes. The money reduces the purchase price to make the home affordable to income eligible buyers.
- CPA funding can provide grants for the purchase and rehab of 1-4 family homes by income eligible buyers. This addresses our aging housing stock and the need for rehab.
Rental Assistance
- CPA funds can be used to acquire or rehab rental housing.
- CPA funds can back a revolving loan fund or guarantee fund for tenants who cannot afford first month, last month, and security deposit. (The state once had such a program for tenants moving out of shelters.)
Other Uses
- CPA funding can provide a match for Home Modifications Bill S.608 funds to adapt the homes of elderly and disabled town residents. Funds can be used to install such safety measures as ramps and bars. In the event that Bill S. 608 does not pass, CPA funding would still be available for these uses.
- CPA funding can provide matching funds under the Housing Innovations Fund which helps to build limited equity coops, housing for people with AIDS, etc.
CPA funds can be used to establish an endowed reserve fund to support affordable housing initiatives. Income from the endowment for local affordable housing can be used straight out or matched with state or federal funding.
Source: Community Preservation Coalition.Old City Hall, 45 School Street, Boston, MA 02108.