Affordable Housing Institute : US

“But the pension fund was just sitting there!” protested Doonesbury’s Uncle Duke, when confronted with what lesser minds would unsympathetically describe as embezzlement.   

“That’s really narrow thinking!”

 

But that’s the problem with excess capital, isn’t it?  Somebody always finds a use for it.

 

Look, the jar’s overfull anyway!

 

Such a problem is illustrated, unfortunately, by the expenditure creativity being displayed by various cities and towns around Massachusetts as they transmogrify the original legislative purpose of the Community Preservation Act’s money into … well, whatever they can think of.  As revealed by yet another insightful policy article from MassInc’s, free CommonWealth magazine:

 

Moving the goal posts

Designed to create open space and affordable housing, the CPA is now being used to pay for sidewalks and artificial turf

 

If I write the rules, there’s no rule against it, right?

 

The Community Preservation Act arose from the noble desire to give municipalities more tools to fight urban sprawl and to make housing affordable so residents could continue to live where they grew up. But over the last several years the focus in many communities has begun to shift to more parochial concerns. Cities and towns, many of them among the wealthiest in the state, are building sidewalks, sprucing up parks, and installing synthetic turf athletic fields—and using the Community Preservation Act to stick the state with half the tab.

 

Seeing the uses of funds drift away from the original legislative purpose is both plausible and disappointing, as I’ve previously lauded the Community Preservation Act as an example of good policy made manifest:

 

Consider, for instance, the illuminating experiment of Massachusetts‘ Community Preservation Act.  The idea is simple: raise funds statewide to create a pool that is used to match (dollar-for-dollar) funding that cities raise from their own coffers, the total sum specifically dedicated to one of three permissible use categories as decided by the town.

 

The program has proved very successful, as a useful retrospective from CommonWealth Magazine shows:

 

This spring, the preservation coalition celebrated the 100th community to approve the CPA (see map) when voters in Marion approved a 2% tax surcharge by a 71-29 margin.

 

Martha’s Vineyard is the Napoleonic hat island; Nantucket is the swoosh.

 

Over its first five years (enacted September, 2000), the CPA has generated $170 million in funding for its permissible uses — meaningful money in a state of 6.3 million people — and its support is growing.

 

The basic concept is sound: encourage cities and towns to buy up open land and preserve green space, and CPA has done a fair amount of that:

 

The eight-year-old Community Preservation Act provides matching funds to municipalities that vote to add a surcharge to their property taxes of up to 3%, with the new revenue earmarked for historic preservation initiatives or projects that create or preserve affordable housing, open space, or recreational areas.  Supporters say the CPA has saved more than 8,000 acres of open space, created more than 1,000 units of affordable housing, and financed hundreds of historic preservation projects statewide.

 

The thing is, affordable housing is expensive, it always costs substantial money, and it’s a difficult public-policy intervention, especially as it always triggers outbreaks of NIMBYism. No surprise, therefore, that politicians would be looking for ways to spend less money on things more politically popular:

 

But recreation, which garnered almost no attention when the Community Preservation Act was debated and approved by the Legislature in 2000, is now the fastest-growing category of spending under the law. It’s also the most controversial. With municipalities hungry for cash and no one regulating what they do with their CPA funds, many communities have become quite imaginative in defining what it means to create or preserve recreational space.

 

Wayland and Acton, for example, concluded that replacing a grass football field with a synthetic turf field created new recreational space.

 

As you can plainly see, that grass on the left is unusable

 

Falmouth felt that the installation of bike racks and benches around town qualified. Weston says it is preserving playing fields at its high school by using CPA funds to install a drainage and irrigation system.  Newton believes rehabbing existing rundown parks creates new recreation space.

 

Really creative definitions of new, don’t you think?

 

Every one of them as good as new!

 

In Sudbury, a wealthy town west of Boston, local officials say the sidewalks that run alongside certain residential streets are actually new recreational facilities serving pedestrians, joggers, bikers, skateboarders, and rollerbladers.  Town officials say the residential sidewalks, paid for with $400,000 in CPA funds, are no different from bike trails or park walkways.

 

Except that the righteous snobs would probably chase away the rollerbladers, if by some oddity they showed up en masse.

 

“Why isn’t walking considered a recreational opportunity?” asks Jody Kablack, Sudbury’s town planner and community preservation specialist. “We firmly believe these are recreational.”

 

Translation: we firmly believe we can get away with calling a sidewalk a park.

 

“Towns are strapped for money. They see this pot of money. They know what they are doing is wrong, but there’s tremendous pressure to satisfy these soccer moms,” says Jeffrey Seideman, one of several Newton residents who successfully challenged in court his city’s plan to use $766,000 in CPA funds to fix up two neighborhood parks.

 

Money is fungible, but use is not.

 

Or is it?

 

Newton has appealed that case to the state Supreme Judicial Court, and Newton’s state senator is leading the charge on Beacon Hill for legislation that would widen the political base of the Community Preservation Act, toss more state money into the pot, and give cities and towns the flexibility to use CPA money for virtually any type of recreation project.

 

In other words, to turn the Community Preservation Act into just another form of revenue sharing.  Three years ago, when I posted about this, I warned of raids:

 

Unallocated funds!

 

4.             Ring-fence the proceeds

 

For an activity to be a program, not simply a slush fund, its purpose must be discretely defined:

 

[Money is] dedicated to spending in three areas: open space, affordable housing, and historic preservation … with communities that adopt the CPA mandated to spend at least 10% of the money in each of the three categories.

 

Although individual communities plumped for heavy usage in one area,

 

“There was a lot of skepticism initially, with people saying the CPA was only perpetuating buying up open space and locking out housing development,” says Dorrie Pizzella, executive director of the preservation coalition, an umbrella group that includes conservation, housing, and historic preservation advocacy organizations.

 

… overall results are encouragingly diversified:

 

Of the $170 million appropriated since the act was approved:

 

38% has gone to open space acquisitions

35% has been earmarked for affordable housing

19% has gone to historic preservation projects

 

The remaining 7% has gone to recreation projects, a category designed to allow spending on park improvements in communities where there is little remaining open space to buy.

 

Protecting legislative allocations since 1916

 

5.             Guard the fences!

 

Just like Doonesbury’s Uncle Duke, who once famously exclaimed, “but the pension fund was just sitting there!” elected officials who see a large pot of money are always eager to tap it — just for a minute, as Atlas said to Hercules:

 

“Let me shift it on my shoulders.”

 

Each year since the law’s passage, supporters have also had to contend with various proposals to divert money from the state matching fund for other purposes. The latest came this year, when Gov. Mitt Romney’s budget proposed transferring $10 million of the approximately $100 million in the Community Preservation Fund into a separate fund established last year to reward communities for adopting zoning changes that allow for denser development near town centers, part of the administration’s smart-growth strategy.  

 

 

They must be prevented from doing so:

 

Every effort to raid the fund has been turned back, and with nearly one-third of the state’s communities now having adopted the CPA, the constituency for the preservation act is only growing bigger and stronger.

 

If a raid succeeds, the political coalition that raised the funding collapses.

 

The raid is in full flight now:

 

According to the Community Preservation Coalition’s website, recreation spending jumped from $800,000 in fiscal 2002 to nearly $8 million in fiscal 2006. Total recreation spending from fiscal 2002 through fiscal 2006, the most recent year available, was $15.5 million. During that same period, spending on open space ($87.5 million), affordable housing ($68.1 million), and historic preservation ($41.0 million) was much higher, but all three categories grew more slowly.

 

The problem is all those bike racks and sidewalks are coming at the expense of housing:

 

Affordable-housing spending actually declined 17% between fiscal 2005 and fiscal 2006. Spending priorities vary among municipalities. Cambridge, for example, spends 80% of its money on affordable housing and nothing on recreation. (More than half of all CPA-created affordable housing is in Cambridge.)

 

That’s Our Fair City in action!

 

Neville Place, Cambridge

Putting the state’s money where our mouths are!

 

A report issued last year by the Rappaport Institute for Greater Boston at Harvard University indicated that CPA money flows predominantly to wealthier cities and towns because they can afford the property tax surcharge and their high property values tend to generate a higher state match. (See “Study Says CPA Steers Money to Wealthy Towns,” Inquiries, CW, Summer ’07).

 

The top 10 recipients of state CPA money include Cambridge, which has received nearly $34 million to date, and Newton, which has received $11 million.

 

Much though I like living in Cambridge, I feel a twinge of embarrassment that we’re winning this competition:

 

The others in the top 10 are Barnstable, Weston, Nantucket, Westford, North Andover, Sudbury, Duxbury, and Plymouth. Weston is the state’s wealthiest community and Sudbury is the fifth-wealthiest. The average median household income of the top 10 CPA communities is $83,166—or 65% higher than the statewide average.

 

If the Community Preservation Act funds devolve back into being nothing more than revenue sharing, they lose their policy justification.  Worse, the effect is to share more revenue back to rich towns, and less back to poorer ones. 

 

What’s mine is mine, and what’s yours is mine

 

Unfortunately, some supporters want to widen the loophole even more:

 

But CPA supporters are pushing for more than just clarity. The legislation they are pushing on Beacon Hill would pump more state money into the CPA fund, broaden political support for the law by making it easier for the state’s cities to join, and give towns the ability to spend recreation money pretty much as they see fit.

 

The bill, filed by state Sen. Cynthia Creem of Newton … to make the CPA more enticing to cities … would also make it possible to obtain state matching funds beyond what would be warranted by the community’s property tax surcharge. The bill would allow a municipality to vote for a 1% property tax surcharge but qualify for participation at the 3% level by incorporating other existing municipal revenues, including funds from a hotel-motel tax, linkage fees, zoning payments, and property sales.

 

Senator Creem wants things to be more enticing

 

Marc Draisen, executive director of the Metropolitan Area Planning Council, says cities are enthusiastic about the proposed change. “The Community Preservation Act is one of the most popular local option programs in recent Massachusetts history,” he says.

 

I like Marc – have known him a decade or more – and I can understand why he’d see expanding CPA funding as a good thing, but not at the expense of its focus.

 

But Guive Mirfendereski, the Newton lawyer who is representing residents in their lawsuit over CPA recreational spending, says Creem’s bill is no technical amendment. He says the bill turns the Community Preservation Act into just another form of local aid. He says the bill changes the existing law so dramatically that, if it were to pass, communities should be required to seek voter approval for the CPA again.

 

“Knowing what I know today, I would not have voted for the adoption of the act back in November 2001,” Mirfendereski told lawmakers.

 

It’s too bad you can’t take votes back, isn’t it?

 

Barbara Anderson, executive director of Citizens for Limited Taxation, says she also feels hoodwinked by the metamorphosis of the Community Preservation Act. “What started out as a way to preserve open space has become ‘What can we give every town?’” she says. “It’s gotten silly.”

 

A Community Preservation Act not dedicated to affordable housing merely takes from the poorer towns and gives to the rich.  It wasn’t supposed to do that.

 

Rob from the who and give to the whom?*

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