Time to dump the CPA in Sturbridge

A couple of weeks ago I posted a copy of a "Letter to the Editor" regarding the Community Preservation Act (CPA) and the effort to repeal this act in Sturbridge. There will be a ballot question at the election on April 9th. I have been receiving more information on the CPA and the more I learn the more I am for voting to get the town out of the CPA.
Here is a copy of a Letter to the Editor written by Janet Garon with some very interesting facts about the CPA and the impact it is having on taxpayers in Sturbridge. It's a little long but worth the time to read it.

March 20, 2012

Dear Editor:
 A small group of citizens in Sturbridge has been deeply researching the Community Preservation Act (CPA), how it impacts our citizenry, and what changes will occur should residents decide to revoke the CPA. We wish to share some new information with residents to counter some misinformation while helping residents to make informed decisions during the Town Elections on April 9, 2012, as this is the date voters will be deciding to maintain or revoke the CPA here in Sturbridge.
 Sturbridge is $4.3 million in debt with four CPA projects, which is 8% of the town’s $50,000,000 debt.
 In 2011, our CPA debt payment was $413,482 but the surcharge revenues collected were $354,225. This is important because the Department of Revenue issued two Legal Opinions in 2004 and 2006, stating that a town’s annual CPA debt should not exceed the amount of annual CPA surcharge revenues collected. Thus, we are currently upside-down on our CPA debt/revenues and need to stop spending.
 If voters decide to revoke the CPA, the 3% surcharge on your real estate tax bill will continue until the CPA debt is paid – up to 2030; and the annual matching funds will continue the same way it normally would. Also, revoking the CPA has no adverse effect on the town’s bond rating or outlook.
 Matching funds are NOT dependent upon how much CPA money the town spends nor are they “grants.” Matching funds come from fees/surcharges collected at Massachusetts’ Registries of Deeds. Therefore, the percentage of matching funds fluctuates each year for two reasons: 1) the total amount of money collected in fees/surcharges at the Registries of Deeds is directly dependent upon the amount of real estate activity in our state and 2) other towns can adopt the CPA, which reduces the percentage of matching funds –148 towns have adopted the CPA and two more adoptions are pending in 2012.
 The various state agencies of Massachusetts will NOT be “angry” at Sturbridge if the CPA is revoked. The State doesn’t care if the town revokes the CPA or not.
 CPA funds cannot be used for staffing any town departments, nor the necessary personnel to maintain
current recreational fields or the other open spaces in Sturbridge. CPA guidelines do not permit purchases of sports equipment of any kind, playground equipment on school property or on town-owned, non-CPA acquired recreation areas. For example, playground equipment purchased with CPA funds in 2008 for the Cedar Street Rec Area is actually not permitted under CPA guidelines.
 Revoking the CPA is about controlling spending. Our position is: we no longer have the luxury of choosing to spend money on projects that do not produce a financial return to the town. At this time, tough choices must be made – voters must differentiate between buying what we NEED versus what we WANT. Spending taxpayer money on non-essential projects in these tough economic and uncertain times is wasteful and cannot be justified to those in our town who are in the worst financial condition and yet are now forced to continue to pay this 3% surcharge. The CPA is entirely taxpayer-funded, on both the front and back ends of the process: we pay the fees at the Registries of Deeds and we also pay the 3% surcharge on our tax bills. The “state” does not provide any matching funds – WE DO, Massachusetts homeowners!  The State just manages the fund and cuts the checks.
 The CPA cannot be used to fund the following: a waterline down Route 15; an Economic Development
Director; additional Department of Public Works employees or other town staff; management plans for the town's buildings and studies to determine long term capital needs. Nor will it fund upgrades or expansions to the Public Safety Building or the DPW Garage/Maintenance Facility or repairs to three bridges that fall under local jurisdiction on Holland, Champeaux, and Farquhar Roads – our Master Plan says these latter two are immediate needs. The CPA can only fund open space acquisitions for conservation and/or recreation; historic preservation projects; and affordable housing projects – none of these produce INCOME for the town. In fact, they are costing the town money, resulting in additional staffing requests at recent budget meetings.
 The MA Department of Revenue’s forecast for the first round of matching funds distributed to all CPA communities will be reduced from the 26% received in 2011 to 22% in 2012 (this is subject to change; the percentage of matching funds depends on the volume of real estate transactions, the amount of fees collected at Registries of Deeds, and whether more communities adopt the CPA; therefore, the percentage of matching funds could be higher or lower than 22%.)
 Sturbridge currently has the second highest property tax rate compared to nine towns around us. According to the town administrator’s FY13-FY17 Five Year Tax Projections, our tax rate is forecast to increase from $17.63 to $19.13 in FY2013.
 Pending legislation to amend the CPA comes as a result of the decline in the real estate market/reduction in matching funds, the adoption of the CPA in 147 other MA communities, and several towns now wanting to opt out of the CPA. Therefore, the legislature is proposing to increase the existing imposed CPA fees/surcharges on all transactions at the Registries of Deeds in order to match local surcharge revenues at not less than 75%. However, there IS NOT a “guarantee” of 75%, simply because there’s no way to forecast how many towns will adopt or revoke the CPA, nor is there any way to predict when real estate transaction volume will generate the income needed to pay out the 75%. According to State Representative Todd Smola, who is one of the sponsors of this pending legislation, this Bill currently sits in Committee and most likely, there will be no action taken during this legislative session. That means the Bill will need to be re-filed in 2013, at which time the bill will go back to Committee with no anticipated timeline as to when it would actually be taken out of committee and brought up to the House and Senate for a vote . What happens if we count on this money but the Bill fails to pass? While it is possible this bill could be approved by the Legislature, there must be enough fees collected to cover all the distributions to all cities and towns that have adopted the CPA – again, who can guarantee the 75%? 
 So, why revoke the CPA? With the town’s debt topping out at $50,000,000, of which 8% is $4.3 million in CPA debt, revocation is about controlling spending. Given that the town is currently upside-down on its debt versus the amount of surcharge revenues collected, our position is:  1) stop spending on new projects and 2) use this time to pay down the debt. When the debt is paid, voters can decide to bring the CPA back, either at the current 3% surcharge or possibly a lower surcharge.  At that time, voters could possibly decide to exempt the surcharge for individuals who qualify for low income housing or low/moderate income senior housing.
 Here is a summary of what will happen if voters decide to revoke the CPA:
1) The 3% surcharge on your property tax bill and the matching funds continue until the debt is paid.
2) All monies collected from the 3% surcharge and matching funds go into one pot to pay down the debt.
3) With voter approval, the existing balance in the Affordable Housing Fund can be spent on new projects.
4) No new open space or historic projects can be created as all monies collected will go to pay the debt.
5) The debt will be paid off by 2030 or perhaps sooner.
 Sincerely,
 Janet Garon
Sturbridge

The paragraph I highlighted is the one which sold me on it. As I have written here before, it is time to stop spending money we don't have on things we don't need.