Monthly Archive for October, 2005

The big question about the Watertown CPA

Warren Tolman, one of the co-chairs of the Watertown Committee for Community PreservationWatertown Committee for Community Preservation, makes this claim

Since the town spends more on average than the proposed surcharge of $800,000, adopting the CPA in Watertown could shift items from the town’s capital budget to the community preservation fund, thus freeing up money for education, public works, and so on.

I recently discussed this with Jonathan Hecht as well. The important question for me is what is the net effect on taxes over the next few years? I can handle a tax increase now if it means less of an increase (or even a decrease) later. But I don’t think we’re talking about that.

Projects that Tolman mentioned that can use the CPA funds include converting Victory Field to turf, rebuilding the Grove Street entrance to Fillipello Park after the recycling center is moved, restoring the Edmund Fowle House, building a regulation Little League field or helping seniors and town employees remain in Watertown.

But that assumes that we would spend money on the proposed CPA-fundable projects even if it meant not spending the money necessary for “education, public works, and so on.” I don’t think the town would ever convert Victory Field to turf or build a Little League field  before it hires enough teachers and makes sure the trash gets picked up. At least I hope not.

So we’re not really talking about “freeing up” money from the budget. We’re talking about adding money to the budget so that we can do more.

The $10 return on every $3 that residential property owners will pay additionally with the CPA is a great deal but I also don’t think that’s so simple either. If business owners have to pay the 2% surcharge as well then they will pass their higher expenses on to their customers or tenants. I suppose most businesses in Watertown also serve lots of customers outside of Watertown so the higher costs would get distributed more broadly. But it still represents a hidden cost for Watertown residents. Extending that thinking, are the projects proposed for CPA funds going to improve the opportunities for businesses to open and expand in Watertown. What do the business owners think?

Thinking About the Community Preservation Act

As someone who blogs about
Watertown I have been asked by the Watertown Committee for Community
Preservation to support the CPA in my blog. So here are my
thoughts.

The CPA seems like
a good deal for Watertown. We pay a 2% surcharge, the state matches it
1:1 and the town has $1.6 million for “expanding existing parklands,
improving recreational facilities, preserving historic artifacts and
structures, and supporting more housing opportunities for Watertown
residents.” This is just the kind of initiative I would normally
support. My family makes use of Watertown’s parks, I am interested
in historic preservation, and I’d like to see Watertown remain a
diverse community. But it’s not that simple. Here are the issues I am
wrestling with:

Would we really be missing out?

I
do not buy things I don’t need just because they are on sale.
Proponents of the CPA argue that we are missing out on our share of our
state tax money by not raising our own local taxes via the CPA. I would
argue that if I don’t want to spend $10 on a project, then why would I
be in favor of spending $20 on it – regardless of whether it’s my money
or someone else’s being spent? This leads me to my next question:

Is this what I want to spend my money on?

The
CPA will cost my family about $100 this year, and more each year
that taxes go up. Is paying additional taxes what I would choose to do
with that $100? That’s $100 I won’t put away for retirement (and since
that $100 would be invested tax free for at least 25 years, we’re
talking about a future value of considerably more than $100).

I
work for a small business, my salary has not been keeping pace with the
increases in property tax, energy costs and health insurance costs, to
name just the biggest expenses that make Massachusetts the most
expensive place to live in the country. This is not the time to ask me
to pay more in taxes.

If a charitable organization asked, I would
probably contribute to fund the projects the CPA will support. But I
would give what I felt I could afford. With the CPA I am forced
into a fixed amount.

Is there a bigger problem we are avoiding?

I
believe that if the town had unlimited funds, we would expand our
recreational facilities, preserve our historic buildings and provide
housing subsudies for low income families and municipal workers. But we
don’t have unlimited funds and so we fund what we need
and with whatever’s left we choose from the myriad of things we want.
Unfortunately the things we need – healthcare costs in particular and
now energy costs – are taking a larger and larger slice of the pie
leaving less available for the things we want. The CPA aims to deal
with this problem of not enough money for the things we want by having
us pay more taxes. Doesn’t that avoid the problem of spiraling costs
for the things we need? Wouldn’t it be better to figure out a way to
reduce the costs of those things, especially health care costs, rather
than avoid that problem by just increasing taxes. 

Another
issue to consider in this light is that once we pass the CPA, we can’t
repeal it for 5 years. If costs for the things we need continue to rise
and the funds we get from the state don’t keep pace, which is the only
way we avioded teacher layoffs this year, then we will need a tax
increase just to pay for necessities. That will come on the heels of
this 2% surcharge that cannot be repealed.

Do I have
confidence in the committee that will recommend how the money should be
spent and in the Town Council that will approve those recommendations?

Who decides what projects will be financed?
- The Town Council must approve each project. Recommendations come from
a 5-9 person committee consisting of representatives from the
Historical Commission, the Housing Authority, the Conservation
Commission, the Recreation Department, and the Planning Board. Up to
four additional members are selected at large.
(WCCP Fact Sheet)

Looking
at the makeup of the recommending committee, one could predict
considerable disagreement and competing interests. Our town has a town
manager specifically to avoid the problems inherent in determining
budget allocations by committee.

Do I feel confident that the money will be directed to projects that will truly improve the quality of life for most residents?

One
thing that is fresh in my mind is listening to counselors claim that
they didn’t realize we weren’t going to be able to put the recycling
center back in Filipello Park once the incinerator was demolished. I
can’t help wondering if the ideas people have now about how to use
the money are actually permitted uses of the CPA funds.

Funds cannot
replace existing operating funds. So they can’t be spent
on projects that were approved before the CPA was passed such as
renovation or restoration of properties the community already owns and
they can’t be spent on maintenance. Pending legislation would
amend the CPA to allow the restoration and/or renovation of properties
that were not acquired or created with CPA funds.

New
construction of a playground or park is permitted but maintenance,
restoration, or renovation of an existingplayground, park, or other
recreational parcel is not permitted.

CPA funds won’t
help us keep up our recreational facilities. It will just allow us to
buy new recreation land – which will then need to be kept up. So far,
it looks like most CPA money across the state has been spent on
affordable housing.

Do other towns think the CPA is worth it? 

CPA supporter tell us that 100 towns have passed the CPA but many have voted it down. Of those towns that have voted on the CPA, 100 have passed and 51 have failed election.
Of the cities and towns surrounding Watertown, Newton passed a 1%
surcharge and Cambridge passed a 3% surcharge in 2001. Boston and
Waltham voted it down. Arlington’s Town Meeting voted against even
putting it on the ballot. In Belmont they have never brought it up
for inclusion on the ballot (data below).

Towns surrounding Watertown:

  • Boston – Failed election 31,336 yes, 41,216 no (43% yes) 2 percent Low income, first $100,000 11/6/01
  • Belmont – Never on ballot
  • Cambridge –
    Passed election 12,016 yes, 4,861 no (71% yes) 3 percent Low
    income, first $100,000 CC 11/6/01
  • Arlington – Failed vote to put on ballot at TM in spring, 2003
  • Newton – Passed election 6,225 yes, 6,013 no (51% yes) 1 percent None CC 11/6/01
  • Waltham – Failed election 2,431 yes, 3,463 no (41% yes) 3 percent First $100,000 11/6/01

Map: CPA_passed_&_on_the_ballot_as_of_6.15.05.pdf (4103 KB)

More interesting is a look at towns with similar characteristics as Watertown. We
have the 12th highest population density in the state. Of the
15 cities and towns with the highest population densities,
only one, Cambridge, has passed the CPA.
  Boston,
Malden and Winthrop voted it down. In Arlington and Brookline it
never made it past Town Meeting. Eight have never brought it up
for a vote in Town Meeting or City Council (data below). Of the 33
cities/towns in Massachusetts with a population density greater than
3000 people per square mile, only Cambridge, Newton and Randolph have
passsed the CPA. Cambridge passed it with 71% voting yes but in Newton
and Randolph it just squeaked by. Newton passed it with 50.4% voting
yes and Randolph passed it with 51% voting yes.

Towns with similar population density as Watertown

  • Medford city, Middlesex County 6,851.30 – Never on ballot
  • Lowell city, Middlesex County 7,635.60 – Never on ballot
  • Revere city, Suffolk County 7,994.20 – Never on ballot
  • Watertown city, Middlesex County 8,025.70
  • Arlington town, Middlesex County 8,179.60 – Failed vote to put on ballot at TM in spring, 2003
  • Lynn city, Essex County 8,233.70 – Never on ballot
  • Brookline town, Norfolk County 8,409.70 – Failed vote to put on ballot at Town Meeting June 4, 2002
  • Winthrop
    town, Suffolk County 9,208.30 – Failed election 1647 yes, 1967 no
    (46% yes) 3 percent All three 5/7/01
  • Lawrence city, Essex County 10,351.40 – Never on ballot
  • Malden
    city, Middlesex County 11,102.90 – Failed election 3,129 yes,
    5,531 no (36% yes) 3 percent Low income, first
    $100,000 11/6/01
  • Everett city, Middlesex County 11,241.10 – Never on ballot
  • Boston
    city, Suffolk County 12,165.80 – Failed election 31,336 yes,
    41,216 no (43% yes) 2 percent Low income, first $100,000 11/6/01
  • Cambridge
    city, Middlesex County 15,766.10 – Passed election 12,016
    yes, 4,861 no (71% yes) 3 percent Low income, first
    $100,000 CC 11/6/01
  • Chelsea city, Suffolk County 16,036.80 – Never on ballot
  • Somerville city, Middlesex County 18,868.10 – Never on ballot

GCT-PH1.
Population, Housing Units, Area, and Density: 2000 Data Set: Census
2000 Summary File 1 (SF 1) 100-Percent Data Geographic Area:
Massachusetts — Place and County Subdivision

Do I have confidence that we will get the 100% match from the state?

Where will the state matching money come from?
A $20
surcharge on the fees of the registers of deeds and the assistant
recorder with respect to registered land and a $10 surcharge on the
fees for a municipal lien certificate.

How much money will there be?
The CPA web site estimates at least $26 million per year.

How will the money be distributed?
This
is where things get complicated and confusing. First 80% of the fund
(the “match distribution”) shall be distributed in October to each city
or town, in an amount not less than 5 per cent but not greater than 100
per cent of the total amount raised by June of that year. In the case
of Act approval at a November election the surcharge can be applied to
the fiscal year in progress (through the remaining tax bills) if the
tax commitment has not yet been made for the fiscal year, or it can be
deferred until the beginning of the next fiscal year. The
percentage shall be the same for each city and town and shall be
determined by the commissioner annually in a manner that distributes
the maximum amount available to each participating city or town. It is estimated that all CPA communities will get a 100% match through 2009. But
if lots of towns pass the CPA or if the funds from the State Registry
surcharge decline so that there’s not enough to match every town’s
surcharge, we could get as little as 5% of what we raise.

Second, the remaining 20 per cent of the fund is distributed in a second round distribution, known as the equity distribution. But
only those cities and towns that adopt the maximum surcharge
(3%) are eligible for the second round. So Watertown with its 2%
surcharge would not be eligible.
Even if we did pass a 3%
surcharge, our CP Rank which determines how much we get of
the remainder of the funds is very low. Watertown’s estimated CP rank
is 318 out of 341 ranked (10 are not ranked), which puts us solidly in
the bottom decile. File Attachment: CP Ranks, by rank.xls (96 KB)

 

For these reasons, I cannot at this time support the CPA. I’m happy to give anyone the opportunity to change my mind.

 

FDIC State Profiles

FDIC State Profiles

Some interesting items from the Fall 2005 state profile from the FDIC:

  • New England already has the highest residential cost per kilowatt hour of electricity in the country. This past year New England was the coldest region in the United States.
  • Over the four quarters ended in second quarter 2005, house prices rose by 11.8 percent in Massachusetts. House prices in the region rose by 13.0 percent, while nationally the increase was 13.4 percent.



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