Posted on June 15, 2015
BOSTON, June 15, 2015 --- Recent guidance from the state Department of Revenue (DOR) warrants immediate attention by Municipal Affordable Housing Trusts and community preservation committees. While some communities may already be in compliance with the requirements noted, it is important for trusts and CPCs to review the following information.
Expansion of trust powers recommended
The Municipal Affordable Housing Trust statute 55C c.4 states that the purpose of a trust is to "create or preserve" affordable housing. The trust statute does not include "support" which is an eligible activity under the Community Preservation Act statute.
While a number of communities have attempted to address this by executing grant agreements between trusts and CPCs, the trust statute does not explicitly grant trusts the power to execute a grant agreement to carry out programs that do not meet the trust statute's stated purpose to create and preserve affordable housing. The Community Preservation Coalition addressed grant agreements in their October 2014 bulletin. http://www.communitypreservation.org/news/7136.
Individual trusts, particularly those that are using CPA funds for "support" activities as defined in the CPA statute, should make their own determination regarding the need to amend their original vote establishing the trust to include the power to execute grant agreements as described above.
MHP, CHAPA, CPC addressing this issue
MHP, working in cooperation with the Citizens' Housing and Planning Association (CHAPA) and the Community Preservation Coalition, is recommending a change to the trust statute language that would expand the powers of the trust to include execution of a grant agreement with a municipality/community preservation committee to administer all CPA eligible activities. We are currently drafting language that would expand trust powers and have it automatically apply to all existing trusts. We will seek legislative support for this change during the current session.
Anti-Aid Amendment applies to trust and CPA programs
As a government entity, Municipal Affordable Housing Trusts must comply with constitutional and general principles related to the payment of public funds to private individuals or entities. The Anti-Aid amendment to the Massachusetts Constitution (MA. Const. amend. Article 42, s.2) as amended by Article 103 generally prohibits the granting of public funds to private organizations except when the funds are used for a designated public purpose and the benefits accrue to the public.
In order to comply with the law, all Municipal Affordable Housing Trusts or CPA-funded projects or programs should include some type of affordability restriction or recapture provision recorded through a deed, mortgage or contract that is commensurate with the assistance provided. Programs where communities or trusts are currently providing grants to individuals without any type of restriction or contract are not in compliance with the anti-aid statute.
For more information about this issue, contact MHP's Ruston Lodi at rlodi@mhp.net or Callie Clark at cclark@mhp.net.