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Council Mtg October 13, 1998 Santa Monica, California
TO Mayor and City Council
FROM City Staff
SUBJECT Recommendation to Authorize the City Manager to Negotiate and Execute
a Mills Act Hlstoncal Property Contract between the City of Santa Monica
and the Property Owner of 2402 Fourth Street, #7, Located In Hollister
Court, a Designated City Landmark Applicant Marsha Sands
INTRODUCTION
This report recommends that the City Council adopt a resolution and authOrize the City
Manager to negotiate and execute a Mills Act Historical Property Contract between the
CIty of Santa MonIca and the property owner of 2402 Fourth Street, #7 located In
Hollister Court, a designated City Landmark The Mills Act IS a state law enabling local
governments to enter Into contracts With owners of qualified historic properties to
authOrize a property tax reduction In exchange for preservation of the historic structure
The proposed resolution IS contained In Attachment A and the Mills Act application IS
contained In Attachment B
BACKGROUND
In 1991, as part of a comprehensive reVISion to the City's Landmarks Ordinance, the
City Council authOrized deSIgnated structures of merit, landmarks, and contributing
structures located In deSignated histOriC districts to be considered "qualified historical
properties" eligible for historical property contracts submitted pursuant to the proVIsions
of California Government Code Sections 50280-50290 As a result, property owners
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of such designated historic properties may file a Mills Act Contract Application The
Mills Act contract IS executed between the City and property owner, and results In a ten
year agreement to lower property taxes As a direct response to the tax savings, the
property owner agrees to protect, preserve, and maintain the historical and
architectural character of the property A list of restoration or repair Items to be
accomplished over the contract period are Incorporated Into the Mills Act Contract
These restoration tasks are financed through savings generated by the lowered tax
rate
Once approved, a Mills Act contract requires the County Tax Assessor's office to
determine the value of the historic property based upon Its current net operating
Income, rather than upon the traditional assessed valuation method, resulting In a
property tax reduction For owner-occupied structures, the net operating Income IS
determined by the Income the property would produce If rented In exchange for the
property tax reduction, the owner agrees to protect, maIntaIn and, If necessary, restore
the histOriC property
Under the traditIonal method of determinIng property taxes, properties are reassessed
when sold However, Since Mills Act contracts run with the property, subsequent
owners may realize greater tax benefits, as the assessed property value typically
Increases when property IS sold, resulting In an even greater difference between the
property taxes under the assessed valuation method versus the property tax calculation
permItted by the Mills Act contract ThiS can be a Significant marketing feature for the
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property In terms of future sales and IS considered an Important hIstone preservation
Incentive because the property will be maintained
The Initial Mills Act contract term IS ten years However, each year on the anniversary
of the contract's effective date, an additional year IS added to the contract term unless
the property owner or the City submits a notice of non-renewal to the other party In a
timely manner Effectively, the actual term of the contract IS at least ten years, but may
be Indefinite, as It IS automatically annually renewed
This IS the fifth Mills Act contract considered by the City To date, one contract has
been recorded with the Los Angeles County Recorder, and filed with the Los Angeles
County Assessor to complete the new tax assessment Staff IS currently working wIth
property owners to execute the remalmng contracts, which must be recorded by
December 31, 1998 to be considered under the assessor's next tax year The tax
adjustment for the approved Mills Act contracts would then be reflected on the property
owners' October 1999 tax bill As a result, none of these approved Mills Act properties
have commenced the restoration or repair projects Identified In the property contract
ANAL YSIS
The property owner of 2402 Fourth Street, #7 has requested to enter Into a Mills Act
contract to offset the cost of normal maintenance and repairs The Mills Act contract
savings would be used for continued maintenance of bUilding details which are Integral
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to the property's historic Integnty, Including painting, roofing and window repairs,
landscaping (Including new fencing), and a bathroom upgrade
The maintenance plan for this property IS Included In the Mills Act application and Will
be Incorporated Into the Mills Act contract The maintenance plan proVides a list of
projects to be completed by the property owner dUring the initial ten year contract term
In addition, the application prOVides an estimate of the property owner's tax savings as
well as an estimate of the City's annual costs due to the property tax reduction Since
thIS estimate IS based on financial data submItted by the applIcant, the County
Assessor Will verify the calculation prior to the final tax assessment By executing the
contract, the City does not corroborate the applicant's submitted financial statement,
but authOrizes tax abatement for the property.
LANDMARKS COMMISSION REVIEW
The Landmarks Commission reviewed thiS request at Its September 14, 1998 meeting
and directed Staff to forward a recommendatIon to the CouncIl supportIng the
application The Mills Act IS one of the few financial incentives available to owners of
hlstonc properties and IS an Important tool In the Commission's efforts to encourage the
deSignation and long term preservation of the City's histOriC resources
BUDGET/FISCAL IMPACT
Execution of thiS Mills Act contract would result In reduced property tax revenue to the
City The actual amount of the tax reduction IS determined by the Los Angeles County
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Assessor, based on an evaluation of the worksheet provided with the application The
current annual property taxes for this property are approximately $3,130 Although the
application states that the annual cost to the City In lost tax revenue would begin at
$165 00 and Increase at a rate of less than 1 % each year, the actual revenue loss IS
subject to review and determination by the County Tax Assessor once the contract has
been executed and recorded with the County
RECOMMENDATION
It IS recommended that the City Council adopt the attached resolution and authorrze the
City Manager to execute an Hlstoncal Property Preservation Agreement under the Mills
Act, between the City of Santa MOnica, and the property owner of 2402 Fourth Street,
#7, located In Hollister Court, a desIgnated CIty Landmark
Prepared by Suzanne Fnck, Director
Karen Ginsberg, Planning Manager
Amanda Schachter, Senior Planner
Donna Jerex, Associate Planner
City Planning DIVIsion
Planning and Community Development Department
Attachments A Mills Act Resolution
B Mills Act Contract ApplicatIon
F \PLAN\SHARE\COUNCll\STRPTlMlllSACT #5 wpd
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ATTACHMENT A
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F .\PLAN\SHARE\LMK\MILLSACT\RES0240244th #7 wpd
CIty Council Meetmg 10/13/98 Santa Moruca. CaltfornIa
RESOLUTION NUMBER 9326CCS
(City Councd Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAt'l"T A MONICA
AUTHORIZING THE CITY MANAGER TO EXECUTE A HISTORICAL
PROPERTY CONTRACT IN ACCORDANCE \V1TH GOVERNMENT
CODE SECTION 50280 WITH THE OWNER OF THE PROPERTY
LOCATED AT 2402 FOURTH STREET, #7
WHEREAS, Government Code Sectlon 50280 et seq authonzes a CIty to enter into a
lnstoncal property contract with the owner of any qualIfied historical property to restnct the use
of such property so that it retams Its hlstoncally slgruficant charactenstlcs m return for wlnch the
property OVlner obtains property tax relIef;
WHEREAS, Santa Moruca Municipal Code SectIon 9 36 270(g} proVides that deSIgnated
structures of ment, landmarks, and contnbuting structures located in lnstonc distncts that are
pnvately o~ned shall be consIdered qualIfied lustoncal properties elIgIble to enter Into histoncal
property contracts with the City upon resolutIon by the CIty Council;
WHEREAS, the property located at 2402 Fourth Street, #7 IS a deSIgnated CIty landmark
and the owner of the property has filed an applIcation to enter Into a histoncal property contract
wah the City;
WHEREAS, the Landmarks Commission reVIewed the o'Nner's applIcatlOn at its
September 14, 1998 meeting and directed City Staff to forward a recommendatlOn to the City
CouncIl III support of the applicatIOn;
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for housing servIces and amemtIes as provIded to market rate dwellIng umts m the project,
whether or not occupants of market rate dwellIng umts pay separate charges for such servIces and
amemtles Housmg servIces and common area amemtIes mclude, but are not lImned to, the
followmg parkIng, use of common facIlItIes mcludmg pools or health spas, and utIlItles If the
project IS master-metered NotWIthstandmg the foregoing, utIlIty charges, to the extent
indIvIdually metered for each UnIt in the proJect, may be passed through or billed dIrectly to the
occupants of affordable housmg umts In the project In addItIon to maxImum allowable rents
collected for those affordable housmg umts
Multifamily Project. A multIfamIly reSIdentIal development, IncludIng but not hmlted to
apartments, condomInIUms, townhouses, or the multIfamIly reSIdentIal component of a ffilxed use
project, for whIch CIty permIts and approvals are sought
l\-lultifamily Project Applicant Any person, firm, partnershIp, aSSOCIatIOn, JOInt
venture, corporatlOn, or any entIty or combmatIon of entItIes WhICh seeks CIty development
permIts or approvals to developed a multIfamIly project
l\lultifamily Residential District. Any dIstnct deSIgnated m the Santa MOnIca Zonmg
Ordmance as a multifamIly reSIdentIal dIstnct
Parcel Parcel as defined In Santa MOnIca Mumclpal Code SectIOn 9 04 02 030570
Vacant Parcel. A parcel m a multIfamIly reSIdential dlstnct whIch eaher has no
reSIdentIal structure located on it ~~ t~~~ :.;~.~ ~L.: ~ ;~~~~~~f~;~~~lJ Y~":'J .:.:: ;:; ;;~.:~ -.-.-~:~~. :~:~ ~;:]':;
Plan111n~ DqHlftR.cn~ as of August 20, 1998 or whIch had a reSIdentIal structure located on it on
that date whIch was subsequently demoltshed pursuant to a demolItIon order of the CIty No
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demolItlOn of structures shall be permitted except in accordance WIth Santa Momca 1.1umc~pal
Code SectIon 9 04 10 16 et seq
SECTION 2 Sectlon 956070 of the Santa MOnIca MumcIpal Code IS hereby amended
to read as follows
Section 9.56.070. Affordable Housing Fee.
A multifamily project apphcant may meet the affordable housing oblIgauons establIshed by
thIs Chapter by paymg an affordable housmg fee m accordance wIth the followmg reqUirements
(a) An affordable housing fee may be paId m accordance wIth the followmg formulas
(1) 1vfultlfamlly Projects III Mulufanuly ReSidentIal Dlstncts
Affordable housmg umt base fee X floor area ofmulufamIly project
(2) MultIfamily Projects 10 MultifamIly ReSIdentIal Distncts on Vacant Parcels
Affordable housing umt base fee X floor area of multIfamIly project
X 75%
(3) MultifamIly Projects In Industnal/CommercIaI Dlstncts on Parcels that are
either not already developed with multIfamIly housmg or are already developed
WIth multifamIly housmg, but the multIfamIly project preserves the eXIstmg
multifamIly housmg or a Category C Removal Permit has been obtained for the
existmg mulufamlly housing
Affordable housing umt base fee X floor area ofproJect devoted
to residential uses X 50%
(b) For purposes of thIS Section, the affordable housmg umt base fee may be establIshed at
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least every two years by resolutIOn of the City Council The amount of the affordable housmg
fee that the multtfamlly project applicant must pay shall be based on the affordable housmg umt
base fee resolutIOn m effect at the tIme that the applicatiOn for the multlfarmly project IS deemed
complete or based on ResolutIOn No 9295 (CCS), whichever resolutIOn is adopted later in time
(c) The amount of the affordable housmg unit base fee may vary by product type
(apartment or condomimum) and shall reflect, among other factors, the relatIOnship between new
market rate muIti-famdy development and the need for affordable housmg and the Impact that the
fee will have on the finanCial return of multlfamlly project apphcants
(d) The fee shall be paId in full to the CIty prior to the CIty grantmg any approval for the
occupancy of the project
(e) The CIty shall deposit any payment made pursuant to thiS SectIOn m a Reserve
Account separate from the General Fund to be used only for development of very low- and low-
mcome housmg, admmlstratlve costs related to the production of thIs housmg, and momtoring
and evaluation of thIs Affordable Housmg Production Program Any momes collected and
mterest accrued pursuant to thiS Chapter shall be comrmtted withm five (5) years after the
payment of such fees or the approval of the multifamIly proJect, which ever occurs later Funds
that have not been appropnated wlthm thiS five year penod shall be refunded on a pro rata share
to those mulufamtly project applIcants who have paId fees dunng the penod Expenditures and
conllmtments offunds shall be reported to the City Council annually as part of the City budget
process
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ATTACBl\fRNT B
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CIty of
Santa MODIca
em" 01- ~ A.N T ' PIanrung and Commumty Development Oepanment
CITY P(A""Nl::r~Q!'" t City Planmng DlVlslOn
'J/ ~ (310) 458-8341
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o MmLs ACT CONTRACT APPLICATION
(Please Type or Pnnt All Informabon)
ApplIcabon Number (s) Filed ~ Ilfj/4(
Fee /. .
qt fJlllls trcrCIq- Receipt NJ/Ir
By T>r
PROJECT ADDRESS r:l ~~ J. - ~ lA.if 47
Land Use Element DIstrIct ZOnIng Thstnct
Legal DescnptJon (Lot, Block, Tract) kfr -1lLlR tJ. i S I 3,r -,./
Legal Descnptlon (Book, Page Parcel #) / I 'f q ,(/tf..4 ~ fl/- ~ f J>t
. F . II J ,;
[Please attach copy of legal dcscnptlon Generally tins )S "Exinbl.t A" on a Deed ]
APPUCANT l.f #.1Phone 3IP-!f'l-9f/1
Address ~t/(y -u/l
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Santa Maruca Busmess License No
CONTACTPERSON=~ Ii
Address ( 1.,1 r I u...... f ~--;:~hone Ip If -'1 ('",-1-
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Santa Maruca Busmess L)cense No
DESIGNERlAR(;HHt;CT
Address Phone
ProfessIonal LICense Number
Santa Moruca Busmess License No
- ATTORNEY
Address Phone
Santa Maruca Busmess LIcense No
PROP!'IITY OWNER
Address Phone
I Cernfy that tlus apphcatlon IS bemg made With my consent
PROP>;RTY OWNER'S SIGNATURE nt, ! 1:- .;r;:.,- /. ~
EXlSUng Use of Property ~~.!t~.uJ ,Lt ?-tr.u ;;.tL~t-'- Letr
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RehabIlitation or Mamtenance Needed
(Attach eIther the Rehablhtatlon OI Man-~nam:e Plan. as appropnate)
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Date of Local DesIgnabon ,
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Is the property deSIgnated as part of an histonc dtstrIct? r'fW If so, what dlstnct? I
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Is the property hsted on the Nauonal Register of HIstonc Places? Yes /NO
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Is the property hsted as pan of an lustonc dtstrIct? ~If so. what dIstrict"
Please also attach
- I A restoranowrehahthtanon plan for the designated lustonc property. If the bwldmg 15
already restored and In good condttIon. a maIntenance hst must be submitted to support
the need for tax rehef
2 A cost estImate of the restoranonlrehablhtatton plan from a cerllfed archltect
3 A completed FmancIal AnalYStS of Mills Act Contract fonn
4 Photographs of ail bwldmg elevauons and character defunng features usmg 35 mm black
and whlte film
I terrify that tbe ioformahoo tootalRed lD tbe apphcatlon IS correct to the best of my
knowledge aDd that thIS applitatloo 15 made With tbe knowledge and tODseDt of the
propertv OWDer
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APPLICANT'S SIGNATURE )}t 1/ Ai. ft-I<-L.- DATE
. . ,j I
Dnver's License Number State Explranon Date
f \plan\share\1mk\rmllsapp i
k/11l28/95 [
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Status of RI~ht-of-Way Uses
rn the years since regular ralr operatrons ceased, approxImately 21 busInesses have
expanded their activities onto the portion of the nght-of-way east of 17th Street that remains
pubhcally-owned These uses Include
. employee parking
. access roadways
. small bUildings and structures
. parking and storage of automobiles and delivery/work trucks
. display and storage of plants In conjunction with a commercial nursery
. construction staging (storage of matenals and equipment) and parking
. storage of stone, rock, and lumber matenals
. vehIcle Impound
. landscaping
. bIllboards
Status of MT A Leases
Of the 21 eXisting uses, 6 have leases wIth the MTA, 9 had Southern PaCific leases that
have been continued by the MT A, 4 have MT A subleases, and 2 have no lease The
leases vary from a three-block-long segment leased to Hastings Plastic to a six-car parking
area subleased to the Goodman Center The two properties that do not have a valid lease
are both used for parklnglvehlcle storage The MTA has notified these two businesses
that they are uSing the properties Illegally, but has not taken any further action The City
IS also pursuing enforcement action to remove the uses
The Southern PaCific leases predate the CUP requirement, which was established In 1984
In conjunction with adoptIOn of the Land Use and Circulation Element Because these
lease holders began uSing the right-of-way pnor to the CUP requirement, they are
conSidered legal non-conforming uses All of the MT A leases were established after the
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EXHIBIT "e"
mSToiUc PROPERTY PRESERVATION AGREEMENT
PROPOSED HOME IMPROVEMENTS
.
The followmg renovatIOn projects shall be completed by the applicant over the mmal 10 year
term of the contract
Item Year Task
I 7r:;:;:;- ;f'/7 ,
l' '~/711
2 1.O ~ i)O /
3 ~J~ /1777
4 -1'/~ ~
~ tlAJU- ~ t'Jr} '1
5 fA.- f J Jr 1j(;;~(,rlrv/ ~
6 /.L; ljj/Cv~ jJ2~J ,J. tf7J .>"
. 1A~aZiA
7 -<( j.A x::; tlFD
8 iA' ,q-0'- 1 ~ d
1 J/'..-d-l.?./ ,f?/ , ,
9 .ft, j,MA {)/Jtj 7iS-
j/llP ~ (I
10 . ,
fl.-1 (..eJ.../J
11
12
Imk\m1l1sact
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