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SR-10-28-2008-1BCity Council Meeting: October 28, 2008 Agenda Item: 1 B To: Mayor and City Council From: Eileen Fogarty, Director, Planning & Community Development Subject: Mills Act Agreements: 2101 La Mesa Drive and 2617 Third Street Recommended Action Staff recommends that the City Council adopt resolutions authorizing the City Manager to negotiate and execute Historic Property Preservation Agreements (Mills Act Contracts) between the City of Santa Monica and the property owners of one designated City Landmark at 2101 La Mesa Drive and one Contributing Structure to the Third Street Neighborhood Historic District at 2617 Third Street. Executive Summary The Mills Act is a state law that enables local governments to enter into contracts with owners of qualified historic properties to authorize a property tax reduction. The Mills Act is one of the few financial incentives available to owners of historic properties and is an important tool for implementing the City's goals, as articulated in .the City's Historic Preservation Element, to promote the designation and long-term preservation of historic resources through the provision of incentives and technical assistance. The City requires Mills Act Contract applicants to provide a report prepared by a qualified architect describing the condition of the structure and its restoration and maintenance needs in order to ensure the resource's historic integrity and structural stability. The recommendations in the architect's report are reflected in the proposed 10-year restoration/maintenance plan which becomes an attachment to the Mills Act Contract entered into between the City of Santa Monica and property owners. Staff verifies the information contained in the report and may ideritify additional restoration and maintenance items as necessary. Execution of the two pending Mills Act Contracts will result in reduced property tax revenue to the City estimated at $10,636 for the 2008-2009 fiscal year and a similar amount annually thereafter: 1 Discussion 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 historic properties eligible for historic property contracts submitted pursuant to the provisions of California Government Code Sections 50280-50290. As a result, property owners of such designated historic properties may file a Mills Act Contract application. 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 most cases, in a property tax reduction. For residential or commercial structures that are rented, the net operating income is determined based on actual rents received. For residential and commercial structures that are owner-occupied, the net operating income is determined by the income the property would produce if rented. In exchange for a 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 property in terms of future sales and are considered an important historic preservation incentive because the property will be maintained.. Similarly, the obligations and property tax reduction benefits associated with the Mills Act contract are also binding upon successive property owners during the contract term. 2 The initial Mills Act contract term is a minimum ten-year period. Each year on the anniversary of the effective date. of the agreement, also known as the renewal date, a year is automatically added to the initial ten-year term of the agreement. This effectively makes the term of the contract at least ten years but possibly indefinite unless the owner or City submits. a notice of non-renewal. If such a notice of non-renewal were submitted, the contract would. remain in effect for the balance of the term remaining, either from its original date of execution if within the initial ten-year term, or from the date of the last one-year renewal of the agreement. Alternatively, the owner may petition the City to initiate an immediate cancellation, which would result in payment of a penalty equal to 12.5% of the property's assessed current fair market value of the property, as determined by the County Assessor as though the property were free of the contractual restriction. The City may also cancel the contract in the event of a breach of contract conditions, whereby the property owner would be subject to pay the same 12.5% penalty. The terms of the contract also state that the agreement may be amended, in whole or in part, if both the owner and the City agree to execute a recorded document to memorialize the contract amendment Santa Monica Mills Act Contracts In addition to the certified architect's report, financial data is also required as part of the Mills Act Contract application in order to calculate an estimate of the potential tax reduction and provide guidance to the Landmarks Commission and Council in making a decision on Contract requests, The County Assessor will make a final determination of the taxes due when the approved Contract is submitted and recorded, and will continue to conduct property tax assessments on annual basis. Los Angeles County Assessor's Office data showed that for the 2006-2007 tax year, property value assessments of thirty-seven of the thirty-nine Santa Monica historic properties. with executed Mills Acts. Contracts have been reduced by 12% to 91 %, with 3 the average reduction being 51 %, when compared to their "Proposition 13" values. From these Mills Act Contract property value assessments, correspondingly lower taxes have been levied on these properties. Each year, the County Assessor will reassess taxes due for properties with Mills Act Contracts. Data for the 2007-2008 tax year has not yet been received from the County Assessor's Office; however, it is anticipated that the average reduction in property taxes will be similar to .last year's data, as follows: 2003-2004: 14%-75% reduction with an average reduction of 47%; 2004-2005: 6%-74% with an average reduction of 42%; 2005-2006: 12%-90% with an average reduction of 51 %; and 2006-2007: 12%-90% with an average reduction of 51 %. Property owners are required to obtain all applicable entitlements such as a Certificate of Appropriateness, and all associated building permits for work proposed in the ten- year restoration/maintenance plan. Furthermore, all work propo"sed in the ten-year restoration/maintenance- plan must comply with "The Secretary of the Interior's Standards for the Treatment of Historic Properties. with Guidelines for Preserving, Rehabilitating, Restoring & Reconstructing Historic Buildings" (Weeks & Grimmer, 1995). Property. owners are also required to submit a report to the City on a biennial basis to demonstrate compliance with Contract terms. Staff may also conduct a site visit every year to ensure that restoration and maintenance plans are implemented in accordance with Contract terms. Analysis The two applications submitted in 2008 include an early Craftsman style .bungalow that is a Contributing Structure to the Third Street Neighborhood Historic District located at 2617 Third Street, and a John Byers designed and constructed adobe residence located at 2101 La Mesa Drive. In addition to the specific restoration and repair obligations listed below for each property, each Mills Act Contract will include a standard 4 requirement for ordinary maintenance and upkeep throughout the Contract's term for work such as additional roof maintenance, and plumbing and electrical systems maintenance. 2617 Third Street- A Mills Act Contract application was filed on August 15, 2008 for the early Craftsman style bungalow located at 2617 Third Street. This residence is a Contributing Structure to the Third Street Neighborhood Historic District which was established by the City on July 24, 1990. The subject property is located on the east side of Third Street between Ocean Park Boulevard and Hill Street in the Third Street Neighborhood Historic District. The subject parcel contains cone-story, Turn-of-the-Century cottage that was constructed in 1905 and a rear yard accessory structure. The primary, Turn-of-the-Century cottage features a number of character-defining features of the style including a bellcast hipped roof, narrow clapboard siding, a front gable containing an attic window flanked by louver vents to form a pediment over the entry, projecting bay windows, and an enclosed porch. 5 As part of the Mills Act application, an architect's report was prepared by architect Michael W. Folonis, FAIA. The report assesses the condition of the primary residence and identifies repair, restoration/rehabilitation and maintenance needs along with a general schedule for completidn of work. As discussed more fully in Attachment A, the exterior of the cottage is generally in fair condition; however, the interior of the structure has suffered from significant deferred maintenance from previous owners and will require significant improvements to ensure that the cottage is habitable. The property owner has proposed a series of significant work items in the first five years of the Contract term in order to protect the integrity of the building and its architectural features, and install necessary facilities and services to the cottage such as a kitchen (there is currently no kitchen in the residence) and code compliant plumbing and mechanical and electrical infrastructure. Proposed Maintenance and Rehabilitation Plan Examples of work proposed during the first five years of the Contract include the #ollowing: • Replace damaged foundation in accordance with Certificate of Appropriateness 06CA-018 approved on January 23, 2007. • Excavate and finish basement in accordance with Certificate of Appropriateness 06CA-018 approved on January 23, 2007. • Create a new kitchen for the residence in accordance with Certificate of Appropriateness 06CA-018 approved on January 23, 2007. • Create full bath for residence in accordance with Certificate of Appropriateness 06CA-018 approved on January 23, 2007. • Install new electrical system. • Install new plumbing system. • Install new gas line system • Install HVAC system. 6 • Repair and repaint exterior wood finishes including siding, architectural elements such as the porch columns, gables, and roof overhangs. • Restore original wood frame windows and doors. • Reconstruct front stairs in accordance with Certificate of Appropriateness 06CA- 018 approved on January 23, 2007. Examples of property-specific maintenance included in the Contract include the following: Termite control treatment every five years. • Exterior weatherproofing sealer on woodwork, trim, and siding every three years. Annual HVAC maintenance. •. Annual landscape maintenance. Attachment A contains the estimate financial analysis for the property at 2617 Third Street. 2101 La Mesa Drive A Mills Act Contract application was filed on September 2, 2008 for the adobe residence located at 2101 La Mesa Drive designed and built by locally significant architect. John Byers. The residence was designated as a City Landmark on April 14, 2008. The design' of this house fully articulates Byers' design principles for adobe hand-made architecture as well as expressing his aesthetic and romantic ideals of a traditional Mexican Colonial adobe dwelling adapted for 1920s residential architecture in Santa Monica. The subject property embodies a number of character-defining features of the Mexican Colonial Revival style including its general- scale and massing; its walls constructed of handmade adobe bricks covered with hand-finished stucco; alow- pitched hipped and gabled roof covered with hand-made red clay tiles; deeply recessed window openings; wood-framed casement windows with iron grilles; wide front porch sheltered by an extension of the main roof; and rear courtyard. Other character-defining 7 features of the residence include its inset bench and original decorative tiles adjacent to the front entry. ~a ~ ~ ~ s _ l ~~ _, t ;- ~ +.- ",t~':= j r x ~~ ~~4 As part of the Mills Act application, an architect's report was prepared by architect John Dutton. The report assesses the condition of the residence and identifies repair, restoration/rehabilitation and maintenance needs along with a general schedule for completion of work. As discussed more fully in Attachment B, the residence requires significant restoration and rehabilitation work to address years of deferred maintenance and inappropriate additions and alterations to the property done before the current owner purchased the property. The applicant has received approval by the Landmarks Commission fora complete and thorough rehabilitation of the residence -along with a 1,381 square foot, 8 one-story addition to the rear of the structure. The rehabilitation work for the residence is identified in the attached restoration and rehabilitation plan for the residence. A building permit has also been issued for this work. Proposed Maintenance and Rehabilitation Plan Examples of work proposed during the first five years of the Contract include the following: • City-required implementation of lot stabilization: engineering, caissons, grade beams, earth removal, concrete and grading, in accordance with approved plan check no. 07PC-1560. • Repair, restoration, and treatment of all interior and exterior adobe masonry, plaster, stucco, the work. • Repair, restoration, or replacement in-kind if damaged beyond repair, of all woodwork including framing and beams. • Restoration of all doors and windows. • Upgrade and replace plumbing system. • Upgrade and replace heating system. • Upgrade and restore electrical system. • Restoration of original iron work window screens and details at primary elevation. • In-kind replacement of original iron work porch railing at primary elevation. • Installation of new roof system: replace and/or reinforce roof supports; install new insulation; inspect existing roof tiles; repair and/or replace in-kind damaged or historically inappropriate roof tiles. • Installation of new roof drainage system including gutters and downspouts. Examples of property-specific maintenance included in the Contract- include the following: • Annual inspection, maintenance, repair, or in-kind replacement of exterior adobe walls; treat with waterproofing to ensure the structural integrity of the walls. • Annual repair or in-kind replacement of original roof tiles if necessary. 9 • Annual roof maintenance (ihspect tiles, waterproofing). • Annual HVAC maintenance. • Yearly landscaping and drainage system maintenance. • Annual inspection, maintenance, and repair of all the and plasterwork. Attachment B contains the estimate financial analysis for the property at 2101 La Mesa Drive. Commission Action The Landmarks Commission reviewed both Mills Act Contract requests at its September 8, 2008 meeting and directed staff to forward recommendations to the Council in support of both applications. Budget/Financial Impact Execution of these Mills Act Contracts will result in reduced property tax revenue to the City estimated at $10,636 for the 2009-2010 fiscal year. Similar reductions in property tax revenue to the City are anticipated each fiscal year for the life of the both Mills Act Contracts. However, the amount of revenue loss is not significant in terms of total property tax revenues collected from all properties in the City. A summary financial analysis table is included as Attachment C. Prepared by: Roxanne Tanemori, AICP, Senior Planner App P. Development Forwarded to Council: u P/L~a'mont Ewe ity C'it'y Manager 10 Attachments: A. 2617 ~Chird Street: Draft Mills Act Resolution, Architect's Report, Site Photographs, and Financial Analysis B. 2101 La Mesa Drive: Draft Mills Act Resolution, Architect's Report, Site Photographs, and Financial Analysis C. Summary Financial Analysis Table 11 .'~k ,J -` 11 1 1. l _,..,ch~ s+. ~oionis, r~*~a :and ; ~, s;c ~aatzs . -_ -r. Oscan Ya:?c ?3o,f ~,_vard .,.,,-~.~ -.:~...ca Calicruiz. ,o;yoc j 1 ~', C'4c i i r~:cn~G3.'>y Pzt July 23, 2008 Mark Woollen 2617 Third Street Santa Monica, CA 90405 Ref: Report of Historic House 2617 3rd Street Santa Monica, CA 90405 Scope of Report: The intent of this report is to generally describe the condition of the existing house. General Description: The house was constructed in 1906 and is associated with the following sighificant historical persons: Jamesetto Blanchard, John D. Blanchard, Janette Blanchard, and J. Howard Blanchard. It was designated a contributing structure to the Third Street Historic District by the City of Santa Monica on August 7, 1990. The house sits on a 50' x 145' lot in the area known legally as Vawter's Subdivision. It sits in front of anon-contributing house located at the rear of the property. Acement-parking pad is located in front and to the north of the property. The property itself is a classic example of the California bungalow featuring many of the characteristics associated with that style of building. The one story structure features a hipped roof with flared eaves and a gable with flared eaves above the front entry. Other elements of note include the bay windows at the front and side elevations, the scalloped detail above the vent in the gable face, and the classical columns on either side of the glass enclosed sun porch. The exterior of the house is in fair condition while the ':'.CHITHCT page two July 23, 2008 2617 Third Street Santa Monica, CA 90405 ~'s~Cl'12v~ 4~i. Pc±tOnis, F.AU1 r:i hscciates interior has been severely neglected by previous owners. A restoration and remodeling plan has been approved and a building permit issued by the City of Santa Monica that will also include a modest 148 square foot addition to the north side of the bungalow. The addition was designed and approved by the City's Landmarks Commission under the Secretary of Interior Standards and the 3rd St. Historic District Guidelines. Exterior Finishes: The house is in fair condition ocean for the past 102 years. good condition. The house is property line to the west. decorative woodwork have t damaged and need repair. Tt current building code. Recommendations: considering it has existed three blocks from the The roof was replaced seven years ago and is in permitted to be relocated 7'-1" closer to the front everal areas including overhangs, gables and een neglected and need repair. Windows are e front non-original stucco steps do not meet the • All damaged woodwork, gables, and overhangs to be repaired. • After the addition the entire exterior should be painted. • Repair all damaged non-functioning windows. • Replace front stairs to meet code. • Maintenance and applied weatherproof sealer of the exterior woodwork should occur. Interior Finishes: The interior is in extremely poor condition. Unfortunately, significant damage to the interior was sustained when the previous owner gutted the house. The house currently has no kitchen. The house currently does not have a full bathroom. All historic detail has been stripped from the interior of the house. Recommendations.. • A fully functioning kitchen must be built. • A fully functioning bathroom must be built. • The entire interior needs to be repaired to reasonable living standards. a3G=iiTECT page three July 23, 2008 2617 Third Street Santa Monica, CA 90405 Roof: :~CiahaelTiO. Foh?~.~s, runs sd i:SS;. ,...;tes The roof was rebuilt seven years ago and is in good condition. An approved addition on the north side of the house is planned and will require a new roof in this area. Recommendations: • Build new roof for the addition to match existing. Electrical, Plumbing, and Forced Air Units: The electrical wiring is outdated and of very poor quality. The plumbing is also inadequate. Trees roots have invaded the main sewer line creating backup problems for the property. The building contains no heating or air conditioning. Recommendations: • Remove old wiring, new electrical wiring and a new service panel installed. • Replace sewer Tine. • Replace all plumbing and provide for new kitchen, bathroom and exterior hose bibs. Landscape: Many of the mature plants on the property will need to be trimmed. The preference is to alter the current landscape as little as possible to preserve the historic character of the property. The property's current fence and gate are in need of repair. _-`.ACHLTECT page four July 23, 2008 2617 Third Street Santa Monica, CA 90405 Recommendations: ~icnael .%. Folonis, ,sera s.c .Assooiares • The property line fence should be replaced and be a color more in tune with the surrounding structures. • The trees require yearly maintenance to keep them from overwhelming the front structure. • Lighting should be installed. • The new rear deck is planned to create a more natural association between the front bungalow and the surrounding landscape. Michael W. Folonis, Respectfully, ~...__~,_ rc~ Maintenance and Restoration Plan for: 2617 3`d Street Santa Monica, CA 90405 Restoration/Rehabilitation Plan ..^,'~:hz-. %';? '.; ionic, -„ta ana :'-..vsocia.ces -. _': Oc=.a.~ i-a.k Rotiievard ,.~.. _z tvfonira :.aiifcrt r!. ?c1n; Item Year Task Estimate 1 2008-2018 Replace damaged foundation $90,000 2 2008-2018 Excavate and finish basement $200,000 3 2008-2018 Repairs to Exterior $15,500 4 2008-2018 Renovation of windows $45,000 5! 2008-2018 Renovation of doors $35,000 6 2008-2018 Renovation of front steps $20 460 7 2008-2018 Create a kitchen for the house $95,000 8 2008-2018 Create a full bath for the house $55,000 9 2008-2018 Interior renovation $75,000 10 2008-2018 New Electrical $30,000 11 2008-2018 New Plumbing $22,000 12 2008-2018 New Gas lines $5,500 13 2008-2018 New Roof $13,000 14 2008-2018 New Paint Interior and Exterior $34,300 15 2008-2018 Replace site fence and gates $30 000 16 2008-2018 New HVAC system $8,500 17 2008-2018 New Rear Deck $20,200 2008-2018 Total Estimate Restoration Plan $794,460 _;.....,~~., ~ LC'. 2617 3`d Street Santa Monica, CA 90405 Maintenance Plan ~..u:z ~i oxi ca t.a inc.... ~ .)o~!o> 3 s cc: zS; rr~{oi i 7~.~:,..Zn~~ .. Item Year Task Estimate 1 2008-2018 5 ear termite revention maintenance $5,000/5 rs 2 2008-2018 Annual landsca e maintenance $3,000/ r 3 2008-2018 3 year exterior weatherproofing sealer on woodwork, trim, casing and shin les. $7,000/3yrs 4 2008-2018 Annual HVAC maintenance $500/ r 2008-2018 Total Estimate Restoration Plan $81,000 l-'',, ESTIMATE FINANCIAL ANALYSIS FOR MILLS ACT CONTRACT** 2617 Third Street, Santa Monica, CA REVENUES Current 1) Est. Monthly Rental Income $3,500 (estimate only ") 2) Annual Rental Income $42,000 ANNUAL EXPENSES Gen. Expenses: 25% SFD, Others 30% $10,500 Vacancy loss 3% $1,260 8) Total Expenses $11,760 NET OPERATING INCOME (NOI) $30,240 (Line 2 Minus 8) CAPITALIZATION RATE 9) Interest Component 6.75% 10) Historic Property Risk 4% (2%, or 4% for SFD) 11) Property Tax Component 1% 12) Amortization Component 0.5% 13) Capitalization Rate 12% (Sum Line 9 - 12) TAXES 14) Mills Act Assessment $246,857 (NOI/ Line 13) 15) Tax Under Mills Act $2,555 (Line 14 X :01035146) 16) Current Tax $13,259 17) Tax Savings (Line 16 -Line 15) $10,704 18) Annual Costs to City (Line 17 X 16%) $1,713 *This worksheet provides only an estimate analysis. The County of Los Angeles Office of the Assessor is responsible for calculating official Mills Act property tax assessments each year, Report of Existing Historic House located at 2101 La Mesa Drive, Santa Monica, CA 90402 Scope of Report The intent of this report is to generally describe the condition of the existing house. General Description The house was built and designed in 1924 by John Byers. It has become known as the Zimmer house and was designated as a Landmark by the City of Santa Monica in April of 2008. The house is located on the rim of Santa Monica canyon overlooking the Riviera Golf Club. In front of the house on the border of La Mesa Drive sits a large Morton Fig tree and a smaller Magnolia. The house fully visible from the sidewalk and is located across the street from another John Byer's built and land marked home. The house itself is in very poor condition, he result of many years of deferred maintenance and lack of care by previous owners. Prior to the current owner taking possession of the property it had been vacant and essentially open to the elements for a period of fifteen to eighteen months. There is extensive dry rot to the wood, the plaster and adobe walls have been damaged by moisture, many of the windows are inoperable and someone has sandblasted all of the interior beam and woodwork causing extensive damage. The original house had been renovated numerous times with little regard for the historic features of the house. In many case the original features were damaged, replaced, covered, modified and generally not treated with the concept of preservation in mind. Structurally there are issues with the roof rafters in the bedrooms, with the internal brick walls that encase the fireplace. In addition many of the basic design elements including the open courtyard were compromised by renovations that enclosed portions of the house with sliding glass doors and rebuilt floors by pouring concrete over the existing flooring. The house is uninhabitable. The lot is 100 x 280 feet and sits in the edge of Santa Monica canyon. There are numerous issues regarding the stability of the backyard and soils. A full report has been filed and the recommendations for the backyard stabilization are numerous and lengthy Some of the defining features of the house are: the adobe walls and plaster construction, the single story hacienda courtyard design, the pronounced Mexican Colonial feel to the design, the exposed beams and rafters in the living room, the unique doors and transom designs to the courtyard, the open courtyard entry, the and masonry detail around the front entrance. General Recommendations This property needs to be completely restored. If the current owner of the property had not made it clear his desire was to restore this home and property we do not see how it would be economically feasible to do so. Every element of the house needs to be carefully restored in many cases this requires selective and careful exploratory demolition of the existing structure. Extensive research has been done to ascertain the original design of the house. In order to restore the house it will take a group of specialists. Much of the detail and description was included in the landmark application in April of this year. To summarize john Dutton is the lead architect, Martin Weil a preservation architect has also been retained to consult on preservation and restoration issues, including original features and the work. The owner has worked with specialists from the Getty museum and engineers recommended by them to help with the special structaral issues of adobe construction. A full and detailed plan for the house has been submitted and approved by the City and detailed plan and budget is attached. Recommendations for Lot Stabilization The City of Santa Monica and the soils engineers outlined an extensive plan to stabilize the backyard and bluff. It included seventeen caissons with extensive steel and concrete work, grade beams and retaining walls. This work has just recently been completed. Recommendations for Exterior Features and Finishes Adobe Walls All the Adobe walls need to be evaluated and where moisture has entered be stripped and dried. All stucco work need to be repaired and or replaced and new waterproofing needs to be added at the top of all walls and stucco. Moisture is the number one offender with adobe walls so all work should be done with that in mind. All fastening to new construction should be completed with guidance of structural engineer an/or adobe specialist. Adobe Maintenance All adobe walls should be inspected each year any leaks or cracks in stucco should be repaired immediately. Also yearly the walls should be inspected and checked for any structural irregularities. Exterior Woodwork and Rafters All rafters and woodwork should be evaluated and dry rot and termite damaged wood removed and replaced. All moisture damaged woodwork and headers need to be replaced. Any original woodwork that can be salvaged should be stripped and restored then stained. Exterior Woodwork Maintenance All exterior woodwork should be stripped and stained every three years. Exterior Courtyard The hacienda style of the house makes the courtyard and courtyard entry an important feature. All concrete should be removed and the courtyard should be restored using the and organic hardscape and landscape. A fountain or central feature should be included and a full drainage plan should be implemented. All the columns both in front and rear of the house need to be replaced. All the ironwork in the front of the house needs to be replaced Courtyard Maintenance The courtyard will require regular and ongoing maintenance and the indoor outdoor nature of the house in this area will require special attention. All the work and stucco walls should be evaluated for damage and repaired on as needed basis. Roof The roof of the house needs to be completely replaced. Roof should be stripped and reinforced as necessary under supervision of engineer and/or adobe expert. Roof supports and T & G should be replaced. New insulation should be added all roof tiles should be stripped and repaired any broken tiles replaced with salvage tiles from same time period. There have been numerous home remedy attempts to add flashing and waterproofing to the roof and repair leaks with various materials. Gutters should be added along with functioning drainpipes and a drainage plan. Skylights should be repaired and replaced as needed. Chimney cap should be repaired with new stucco and hardware. Roof Maintenance Given the unique make up of the adobe and plaster walls the roof should be inspected each year for leaks. Leaks may not be noticeable inside the house and still cause damage to the adobe walls so inspection and preventative maintenance are very important. In addition and broken or cracked roof tiles should be replaced on a yearly basis. Electrical, HVAC and Plumbing The Electrical in the house needs to be completely replaced. There is original wiring in pipe conduit that is in terrible condition and is hazardous. The main panel is insufficient and should be replaced. All conduit and wiring removed and replaced. There is no exiting HVAC and the original heating system serviced only the original portion of the house and is no longer operable. The plumbing needs a complete evaluation and testing for leaks and damage. All the hardware in the house needs to be repaired and replaced as needed. Interior Finishes This part of the report will focus on the original portion of the house and recommended preservation and restoration work. The main entry way needs to be restored to a courtyard entry. All the new renovations done over the years should be stripped away. The original doorway and transom should be repaired and replaced as needed and the size and scale should stay as they are. The entry doors to the kitchen and main living room should be aligned and replaced with doors of original style and design. All wiring and switches should be replaced with period type switches and wall sconces should be made to match originals. Living room interior beams should be evaluated and the best method for repairing their damage from sand blasting should be ascertained. The back wall of the living room should be restored and mantel restored as it is original but in very poor shape. The niche next to the fireplace should be reinstated. All work in this room should be carefully done, as this is the original portion of the house. Martin Weil will review and advise on this area of the house. The Interior work is mostly restoration in nature and will be time consuming detailed work requiring guidance with respect to certain period pieces. Upon completion all interior work will require maintenance and special care with respect to cleaning materials, waxes polishes etc. ®~ ~ ~ is y n~ -per ~\~ Sen.°- 1-0`).'.;c-~ ;~ ,, Restoration Budget for 2101 La Mesa Drive 1. Lot Stabilization: Engineering, Caissons, Grade Beams, Earth Removal, Concrete and Grading 800,000 2. Masonry, Plaster and Stucco, the work, Interior and Exterior 250,000 3. Woodwork All framing, restoration and replacement of beams and woodwork 150,000 4. Roof All Thermal, insulation, tile, moisture protection 100,000 5. Doors and Windows Restoration of all doors and windows 60,000 6. Mechanical Upgrade and replace plumbing and heating 100,000 7. Electrical Upgrade and Restore Electrical 120,000 8. Iron work 30,000 9. Special Consultants Preservation Architect and Adobe Engineer 30,000 10. Drainage 20,000 Total Restoration of Original portion of Zimmer House $1,660,000 Maintenance Budget Annual replacement and repair of exterior Adobe Walls and Waterproofing Annual replacement and repair work to original tiles and roof maintenance HVAC Maintenance All Interior/exterior Tile, Adobe and Plasterwork Maintenance Landscape and drainage maintenance 20,000/yr. 12,000/yr. 1,000/yr 17,000/yr. 5,000/yr Total Annual Maintenance Budget $ 55,000/ yr -, ESTIMATE FINANCIAL ANALYSIS FOR MILLS ACT CONTRACT** 2'! 09 La Mesa Drive REVENUES Current 1) Est. Monthly Rental Income $12,000 (estimate only "') 2) Annual Rental Income $144,000. ANNUAL EXPENSES Gen. Expenses: 25%SFD, Others 30% $36,000 Vacancy loss 3% $4,320 8) Total Expenses $40,320 NET OPERATING INCOME (NOI) $103,680 (Line 2 Minus 8) CAPITALIZATION RATE 9) Interest Component 6.75% 10) Historic Property Risk 4% (2%, or 4% for SFD) 11) Property Tax Component 1% 12) Amortization Component 0.5% 13) Capitalization Rate 12% (Sum Line 9 - 12) TAXES 14) MiIlsActAssessment $846,367 (NOI/ Line 13) 15) Tax Under Mills Act $8,761 (Line 14 X .01035146) 16) Current Tax $64,527 17) Tax Savings (Line 16 -Line 15) $55,766 18) Annual Costs to City (Line 17 X 16%) $8,923 *"This worksheet provides only an estimate analysis. The County of Los Angeles Office of the Assessor is responsible for calculating official Mills Act property tax assessments each year. ATTACHMENT C Summary Financial Analysis Table Electronic version of attachment is not available for review. Document is available for review at the City Clerk's Office and the Libraries. 14 Attachment C 2008 -- SUMMARY OF ESTIMATE FINANCIAL ANALYSIS FOR MILLS ACT CONTRACTS** Property Est. Assessed Current Tax Est. Tax Est. Mills Est. Reduction in City Revenue City City Address Value (MILLS (Prop. 13) (MILLS Act Tax as Property Tax (Prop. 13) Revenue Revenue ACT) ACT) a % of (MILLS ACT) Reduction Current Tax 2617 Third Street $246,857 $13,259 $2,555 19.3% -$10,704 $2,121 $409 ($1,713) 2101 La Mesa Drive $846,367 $64,527 $8,761 13.6% -$55,766 $10,324 $1,402 ($8,923) **This worksheet provides only an estimate analysis. The County of Los Angeles Office of the Assessor is responsible for calculating official Mills Act property tax assessments each year. Reference Resolution Nos. 10351 and 10352 (CCS); Contract Nos. 8986 (CCS) and 8987 (CCS).