SR-07-08-2014-7EAMA City Council Report
City of
Santa Monieam
City Council Meeting: July 8, 2014
Agenda Item: �F-
To: Mayor and City Council
From: David Martin, Director, Planning & Community Development
Subject: Introduction and First Reading of an Ordinance amending SMMC Section
9.36.270(g) Regarding Historical Property Contracts (Mills Act).
Recommended Action
Staff recommends the City Council:
1. Introduce for first reading the attached proposed ordinance to amend Chapter
9.36.270(g) of the Municipal Code and define additional eligibility requirements for
qualified historic properties pursuing Historical Property Contracts (i.e. Mills Act
Contracts) with the City.
2. Direct staff to amend the Mills Act application form to include a detailed description
of a proposed "Work Plan."
3. Direct staff to monitor active Mills Act contracts biennially and require contract
holders to submit a report describing work performed on the property and progress
toward completing the activities described in the Work Plan.
Executive Summary
Following previous direction by Council, staff has worked collaboratively with the
Landmarks Commission and prepared an ordinance to amend the Preservation
Incentives section of the Municipal Code (Section 9.36.270(g)). In addition, a
recommendation to amend the application form and requirements is presented.
Further, staff recommends all Historical Property Contract recipients be required to
report back to the City biennially on their progress in fulfilling contractual obligations.
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Background
The Mills Act is a State law that enables cities to enter into contracts with property
owners of qualified historic properties, defined locally as designated Landmarks,
Structures of Merit, or contributors to a local historic district, to potentially reduce
property tax obligations. Although the State enabling legislation (California Government
Code Sections 50280 - 50290) mandates certain contractual provisions, such as a
minimum 10 -year term and establishing a protocol for cancelling a contract, the law
allows each city to develop its own implementation criteria and application requirements
based on local factors and conditions. As indicated below, the City's current enabling
legislation for the Program, while in conformance with the State's basic requirements for
establishing a Mills Act program, does not offer additional guidelines or further
limitations regarding eligibility:
(g) Historical Property Contracts. Designated structures of merit, landmarks and
contributing structures located in Historic Districts that are privately owned shall
be considered qualified historical properties eligible for historical property
contracts submitted or entered into, pursuant to the provisions of Article 12,
commencing with Section 50280, Chapter 1, Part 1, Division 1, Title 5, of the
California Government Code upon resolution approval by the City Council.
This preservation incentive has been locally available to owners of qualified historic
properties since 1991.
In the autumn of 2012, Council was presented with a request for a Mills Act contract
submitted for a designated City Landmark residence located on La Mesa Drive. The
application was filed and received while rehabilitation of the residence (in accordance
with an approved Certificate of Appropriateness that mandates conformance with the
Secretary of the Interior's Standards) was nearing completion. During Council
deliberation on whether to move forward with the contract, a question arose as to the
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appropriateness of entering into a contract involving a completely rehabilitated historic
structure and whether this was the intent of the City's Mills Act program.
Council directed staff to work with the Landmarks Commission to review the current
guidelines and requirements of the City's Program and determine if changes should be
recommended to revise eligibility requirements and potentially add program restrictions,
including possible assessment valuation eligibility caps or annual "lost revenue" caps, to
ensure that public and private benefits are realized and are appropriately aligned with
the Program goals and the City's financial objectives.
Discussion
In response to Council direction, in December 2012 the Landmarks Commission
conducted a public discussion on the Program in general and took action by forming a
three - member subcommittee. Its purview was limited to a review of the City's current
Program and possible development of recommendations to improve its overall
implementation and effectiveness. The Commission was particularly interested in
having the Subcommittee assess whether the Program would benefit from more
restrictive applicant eligibility requirements.
Staff prepared and presented research to the Subcommittee that summarized Mills Act
programs currently administered in the Cities of Burbank, Claremont, Glendale, Los
Angeles, Pasadena, San Diego, San Francisco and West Hollywood. These
communities all have strong local historic preservation programs, the majority of which
established eligibility requirements in addition to the baseline standard of National, State
or local listing or designation. Some of these requirements include: no delinquent
property taxes; no code violations; and a maximum assessed valuation. A detailed
summary of requirements in the other jurisdictions is contained in Attachment A.
The subcommittee presented its initial findings and recommendations to the full
Landmarks Commission on May 13 2013. In general, the subcommittee thought the
Program would benefit from stricter eligibility requirements that discourage property tax
delinquency and confirmed outstanding code violations. Further, the subcommittee felt
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that Program applicants should articulate in their application, their preservation intent
and state how a Mills Act contract will advance the reconstruction, preservation,
restoration, rehabilitation and /or maintenance of the qualified resource. This is best
expressed in a complete "Work Plan ".
Unlike many other local jurisdictions, the subcommittee did not support the
establishment of an assessment valuation eligibility cap or an annual "lost revenue" cap.
An assessment valuation cap excludes a property with an assessed value over a certain
amount from being eligible to apply for a Mills Act Contract. For example, in the City of
Los Angeles any qualifying historic single - family property that has an assessed value
over $1.5 million is not eligible to apply. Pasadena has a similar restriction, whereas in
San Francisco the maximum assessed value is $3.0 million.
Another approach is to limit or cap the projected "lost revenue" that a local jurisdiction
may incur whether annually or cumulatively. The City of San Diego established that in
any given year, the amount of property tax revenue due to the City that would have
been collected from those properties applying for a new Mills Act contract cannot
exceed $200,000. In the City of Los Angeles, the cumulative amount of lost revenue for
all participating properties cannot exceed $2.0 million. Once these thresholds are met,
neither jurisdiction will accept any additional contract applications.
The subcommittee believed that such restrictions may potentially discourage property
owners from pursuing or supporting a landmark designation. The subcommittee felt that
given the limited incentives available, all landmarks should be eligible for the same
benefit options regardless of a property's value or the City's financial situation.
During public discussion and debate on the proposed amendments to the Program,
Staff advanced a recommendation to the Commission that was generally in alignment
with that of the subcommittee, with one exception; staff's initial proposal introduced an
annual lost revenue cap. Staff believed that such a cap would allow the City to be
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fiscally prudent in its overall Program approach while not excluding any qualified historic
property from pursuing a Mills Act contract. It was believed that a lost revenue cap
would meter the number of new contracts annually based on a predictable annual "lost
revenue" impact to the City. However, during public discussion on the matter at the last
several Landmarks Commission meetings, starting on November 11, 2013 and
continuing through the May 12, 2014 meeting, the Commission unanimously objected to
the implementation of any type of financial cap for Mills Act contracts and emphasized
that such restrictions would discourage property owners from pursuing or supporting a
landmark designation, which would be detrimental to the overall success of the City's
historic preservation program. Staff has since revised its position and no longer
endorses a cap provision for Mills Act contracts.
After final discussion and deliberation, staff and the Landmarks Commission mutually
support amendments to the Mills Act program that will define additional eligibility
requirements for Program applicants and require that applicants articulate their intent for
obtaining a contract and amending the application requirements to include a detailed
Work Plan. In summation, it is recommended that the City's enabling legislation for the
Program, Article IX, Chapter 9.36, Subsection 270 (g) of the Santa Monica Municipal
Code, be amended to read as follows (proposed text is italicized):
(g) Historical Property Contracts. Designated structures of merit, landmarks and
contributing structures located in Historic Districts that are privately owned and not
exempt from property taxation shall be considered qualified historical properties eligible
for historical property contracts submitted or entered into, pursuant to the provisions of
Article 12, commencing with Section 50280, 'Chapter 1, Part 1, Division 1, Title 5, of the
California Government Code. The City Council shall, by resolution approve a historical
property contract with the owner of a qualified historical property, provided that:
(1) The property has no confirmed and outstanding violations of this Code, or any
other applicable federal, state or local law, rule or regulation;
(2) The property is not subject to any tax delinquency; and
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(3) All completed or ongoing alterations, construction or rehabilitation to designated
buildings or structures located on the property conform to the Secretary of the
Interior's Standards for the Treatment of Historic Properties.
In order to improve the submittal requirements to ensure that a complete understanding
of the property is conveyed and that all applications provide a consistent level of detail,
staff recommends that the Mills Act application forms be amended to require the
following:
• Work Plan: No application will be accepted for consideration without a fully
developed Work Plan. This Work Plan shall demonstrate the applicant's
preservation goals and the use of the Mills Act as a financial means of achieving
these goals. This Work Plan shall include an assessment by a professional
qualified in historic preservation of existing conditions, including structural,
electrical, plumbing, and the condition of all interior and exterior significant
architectural features. This report must identify which architectural elements are
original and which have been altered or remodeled. The Work Plan must be
accompanied by comprehensive and detailed photographs that document all
architectural features, both interior and exterior, with views of whole elements as
well as character - defining details. Specific tasks must be detailed and include a
description of the proposed work, the time frame for completion, and the cost.
• Signed acknowledgement of receipt of a copy of the Guidelines for the
Assessment of Enforceably Restricted Historical Properties, prepared by the
State Board of Equalization, as amended periodically.
Critical to the success of the Program is a monitoring effort to ensure that property
owners fulfill their contractual obligations in a timely manner. Although State law
mandates official monitoring to occur every five years, staff is recommending that the
City monitor active Mills Act contracts biennially, requiring contract holders to submit a
report to the Planning & Community Development Department describing work
performed on the property and progress toward completing the activities described in
the Work Plan. At the conclusion of each monitoring cycle a summary Information Item
will be transmitted to Council.
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Alternatives
The Council has complete discretion to establish Mills Act contract applicant eligibility
criteria and /or application requirements which it believes will further advance the
objectives of the Preservation Program, provided such restrictions do not conflict with
State laws governing Mills Act programs. The Council may choose to establish caps, as
previously described in this report. They may also limit contracts to properties of a
certain type (e.g. residential only) or condition (e.g. those having already undergone
rehabilitation within a specified time period are not eligible). The Council may also
choose to take no action leaving the current criteria intact.
Financial Impacts & Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action.
Prepared by: Scott Albright, AICP, Senior Planner
Approved:
David Martin
Director, Planning and Community
Development
Attachments:
Forwarded to Council:
Rod Gould
City Manager
A. Mills Act Eligibility Requirements /Restrictions — Other Local Governments
B. Proposed Ordinance
rA
ATTACHMENT A
Mills Act Eligibility Requirements /Restrictions — Other Local Governments
City
Eligibility Requirement
Restrictions
Burbank
• Listed on the National Register or
• Work Plan must demonstrate
California Register, or locally listed.
reinvestment of tax savings for
rehabilitation, restoration or
• Tax delinquent properties ineligible.
maintenance activities.
• Properties with outstanding code
violations are ineligible.
Claremont
• Listed on National Register,
• The number of applicants per
California Register, or locally listed
calendar year is limited to six (6).
Glendale
• Listed on National Register,
• None
California Register, or locally listed
Los Angeles
• Locally designated as a
Annual "lost revenue" cap of $2
Historic /Cultural Monument or a
million for all contracts.
Contributing Property within a
Historic Preservation Overlay Zone
(HPOZ).
• Assessed tax value cap of $1.5
million for Single Family Residential;
$3.0 million for income producing
Multi-Family/Commercial/Industrial
properties
• Must need "significant' restoration or
rehabilitation work.
Pasadena
• Listed on the National Register or
None
locally designated resources, or
designed by the architectural design
firm of Greene and Greene.
• Buildings that have already
undergone rehabilitation or do not
require future rehabilitation are
ineligible.
• Assessed tax value cap of $1.5
million for Single Family Residential.
City
Eligibility Requirement
Restrictions
San Diego
a Listed on the City of San Diego
Cap on the annual amount of new
Register.
tax revenue reductions at
$200,000.
e The historic building must be visible
from the public right -of -way.
San Francisco
a Listed on National and State
Contracts are not guaranteed.
Register listed, or locally designated.
Applications are prioritized based
on criteria in order to determine
e Properties with outstanding code
which are most likely to yield the
violations are ineligible.
greatest public benefit.
e Assessed tax value cap of $3 million
for residential and $5 million for
commercial, industrial or mixed -use
properties.
e Property must have active
rehabilitation work or had recently
completed rehabilitation in the year
prior to application.
West
a Locally designated Cultural
. None
Hollywood
Resources
e Demonstrated need for restoration
and /or rehabilitation.
e Any restoration /rehabilitation work
must be complete prior to or
concurrent with the application
request.
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City Council Meeting: 7 -8 -14
Santa Monica, California
ORDINANCE NUMBER (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA MONICA AMENDING SANTA MONICA MUNICIPAL CODE SECTION
9.36.270(G) TO INCLUDE ADDITIONAL ELIGIBILITY REQUIREMENTS FOR
HISTORICAL PROPERTY (MILLS ACT) CONTRACTS
WHEREAS, Government Code Sections 50280 et seq., authorizes a city to enter
into historical property (Mills Act) contracts with any owner of any qualified historical
property; and
WHEREAS, upon entering into an historical property contract, the property owner
agrees to preserve and maintain the qualified historical property so that it retains its
historically significant characteristics, and, in return, the property owner obtains property
tax relief; and
WHEREAS, Santa Monica Municipal Code Section 9.36.270(g) provides that
privately -owned designated Structures of Merit, Landmarks, and Contributing Structures
located in Historic Districts are considered qualified historical properties eligible to enter
into historical property contracts with the City; and
WHEREAS, the City desires to amend Section 9.36.270(g) in order to refine the
eligibility requirements for such historical property contracts for purposes of ensuring
that through these contracts a public and private benefit that is appropriately aligned
with the City's historic preservation and financial goals is realized.
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NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES
HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Section 9.36.270 of the Santa Monica Municipal Code is hereby
amended to read as follows:
SECTION 9.36.270 Preservation Incentives.
(a) Architectural Review Exemption. Provided that a certificate of
appropriateness is obtained from the Landmarks Commission, the following projects
shall be exempt from review by the Architectural Review Board:
(1) All work to a designated landmark building or contributing structure to an
adopted Historic District; and
(2) All additions to, modifications of, alterations of, or new construction on a
landmark parcel or parcel containing a contributing structure to an adopted Historic
District.
The Landmarks Commission may refer any of these matters to the Architectural
Review Board for comment.
(b) Building Permit and Planning Application Fees. All building permit and
planning fees for administrative approval applications shall be waived for designated
landmarks, or contributing structures located in a Historic District.
(c) Certificates of Appropriateness /Administrative Approval Fees. All
certificate of appropriateness and certificate of administrative approval fees for any
alteration, restoration or construction, in whole or in part, to a designated landmark or to
a contributing structure located in a Historic District shall be waived.
(d) Any parking incentives permitted by the Zoning Ordinance.
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(e) Streetscape Improvements in Historic Districts. Whenever
streetscape improvements are proposed by the City in areas that are designated
Historic Districts, the City shall consider the use of materials, landscaping, light
standards and signage that are compatible with the area's historic and architectural
character.
(f) State Historical Building Code. The California State Historical Building
Code (Title 24, Part 8, California Administrative Code) shall be applied to alterations to
designated structures of merit, landmarks, and contributing structures located in Historic
Districts.
(g) Historical Property Contracts. Designated structures of merit,
landmarks and contributing structures located in Historic Districts that are privately
owned and not exempt from property taxation shall be considered qualified historical
properties eligible for historical property contracts submitted or entered into, pursuant to
the provisions of Article 12, commencing with Section 50280, Chapter 1, Part 1, Division
1, Title 5, of the California Government Code.-upon The City Council shall, by
resolution, approve a historical property contract with the
owner of a qualified historical property, provided that:
(1) The property has no confirmed and outstanding violations of this Code or
any other applicable federal state or local law, rule or regulation;
(2) The property is not subject to a tax delinquency; and
(3) All completed or ongoing alterations construction or rehabilitation to
designated buildings or structures located on the property conform to the Secretary of
the Interior's Standards for the Treatment of Historic Properties.
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(h) Plan Check Processing. Structures designated as landmarks or
contributing buildings or structures to a Historic District shall receive priority Building
Division plan check processing.
SECTION 2. Any provision of the Santa Monica Municipal Code or appendices
thereto inconsistent with the provisions of this Ordinance, to the extent of such
inconsistencies and no further, is hereby repealed or modified to that extent necessary
to effect the provisions of this Ordinance.
SECTION 3. If any section, subsection, sentence, clause, or phrase of this
Ordinance is for any reason held to be invalid or unconstitutional by a decision of any
court of competent jurisdiction, such decision shall not affect the validity of the
remaining portions of this Ordinance. The City Council hereby declares that it would
have passed this Ordinance and each and every section, subsection, sentence, clause,
or phrase not declared invalid or unconstitutional without regard to whether any portion
of the ordinance would be subsequently declared invalid or unconstitutional.
SECTION 4. The Mayor shall sign and the City Clerk shall attest to the
passage of this Ordinance. The City Clerk shall cause the same to be published once
in the official newspaper within 15 days after its adoption. This Ordinance shall become
effective 30 days from its adoption.
APPROVED AS TO FORM:
-7 M
MA SHA J S OUT IE
Cit ttorney
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