REPORT TO COUNCIL
SUBJECT
Title
Action on Historic Preservation Agreement (Mills Act Contract) for 957 Lewis Street
Report
COUNCIL PILLAR
Promote and Enhance Economic Housing and Transportation Development
BACKGROUND
Property owners Brian and Christine Allen applied for approval of a Preservation Agreement (Mills Act Contract) for the property located at 957 Lewis Street. The subject property is a 0.15-acre lot located on the northeast corner of Lewis Street and Washington Street. The existing residence is a single-story Vernacular architectural style constructed circa 1895. There is a detached garage/shed located to the rear of the residence that is not historically significant as it was constructed more than 50 years after the construction of the residence.
A requirement of the Mills Act is that the building must be a qualified structure, listed on either a local, State, or National register. The property is currently listed on the City’s Historic Resource Inventory (HRI) based on the age and the architectural integrity of the residential structure. The property owner has submitted the requisite application, including a Historic Survey (DPR 523A Form) of the property, Statement of Justification for the request, and a 10-Year Restoration and Maintenance Plan for evaluation of the proposed workplan to restore, rehabilitate and maintain the property. The Mills Act Contract with 10-Year Restoration and Maintenance Plan and supporting documents were made part of the Historical and Landmarks Commission staff report, included here as Attachments 1 and 2 respectively, and reviewed at the September 1, 2022 Historical and Landmarks Commission meeting.
Following review of the application, staff report and public testimony, the Historical and Landmarks Commission recommended that Council approve the Mills Act Contract and adopt the Ten-Year Restoration and Maintenance Plan for 957 Lewis Street. An excerpt of the draft Minutes of the September 1, 2022 Historical and Landmarks Commission meeting is provided as Attachment 3.
DISCUSSION
The purpose of the Mills Act Contract is to offer owner(s) of historically significant properties an economic incentive to maintain and preserve the historical physical integrity of their properties, which thereby also increases the aesthetic and economic health of the surrounding neighborhood and the City. A Ten-Year Restoration and Maintenance Plan is required to document specific maintenance and preservation activities proposed to be undertaken by the property owners for the Contract property.
The Council established a process for evaluating Mills Act Contract requests on September 4, 1993 (Resolution No. 5843), that set a limit of five contracts per year. In 2004, the City Council increased the number of allowable contracts to 10 per year. If approved, the subject property would be the fifth for 2022 and within the City’s allowed number of ten contracts for 2022.
The property owner’s Statement of Justification along with the 10-Year Restoration and Maintenance Plan demonstrate the property owner’s intent to invest in the subject property consistent with the purpose of Mills Act Contracts.
ENVIRONMENTAL REVIEW
The Mills Act program is exempt from the California Environmental Quality Act (“CEQA”) pursuant to Section 15331 of the CEQA Guidelines (Class 31 - Historical Resource Restoration / Rehabilitation). Class 31 consists of projects limited to maintenance, repair, stabilization, rehabilitation, restoration, preservation, conservation or reconstruction of historical resources in a manner consistent with the Secretary of the Interior's Standards for the Treatment of Historic Properties (“SOI Standards”). The Project will result in the restoration and rehabilitation of the 1903 structure consistent with the SOI Standards.
FISCAL IMPACT
The amount of the property tax reduction depends upon the property, location, size, and comparable properties in the area. Currently, the assessed value of the property is approximately $1,045,394 (6/30/2022 information) and the annual property tax is approximately $12,394 (2021/22 value) (Source: Santa Clara County Assessor’s Office). The City receives approximately ten percent (10%) of the base property tax. The Mills Act tax reduction is based on an income capitalization method (ICM) calculation based on the average monthly rent, average maintenance costs, and an amortization schedule to arrive at a reduced appraisal value resulting in lower property taxes. The anticipated tax reduction would be 20 percent to 70 percent based on the County’s evaluation of the property’s age, condition, and local market value factors in accordance with the formula set by state law. Based on the latest information available, the estimated annual fiscal impact to the City for this individual Mills Act contract would be a decrease of property tax revenue in the range of $248 to $868. The actual future fiscal impact may be greater due to the reassessment of property value by the County upon transfer of ownership.
As the current Council policy allows up to ten Mills Act Contracts to be approved each year, the cumulative economic impact for multiple Mills Act contract does not significantly reduce the overall property tax income for the City. The Mills Act contract is the fifth such request in 2022.
COORDINATION
This report has been coordinated with the Finance Department and the City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Authorize the City Manager to execute a Mills Act Contract and adopt the 10-Year Restoration and Maintenance Plan associated with the property at 957 Lewis Street.
Staff
Reviewed by: Andrew Crabtree, Director of Community Development
Approved by: Rajeev Batra, City Manager
ATTACHMENTS
1. Mills Act Contract and 10-Year Restoration and Maintenance Plan
2. Staff Report from Historical and Landmarks Commission meeting of September 1, 2022
3. Draft Excerpt Historical and Landmarks Commission meeting minutes of September 1, 2022