REPORT TO COUNCIL
SUBJECT
Title
Action on the Historic Preservation Agreement (Mills Act Contract) (PLN24-00264) for 1756 Fremont Street
Report
COUNCIL PILLAR
Promote and Enhance Economic Housing and Transportation Development
BACKGROUND
Property owners, Joe Navasca and Yemon Oo, applied for a Historical Preservation Agreement (Mills Act Contract) (File No. PLN24-00264) for the property located at 1756 Fremont Street. Enacted in 1972, the California Mills Act legislation grants participating local governments the authority to enter into contracts with owners of qualified historic properties who actively participate in the restoration and maintenance of their historic properties while receiving property tax relief. Santa Clara participates in the Mills Act Program. A requirement of the Mills Act Contract 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) for age and the architectural integrity of the residential structure.
The subject property is a 6,573 square-foot lot located on the southwest side of Fremont Street between Pierce Street and Lincoln Street. The residence was constructed circa 1870 and relocated from the Agnew/Alviso area to the current site in 1924. When relocated, the residence was converted from a National style two-story farmhouse to a one-story house with a new roof and front porch in line with Craftsman Bungalow architectural style. The existing residence on the property is a 1,105 square-foot, one-story house designed in the National architectural style with Craftsman details. The property has a detached shed structure/garage that was constructed in 1924. The property has been altered since its relocation, including the removal of board and batten siding from the rear façade and external brick chimney, and rear addition with a pitched roof and new channel-lap siding. The property has been altered since the release of the 2015 California Department of Parks and Recreation (DPR) form in that the façade of the rear addition now has a paired vinyl door instead of a horizontal door and has fewer windows.
The property owners submitted the requisite application, including a historic survey (DPR523A Form), an Addendum to the 2015 DPR523A Form, a 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 proposed Mills Act Contract with the 10-Year Restoration and Maintenance Plan and supporting documents were presented to the Historical and Landmarks Commission (HLC), and are included here as attachments. The HLC unanimously recommended that the City Council approve the Mills Act Contract and adopt the 10-Year Restoration and Maintenance Plan for 1756 Fremont Street.
DISCUSSION
The Mills Act Program allows a qualified property owner to receive a potential property tax reduction and use that savings to assist in offsetting the costs to rehabilitate, restore, and maintain their property. To qualify for this program, the property and/or building must be listed on either a local, State, or National register. The property must also have a plan to restore and rehabilitate the property.
A DPR523A Form was prepared by Lorie Garcia of Beyond Buildings on March 14, 2015, and the Addendum to the DPR523A Form was prepared by William Kostura in October 2023. Both assess the historical significance of the property based on National and State (California) Register criteria and the City’s local criteria for significance. The evaluators found the structure at 1756 Fremont to be in overall good condition except for the alteration to the rear façade. The evaluators concluded that the property continues to retain enough of its historic character and appearance to be recognizable as a historic resource and to convey the reason for its significance as a Historically Significant Property on the City’s HRI.
The property owners submitted a Statement of Justification and 10-Year Plan for restoration and maintenance of the property. The Plan includes window and entry porch restoration, original wood siding repair, painting, electrical and HVAC update, and roofing repair. The property owners will obtain Significant Property Alteration permits for the work described in the Plan as required by the Historic Preservation Ordinance (Chapter 18.130).
On September 3, 2024 the Planning Division received a public comment letter from Historian, Lorie Garcia, who recorded the DPR in 2015, which provides clarification and corrections to the 2023 Addendum and 2015 DPR. The letter provided clarification on the rear addition. In the 2015 DPR, Ms. Garcia identified the large rear addition as being constructed in 1924, but a small, offset separate addition providing basement access was added between 2005 and 2015. According to Ms. Garcia, the 2023 addendum misinterpreted the 2015 DPR as indicating that the entire rear addition was added sometime between 2005-2010. Ms. Garcia’s letter corrects this, and states that most of the rear addition was actually added when the house was relocated in 1924. A revised and updated 2023 DPR Addendum was also provided by the applicant that corrects this information. The 2015 DPR, comment letter from Lorie Garcia, and the revised 2023 DPR Addendum are included as Attachment 1.
The 10-year plan did not need to be updated, because the proposed repairs to the windows and rear addition are minor and related to repairing damage.
The HLC in their recommendation to the City Council found that the work proposed in the 10-Year Restoration and Maintenance Plan adheres to the Secretary of the Interior’s Standards for Rehabilitation. The proposed improvements, and the owner’s statement of justification, support the preservation, protection, and maintenance of a locally designated significant structure.
If approved, the subject property would be the second Mills Act Contract for 2024 and within the City’s allowed number of 10 contracts for 2024.
ENVIRONMENTAL REVIEW
The Mills Act program is exempt from the California Environmental Quality Act (“CEQA”) pursuant to Section 15331 of the CEQA Guidelines (Historical Resource Restoration / Rehabilitation). This exemption 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 1898 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 $945,833 (06/30/2024 information) and the annual property tax is approximately $11,015 (2023/24 value) (Source: Santa Clara County Assessor’s Office). The City receives approximately 10% of the base property tax. The Mills Act Contract 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% to 70% 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 $220 to $771. 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 10 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. This Mills Act contract is the second such request in 2024.
COORDINATION
This report has been coordinated with the Finance Department and the City Attorney’s Office.
PUBLIC CONTACT
No public notices are required for this item. 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
1. Determine that the project is categorically exempt from CEQA pursuant to CEQA Guidelines Section 15331(Class 31 - Historical Resource Restoration / Rehabilitation); and
2. Authorize the City Manager to execute a Mills Act Contract in a final form approved by the City Attorney and adopt the 10-Year Restoration and Maintenance Plan associated with the property at 1756 Fremont Street.
Staff
Reviewed by: Reena Brilliot, Acting Director, Community Development Department
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Mills Act Contract, Property Description, 2015 Primary Record, Comment Letter, 2023 Primary Record Update, Standards of Rehabilitation, 10-Year Restoration Plan
2. Historical and Landmarks Commission Staff Report from September 5, 2024
3. Statement of Justification