REPORT TO COUNCIL
SUBJECT
Title
Public Hearing: Action to Terminate Two Historic Property Preservation Agreements (Mills Act Contracts) at 1711 Main Street and 906 Monroe Street / 1341 Homestead Road
Report
BACKGROUND
The Mills Act is an economic incentive program designed to encourage the restoration and preservation of qualified historic buildings by private property owners. Enacted in 1972, the legislation authorizes participating local governments to enter into contracts with owners of eligible historic properties. In exchange for property tax relief, owners agree to actively maintain and restore their properties in accordance with an approved ten-year restoration plan.
The Planning Division of the Community Development Department administers the Mills Act program for the City of Santa Clara. As part of the program, the City conducts audits of Mills Act properties every five years to ensure compliance with approved restoration plans. The most recent audit occurred in 2017; the audit originally scheduled for 2022 was postponed until 2024 due to the COVID-19 pandemic.
During the audit, property owners are required to submit documentation demonstrating compliance with their restoration plans. Acceptable documentation includes receipts, invoices, photographs, and other records of eligible improvements and maintenance work. Property owners may also choose to schedule an on-site inspection with City staff in lieu of submitting documentation.
Despite repeated outreach attempts by staff, one property owner did not respond to the audit and another property owner did not submit adequate documentation. As a result, these properties were identified as noncompliant with the requirements of their Historic Property Preservation Agreements and are subject to cancellation of their Historic Property Preservation Agreements (Mills Act Contracts).
DISCUSSION
Upon entering into a Mills Act Contract, property owners sign a Historic Property Preservation Agreement with the City, which is also recorded with the County. This agreement requires owners to provide any information requested by the City to verify compliance and outlines both nonrenewal and termination procedures. The contracts automatically renew for an additional ten years unless the City or owner initiates non-renewal or cancellation.
There are currently 132 Mills Act properties in the City of Santa Clara. As part of the 2024/2025 audit process, all property owners were contacted via mail and/or email and asked to submit self-reported documentation, such as invoices, photographs, and written descriptions of work completed. When the property address and the owner’s mailing address differed, notifications were sent to both, as verified through Santa Clara County assessment records. Property owners were also offered the option to schedule an on-site inspection in lieu of submitting documentation.
For owners who did not respond to the initial outreach, City staff conducted multiple follow-up efforts, including phone calls, certified mail, and attempted in-person delivery of notices by Code Enforcement staff. Despite these efforts, two property owners remained nonresponsive:
• 1711 Main Street
• 906 Monroe Street / 1341 Homestead Road (currently bank-owned)
The property at 1711 Main Street entered into the Historic Property Preservation Agreement in 2000 under previous ownership. The current owners purchased the home in 2012 and participated in the 2017 audit, including an on-site inspection. At that time, the property was found to be in general compliance. During the current audit, the owners have only provided a narrative description of work completed from the original 10-Year Plan approved in 2000. They noted that most of the work in the 10-Year Plan, including rewiring, flooring replacement and refinishing, rear and basement additions, painting, and other electrical work, was completed by the previous owners prior to their purchase of the house in 2012. Because the 2000 plan is now outdated, documentation demonstrating ongoing maintenance or additional completed work is necessary to verify continued compliance with the program. Staff records show only one building permit since the 2017 audit, a reroof in 2019 (File No. BLD2019-56460) was applied for. The owners also referenced a new water heater installed in 2020, but no permit for this work was found. Staff conducted a windshield survey and observed that the exterior of the home appears to be in disrepair.
The property at 906 Monroe Street entered into the Historic Property Preservation Agreement in 1998 under previous ownership. There are two residences on the property, however only 906 Monroe Street is listed on the City Historic Resource Inventory (HRI) and is subject to the Mills Act. During the 2017 audit, the owners at that time selected an on-site inspection with staff, and the residence was found to be in fair condition. The property is currently bank owned following an unsuccessful redevelopment proposal. Bank representatives have not responded to requests for audit participation.
Section 3(c) of the City’s standard Historic Property Preservation Agreement, which was used for both properties, provides that a failure to allow verification of compliance through periodic on-site inspections constitutes a breach of contract. Section 4(a) requires Owners to furnish the City with any information requested by the City to determine compliance with the terms of the Agreement. Because both of the property owners listed above failed to respond to repeated requests for information or to allow for on-site examination of the properties, both properties are considered to be in breach of both sections of their agreements.
California Government Code Section 50284 requires that a duly noticed public hearing be held before a Mills Act contract can be cancelled. At the November 4, 2025, Council meeting, the Council voted to set the termination hearing for January 27, 2026. Mailed notices were sent to the affected property owners, and a public notice must also be published in the Santa Clara Weekly.
If the Council votes to terminate the agreements, the property owners will be subject to a cancellation fee equal to 12.5 percent of the current fair market value of the property as determined by the county assessor, as required by the California Government Code. This fee is paid to the county auditor and allocated to each jurisdiction in the tax rate area where the property is located. The properties will remain listed on the City’s HRI and will continue to be subject to all requirements of the Historic Preservation Ordinance. Any future work on the structures will still require historic review and approval consistent with City regulations.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
If the Mills Act contracts are cancelled, the City will notify the County of the properties that would no longer receive the associated property tax relief. For the City of Santa Clara, the annual relief amounts for the two properties range from approximately $53 to $353 (2024/25 value) (Source: Santa Clara County Assessor’s Office). The City would also receive a portion of assessed cancellation fees.
COORDINATION
This report was coordinated with 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 or at the public information desk at any City of Santa Clara public library.
Mailed notices were sent to the affected property owners at both the subject properties and the owners’ mailing addresses, if different, on January 15, 2026. In addition, a notice was published in the Santa Clara Weekly on January 14, 2026.
RECOMMENDATION
Recommendation
Hold the public hearings, consider all testimony presented and, based upon the evidence presented:
1. Terminate the Mills Act Contract for the property located at 1711 Main Street due to violation of Sections 3(c) and 4(a) of the Agreement, effective immediately;
2. Terminate the Mills Act Contract for the property located at 906 Monroe Street / 1341 Homestead Road due to violation of Sections 3(c) and 4(a) of the Agreement, effective immediately; and
3. Direct the Community Development Director to inform the affected property owners and the County and take all other actions necessary to implement the terminations.
Staff
Reviewed by: Afshan Hamid, Director, Community Development Department
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. 1711 Main Street Historic Preservation Agreement
2. 906 Monroe Street Historic Preservation Agreement