REPORT TO COUNCIL
SUBJECT
Title
Action on Mills Act Contract for 1311 Lewis Street
Report
BACKGROUND
Shun Ye and Yilin Yu, the home owners of the residence at 1311 Lewis Street, are requesting the approval of a Historic Property Preservation Agreement (Mills Act Contract) with the City and adoption of an associated 10-Year Restoration and Maintenance Plan. The State of California enacted legislation that allows owners of historically designated properties to enter into a Mills Act Contract with the legislative bodies of local agency jurisdictions, pursuant to Government Code Section 50280 and following. Mills Act Contract properties then qualify for property tax incentives contained in the California Revenue and Taxation Code. The purpose of a Mills Act Contract is to offer owner(s) of historically significant properties an economic incentive to maintain and preserve the historic physical integrity of their properties, which thereby also increases the aesthetic and economic health of the surrounding neighborhood and the City. A 10-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 City Council established a process for evaluating Mills Act Contract requests on September 4, 1993 (Resolution No. 5843), that established a limit of five contracts per year. In 2004, the City Council increased the number of allowable contracts to ten per year. If approved, the subject proposal would be the City’s third Mills Act Contract in 2018.
The subject property is currently listed on the City’s Historic Resource Inventory (Inventory). An updated State Department of Parks and Recreation (DPR) form evaluating the significance of the structure (Historical Survey) was prepared for the current proposal and concluded that the property retains sufficient integrity to continue to merit listing on the Inventory.
The project request was considered by the Historical and Landmarks Commission (HLC) at its meeting on September 6, 2018. No comments were received from the public during the public comment period. The HLC reviewed the Historical Survey and Proposed 10-Year Restoration and Maintenance Plan and recommended approval of the requested Mills Act Contract.
DISCUSSION
The applicants’ Statement of Justification and the proposed Historic Property Preservation Agreement (Mills Act Contract) with exhibits including the DPR and the Proposed 10-year Restoration and Maintenance Plan (attached) demonstrate sufficient intent by the property owners to invest in the property consistent with the purpose for Mills Act Contracts. The City conducts periodic review of Mills Act Contract properties to verify that property owners are performing the maintenance and preservation activities described in the 10-year Restoration and Maintenance Plan.
Furthermore, based upon information provided by the applicant, the subject property has sufficient historical value as to warrant use of a Mills Act Contract to promote the ongoing preservation of the property.
The staff report for the HLC meeting is attached for reference.
ENVIRONMENTAL REVIEW
The Mills Act program is exempt from the CEQA environmental review requirements per CEQA Section 15331, which exempts projects limited to maintenance, repair, installation, rehabilitation, restoration, preservation, conservation or reconstruction of historical resources in a manner consistent with the Secretary of the Interior 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 $886,000 and the annual property taxes are $10,352 (source: Santa Clara County Assessor’s Office). The City receives approximately 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 reduction in taxes would be 20% to 80% 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. The estimated annual fiscal impact for the City would be a negligible decrease of property tax revenue in the range of $200 to $800.
COORDINATION
This report has been coordinated with the Finance Department and 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 proposed 10-Year Restoration and Maintenance Plan associated with the Contract for the property at 1311 Lewis Street with Applicants Shun Ye and Yilin Yu; PLN2018-13309.
Staff
Reviewed by: Andrew Crabtree, Director of Community Development
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. Historic Property Preservation Agreement Including 10-Year Rehabilitation Plan
2. Historical and Landmarks Commission Staff Report of September 6, 2018