REPORT TO COUNCIL
SUBJECT
Title
Action on the Historic Preservation Agreement (Mills Act Contract) (PLN23-00507) for 1059 Madison Street
Report
COUNCIL PILLAR
Promote and Enhance Economic Housing and Transportation Development
BACKGROUND
Property owners Adalbert Wysocki and Huilin Kohare applied for a Historical Preservation Agreement (Mills Act Contract) (File No. PLN23-00507) for the property located at 1059 Madison 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 7,798 square-foot lot located midblock on Madison Street between Franklin Street and Benton Street. Constructed in 1898, the existing residence on the property is a 2,658 square-foot, one-story house designed in the Queen Anne architectural style. The property has a detached garage that was legally constructed in 1997. The property has been altered since its original construction, including the removal of a chimney in 1995 and a basement addition in 1997.
The property owners submitted the requisite application, including a historic survey (DPR 523A Form) of the property, 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 10-Year Restoration and Maintenance Plan and supporting documents were presented to the Historical and Landmarks Commission (HLC), included here as Attachments 1 and 2 respectively, and reviewed at the April 4, 2024 HLC meeting. Following review of the application, staff report and public testimony, the HLC unanimously recommended that the City Council approve the Mills Act Contract and adopt the 10-Year Restoration and Maintenance Plan 1059 Madison 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 the program, the property and/or building must be listed on either a local, State, or National register. The property owner must also have a plan to restore and rehabilitate the property.
A Department of Parks and Recreation (DPR) 523A Form was prepared by Lorie Garcia of Beyond Buildings on January 17, 2024, assessing the historical significance of the property based on National and State (California) Register criteria and the City’s local criteria for significance. The evaluator found the structure at 1059 Madison Street to be in overall good condition except for the alterations to the basement windows, the rear sliding entry doors, and the double-tiered deck. The evaluator stated that the residence appears to have had little external change since its construction in 1898. The evaluator 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 Restoration and Maintenance Plan includes repainting and refinishing the exterior, fumigation, and pest control, restoring porch flooring and stairs, refurbishing floors throughout, window restoration, roof replacement, and exterior improvements to the gutters, driveway, landscaping, lighting, and fencing. The property owners will obtain Significant Property Alteration permits for the work described in the Restoration and Maintenance Plan as required by the City’s Historic Preservation Ordinance (Santa Clara City Code Chapter 18.130).
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 first 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 $1,619,805 (06/30/2023 information) and the annual property tax is approximately $19,055 (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 $381 to $1,334. The actual future fiscal impact may be greater due to the reassessment of property value by the County upon transfer of ownership.
This is the first Mills Act contract 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 1059 Madison 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, Primary Record, Standards of Rehabilitation, 10-Year Restoration Plan
2. Staff Report from Historical and Landmarks Commission meeting of April 4, 2024
3. Statement of Justification