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HomeMy WebLinkAbout07-11-2000 City Council Agenda Packet :i CITY CLERK AOENDA ! ADJOURNED MEE TIl'q ~,-,--.,.,~,~,=,----~--~~ SESSION SARATOGA CITY COUNCIL JULY 11, 2000 Heritage Preservation Commission Saratoga Union School District ADJOURNED MEETING/JOINT SESSION-7:00 P.M. ADULT CARE CENTER,- 19655 ALLENDALE AVENUE PLEDGE OF ALLEGIANCE ROLL ,CALL REPORT OF CITY CLERK ON POSTING OF AGENDA (Pursuant to Gov't. Code 54954.2, the agenda for this meeting was properly posted on July i~/[, 2000) COMMUNICATIONS FROM PUBLIC Oral Communications on Non-Agendized Items Any member of the public will be allowed to address the City Council for up to 3 minutes on matters not on this agenda. JOINT MEETING WITH HERITAGE PRESERVATION COMMISSION .1. Status of the I~eritage Orchard. Possibility of City adopting an implementing ordinance for the Mills Act. ADJOURNMENT TO JOINT MEETING WITH SARATOGA UNION SCHOOL DISTRICT Implementation of Cooperation Agreement dated June'4, 1999 A. Saratoga Elementary School Project 1. preservation of two heritage eucalyptus' trees 2. widening of Oak Street 3. feasibility study for traffic circulation & congestion B. Redwood Middle School Project 1. implementation of Circulation Plan 2. driveway closure 3. status of feasibility study of adding separate turn lane on Fruitvale Ave. 4. status of traffic circulation and congestion study Continued Cooperation A. Dislrict and City liaison appointments Future Issues A. Foothill School 1. realignment of path through Foothill Park 2. traffic and access issues B. Expansion of traffic guards ADJOURNMENT In compliance with the Americans with Disabilities Act .(ADA), if you need special assistance to participate in this meeting, please e6ntact the City Clerk at (408) 868-1269. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting (28 CFR 35.102-35.104 ADA Title II) Mills Act Property 'l-ax Abatement Program The Mills Act is a state sponsored legislation granting local governments the authority to directly participate in an historic preservation program. More importantly, the Mills Act is a self- directed, economic incentive program designed to provide private property owners the opportunity to actively participate in the restoration of their properties while receiving property tax relief. This package of information contains: An information sheet on the Mills Act program A list of cities and counties participating in the Mills Act program An example of a property tax assessment of an historic property in Sacramento County illustrating the comparison between the standard calculation of a property tax assessment with the Mills Act projection The Mills Act information package from Redwood City Copies of the California Government Code and the Revenue and Taxation Code on the Mills Act Articles on the Mills Act program Should you require additional information on the Mills Act, please contact Eugene Itogawa in the Office of Historic Preservation, PO Box 942896, Sacramento CA 94296-0001, (916)-653-8936, . gitog@ohp, parks.ca.gov. SARATOGA CITY COUNCIL EXECUTIVE SUMMARY NO: AGENDA ITEM: MEETING DATE: July 11, 2000 CITY MANAGER: ~'_~~ ~ ORIGINATING DEPT: Community Development DEPT HEAI~:./~/-x SUBJECT: Joint Meeting with the Heritage Preservation Commission Discussion Topics: The Heritage Preservation Commission would like to discuss the following topics with the City Council: 1. Status of the Heritage Orchard 2. Possibility of the City adopting an implementing ordinance for the Mills Act ATTACHMENTS: 1. Mills Act information Table of Contents IntrOduction ._~ Communities-Participating in Mills Act Program ................................................... 5 Property Tax Assessment Example ..................................................................... 8 · RedWood. City Mills Act Information Pa~ckage ..................................................... 11 California State Codes Relating to Mills Act Program ........................................ 16 Articles Related to Mills, Act Program ................................................................. 22 Communities Participating in Mills Act Program County/City # of Certified Local Contracts Ordinance? Government? Alameda County Berkeley 1 Yes No Contra Costa County Danville Orinda (pending) 4 Yes Yes No Fresno County Fresno (pending) Yes Los Angeles County Glendale Glendora La Verne Long Beach Los Angeles (City) Los Angeles (County) Monrovia Norwalk (pending) Pasadena (pending) Redondo Beach Santa Monica Sierra Madre West Hollywood Whittier 0 Yes 5 Yes 4 No 7 Yes 58 Yes 2 23 Yes 27 Yes 0 Yes 14 Yes 48 Yes 1 Yes Yes No No Yes No No No No Yes Yes Yes No Yes No Marin County Belvedere Larkspur 1 Yes 1 Yes No Monterey County Monterey (City) Monterey (County) (pending) 0 Yes Yes Yes Napa County St. Helena 0 Yes No County/City . · santa Clara County Los Altos Morgan Hill Palo Alto san Jose Sunnyvale . Solano-County Benicia Valle jo Stanislaus County Modesto Newman (pending) Tuolumne County Soulsbyville (Unincorporated) Tuttletown (Unincorporated). Ventura County Ojai Ventura (County) # of Contracts 1 1 2 3 3 2 2 11 Ordinance? Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Certified Local Government? Yes No Yes Yes Yes Yes No Yes Yes No Yes 7 EXAMPLE 1: Mills Act v. Normal Assessment Single Family Residence 1400 Sq. Ft., 7,5 Years Old Mills Act Assessment Income Approach to Value Gross Income: {$850/mo x 12}= $10.200 Vacancy & Col Loss: ($%} = $ - 510 Eff_ective Gross: $9,690 Expenses: Maintenance $ 600 Insurance $ 400' Total Expenses: $- 1,000 Net Operating Income $ 8,690 Capitalization Rate Interest Rate 7.50 Risk Rate 4.00 Depreciation Rate 2.00 Tax Rate 1.00 Total Cap Rate 14.50 % Capitalization of Net IncOme: NOI/Cap Rate $ 8.690 = $ 59,931 .1450 Assessed Value = $60,000 Estimated Properly Taxes: $ 600 Normal Assessment Market Approach to Value 1} 2~ Assessor uses Sale Comparison Approach using sales of similar properties appropriately ac~sted for differences between comparable and the subject property. Sales indicate market value of $150,000 Assessed Value = Estimated Taxes = $1S0,000 $1,s00 Net property tax savings under Mills act: $900 (60%) Redwood City Mills Act Information Package (Courtesy of the City of Redwood City) 11 BENEFITS OF MILLS ACT AGREEMENT REDUCTION IN PROPERTY TAX. INCEASES LIKELIHOOD OF PRESERVATION. ASSURES MECHANISM TO AVOID DETERIORATION. PROVIDES MECHANISM FOR REHABII. ITATION. CAN ENCOURAGE SENSITIVE HOME BUYERS TO PURCHASE DESIGNATED HISTORIC STRUCTURES. MEETS THE GOALS OF THE HISTORIC LANDMARKS ELEMENT OF THE 1990 GENERAL PLAN AND HISTORIC PRESERVATION ORDINANCE. AFFECTS OWNER-OCCUPIED STRUCTURES AS WELL AS INCOME-PRODUCING PROPERTIES. VISUALLY IMPROVES THE PHYSICAL ENVIRONMENT OF THE COMMUNITY AND PROVIDES A FOCUS ON HISTORIC LANDMARKS. .13 50281.1. Fees. The legislative body entering into a contract described in this article may require that the property owner, as a condition to entering into the contract, pay a fee not to exceed the reasonable cost of administering this program. 50282. Renewal. (a) Each contract shall provide that on the anniversary date of the contract or such other annual date as is specified in the contract, a year shall be added automatically to the initial term of the contract unless notice of nonrenewal is given as provided in this section. If the property owner or the .legislative body desires in any year not to renew the contract, that party shall serve written notice of nonrenewal of the contract on the other party in advance of the annual renewal date of the contract. Unless the notice is served by the owner at least 90 days prior to the renewal date or by the legislative body at least 60 days prior to the renewal date, one year shall automatically be added to the term of the contract. (b) Upon receipt by the owner of a notice from the legislative body of nonrenewal, the owner may make a written protest of the notice of nonrenewal. The legislative body may, at any time prior to the renewal date, withdraw the notice of nonrenewal. (c) If the legislative body or the owner serves notice of intent in any year not to renew the contract, the existing contract shall remain in effect for the balance of the period remaining since the original execution or the last renewal of the contract, as the case may be. (d) The owner shall furnish the legislative body with any information the legislative body shall require in order to enable it to determine the eligibility of the property involved. (e) No later than 20 days after a city or county enters into a contract with an owner pursuant to this article, the clerk of the legislative body shall record with the county recorder a copy of the contract, which shall describe the property subject thereto. From and after the time of the recordation, this contract shall impart a notice thereof to all persons as is afforded by the recording laws of this state. 50284. Cancellation. The legislative body may cancel a contract if it determines that the owner has breached any of the conditions of the contract provided for in this article or has allowed the property to deteriorate to the point that it no longer meets the standards for a qualified historical property. The legislative body may also cancel a contract if it determines that the owner has failed to restore or rehabilitate the property in the manner specified in the contract. 50285.' Consultation With state commission. No co~ntract shall be canceled under Section 50284 until after the legislative body has given notice of, and has held, a public hearing on the matter. Notice of the hearing shall be mailed to the last known address of each owner of property within the historic zone and shall be published pursuant to Section 6061. 17 California Revenue and Taxation Code, Article 1.91 Sections 439 - 439.4 439. Historical Property Restrictions; enforceably restricted property. For the purposes of this article and within the meaning of Section 8 of Article XIII of the Constitution, property is "enforceably restricted" if it is subject to an historical property'contract executed pursuant to Article 12 (commencing with Section 50280) of ChaPter 1 of Part 1 of Division 1 of Title 5 of the Government Code.. 439.1. Historical Property; definitions. For purposes of this article "restricted historical property" means qualified historical property, as defined in Section 50280.1 of the Government Code, that is subject to a historical property contract executed pursuant to Article 12 (commencing with Section 50280) of Chapter 1 of Part 1 of Division 1 of Title 5 of the Government Code. For purposes of this section, "qualified historical property" includes qualified historical improvements and any land on which the qualified historical improvements are situated, as specified in the historical property contract. If the historical property contract does not specify the land -that is to be included, "qualified historical property" includes only that area of reasonable size that is used as a site for the historical improvements. 439.2. HiStorical Property; valuation. When valuing enforceably restricted historical property, the county assessor shall not consider sales data on similar property, whether or not enforceably restricted, and shall value that restricted historical property by the capitalization of income method in the following manner: (a) The annual income to be capitalized shall be determined as follows: (1) Where sufficient rental information is available, the income shall be the fair rent that can be imputed to the restricted historical property being valued based upon rent actually received for the property by the owner and upon typical rentals received in the area for similar property in similar use where the owner pays the property tax. When the restricted historical property being valued is actually encumbered by a lease, any cash rent or its equivalent considered in determining the fair rent of the property shall be the amount for which the property would be expected to rent were the rental payment to be renegotiated in the light of current conditions, including applicable provisions under which the property is enforceably restricted. (2) Where sufficient rental information is not available, the income shall be that Which the restricted historical property being valued reasonably can be expected to yield under prudent management and subject to applicable provisions under which the property is enforceably restricted. (3) If the parties to an instrument that enforceably restricts the property stipulate therein an amount that constitutes the minimum annual income to be capitalized, then the income to be capitalized shall not be less than the amount so stipulated. For purposes of this section, income shall be determined in accordance with rules and regulations issued by the board and with this section 19 valuation that would have resulted by calculation under Section 110.1, as though the property was not subject to an enforceable restriction in the base year. (e) The value of the restricted historical property shall be the quotient of the income determined as provided in subdivision (a) divided by the capitalization rate determined as provided in subdivision (b) or (c). (f) The ratio prescribed in Section 401 shall be applied to the value of the property determined in subdivision (d) to obtain its assessed value. 439.3. Historical Property; notice of nonrenewal. Notwithstanding any provision of Section 439.2 to the contrary, if either the county or city or the owner of restricted historical property subject to contract has served notice of nonrenewal as provided in Section 50282 of the Government Code, the county assessor shall value that restricted historical property as provided in this section. (a) Following the hearing conducted pursuant to Section 50285 of the Government Code, subdivision (b) shall apply until the termination of the period for which the restricted historical property is enforceably restricted. (b) The board or assessor in each year until the termination of the period for which the property is enforceably restricted shall do all of the following: (1) Determine the full cash value of the.property pursuant to Section 110.1. If the property is not subject to Section 110.1 when the restrictiOn expires, the value shall be determined pursuant to Section 110 as if the property were free of contractual restriction. If the property will be subject to a use for which this chapter provides a special restricted assessment, the value of the property shall be determined as if it were subject to the new restriction. (2) Determine the value of the property by the capitalization of income method as provided in Section 439.2 and without regard to the fact that a notice of nonrenewal or cancellation has occurred. (3)Subtract the value determined in paragraph (2) of this subdivision by capitalization of income from the full cash value determined in paragraph (1). (4) Using the rate announced by the board pursuant to paragraph (1) of subdivision (b) of Section 439.2, discount the amount obtained in paragraph (3) for the number of years remaining until the termination of the period for which the property is enforceably restricted. (5) Determine the value of the property by adding the value determined by the capitalization of income method as provided in paragraph (2) and the value obtained in paragraph (4). (6) Apply the ratios prescribed in Section 401 to the value of the property determined in paragraph (5) to obtain its assessed value. 439.4. Historical Property; recordation. No property shall be valued pursuant to this article unless an enforceable restriction meeting the requirements of Section 439 is signed, accepted and recorded on or before the lien date for the fiscal year in which the valuation would apply. 21 .lax l:)real(s tavor preservation Glendora uSes obscure '" state lawto promote landmark protection S~A~ W~r~ ' GLENDO~. ~ City otBeials have tapped a little-used statelaw to grant tax breaks to owners of historical and important struc- tures in exchange for their prom- lses to preserve the buildings. It is the fast time Olendora has used a t~td~:.A, ct .a~ment, .and the second time ~t nas ~een used m the east San Gabri- el Valley. La Verne started the ~'end in Los Glendora officials also recently doubled the number of historical sites here by desig- mating seven properties as landmarks. The move is drawing praise from unex. "I think it's great We welcome it," said John De Lazarro, president of the Glendora Preservation Foundation. The group re- mains in a court battle with Glendora over whether the city illegally tore down a 1910 Crag~man home ~ years ago. "Maybe this council is more preservation. minded than the previous one," he said. "ff they see a need to preserve more of our heritage, that's great." The five owners that ent6r~l into a Mills Act conwact last month saved a total of $8.000 in property, taxes. Since Glendora's share is 1 percent of that, it loses $80 in an. nual property ta~es, said city planner Mi- chael Yankovich. Approved for MilLs Act agreements were the house at 128 W. Bennett Ave. and the off~ce at 120 W. Bennett Ave. Both used to belong to Glendora's trust city attorney, Roff Bidwell. Other contracts approved were for 330 E. Foothill Blvd.; 134 N. Pennsylvania Ave.; and 301 E. Meda Ave. The latter had al. - ready been named as a historical landmark At the same time, .the city desigmated'the following as historical landmarks: · Bidwell home and oflice. · The Venberg building at 111 N. Glen- dora' Ave. · The Bender home and the venerable oak at 724 N. Rainbow Drive. · 1010 E. Foothill Blvd. · 330 E. Foothill Blvd. · 134 N. Pennsylvania Ave. Glendora relied on a state law that was rarely used since it was passed in 1976 to gnucoUrage owners to preserve historic - utidings in exchange for reducing property taxes. Participation is voluntary. Owners used to have to open their homes for public tours and were tied to 20-year contracts -- provisions that hampered par- ticipation. These were deleted in 1~85. The number of such contracts has deft- nitely inenmsed, mainly because the word is getting o.ut~ sai~ ~ Swardey, a pro- gram asaoc~ate with me non-profit Callfor. ma Preservation Foundation. To date, 43 cit- ies have used it. To be eligible for such a contract, the site mt:st either be listed on the National Regis- · ter of Historic Places or on a state, county or city omelal rL~ister. Properties located in a Natim.~al Register or local historic district are al.se viable candidates.. Staff photo by WALT MANCINI ED AND SUSAN CELAYA will have their property taxes cut by roughly $1,400 to encourage the preservation of their historic Craftsman home. The county assessor's office re-assassas the property taxes. Participants enter into a 10-year contract which includes a yearly in- spection by the city to make sure the own- ers are sticking to the agreement. Ed Celaya said he would have proceeded with pre,~wving the house at 330 E. Foothill Blvd. with or without the agreement. The city considers his home a good example of the Craftsman style of architecture. Instead of I~,074, he will now pay $643 in property 'The city's goal really wasn't any differ- ent than what we wanted," Celaya said. "We wanted to buy an older home and pre- serve iL The Mills Act was secondary." To Mohamad Alameddine, who now owns the Bidwen home and office, entering into an agreement with the city seemed like a good deal -- especially with the tax break. Starting nex~ year, he will pay $59 rather than $1,049 in property taxes for the Bidwell off]ce building. For the Bidwell home, he will pay $643 instead of his cur. rent property tax of $1,678.