The URL can be used to link to this page

Home My WebLink AboutMillls Act Propert Tax Abatement Programr �0 3 � C4 GM .`1 life Sarafegs f{isforfcaf Foundation U) ,� :..ratoga Historical Museum �a �E? _ _ - .st Office Box 172 < 03 Jr. - aratoga, California 95071 -0172 Saratoga Heritage Commission 13777 Fruitvale Avenue Saratoga CA 95070 -5151 3 5 0 1 t� } 5 1 5 1 �$ f�r�rrr�rir�Srrrtrrr+ i�rrrr�rirrrr�ir�r�rrrr��rrr��rrrira��r� Mills Act Property Tax 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. This publication has been financed in part with Federal funds from the National Park Service, Department of the Interior, under the National Historic Preservation Act of 1966, as amended, and administered by the California Office of Historic Preservation. The contents and opinions do not necessarily reflect the views or policies of the Department of the Interior, nor does the mention of trade names or commercial products constitute endorsement or recommendation by the Department of the Interior. Under Title VI.of the Civil Rights Act of 1964 and Section 504 of the Rehabilitation Act of 1973, the U.S. Department of the Interior. strictly prohibits unlawful discrimination on the basis of race, color, national origin, age, or handicap in its federally- assisted programs. If you believe you have been discriminated against in any program, activity, or facility as described above, or if you desire further information, please write to Office for Equal Opportunity, U.S. Department of the Interior, National Park Service, Box 37127, Washington DC 20013 -7127. OV01 2 Table of Contents Introduction............................................................................. ..............................4 Communities Participating in Mills Act Program ..................... ..............................5 Property Tax Assessment Example ........................................ ..............................8 Redwood City Mills Act Information Package ........................ .............................11 California State Codes Relating to Mills Act Program ............ .............................16 Articles Related to Mills Act Program ..................................... .............................22 3 Introduction Economic incentives contribute to the preservation of residential neighborhoods and the revitalization of downtown commercial districts. The Mills Act is the single most important economic incentive program available in California for use by private property owners of qualified historic buildings. Owner - occupied single family residences and income - producing commercial properties may qualify for the Mills Act program. Property owners of historic buildings may qualify for property tax relief if they pledge to rehabilitate and maintain the historical and architectural character of their properties for at least a ten -year period. Mills Act participants may realize a property tax savings of approximately 50% each year for newly improved or purchased older properties. County Assessors are required to calculate the assessed value of the property tax savings for Mills Act properties on the capitalization of income method rather than on market value. The Mills Act is a permissive program subject to approval and adoption by city and county governments. California's four largest cities (Los Angeles, San Diego, San Francisco, and San Jose) have instituted Mills Act programs. The Mills Act provides local governments the flexibility to design preservation programs to accommodate specific community needs and priorities for rehabilitating entire neighborhoods, encouraging seismic safety programs, contributing to affordable housing, promoting heritage tourism, or fostering pride of ownership. A formal agreement, generally known as a Mills Act contract, is executed between the local government and the property owner for a minimum ten -year term. Contracts are automatically renewed each year and are transferred to new owners when the property is sold. Property owners agree to protect, preserve, and maintain the property in accordance with specific historic preservation standards and conditions identified in the contract. Periodic inspections of the property by city or county officials ensure proper maintenance of the property. Local authorities may impose penalties for breach of contract or failure to protect the historic property. The contract is binding to all owners during the contract period. A qualified historic property is a property listed on any official federal, state, county, or city register, including the National Register of Historic Places, the California Register of Historical Resources, California Historical Landmarks, State Points of Historical Interest, local landmarks, and local survey listings. The Office of Historic Preservation maintains a current list of cities and counties that have adopted the Mills Act and copies of successful Mills Act ordinances, resolutions, and contract agreements. 4 COMMUNITIES PARTICIPATING IN MILLS ACT PROGRAM COUNTY /CITY # OF CONTRACTS (ORDINANCE CERTIFIED LOCAL GOVERNMENT ALAMEDA COUNTY -- -- ----------------------------- - -- - BERKELEY 1 YES - - -- NO - - -- ------------------ - - - - -- CONTRA COSTA COUNTY -- - - -- DANVILLE 4 YES ORINDA (PENDING) NO FRESNO COUNTY - FRESNO (CITY) (PENDING) -- YES LOS ANGELES COUNTY - - - GL.ENDAI__E _ 0 YES - - -- YES _ GLENDORA - -- - -- _ -- 5 YES NO LA VERNE 6 NO NO LONG BEACH LOS ANGELES (CITY) - _- _ LOS ANGEI -ES (COUNTY) -- - 7 _ YES -- YES 124 YES NO 2- - -- - NO MONROVIA 39 YES - -- NO _U. -.. ALK (PENDING) - - - - -- - -- POMONA 0 - - - - -- -- YES -- - - -- - - -- NO EDONDO BEACH 27 - YES - - - -- YES SANTA MONICA - - --- - - - - -- - - -- - - -- p _ _ YES - -- - - -- ---- - - - - -- YES SIERRA MADRE _- 14 _ YES NO SOUTH PASADENA - -_- 2 _ YES WEST I IOLLYWOOD- - - - - -- 48 - - - -- _ YES _ YES - - - - - - -- f-iITTIER 1 YES NO MARIN COUNTY BELV_E_DERE - - - -- - - -- YES - -- - NO _ LARKSPUR - -- - - - -- 1 YES NO - MONTEREY COUNTY - - - - - -- MONTEREY (CITY) - - -- 4 YES _. MONTEREY (COUNT`() (PENDING) - 0 YES e COMMUNITIES PARTICIPATING IN MILLS ACT PROGRAM COUNTY /CITY # OF CONTRACTS - ORDINANCE CERTIFIED LOCAL GOVERNMENT ----------------- - - - - -- - -- NAPA COUNTY - -- - - - - - - -- -- -- NAPA (CITY) -- -- - - - -- - -- 0 NO ST.HELENA 0 -- -- - -.YES — - - -- - -- - - - - - - - - -- YES NO --- - - - - -- ORANGE COUNTY ANAHEIM - - - -- 25 BREA 4 IRVINE — NO NO - - -- - - -- -- - - - -- - -------- ..- - - - LAGUNA BEACH - - -- - -- - -- 5 ___ NO _ — -- - ORANGE CITY (_. � - - - -- - - - -- - - - -- 36 YES - -- _ -- NO - - -- SAN C_L_EM_ENTE 16 YES — - -- O - - - - -- — - SAN JUAN CAPIST_ RANO YES YES -- SANTA ANA - -- NO - -- - - - USTIN - -- 1 YES NO YES YES RIVERSIDE COUNTY — — — CORONA - -- PALM SPRINGS - -- __ YES NO — - -- NO -- -- SACRAMENTO COUNTY - -- — GALT (PENDING) -- _ SACRAMENTO (CITY) -- 2 2 NO — _ — - - -- YES YES -- SAN BERNARDINO COUNTY ---------------- COLTOtJ -- - -- ------ .... .. . _-------------- - - - - -- -- - - - -- 12 YES YES - -- HIGHLAND - - -- - 1 _ — ONTARIO 2 - NO _ . - -- - - -- YES -- -- RANCHO CUCAM0NGA 22 NO - - - -- NO - - - -- — SAN BERNADINO (CITY) 1 YES -- NO - - - -- — NO - -- COMMUNITIES PARTICIPATING IN MILLS ACT PROGRAM CITY/COUNTY OF CONTRACTS ORDINANCE CERTIFIED LOCAL GOVERNMENT SAN DIEGO COUNTY CHU LA VISTA 0 NO ESCONDIDO----..--- 25 k7 YES YES LA MESA POWAY (PENDING) . . - . ------------ SAN DIEGO (CITY) SAN-F-RANCISCO COUNTY ----.- SAN FRANCISCO (CITY/COUNTY) YES 317 YES 1 YES YES SAN LUIS OBISPO COUNTY PASA ROBLES (PENDING) NO SAN LUIS OBISPO (CITY) 19 YES JZ_ SAN MATEO COUNTY REDWOOD CITY SAN MATED (CITY) -- 5 YES YES YES -- NO SANTA C LARA C 01 JNTY LOS YES YES MORGAN HILL - YES NO PALO ALTO 2 YES YES SANJOSE SUNNYVALE 3 YES 3 NO YES SO L ANO COUNTY - BEN ICIA 2 YES N 0 VALLEJO - ---- ---- 2 - YES -YE-S- - S,TANISLAUS--COUNTY---------.-------------- MODESTO 12 YES 0 TURLOCK 1 NO NO t. z COMMUNITIES PARTICIPATING IN MILLS ACT PROGRAM COUNTYXITY # OF CONTRACTS ORDINANCE CERTIFIED LOCAL GOVERNMENT TUOLUMNE COUNTY SOULSBYVILLE (UNINCORPORATED) 1 YES YES TUTTLETOWN (UNINCORPORATED) 1 YES YES VENTURA COUNTY OJAI YES NO VENTURA COUNTY YES YES Property Tax Assessment Example (Courtesy of Sacramento County) EXAMPLE 1: Mills Act V. Normal Assessment Single Family Residence 1400 Sc. Ft., 75 Years Old Mills Act Assessment Inccme Approach to Vctue Gress Income: ($c�SO /me x 12)= $10.200 Vacancy & Ccl Loss: (5=/Q) _ S -510 Effective Gross: $9.650 Expenses: Maintenance S 600 Insurance $ 4CO Tctcl Expenses: e - 1.000 Net Operating Inccme $ 8,690 Cepifciizeiicn Rate Interest Rcie 7,50 Risk Rcte 4.CO Ceprecicficn Rate 200 Tax Rcte 1.00 Total Cap Rcte 14.50 Ccpitciizcticn cf Net Inccme: NOI /Ccp Rcte S 8,690 = $ 59,931 .1450 Assessed Value = $60,000 Estimated Property Taxes: $ 600 Normal Assessment Mcrket A.pprccch to Value l) Assessor uses Sale Comparison Approach using sales of similar properties appropriately ccfusted fcr differences between comparable cnd the subject property. 2) Scfes indicate m.crket value c` 5l 50.Gv0 Assessed Value = $150,000 Estimated Taxes = $1,500 Net Frcce./ tcx savings under Mills act = $900 ;6C o) 9 EXAMPLE 2: Mills Act v. Normal Assessment - 1996 Commercial Office Building Mills Ac' Assessment Income Approach to Value Gross Income: Office 140,136 sf G $1.71= Office 20.860 sf @ 2.O4= Storage 540 sf @ $1.01= Total Annual Income $239.6-26 42 S5; 'a5 $282725 x 12 and 53.392700 Vacancy -515a 7.50 -169.625 Effective Gross Deprecictien Rate $:.223.065 Expenses: 1.00 Tctci Ccp Rcte Mcnagment - 257.245 Maintenance - 96.5 =;, Insurance - 50.0GO Utilities -121.984 Janitorial -120.744 - 847.168 Net Income: $2375.897 Capitalization Rate: Interest Rate 7.50 Risk Rate 2.00 Deprecictien Rate 2.00 Tax Rate 1.00 Tctci Ccp Rcte 1250 Capitalized Value: NCI /Rate S 2,375.897= $19.007,176 .1250 Value Conclusion: Assessed Value = $19,000,000 Estimated Properly Taxes: $ 190,000 Normai Assessment Income Approach to Vclue Gross Income: (Some es for Mills Act Treatment) Net Income: $2,37=,897 Capitalization Rate: Market Derived OAR 9.50 Tax Rate 1.0 0 Total Ccp Rate 10.50'a Capitalized Value: NOI /Rate $2,375,897= $22.627,=00 .1050 Value Conclusion: Assessed Value = $22,625,000 Estimated Property Taxes: $ 226,250 Net property tax savings under Mills act = $36,250 (161/0) 10 COURT =S°. OF S.'_CQ _�a�•-"0 r'O? :- ;-'_ `= 52330R o QFFIC2 Redwood City Mills Act Information Package (Courtesy of the City of Redwood City) 11 WHAT IS THE MILLS ACT? • ADOPTION IN 1972, AMENDED IN 1984. • PROVIDES FOR A REDUCTION IN PROPERTY TAXES FOR QUALIFIED HISTORIC PROPERTIES. • REPRESENTS A CURRENT USE ASSESSMENT FOR PROPERTIES, KNOWN AS A "CONTRACT ASSESSMENT'. • PROPERTY OWNERS MUST ENTER INTO PRESERVATION CONTRACTS WITH THE CITY IN EXCHANGE FOR PROPERTY TAX RELIEF. • SOURCE OF AUTHORITY: CONSTI'T'U'T'IONAL AUTHORITY TO PROVIDE PROPERTY TAX RELIEF FOR HISTORIC PROPERTIES (CA. CONSTITUTIONAL ART. XIII -8) HISTORIC PROPERTY CONTRACTS (CA. GOVT. CODE -- 50280 - 50289) REASSESSMENT OF PROPERTY SUBJECT TO A MILLS ACT CONTRACT (CA. REVENUE & TAX CODE -- 439 - 439.4) • COUN'T'Y ASSESSOR DIRECTED BY STATE LAW TO ADJUST VALUE OF PROPERTY DOWNWARD TO REFLECT RESTRICTIONS PLACED ON PROPERTY RATHER THAN MARKETVALUE. COURTESY OF REDWOOD CITY 12 BENEFITS OF MILLS ACT AGREEMENT • REDUCTION IN PROPERTY TAX. • INCEASES LIKELIHOOD OF PRESERVATION. • ASSURES MECHANISM TO AVOID DETERIORATION. • PROVIDES MECHANISM FOR REHABILITATION. • CAN ENCOURAGE SENSITIVE HOME BUYERS TO PURCHASE DESIGNATED HISTORIC STRUCl'URES. • 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 PHySICgi, ENVIRONMENT OF TfE COMMUNITY AND PROVIDES A FOCUS ON HISTORIC LANDMARKS. 13 CONTRACT APPROVALPROCESS QUALIFIED HISTORIC PROVERTY OWNER STAFF TAX ASSESSOR MILLS ACT CONTRACT HISTORIC RESOURCES ADVISORY COM. CITY COUNCIL . PLANNING COMMISSION GJ:Eli (1/4/96) OPROPERTY VALUE: $100,000 O MORTGAGE RATE 10.5% MILLS ACT NET ANNUAL INCOME : CAPITALIZATION RATE: PROPERTY RISK COMPONENT + 4% TAX RATE 1% 20 YEAR LIFE $6000 = 20.50% ONSW ASSESSED VALUE: $6000 20.50%=$29 . 268 OCURRANT PROPERTY $1000 MILLS ACT PROPERTY TAX $293 TAX PAYMENT SAVINGS: $707 Gl:eh (1/9 /96) California State Codes Relating to Mills Act Program California Government Code, Article 12, Sections 50280 - 50290 50280. Restriction of property use. Upon the application of an owner or the agent of an owner of any qualified historical property, as defined in Section 50280.1, the legislative body of a city, county, or city and county may contract with the owner or agent to restrict the use of the property in a manner which the legislative body deems reasonable to carry out the purposes of this article and of Article 1.9 (commencing with Section 439) of Chapter 3 of Part 2 of Division 1 of the Revenue and Taxation Code. The contract shall meet the requirements of Sections 50281 and 50282. 50280.1. Qualified historic property. "Qualified historical property° for purposes of this article, means privately owned property which is not exempt from property taxation and which meets either of the following: (a) Listed in the National Register of Historic Places or located in a registered historic district, as defined in Section 1.191 -2(b) of Title 26 of the Code of Federal Regulations. (b) Listed in any state, city, county, or city and county official register of historical or architecturally significant sites, places, or landmarks. 50281. Required cone- .:-t provision. Any contract entered into „der this article shall contain the following provisions: (a) The term of the co = --A shall be for a minimum period of 10 years. (b) Where applicable. -Iontract shall provide the following: (1) For the preservatie--: :)i the qualified historical property -and, when necessary, to restore and rehabilitate the property to conform to the rules and regulations of the Office of Historic Preservation of the Department of Parks and Recreation, the United States Secretary of the Interior's Standards for Rehabilitation, and the State Historical Building Code. (2) For the periodic examinations of the interior and exterior of the premises by the assessor, the Department of Parks and Recreation, and the State Board of Equalization as may be necessary to determine the owner's compliance with the contract. (3) For it to be binding upon, and inure to the benefit of, all successors in interest of the owner. A successor in interest shall have the same rights and obligations under the contract as the original owner who entered into the contract. (c) The owner or agen4 An owner shall provide written notice of the contract to the Office of Historic rvation within six months of entering into the contract. 16 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 contract 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 50286. Cancellation. (a) If a contract is canceled under Section 50284, the owner shall pay a cancellation fee equal to 121/2 percent of the current fair market value of the property, as determined by the county assessor as though the property were free of the contractual restriction. (b) The cancellation fee shall be paid to the county auditor, at the time and in the manner that the county auditor shall prescribe, and shall be allocated by the county auditor to each jurisdiction in the tax rate area in which the property is located in the same manner as the auditor allocates the annual tax increment in that tax rate area in that fiscal year. (c) Notwithstanding any other provision of law, revenue received by a school district pursuant to this section shall be considered property tax revenue for the purposes of Section 42238 of the Education Code, and revenue received by a county superintendent of schools pursuant to this section shall be considered property tax revenue. for the purposes of Article 3 (commencing with Section 2550) of Chapter 12 of Part 2 of Division 1 of Title 1 of the Education Code. 50287. Action to enforce contract. As an alternative to cancellation of the contract for breach of any condition, the county, city, or any landowner may bring any action in court necessary to enforce a contract including, but not limited to, an action to enforce the contract by specific performance or injunction. 50288. Eminent domain. In the event that property subject to contract under this article is acquired in whole or in part by eminent domain or other acquisition by any entity authorized to exercise the power of eminent domain, and the acquisition is determined by the legislative body to frustrate the purpose of the contract, such contract shall be canceled and no.fee shall be imposed under Section 50286. Such contract shall be deemed null and void for all purposes of determining the value of the property so acquired. 50289. Annexation by city. In the event that property restricted by a contract with a county under this article is annexed to a city, the city shall succeed to all rights, duties, and powers of the county under such contract. 50290. Consultation with state commission. Local agencies and owners of qualified historical properties may consult with the State Historical Resources Commission for its advice and counsel on matters relevant to historical property contracts. 18 California Revenue and Taxation Code Article 1.9 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 and shall be the difference between revenue and expenditures: Revenue shall be the amount of money or money's worth, including any cash rent or its equivalent, that the property can be expected to yield to an owner - operator annually on the average from any use of the property permitted under the terms by which the property is enforceably restricted. Expenditures shall be any outlay or average annual allocation of money or money's worth that can be fairly charged against the revenue expected to be received during the period used in computing the revenue. Those expenditures to be charged against revenue shall be only those .which are ordinary and necessary in the production and maintenance of the revenue for that period. Expenditures shall not include depletion charges, debt retirement, interest on funds invested in the property, property taxes, corporation income taxes, or corporation franchise taxes based on income. (b) The capitalization rate to be used in valuing owner - occupied single family dwellings pursuant to this article shall not be derived from sales data and shall be the sum of the following components: (1) An interest component to be determined by the board and announced no later than September 1 of the year preceding the assessment year and that was the yield rate equal to the effective rate on conventional mortgages as determined by the Federal Housing Finance Board, rounded to the nearest 1/4 percent. (2) A historical property risk component of 4 percent. (3) A component for property taxes that shall be a percentage equal to the estimated total tax rate applicable to the property for the assessment year times the assessment ratio. (4) A component for amortization of the improvements that shall be a percentage equivalent to the reciprocal of the remaining life. (c) The capitalization rate to be used in valuing all other restricted historical property pursuant to this article shall not be derived from sales data and shall be the sum of the following components: (1) An interest component to be determined by the board and announced no later than September 1 of the year preceding the assessment year and that was the yield rate equal to the effective rate on conventional mortgages as determined by the Federal Housing Finance Board, rounded to the nearest 1/4 percent. (2) A historical property risk component of 2 percent. (3) A component for property taxes that shall be a percentage equal to the estimated total tax rate applicable to the property for the assessment year times the assessment ratio. (4) A component for amortization of the improvements that shall be a percentage equivalent to the reciprocal of the remaining life. (d) Unless a party to an instrument that creates an enforceable restriction expressly prohibits the valuation, the valuation resulting from the capitalization of income method described in this section shall not exceed the lesser of either the valuation that would have resulted by calculation under Section 110, or the 20 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 Articles Related to Mills Act Program pp N I I I i 1 I ac ureaKs tavor preservation Glendora uses obscure state law to promote landmark protection _ = ��f•��' °�.:,�:: J. STS %VatTE;a LIDOORA — City officials have tapped a little-used state law to grant tax breaks to owners of historical and important st uc- tum in exchange for their prom• ises to preserve the buildings. It is the first time Glendora has used a Mills Act agreement and the second time that it has been used in the east San Gabri- el Valley. La Verne started the trend in Los Angeles County in 1992 Glendora of ci&- also recently doubled t-he number of historical sites here by desig- nating seven properties as Landmarks. The move is drawing praise from unex- pected sources. I think its 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 19io Craftsman home three years ago. 'Maybe this council is more preservation- minded than the previous one,' he said "If they see a need to preserve more of our heritage. that's great" The five owners that entered into a Mills Act contract last month saved a total of 58.000 in property taxes. Since Glendora's share is 1 percent of that it loses S80 in an- nual property taxes, said city planner Mi- chael Yankovich. Approved for Mills Act agreements were the house at 128 W. Bennett Ave and the office at 1211 W. Bennett Ave Both used to Wong to Glendora's fast city attorney. Roll' Bidwell Other contracts approved were for 330 E. Foothill Blvd- 134 N. Pennsylvania Ave; and 301 & Meda Ave The latter had al- ready been named as a historical landmark. At the same time. the city designated the following as historical landmarks. ■ Bidwell home and office. dory TheVanberg budding at ill N. Glen- ■ The Bender !tome and the venerable oak at 724 N. Rainbow Drive ■ 1010 l± Foothill Blvd. ■ 330 E_ Foothill Blvd. ■ 134 N. Pennsylvania Ave. Glendora relied an a state law that was rarely used since it was passed in 1976 to encourage owners to preserve historic buildings in exchange for reducing property tames. Participation is voluntary. Owners used to have to open their homes for public tours and were tied to wear contracts — provisions that hampered par - ucipation. These were deleted in 1955. ; "'.le county assessor's office re- assesses The number of such contracts. has deft- the property taxes- Participants enter into a nitely increased mainly oecause the word 10 -year contract which includes a yearly fin- is getting out said Paige Swartley , a pro- spection by the ciry to make sure the own - gram associate with the non -profit Califor- ers are sticking to the agreement nia ?reservation Foundation. To date. 43 cit- I Ed Celaya said he would have proceeded ies have used it with preserving the house at 3o E. Foothill To be eligible for such a contract the site Blvd. with or without the agreement The r.-tst either be listed on the National Regis- ciry considers his home a good example of ter or Historic Flares or on a state. county the Craftsman style of architecture_ Lzstead or city official register. Properties located in of S20i4. he will now pay S643 in property a Natint.1al Register or !oral historic district axes. are also viable candidates. I • due city's goal really wasn't any aiffer- F. - - i +. Staff PhuOD by WALT MANCINI ED AND SUSAN CElAYA will have their properry taxes cut by roughly 51.400 to encourage the preservation of their historic Craftsman dome_ 23 ent than what we wanted." Celava said "We wanted to buy an older home and pre- serve it The Mills act was secondary •.. To Mohamad AL—if fin • who now owns the Bidwell home and office• enter into an agreement with the city seemed like a good deal — especially with the tat break Starting next year, he will pay S59 rather than S1,049 in property takes for -he Bidwell office building. For the Bidwell home, he will pay %43 instead of his cur - rent prope ry tax of 51.678. ]RESOLUTION NO. 03 -020 A RESOLUTION OF THE CITS' COUNCII:L OF THE CITY OF SARATOGA SUPPORTING THE SARATOGA HISTORICAL MUSEUM GRANT REQUEST WHEREAS, the City Council recognizes the ini.portance of preserving historic resources in the community and the need to enhance: and maintain the unique character of the historic resources; and WHEREAS, the City of Saratoga City Council supports the Saratoga Historical Museum's request ;fo.r a $5,000 grant from the Community Foundation of Silicon Valley; and WHEREAS, the Heritage Preservation Commission has reviewed the request at a regular meeting held March 11, 2003 where they recornnrended approval of the project to the City Council with a 7 -0 vote; and WHEREAS, in accordance with the City Code Section .1.3- 10.050(f) the Saratoga Historical Museu.ni's request for support of a grant has been placed on the City Council agenda for a public hearing on. March 11, 2003 and noticed accordingly; and WHEREAS, the City Council held a duly noticed Public Hearing at which time all interested parties were given a full opportunity to be heard arid to present evidence; and WHEREAS, the City Council finds that supporting the grant request is consistent with the City of Saratoga Heritage Preservation: Code Chapter 13, and the General Plan Conservation Element: CC). 5.0 to "Protect historical and archaeological values and significant geographic landmarks from destruction by development :wher:cever possible" in that It will assist the Saratoga. Historical, Museurn with the continued operation of the Museum arid the education and preservation of significant historic values in the community that are currently being maintained at the Museum. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Saratoga t:hai it: approves the request to support the >aratoga Historical Museum's application for a $5,000 grant: fi-om the: Community Foundation of Silicon Valley. The above and foregoing Resolution was passed and adopted at a regular- meeting of the City Council of the City of Saratoga held on the 19 "' day of March 2003 by the following vote: AYES: Councilmembers Stan Bogosian, Kathleen King, Norman Kline, Vice Mayor Ann Wah:onsmith, Mayor Nick Streit N) ABS] NT: None ABSTAI.N: None Nick Streit, Mayor