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AGENDA
ADJOURNED MEETING/JOINT SESSION
SARATOGA CITY COUNCIL
HERITAGE PRESERVATION COMMISSION
JANUARY 21, 2003
ADJOURNED MEETING/JOINT SESSION-7:00 P.M.
ADULT CARE CENTER - 19655 ALLENDALE AVENUE
CALL MEETING TO ORDER - 7:00 P.M.
MAYOR'S REPORT ON CLOSED SESSION
PLEDGE OF ALLEGIANCE
ROLL CALL
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REPORT OF CITY CLERK ON POSTING OF AGENDA
(Pursuant to Gov't. Code 54954.2, the agenda for this meeting was properly posted ~'
January 17, 2003
COMMUNICATIONS FROM COMMISSIONS & PUBLIC ~ ~-
Oral Communications on Non-Agendized Items
Any member of the public will be allowed to address the City Council for up to three (3) _
minutes on matters not on this agenda. The law generally prohibits the council from
discussing or taking action on such items. However, the Council may instruct staff
accordingly regarding Oral Communications under Council Direction to Staff. r
Communications from Boards and Commissions ` '~
None
Written Communications
None
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Oral Communications -Council Direction to Staff
Instruction to Staff regarding actions on current Oral Communications.
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JOINT MEETING WITH HERITAGE PRESERVATION COMMISSION
1. Heritage Preservation Commission
A. Introduction
B. Heritage Resource Inventory and Ordinance
C. Mills Act
~ ~ D. Fund Raising Programs
~~ E. Other
OTHER
CITY MANAGER'S REPORT ~,
ADJOURNMENT
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In compliance with the Americans with Disabilities Act (ADA), if you need special
assistance to participate in this meeting, please contact 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)
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CITY OF SARATOGA
CITY COUNCIL MEETING CALENDAR 2003
2/1 Council Retreat
2/5 Regular Meeting
2/11 Adjourned Meeting -Youth Commission, Library Commission, Arts
Commission
2/19 Regular Meeting
3/5 Regular Meeting
3/11 Adjourned Meeting - SASCC, Parks and Recreation Commission
3/19 Regular Meeting
4/2 Regular Meeting
4/16 Regular Meeting
4/22 Adjourned Meeting -Public Safety Commission, Sheriff, Fire Districts
5/7 Regular Meeting
5/10 Council Retreat
5/13 Adjourned Meeting -Finance Commission, Chamber of Commerce,
SBDC, Planning Commission
5/21 Regular Meeting
6/4 Regular Meeting
6/18 Regular Meeting
7/2 Regular Meeting
7/16 Regular Meeting
8/6 Regular Meeting -City Manager Evaluation
8/20 Summer Recess
9/3 Regular Meeting
9/17 Regular Meeting
9/23 Adjourned Meetin,_,g -Public Safety Commission, Saratoga Union School
District, Cupertino Union School District, Campbell Union School District
10/1 Regular Meeting
10/15 Regular Meeting
11/5 Regular Meeting
11/19 Regular Meeting
12/3 Regular Meeting
12/9 Adjourned Meeting -Council Reorganization
12/17 Regular Meeting
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SARATOGA CITY COUNCIL
MEETING DATE:.. January 21, 2003 AGENDA ITEM:
• Communit Develo ment CITY MANAGER: ~%~
ORIGINATING DEPT. y P
PREPARED BY: John F. Livingstone AICP~~~ DEPT HEAD:
SUBJECT:. Discussion topics .for the joint City Council, Heritage Preservation Commission
meeting..
RECOMMENDED ACTION:
Provide direction to staff concerning the requested topics, but not limited to these topics only.
REPORT SUMMARY:
The HPC is interested in obtaining direction from. the City Council on three topics, updating the
Heritage Resource Inventory and the Heritage Preservation Ordinance, the Mills Act, and future
fund raising activities.
DISCUSSION:
Heritage Resource Inventory and Ordinance
The Heritage Preservation Commission (HPC) is in .the process of updating the .Heritage.
Resource Inventory and Ordinance. The original inventory list was not comprehensive and
should be regularly updated as a requirement of being a Certified Local :Government. The
Ordinance should also be updated. In order to start the process the HPC plans on first. surveying
.the possible historic structures in the City and then deciding which of these should be placed on
the Heritage Resource Inventory. The original list done in the 1980's was not comprehensive and
the property owners volunteered to be placed on the, list. Once the location and .number. of
historic structures are located, a review of its. applicability to our existing ordinance and future
land use policies can be reviewed.
Since the original City of Saratoga. Heritage Ordinance and Heritage Resource List was created .
the California Environmental Quality Act (CEQA) has changed.. In the last three years. CEQA
.has. been updated to include any adverse changes including demolition, relocation_or alteration
.such that the significance of an historical .resource would be impaired. A Historic Resource is
defined as one that has significant .local significance or is eligible under the California Register.
If a survey for the property does not exist the lead agency must evaluate all buildings and sites
over 50 years old against the California Register criteria.
The HPC is proposing the mandatory designation of all historic structures in the community that
meet certain criteria. The prior list was done on a voluntary basis. The advantage of creating a
new mandatory designation is that it educates the existing and proposed buyers that their
structure has historic .significance and may be subject to the CEQA. An applicant could
unknowingly prepare drawings to build a new home on a site with a historic home on it that is
not on the current City of Saratoga Heritage Resource inventory. It also protects historic
structures that are not currently on the list.
An alternative approach would be to not make a list. and review each property individually when
a project is proposed.. The Ordinance could be updated to clearly advise .applicants of detailed
submittal requirements needed to establish a structure's historic significance.
The original list includes approximately 111 properties. There are approximately 1,747 homes
that were built prior to 1952, which is the 50-year time period. At 1945 the number of structures
are reduced to 494. Assuming at least 100 of these properties. are on our existing list the HPC
would need to survey approximately 400 properties. The State Office of Historic Preservation
prefers the list encompass as many parcels as possible built prior to 1952.
I have been advised by the State Office of Historic Preservation that as a Certified Local
Government we could qualify for grant money to hire professional consulting firms to .assist with
the survey and ordinance. Last year approximately 20 cities applied and 9 received grants. The
largest amount was $25,000. The City needs to match the amount by 40% with either staff time
or money. The HPC feels that some type of professional assistance with the project. is necessary.
The HPC could do the survey work and then have a Certified Historic Consultant review the
surveys and assist with updating the ordinance.
The State also said that they would be more than happy to come to Saratoga and speak to the
Commission or Council on the topic and provide us with guidance on the survey ,and ordinance.
The following are some of the questions that the HPC would like direction from the City Council
on:
1. Making the designation of a property deemed historic mandatory after a review by thee.
HPC of sites from the expanded survey.
2. What type of contribution is the council willing to make to support the project? Is the
Council willing to provide the 40% match to hire a consulting firm to manage the survey
process?
3. Is the 1945 cut off date appropriate upon which to base a citywide survey?
Currently staff reviews each property on a case-by-case basis to see if it may be of historic
significance and whether it is listed in the City of Saratoga's Heritage Resource Inventory. If the
house is on the current Heritage Resource Inventory, the project is considered locally significant
and reviewed by the Heritage Preservation Commission. If the project is not on the list and
appears to be historic and the applicant is proposing a major change to the structure such as a
demolition, staff will recommend that the applicant contract with a Certified Historic Architect.
The Historic Architect will first review the structure to see if it has any historic significance. If
the structure were historic the project would then need to either meet the Secretary of Interior
Standards for the proposed work or be subject to an environmental review. The Heritage
Preservation Commission may also require that an applicant provide a report. from a Certified
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Historic Architect. For a complete evaluation of a potential historic property it costs the
applicant approximately $3,000 dollars. The report also has been used to remove properties
from the list that have been initially considered historic.
Mills Act
The Mills Act is state sponsored legislation granting local governments the authority to enter into
an agreement with a property owner to allow them reduced property tax payments for the
restoration and continued maintenance of their historic property. This is an economic incentive
for property owners to preserve and maintain their buildings.. I have attached a document from
the State of California explaining the program in detail. The City of Saratoga does not currently
participate in the program. In order for a Saratoga resident to participate in the program the City
must pass a resolution approving the Mills Act.
The HPC would like direction concerning or relating to the Council's interest in the proposal and
the opportunity to come back to the Council with a detailed report on the matter.
Fund Raising Programs
The HPC is interested in continuing fund raising activities such as the calendar sales. The funds
would be used to educate and promote the preservation of historic resources in the community.
The HPC would like to discuss various administrative methods that could be available to them
for future projects such as the Adopt a Tree Program or House Tours to raise additional funds.
FISCAL IMPACT:
Heritage Resource Inventory and Ordinance
The proposed survey of historic properties and ordinance update may have a fiscal impact if the
Council supports using a Historic Consultant to assist with the survey and. ordinance. For
approximately $13,000 a consultant would provide materials, supervise field surveys and provide
training to a number of volunteers to conduct the survey. The consultant would also provide the
final report and evaluations on each property. For an additional $2,000 the consultant would
review the City of Saratoga's Ordinance, identify problems with the ordinance, and provide
solutions to the problems. Finally for an additional $2,000 the consultant would conduct three
community workshops. This amount may be offset if a grant is received for the project.
The alternative would be to have staff work with the HPC to continue the update on a volunteer
basis.
Mills Act
Potentially all of the homes selected to be on the Heritage Resource Inventory would be eligible
for the Mills Act Property Tax Abatement Program. The attached handout shows that other local
cities only have one to three contracts per City. The administration of the program can be
charged to the applicants. The City would however, lose a portion of the property tax normally
received from these properties. The City of Saratoga normally receives approximately $1,750 in
property tax based on a $5,000,000 property or $350 fora $1,000,000 property. The Mills Act
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would reduce this by approximately 60% or $1,050 and $210 respectively. The reduction in
taxes may also impact the schools and other jurisdictions. Each request could be reviewed by the
City Council on a case-by-case basis.
Fund Raising Programs
The fund raising programs would require additional staff time depending on the complexity of
the project. The staff time to set up the additional accounts is insignificant.
FOLLOW UP ACTIONS:
Heritage Resource Inventory and Ordinance
The HPC will set a date to have representatives from the State Office of Historic Preservation
provide training and guidance on the survey and ordinance update. The HPC will continue.
surveying homes for placement on the Heritage Resource Inventory.. Staff would then submit for
a grant to assist with the survey and ordinance update, and prepare a request for proposal to start
interviewing consultants.
Fund Raising Programs
Start working on the Adopt a tree program and house tour projects.
Mills Act
Prepare a detailed staff report to bring back to the City Council for discussion.
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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.
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This publiption 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 cornerns and opinions do not necessarily reflect the views or
polices of the Department of the Interior, nor does the merrtion of trade names or commercial products
constitute endorsement or recommendation by the Department of the Interior. Under Title Vl.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. n you believe you have been discriminated against in any program, activity, or
facility as described above, or 'rf 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.
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Table of Contents
Introduction ........................................................................................................... 4
Communities Participating in Mills Act Program ...................................................5
Property Tax Assessment Example ......................................................................8
Redwood City Mills Act Information Package .....................................................11
Califiomia State Codes Relating to Mills Act Program :..............................:.........16
Articles Related to Mills Act Program ..................................................................22
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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 Califomia 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 ff they
pledge to rehabilitate and maintain the historical and architectural character of
their properties for at least aten-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.
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The Mills Act is a permissive program subject to approval and adoption by city
and county govemments. California's four largest cities (Los Angeles, San
Diego, San Francisco, and San Jose) have instituted Mills Act programs. The
Mills Act provides local govemments the flexibility to design preservation
programs to accommodate specirfc 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
tenor. 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
Califomia Register of Historical Resources, Califomia 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.
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~;~::-
Pfopei-ty Tax Assessment Example
(Courtesy of Sacramento County)
•
C,
3
EXAMPLE is Mills Act v. Normal~Assessment
Single Family Residence
1=C0 Sc. Ft., 75 Yecrs Oid
Mills Act Assessment
Inccme AFFrccc'~ to Vcive
Gress Inccme: i$2S0/mc x 12)= $10..GO
vcccncy 3 col Loss: (5 0) _ ~ - `10
Effective Cross: X9.690
E~cpenses:
Mcintencnce c00
lrsurcnce ~ 400
T ctc: Expenses: ~ - 1.000
Nei GFerctirs lr,ccm~e $ 8.b50
Cc~itciizcticn Rate
Interest Rcte 7.50
Risk Rcte 4.00
Cerrecicticn Rcte 200
Tcx Rcte 1.C-0
Tetcl Cca Rcte 1x.50 0
Cc:.itciizcticn cf Net Inccme:
NOI/Cop Rcte i?3 .c°0 = $ 59.531
.1450
Assessed Velue = ,Sb0,000
Estimated Property Tcxes: $ 600
Normcl Assessment
Mcricet ~.Fcrccch to VGue
1) Assesscr uses Scie Ccm~c:iscn
Aporecch t,~sir.5 scles cf simiicr
properties cprrcpriciely ce;•ustec' for
ciiferences between cempcrcble
cnd the subject prcpery.
2) Seles in~iccte rr,cricet vciue c;
$150.Gti,~O
Assessed Vciue = $150,000
Estimated Tcxes = $1,00
Nei FrccE.riy ~cx scvings under !v1)lls cc. _ $900 ;cC o~
4
•
•
•
9
EXAMPLE 2: Mills Act v. Normal Assessment • 1996
r~
L
Comrx~erciel Office Building
Milis Ac' Assessment
Income AFprocc~ to Vciue
Normcf Assessment
Income Approech to Vciue
Gross Income:
Office ] 40, ] 36 st G 5 ] .i 1= S23S,526
Office 20.860 sf ~ 2.04= 42.55-
StcrcSe 540 sf ~ 51,01= Ss5
5282.725
_ x i ~ mo
7ota1 Annual income 53,39270
Vacancy -5 0 - 169.635
Effecfiive Gross 5:.?73.065
Expenses:
Mcnagmer•,t - 25i.8~~
Mcintencnce - 90.E=:,
lnsurcnce - {0 r~
Utilities - 32].924
.lanitcrcl - l 20.744 - 8~ i . i E8
Net Income: 52375.E97
CapifiaGzation Rate:
lrterest Rcte 7.50
Risk Rcte 200
Deprecictien Rcte 2.00
i ox Rate 1.00
7ctct Ccp Rcte 1250 0
Capifiai'rzed Vciue:
NCI/Rate 5 2?75.$9i= Sig ~Oi,17b
.i2~0
Vciue Conclusion:
Assessed Vciue = 519,000,000
Estimated Property 7cxes:: ? 90,000
Gross Income:
(Some es fcr Mi11s Act ireetmer,tj
Net Income: $2.3i~,?97
Capitatizalion Rate:
Mcricet De.*ived OAR ~.~ o
i ax Rcte 1.0 0
7ctci'Ccp Rote 10.5G o
CapifiaI'ued Vaiue:
NOIJRcte $ 2.75.897= S22.b2i,~90
. ] 050
Vaiue Conclusion:
Assessed Vciue = $22,625,000
Estimated Property ?axes: $226.250
Net rrcperry tcx savings under Mills cct = $36,25a (1 c of
J.. ~ 0
COL'R'?'=c~' OF S CQ:.:•'~:d~'U r'0;.':•;:'. :SSL•SSOR S OFF1C
•
Redwood City Mills Act Information Package
(Courtesy of the City of Redwood City)
•
•
11
i
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:
- CONSTTI'UTIONAL AUTHORITY TO PROVIDE
PROPERTY TAX RELIEF FOR HISTORIC
PROPERTIES (CA. CONL-TITUTIONAL ART: XIII-8)
- HISTORIC PROPERTY CONTRACTS (CA. GOVT.
CODE--50280-50289)
- REASSESSMENT OF PROPERTY SUBJECT TO A
MTT.T S ACT COACT (CA. REVENUE & TAX
CODE--439-439.4)
• ~ COUN'T'Y ASSESSOR DIRECTED BY STATE LAW TO
ADJUST VALUE OF PROPERTY DOViTNWARD TO REFLECT
RESTRICTIONS PLACED ON PROPERTY RATHER THAN
VALUE.
r~
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 STRUCTURES.
• MEETS THE GOALS OF THE HISTORIC LANDMARKS
ELEMENT OF THE 1990 GENERAL PLAN AND HISTORIC
PRESERVATION ORDINANCE.
• AI--FELTS OWNER-OCCUPIED STRUCTURES AS WELL AS
INCOME-PRODUCING PROPERTIES.
• .VISUALLY Ilv1PROVES THE PHYSICAL ENVIRONMENT OF
THE COMMUNITY AND PROVIDES A FOCUS ON HISTORIC
LANDMARKS.
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15
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 histcr;c 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 corrt-~.~t provision.
Any contract entered into ~:~derthis 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. ~•:=:~ ::ontract shall provide the following:
(1) For the preservatio-::~z the qualified historical property and, when
necessary, to restore ana 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 interor 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 ager== --~ ~n 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 legi~fatrve 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 'rf 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 721/2 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) Notwithstandingany 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 Tile 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 i
439. Historical Pro a Restrictions; enforceabl restricted property. ~1°
P rtY Y
For the purposes of this article and within the meaning of Section 8 of Article Xlll
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 Govemment
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 Govemment 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 Govemment 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 interes# 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 I'rfe.
(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
Govemment 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 enforceabty 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 whicf~ 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
•
•
22
pax ureaKS ravor preservation
Glendora uses obscure
state la~v to promote
landmark protection
~~
sr~ way
tExDOw- -city off CiaLs have
tapped a littlettsed state law m
k;~ taY breaks to owners of
historical and important siruc•
totes in etcltartge for their prem-
ises to presetae the buildings.
It s the first time Glatdora has used a
Mills Act agreement and the second time
that :t has been used kn the east Sera Gabti
e' Valley. La Verne started the tread in Los
Angeles County in 1992
Glatdora officials also tecastly doubled
the nttmba of historita sites here by desig-
nating seven properties as tanAmarke
The move is drawing praise limn ~nes-
peced sourixs
"I think it's great VGe weltx~e it" said
John De LawTO. president of the Gleadara
Preservation Foundation The gtrnlp re•
mains in a rnurt battle with Glendora ovEx
w(~aftsman htm~ie th~Y tore down a 1910
years age
"Maybe this oamol is more preservatioa•
minded than the previous one," 1te said. "If
they see a need to preserve mote of ota
het. that's great"
The five owners that entered into a Mt'Ds
Act contract last month saved a total of
58.000 in properly taxes. Sirt~ Glendora's
share is 1 patjatt ~' that it loses S80 in an-
neal property taxes, said ettY planner' M%
rhael Yanlo7vkch.
Approved for Mills Act agt~aaents were
the house at 128 w. Bennett Ave and the
office at 120 w. Bennett Ave Both teed to
belong to Glertdosa's 5tst city ~'~Y, Ftolf
Bidwell
Other mntra~s approved were for 330 E.
Foothill Blvd.: 139 b1. Pennsylvania Ave.;
and 301 £. Meda Ave. The lager had al-
ready beery named as a historirai landmark.
At the snare time, the city desi~tated the
following as historical landmarits:
^ Bidwell home ark ailice.
^ The Veaberg bttiidmg at 111 N. Gltm•
data Ave
i The Benda home and the venerable
oak at 7?A N. Raittboov Drive
^ 1010 E Foothill Blvd.
^ 330 E FoothiIl Blvd.
^ 134 N. Pertnsytvania Ave.
Glertdara relied on a state law Brat was
rarely treed sine it vows passed in 1976 m
encourage owners to preserve histnriC
bttilding3 in etcttatt@e for redttciag prvpaty
tatoes. Pardctpation is voltmtmy.
Owners teed to have to open their homes
for public Lotus and were tied to 24vgt
oortttacts -provisions that hampered pas-
~CipaL]On These wed deleted ]II 1985.
The number of such contracts. has defr
nicely incensed. mainly oecatae the word
is Setting out said Paige Swartley , a pm
~ gram associate wish the non-pmfit Califor-
~ nia preservation Fbunda>;ors. To dare. 43 ctt•
ies have teed it
t To be eligible for such a contract the site
i rr:•~st e_~ther be listed on the National Regis-
; ter er u_istonc D1ac4s cr on a state cotuttq
~ or cit<• 7tt'icial register. Prvpades located ~
a Natiot.~al Register or local historic district
• are also tiahle candidates.
I
'~;'lE CD1mTy a55ES50r S 0~1Ce rE-35ES525
tax propert5• ~ ?anticipants enter into a
14year cotitract which includes a yearly kn•
spection by the ~• to make sure tbe own-
ers are sticking to t»*e agreement
Ed Celaya said he would have proceeded
with preserving the house at ~0 E Foothill
Blvd. tvk@i or without the agreement The
cir5' considers kris home a good example of
the C:zRsman s>Sde of atLhitecnnp.:.~stead
of 5LOi4. he will now pert 5643 ~ property
~.
' :'he cin•'s goal really ~vasa't .sty aiffer
ent than what we wanted." Ceaya Said.
"We wanted to buy ett older home ; ad pre-
serve it The Mills Act was sernndary."
Tb Mohamed Alameddkne ,who now ~
owns the Bidwell home and office, enterag
into an agreement with :he city seemed iklte
a good deal -especially with the tae I
6arak Starting nett year, he will ray ~
rasher than S1.4f9 in ptopertp tares fa' the I
Bidwel office building Fat the Bidwell
horse, he will pay ~ instead of his cur.
tent property tax of SlbJB. I
~.
•
•
23
Staft pftOW by WALT MANClNI
ED AND Si15AN CElAYA will have their property taxes. cut by roughly
X1.§00 to encourage the preservation of their historic Craftsman dome..