CALIFORNIA COASTAL COMMISSION: APPROVAL of City’s LCP Amendments regarding Medical Marijuana Dispensaries and Mills Act Historic Preservation

ABSTRACT: At the California Coastal Commission's August 2010 meeting, the Coastal Commissioners approved both agenda items submitted by the City of Carmel-by-the-Sea, namely LCP Amendment No. CML-1-10 (Medical Marijuana Dispensaries) and LCP Amendment No. CML-2-10 (Mills Act Historic Preservation).

CALIFORNIA COASTAL COMMISSION
AUGUST 2010 AGENDA

SAN LUIS OBISPO COUNTY GOVERNMENT CENTER
BOARD OF SUPERVISORS CHAMBERS
1055 MONTEREY STREET
SAN LUIS OBISPO, CA 93408

CENTRAL COAST DISTRICT
14. LOCAL COASTAL PROGRAMS (LCPs). See AGENDA CATEGORIES.
a. City of Carmel-by-the-Sea LCP Amendment No. CML-1-10 (Medical Marijuana Dispensaries). Public hearing and action on request by City of Carmel-by-the-Sea to amend the LCP to ban medical marijuana dispensaries in the city. (MW-SC) [APPROVED]

b. City of Carmel-by-the-Sea LCP Amendment No. CML-2-10 (Mills Act Historic Preservation). Public hearing and action on request by City of Carmel-by-the-Sea to modify the LCP’s historic preservation requirements (including to eliminate certain standards, put more emphasis on historic rehabilitation, and to expand the number of eligible properties) in accordance with the Mills Act. (MW-SC) [APPROVED]

ADDENDUM:
COMMISSIONERS
Public Members
Steve Blank (Governor's Appointment)
Steve Kram (Governor's Appointment)
Sara Wan (Senate Rules Committee Appointment)
Mary K. Shallenberger (Vice Chair) (Senate Rules Committee Appointment)
William A. Burke (Assembly Speaker Appointment)
William Patrick Kruer (Assembly Speaker Appointment)

Bonnie Neely (Chair), North Coast Representative
Ross Mirkarimi, Supervisor, North Central Coast Representative
Mark W. Stone, Supervisor, Central Coast Representative
Khatchik H. Achadjian, Supervisor, South Central Coast Representative
Richard Bloom, Councilmember, South Coast Representative
Esther Sanchez, Councilmember, San Diego Coast Representative

PUBLIC RESOURCES CODE
DIVISION 20
CALIFORNIA COASTAL ACT (2010)

Two Noteworthy 4 May 2010 City Council Agenda Items

ABSTRACT: Two noteworthy 4 May 2010 City Council Agenda Items, namely Receive presentation on the Carmel Beach canine education and enforcement program and an Ordinance amending the Mills Act program found in the Historic Preservation Ordinance and, are presented. Selected excerpts from the Agenda Item Summary and Staff Report are presented, as well as information submitted by historic residential property owner David D. Hutchings, including Hutchings’ Executive Summary.

AGENDA PACKET
Regular Meeting
Tuesday, May 4, 2010
4:30 p.m., Open Session
City Hall
East side of Monte Verde Street between Ocean and Seventh Avenues

Live and archived video streaming available

V. Announcements from Closed Session, from City Council Members and the City Administrator

D. Announcements from City Administrator
1. Receive presentation on the Carmel Beach canine education and enforcement program.

IX. Ordinances
A. Consideration of an Ordinance amending the Mills Act program found in the Historic Preservation Ordinance (First reading).

Description: This proposal would amend the application requirements of the Mills Act to eliminate some of the existing standards, place an emphasis on rehabilitation, and allow properties in any zoning district to apply.

Staff Recommendation: Approve the Ordinance (1st Reading).

Important Considerations: The Mills Act was enacted by the State of California in 1972 as a way to encourage partnerships between local governments and property owners of historic resources. Local governments are not required to participate in the Mills Act.

For those governments that do participate, a Mills Act contract may be offered to any property that contains an historic resource. The contract must be for at least 10 years and the property owner typically agrees to specific rehabilitation/restoration efforts. In turn, the property owner receives a reduced property tax assessment. The jurisdiction benefits by having historic resources maintained and enhanced; the property owner benefits by having a reduced tax burden.

Decision Record: The Council continued this item on 6 April 2010 with a request for additional financial analysis on the program.

STAFF REPORT
Exhibit “A” (attached) includes proposed changes to the existing ordinance to: 1) place an emphasis on rehabilitation; 2) revise the required findings; 3) open the program to commercial properties; and 4) allow the Council to establish by Resolution a limit on the number of contracts that could be approved.

Residential: There are approximately 210 residential properties listed on the City’s Historic Inventory. Properties that could potentially qualify for a Mills Act contract would be limited by the following considerations:

• Additions: The City’s ordinance does not allow contracts for properties with increased floor area by 15% or more from the original historic size. Without an analysis of every property on the inventory, it is impossible to know how many properties this requirement may disqualify. Staff estimates somewhere between 30% to 40%.

• Proposition 13: California’s Proposition 13 limits the maximum amount of
property taxes that can be assessed and prohibits reassessing a property’s value unless there is a change of ownership or new construction. Therefore, many owners of historic properties already enjoy low property tax rates and would not benefit by a Mills Act contract.

• Rehabilitation: If the Council adopts the proposed amendments, the number of potential candidates for Mills Act contracts will be further reduced based on the emphasis on rehabilitation.

Commercial: There are approximately 50 commercial properties listed on the City’s Historic Inventory. The City’s current Mills Act program does not include commercial properties, unless they provide affordable housing. The Council has expressed an interest in extending the program, particularly for historic motels.

The following motels are currently listed on the City’s Historic Inventory:
• Pine Inn (CC District)
• Cypress Inn (RC District)
• L’Auberge (RC District)
• Normandy Inn (RC District)
• La Playa (R-4 District)
• Sea View Inn (R-1 District)
• Colonial Terrace (R-1 District)
• Edgemere (R-1 District)

In general, Mills Act assessments are based on the Income Approach to Value rather than the standard Market Approach to Value. A key factor to this approach is what a property can produce in rent. Since rental rates are generally higher per square foot for commercial property, and particularly for motels, compared to residential property, commercial properties are generally not likely to see as significant property tax reductions from the Mills Act as would residential properties. Property tax reductions, however, could still be significant.

Economic Impact: Staff has assumed that the average market value of properties receiving a contract would be $1.5 million dollars. This would result in a net loss to the City of approximately $1,020 per contract (see Exhibit “B”). Staff also assumed that each 10-year contract would be renewed for an additional 10 years, as provided for in the Mills Act. Based on these assumptions, the following table demonstrates what the City could potentially lose in tax revenue (not including inflation) if two contracts were approved each year.

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10
$2040 $4080 $6120 $8160 $10,200 $12,240 $14280 $16,320 $18,360 $20,400

Yr 11 Yr 12 Yr 13 Yr 14 Yr 15 Yr 16 Yr 17 Yr 18 Yr 19 Yr 20
$22,440 $24,480 $26,520 $28,560 $30,600 $32,640 $34,680 $36720 $38760 $40,800

By Year 10 the City could experience a $20,400 reduction in property tax revenue in that year and have lost approximately $112,200 over a 10-year span. Staff points out, however, that based on the budget for fiscal year 2009/10, $20,400 would only be approximately .1% of the total budget.

Problematic Criteria: CMC 17.32.100 establishes findings that must be made in order to approve a Mills Act contract. Several of these findings make qualifying for a contract very difficult.

Summary: In summary, the Council should answer the following questions:

1) Should Mills Act contracts be offered primarily to properties with significant rehabilitation needs or should they be offered to all historic properties regardless of their current condition?

2) Should the existing problematic findings be amended as recommended?

3) Should the ordinance be amended to include historic commercial properties in the program?

4) Should the ordinance establish a cap on the number of contracts that can be approved during any given year? If a cap is established, should it exclude motels applications?

RECOMMENDATION
Approve the Ordinance amending the Mills Act requirements on first reading.

Exhibit “D”
Submitted by Historic Residential Property Owner David Hutchings
Note: Bold Print highlighted by Hutchings

California Government Code, Article 12, Sections 50280 – 50290

50281. Required contract provision.
Any contract entered into under this article shall contain the following provisions:

(b) Where applicable, the contract shall provide the following:

(1) For the preservation of 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, a nd the State Historical Building Code.

GUIDELINES FOR THE ASSESSMENT OF
ENFORCEABLY RESTRICTED HISTORICAL PROPERTY

HISTORY
Effective March 7, 1973, Chapter 1442 of the Statutes of 1972 (also known as the Mills Act) added sections 50280 through 50289 to the Government Code to allow an owner of qualified historical property to enter into a preservation contract with local government. When property is placed under such a contract, the owner agrees to restore the property if necessary, maintain its historic character, and use it in a manner compatible with its historic characteristics.

ENFORCEABLY RESTRICTED HISTORICAL PROPERTY
Under section 439, historical property is "enforceably restricted" if it meets the definition of a "qualified historical property" as defined in Government Code section 50280.1 and is subject to a historical property contract executed pursuant to Government Code section 50280 and following. A qualified historical property includes qualified historical improvements and the land on which the improvements are situated, as specified in the historical property contract. If the contract does not specify the land to be included, the qualified historical property includes only a land area of reasonable size to situate the improvements.

The historical property contract must have a minimum term of ten years, and, as applicable, must contain certain other elements, including the following:
• A provision relating to the preservation of the qualified historical property and, when necessary, the restoration and rehabilitation of the property in conformance with state historic preservation guidelines;

SUMMARY
The key points contained in these guidelines can be summarized as follows:
1. An owner of qualified historical property may enter into a preservation contract with local government. When property is placed under such a contract, the owner agrees to restore the property if necessary, maintain its historic character, and use it in a manner compatible with its historic characteristics. Such property receives the special valuation treatment prescribed under Revenue and Taxation Code sections 439 through 439.4.

Mills Act Property Tax Abatement Program
Technical Assistance Bulletin #12
CALIFORNIA OFFICE OF HISTORIC PRESERVATION
Department of Parks & Recreation

Benefits to Owners
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. The Mills Act program is especially beneficial for recent buyers of historic properties and for current owners of historic buildings who have made major improvements to their properties.

Executive Summary
Supplement to Documents Previously Provided By David D. Hutchings
For April 6, 2010 Carmel City Council Meeting Pertaining to the Mills Act

Disagreement with Proposed Exhibit A

My disagreement with Exhibit A centers around the language stated as the “Primary Purpose” for offering the Mills Act”. It is my belief that the current proposed language is not in compliance with the California Code, the California Guidelines, and the Ca. OHP Tech. Bulletin #12.

Staff recommends that Exhibit A should read:

“The primary purpose for offering Mills Act contracts in the City of Carmel-by-the-Sea is to assist in the rehabilitation and long term-maintenance of historic resources”.

It is my belief that Exhibit A to be in compliance should read:

“The primary purpose for offering Mills Act contracts in the City of Carmel-by-the- Sea is to assist in the rehabilitation and / or long term maintenance of historic resources”.

Point / Authorities and Brief Discussion for My Belief:

1. Ca. Code 50281(b) (1) clearly states “For the preservation of the qualified historic property and when necessary to restore and rehabilitate the property”. Mandating rehabilitation rewrites the “when necessary” provision of the law. The Code only mandates long-term preservation / maintenance, not rehabilitation.

2. Ca. Guidelines state “When property is placed under such a contract, the owner agrees to restore the property if necessary, maintain its historic character, and use it in a manner compatible with its historic characteristics”. Ca. Guidelines requires restoration only if necessary, but mandates maintenance of the historic character of the property.

3. The Ca. OHP Mills Act Property Tax Abatement Program Technical Assistance Bulletin #12 states “The Mills Act program is especially beneficial for recent buyers of historic properties and for current owners of historic buildings who have made major improvements to their properties”. The Ca. OHP Bulletin #12 does not say “who will make major improvements to their properties but rather says who have made major improvements to their properties.

4. The City of Monterey (the nearest major city) in their criteria clearly state that “The Mills Act Contract will serve to offset the costs of rehabilitation and/or maintaining the cultural resource”.

City’s Discretion to Determine Approved Mills Act Contracts Would Not Change

Because approval of the Mills Act by the City is discretionary, the City’s discretion to determine which properties are approved if my proposed language was implemented would not change. The City could still only approve Mills Act contracts for historic properties requiring just
rehabilitation but would not exclude for consideration historic properties already fully restored requiring long term-maintenance to preserve historic character.

ADDENDUM:
Mills Act Property Tax Abatement Program
Technical Assistance Bulletin #12
CALIFORNIA OFFICE OF HISTORIC PRESERVATION
Department of Parks & Recreation
1416 9th Street Room 1442-7
Sacramento, CA 95814
PO Box 942896
Sacramento, CA 94296
916-653-6624
calshpo@ohp.parks.ca.gov
www.ohp.parks.ca.gov

California’s four largest cities (Los Angeles, San Diego, San Francisco, and San Jose) as well as more than 75 other city and county governments have instituted Mills Act programs.

Mills Act Contact List

Mills Act Staff Contact
Shannon Lauchner
Mills Act/CLG Coordinator
State Historian II
916-653-5649
slauchner@parks.ca.gov

Part III: Mills Act Workshop

Commentary: Mills Act Workshop

The City Council’s 24 October 2006 Mills Act Workshop deliberations served to add more, not less, confusion and chaos into the public arena without any articulated plan as to the city’s future course of action.

Simply put, there are essential 3 aspects of the City’s Preservation Program which need clarification; the Historic Context Statement, Chapter 17.32 Historic Preservation of the Municipal Code and the Carmel Inventory of Historic Resources.

I: The Historic Context Statement
The City’s Historic Context Statement is used by qualified architectural historians to evaluate potential historic resources for “determining eligibility for the Carmel Inventory (17.32.060); “The purpose of the Historic Context Statement is to establish a baseline of information against which the potential historic significance of a property is evaluated.” Ergo, the Historic Context Statement is the preserve of experts, not Carmel-by-the-Sea City Council members.
Moreover, the City Council’s generated confusion over the Historic Context Statement illuminated a distressing situation; and that is, City Council Members act as if there are charged with reinventing the wheel, when they are supposed to respect the advise and recommendations of the Planning Staff and the Historic Resources Board. The Historic Resources Board (HRB) consists of a group of “professional members” and members of the public with a “demonstrated interest in and knowledge of architectural history, architecture, archaeology, anthropology, paleontology, architecture, historic architecture, local history or fields related to historic preservation such as construction, planning, geography, landscape architecture, urban design, ethnography, fine arts, or real estate.” The HRB Members have “Duties and Powers” (2.74.020) “To advise the City Council on proposed Mills Act contracts and proposed tax credit applications.” Similarly, the Planning Staff, a group of professionals, prepares staff reports and makes recommendations based on their knowledge and expertise. Yet City Council members do not seriously consider their advice and recommendations, particularly regarding Mills Act Contracts.

Note: In both the Scheingart Mills Act Contract application (Kathryn Waite House) and the Hutchings Mills Act Contract application (Elizabeth F. Armstrong House # 2), the Planning Staff and the HRB recommended to the City Council that these Mills Act Contracts be approved. The City Council denied the Hutchings’ a Mills Act Contract on 8 August 2006. And the City “temporarily removed” the Scheingart residence from the Inventory until the California Coastal Commission staff communicated to the City that this action was “illegal;” apparently, the Scheingart’s have since withdrawn their Mills Act Contract application.

II. Chapter 17.32 Historic Preservation of the Municipal Code
According to the City’s Municipal Code, 5 “Required Findings” must be met prior to the City Council approving a Mills Act Contract.

Required Findings: CMC 17.32.100.B requires that specific findings be made before a Mills Act Contract can be approved. The following is a list of the findings…from staff:

Finding #1: The building is designated as an historic resource by the City and is listed on the Carmel Register.

Finding #2: The proposed maintenance plan is appropriate in scope and sufficient in detail to guide long-term maintenance.

Finding #3: Alternations to the historic resource have been in the past, and will continue to be in the future, limited to interior work and to exterior rehabilitation and alteraations that:

(A) Comply with the Secretary’s Standards, and do not affect the
basic form and design of the original historic resource, and
(B) Do not affect any primary elevation, and
(C) Do not alter, damage or diminish any character-defining feature, and
(D) Do not increase floor area on the property by more than 15 percent beyond the amount established in the documented original or historic design of the resource, and
(E) Do not result in any second-story addition to a single-story historic resource, and
(F) Meet all zoning standards applicable to the location of the property.

Finding #4: The Mills Act contract will aid in offsetting the costs of rehabilitating and/or maintaining the historic resource and/or will offset potential losses of income that might otherwise be achieved on the property.

Finding #5: Approval of the Mills Act contract will represent an equitable balance of public and private interests and will not result in substantial adverse financial impact on the City.

In contrast, the State Requirement is basically only that the “properties must be identified as historic (National, State or Local level).” As Sean Conroy stated during his PowerPoint presentation, most communities only have the State Requirements.

To be fair and equitable, The City Council should repeal Findings #3 (D) and (F), especially since the City Council is defining “Meet all zoning standards applicable to the location of the property,” as “meet all current zoning standards applicable to the location of the property.”

III. The Carmel Inventory of Historic Resources

The crux of the City’s preservation implementation problem is the City’s Inventory of Historic Resources; that is, there appears to be numerous DPR 523 Forms containing “slightly inaccurate, but more often grossly inadequate” information, as City Councilman Gerard Rose stated. However, for property owners who have appealed their respective designations, a review by the Planning Staff, Historic Resources Board and City Council will ensure properties lacking historic merit will be removed from the City’s Inventory.

In retrospect, the appropriate lesson to be learned from nearly 2 years of implementing the historic preservation section of the Local Coastal Program is the following: For the City’s Inventory of Historic Resources, the City should have contracted with an architectural historian committed to more rigorous research standards or contracted with another architectural historian to review the Inventory for accuracy, completeness, et cetera prior to their submittal to the California Coastal Commission for certification.

Lastly, while City Councilman Gerard Rose exclaimed that the City Council needs to “straighten up our own house,” it is axiomatic that competent public servants would have straightened up their own houses prior to the city’s submittal of the city’s Local Coastal Program to the California Coastal Commission for certification in 2004. A corollary: City Council Members do not suffer the consequences of their failures to adequately perform their duties and responsibilities, rather members of the public are unnecessarily adversely impacted.

Part II: Mills Act Workshop

CITY COUNCIL
SPECIAL MEETING
MILLS ACT WORKSHOP
24 OCTOBER 2006

Statements made by City Council Members and a Carmel-by-the-Sea Resident & Comments:

Mayor Sue McCloud: “Let me reemphasis that this is a workshop really designed for Council to be sure we understand all the provisions and the objectives of the Mills Act before we start applying it and setting some dimensions around it.”

Comment: After all the City Administrator/City Council generated confusion over the targeted audience for the workshop, it is finally interesting to know that Mayor McCloud viewed the Mills Act Workshop for the City Council; a resident would assume City Council Members understood the provisions and consequences of the Mills Act prior to their submittal of the Local Coastal Program for certification in 2004.


City Councilman Michael Cunningham: “I don’t think we should proceed thinking there’ll be no impact on our property tax revenues…it could make a huge difference on our tax receipts…You’ve gotten evidence that says it isn’t the case and I find it very surprising.”

Comment: Assuming City Council Members received their Mills Act Workshop packets prior to the meeting, the public expects members who find information in their packets “surprising” to make an effort to dispel their surprise by asking the appropriate questions to the appropriate individuals prior to a meeting. In this particular case, City Councilman Michael Cunningham could have contacted the Monterey County Assessor – County Clerk - Recorder, Stephen L. Vagnini, to confirm, refute and /or clarify the planning staff’s information.
Note: Monterey County Assessor – County Clerk – Recorder Stephen L. Vagnini confirmed the financial implication statements made by Senior Planner Sean Conroy to the City Council at the Workshop.


City Councilman Michael Cunningham: “...suggested making them available only to those who face economic hardship as a result of historic designation.”

Comment: “The Mills Act is the single most important economic incentive program in California for the restoration and preservation of qualified historic buildings by private property owners,” according to the California Office of Historic Preservation. As the following reference states, “The purpose of granting a contract is to aid in offsetting the costs of maintenance and rehabilitation or to offset the potential loss of income that might otherwise be achieved on the property.” City Council Members are charged with implementing the Mills Act, not rewriting the Mills Act to include “economic hardship” as a determining factor, especially since economic status was not intended to be used as a criterion.

References:
Mills Act Contracts: Goal 1-5 of the Land Use Element of the General Plan encourages providing incentives, such as tax relief, to promote preservation and rehabilitation of historic resources. CMC 17.32.100 identifies potential benefits to properties that are included on the City’s Register of Historic Resources. The most significant benefit is the granting of a Mills Act Contract…The Mills Act was enacted by the State of California in 1972 and grants participating local governments authority to enter into contracts with owners of qualified historic properties. Owners are expected to actively participate in the restoration and maintenance of their historic properties while receiving property tax relief. As part of the City’s Local Coastal Program, Mills Act Contracts are now being offered to qualifying properties. The purpose of granting a contract is to aid in offsetting the costs of maintenance and rehabilitation or to offset the potential loss of income that might otherwise be achieved on the property.
(Source: City Staff Report)

General Plan/Coastal Land Use Plan Land Use & Community Character Element
Carmel-by-the-Sea Page 1-43
Cultural Resources
Historic Preservation

G1-5 Protect and enhance historic resources. Ensure that City ordinances, development review processes and administrative policies support, facilitate and coordinate with preservation activities. Provide incentives for property owners to preserve and rehabilitate historic resources. (LUP)


City Councilwoman Paula Hazdovac: “I don’t think we have a very clear picture of what is actually historic, simply based on how many appeals we have overturned, or granted…the documentation we have so far isn’t accurate...”

City Councilman Gerard Rose: “...the last few months have proven very troubling for me as it relates to our Historic Inventory. Again and again we have seen homes described as historic on DPR Forms that were sometimes slightly inaccurate, but more often grossly inadequate…”

Comment: If the DPR 523 Forms on the Inventory of Historic Resources properties contain “grossly inaccurate” information, then why has the city continued to compensate the architectural historian hired to compile the Inventory, Kent L. Seavey? Note: Since certification of the Local Coastal Program, the city has paid Kent Seavey $ 22,975 in “professional services.”

City Councilman Gerard Rose: “...the historic context statement “is far broader and vaguer than most people realize,” and therefore “has been the source of a lot of confusion, not only among the public but for decision makers.”

Comment: The City’s Historic Context Statement is used by qualified architectural historians to evaluate potential historic resources. Since the City Council Members are not qualified, let alone charged with updating the Inventory, then the City Council should refrain from using the Historic Context Statement as a ruse to delay hearings and decisions on Mills Act Contracts.

Reference:
Carmel-by-the-Sea Municipal Code
Chapter 17.32
HISTORIC PRESERVATION
17.32.060 Determining Eligibility for the Carmel Inventory.
A. Historic Context Statement.
2. The purpose of the Historic Context Statement is to establish a baseline of information against which the potential historic significance of a property is evaluated.

“He (City Councilman Gerard Rose) said he would prefer high standards to preserve the most noteworthy properties, such as the first of a type built and the best example of a particular architectural style.”

Comment: In the Local Coastal Program, it already clearly states that the “best” be represented in the Inventory.

Reference:
General Plan/Coastal Land Use Plan Land Use & Community Character Element

Protection of Historic Resources
Its primary goals…, and to promote the identification and preservation of structures and sites that best represent this history.

Additionally, Staff and the HRB use reason 3) There are a sufficient number of other, better preserved or more important resources of the same type elsewhere within the City, as a criterion for removing a property from the Inventory.

Reference:
Staff and the HRB recognize four possible reasons for removing a property from the Carmel Inventory: 1) There are gross, non-correctable errors in the historic documentation, 2) The property bears a poor or minimal relationship to the adopted Historic Context Statement, 3) There are a sufficient number of other, better preserved or more important resources of the same type elsewhere within the City, and 4) The resource has lost its historic integrity through past alterations.


Carmel-by-the-Sea Resident Monte Miller: “After hearing your discussion, I’m a lot more clear on what some of the tradeoffs are and in a workshop we should have been able to interact with you during the whole session…the point is when you call something a workshop that people should be able to interact after you guys start your discussion because I imagine a lot of people have some opinions and inputs to you that might be valuable to you in your thought process.”

Comment: Definition of Workshop: “An educational seminar or series of meetings emphasizing interaction and exchange of information among a usually small number of participants”
(Source: http://www.thefreedictionary.com/workshop)

PART I: Mills Act Workshop

CITY COUNCIL SPECIAL MEETING
MILLS ACT WORKSHOP
24 OCTOBER 2006

Senior Planner Sean Conroy gave a “brief powerpoint presentation on the Mills Act, a general overview.”

MILLS ACT WORKSHOP
• Origins
• State Requirements
• Property Tax Example
• City Requirements/Objectives
• Discussion

THE MILLS ACT
• State legislation enacted in 1972.
• Gives cities authority to directly assist property owners in historic preservation.
• Gives property owners public recognition and an economic incentive to restore and preserve their properties.

PROGRAM FLEXIBILITY
• There is no requirement to implement the Mills Act. This decision is left to each city.
• The Act sets minimum standards to qualify for benefit.
• The Act also allows each city to customize the program to suit local needs.

SELECTION FLEXIBILITY
• Mills Act contracts are not permits.
• Contracts are completely discretionary.
• Some of Carmel’s selection criteria require judgment. This allows for interpretation and flexibility on a case-by-case basis.

STATE REQUIREMENTS
• Properties must be identified as historic (National, State or Local level)
• The minimum contract term is 10 years.
• Contracts must contain renewal provisions.
• Owner must provide written notice of the contract to Office of Historic Preservation.

BENEFITS
• Benefit to property owner:
Property tax is reduced by using its “income value,” rather than “market value.”
• Benefit to City:
Historic resource is rehabilitated, maintained and protected from significant alternations in the future.

MILLS ACT EXAMPLE
• Normal Assessment vs. Mills Act Example
Property Tax 1% of Assessed Value = Market Value vs. Property Tax based on Rental Income, Net Operating Income and Capitalization Rate.
(Generally, a 40% - 60% Property Tax Reduction for Property Owner)

CITY FINANCES
• The County collects less in taxes.
• City receives less than 1% of the taxes collected by the County.
• The total pool of property taxes is distributed to the State, County and Cities. The property tax reduction is diffused among all jurisdictions Statewide.
• Financial impact to the City is limited.

CITY ORDINANCE
• Preservation Ordinance is part of the Local Coastal Program
• The Mills Act is one of several benefits included in the ordinance.
• Other benefits include reduced building permit fees, use of the State Historic Building Code and more flexibility with development standards.

INTENT OF (CITY) STANDARD
• Provide economic benefit to owners of historic resources
• Establish process that includes Historic Resources Board and City Council review.
• Establish criteria that limits the number of properties that can qualify to minimize fiscal impacts on the City.

MINIMUM (CITY) STANDARDS
• Property must be listed on the City’s Register of Historic Resources.
• A maintenance and management plan must be prepared and approved.
• Any historic R-1 property is eligible.

All past alternations must:
• Comply with the Secretary of Interior’s Standards for historic properties.
• Meet all current zoning standards.

No past alternation:
• Increased floor area on the site by more than 15% beyond historic size.
• Resulted in a second story addition.
• Affected the basic form and design of the original historic structure.
• Altered, damaged or diminished any character defining feature.

Senior Planner Sean Conroy: The current criteria is…”very strict and they are very limiting as far as how many properties would be able to quality.”

CURRENT OBJECTIVES
• Reward owners of well-preserved historic properties with only minimal alterations.
• Help offset rehabilitation costs.

POSSIBLE NEW OBJECTIVES
• Recognize only the best/most important examples of each historic resource type
• Help offset rehabilitation costs only for seriously damaged/degraded properties.
• Help offset significantly diminished development opportunities.

OTHER COMMUNITIES
• Most communities only require that a property be identified as historic to qualify.
• Several communities limit the number of contracts per year. (Coronado, Belvedere, Sierra Madre.) I.e. 2-3.year.
• Los Angeles does not allow contracts for properties valued over $1.5 million.

DISCUSSION
• Which objectives should contracts satisfy?
• Are the City’s standards and selection criteria appropriate?
• How strictly should the City’s discretionary criteria be applied?
• Should the City set an annual limit on the number of contracts?

A City Council In Total DISARRAY Over The Mills Act

UPDATE:
Council Retreat – 5:00 p.m.
October 9, 2006 – Please note change of date
Location TBA

Mills Act Workshop – 5:00 p.m.
October 24, 2006
Council Chambers

CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL AGENDA

Regular Meeting
Tuesday, September 12, 2006

XI. Orders of Council

D. Scheduling Future City Council meetings – Please Bring Your Calendar.

XII. Adjournment

Prior to adjournment, the last tedious 15 minutes were spent scheduling a Mills Act Workshop and a City Council Retreat.

After a few minutes of chaotic talk, City Attorney Don Freeman stated, as follows:

“By way of a question, what are you anticipating a Workshop on the Mills Act is going to produce for you?”

Councilwoman Paula Hazdovac: “We will learn something. I’m not prepared to vote on anything at this point until..."

City Attorney Don Freeman: “Well, the issues are more than just the Mills Act, I would think, because what you want to know is what the criteria that we have that you have already established, that you have already adopted, whether any of those need to be amended in light of a new context statement being rewritten or amended, what effect it would have and then what effect anything would have on your budget in over however period of time...”

Later, City Administrator Rich Guillen reiterated his previous memo and suggested that the Workshop would cover Steps One and Two, public education and a discussion of the Mills Act criteria and the Retreat would cover Steps Three and Four, attorney review of a model agreement and the fiscal impacts.

Clearly exasperated, City Councilman Erik Bethel stated “Are we deciding whether or not to have a meeting at all or what we’re going to have at the meeting?”

After proposed dates of Thursday September 28 and Thursday October 5 were rejected, the City Council Members finally decided on Tuesday October 10 at 5:00 P.M. for the Workshop. However, after City Administrator Guillen made his suggestion, as described above, he then recommended that since he would be in Europe for two weeks beginning October 12, the Retreat should be held October 10 “because I’ll be here.” And the Workshop should be held either “October 17, Oct 19 or anytime after that cause I don’t think I necessarily have to be there.”

Finally, after a disjointed and chaotic 15 minutes, the City Council Members agreed to a Retreat on Tuesday, October 10, 2006 at 5:00 P.M. at a place to be determined and a Workshop on Tuesday, October 24, 2006 at 5:00 P.M. Input for the Retreat agenda was solicited.

Note: Mayor McCloud remarked during the discussion, “I don’t think that most people out there, Mike, know what the Mills Act is anymore than the Council does...”


COMMENTS:
That it took the City Council 15 minutes to decide the scope (?) and dates of a Retreat and Mills Act Workshop suggests that the City Council will not get a grip on the city’s Mills Act as codified in the city’s Local Coastal Program (LCP) for some time into the future. Which begs the question, what else in the city’s LCP did the City Council Members not read and comprehend in terms of its contents and consequences prior to their submission of the city’s LCP to the California Coastal Commission for certification?


Reference:
City Council Minutes
Regular meeting
August 8, 2006

City Administrator Guillen presented for Council consideration four points:

1. A City Council workshop needs to be scheduled to educate the public on how the Mills Act will be applied in our community;

2. Staff needs to present to the City Council (at a regularly scheduled meeting) Mills Act criteria that meets the minimum intent of the State Law and is in-line with City Council policy direction;

3. The City Attorney needs to review and recommend to the City Council a model agreement that can be applied to any property that meets the Mills Act criteria; and

4. Finally, staff needs to analyze the financial impact to the City’s Property Tax revenues so that the City Council fully understands the financial impact of Mills Act property approvals.

MILLS ACT: Participating California Cities & Counties

As of 2006, according to the California State Office of Historic Preservation, there are 83 cities and counties participating in the Mills Act Program; a total of 1713 historic resources state-wide.
Note: The City of Monterey has 7 historic resources property owners with Mills Act Contracts and the County of Monterey’s application is currently pending.


COMMUNITIES PARTICIPATING IN MILLS ACT PROGRAM

Jurisdiction County # of Contracts

Berkeley Alameda 1
Fremont Alameda 2
Chico Butte 4
Danville Contra Costa 4
Claremont Los Angeles 2
Covina Los Angeles 0
Glendale Los Angeles 17
Glendora Los Angeles 5
La Verne Los Angeles 6
Long Beach Los Angeles 22
Los Angeles (county) Los Angeles 2
Los Angeles (city) Los Angeles 235
Monrovia Los Angeles 64
Pasadena Los Angeles 25
Pomona Los Angeles 0
Redondo Beach Los Angeles 43
San Gabriel Los Angeles 1
Santa Monica Los Angeles 18
Sierra Madre Los Angeles 14
South Pasadena Los Angeles 3
West Hollywood Los Angeles 68
Whittier Los Angeles 24
Belvedere Marin 1
Larkspur Marin 1
Monterey (city) Monterey 7
Monterey (county) (pending) Monterey 0
Napa (city) Napa 0
St. Helena Napa 0
Truckee Nevada 4
Anaheim Orange 127
Brea Orange 5
Dana Point Orange 5
Irvine Orange 1
Laguna Beach Orange 5
La Mesa Orange 0
Orange (city) Orange 74
San Clemente Orange 16
San Juan Capistrano Orange 1
Santa Ana Orange 29
Tustin Orange 6
Placer (county) Placer 0
Corona Riverside 17
Palm Springs Riverside 1
Sacramento (city) Sacramento 29
Colton San Bernardino 12
Fontana San Bernardino 2
Highland San Bernardino 2
Ontario San Bernardino 12
Rancho Cucamonga San Bernardino 45
San Bernardino (city) San Bernardino 0
Upland San Bernardino 28
Chula Vista San Diego 29
Coronado San Diego 0
Encinitas San Diego 1
Escondido San Diego 54
La Mesa San Diego 22
National City San Diego 3
San Diego (city) San Diego 475
San Diego (county) San Diego 14
San Francisco (city and county) San Francisco 1
San Luis Obispo (city) San Luis Obispo 23
Redwood City San Mateo 5
San Mateo (city) San Mateo 1
South San Francisco San Mateo 6
Gilroy Santa Clara 1
Los Altos Santa Clara 5
Morgan Hill Santa Clara 1
Palo Alto Santa Clara 2
San Jose Santa Clara 4
Santa Clara (city) Santa Clara 34
Santa Clara (county) Santa Clara 4
Saratoga Santa Clara 0
Sunnyvale Santa Clara 3
Benicia Solano 12
Vallejo Solano 3
Modesto Stanislaus 12
Jamestown (unicorporated) Tuolomne 1
Soulsbyville (unincorporated) Tuolomne 1
Tuolomne (unicorporated) Tuolomne 1
Tuttletown (unincorporated) Tuolomne 1
Ojai Ventura 1
Ventura (City) Ventura 2
Ventura (county) Ventura 1

TOTAL 1713

Based on notifications provided to the Office of Historic Preservation. Actual totals likely greater. As of May 2006

(Source:
http://ohp.parks.ca.gov/