city council agenda report
Agenda Item 15
CM Review: _______ Fiscal Review: _____
CITY COUNCIL AGENDA REPORT MEETING DATE:
August 1, 2011
SUBJECT:
Historic Preservation Subcommittee Report
PRESENTER:
Patrick Clarke, Planner
REQUESTED ACTION:
Direct staff to prepare a report to the Planning Commission outlining the Mills Act program
FISCAL IMPACT:
Depends on level of participation by property owners
BACKGROUND There is a wealth of older buildings in the City which reflect the historic past of the community and the development of housing and commercial structures over time. The City has an impressive collection of buildings representative of various architectural styles and eras dating back over 100 years. Many of these buildings have historic value that add character and contribute to the beauty of La Cañada Flintridge as a place to live. Among these buildings are older homes that have long been sought out by residents who appreciate the unique lifestyles that can be enjoyed by living in historic homes and estates. The City Council discussed the issue of historic preservation at its August 2 and December 20, 2010 meetings. These discussions were in response to Mr. Brad Schwartz, owner of the property located at 4166 Woodleigh Lane, contacting City staff regarding the possibility of creating a local Mills Act Property Tax Abatement program in support of historic residences and structures in the City. A Mills Act Ad-Hoc Committee comprised of residents and historic preservation experts was formed in order to study the issues and to report back to the City Council with recommendations. The Committee was chaired by City Councilmember Donald Voss and had the following members: Candy Dougherty, John Roberts, Herand Der Sarkissian, John Benriter, Graham Stumpf, Tim Historic Preservation City Council
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Agenda Item 15
Gregory, Daniel Jordan, Robert Stanley and Patrick Clarke (Bob Moses had to withdraw from the Committee due to work scheduling issues). The Mills Act is defined by the State of California as follows: “Economic incentives foster the preservation of residential neighborhoods and the revitalization of downtown commercial districts. 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. Enacted in 1972, the Mills Act legislation grants participating local governments (cities and counties) the authority to enter into contracts with owners of qualified historic properties who actively participate in the restoration and maintenance of their historic properties while receiving property tax relief.” MISSION STATEMENT The Committee met a total of five times between March and June, 2011 and changed its name to the Historic Preservation Ad-Hoc Committee to better reflect the comprehensiveness of the issues discussed. This range of issues is reflected in the mission statement adopted by the Committee: “To reflect its distinctive history, development and identity, historic preservation should be promoted and cultivated in La Cañada Flintridge as an important value for the City’s residents.” DEFINITION The Committee discussed what constitutes historic preservation and agreed upon a definition which is used in State law and was adapted by the Committee to better reflect the character of La Cañada Flintridge: “1. It is identified with persons or events significant in local, regional, state or
national history. 2. It is representative of the work of a notable builder, designer or architect. 3. It contributes to the significance of an historic area, being a geographically definable area. 4. It embodies one or more distinctive characteristics of style, type, period, design, materials, or craftsmanship. 5. It has a unique location or physical characteristics or represents an established and familiar visual feature of neighborhood, community, or the City. 6. It promotes awareness and appreciation of City, local and national history, and demonstrates the value of historic preservation as a community value. Historic Preservation City Council
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Agenda Item 15
7. It has yielded, or may be likely to yield information important in prehistory or history.” It is interesting to note that the age of a building is not the sole indicator of historical significance and that the criteria are comprehensive in nature covering physical and personal aspects of buildings. The best examples of historic significance as manifested in a structure embody more than one of these elements with the Lanterman House as an obvious example in La Cañada Flintridge. Overall, the definition is comprehensive and provides a measure of how to evaluate buildings for potential historic designation. STRATEGIES The Committee discussed a number of methods used by other cities to encourage historic preservation and that could be considered by the City of La Cañada Flintridge including the following: 1. Reducing or eliminating City building fees for work on historic buildings. 2. Providing for flexibility for Zoning Code interpretations including setbacks, floor area ratio and parking requirements. 3. Creation of a historic preservation society. 4. Enacting a Mills Act program in the City. These methods for encouraging property owners to pursue historic preservation are not mutually exclusive and can be combined. However, a reduction or elimination in fees could have a significant impact on City revenues as the City contracts with Los Angeles County for plan check services, while granting exceptions to the Zoning Code could create inconsistencies in land use patterns. The Committee determined that the most efficient method would be for the City to adopt a Mills Act program which would provide the greatest financial incentives to property owners but with the costs of the program shared by a number of agencies. In addition, the City could also consider initiating the establishment of an organization charged with encouraging historic preservation in La Cañada Flintridge. This group could prepare historic research and provide home tours of historic properties in the City. ORGANIZATION AND OPERATION The Committee thoroughly discussed the potential financial impacts to the City and property owners from enacting a Mills Act program. This included reviewing financial scenarios provided by the Finance Director, Daniel Jordan, which were based on various assessed property values and average rental rates for houses in the City. Table 1 shows a range of the amounts of property taxes that would be forgone by the City for different numbers of participants by 3 different assessed values for having a Mills Act program. In addition, the percentage reduction as a total of property taxes is included to show the financial impact to the City. For example, if there were 15 Mills Act contracts on properties assessed at $1,000,000 each in value, the City would forfeit $6,255 per Historic Preservation City Council
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8/1/2011
Agenda Item 15
year, while 30 contracts on properties assessed at $750,000 each in value would amount to $7,470. These potential reductions account for 0.170% and 0.203% of the City’s property tax revenues, respectively. Overall, property tax revenues comprise approximately 34% of the City budget so the potential impact of the reduction in City revenues is further reduced.
TABLE 1
Table 2 shows the amount of property tax revenues received by the City per year from 2003 to 2010:
TABLE 2
Historic Preservation City Council
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Agenda Item 15
The amount of property tax savings to those residents with Mills Act contracts can receive varies and is based on the assessed value of properties as determined by the Los Angeles County Tax Assessor. Table 3 shows the total assessed values for all properties located in La Cañada Flintridge: La Canada Flintridge Taxable Assessed Value of Secured Property FY 2009-10 Property Category Residential
Taxable Assessed Value
Parcels
Assessed Value per Parcel
6,866
$5,119,315,694
$745,604
229
$197,996,809
$864,615
Industrial
1
$304,013
$304,013
Miscellaneous
4
$547,358
$136,840
498
$68,298,780
$137,146
Institutional
20
$34,871,695
$1,743,585
Recreational
8
$6,360,471
$795,059
164
$0
$0
7,790
5,427,694,820
Commercial
Vacant
Exempt Total
TABLE 3 Residential assessed property values total $5,119,315,684 which accounts for 94.3% of all property in the City. While the Mills Act applies to all types of properties, it will probably be residential properties which will comprise the bulk of contracts. Overall, the average assessed value per residential property in the City is $745,604 based on the Assessor records. However, average property values are probably greater given the methodology used by the assessor’s office to determine value (price paid for houses at the most recent sale date, plus approximately 2% increase per annum). Table 4 shows average and median house prices from 2008 to 2010. La Canada Flintridge Single Family Residential Full Value Sales
Year
Full Value Sales
2008
158
$1,289,032
$1,070,500
2009
216
$1,217,315
$1,050,000
2010* 108 * Data through June 30, 2010
$1,257,034
$1,096,000
Average Price
Median Price
Average Assessed Value (AAV)
$745,604
AAV as a % of Average Sales Price
AAV as a % of Median Sales Price
59.31%
68.03%
TABLE 4 Historic Preservation City Council
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8/1/2011
Agenda Item 15
Attachments 2-4 shows the tax savings to property owners from having a Mills Act contract over a 10 year period and a breakdown by agency of revenue reductions for properties with average assessed values of $750,000, $1,000,000 and $2,550,000. With an assessed value of $750,000 property owners would pay property taxes of $8,477 per year which would total $92,802 over a 10 year period. However, with a Mills Act contract, the same property tax bill would be $4,270 per year, or a total of $46,759 over a 10 year period. This is a reduction of $46,043 in property taxes paid over this time period. The loss in revenue to the City from this case would be $249 per year and $2,734 over a 10 year period. It is important to note that in discussions with the County Tax Assessor’s Office, the amount of revenues paid to La Cañada Unified School District and Glendale Unified School District would not be reduced. The is because the State of California pays the District money based on average daily attendance and will make up the difference from any property tax loss. However, other agencies including Los Angeles County, Los Angeles Consolidated Fire District and other agencies will have their revenues reduced according to the formula shown on Table 5 on the next page.
La Canada Flintridge Distribution of Property Tax Dollar Agency
Portion of Property Tax Dollar
Los Angeles County
$0.2370
La Canada Unified School District Los Angeles Consolidated Fire District
$0.2287
Education Aug. Fund Impound
$0.1329
City of La Canada Flintridge
$0.0671
Education Rev. Augmentation Fund
$0.0666
Pasadena Area Community College
$0.0353
Los Angeles County Library
$0.0228
Other Agencies
$0.0378
Total
$1.0000
$0.1718
TABLE 5 The Mills Act gives local governments significant authority and latitude in creating historic preservation programs which are suited to unique local situations. It is up to the City to decide what parameters and limits to use if it establishes a program that reflect local community needs. An evaluative process would need to be established which uses the standards set by the State of California to determine eligibility for Mills Act contracts. The City Council will need to consider options such as whether to limit the program to a Historic Preservation City Council
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8/1/2011
Agenda Item 15
predetermined total dollar amount, or set a maximum number of contracts per year or, put a cap on the dollar value per building. As an example, the City Council could decide to limit the amount of tax reduction to the City to $10,000 per year to initiate the program. This maximum amount would correspond to about 40 contracts on properties with an average assessed value of $1,000,000, or about 25 contracts on properties assessed at $750,000, or about 8 at $2,550,000 or some combination of these assessed values (See Table 1 on page 3). Alternatively, the City Council could limit the number of contracts permitted per year to 5, or 10 or some other preferred number. It’s unknown at this time how many applications the City will receive or what would be the total property tax impact of potential contracts. Any program approved by the City Council can be changed over time to correct issues that may materialize once a program is initiated. Since the number of potential applications and the potential property tax reductions from them is unknown, the City Council may want to limit the dollar amount to $10,000 per year to start the program but potentially increase it to $25,000 over time depending on how popular the program becomes in the City. The amount of tax savings is determined by the Los Angels County Tax Assessor. The methodology used to determine the reduction includes the use of local rental rates for housing weighted by number of bedrooms. Table 6 shows the average rents for homes in the City as determined by a survey which is included in the City’s Housing Element. In addition, staff spoke to local realtors who verified the weighted average rental rate of approximately $4,488 per month. This rate could potentially be utilized by the Assessor’s Office in determining the amount of savings to be gained through a Mills Act contract. The rental rate that is used is important as an increase in rental rates can mean bigger property tax savings for property owners and, correspondingly, bigger reductions in City property tax income.
La Canada Flintridge Owner-Occupied Households & Rental Costs Number of Bedrooms
Average Rent Estimate
Weighted Average Rent
Households
% of Total Households
22
0.36%
$900
$3
1 bedroom
244
3.98%
$1,625
$65
2 bedrooms
707
11.54%
$2,500
$289
3 bedrooms
2,759
45.04%
$3,845
$1,732
4 bedrooms
1,765
28.81%
$5,875
$1,693
629
10.27%
$6,891
$708
6,126
100.00%
Studio
5+ bedrooms Total
$4,488
TABLE 6 Historic Preservation City Council
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Agenda Item 15
Over 55 cities across the State of California have adopted historic preservation programs since the Mills Act was passed in 1972, including the neighboring cities of Pasadena, Glendale and South Pasadena. Attachment 1 provides a summary of buildings under contract in the City of Glendale and the impact on property taxes for the property owners and the City. While Glendale has a far larger population and a greater numbers of residences and other buildings compared to La Cañada Flintridge, the attachment clearly shows the potential savings to residents and the relative minor reduction in overall city revenues. Programs used by neighboring cities could be used as a guide for establishing a program in La Cañada Flintridge. In addition, the State of California Office of Historic Preservation provides assistance in preparing local ordinances (Attachment 6). The Committee discussed how a Mills Act program would operate in the City of La Cañada Flintridge. The Committee recommended that if the City were to implement such a program the City Council may want to consider one that is not onerous on potential applicants but that still meets the requirements of the applicable law. Under the Committee-preferred program, the City would collect a fee for consultants to review applications and to provide an early assessment of potential to qualify. Since the City does not have a historic preservation commission and the creation of one would be both expensive and possibly overly regulate the process, the Committee recommended that a subcommittee be formed of two Planning Commission members and two residents with historic preservation backgrounds or interests selected by the Commission. If an application for a contract was for a commercial building which required exterior changes to a building, input or review by the Design Commission would be required. Final approval of any contracts would be by the City Council. Overall, the application process should not be too arduous and should not deter people from applying for contracts. As a follow-up, an annual report should be prepared for the City Council as part of the City Manager’s annual report outlining the program and possibly offering suggestions for changes as needed. SUMMARY The Committee, which was comprised of residents and historic preservation experts, under the chair of Councilmember Donald Voss, was charged with the task of considering options for historic preservation in the City of La Cañada Flintridge. The Committee reviewed and discussed a number of methods to encourage preservation in the City. In addition, the Committee spent considerable time analyzing the potential financial implications of establishing a Mills Act contract program and recommended Historic Preservation City Council
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8/1/2011
Agenda Item 15
that such a program be established. The description of the organization and operation of the program provided in this staff report is an outline, and the Committee is requesting City Council approval to forward this proposal to the Planning Commission for further development and later City Council approval of the finished design of the program. OPTIONS: 1. 2. 3.
Direct staff to prepare a report to the Planning Commission outlining a Mills Act program. Direct staff not to pursue a Mills Act program. Take no action at this time and request further study.
RECOMMENDATION: 1.
Option 1: Direct staff to prepare a report to the Planning Commission outlining a Mills Act program.
Attachments: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Office of Historic Preservation – California State Parks. California Office of Historic Preservation: Drafting Historic Preservation Ordinances – Introduction. Historic Preservation Incentives Assessed Value - $750,000. Assessed Value - $1,000,000. Assessed Value - $2,550,000. 2010 Mills Act Historical Properties – City of Glendale. List of Cities in California with Mills Act Programs. City of Pasadena Historic Preservation Process for Designating Historic Resources December 20, 2010, City Council Staff Report
Historic Preservation City Council
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8/1/2011
CM Review: _______ Fiscal Review: _____
CITY COUNCIL AGENDA REPORT MEETING DATE:
August 1, 2011
SUBJECT:
Historic Preservation Subcommittee Report
PRESENTER:
Patrick Clarke, Planner
REQUESTED ACTION:
Direct staff to prepare a report to the Planning Commission outlining the Mills Act program
FISCAL IMPACT:
Depends on level of participation by property owners
BACKGROUND There is a wealth of older buildings in the City which reflect the historic past of the community and the development of housing and commercial structures over time. The City has an impressive collection of buildings representative of various architectural styles and eras dating back over 100 years. Many of these buildings have historic value that add character and contribute to the beauty of La Cañada Flintridge as a place to live. Among these buildings are older homes that have long been sought out by residents who appreciate the unique lifestyles that can be enjoyed by living in historic homes and estates. The City Council discussed the issue of historic preservation at its August 2 and December 20, 2010 meetings. These discussions were in response to Mr. Brad Schwartz, owner of the property located at 4166 Woodleigh Lane, contacting City staff regarding the possibility of creating a local Mills Act Property Tax Abatement program in support of historic residences and structures in the City. A Mills Act Ad-Hoc Committee comprised of residents and historic preservation experts was formed in order to study the issues and to report back to the City Council with recommendations. The Committee was chaired by City Councilmember Donald Voss and had the following members: Candy Dougherty, John Roberts, Herand Der Sarkissian, John Benriter, Graham Stumpf, Tim Historic Preservation City Council
1
8/1/2011
Agenda Item 15
Gregory, Daniel Jordan, Robert Stanley and Patrick Clarke (Bob Moses had to withdraw from the Committee due to work scheduling issues). The Mills Act is defined by the State of California as follows: “Economic incentives foster the preservation of residential neighborhoods and the revitalization of downtown commercial districts. 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. Enacted in 1972, the Mills Act legislation grants participating local governments (cities and counties) the authority to enter into contracts with owners of qualified historic properties who actively participate in the restoration and maintenance of their historic properties while receiving property tax relief.” MISSION STATEMENT The Committee met a total of five times between March and June, 2011 and changed its name to the Historic Preservation Ad-Hoc Committee to better reflect the comprehensiveness of the issues discussed. This range of issues is reflected in the mission statement adopted by the Committee: “To reflect its distinctive history, development and identity, historic preservation should be promoted and cultivated in La Cañada Flintridge as an important value for the City’s residents.” DEFINITION The Committee discussed what constitutes historic preservation and agreed upon a definition which is used in State law and was adapted by the Committee to better reflect the character of La Cañada Flintridge: “1. It is identified with persons or events significant in local, regional, state or
national history. 2. It is representative of the work of a notable builder, designer or architect. 3. It contributes to the significance of an historic area, being a geographically definable area. 4. It embodies one or more distinctive characteristics of style, type, period, design, materials, or craftsmanship. 5. It has a unique location or physical characteristics or represents an established and familiar visual feature of neighborhood, community, or the City. 6. It promotes awareness and appreciation of City, local and national history, and demonstrates the value of historic preservation as a community value. Historic Preservation City Council
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8/1/2011
Agenda Item 15
7. It has yielded, or may be likely to yield information important in prehistory or history.” It is interesting to note that the age of a building is not the sole indicator of historical significance and that the criteria are comprehensive in nature covering physical and personal aspects of buildings. The best examples of historic significance as manifested in a structure embody more than one of these elements with the Lanterman House as an obvious example in La Cañada Flintridge. Overall, the definition is comprehensive and provides a measure of how to evaluate buildings for potential historic designation. STRATEGIES The Committee discussed a number of methods used by other cities to encourage historic preservation and that could be considered by the City of La Cañada Flintridge including the following: 1. Reducing or eliminating City building fees for work on historic buildings. 2. Providing for flexibility for Zoning Code interpretations including setbacks, floor area ratio and parking requirements. 3. Creation of a historic preservation society. 4. Enacting a Mills Act program in the City. These methods for encouraging property owners to pursue historic preservation are not mutually exclusive and can be combined. However, a reduction or elimination in fees could have a significant impact on City revenues as the City contracts with Los Angeles County for plan check services, while granting exceptions to the Zoning Code could create inconsistencies in land use patterns. The Committee determined that the most efficient method would be for the City to adopt a Mills Act program which would provide the greatest financial incentives to property owners but with the costs of the program shared by a number of agencies. In addition, the City could also consider initiating the establishment of an organization charged with encouraging historic preservation in La Cañada Flintridge. This group could prepare historic research and provide home tours of historic properties in the City. ORGANIZATION AND OPERATION The Committee thoroughly discussed the potential financial impacts to the City and property owners from enacting a Mills Act program. This included reviewing financial scenarios provided by the Finance Director, Daniel Jordan, which were based on various assessed property values and average rental rates for houses in the City. Table 1 shows a range of the amounts of property taxes that would be forgone by the City for different numbers of participants by 3 different assessed values for having a Mills Act program. In addition, the percentage reduction as a total of property taxes is included to show the financial impact to the City. For example, if there were 15 Mills Act contracts on properties assessed at $1,000,000 each in value, the City would forfeit $6,255 per Historic Preservation City Council
3
8/1/2011
Agenda Item 15
year, while 30 contracts on properties assessed at $750,000 each in value would amount to $7,470. These potential reductions account for 0.170% and 0.203% of the City’s property tax revenues, respectively. Overall, property tax revenues comprise approximately 34% of the City budget so the potential impact of the reduction in City revenues is further reduced.
TABLE 1
Table 2 shows the amount of property tax revenues received by the City per year from 2003 to 2010:
TABLE 2
Historic Preservation City Council
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Agenda Item 15
The amount of property tax savings to those residents with Mills Act contracts can receive varies and is based on the assessed value of properties as determined by the Los Angeles County Tax Assessor. Table 3 shows the total assessed values for all properties located in La Cañada Flintridge: La Canada Flintridge Taxable Assessed Value of Secured Property FY 2009-10 Property Category Residential
Taxable Assessed Value
Parcels
Assessed Value per Parcel
6,866
$5,119,315,694
$745,604
229
$197,996,809
$864,615
Industrial
1
$304,013
$304,013
Miscellaneous
4
$547,358
$136,840
498
$68,298,780
$137,146
Institutional
20
$34,871,695
$1,743,585
Recreational
8
$6,360,471
$795,059
164
$0
$0
7,790
5,427,694,820
Commercial
Vacant
Exempt Total
TABLE 3 Residential assessed property values total $5,119,315,684 which accounts for 94.3% of all property in the City. While the Mills Act applies to all types of properties, it will probably be residential properties which will comprise the bulk of contracts. Overall, the average assessed value per residential property in the City is $745,604 based on the Assessor records. However, average property values are probably greater given the methodology used by the assessor’s office to determine value (price paid for houses at the most recent sale date, plus approximately 2% increase per annum). Table 4 shows average and median house prices from 2008 to 2010. La Canada Flintridge Single Family Residential Full Value Sales
Year
Full Value Sales
2008
158
$1,289,032
$1,070,500
2009
216
$1,217,315
$1,050,000
2010* 108 * Data through June 30, 2010
$1,257,034
$1,096,000
Average Price
Median Price
Average Assessed Value (AAV)
$745,604
AAV as a % of Average Sales Price
AAV as a % of Median Sales Price
59.31%
68.03%
TABLE 4 Historic Preservation City Council
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8/1/2011
Agenda Item 15
Attachments 2-4 shows the tax savings to property owners from having a Mills Act contract over a 10 year period and a breakdown by agency of revenue reductions for properties with average assessed values of $750,000, $1,000,000 and $2,550,000. With an assessed value of $750,000 property owners would pay property taxes of $8,477 per year which would total $92,802 over a 10 year period. However, with a Mills Act contract, the same property tax bill would be $4,270 per year, or a total of $46,759 over a 10 year period. This is a reduction of $46,043 in property taxes paid over this time period. The loss in revenue to the City from this case would be $249 per year and $2,734 over a 10 year period. It is important to note that in discussions with the County Tax Assessor’s Office, the amount of revenues paid to La Cañada Unified School District and Glendale Unified School District would not be reduced. The is because the State of California pays the District money based on average daily attendance and will make up the difference from any property tax loss. However, other agencies including Los Angeles County, Los Angeles Consolidated Fire District and other agencies will have their revenues reduced according to the formula shown on Table 5 on the next page.
La Canada Flintridge Distribution of Property Tax Dollar Agency
Portion of Property Tax Dollar
Los Angeles County
$0.2370
La Canada Unified School District Los Angeles Consolidated Fire District
$0.2287
Education Aug. Fund Impound
$0.1329
City of La Canada Flintridge
$0.0671
Education Rev. Augmentation Fund
$0.0666
Pasadena Area Community College
$0.0353
Los Angeles County Library
$0.0228
Other Agencies
$0.0378
Total
$1.0000
$0.1718
TABLE 5 The Mills Act gives local governments significant authority and latitude in creating historic preservation programs which are suited to unique local situations. It is up to the City to decide what parameters and limits to use if it establishes a program that reflect local community needs. An evaluative process would need to be established which uses the standards set by the State of California to determine eligibility for Mills Act contracts. The City Council will need to consider options such as whether to limit the program to a Historic Preservation City Council
6
8/1/2011
Agenda Item 15
predetermined total dollar amount, or set a maximum number of contracts per year or, put a cap on the dollar value per building. As an example, the City Council could decide to limit the amount of tax reduction to the City to $10,000 per year to initiate the program. This maximum amount would correspond to about 40 contracts on properties with an average assessed value of $1,000,000, or about 25 contracts on properties assessed at $750,000, or about 8 at $2,550,000 or some combination of these assessed values (See Table 1 on page 3). Alternatively, the City Council could limit the number of contracts permitted per year to 5, or 10 or some other preferred number. It’s unknown at this time how many applications the City will receive or what would be the total property tax impact of potential contracts. Any program approved by the City Council can be changed over time to correct issues that may materialize once a program is initiated. Since the number of potential applications and the potential property tax reductions from them is unknown, the City Council may want to limit the dollar amount to $10,000 per year to start the program but potentially increase it to $25,000 over time depending on how popular the program becomes in the City. The amount of tax savings is determined by the Los Angels County Tax Assessor. The methodology used to determine the reduction includes the use of local rental rates for housing weighted by number of bedrooms. Table 6 shows the average rents for homes in the City as determined by a survey which is included in the City’s Housing Element. In addition, staff spoke to local realtors who verified the weighted average rental rate of approximately $4,488 per month. This rate could potentially be utilized by the Assessor’s Office in determining the amount of savings to be gained through a Mills Act contract. The rental rate that is used is important as an increase in rental rates can mean bigger property tax savings for property owners and, correspondingly, bigger reductions in City property tax income.
La Canada Flintridge Owner-Occupied Households & Rental Costs Number of Bedrooms
Average Rent Estimate
Weighted Average Rent
Households
% of Total Households
22
0.36%
$900
$3
1 bedroom
244
3.98%
$1,625
$65
2 bedrooms
707
11.54%
$2,500
$289
3 bedrooms
2,759
45.04%
$3,845
$1,732
4 bedrooms
1,765
28.81%
$5,875
$1,693
629
10.27%
$6,891
$708
6,126
100.00%
Studio
5+ bedrooms Total
$4,488
TABLE 6 Historic Preservation City Council
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Agenda Item 15
Over 55 cities across the State of California have adopted historic preservation programs since the Mills Act was passed in 1972, including the neighboring cities of Pasadena, Glendale and South Pasadena. Attachment 1 provides a summary of buildings under contract in the City of Glendale and the impact on property taxes for the property owners and the City. While Glendale has a far larger population and a greater numbers of residences and other buildings compared to La Cañada Flintridge, the attachment clearly shows the potential savings to residents and the relative minor reduction in overall city revenues. Programs used by neighboring cities could be used as a guide for establishing a program in La Cañada Flintridge. In addition, the State of California Office of Historic Preservation provides assistance in preparing local ordinances (Attachment 6). The Committee discussed how a Mills Act program would operate in the City of La Cañada Flintridge. The Committee recommended that if the City were to implement such a program the City Council may want to consider one that is not onerous on potential applicants but that still meets the requirements of the applicable law. Under the Committee-preferred program, the City would collect a fee for consultants to review applications and to provide an early assessment of potential to qualify. Since the City does not have a historic preservation commission and the creation of one would be both expensive and possibly overly regulate the process, the Committee recommended that a subcommittee be formed of two Planning Commission members and two residents with historic preservation backgrounds or interests selected by the Commission. If an application for a contract was for a commercial building which required exterior changes to a building, input or review by the Design Commission would be required. Final approval of any contracts would be by the City Council. Overall, the application process should not be too arduous and should not deter people from applying for contracts. As a follow-up, an annual report should be prepared for the City Council as part of the City Manager’s annual report outlining the program and possibly offering suggestions for changes as needed. SUMMARY The Committee, which was comprised of residents and historic preservation experts, under the chair of Councilmember Donald Voss, was charged with the task of considering options for historic preservation in the City of La Cañada Flintridge. The Committee reviewed and discussed a number of methods to encourage preservation in the City. In addition, the Committee spent considerable time analyzing the potential financial implications of establishing a Mills Act contract program and recommended Historic Preservation City Council
8
8/1/2011
Agenda Item 15
that such a program be established. The description of the organization and operation of the program provided in this staff report is an outline, and the Committee is requesting City Council approval to forward this proposal to the Planning Commission for further development and later City Council approval of the finished design of the program. OPTIONS: 1. 2. 3.
Direct staff to prepare a report to the Planning Commission outlining a Mills Act program. Direct staff not to pursue a Mills Act program. Take no action at this time and request further study.
RECOMMENDATION: 1.
Option 1: Direct staff to prepare a report to the Planning Commission outlining a Mills Act program.
Attachments: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Office of Historic Preservation – California State Parks. California Office of Historic Preservation: Drafting Historic Preservation Ordinances – Introduction. Historic Preservation Incentives Assessed Value - $750,000. Assessed Value - $1,000,000. Assessed Value - $2,550,000. 2010 Mills Act Historical Properties – City of Glendale. List of Cities in California with Mills Act Programs. City of Pasadena Historic Preservation Process for Designating Historic Resources December 20, 2010, City Council Staff Report
Historic Preservation City Council
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8/1/2011
