The San Marino City Council unanimously directed city staff to incorporate the Mills Act—a state law establishing a tax incentive program to help foster preservation—into the City of San Marino’s new historic preservation ordinance.
“[It] grants participating local governments 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 tax relief,” explained Planning and Building Director Aldo Cervantes.
Cervantes stated that qualified historic properties include those listed on the National Register of Historic Places, California Register of Historic Resources or a registry maintained by the city. A typical contract would span a minimum of ten years with automatic renewals, during which time an “applicant must demonstrate, through a construction schedule, that during each year of the contract, specific renovation projects will occur,” he noted.
“Inspections will be performed by staff to ensure compliance with that contract,” Cervantes stated, adding that the contract could be terminated by either party, but would be terminated if the property owner did not comply with the contract.
An owner-terminated contract would also result in a fee assessed to the property owner.
The property tax owed by a Mill’s Act property is based on a formula that includes a property’s expected rental income and other factors, but not the pre-Mill’s Act assessed value, according to Cervantes.
“The [property] value does have some impact on the numbers here, but a lot of it is the rent. What would you yield if you were renting that property?” he clarified.
As an example, Cervantes demonstrated that a $2.89 million San Marino home—paying $14,000 in property taxes—with historic characteristics and a pure architectural style could be reassessed at $707,000.
“So combined, the city as well as the school district could stand to lose $6,900 every year under that contract,” he explained.
With those savings, Cervantes continued, homeowners would preserve particular historic elements of their home.
“It’s just a financial incentive. It’s not meant to completely give you the financial means of completing a specific project as a whole,” he explained.
Chris DeWitt of Lombardy Rd. and former owner of a Mill’s Act property in Glendale, spoke in favor of the council’s action.
“San Marino is one of the few cities in Southern California—with properties like we have—that doesn’t have the Mills Act,” he said. “I think it is important for the preservation of the architectural integrity of the city. Title 24 Energy Codes are now mandatory for all remodels. We are doing some work on our house now and unless the house has historic designation, we can’t use historic doors and windows,” DeWitt noted.
Cervantes added that several cities which have enacted the Mill’s Act have placed on it a variety of different caps.
“A number of cities that have the Mills Act, for example Beverly Hills has a [property tax] lose cap of $100,000. You can also cap the number of applicants,” he said, noting that a property value cap could also be placed.
Upon hearing the discussion about this issue, Mayor Richard Sun reminded the council, staff and citizens, “A majority of our revenue for this city is property tax.”
Sun requested that city staff prepare a variety of policy scenarios, including one that imagines a ‘worst case scenario’ for the city’s property tax revenue.
San Marino’s historic preservation ordinance currently outlines the process to nominate a home for local historic designation.
Cervantes will return to the council with drafts of ideas for the ordinance in May. Upon receiving Council direction, the San Marino Planning Commission will review the ordinance in June. Once the Planning Commission has approved the ordinance, it will be sent back to the city council for first and second readings.
