To: Honorable Mayor and Members of City Council
From: Vincent Smith, Community Development Director
Prepared By: Michael Walker, Senior Planner
TITLE:
Title
Preservation of Qualified Historical Property at 1206 Oak Street
LABEL
RECOMMENDED ACTION:
Recommendation
Authorize the Community Development Director, on behalf of the City, to execute a Mills Act Historic Preservation Agreement with Bob Stroub, trustee of the Robert Marshall Stroup Revocable Trust dated 10/15/2020, for the Local Landmark property at 1206 Oak Street.
Body
DISCUSSION:
The Applicant, Bob Stroub, trustee of the Robert Marshall Stroub Revocable Trust, has submitted an application for a Mills Act Contract related to prior preservation and ongoing preservation of a Local Landmark (LLM) on the City’s Historic Resources Inventory.
The Mills Act Contract application for 1206 Oak Street does not propose immediate improvements that require approval of a Certificate of Appropriateness. Future exterior alterations may require additional review pursuant to the Historic Preservation Ordinance (NMC Chapter 15.52).
The applicant proposes further ongoing maintenance and repairs as reflected in the Ten-Year Rehabilitation Plan. In order to be considered eligible for the subsequent tax year assessment, a contract must be approved and recorded at the County by the end of the calendar year.
SITE CONTEXT AND HISTORY
The property is located on the northwest corner of Oak Street and Coombs Street within the Traditional Residential General Plan Designation, and the Traditional Residential Zoning District (RT-5).
The subject property is on the City’s Historic Resources Inventory as a Local Landmark (LLM). The residential structure was originally built circa 1889 and has been used for residential purposes.
The subject property was completely renovated in the 1990s and included restoration of the front and rear porches, interior restoration, and seismic retrofitting. Highlights of the restoration project are further described in the project description. The property owners were awarded Napa County Landmarks 1994 Preservation Award of Merit for the Rehabilitation of the Residence at 1206 Oak Street.
PROJECT DESCRIPTION
The City has received an application for a Mills Act Contract on a Local Landmark property that has been restored. The Mills Act Contract is requested for the purpose of obtaining a property tax reduction to help off-set the cost of repairs incurred in efforts to restore and preserve the subject historic building and for ongoing preservation of the building. No new work is proposed with this request. The full restoration plan is further described in the Ten-Year Rehabilitation Plan, attached as Exhibit C of the Mills Act Contract (see ATCH 1) and the Project Description (see ATCH 2).
Previous rehabilitation projects are fully described in the project description (see ATCH 2) and outlined below:
• Rehabilitation and conversion of the first floor to an Accessory Dwelling Unit (ADU)
• Interior restorations
• Repaint exterior and reroof
• Ongoing repairs and maintenance
MILLS ACT OVERVIEW
The Mills Act was adopted by the State legislature in 1972. The Mills Act provides a means for an owner to reduce property taxes on a historic property in exchange for an agreement with a local government entity that the owners maintain the property’s historic character. The purpose is to encourage the renovation and maintenance of historic properties throughout the State by providing a tax incentive. It is similar to the Williamson Act, which encourages the preservation of agricultural land in return for a lower property tax rate.
The Mills Act enables local governments to enter into a voluntary contract with owners of historic properties. The City is not obliged to enter into a contract even if the properties are eligible. The contract extends for an initial term of 10 years. It will automatically renew each year on its anniversary date creating a new 10-year agreement unless the property owner or the City provides a notice of non-renewal. In such case, the contract will terminate at the end of the current 10-year term or the applicable renewal term. In order for a property to be eligible, it must be listed on the National Register of Historic Places, be listed on the California Register of Historic Places, or be listed on a local inventory. The subject property is eligible because, although it is not listed on the National Register of Historic Places, it is listed on the City’s local historic inventory as a Local Landmark.
The property owner must agree to restore (if necessary) and maintain the property in a manner appropriate to its historic character. The local government is responsible for monitoring the property to ensure that the agreed to restoration and/or maintenance has been complied with. Many communities use the Secretary of Interior’s Standards for Rehabilitation as their restoration standard. However, each community makes its own determination as to what will be required of property owners.
Should the City decide the property owner has breached the terms of the contract, the City can bring legal action against the owner or simply cancel the Contract. If the contract is cancelled for this reason, a penalty of 12.5% of the market value of the property at the time of cancellation is assessed. Although the contract is initially made between the property owner and the City, it remains with the property even after it is sold. When the property transfers, it is not re-assessed at its new market value, thereby allowing the new property owners to enjoy a pre-existing reduced tax rate. This can contribute to the overall value of the historic property.
CULTURAL HERITAGE COMMISSION REVIEW
The Cultural Heritage Commission reviewed the Mills Act Contract request at their October 12, 2023 meeting. The Commission recommended that the initial year of the Ten-Year Rehabilitation Plan be updated to reflect more rehabilitation of the first floor. Exhibit C of the Mills Act Contract (ATCH 1) has been updated to reflect this change. The Commission recommended that the City Council authorize execution of the Mills Act Contract.
FINANCIAL IMPACTS:
The recommended action would result in a reduction in the City’s share of annual tax revenue. The amount of property tax savings varies from year to year, based on expenditures for improvements by the owner. The City’s portion of property tax revenue also varies year to year. Current Tax Assessor information for the City’s active Mills Act Contracts is provided (see ATCH 3).
Because the initial term of the contract is ten years and the term is extended automatically each year for an additional year unless a notice of non-renewal is provided by the owner or the City, the reduction would continue for at least ten years. Once a notice of non-renewal is provided by the City or owner, the property tax reduction would cease upon the expiration of the remaining term of the contract.
The City currently has 14 active Mills Act Contracts. Nine for residential properties; five for commercial/hospitality properties. Based on information from the Napa County Tax Assessor Office, the total property tax savings for similar residential properties in 2023 is $104,976 for an average of $11,664.
The City’s portion of the property tax for FY23 is 18.8%.
Based on current Tax Assessor data and the City’s property tax rate of 18.8%, the total property tax reduction for the City’s share of nine residential properties is $19,735 for an average of $2,193.
CEQA:
The Community Development Director has determined that the Recommended Action described in this Agenda Report is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301, which exempts minor alterations to existing structures and Section 15331, which exempts projects that rehabilitate, restore, preserve and conserve historical resources in a manner consistent with the Secretary of Interior’s Standards for the Treatment of Historic Properties with Guidelines for Preserving, Rehabilitating, Restoring and Reconstructing Historic Buildings.
DOCUMENTS ATTACHED:
ATCH 1 - Mills Act Contract
ATCH 2 - Project Description
ATCH 3 - Tax Assessor Information
NOTIFICATION:
Notice of the scheduled public hearing was provided on October 27, 2023, by US Postal Service to all property owners within a 500-foot radius of the subject property. Notice of the public hearing was also published in the Napa Valley Register on October 27, 2023, and provided to people previously requesting notice on the matter at the same time notice was provided to the newspaper for publication.