TITLE
Recommendation to adopt recommended revisions to the City’s Mills Act Property Tax Incentive Program for historic properties. (Citywide)
DISCUSSION
On February 4, 2014, the City Council requested an update on the status of re-instituting the Mills Act property tax incentive program for historic properties. Staff has now completed the research of existing Mills Act programs in a variety of other California cities, and consulted with the State Office of Historic Preservation and the LA County Assessor’s office.
Based on that research, a series of recommendations have been developed, including evaluation and prioritization criteria for eligible properties, and an annual timeframe for application review and approval to streamline the process (Exhibit A - Recommendations Summary). The Cultural Heritage Commission (CHC) discussed the Mills Act program recommendations at its October 13, 2014 meeting and made several recommendations that are contained herein.
As provided by State law, entering into a Mills Act contract results in a property tax reassessment by the local county tax assessor, who assesses property value by applying a complicated formula based on income capitalization, risk factors, and expected life of the property. Generally, experience with such contracts indicates that owners benefit from approximately a 30-50 percent reduction in property tax, which, in turn, lowers City revenue from property taxes for these properties. The contract runs with the property and is passed on to subsequent owners. The contract is for a period of 10 years and automatically renews itself on a continuous basis unless steps are taken by the City to cancel the contract. Upon cancellation of the contract, the actual termination date of said contract is 10 years from the date of cancellation.
There are 31 single-family and duplex properties currently with Mills Act contracts. There are three multi-family properties with a cumulative total of nearly 100 individual unit...
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