RES-11122 Amending Mills Act ProgramRESOLUTION N0. 11122
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ORANGE AMENDING THE MILLS
ACT PROGRAM REQUIREMENTS TO ALLOW
REHABILITATION OF INTERIOR HISTORIC
FEATURES IN REHABILITATION/MAINTENANCE
PLANS FOR MILLS ACT CONTRACTS.
WHEREAS, on August 25, 1998, the City Council adopted Resolution No. 8920,
authorizing the implementation of a Mills Act Program in the City of Orange and establishing a
policy for historic property preservation agreements (Mills Act Contracts); and
WHEREAS,the purpose of the Mills Act Program is to provide a financial incentive for
historic preservation whereby the property owner may receive a reduction in property taxes in
exchange for an agreement to preserve, rehabilitate, and maintain a historic property over a
minimum ten year term; and
WHEREAS, the Mills Act Program in the City of Orange requires property owners to
prepare and complete a Rehabilitation/Maintenance Plan for the property, which is incorporated
into the Mills Act Contract and identified therein as Exhibit D; and
WHEREAS,work included in the Rehabilitation/Maintenance Plan must be completed in
conformance with the Secretary of the Interior's Standa ds for the Treatment of Historic
Properties (SOI Standards) and local historic preservation design standards; and
WHEREAS, the Mills Act Program requirements established in 1998 prohibit the
inclusion of interior historic features in the Rehabilitation/Maintenance Plan for a Mills Act
Contract; and
WHEREAS, the CiTy Council desires to amend the Mills Act Program requirements to
allow property owners to include preservation,rehabilitation, and maintenance of interior historic
features in the Rehabilitation/Maintenance Plan for a Mills Act Contract; and
WHEREAS,this amendment to the Mills Act Program requirements shall apply to all new
contracts and to amendments or updates to existing contracts processed after the date of adoption
of this Resolution; and
WHEREAS, the City Council conducted a public meeting on November 13, 2018, at
which time interested persons had an opportunity to testify either in support of, or opposition to,
the amendment to the Mills Act Program requirements.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Orange
hereby amends the Mills Act Program requirements to allow rehabilitation of historic interior
features in conformance with the SOI Standards to be included in the Rehabilitation/Maintenance
Plan for a Mills Act Contract. Work on interior features included in the
Rehabilitation/Maintenance Plans shall be limited to rehabilitation of existing historic features or
reconstruction of documented missing historic features, as detailed and presented in the revised
staff report, pages 3 through 4 (attached), capping the amount of interior rehabilitation in the
Rehabilitation/Maintenance Plan to no more than 25 percent of the total cost estimate in the plan.
The Community Development Director, or designee, shall make a recommendation to the City
Council on approval of each Mills Act Contract, including the scope, timeline, and content of the
Rehabilitation/Maintenance Plan in conformance with the SOI Standards.
SECTION 1 —FINDINGS
General Plan Conformance
The project must be consistent with the goals and policies stated within the City's General Plan.
The amendment to the Mills Act Program requirements is consistent with the General Plan goals
and policies of the Cultural Resources & Historic Preservation Element in that it encourages the
use of incentives to promote the long-term preservation and rehabilitation of historic resources in
conformance with the SOI Standards.
SECTION 2 —ENVIRONMENTAL REVIEW
The amendment to the Mills Act Program requirements is categorically exempt from the provisions
of the California Environmental Quality Act (CEQA)per State CEQA Guidelines 15308 (Class 8
Actions by Regulatory Agencies for Protection of the Environment) and 15331 (Class 31 -
Historical Resource Restoration/Rehabilitation). The amendment expands an incentive program to
promote the long-term preservation and rehabilitation of historic resources and is consistent with
the City Council's prior action adopting the Mills Act Program to encourage historic preservation.
It assures the maintenance and protection of the environment through the preservation of historic
resources. As required by the Class 31 exemption, rehabilitation of interior features is required to
be in conformance with the Secretary of the Interior's Standards for the Treatment of Historic
Properties. There is no environmental public review required for a Categorical Exemption.
ADOPTED this 13th day of November 2018.
ere a E. Smith, Mayor, City of Orange
ATTEST:
Robert Zorn o, Chief Clerk, City of Orange
Resolution No. 11122 2 I
I
I
STATE OF CALIFORNIA )
COUNTY OF ORANGE )
CITY OF ORANGE
I, ROBERT ZORNADO, Chief Clerk of the City of Orange, California, do hereby certify
that the foregoing Resolution was duly and regularly adopted by the City Council of the City of
Orange at a regular meeting thereof held on the 13th day of November 2018, by the following
vote:
AYES:COUNCILMEMBERS: Alvarez, Whitaker, Smith, Murphy,Nichols
NOES:COUNCILMEMBERS: None
ABSTAIN: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
Robert Zo ado,Chief Clerk,City of Orange
Resolution No. 11122 3
Revised per Council direction on 1 '1/13/2018
c AGENDA ITEM
o; a
p' '2
QF , ,,.. November 13, 2018
o
ReviewedNerified By:
TO: Honorable Mayor and
Members of the City Council City Manager
k nance Director
THRU'Rick Otto To Be Presented By:Marissa MosWer,
Historic Preservation Planner
City Manager Cons Calendar City Mgr Rpts
FROM:Wllllam CYouCh Council Reports Legal Affairs
Community Development Director Boards/Cmtes _ Public Hrgs
X Admin Reports Plan/Environ
1. sus CT
Rehabilitation of Interior Historic Features in Mills Act Properties.
2. Si]MMARY
The current Mills Act Program requirements do not permit interior rehabilitation as part of the
eligible work for a Rehabilitation/Maintenance Plan. In September 2018, the City Council
requested that the Community Development Department provide information on including
rehabilitation of interior historic features in the Rehabilitation/Maintenance Plans of Mills Act
Contracts.
3. RECOMIV NDED ACTION
If the City Council chooses,adopt Resolution No. 11122 entitled:
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ORANGE AMENDING THE NIILLS ACT
PROGRAM REQUIREMENTS TO ALLOW
REHABILITATION OF INTERIOR FIISTORIC
FEATURES IN REHABILITATION! MAINTENANCE
PLANS FOR MILLS ACT CONTRACTS
4 FISCAL IMPACT
No impact.
ITEM 7.1 1 11/13/18
5. STRATEGIC PLAN GOAL(S)
5. Recognize, promote,and preserve Orange's rich heritage.
d) Expand and strengthen processes and practices related to protection and cultural resources.
6. GENERAL PLAN IMPLEMENTATION
Cultural Resources Element
Goa13.0 Provide incentives and expand education efforts for historic preservation.
Policy 3.2 Provide incentives to encourage and support historic preservation.
7. DISCUSSION and BACKGROUND
At the request of City Council, staff of the Community Development Department Plaruiing
Division has.prepared information on the potential to include rehabilitation of historic interior
features iri the Rehabilitation/Maintenance Plans for Mills Act properties. Including interior
rehabilitation in the Rehabilitation/Maintenance Plan will not affect the property tax reduction
received by property owners. However, it will allow property owners more flexibility to meet the
minimum program requirements.
Mills Act Pro ram BackSround
The Orange Mills Act Program was established in 1998 as an incentive to encourage preservation
of historic resources.Properties eligible for a Mills Act Contract are contributors to an established
historic district or separately listed in or eligible for the National Register of Historic Places or the
California Register of Historical Resources.
The Mills Act Contract is a legal agreement between the property owner and the City that is
recorded against the property. Under the contract terms, the property owner agrees to preserve,
maintain,and rehabilitate the historic property in conformance with the Secretary of the Interior's
Standards foY the Treatment of Historic Properties (SOI Standards) and with local historic
preservation standards. The property owner is required to prepare and complete a
Rehabilitation/Maintenance Plan with a timeline for specific work items on the historic property.
In exchange, the property owner may receive a reduction in property taxes to offset the costs of
rehabilitation. The purpose of the Mills Act Program is to support long-term preservation with a
financial incentive that is reinvested in historic properties.
Under the Mills Act Program, the total property tax collected by the Orange County Assessor
decreases because the property is re-assessed using a formula mandated by state Iaw. The City's
percentage of property tax revenue received(approximately 14%) does not change.
There are currently 234 active Mills Act Contracts with eight new applications for 2018.
RehabiIitation/Maintenance Plan
Each Mills Act application requires the property owner to prepare a Rehabilitation/Maintenance
Plan for the property. Under the current program requirements, the plan must comply with the
following:
ITEM 7.1 2 11/13/18
The work must be in conformance with the SOI Standards and Historic Preservation
Design Standards for Old Towne(or Orange Eichler Design Standards, if adopted).
Only work on the exterior and systems of the historic building (electrical, plumbing; and
structural) is eligible. Work on interior features cannot be included.
The total cost of rehabilitation over the ten-year contract term must approximately equal
or exceed the amount of estimated tax savings.
Staff reviews the Rehabilitation/Maintenance Plans submitted by property owners to ensure that
all work meets the SDI Standards. As part of the application process, staff makes a site visit to the
property and revises the Rehabilitation/Maintenance Plan in collaboration with the property owner
to prioritize safety issues and provide the greatest benefit to the appearance of the historic district
as a whole. In addition, staff conf rms that the cost estimate for the Rehabilitation/Maintenance
Plan approximately equals or exceeds the property ta c savings estimated over the initial ten-year
term of the contract. After the property owner and staff have agreed on the contents of the
Rehabilitation/Maintenance Plan, staff makes a recommendation on the application to City
Council.
Property owners are required to report to the Community Development Department on the work
completed on the Rehabilitation/Maintenance Plan each year and are required to allow staff to
conduct inspections of the property once every five years.
Interior Rehabilitation under Mills Act Contracts
All work on Mills Act properties must conform with the SOI StandaYds, which are based on a
hierarchy of recommendations for the treatment of historic features:
1. Maintain original features in good condition.
2. Repair original features that are deteriorated.
3. Replace only the original features that cannot be repaired. Replacement should be in kind,
matching the materials,details, and finish.
4. Reconstruct missing original features.The reconstruction should be based on documentary
or physical evidence on the building.
If the work proposed for a historic interior feature falls into one of these categories, staff
recommends that it could be eligible for the Rehabilitation/Maintenance Plan. This approach is.
consistent with the treatment of historic exterior features and is in conformance with the SOI
Standards and the Historic Preservatioii Design Standards for Old Towne. The work items should
be limited to rehabilitation of existing historic features or reconstruction of well-documented
missing historic features. Remodeling based on a property owner's personal taste or changes to
features that are not historic would not be eligible for the Rehabilitation/Maintenance Plan.
The following are examples of interior rehabilitation that meet the SOI Standards and could be
eligible for the Rehabilitation/Maintenance Plan:
Interior Features Eligible for Re/:abilitatio t/Maintena ce Plan
Ceilings and Walls Repair of cracked or damaged plaster ceilings and walls to match
original condition, including cove ceilings and other decorative
details
ITEM 7.1 3 11/13/18
Removal of paint and/or repair of wainscot/paneling to match
original condition
Painting previously painted surfaces
Doors and Windows Removal of paint and/or repair of damaged interior doors
Repair of original surrounds and trim elements
Repair of original interior hardware and replacement of missing
hardware to match the historic condition
Floors Uncovering,refinishing,and repair of original flooring
Cabinetry, Fireplaces, Removal of paint,refinishing and/or repair of original cabinetry and
and other Decorative trim elements
Features
Repair of original fireplace surrounds and mantels
Repair of original light fixtures
Other original interior features may be eligible for inclusion in the Rehabilitation/Maintenance
Plan, depending on the uniqueness of the feature or the specific circumstances of the historic
property.The Community Development Director,or designee,will review the requested work item
with the property owner prior to making a recommendation on the contract to the City Council.
If interior features are permitted in the Rehabilitation/Maintenance Plan, staff will continue to
prioritize work related to the exterior of the historic buildings and to life safety improvements,
such as seismic retroft, as these have the largest public benefit to the historic district as a whole.
If Council chooses to amend the Mills Act Program requirements, staff recommends capping the
amount of interior rehabilitation in the Rehabilitation/Maintenance Plan to no more than 25 percent
of the total cost estimate in the plan. This will ensure.that the majority of the impxovements made
under the Mills Act Contract are focused on safety and public benefits to the appearance of the
historic district.
If interior"features were included in the Rehabilitation/Maintenance Plan, the property owners
would commit to preserve those features for the life of the contract. In those cases, staff would
include interior features in the site inspection prior to contract approval and during the required
five-year inspections of Mills Act properties.
Effect on Pronertv Taxes under the Mills Act Contract
Under the state law for Mills Act Contracts, the assessed value of a property with a Mills Act
Contract is based on the property's income-producing potential. The formula used by the Orange
County Assessor for the Mills Act valuation of a property is based on the property's rental value
and an interest rate set annually by the state Board of Equalization.
As a result, the property tax•reduction does not change based on the axnount of work included in
the Rehabilitation/Maintenance Plan. Ir,cluding interior rehabilitation will not directly affect the
property tax bill sent to property owners or the amount of property tax decrease realized by the
City.
The purpose of the Mills Act Program is to reinvest the property tax savings in rehabilitation of
the historic property. Under the current program requirements, the amount of tax savings should
ITEM 7.1 4 11/13/18
approximately equal the cost of the work in the Rehabilitation/Maintenance Plan over ten years. If
interior features were el'igible for the plan,property owners would have more options for work that
meets the minimum costs expected for the Rehabilitation/Maintenance Plan. However, the total
property tax savings to the property owner would not increase.
Council Action
If Council chooses to amend the Mills Act Program requirements, staff has prepared a draft
resolution reflecting the discussion in the staff report,provided as Attachment 1.
8. ADVISORY BOARD RECOMMENDATION
None.
9. ATTACHMENTS
Attachments to Report:
1. Draft Resolution No. 11122 amending Mills Act Program Requirements
2. Existing Sample Rehabilitation/Maintenance Plan for Mills Act Contract
3. Orange County Assessor Sample Mills Act Property Assessments
ITEM 7.1 5 11/13/18