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6.1F Page 5 DISCUSSiON/ISSUES Mills Act contracts are processed by numerous municipalities throughout California and are considered by the California State Office of Historic Preservation as one of the most efficient and beneficial local preservation incentives that a municipality can offer to the owners of designated resources. The Redwood City Mills Act Contract historic preservation program was adopted by the City Council in 1990. The City currently manages a total of seven Mills Act contracts successfully, three of which are over 10 years old. Mills Act contracts are recorded against the title of the subject property and renew automatically every year, subject to a minimum commitment by the property owner of 10 years unless cancellation is requested. As a result of such agreements. early tax savings can be channeled towards the long term maintenance of a property according to clear historic rehabilitation standards. Staff/HRAC conducts yearly inspections to insure the above. If contract cancellation is requested prior to the completion of the 10 year period, the property owner is then subject to financial penalties which are proportional to the tax benefits granted during contract period and coflected by the Tax Assessor. General questions: Q: Why should the City provide property tax relief benefit to this particular building? A: The Historic Preservation Ordinance has very specific criteria that properties must meet in order to be designated as a Historic landmark and thus become eligible for the Mills Act property tax relief program. As a result, a relatively minute number of properties are eligible for this program i.e. out of approximately 16,000 residential parcels only 96 are eligible for this program. Q: What is the revenue loss to the City? A: Once granted a Mills Act Contract, a property owner saves approximately 40% to 60% of the individual assessed tax valuation of the property. Since the City collects approximately 20% of the 1 % of assessed value of the property, an estimated loss of revenue to the City for a property valuated at $750,000 would be $620 (40%) to $840 (60%) annually. Q. How does this benefit the City? A. Because of the yearly maintenance inspection requirement associated with Mills Act Contracts, a mandated design review process for exterior changes and required compliance to the Secretary of Interior's Standards, the City gains a powerful tool to insure the long term preservation of properties under contract. Property owners commit to a high quality maintenance program which is expected to affect the property values of the neighborhood and reflects positively in Community pride and character. GENERAL PLAN AND ZONiNG COMPLIANCE The implementation of Mills Act Contracts for the long term preservation of the Community's historic resources clearly contributes to the primary goals and objectives of the Historic Resource Element of the General Plan. Mills Act contracts do not affect the zoning regulations which are currently applicable to the subject property.