City Council - Successor Agency - Housing Authority
March 19, 2024

CITY OF FULLERTON
_________________________________________________________________________________________________________________________________________________________ Community and Economic Development Department

I
tem No. 2
February 28, 2024
6:30 p.m.

Public Hearing
TO
: Chair Gambino and
Members of the Landmarks Commission/Planning Commission A

PPLICATION
ZO
N-2023-0076 (Historic Application)
S

UMMARY AND APPLICATION REQUESTED
Thi
s is a request to amend Mills Act Program Guidelines (“Guidelines”).

CE

QA DETERMINATION
Thi
s item was reviewed per the California Environmental Quality Act (CEQA) requirements and is considered Categorically Exempt ( 15331) - Historical Resource Restoration/Rehabilitation.

This exemption allows for the preservation and conservation of historical resources in a manner consistent with the Secretary of Interior's Standards for the treatment of Historic Properties , specifically with the Guidelines for Preserving, Rehabilitating, Restoring, and Reconstructing Historic Buildings. The changes to the Guidelines are textual and do not entail any development or construction.

A
UTHORIZATION – LANDMARKS COMMISSION
The C
ommunity and Economic Development Department (Planning Division) will continue to be responsible for preparing application materials, conducting meetings with applicants, notifying eligible properties and, with assistance from the City Attorney’s Office, preparation of Mills Act Contracts for consideration by the City Council.

The
Planning Commission, acting in their role as the Landmarks Commission, will continue to review requests to have properties added to the City’s Historic Register, therefore making them potentially eligible to receive a Mills Act Contract. However, for clarification, a property being listed on the Historic Register is not a mandatory requirement for a property being approved for a Mills Act Contract. The Landmarks Commission would also be responsible for reviewing certain proposals to rehabilitate, modify or add to properties that are listed on the Historic Register pursuant to Fullerton Municipal Code (FMC) Chapter 15.17 and 15.48.

P

ROJECT BACKGROUND
O
n April 21, 2020, the City Council adopted Resolution No. 2020- 38 establishing a Mills Act Program for the preservation, rehabilitation, and maintenance of eligible historic properties and associated program administration guidelines. For reference, the City Council Resolution and Landmarks Commission/Planning Commission Staff Report
February 28, 2024
Item No. 2 Page 2 ZON- 2023-0076
Agenda Report for the Mills Act Program Adoption and Guidelines are attached (Attachments 2 and 3).

U
nder the current policy, the City is limited to approving ten Historic Property Preservation Agreements (Mills Act Contracts) per year. Since the Mills Act Program adoption, the City Council has only approved two Mills Act Contracts. Looking at the prog rams for similarly developed / aged cities within close proximity to Fullerton, these other cities have annual limits for accepting and processing Mills Act Contracts as follows:
• C
ity of Orange – no annual limit
• City of Santa Ana – no annual limit
• City of Pasadena – annual limit of 20/year for single family and 6/year for multi-family and c
ommercial
• City of Anaheim – no annual limit
O
n April 1, 2023, the City Council approved minor revisions to an Agreement that had been previously approved. The approved revisions served to facilitate and clarify the Agreement language and requirements. As a follow -on to this activity, the board members of Fullerton Heritage approached City staff to recommend proposed amendments to the Guidelines for the overall purpose of making the program more attractive to potential applicants. The amendments are intended to clarify, reduce financial barriers (i.e., application fee, inspection fee, assessed property value), and include additional historic properties eligible for consideration of a Mills Act Contract.

P

ROJECT DESCRIPTION
A
s previously described, the overall intent of this request is to attract more applicants to the Mills Act Program with the overarching goal of preserving the City’s historic fabric of older and significant dwellings. Attached is the Mills Act Program Guidelines with proposed amendments shown in red as strikeouts or new language (Attachment 4). The amendments include the following changes:

E
ligible Properties
I
ssue: The property sales price limit is set too low, thereby disqualifying the vast majority of potential applicants. Also, requiring that a property be a potential/possible significant property disqualifies a large amount of properties that could otherwise qualify.

P
roposal: Delete “Potential/Possible Significant Property.” Delete “property must have an assessed valuation of less than $800,000.” Add “property must have assessed valuation of less than previous year’s median homes sales price in Orange County” and “ a property that is a designated Local Landmark is exempt from this valuation requirement.” M
ills Act Contract Responsibilities
I
ssue: Listed examples of qualified improvements can be expanded to attract more applicants.

P
roposal: Add “ common improvements that can be included in a Mills Act Contract.

Improvements include replacement of non-historic material on exterior wall, removal of non- historic porches, porch features or porte-cocheres or replacement of inappropriate windows Landmarks Commission/Planning Commission Staff Report
February 28, 2024
Item No. 2 Page 3 ZON- 2023-0076
and window screens.” Add “appropriate work items under a Contract may include the cost of documented improvements completed within the last five years from the Contract date.” M
ills Act Contract Process
I
ssue: There is no state requirement to conduct an interior inspection of the structure(s).

P
roposal: Delete “interior inspection of the property.” Delete pre-contract improvements that are proposed as added language to Mills Act Contract Responsibilities section.

M
ills Act Program Fees
I
ssue: Cost of fees has put off some applicants from applying.

P
roposal: Amend application processing fee from $1,520 to $500. Regarding annual $85 processing fee, add “unless an authorized representative, such as Fullerton Heritage or of the like, is utilized to perform a photographic survey of the exterior of the property, then the fee is waived.”
M
ills Act Contract Holder Obligations
I
ssue: Five-year inspection is covered by annual inspections.

P
roposal: Delete Five-Year Inspections (whole paragraph).

A

NALYSIS
S
taff provides the following analysis for the proposed amendments identified above.

E
ligible Properties
A “Potential/Possible Significant Property” has not received “Historical Landmark” or “Significant Property” designation pursuant to FMC Chapter 15.58. For a “Potential/Possible Significant Property,” conformance has not been established with Secretary of the Interior's "Standards for Rehabilitation of Historic Properties" and the State Historic Building Code. A “Potential/Possible Significant Property” does not have the historic significance eligibility for a Mills Act Contract.

W
hen the Mills Act Progr am Guidelines were adopted in 2020, the median home sales price in Orange County was $950,000. As of July 2023, the median home sales price is $1,300,000 (source: California Association of Realtors). With the median sales price, the current assessed valuation requirement (less than $800,000) overly restricts potential Contracts. Staff agrees with the proposed amendment for a property to have an assessed valuation of less than the previous year’s home sales price in Orange County.

H
owever, should this increase in the application threshold amount not generate substantially more applications, staff would suggest that the threshold be eliminated to come in line with cities such as Orange, Anaheim, or Santa Ana.

M
ills Act Contract Responsibilities
Staff agrees that adding the identified common improvements as part of the rehabilitation plan in a Mills Act Contract. Staff recommends an amendment that work completed by the current owner in the year prior to the application will be considered as recently completed to qualify for the Landmarks Commission/Planning Commission Staff Report
February 28, 2024
Item No. 2 Page 4 ZON- 2023-0076
program. The purpose of this is to reinforce that the Mills Act is an incentive program to encourage future rehabilitation work to happen.

M
ills Act Contract Process
Regarding inspections, staff recommends retaini ng interior inspections, if necessary. The objective is to review exterior features, but in some cases, it is necessary to inspect the interior when it affects the building exterior. In such case, the Planning Division would provide the owner advance notice. Staff agrees delet ing pre-contract improvements that are proposed as added language to Mills Act Contract Responsibilities section.

M
ills Act Program Fees
For comparison with other cities, staff reviewed the following Mills Act Program fee information:

City Application Processing Fee
Anaheim No fee
Brea $250 (initial deposit)
Claremont $1000 (initial deposit)
Huntington Beach $500
Orange $1050
Pasadena $1365 (single-family), $2729 (multi-family)
Santa Ana $2694
Tustin $500
R
egarding an amendment to the application processing fee, staff recommends a $ 500 initial deposit to begin processing a Mills Act Contract application. The deposit would be used to review the application and plans, research, conduct site visit/inspections, prepare staff reports and presentations, and send all required public notifications . Additional funds and/or subsequent deposits may be required depending upon the level of staff time necessary to complete the project. All remaining unused portion of the deposit(s) will be returned to the a pplicant upon the completion of the Project. The fee shall not exceed the reasonable cost of providing the service for which the fee is charged (Government Code Section 50281.1).

S
taff agrees with amending, including waiving, the $85 annual processing fee if an authorized representative, such as Fullerton Heritage or of the like, is utilized to perform a photographic survey of the exterior of the property.

M
ills Act Contract Holder Obligations
Regarding deleting five-year inspections, staff reviewed Government Code establishing Historical Property Contracts. Government Code Section 50281.b.2 states where applicable the contract shall provide for an inspection every five years to determine the owner’s compliance with the contract. Staff recommends retaining five-year inspection.

RE

COMMENDED ACTION
Pursuant to the findings and facts, including General Plan consistency, outlined therein, find that the project is c ategorically exempt from CEQA, and adopt Landmarks Commission Resolution No. PC-2024-04 entitled:

RESOLUTION NO. PC 2024-04

A RESOLUTION OF THE LANDMARKS COMMISSION OF THE CITY OF

FULLERTON, CALIFORNIA, RECOMMENDING TO THE CITY COUNCIL

REVISIONS TO MILLS ACT PROGRAM GUIDELINES

RECITALS

WHEREAS in 1976, Proposition 7 was passed by voters and became Constitutional Amendment Article XIII, Section 8, commonly known as the Mills Act, to promote the preservation of property of historical significance by offering an economic incentive within the State Revenue and Taxation Code; and

WHEREAS the Mills Act grants local government the authority to establish, administer, and implement Mills Act historic preservation tax incentive programs with property owners who actively participate in the restoration and maintenance of their histor ic properties through a Historic Property Preservation Agreement; and

WHEREAS a Historic Preservation Chapter (Chapter 3) was included in The Fullerton Plan with the stated purpose to guide the preservation, protection, restoration, and rehabilitation of historical resources in order to reaffirm their continuing value as a resource contributing to the vitality and diversity of the present; and

WHEREAS item 4.6 of the Short -Term Action Plan section within The Fullerton Plan identified the development and implementation of a Mills Act program to provide financial incentives to restore and preserve historic resources; and

WHEREAS this action is Categorically Exempt from the California Environmental Quality Act (CEQA) per Section 15331 (Historical Resource Restoration/Rehabilitation).

RESOLUTION

NOW, THEREFORE, BE IT FOUND AND DETERMINED AND RESOLVED by the Landmarks Commission of the City of Fullerton as follows:

THE LANDMARKS COMMISSION OF THE CITY OF FULLERTON HEREBY recommends to the City Council revisions to Fullerton Mills Act Program Guidelines, as indicated in red on Exhibit A.

ADOPTED BY THE FULLERTON LANDMARKS COMMISSION ON FEBRUARY 28, 2024.

_______________________________
Peter Gambino, Chairman
Exhibits:

Exhibit A – Mills Act Program Guidelines Revisions
RESOLUTION NO. 2020- 38

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTON,

CALIFORNIA, ESTABLISHING A MILLS ACT PROGRAM FOR THE

PRESERVATION, REHABILITATION AND MAINTENANCE OF ELIGIBLE

HISTORIC PROPERTIES AND ASSOCIATED PROGRAM

ADMINISTRATION GUIDELINES

RECITALS
WHEREAS in 1976, Proposition 7 was passed by voters and became Constitutional Amendment Article XIII, Section 8, commonly known as the Mills Act, to promote the preservation of property of historical significance by offering an economic incentive within the State Revenue and Taxation Code; and
WHEREAS the Mills Act grants local government the authority to establish, administer, and implement Mills Act historic preservation tax incentive programs with property owners who actively participate in the restoration and maintenance of their historic properties through a Historic Property Preservation Agreement; and WHEREAS a Historic Preservation Chapter ( Chapter 3) was included in The Fullerton Plan with the stated purpose to guide the preservation, protection, restoration, and rehabilitation of historical resources in order to reaffirm their continuing value as a resource contributing to the vitality and diversity of the present; and WHEREAS item 4. 6 of the Short - Term Action Plan section within The Fullerton Plan identified the development and implementation of a Mills Act program to provide financial incentives to restore and preserve historic resources; and WHEREAS this action is Categorically Exempt from the California Environmental Quality Act ( CEQA) per Section 15331 ( Historical Resource Restoration/ Rehabilitation).

THE CITY COUNCIL OF THE CITY OF FULLERTON HEREBY RESOLVES AS FOLLOWS:

THE CITY COUNCIL OF THE CITY OF FULLERTON HEREBY establishes a Mills Act Program for the City of Fullerton for the preservation, rehabilitation and maintenance of designated historic structures subject to compliance with the established Fullerton Mills Act Program Guidelines ( Exhibit A) and City Council approval of a Historic Property Preservation Agreement between the historic property owner and the City.

ADOPTED BY THE FULLERTON CIT)
Resolution No. 2020- 38

ATTEST:

Date `
Exhibits:

Exhibit A — Mills Act Program Guidelines
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Community & Economic Development Department
CITY OF FULLERTON 1303 WEST COMMONWEALTH AVENUE I FULLERTON, CA 92832 Mills Act Program Guidelines & Application
Mills Act Program Summary
Mills Act properties reflect the diversity of Fullerton' s architectural and cultural heritage. The Mills Act Program is a partnership between the historic property owner and the City to preserve these important historic resources in our community. The Mills Act Program is intended to offset the costs of rehabilitation and maintenance of your historic property. Mills Act properties become the best representations of the commitment and care for historic buildings and we look forward to working with you to determine if the Mills Act Program is a good fit for you and your historic property. Should you have any questions about the Mills Act Program, please contact:

Andrew Kusch
Associate Planner
303 West Commonwealth Avenue
714) 735 - 6599
AndrewK( a) citvofF u Ile rton. com
The Mills Act Program is a voluntary historic preservation program, enabled by California Government Code, Article 12, Sections 50280- 50290, established in 1972. The Mills Act allows a City to enter into a Historic Property Preservation Agreement ( also referred to as a Mills Act Contract) with owners of qualified historic properties. Under the terms of the Mills Act Contract, the property owner agrees to preserve, maintain, and rehabilitate the historic property in conformance with the Secretary of the Interiors Standards for the Treatment of Historic Properties and with local historic preservation standards.

Under a Mills Act Contract, the historic property is reassessed by the Orange County Assessor' s Office to determine the " Historical Property Value." The Historical Property Value is based on the property' s income- producing potential ( generally from rental income) and is used to determine property taxes under the Mills Act Contract. The amount of property tax reduction varies based on each property' s income- producing potential and current assessed value.

Eligible Properties
Pursuant to Section 439 of the Revenue and
Taxation Code, a " qualified historical property" is
defined as a privately owned property that is not
exempt from property taxation and is listed on any
national, state or local historic register. The Fullerton Plan contains several historic designations based on
the level of significance, these designations include:

National Register
Local Landmark
Significant Property
Potential/ Possible Significant Property
Historic Districts / Preservation Zones
With the exception of Potential/ Possible Significant Properties and properties within Preservation Zones, which would be determined on a case- by- case basis based on the age and historic/ architectural integrity of the structure, properties listed in any of the above categories would be eligible for a Mills Act Contract subject to the additional eligibility criteria listed below.

Mills Act Program Guidelines & Application
Additional Eligibility Criteria -
Property must be privately owned.

Property must be subject to property taxation.

Property must have an assessed valuation of less than $ 800,000 dollars.

Property must be residential in nature / use.

Mills Act Contract Responsibilities
The Mills Act is not intended to be a subsidy for those seeking to remodel their property or a tool to assist with mortgage payments. The purpose of the program is for the funds saved in property taxes to be utilized for the rehabilitation and maintenance of the property and all work must conform to the Federal Guidelines developed for the treatment of historic properties, known as the Secretary of the Interior' s Standards for Rehabilitation. In general, the total cost estimate in your Rehabilitation/ Maintenance Plan should equal the approximate amount of property tax savings over the first ten year term of the contract.

Under a Mills Act Contract, you are not required to return a building to its appearance during a specific historic period; however, you are required to complete work that supports the long- term preservation of the building. Examples of appropriate work items under a Mills Act Contract include:

Seismic retrofit
Re -roofing
Plumbing repair/ upgrades
Electrical repair/ upgrades
Mechanical repair/ upgrades
Window repair
Siding repair and repainting
All work must be related to the exterior or building systems. Cosmetic improvements to the interior of historic buildings, such as kitchen or bathroom renovations, are not considered eligible work items under the Mills Act Program. All work on a property with a Mills Act Contract must be in conformance with the Secretary' s Standards. Property owners considering applying fora Mills Act Contract should first familiarize themselves with the applicable historic preservation regulations prior to submitting your application. For the application, property owners are required to submit a description of work, timeline, and cost estimates for rehabilitation of the property during the first ten year term of the Contract ( see Rehabilitation/ Maintenance Plan). Please note that the Rehabilitation/ Maintenance Plan is binding on all future property owners, so it should address the critical preservation needs of the property and not the personal preferences of the property owner.

Mills Act Property Tax Assessment
Mills Act properties are re -assessed annually by the Orange County Assessor' s Office through a methodology determined by the State of California. Under the Mills Act, three property values are determined:

1. Base Year Value, or the purchase price under Proposition 13 with an annual 2% rate of increase.

2. Fair Market Value, or the potential sale value of the property at the time of the assessment.

Mills Act Program Guidelines & Application

3. Historical Property Value, calculated as described below.

The Historical Property Value is based on the property' s ability to produce income. For owner - occupied property, income is based on potential rental value. For multi -family properties, income is based on actual rent rolls. The property' s income less expenses is then divided by a capitalization rate to establish the Historical Property Value.

The Assessor will base property taxes on the lowest of these three values. Depending on when the property was purchased and the assessed value, this generally results in a sizable property tax reduction. Entering into a Mills Act Contract does not guarantee a reduction in property taxes; you are most likely to benefit from a Mills Act contract if you have purchased the property within the past 10 years.

Mills Act Contract Terms
Mills Act Contracts run for a ten year term and are automatically renewed each year on the anniversary of the Contract's approval by City Council. In effect, the contract is always 10 years away from termination, unless the property owner or the City submits a notice of non -renewal. The property owner must provide written notice of non -renewal to the City at least 90 days prior to the renewal date, or another year is automatically added to the Contract. Following submittal of a notice of non- renewal, the contract will be terminated at the end of the current ten year term.

If the City finds that the property owner in breach of the contract terms, the City may initiate proceedings to cancel the Contract. The property owner may also petition the City for immediate cancellation. A penalty of 12. 5% of the property' s assessed fair market value will be imposed for a cancelled contract. If you are unable to complete items on your Mills Act scope of work within the proposed timeline due to unforeseen circumstances, please contact City staff as soon as possible to discuss an amendment to the Rehabilitation/ Maintenance Plan. The Mills Act Contract is a legally binding document recorded against the property. The Contract runs with the property and is binding on all future owners. Property owners are encouraged to seek independent counsel on the nature, extent, and duration of their rights and obligations under the contract terms.

Mills Contract Process
Application Submittal - Pursuantto the adoptedguidelines, the City may process no more than ten ( 10) Mills Act Contracts per calendar year. Applications are accepted on a first- come, first- served basis and must be received no later than August 1s` of each year. Applications are accepted by appointment only. Please contact Planning Division staff prior to submitting your application to discuss whether your property is a good candidate for a Mills Act Contract and to set up an appointment. Following receipt of the application and required fee, staff will review your application to determine if it is complete and meets the requirements of the Mills Act Program.

Mills Act Program Guidelines & Application
Pre - Approval Inspection and Pre - Contract
Rehabilitation - After your application has been i
reviewed, staff will schedule a pre - approval inspection. ! #} The pre - approval inspection is required under State
law enabling the Mills Act Program and will include
both the exterior and interior of the property. The
property owner must be present for the inspection. The
primary purpose of the inspection is to discuss what
items, if any, are required to be completed pre-
r
contract and what can be included in the proposed ten
year Rehabilitation / Maintenance Plan. Pre - contract
improvements are those that will return any lost historic integrity and character to an altered residence in order to qualify the property for a Mills Act Contract.

Properties with a high level of historic integrity may require only minor pre -contract work to qualify, and some of the improvements reference below may be deferred to be included in the Rehabilitation/ Maintenance Plan. The most common pre - contract improvements include:

Cleanup of unkempt or overgrown landscaping.

Removal or replacement of incompatible fencing in front or visible side yards.

Removal of window or wall air conditioning units that are visible from the public right-of-way.

Removal of metal awnings that are not historic features of the residence.

Removal of canvas awnings that obscure window sizes or shapes.

Removal of security screen doors from the front door.

Relocation of visible television antennas or dishes to not be visible from the public right-of-way, or removal if no longer in use.

Removal of non -historic features added to front yards including inappropriate plantings, planters, or edging of incompatible style or material ( ex. scalloped concrete edging).

Other potential pre -contract improvements in order to make the property more competitive for approval of a Mills Act Contract include:

Replacement of a non - historic materials on exterior walls, such as inappropriate stucco over an earlier stucco finish or aluminum or vinyl siding over wood siding.

Removal of any non -historic porches or porte- cocheres, porch features or cladding materials such as tile or brick).

Replacement of inappropriate metal or vinyl windows visible from the public right- of-way with windows that reproduce the historic details, including frame and casing. The new windows must be based on other intact examples on the house or, if all are missing, earlier photographic evidence or approved examples from houses of similar age and style.

Broken, excessively dirty or worn window screens. Replacement screens should be wood -frame, if appropriate to the era or style of the house, or metal - frame screens painted to match the trim.

Replacement with appropriate wood screens and hardware may be part of the Rehabilitation / Maintenance Plan.

Mills Act Program Guidelines & Application
City Council Review - After the pre -approvalinspection, staffwill prepare a reportmaking a recommendation to the City Council regarding approval of the Mills Act Contract. Mills Act Contracts are presented to City Council at a regularly scheduled public hearing, typically in early December. The City Council is not required to approve all Mills Act contracts and may modify or reprioritize the Rehabilitation/ Maintenance Plan based on preservation priorities. The City Council' s decision on the Mills Act Contract is final. When the total number of Mills Act Contracts approved reaches 50, the City Council shall be required to adopt a Resolution reauthorizing the program and specifying how many additional Mills Act Contracts will be considered.

Contract Execution - After City Council approval of the Contract, the property owner must execute the Historic Property Preservation Agreement. The property owner must sign and have notarized the Agreement with the attached Notary Acknowledgement and return two original copies to the City Clerk. The Mayor, City Attorney,
and City Clerk will sign both copies of the Mills Act
Contracts. The date on the Contract will be the date
that City Council took action on approval of the
Contracts. The property owner must then pick up
both copies of the signed contracts from the City
Clerk and have them recorded at the Orange County
Clerk - Recorder Department ( located at 12 Civic
Center Plaza, Santa Ana, CA 92701) on or before
December 311'. The property owner is required to
pay all fees related to recording. Contracts must be
recorded on or before December 31 It to go into effect
for the following tax year.

Property Tax Reduction - Followingrecordingof the Contract, the Assessor's Officewill re- assess the property using the Mills Act Historical Property Value. The Assessor typically re- assesses properties in the spring and summer following recording of the Contract. The property tax reduction may not be reflected in your property tax bill until the fall or winter after the Contract is recorded.

Mills Act Program Fees
The Mills Act Contract application processing fee is $ 1,520, payable to the City of Fullerton.

Following approval of the Contract, an annual processing fee of $ 85 is required. Fees are subject to change by Resolution of the City Council and all fees are non- refundable.

Mills Act Contract Holder Obligations
Annual Progress Report - Under the terms of the Contract, the City requires property owners to submit an annual progress report describing the work completed on the property during the previous year. Progress reports are included in the application and available on the City' s website and should be mailed to the following address:

Mills Act Program Guidelines & Application
City of Fullerton
Community and Economic Development Department - Planning Division 303 West Commonwealth Avenue, Fullerton, CA 92832
Five Year Inspections - Mills Act Contract properties are required to be inspected once every five years. Inspections will include the exterior and interior of the building, and the property owner must be present at the inspection. City Staff will contact the property owner in advance of the inspection period to set up a time and date for the inspection.

Ten Year Rehabilitation/ Maintenance Plan - At least 90 -days prior to the end of the first ten ( 10) year term of the Contract, the property owner is required to submit a Rehabilitation / Maintenance Plan for the next ten year term of the Contract. Any changes to the Rehabilitation / Maintenance Plan must be approved by City staff. Failure to comply with the terms of the Plan may result in termination of the Agreement.

Mills Act / Historic Preservation Resources
Secretary of the Interior Standards — https:// www. nps. gov/ tps/ standards. htm Fullerton Local History Room - https:// www. fullertonlibrary. org/ local history/ default. asp Fullerton Heritage - https:// www. fullertonheritage. org State Office of Historic Preservation - https:// ohp. parks. ca. gov/ Preserve OC - https:// www. preserveorangecounty. orq/
Frequently Asked Questions
Q: Is there a fee for the Mills Act Program in Fullerton? A: There is a fee to apply for the Mills Act program. These fees are to cover the City's costs for preparing and reviewing the Mills Act Contract and preparing the associated reports and conducting inspections.

Q: How are my property tax savings calculated if I am awarded a Mills Act Contract? A: There are a number of factors that contribute to a property tax savings calculation. For an explanation of how your property tax will be calculated and an estimate of how much you may save under the Mills Act Program, you may call the Mills Act contact at the Orange County Assessor' s Office at: (714) 834-2959.

Q: When would I receive my property tax reduction?
A: Mills Act Contracts are awarded and recorded by the end of the calendar year. Tax savings are seen on the following year' s tax bill. For example, if you are approved for the 2020 Mills Act Class your Contract would be recorded in December of 2020 and you would see your tax savings on your 2021 tax bill.

Q: What if I want to cancel my Mills Act Contract?
A: Mills Act Contracts may be canceled by the owner at any time. The owner will need to submit a letter to the City explaining their desire to end the Contract. The Mills Act Contract has a term of 10 years and automatically renews at the end of each year. Once the owner cancels their Contract, they will remain under Contract for the rest of the 10 year term. During that time, the owner will still be responsible for maintaining the historic integrity of their property, but their tax savings will gradually decrease.

Mills Act Program Guidelines & Application
Q: How is the program enforced?
A: All Mills Act Contracts are enforced through regular inspections, which evaluate everything visible from the public right-of-way. Mills Act property owners are notified of the inspection results by mail and told if they are in compliance or if there are outstanding issues that need to be resolved.

Q: What happens if a Mills Act property changes ownership? A: Mills Act Contracts remain with the property. When a property with a Mills Act Contract is sold, the new owner will automatically assume the reduced tax rate and all the
obligations of owning a Mills Act property. It is important that sellers of Mills Act properties disclose the Mills Act
requirements to the new property owners, as well as any unfinished maintenance items from their 10 - Year
Rehabilitation / Maintenance Plan, as the new owners will be required to comply with the same requirements of the
program.

Q: What happens if I do not fulfill my obligation under my Rehabilitation/ Maintenance Plan or other contract provisions?
A: The City strives to work with property owners to stay in compliance with their Mills Act Contracts and to get back into compliance if any items require attention. However, if a property continues to remain out of compliance after a series of attempts by staff to remedy the situation, State law allows the City to cancel the owner' s Mills Act Contract and fine the owner 12.5% of the fair market value of the property.

Q: Am I guaranteed a Mills Act Contract if I submit an application and complete all the pre - contract rehabilitation?
A: No. When a propertyownerappliesfor a MillsAct Contract, a Contract is neverguaranteed, even if they complete every item described to them throughout the application process. The final decision whether to grant or not grant a Mills Act Contract is made by the City Council.

Mills Act Program Guidelines & Application
1 Mills Act Application Checklist
Mills Act Contract Application
Fill in required owner and property information. All property owners must sign and date the application. If the property is owned by a trust, corporation or other legal entity, the officers or trustees signing for the entity must include their titles on the application form.

Rehabilitation 1Maintenance Plan
List and description of work items with anticipated timing and cost estimates.

Mills Act Tax Assessment Worksheet
Photograph Inventory of the Property
Black and white photographs of the entire property, including all building elevations and yards or open spaces. Photographs may be obtained with a digital camera and printed on high quality photographic paper at 8" by 10". Prints should be numbered with pencil on the back of the image and accompanied by a photo index with labels identifying the location or building feature, property address, and date of image.

Site Plan
The site plan must be drawn to scale on 8W by 11" or 11" by 17" paper. The site plan should identify all major site features, including all buildings, hardscape and major landscape features. The site plan must include a north arrow, street names, and property and building dimensions.

Property Tax Bill
Copy of the most recent property tax bill. If the property was recently purchased and you have not received a property tax bill, this may be submitted at a later date.

Grant Deed
Copy of the grant deed showing current property owners. The grant deed must include the legal description of the property. If the property is owned by a trust, corporation, or other legal entity, the articles of incorporation must be included with the grant deed. Officers or trustees who sign the application form must be clearly identified with their titles and relationship to the ownership entity in the articles of incorporation.

Termite Condition Report
Copy of report must be dated within six months of application submittal.

Title Insurance Policy
A Title Insurance Policy is only required if the property was purchased within three months of the application submittal.

Application Fee - $1,520.00 (Checks made Payableto the City of Fullerton) This fee is non- refundable.

Property Owner Authorization Form (Master Application Form) Mills Act Program Guidelines & Application
f of Fullerton - Mills Act Application
Owner Signature
Owner Name ( Print)
Date
Staff UseOnly
Date Received:

ReceivedBy:

Owner Signature
Owner Name ( Print)
Date
Property
PropertyAddress:

PropertyPurchaseDate:

Assessor' s Parcel Number:

ExistingUse:

National Register
HistoricEligibilityType
California Register
check all that apply]:

Fullerton Historic Register
Preservation Zone / Historic District
Other:

Date of Construction:

Historic Name ( If applicable):

Architectural Style:

Architect, If Known:

Owner
PropertyOwner(s):

Owner(s) MailingAddress:

Telephone No.:

Alt. Telephone No.: Contact Information:

Email Address:

Acknowledgement
Iam (weare) thepresentowner(s) of thepropertydescribedabove. I (we) havereadtheapplication, knowandunderstandthecontents thereof, andherebyapplyfor a MillsActContract.

Owner Signature
Owner Name (Print)
Date
StaffUse Only
Date Received:

ReceivedBy:

Owner Signature
Owner Name (Print)
Date
Mills Act Program Guidelines & Application
Mills Act Tax Assessment We
PropertyAnnual
An estimate of monthly rental income is required, even if the MonthlyRentalIncomepropertyis owneroccupied. Forsingle-familyresidences, arealtor may be able to assist you in determining the potential rental income from your property.

Annual Rental Income Multiple monthlyrental incomeby 12.

Annual Operating Expenses
Insurance
Utilities Electricity, Water, Gas.

Maintenance GeneralRepairs, Cleaning, Painting, Landscaping.

TotalExpensesAddtotalexpenses. Totalexpensestypicallyequalapproximate/ 25% of annual rental income.

Annual Net Income
NetTotal I Annual rental incomeminus total expenses.

Capitalization
InterestRateComponentFixedinterestrateestablishedbytheBoardofEqualizationfor most recent year. [ 4. 0%]
HistoricPropertyTaxRisk 4.0% forsingle-familyresidences Component 2.0% for all other properties
Property Tax Component Fixed Component (1.0%]
Amortization Component Basedon life of improvements. (Typically0.67%] Capitalization Rate Add individual components above.

Assessed Value
HistoricPropertyValue Nettotaldividedbycapitalizationrate.

Current Assessed Value From currentproperty tax bill.

Estimated Tax Reduction
CurrentTax Generallevy tax portion only. Does not includesewer assessments, bond issues, or other voter indebtedness.

EstimatedTaxunderMillsAct 1.0% ofHistoricalPropertyValue. Providedasanestimateofpotential tax savings.

Mills Act Program Guidelines & Application
C1
Sample Historic Property PreservationAgreement

HISTORIC PROPERTY PRESERVATION AGREEMENT

MILLS ACT CONTRACT)
THIS HISTORIC PROPERTY PRESERVATION AGREEMENT ( the " Agreement") is made and entered into as of the date of executionby the City (herein referredto as the "EffectiveDate"), and is beingentered into by and betweenthe CITYOF FULLERTON, a municipalcorporation ("City"), and ( referred to hereinasthe "Owner"), withreferenceto thefollowing:

RECITALS
WHEREAS, theMillsAct (GovernmentCodeSection50280etseq.) providescitieswiththeopportunitytocontractwith ownersof qualifiedhistoricalpropertieswherebythe ownerpromisesto preserve, restoreandrehabilitatethe propertyinreturn fora reducedpropertytaxassessment; and
WHEREAS, theCityisdedicatedtotheprotectionandstabilizationofpropertyvaluesthroughmaintainingandupgrading its older housing stock, throughthe use of incentivessuch as the MillsAct; and WHEREAS, theMillsActwillalsohavebeneficialeffectsonCitybusinesses, economicstabilityandcommunityprideby preservingimportant neighborhoodresources; and
WHEREAS, the useoftheMillsActWIIfulfilloneofthe City's 2012HistoricPreservationChapterof theFullertonPlan; specifically, "Supportprojects, programs, policiesandregulationsto promotethe maintenance, restorationandrehabilitationof historicalresources" (PolicyP4.3); and
WHEREAS, it isthe City's expectationthattheOwnerwillusethe propertytaxsavingsaccruedunderthisAgreement forimprovementstothe "HistoricProperty" (asdefinedbelow). Tothatend, asaconditionofrenewal, theCitywillrequirearevised scheduleofimprovementseverytenyearsshowinga planfor improvementscommensuratewiththetaxsavings; and WHEREAS, Ownerpossessesfeesimpletitlein andto thatcertainrealproperty, togetherwithassociatedstructures and improvements thereon, located at inthe Cityof Fullerton, Countyof Orange, Stateof California, having Assessor's ParcelNumberXXX -XXX -XXandmorespecificallydescribedinExhibitA, whichexhibitis attachedheretoandmade a parthereof (hereinreferredto asthe "HistoricProperty); and WHEREAS, theHistoricPropertyisaqualifiedhistoricalpropertyundertheMillsActinthatit is privatelyownedproperty whichis not exemptfrom propertytaxationand is listedon the NationalRegisterof HistoricPlaces, CaliforniaRegisterof Historical Resourcesor RegisterofHistoricalLandmarks, CaliforniaPointsof HistoricalInterest, orona Cityof FullertonHistoricRegister, or isaneligiblepropertywithina PreservationZone; and
WHEREAS, Owner, in considerationforabidingbythetermsof thisAgreementshallbeentitledto a reassessmentof valuationofthe HistoricPropertyandanycorrespondingreductionin propertytaxespursuantto theprovisionsof theCalifornia Revenue and Taxation Code; and
WHEREAS, the CityandOwnerfortheirmutualbenefit, nowdesireto enterintothisAgreementto limitthe useofthe Historic Property to prevent inappropriatealterations, to ensure that characteristicsof historical significanceare preserved and maintainedinanexemplarymanner, andtocarryoutthepurposesofArticle12 (commencingwithSection50280) of Chapter1, Part1, Division1ofTitle5oftheCaliforniaGovernmentCodeandArticle1.9 (commencingwithSection439) ofChapter3, Part 2 of Division 1 of the California Revenue and Taxation Code.

Mills Act Program Guidelines & Application

AGREEMENT
NOW, THEREFORE, bothOwnerandCity, inconsiderationofthemutualpromises, covenantsandconditionscontained hereinandthesubstantialpublicbenefitsto bederivedtherefrom, doherebyagreeasfollows:

1. AGREEMENT SUBJECT TO GOVERNMENT CODE SECTIONS 50280 50290. This Agreement is made pursuant to CaliforniaGovernmentCodeSections50280through50290andArticle1.9 (commencingwithSection439) of Chapter 3, Part 2 of Division 1 of the California Revenue and Taxation Code and is subject to all of the provisions of those statutes.

To the extent any of the provisionsin this Agreement are inconsistentwith the pertinent provisionsof the Government andRevenueandTaxationCode, theyaresupersededbythoseCodeSections.

2. ASSESSMENTOFVALUATION. Propertytaxreliefaffordedto Ownerpursuantto Chapter3, Part2 ofDivision1ofthe CaliforniaRevenueandTaxationCodewill be determinedsolelyby the OrangeCountyAssessor. City makesno representationsregardingthe actualtax savingsany person may realize by entering into this Agreement.

3. PRESERVATIONOF PROPERTY. Owneragreesto preserveand maintainthe HistoricPropertyand its character definingfeatures. Characterdefiningfeaturesinclude, butarenotnecessarilylimitedto, thegeneralarchitecturalform, style, materials, design, scale, details, mass, roof line and other aspects of the appearance of the exterior of the Historic Property.

The Secretaryof the Interior's Standardsfor Rehabilitation (ExhibitB) and City's minimummaintenancestandards ExhibitC), attachedheretoandincorporatedhereinbyreference, shallconstitutetheminimumstandardsandconditions forpreservation, restoration, andrehabilitationoftheHistoricProperty, andshallapplytotheHistoricPropertythroughout the termofthisAgreement. Ownershall, wherenecessary, restoreandrehabilitatethe HistoricPropertytoconformto the rules and regulations of the Office of Historic Preservation of the California Department of Parks and Recreation, the U.S. Secretaryof theInterior's StandardsforRehabilitation, theStateHistoricalBuildingCode, andtheCityof Fullerton Historic Preservation Design Standards.

As considerationfor theCityto enterintothisAgreement, theOwneragrees, atitsowncostandexpense, tocomplete, or cause to be completed, the work or improvements described in Exhibit D within the times established therefor in Exhibit D. TheOwnershallsecureanyandall permitswhichmaybe requiredbytheCityor anyothergovernmentalagency affectedbytheconstructionoftheworkor improvements. TheOwneracceptsresponsibilityforandshallberesponsible for identificationofandcompliancewithallapplicablelawspertainingto theconstructionandinstallationoftheworkor improvementsdescribedon ExhibitD andthecontractor contractspertainingthereto. TheOwnerwillneitherseekto holdnorholdtheCityliablefor, andwillholdtheCityharmlesswithrespectto, anyconsequencesofanyfailurebythe Ownertocorrectlydeterminetheapplicabilityofanysuchrequirementstoanycontracthe/she/theyenterinto. Inaddition to the foregoing, the Ownerherebyagreesto andwill complywithall applicablelocal, state, and federalstatutes, regulations, rules, codes (includingbuildingcodes), ordinances, andother requirementsof governmentalauthoritiesnow or hereafterin effect ('ApplicableLaws") pertainingto the use of the HistoricProperty. Ownermustgive the City immediatewrittennoticeon Owner's becomingawarethattheuseor conditionoftheHistoricPropertyis inviolationof anyApplicableLaws.

4. INSPECTIONSANDANNUALREPORTING. Owneragreestopermittheperiodicexamination, bypriorappointment, of theinteriorandexteriorofthe HistoricPropertybytheCountyAssessor, theStateDepartmentofParksandRecreation, theStateBoardofEqualizationandtheCityasmaybenecessarytodetermineOwner's compliancewiththetermsand provisionsof thisAgreement. Owneragreesto providethe Citywitha reportas to thestatusofthe HistoricProperty annuallywithinthirty (30) daysfollowingeachanniversaryof the EffectiveDateof thisAgreement. Theannualreport shallprovidesubstantiationreasonablysatisfactoryto theCity's CommunityandEconomicDevelopmentDirectorthat Ownerhascompletedtheworkrequiredby ExhibitD forthe twelvemonthperiodprecedingeachanniversaryof this Agreement, andwhethertheHistoricPropertyhasundergoneanychangedconditions, andwhetherOwnerhasreceived anypublicfundsfromothersourcesdesignatedforthe preservationor maintenanceof theHistoricPropertyandfrom whom such funds have been received.

Mills Act Program Guidelines & Application

5. PAYMENTOFANNUALINSPECTIONFEE. TheOwnershallpaytheCityanannualfeeforeachrequiredinspectionof the HistoricPropertyfor the purposeof coveringthe reasonablecostof performingrequiredinspectionsas workis completed. SaidfeeshallbepayabletotheCityofFullertonandshallberemittedtothePlanningDivisionupondemand andpriorto therequiredinspection. Theamountof theannualinspectionfeeshallbe establishedbythe CityCouncil andmayberevisedfromtimetotime.

6. TERM. The term of this contract is for a period often ( 10) years. The initial term of this Agreement shall be from, 20_ toandincluding, 20_.

7. AUTOMATICRENEWAL. OneachyearlyanniversaryoftheEffectiveDateofthisAgreement (hereinafterreferredto as the "renewaldate"), oneyearshallbe addedautomaticallytothe initialtermofthisAgreement, unlessnoticeof non- renewal is given as provided in this Agreement.

8. EFFECTOF OUTSIDE FUNDS. If Owner receivesfunds designatedfor the preservationor maintenanceof the Historic Propertyfromanyotherpublicagency, thisAgreementshallnotberenewedexceptuponthevoteoftheCityCouncil.

9. NOTICEOFNONRENEWAL. IfinanyyeareithertheOwnerorCitydesiresnotto renewthisAgreement, thatpartyshall serve written noticeof nonrenewalon the other party in advanceof the annual renewaldate. Unlessthe notice is served byOwnertoCityatleastninety (90) days, orbyCitytoOwneratleastsixty (60) dayspriortotherenewaldate, oneyear shallautomaticallybeaddedto thetermoftheAgreement. Withinfifteen (15) daysof receiptbyOwnerof a noticeof nonrenewalfromtheCity, Ownermaymakea writtenprotest. Uponreceiptofsucha protesttheCityCouncilshallseta hearingpriortotheexpirationof therenewaldateofthisAgreementor tolltherenewaldateuntilsuchhearingcan reasonablyheld. OwnermayfurnishtheCityCouncilwithanyinformationwhichtheOwnerdeemsrelevant; andshall furnishtheCityCouncilwithanyinformationitmayrequire. Atanytimepriortotherenewaldate, Citymaywithdrawits notice of nonrenewal.

10. EFFECTOFNOTICENOTTO RENEW. If inanyyeareitherpartyservesnoticeof intentnottorenewthisAgreement, thisAgreementshallremainineffectforthebalanceof theperiodremainingsincetheoriginalexecutiondateif notyet renewed, orthelastrenewaldateoftheAgreement, asthecasemaybe.

11. UPDATEOFIMPROVEMENTSCHEDULE. Atleastninety (90) dayspriortothetenth (10th) anniversaryoftheEffective DateofthisAgreement, andninety (90) dayspriortoeverytenth (10th) anniversarythereafter, OwnershallprovideCity withan updatedscheduleof improvementsandmaintenanceitemsfor theCity's reviewandapproval. Suchupdated scheduleshallcontaina listofproposedimprovementsand/or revisionstobeaccomplishedduringthenextsucceeding ten (10) yearsof theAgreementanda schedulefor theconstructionof suchimprovements. Withinthirty (30daysafter theCity's receiptofsaidupdatedschedule, theCity's DirectorofCommunityandEconomicDevelopmentshalleither approveor disapprovesuchproposedscheduleof proposedimprovements, orshallrespondin writingbystatingwhat furtherinformation, if any, theCityreasonablyrequiresinordertodeterminetherequestcompleteanddeterminewhether or notto granttherequestedapproval. Uponreceiptof sucha response, the Ownershallpromptlyfurnishto the City suchfurtherinformationasmaybereasonablyrequested.

12. INDEPENDENTADVICEOFCOUNSEL. TheOwner, andeachofthem, representanddeclarethatin executingthis Agreementhe/sheftheyhavereliedsolelyuponhis/her/theirownjudgment, beliefandknowledge, andtheadviceand recommendationsof his/her/theirownindependentlyselectedcounsel, concerningthe nature, extentanddurationof his/her/theirrightsandclaims, andthathe/sheftheyhavenotbeeninfluencedtoanyextentwhatsoeverinexecutingthe samebytheCityor byanypersonrepresentingtheCity.

13. FURNISHINGOFINFORMATION. OwnershallfurnishCitywithanyinformationCityshallrequireinordertoenableCity todetermineeligibilityoftheHistoricPropertyto beclassifiedasa HistoricProperty.

14. ENFORCEMENTOFAGREEMENT. Inlieuofand/or inadditiontoanyprovisionstocanceltheAgreementasreferenced herein, Citymayinstitutean actionatlawor equityto seekspecificperformanceof thetermsof thisAgreement, or to cure, corrector remedyanybreachof thetermsofthisAgreement, to recoverdamagesfor anybreach, ortoobtainany Mills Act Program Guidelines & Application
N
other remedy consistent with the purpose of this Agreement. In the event of a default under the provisions of this AgreementbyOwner, CityshallgivewrittennoticetoOwnerspecifyingtheallegedgroundsfor thedefault. Saidnotice shallbegivenbyregisteredorcertifiedmailaddressedtotheaddressstatedinthisAgreement. Ifsuchviolation(s) is not correctedto thereasonablesatisfactionof theCitywithinthirty (30) daysfromthe receiptofthe noticeof violation, or within such reasonabletime as may be required to cure the breach or default, provided that acts to cure, correct or remedysuchbreachor defaultarecommencedwithinthirty (30) daysandthereafterdiligentlypursuedto completion, thenCitymay, withoutfurthernotice, institutelegalaction. ExceptasotherwiseexpresslystatedinthisAgreement, the rightsandremediesof theCityarecumulative, andtheexercisebythe Cityof oneor moreofsuchrightsor remedies shallnotprecludetheexercisebyit, atthesameor differenttimes, of anyotherrightsor remediesforthesamedefault or anyotherdefaultbytheOwner. AnyfailureordelaybytheCityinassertinganyof itsrightandremediesastoabreach of anyofthecovenants, conditionsor agreementssetforthhereinshallnotoperateasa waiverofsuchbreachor ofany suchrightsor remedies, ordeprivetheCityofitsrighttoinstituteandmaintainanyactionsor proceedingswhichit may deemnecessaryto protect, assertorenforcesuchrightsorremedies. A waiverbytheCityofa breachshallnotbe construedasawaiverofanysucceedingbreachof thesameor othercovenants, conditionsor agreementssetforthin this Agreement.

15. CANCELLATION. CitymaycancelthisAgreementif CitydeterminesOwnerhasbreachedanyof theconditionsor covenantsof thisAgreementor hasallowedtheHistoricPropertyto deteriorateto the pointthatit nolongermeetsthe standardsfora qualifiedhistoricalproperty. CitymayalsocancelthisAgreementif it determinesOwnerhasfailedto restoreor rehabilitatetheHistoricPropertyinthemannerspeckedinthisAgreement.

16. NOTICEOFCANCELLATION. ThisAgreementcannotbecanceleduntilafterCityhasgivennoticeandhasheldapublic hearingasrequiredbyGovernmentCodeSection50285. Noticeofthehearingshallbemailedtothelastknownaddress ofeachownerof propertywithin300feetoftheHistodcPropertyandshallbepublishedinaccordancewithGovernment Code Section 6061.

17. CANCELLATIONFEE. If CitycancelsthisAgreementin accordancewithSection15above, Ownershallpaya cancellationfeeoftwelveandone-halfpercent (12.5%) ofthecurrentfairmarketvalueoftheHistoricPropertyatthe timeofcancellation. ThecurrentfairmarketvalueshallbedeterminedbytheCountyAssessorasthoughtheHistoric Propertywerefreeof therestrictiononthe HistoricPropertyimposedpursuantto thisAgreement. Thecancellationfee shallbepaidto theCountyAuditoratsuchtimeandin suchmannerastheCountyAuditorshallprescribe.

18. NOTICES. All noticesrequiredbyorprovidedforin theAgreementshallbegivenin writingandmaybe mailedor deliveredinpersonattheaddressoftherespectivepartiesasspecifiedbeloworatanyotheraddressasmaybelater specifiedbytheparties. Depositofnoticeinthemail, postageprepaid, shallbedeemedreceiptofthenotice.

CityofFullerton
Attn.: CityManager
303 West Commonwealth Avenue
Fullerton, CA 92832

19. NOCOMPENSATION. OwnershallnotreceiveanypaymentfromtheCityinconsiderationof theobligationsimposed underthis Agreement. The Owner acknowledgesand agrees that the considerationfor the executionof this Agreement is the substantial public benefit to be derived therefrom and the advantagethat will accrue to Owneras a result of the effect uponthe assessedvalue of the Historic Propertyon accountof the restrictionson the use and preservationof the HistoricProperty.

20. REMEDYIFAGREEMENTHELDNOTENFORCEABLE. IntheeventitisfinallydeterminedthisAgreementdoesnot constitutean enforceablerestrictionwithin the meaningof the applicableprovisionsof the CaliforniaGovernmentCode andthe CaliforniaRevenueandTaxationCode, exceptfor an unenforceabilityarisingfromthecancellationor nonrenewalof this Agreement, then this Agreement shall be null and void and without further effect and the Historic Propertysubjectto thisAgreementshallfromthattimebefreefromanyrestrictionwhatsoeverunderthisAgreement without any paymentor further act of the partiesto this Agreement.

Mills Act Program Guidelines & Application

21. ACQUISITION OF PROPERTY BY EMINENT DOMAIN; CANCELLATIONOF CONTRACT; INAPPLICABILITYTO DETERMINATIONOFVALUE. IntheeventthattheHistoricPropertyis acquiredinwholeor partbyeminentdomainor otheracquisitionbyanyentityauthorizedto exercisethepowerof eminentdomain, andtheacquisitionisdeterminedby theCitytofrustratethepurposeoftheAgreement, theAgreementshallbecancelledandnofeeshallbeimposedunder Section17, above. TheAgreementshallbedeemednullandvoidforallpurposesofdeterminingthevalueoftheHistoric Propertyso acquired. If, subsequentto the filing of an action in eminentdomain, the proposedcondemnationis abandonedbythe condemningagency, the restrictionson the useof theHistoricPropertyincludedinthisAgreement shall, withoutfurther agreementof the parties, be reinstitutedand the termsof this Agreementshall continue in full force and effect.

22. EFFECTOF AGREEMENT. Noneof the terms, provisionsor conditionsof this Agreementshall be deemed to create a partnershipbetweenthepartiesheretoandanyoftheirheirs, successorsorassigns, norshallsuchterms, provisionsor conditionscausethe partiesheretoto beconsideredjointventuresor membersof anyjointenterprise.

23. INSURANCE. OwnershallmaintainduringthelifeofthisAgreementahomeowner's insurancepolicy.

24. SUCCESSORSANDASSIGNS, ThisAgreementisbindinguponandshallinuretothebenefitofallsuccessorsininterest of the Owner. A successor in interest shall have the same rights and obligations under this Agreement as the original owner who entered into this Agreement.

25. REQUIREMENTSRELATEDTOTRANSFEROFHISTORICPROPERTY. Intheeventofanysale, transfer, assignment or conveyanceof the HistoricProperty (hereinreferredto as a "Transfer"), theOwneragreesthat, at leastthirty (30) dayspriortosuchTransfer, itshallgivewrittennoticetotheCityofsuchproposedTransfer, includingthename(s) ofthe transferee(s). Inaddition, theOwnerandtheproposedtransferee(s) shallenterintoanddelivertothe Citythroughthe escrowfortheTransferoftheHistoricPropertyanassignmentandassumptionagreementin aformsatisfactorytothe City's Attorneyor suchotherevidenceas maybesatisfactorytotheCitythatthetransferee(s) has (have) assumedthe Owner's obligationssetforthinthisAgreement. UpontheTransferoftheHistoricPropertyandtheassumptionofthe obligationshereunderbythetransferee(s), the Owner's liabilityforperformanceshallbeterminatedastoanyobligation to be performed hereunder after the date of such Transfer.

26. RECORDATION. Nolaterthantwenty (20) daysafterthepartiesexecuteandenterintothisAgreement, Cityshallcause thisAgreementto berecordedintheOfficeof theCountyRecorderoftheCountyofOrange.

27. AMENDMENTS. ThisAgreementmaybe amended, in wholeor in part, only by a writtenand recordedinstrument executedby the partieshereto, exceptthatthe Directorof CommunityandEconomicDevelopmentis authorizedto amend the list of required projects in Exhibit D to be consistent with realized tax savings.

28. COUNTERPARTS. ThisAgreementmaybeexecutedinanynumberofcounterparts, eachofwhichshallbedeemedan original and all of which shall constitute one and the same agreement with the same effect as if all parties had signed thesamesignaturepage. AnysignaturepageofthisAgreementmaybedetachedfromanycounterpartofthisAgreement andre -attachedto anyothercounterpartofthisAgreementidenticalinformheretobuthavingattachedto itoneor more additional signature pages.

29. ADMINISTRATION. ThisAgreementshallbe administeredby the City's Directorof CommunityandEconomic Development (ortheirdesignee) followingapprovalofthisAgreementbytheCity. TheCityshallmaintainauthorityof thisAgreementthroughthe City's Directorof CommunityandEconomicDevelopment (or theirdesignee). TheCity's Directorof CommunityandEconomicDevelopmentshallhavethe authorityto issueinterpretations, waiveprovisions andenterintoamendmentsof thisAgreementon behalfof the Cityso longassuchactionsdo not changethe uses permittedonthe HistoricPropertyor thepurposeofthisAgreement, andsuchamendmentsmayincludeextensionsof timespecifiedin ExhibitD. All otherwaiversor amendmentsshallrequirethewrittenapprovalandconsentofthe City Council.

Mills Act Program Guidelines & Application
INWITNESSWHEREOF, theCityandtheOwnerhaveexecutedthisAgreement.

Dated: _, 20_
Dated: _, 20_
Dated: _, 20—
ATTEST:

CityClerk
J2
OWNER"
CITY"
CITY OF FULLERTON, a municipal corporation
Mayor
APPROVED AS TO FORM:

CityAttorney
Mills Act Program Guidelines & Application
EXHIBIT " A"

LEGAL DESCRIPTION OF HISTORIC PROPERTY
To be inserted.]
APN:

Mills Act Program Guidelines & Application
EXHIBIT " B"

SECRETARY OF THE INTERIOR' S STANDARDS FOR REHABILITATION

1. A property shall be used for its historic purpose or be placed in a new use that requires minimal change to the defining characteristics of the building and its site and environment.

2. The historic character of a property shall be retained and preserved. The removal of historic materials or alterationof features and spacesthat characterizea propertyshall be avoided.

3. Each property shall be recognized as a physical record of its time, place, and use. Changes that create a false sense of historicaldevelopment, such as addingconjecturalfeatures or architecturalelementsfrom other buildings, shall not be undertaken.

4. Most properties change over time; those changes that have acquired historic significance in their own right shall be retained and preserved.

5. Distinctivefeatures, finishes, and constructiontechniquesor examples of craftsmanshipthat characterizea historic property shall be preserved.

6. Deterioratedhistoricfeatures shall be repaired rather than replaced. Where the severity of deterioration requires replacement of a distinctive feature, the new feature shall match the old in design, color, texture, and other visual qualities and, where possible, materials. Replacement of missing features shall be substantiated by documentary, physical, or pictorial evidence.

7. Chemical or physical treatments, such as sandblasting, that cause damage to historic materials shall not be used. The surface cleaning of structures, if appropriate, shall be undertaken using the gentlest means possible.

8. Significantarcheologicalresourcesaffected by a project shall be protectedand preserved. If such resources must be disturbed, mitigation measures shall be undertaken.

9. New additions, exterior alterations, or related new construction shall not destroy historic materials that characterize the property. The new work shall be differentiated from the old and shall be compatible with the massing, size, scale, and architecturalfeaturesto protectthe historic integrityof the propertyand its environment.

10. New additions and adjacent or related new construction shall be undertaken in such a manner that if removed in the future, the essential form and integrity of the historic property and its environment would be unimpaired.

Mills Act Program Guidelines & Application
EXHIBIT " C"

CITY OF FULLERTON HISTORIC PROPERTY

MAINTENANCE STANDARDS
All buildings, structures, yards and other improvements shall be maintained in a manner which does not detract from the appearanceof the immediateneighborhood. The followingconditionsare prohibited:

1. Dilapidated, deteriorating, or unrepaired structures, such as: fences, roofs, doors, walls and windows.

2. Publicly visible storage of scrap lumber, junk, trash or debris.

3. Publicly visible storage of abandoned, discarded or unused objects or equipment, such as automobiles, automobile parts, furniture, stoves, refrigerators, cans, containers or similar items.

4. Stagnant water or excavations, including pools or spas.

5. Any device, decoration, design, structureor vegetationthat is unsightlyby reason of its height, condition, or its inappropriate location.

Mills Act Program Guidelines & Application
EXHIBIT " D"

REHABILITATION / MAINTENANCE PLAN
To be inserted.]
City of Fullerton

RESOLUTION CERTIFICATION

STATE OF CALIFORNIA )

COUNTY OF ORANGE ) SS

CITY OF FULLERTON )
RESOLUTION NO. 2020- 38
I, LucindaWilliams, City Clerk and ex -officio Clerk of the City Council of the City of Fullerton, California, hereby certify that the whole number of the members of the City Council of the City of Fullerton is five and that the City Council adopted the above and foregoing Resolution No. 2020-38 at a regular meeting of the City Council held April 21, 2020 by the following vote:

COUNCIL MEMBER AYES: Fitzgerald, Flory, Silva, Whitaker, Zahra COUNCIL MEMBER NOES: None
COUNCIL MEMBER ABSTAINED: None
COUNCIL MEMBER ABSENT: None
Agenda Report

Fullerton City Council

MEETING DATE: APRIL 21, 2020

TO: CITY COUNCIL / SUCCESSOR AGENCY

SUBMITTED BY: KENNETH A. DOMER, CITY MANAGER

PREPARED BY: MATT FOULKES , DIRECTOR OF COMMUNITY AND

ECONOMIC DEVELOPMENT

SUBJECT: MILLS ACT PROGRAM ADOPTION AND GUIDELINES

SUMMARY
Consideration of a Mills Act Program for the City of Fullerton including program guidelines, selection criteria and approval process for the preservation, rehabilitation and maintenance of eligible historic properties.

RECOMMENDATION
Adopt Resolution No. 2020-XX.

RESOLUTION NO. 2020-XX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY

OF FULLERTON, CALIFORNIA, ESTABLISHING A MILLS ACT PROGRAM F OR THE

PRESERVATION, REHABI LITATION AND MAINTEN ANCE OF ELIGIBLE HIS TORIC

PROPERTIES AND ASSOCIATED PROGRAM ADMINISTRATION GUIDELINES

PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statements:
 Infrastructure and City Assets
 Fiscal and Organizational Stability.

FISCAL IMPACT
Based on the proposed program guidelines, and assuming that the City processed the maximum number of Mills Act Contracts each year ( ten), the resulting property tax revenue loss would be approximately $4,000 per year and would increase annually based on the number of new contracts added to a maximum annual property tax revenue loss of approximately $20,000 to $30,000 (maximum of 50 properties) . Pursuant to the proposed guidelines, when the number of Mills Act contracts reaches 50, the program would require reauthorization by the City Council in order to continue to approve additional Mills Act Contracts . For reference, t he City’s total property tax revenue is

Mills Act Program and Guidelines
April 21, 2020 - Page 2
approximately $45-million dollars per year. Additional discussion of property tax revenue impacts is provided in the discussion section of this report.

DISCUSSION
Mills Act Background
Enacted in 1972, the Mills Act 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 in exchange for receiving property tax reductions. The Mills Act is codified in both the California Government Code (Article 12, Section 50280 – 50290) and the California Revenue and Taxation Code (Article 1.9, Sections 439-439.4).

In 1976, California voters passed Proposition 7, amending Section 8 of Article XIII of the California Constitution, requiring enforceably restricted historical properties be valued on a basis that is consistent with its restrictions and uses. Sections 439 through 439.4 of the Revenue and Taxation Code sets forth the statutory authority for the assessment of Mills Act properties. Essentially, it provides that valuation of the property be determined by the income approach (potential income if rented) rather than a sales data approach, even for an owner-occupied single-family residence.

In 1985, the Mills Act was amended to shorten the contract period from the initial 20-year period to 10-years, as well as eliminate the mandatory public access requirements and reduce the penalty for cancellation of a contract from 50 percent to 12.5 percent.

In 2012 , the Mills Act was amended to include mandatory inspections of Mills Act properties every five years and to allow cities to recover the cost for providing those inspections through a fee to a Mills Act property owner.

Over 100 cities throughout the state have enacted Mills Act Programs including nine Orange County cities as well as the County of Orange. The Office of Historic Preservation reports that approximately three to four cities adopt Mills Act programs each year.

Basic Principles and Purpose of a Mills Act Program
The Mills Act is an economic incentive program in California for the restoration and preservation of qualified historic buildings by private property owners. The Mills Act authorizes a city to enter into agreements with private property owners of qualified historic properties to rehabilitate and maintain their historic properties in exchange for receiving property tax relief. Mills Act contrac ts are for an initial term of ten years. The contract automatically renews each year on i ts anniversary date and a new ten -year agreement becomes effective, creating a "rolling" contract term that is always equal to the initial ten- year term.

The Mills Act is not a subsidy for those seeking to remodel their property or a tool to assist with mortgage payments. The purpose of the program is for the funds saved in property taxes to be utilized for the rehabilitation and maintenance of the property and all work must conform to the Federal Guidelines developed for the treatment of historic properties, known as the Secretary of the Interior’s Standards for Rehabilitation, Building Codes and City design guidelines for historic preservation.

Property owner participation in a Mills Act Program is voluntar y and each contract is subject to review and authorization by the City Council . Mills Act Programs are administered exclusively at the local level allowing cities to customize the program Mills Act Program and Guidelines
April 21, 2020 - Page 3
guidelines to meet their program goals. Once a Mills Act contract is approved, the contract remains binding on the property and is automatically passed on to subsequent property owners. If a property owner wishes to terminate the contract, they must provide notification to the city of their intent to terminate and the contract would conclude at the end of its current ten-year term. If the contract is cancelled prior to the end of the ten-year period, the property owner is assessed a penalty fee as established in the State statute (12.5 percent of the current fair market value of the property).

Properties eligible to participate in a Mills Act Program are required to receive periodic (minimum of once every five years) inspections by the City. The City also has the ability to cancel a contract if the property owner violates the terms of the Mills Act agreement by not maintaining the property in accordance with the required standards.

Policy Direction Provided in the Fullerton Plan
The Fullerton General Plan (The Fullerton Plan), adopted in 2012, included a Historic Preservation Chapter (Chapter 3) with the stated purpose to guide the “preservation, protection, restoration, and rehabilitation of historical resources in order to reaffirm their continuing value as a resource contributing to the vitality and diversity of the present.” Further, Policy 4.3 of The Fullerton Plan states “Support projects, programs, policies and regulations to promote the maintenance, restoration and rehabilitat ion of historical resources.” This policy is further supported within the Short-Term Action Plan section of The Fullerton Plan which identifies the development and implementation of a Mills Act Program to provide financial incentive to restore and preserv e historic resources (Short- term Action Item 4.6).

Recommended Mills Act Program Guidelines
Mills Act Programs are administered at the local level which allows the City Council to control the program parameters, including the ability to amend the program guidelines in the future or to terminate the program.

Historic Property Eligibility Criteria –
Pursuant to Section 439 of the Revenue and Taxation Code, a “qualified historical property” is defined as a privately owned property that is not exempt from property taxation and is listed on any national, state or local historic register. The Fullerton Plan and Fullerton Municipal Code contain several historic designations based on the level of significance, these designations include:
 National Register
 Local Landmark
 Significant Property
 Historic Districts / Preservation
Zones
 Potential / Possible Significant
Properties
With the exception of Potential / Possible Significant Properties and non -historic properties within Preservation Zones , the properties listed above would be eligible to request a Mills Act Contract from the City provided they are privately owned and are not exempt from property taxation. An analysis of the City’s current historic properties contained in Table 6 of the Fullerton Plan (Local Register of Historical Resources) found that there are 66 potentially elig ible properties, with another 17 that are categorized as potentially significant that could become eligible , for a total of 83 properties. Of these potentially eligible properties, those which were purchased prior to 1978 (pre-Proposition 13) or which otherwise pay minimal property taxes, would not see a financial benefit from Mills Act Program and Guidelines
April 21, 2020 - Page 4
entering into a Mills Act Agreement. An example of this scenario is the Pierotti House and Gardens (HL -33, National Register) at 1731 North Bradford Avenue. According to the Orange County Assessor’s Office, this property currently pays $1,237.16 in annual property taxes, of which only $882.06 is general levy. As a result of this very low property tax rate, there are no property tax savings from a Mills Act Contract. Another example is the Fuller House (HL-59, Local Landmark) at 150 Hillcrest Drive which has an assessed valuation of $168,000, resulting in an annual property tax rate of approximately $1,680.

For these properties, and others where the Mills Act property tax value (the restricted value) exceeds the current assessed value, there is no property tax savings resulting from a Mills Act Agreement. The lack of property tax savings does not prohibit a property from requesting a Mills Act Contract, but the purpose of the agreemen t would not be for property tax savings.

Program Eligibility Guidelines -

1. Property must be a residential nature / use.

2. Properties must have an assessed valuation of less than $800,000 dollars.

3. Maximum of ten Mills Act Contracts can be approved per calendar year.

4. The cumulative total number of Mills Act Contracts in the City cannot exceed 50 without program reauthorization by a resolution of the City Council.

Program Administration Guidelines -

1. Institute an inspection fee for Mills Act properties to recover the City costs associated with providing this service as permitted by the Government Code.

2. Establish an annual self-certification requirement by Mills Act property owners and utilize Fullerton Heritage to perform inspections between the mandated City inspections every five years. Fullerton Heritage has indicated that they would offer this service to the City at no charge.

3. Institute an application fee for the preparation of Mills Act Contracts, including any property improvement / rehabilitation schedules, which recovers the full City cost.

Based on the estimated time and materials required to prepare these documents, the fee for a Mills Act Contract would be $1,520 with an annual fee of $85.

4. Establish a Ten-Year Rehabilitation / Maintenance Plan that will accompany all Mills Act Contracts which specifies the type of rehabilitation / maintenance that will be completed by the property owner during the contract period along with estimated costs for this work. The value of the work completed should equal the property tax savings achieved under the Contract.

Property Tax Revenue Impacts
The City of Fullerton receives $0.1564 of every $1.00 of property taxes, with the remaining portion going to the County, Sch ool Districts and Special Districts. As a result, the estimated loss in property tax revenue to the City as a result of a Mills Act Program would be a 15.64% reduction in the general tax levy portion of the property tax (1.0%) for each property with a Mills Act Agreement . Additional taxes such as special assessment charges are not included in the general levy property tax component and not affected by Mills Act Contracts.

Mills Act Program and Guidelines
April 21, 2020 - Page 5
The amount of annual property tax revenue loss to the City is dependent on the assessed valuation of the property applying for a Mills Act contract. The calculation of a Mills Act property tax savings is performed annually by the Orange County Assessor’s Office using the income method which takes the projected income, subtracts expense s and divides that by a capitalization rate to determine the new assessed value, referred to as the Restricted Value. The Restricted Value, the Assessed Value and the Factored Base Year value are compared and the lowest of the three becomes the new value for assessment of the one percent property tax assessed to the property.

For example, a property with an assessed valuation of $500,000 without a Mills Act contract would pay $5,000 a year in property tax (1%). The City receives 15.64% of the $5,000 which equals $782. Using the income method described above to determine the Restricted Value for this same property results in a value of $255,613.12 for a new annual property tax of $2,556.13 and a savings of $2,443.87 per year for the property owner. The City’s portion of the reduced property tax is equal to 15.64% of $2,556.13 or $399.78.

Therefore, the resulting in loss in City property tax revenue is the difference between $782 (original revenue received) minus $399.78 ( adjusted revenue received) which equ als a loss of $382.22 in City property tax revenue annually for this property.

Under the proposed program guidelines, the City would limit the number of Mills Act Contacts that can be granted to no more than ten per calendar year. Further, the City would cap the total number of Mills Act contract properties at fifty before requiring re - authorization of the program by resolution of the City Council. Using those program assumptions, and assuming that the City processed the maximum number of agreements each year (ten), the resulting property tax revenue loss in year one of the program would be approximately $4,000 and would increase annually to a maximum annual property tax revenue loss of approximately $20,000 to $30,000 (maximum 50 properties) when the program would require reauthorization by the City Council to continue. For reference, the City’s total property tax revenue is approximately $45-million dollars per year.

Role of the Landmarks Commission
The Community and Economic Development Department ( Planning Division) would be responsible for preparing application materials, meeting with applicants, notifying eligible properties and, with assistance from the City Attorney’s Office, preparation of Mills Act Contracts for consideration by the City Council.

The Planning Commission, acting as the Landmarks Commission, would also continue to review requests to have a property added to the City’s Historic Register, therefore making it potentially eligible to receive a Mills Act Contract. The Landmarks Commiss ion would also be responsible for reviewing certain proposals to rehabilitate, modify or add to properties that are listed on the Historic Register pursuant to Fullerton Municipal Code Chapter 15.17 and 15.48.

Attachments:
 Attachment 1 – PowerPoint Presentation
 Attachment 2 – Draft Resolution 2020-XX
 Attachment 3 – Mills Act Program Guidelines

City of Fullerton
Mills Act Program
Guidelines &
Application

Community and Economic Development Department
CITY OF FULLERTON | 303 WEST COMMONWEALTH AVENUE I FULLERTON, CA 92832

Mills Act Program Guidelines & Application
Mills Act Program Summary
Mills Act properties reflect the diversity of Fullerton’s architectural and cultural heritage. The Mills Act Program is a partnership between the historic property owner and the City to preserve these important historic resources in our community. The Mills Act Program is intended to offset the costs of rehabilitation and maintenance of your historic property. Mills Act properties become the best representations of the commitment and care for historic buildings and we look forward to work ing with you to determine if the Mills Act Program is a good fit for you and your historic property. Should you have any questions about the Mills Act Program, please contact:

Andrew Kusch
Associate Planner
303 West Commonwealth Avenue
(714) 738-6550
[email protected]
The Mills Act Program is a voluntary historic preservation program, enabled by California Government Code, Article 12, Sections 50280-50290, established in 1972. The Mills Act allows a City to enter into a Historic Property Preservation Agreement (also referred to as a Mills Act Contract) with owners of qualified historic properties. Under the terms of the Mills Act Contract, the property owner agrees to preserve, maintain, and rehabilitate the historic property in conformance with the Secretary of the Interior’s Standards for the Treatment of Historic Properties and with local historic preservation standards.

Under a Mills Act Contract, the historic property is reassessed by the Orange County Assessor’s Office to determine the “Historical Property Value.” The Historical Property Value is based on the property’s income-producing potential (generally from rental income) and is used to determine property taxes under the Mills Act Contract. The amount of property tax reduction varies based on each property’s income-producing potential and current assessed value.

Eligible Properties
Pursuant to Section 439 of the Revenue and
Taxation Code, a “qualified historical property” is
defined as a privately owned property that is not
exempt from property taxation . and is listed on any
national, state or local historic register. The Fullerton Plan contains several historic designations based on
the level of significance, these designations include:
•
•
•
•
•
National Register
Local Landmark
Significant Property
Potential/Possible Significant Property Historic Districts / Residential Preservation Zones / Historic Districts
With the exception of Potential/Possible Significant Properties and properties within Preservation Zones, which would be determined on a case- by-case basis based on the age and historic/architectural integrity of the structure, properties listed in any of the above categories would be eligible for a Mills Act Contract subject to the additional eligibility criteria listed below.

Mills Act Program Guidelines & Application
Additional Eligibility Criteria -
•
•
•

Property must be privately owned.

Property must be subject to property taxation.

Property must have an assessed valuation of less than $800,000 dollars. Property must have an assessed valuation of less than the previous year’s median homes sales price in Orange County.

However, a property that is a designated Local Landmark is exempt from this valuation requirement.

Property must be residential in nature / use.

Mills Act Contract Responsibilities
The Mills Act is not intended to be a subsidy for those seeking to remodel their property or a tool to assist with mortgage payments. The purpose of the program is for the funds saved in property taxes to be utilized for the rehabilitation and maintenance of the property. and All work must conform to the Federal Guidelines developed for the treatment of historic properties, known as the Secretary of the Interior’s Standards for Rehabilitation. In general, the total cost estimate in your Rehabilitation/Maintenance Plan should equal the approximate amount of property tax savings over the first ten-year term of the contract.

Under a Mills Act Contract, you are not required to return a building to i ts appearance during a specific historic period; however, you are required to complete work that supports the long-term preservation of the building. Examples of appropriate work items under a Mills Act Contract include:
•
•
•
•
•
•
•
Seismic retrofit
Re-roofing
Plumbing repair/upgrades
Electrical repair/upgrades
Mechanical repair/upgrades
Window repair
Siding repair and repainting

Other common improvements that can be included (but not required) in an approved Mills Act Contract are:

• Removal of non- historic features added to front yards including inappropriate overgrown plantings, planters, or edging of incompatile style or material (ex. scalloped concrete edging).

• Replacement of a non-historic material on exterior walls, such as inappropriate stucco over an earlier stucco finish or aluminum or vinyl siding over wood siding.

• Removal of any non-historic porches or porte-cocheres, porch features or cladding materials (such as tile or brick).

• Replacement of inappropriate metal or vinyl windows visible from the public right-of-way with windows that reproduce the historic details, including frame and casing. The new windows must be based on other intact examples on the house or, if all are missing, earlier phot ographic evidence or approved examples from houses of similar age and style.

• Broken, excessively dirty or worn window screens. Replacement screens should be wood- frame, if appropriate to the era or style of the house, or metal -frame screens painted to match the trim.

Replacement with appropriate wood screens and hardware may be p art of the Rehabilitation/ Maintenance Plan.

Additionally, the cost of documented improvements of the above kind which were completed within the last 5 years from the contract date may be included in a Mills Act contract.

ra p

Mills Act Property Tax Assessment
Mills Act properties are re-assessed annually by the Orange County Assessor’s Office through a methodology determined by the State of California. Under the Mills Act, three property values are determined:

1. Base Year Value, or the purchase price under Proposition 13 with an annual 2% rate of increase.

2. Fair Market Value, or the potential sale value of the property at the time of the assessment.

Mills Act Program Guidelines & Application

3. Historical Property Value, calculated as described below.

The Historical Property Value is based on the property’s ability to produce income. For an owner- occupied property, income is based on potential rental value. For multi-family properties, income is based on actual rent rolls. The property’s income less expenses is then divided by a capitalization rate to establish the Historical Property Value.

The Assessor will base property taxes on the lowest of these three values. Depending on when the property was purchased and the assessed value, this generally results in a sizable property tax reduction. Entering into a Mills Act Contract does not guarantee a reduction in property taxes . you are most likely to benefit from a Mills Act contract if you have purchased the property within the past 10 years.

Mills Act Contract Terms
Mills Act Contracts run for a ten-year term and are automatically renewed each year on the anniversary of the Contract’s approval by City Council. In effect, the contract is always 10 years away from termination, unless the property owner or the City submits a notice of non-renewal. The property owner must provide written notice of non- renewal to the City at least 90 days prior to the renewa l date, or another year is automatically added to the Contract. Following submittal of a notice of non- renewal, the contract will be terminated at the end of the current ten-year term.

All work must be related to the exterior or building systems. Cosmetic improvements to the interior of historic buildings, such as kitchen or bathroom renovations, are not considered eligible work items under the Mills Act Program. All work on a property with a Mills Act Contract must be in conformance with the Secretary’s Standards. Property owners considering applying for a Mills Act Contract should first familiarize themselves with the applicable historic preservation regulations prior to submitting your application. For the application, property owners are required to submit a description of work, timeline, and cost estimates for rehabilitation of the property during the first ten year term of the Contract (see Rehabilitation/ Maintenance Plan). Please note that the Rehabilitation/Maintenance Plan is binding on all future property owners, so it should address the critical preservation needs of the property and not the personal preferences of the property owner.

Mills Act Contract Process
Application Submittal - Pursuant to the adopted guidelines, the City may process no more than ten (10) Mills Act Contracts per calendar year. Applications are accepted on a first -come, first- served basis and must be received no later than August October 1st of each year. Applications are accepted by appointment only. Please C ontact Planning Division staff prior to submitting your application to discuss whether your property is a good candidate for a Mills Act Contract and to set up an appointment. Following receipt of the application, and required fee staff will review your application to determine if it is complete and meets the requirements of the Mills Act Program.

Mills Act Program Guidelines & Application
Pre-Approval Inspection and Pre -Contract
Rehabilitation - After your application has been
reviewed, staff will schedule a pre-approval inspection.

The pre-approval inspection is required under State law enabling the Mills Act Program and will include both the exterior and interior inspection of the property. The
property owner must be present for the inspection. The
primary purpose of the inspection is to discuss what
items, if any, are required to be completed pre-contract and what can be included in the proposed ten-year
Rehabilitation / Maintenance Plan. Pre -contract
improvements are those that will return any lost historic integrity and character to an altered residence in order to qualify the property for a Mills Act Contract.

Properties with a high level of historic integrity may require only minor pre-contract work to qualify, and some of the improvements reference d below can be deferred to be included in the Rehabilitation/Maintenance Plan. The most common pre-contract improvements include:
• Cleanup of unkempt or overgrown landscaping.
• Removal or replacement of incompatible fencing in front or visible side yards. • Removal of window or wall air conditioning units that are visible from the public right-of-way. • Removal of metal awnings that are not historic features of the residence. • Removal of canvas awnings that obscure window sizes or shapes. • Removal of security screen doors from the front door. • Relocation of visible television antennas or dishes to not be visible from the public right-of-way, or removal if no longer in use.

If the City finds that the property owner in breach of t he the contract terms, the City may initiate proceedings to cancel the Contract. The property owner may also petition the City for immediate cancellation. A penalty of 12.5% of the property’s assessed fair market value will be imposed for a cancelled contract. If you are unable to complete items on your Mills Act scope of work within the proposed timeline due to unforeseen circumstances, please contact City staff as soon as possible to discuss an amendment to the Rehabilitation/Maintenance Plan. The Mills Act Contract is a legally binding document recorded against the property. The Contract runs with the property and is binding on all future owners. Property owners are encouraged to seek independent counsel on the nature, extent, and duration of their rights and obligations under the contract terms.

Mills Act Program Guidelines & Application
City Council Review - After the pre -approval inspection, staff will prepare a report making a recommendation to the City Council regarding approval of the Mills Act Contract. Mills Act Contracts are presented to City Council at a regularly scheduled public hearing, typically in early December. The City Council is not required to approve all Mills Act contracts and may modify or reprioritize the Rehabilitation/Maintenance Plan based on preservation priorities. The City Council’s decision on the Mills Act Contract is final. When the total number of Mills Act Contracts approved reaches 50, the City Council shall be required to adopt a Resolution reauthorizing the program and specifying how many additional Mills Act Contracts will be considered.

Contract Execution - After City Council approval of the Contract, the property owner must execute the Historic Property Preservation Agreement. The property owner must sign and have notarized the Agreement with the attached Notary Acknowledgement and return two original copies to the City Clerk. The Mayor, City Attorney,
and City Clerk will sign both copies of the Mills Act
Contracts. The date on the Contract will be the date
that City Council took action on approval of the
Contracts. The property owner must then pick up
both copies of the signed contracts from the City
Clerk and have them recorded at the Orange County
Clerk - Recorder Department (located at 12 Civic
Center Plaza, Santa Ana, CA 92701 Wells Fargo
Building, 222 S. Har bor Blvd., #110, Anaheim, CA
92805) on or before December 31 st. The property
owner is required to pay all fees related to recording.

Contracts must be recorded on or before December
31st to go into effect for the following tax year.

Property Tax Reduction - Following recording of the Contract, the Assessor’s Office will re - assess the property using the Mills Act Historical Property Value. The Assessor typically re - assesses properties in the spring and summer following recording of the Contract. The property tax reduction may not be reflected in your property tax bill until the fall or winter after the Contract is recorded.

• Removal of non-historic features added to front yards including inappropriate plantings, planters, or edging of incompatile style or material (ex. scalloped concrete edging).

Other potential precontract improvements in order to make the property more competitive for approval of a Mills Act Contract include:

• Replacement of a non-historic material on exterior walls, such as inappropriate stucco over an earlier stucco finish or aluminum or vinyl siding over wood siding.

• Removal of any non-historic porches or porte-cocheres, porch features or cladding materials (such as tile or brick).

• Replacement of inappropriate metal or vinyl windows visible from the public right -of-waywith windows that reproduce the historic details, including frame and casing. The new windows must be based on other intact examples on the house or, if all are missing, earlier photographic evidence or approved examples from houses of similar age and style.

• Broken, excessively dirty or worn window screens. Replacement screens should be wood-frame, if appropriate to the era or style of the house, or metal -frame screens painted to match the trim.

Rleplacement with appropriate wood screens and hardware may be part of the Rehabilitation/Maintenance Plan.

Mills Act Contract Holder Obligations
Annual Progress Report - Under the terms of the Contract, the City requires property owners to submit an annual progress report describing the work completed on the property during the previous year. Progress reports are included in the application and available on the City’s website and should be mailed to the following address:

Mills Act Program Guidelines & Application
City of Fullerton
Community and Economic Development Department, Planning Division 303 West Commonwealth Avenue, Fullerton, CA 92832
Five Year Inspections - Mills Act Contract properties are required to be inspected once every five years. Inspections will include the exterior and interior of the building, and the property owner must be present at the inspection. City Staff will contact the property owner in advance of the inspection period to set up a time and date for the inspection.

Ten Year Rehabilitation/Maintenance Plan - At least 90-days prior to the end of the first ten (10) year term of the Contract, the property owner is required to submit a Rehabilitation / Maintenance Plan for the next ten-year term of the Contract. Any changes to the Rehabilitation / Maintenance Plan must be approved by City staff. Failure to comply with the terms of the Plan may result in termination of the Agreement.

Mills Act / Historic Preservation Resources
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Secretary of the Interior Standards – https://www.nps.gov/tps/standards.htm Fullerton Local History Room - https://www.fullertonlibrary.org/local_history/default.asp Fullerton Heritage - https://www.fullertonheritage.org/ State Office of Historic Preservation - https://ohp.parks.ca.gov/ Preserve OC - https://www.preserveorangecounty.org/
Frequently Asked Questions
Q: Is there a fee for the Mills Act Program in Fullerton? A: There is a fee to apply for the Mills Act program. These fees are to cover the City’s costs for preparing and reviewing the Mills Act Contract and preparing the associated reports and conducting inspections.

Mills Act Program Fees
The Mills Act Contract application processing fee is $1,520 $500, payable to the City of Fullerton upon pre-approval inspection. However, prior to approval of the Contract, initial expenses may include the cost to restore elements of the property in order to qualify for the program. Following approval of the Contract, an annual processing fee of $85 is required unless an authorized representative approved by the City, such as Fullerton Heritage or of the like, is utilized to perform a photographic survey of the exterior of the property, then the fee is waived. Fees are subject to change by Resolution of the City Council and all fees are non-refundable.

Q: How are my property tax savings calculated if I am awarded a Mills Act Contract? A: There are a number of factors that contribute to a property tax savings calculation. For an explanation of how your property tax will be calculated and an estimate of how much you may save under the Mills Act Program, you may call the Mills Act contact at the Orange County Assessor’s Office at: (714) 834-2959.

Q: When would I receive my property tax reduction?
A: Mills Act Contracts are awarded and recorded by the end of the calendar year. Tax savings are seen on the following year’s tax bill. For example
, if you are approved with a for the 2020 Mills Act Contract in 2024, Class your Contract would be recorded in December of 2024. and You would see your tax savings on your 2025-2026 tax bill.

Q: What if I want to cancel my Mills Act Contract?
A: Mills Act C
ontracts may be canceled by the owner at any time. The owner will need to submit a letter to the City explaining their desire to end the Contract. The Mills Act Contract has a term of 10 years and automatically renews at the end of each year. Once the owner cancels their Contract, they will remain under Contract for the rest of the 10-year term. During that time, the owner will still be responsible for maintaining the historic integrity of their property, but their tax savings will gradually decrease.

Mills Act Program Guidelines & Application
Q: How is the program enforced?
A: All Mills Act Contracts are enforced through regular inspections, annual surveys which evaluate everything visible from the public right -of-way. Mills Act property owners are notified of the inspection survey results by mail and told if they are in compliance or if there are outstanding issues that need to be resolved.

Q: What happens if a Mills Act property changes ownership? A: Mills Act Contracts remain with the property. When a property with a Mills Act Contract is sold, the new owner will automatically assume the reduced tax rate and all the
obligations of owning a Mills Act property. It is important that sellers of a Mills Act propertyies
disclose requirements to the new property

the Mills Act
as well as any
unfinished maintenance items from their 10-Year
Rehabilitation / Maintenance Plan, as the new owners will be required to comply with the same requirements of the
program.

Q: What happens if I do not fulfill my obligation under my Rehabilitation/Maintenance Plan or other contract provisions?
A: The City strives to work with property owners to stay in compliance with their Mills Act Contracts and to get back into compliance if any items require attention. However, if a property continues to remain out of compliance after a series of attempts by staff to re medy the situation, State law allows the City to cancel the owner’s Mills Act Contract and fine the owner 12.5% of the fair market value of the property.

Q: Am I guaranteed a Mills Act Contract if I submit an application and complete all the pre-contract rehabilitation?
A: No. When a property owner applies for a Mills Act Contract, a Contract is never guaranteed, even if they complete every item described to them throughout the application process. The final decision whether to grant or not grant a Mills Act Contract is made by the City Council.

Mills Act City Spreadsheet 2024
City Amount of contracts a
year
Sales Price Cap & Eligible
Properties
Cost to apply Yearly inspection &
Fees
Deadlines
Pasadena The City may approve up
to six new contract
agreements per calendar
year for multiple-family
residential, commercial or
industrial properties and
up to twenty new
contract agreements for
single-family residential
properties.

For single-family houses,
eligibility is limited to
properties with a total
assessed value of $2.0 million
or less, except for works of
Greene & Greene, designated
Historic Monuments, and
properties listed individually in
the National Register. In
addition to the exceptions listed
above, one exception per year
may be granted for special
circumstances, which shall be
substantiated by the applicant.

The 2023 fee was
$1,365.00 for single-
family residential
properties and $2,729.00
for multi-family
residential/ commercial/
industrial properties.

Annual self-certification of
completion of work, along
with documentation
(permits, contractor
invoices, before and after
photographs, etc.) and/or
inspections will be
required to ensure
required work is
completed. (No annual
fees for active contracts.)
Contracts that are
recorded by December
31 are typically
reassessed by June 30 of
the following year so that
the reduced tax appears
on the tax bill of October
of that year.

Orange There is no cap on the
number of Mills Act
Contracts accepted per
year.

In 1998, the Orange City
Council took action to
allow Mills Act Contracts.

Since that time, the City
has approved more than
400 contracts.

Mills Act properties are the “best
of the best” in our City and
represent the commitment and
care of their owners to the
health of these historic
buildings. There is no sale price
cap.

Properties eligible for a Mills Act
Contract include:
• Contributors to the Old
Towne Orange National
Register Historic District
• Contributors to the Old
Towne Orange Local
Historic District
• Properties separately
listed in the National
Register of Historic
Places or the California
Register of Historical
Resources
-Recently added non
contributors can now
submit and qualify.

The Mills Act Contract
application fee is $1,050,
payable to the City of
Orange.

Following approval of the
Contract, an annual
processing fee of $100 is
required. No annual
inspection is needed, self
reporting is required and
a 5 year evaluation is
allowed if needed with a
ten year staff review.

Applications are accepted
on a first-come, first-
served basis and must be
received between April 5
- August 1
Anaheim There is no cap on the
number of Mills Act
Contracts accepted per
year. Properties in
Anaheim that are granted
Mills Act Contracts are
considered the best
examples of historic
preservation in the City,
There is no sales cap to
qualify under.

Properties eligible to apply for a
Mills Act Contract are those
listed in the National Register of
Historic Places, the California
Register of Historical
Resources, and/or Anaheim’s
list of “Qualified Historic
Structures.”
Owners of properties that are
not currently listed as a
“Qualified Historic Structure”
may apply to be added if they
meet specific criteria.

Participation in the Mills
Act Program is voluntary
and there is no cost to
apply. Each Contract is
automatically passed on to
subsequent owners and
remains binding on the
property.

All Mills Act properties are
inspected annually.

Inspections are conducted
from the sidewalk and
evaluate everything that is
visible from the public right-
of-way. There is no fee for
this inspection.

Complete Application
packages are due by
August 15th.

Santa AnaThere is no cap on the
number of Mills Act
Contracts accepted per
year. Currently they have
a total of 400 active
contracts.

Agreements are limited to
properties listed on the
Santa Ana Register of
Historical Properties. If
interested in a
preservation agreement
for a property not listed on
the Register, application
for a register listing may
be considered concurrent
with an application for a
preservation agreement.

SFR no cap, Commerical
not sure
Home owner needs to
start by registering the
property which is $500
fee, once registered they
can apply and the Mills
Act fee is $2,694.

Currently they do not do
any kind of inspections so
there are no annual fees.

Please note that the
final deadline to submit
applications for
consideration of a Mills
Act contract is July 17,
2024, in order to be
included in the agenda
for the September 7,
2024.

Orange
County
Average closed price
2023 $1,260,000.00
Fullerton Average closed price
2023 $1,111,500.00