City Council
Report
City Council Meeting: October 28, 2025
Agenda Item: 4.A
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To: Mayor and City Council
From: Jing Yeo, Director, Administration
Subject: Adoption of Resolutions Approving Historic Property Preservation Agreements (Mills Act Contracts) with the Owners of the Properties Located at 137 Hart Avenue, 1958 20th Street, and 226 Palisades Avenue Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of categorical exemption pursuant to Section 15331 of the California Environmental Quality Act (CEQA) Guidelines.
2. Adopt the attached Resolutions authorizing the City Manager to execute Historic Property Preservation Agreement (Mills Act Contract) between the City of Santa Monica and the owners of City-designated historic resources located at: 137 Hart Avenue, 1958 20th Street, and 226 Palisades Avenue.
3. Receive an update on future proposed changes to Mills Act Contract renewal, monitoring, and cost recovery.
Summary
The City has a longstanding commitment to historic preservation that includes educating property owners about and offering the benefits of the Landmarks program. One of those benefits is the Mills Act (California Government Code Sections 50280-50290), a State law that enables contracts between local governments and property owners of qualified historic properties authorizing a property tax reduction. The Mills Act is one of the most effective financial incentives available to owners of historic properties and is an important tool for implementing the goals of the City’s Historic Preservation Element promoting the designation and long-term preservation of historic resources. This is largely because designated properties are in a different regulatory environment than other non-designated structures and generally are more costly to rehabilitate and maintain. Currently, 104 properties in Santa Monica have the benefit of Mills Act 2 of 14
contracts.
The City has received three Mills Act applications for consideration in 2025, all of which are single-unit dwellings. On August 11, 2025, the Landmarks Commission reviewed and recommended approval of one of the applications (226 Palisades Avenue). The other two applications (137 Hart Avenue and 1958 20th Street) were not able to be considered or recommended by the Landmark Commission due to a Commissioner conflict that precluded the Commission from reviewing and making a recommendation.
However, the Santa Monica Municipal Code does not require that the Landmarks Commission act on Mills Act contracts before Council approval and therefore, City Council has the authority to approve a Mills Act contract without a recommendation from the Landmarks Commission.
Staff has determined that each application meets all applicable requirements of State law and the Santa Monica Municipal Code. Therefore, staff recommends approval of all three Mills Act Contracts. Mills Act contracts are approved by Resolution of the City Council (Attachments B through D).
Since the maintenance/rehabilitation programs for each Mills Act contract is for the first 10-year period, included in the contracts is a requirement for an updated maintenance/rehabilitation program at the 10-year renewal date. Currently, there are no cost recovery fees for staff efforts associated with Mills Act contract processing, monitoring efforts, or enforcement. Staff anticipates returning to Council with a comprehensive fee program as part of the next fiscal year budget adoption.
Background
In 1991, as part of a comprehensive revision to the City’s Landmarks Ordinance, the City Council authorized designated Structures of Merit, Landmarks, and contributing structures located in designated Historic Districts to be considered qualified historic properties eligible for historic property contracts submitted pursuant to the provisions of the Mills Act. As a result, property owners of such designated historic properties may file 3 of 14
a Mills Act Contract application. In 2014, the Council passed an Ordinance that revised the City’s Mills Act Program by amending Santa Monica Municipal Code Section
9.56.270(F) to narrow contract eligibility requirements and expand applicant submittal requirements.
Specifically, a Mills Act Contract may only be approved if:
1. The property has no confirmed and no outstanding violations of the Santa Monica Municipal Code, or any other applicable Federal, State, or local law, rule, or regulation;
2. The property is not subject to a tax delinquency; and
3. All completed or ongoing alterations, construction, or rehabilitation to designed buildings or structures located on the property conforms to the Secretary of the Interior’s Standards for the treatment of Historic Properties.
The City requires applicants for Mills Act Contracts to provide a report prepared by a qualified architect describing the condition of the structure and its rehabilitation and maintenance needs to ensure the resource’s historic integrity and structural stability and therefore continue the life and usefulness of the historic structure. Recommendations in the architect's report are reflected in the proposed ten-year maintenance plan. The plan is submitted to the County Tax Assessor's office which determines the value of the historic property based upon its current net operating income, rather than upon the traditional assessed valuation method. In most cases, the result is a reduction in property tax. In exchange for a property tax reduction, the owner agrees to protect, maintain, and, if necessary, restore/rehabilitate the historic property.
The initial Mills Act contract term is a minimum 10-year period. Each year on the anniversary of the effective date of the agreement, also known as the renewal date, a year is automatically added to the initial 10-year term of the agreement. This effectively makes the term of the contract at least 10 years, but possibly indefinite unless the owner or City submits a notice of non-renewal. Alternatively, the owner may petition the City to initiate an immediate cancellation, which would result in payment of a penalty equal to 12.5% of the property’s assessed current fair market value, as determined by 4 of 14
the County Assessor as though the property were free of the contractual restriction. The City may also cancel the contract in the event of a breach of contract conditions, whereby the property owner would be subject to the same 12.5% penalty.
Property owners are required to obtain all applicable entitlements such as a Certificate of Appropriateness, and all associated building permits, for work proposed in the 10- year maintenance plan. Furthermore, all work proposed in the 10-year maintenance plan must comply with “The Secretary of the Interior’s Standards for the Treatment of Historic Properties with Guidelines for Preserving, Rehabilitating, Restoring & Reconstructing Historic Buildings” (Weeks & Grimmer, 1995; revised 2017), and as subsequently amended from time to time. Property owners are also required to submit a report to the City on an annual basis to demonstrate compliance with contract terms.
Staff reviews the reports received and typically conducts site inspections to confirm the completion or necessity of work tasks as part of their assessment.
Discussion
There are three applications for single-unit dwelling structures under consideration for this calendar year – 226 Palisades Avenue, 137 Hart Avenue, and 1958 20th Street.
Staff determined that each property qualifies under SMMC 9.56.270(F), as there are no confirmed or outstanding Code violations, the three properties are current in property tax payments, and all work that had been previously conducted was done in a manner that is consistent with the Secretary of the Interior’s Standards. The specific details of each property are discussed below.
137 Hart Avenue
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Figure 1: Photo of 137 Hart Avenue
A Mills Act Contract is proposed for the property at 137 Hart Avenue. It consists of a one-story, beach side bungalow style single-unit dwelling that was designated as a Santa Monica Landmark on May 12, 2025 by the Landmarks Commission. According to the Los Angeles County Assessor the structure was built in 1905 and 1921 although there is no original permit, and the original date of construction might be 1903. The architectural firm of Kaplan Chen Kaplan conducted a historic resources condition assessment of the property.
The residence served for many years as a rental property except for a period beginning in 1947 when it was owned by Sadie Levy, a local activist who resided there for two decades. The parcel is located on the first block from the beach in a neighborhood surveyed and identified as the potential South Beach Historic District. The site and building are in satisfactory to good condition but are in need of ongoing maintenance and repair.
The building’s character-defining features include its overall visual effect and promenade exterior porch. The specific details of the style include a recessed front porch and fixed, four-lite wood windows located on the east facing wall within the recessed porch. The main entrance consists of a partial glazed wood Dutch door. Solid wood railing atop a low wall clad with wood lap siding is along the porches’ eastern edge. A Tuscan square wood support column is the southeast corner from the railing to 6 of 14
the overhanging roof.
As part of the Mills Act application, a Historic Structure Condition Assessment and Maintenance Plan documents the existing condition of the residential building and identifies repair, restoration/rehabilitation, and maintenance needs (Attachment G) along with a general schedule for completion of work. As discussed more fully in Attachment G, the property appears to be in fair/good condition.
The largest rehabilitation costs are ongoing work to correct site drainage, add sump pumps, gutters and downspouts, and an evaluation and seismic upgrade to the building.
Other work includes landscape, repair and maintenance of wood siding and shingles, continued evaluation of site drainage, and replacement of the roof. Work completed includes window rehabilitation and replacement of non-historic windows and upgrades to electrical, plumbing, and heating systems (building system upgrades). These rehabilitation priorities will prolong the life and use of the building. A substantial amount of rehabilitation work described above was completed in 2024. The applicant has developed a 10-year rehabilitation/maintenance plan describing tasks that will be undertaken to address the identified concerns and ensure on-going maintenance that is expected to be realized through the projected tax savings. The house is undergoing a thorough renovation and maintenance assessment for the first year as well as construction upgrades which are estimated to have a total cost of approximately $112,500 with all identified exterior restoration/rehabilitation projected to cost $512,300 over the initial 10-year contract period.
226 Palisades Avenue
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Figure 2: Photo of 226 Palisades Avenue
A Mills Act Contract is proposed for the English Craftsman style single-unit dwelling that was designed in 1917 by the renowned architects Charles Sumner Greene and Henry Mather Greene. The brothers, partners in their eponymous Pasadena-based firm Greene & Greene, Architects, are the most celebrated architects of the Arts and Crafts movement in Southern California. Greene & Greene translated the tenets of the broader American Arts and Crafts movement into the Southern California-specific Craftsman style of architecture, profoundly influencing the built environment of the region.
The structure (Witbeck House) and parcel were designated on March 10, 2025, by the Landmarks Commission. The parcel is located on the southern side of Palisades Avenue, mid-block between 4th Street and Ocean Avenue. A portion of the building’s extensive character defining features include rectangular plan and asymmetrical composition; hipped and gable roof with open eaves; shaped rafter tails and overhanging rakes; six-over-six, double hung, wood sash windows in single, coupled or tripartite configurations; exterior walls clad in random width; coursed wood shingle siding chimneys; and shingled window hoods above the first-floor windows on the primary façade.
As part of the Mills Act application, a Historic Structure Condition Assessment and 8 of 14
Maintenance Plan was prepared by John LoCascio, Historic Resources Group. The report assesses the existing condition of the residential building and identifies repair, restoration/rehabilitation, and maintenance needs (Attachment E) along with a general schedule for completion of work. As discussed more fully in Attachment E, the fundamental goal in the building’s rehabilitation and repair is to remove non-historical features and materials maintain character defining features.
The site and buildings at 226 Palisades Avenue are in good condition although in need of regular maintenance and restoration and removal of some added non-original features. The Landmark designation application and architectural report (24ENT-0238) were submitted in December of 2024 and includes a current building assessment. The scope of work includes removal of nonhistorical features, repair of historical wood windows including the frame, sash, and casings, painting the building, replacement of non-historical exterior plaster with compatible wood shingle siding, and foundation work that would follow a repair schedule. In 2024, the current owner completed needed plumbing/sewer work and foundation waterproofing. Although not included in the scope of the Mills Act contract, this rehabilitation prioritizes the necessary work to prolong the life and use of the building. The rehabilitation work described will require a building permit. There will also be additional items studied as part of the ongoing maintenance plan, such as upkeep of plantings adjacent to the foundation, pest control, and tree maintenance.
The applicant has developed a 10-year rehabilitation/maintenance plan describing tasks that will be undertaken to address the identified concerns and ensure on-going maintenance that is expected to be realized through the projected tax savings. The maintenance tasks are estimated to have an annual total cost of approximately $52,000 with all identified exterior restoration/rehabilitation projected to cost $768,000 over the initial 10-year contract period.
1958 20th Street
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Figure 3: Photo of 1958 20th Street
A Mills Act Contract is proposed for the two-story, single-unit dwelling located at 1958 20th Street, designated a Landmark Structure by the Landmarks Commission on February 10th, 2025. As part of the Mills Act application, an architect’s report was prepared by Kaplan Chen Kaplan.
Constructed in 1937, the single-unit dwelling was designed by renowned African American Los Angeles architect Paul R. Williams in the American Colonial Revival style.
The home was built for Santa Monica’s first African American physician Dr. Marcus O.
Tucker and his family. The parcel is located in the Pico Neighborhood on the west side of 20th Street, mid-block between Pico Boulevard and Delaware Avenue. The Statement of Official Action (STOA) for the designation of the structure and parcel includes information on the historic context of the Santa Monica’s African American community and the Pico neighborhood, including the importance of the Tucker family and Paul R.
Williams. The site and building are in adequate to fair condition and in need of maintenance and repair.
The wood-frame building has a low-pitched hipped roof with moderately overhanging 10 of 14
eaves with exposed shaped rafter tails. The primary (northeast) facade of the building is clad with V-groove wood siding on the second story that wraps around to the northwest and southeast facades before terminating at second story windows. A string course divides the two stories. The remaining volume of the building is clad in smooth stucco.
Character defining features include decorative exposed rafter tails at second floor with shaped ends on the front elevation and recessed entryway with triangular pediment wood surround. The building is set back from the street, and its Colonial Revival style reflects a formal prominence that stands out from the rest of the block on this important street in the city.
The report assesses the condition of the building and identifies repair, restoration/rehabilitation, and maintenance needs (Attachment F) along with a general schedule of work. The major upgrades are investments in drainage, structural foundation, landscape, plaster, wood siding, and window repair and replacement. Some work has already been completed in anticipation of the Mills Act contract, which includes building system upgrades (electrical and a new sewer line) and painting.
Major expenditures include a new roof and maintenance and repair to the wood siding and trim. The highest anticipated expenditure is the building’s roof replacement valued at $20,000 with anticipated work scheduled for 2027. In addition to the rehabilitation plan, a 10-year maintenance plan describing tasks that will be undertaken to address the identified concerns that are expected to be realized through the projected tax savings has also been included in the application. The existing building conditions are listed as adequate/fair and in need of regular standard maintenance.
The maintenance as well as the building renovation tasks are estimated to have an annual total cost of approximately $124,000 with all identified exterior restoration/rehabilitation projected completed by 2029 over the initial 10-year contract period.
Future Changes to Contract Renewal, Monitoring, and Cost Recovery 11 of 14
Currently, of the 104 existing contracts the City oversees, 57 are beyond the initial 10- year maintenance and restoration term. These contracts are renewed annually, and older contracts are currently not obliged to update their maintenance and restoration work programs since the contract did not specifically address that requirement. Moving forward, contracts recorded in 2025 and beyond will be required to provide an updated work program as part of their Mills Act contract upon the 10th renewal year from the original contract execution date. Staff is also exploring a cost recovery fee for contract monitoring for the Mills Act Contracts considered in 2026 and for all future contracts.
The City currently does not charge an application filing fee for a Mills Act Contract (designated Landmarks, Structures of Merit, and Historic District Contributors are eligible). These contracts require a substantial amount of staff effort including review and analysis of materials, site visits for verification of work and existing conditions, developing the contract and presentations to both the Landmarks Commission and the City Council. The cities of Los Angeles ($2,845 proposed), San Diego ($1,523), San Francisco ($3,498), and San Jose, Coronado, Orange and Long Beach all have application fees. The City of San Diego has a monitoring fee ($870.39 every five years) and an enforcement fee ($1,935.80), and a monitoring fee is being proposed for the City of Los Angeles ($2,845). The fees charged by the City of San Diego recover approximately 27% of the City costs.
Over the past decades the City has engaged in monitoring Mills Act contracts every few years. This has included contacting and working with property owners to confirm what, if any work associated with the contract has been performed, including building permit research and site visits. Going forward, staff anticipates that contracts will be monitored annually. Currently, there is no fee for monitoring Mills Act contracts. A monitoring fee would provide cost recovery and a more detailed analysis will be provided with the 2026 comprehensive user fee study.
As part of this renewed Mills Act monitoring program, staff has reviewed a report that details Mills Act contract implementation by various California cities produced by Robert Chattel and Chattel Inc. The report was prepared for the City of Los Angeles, which has 12 of 14
the largest Mills Act program in the state and has paused their adoption of any new Mills Act contracts since 2021. The report also provided a series of recommendations, one of which is to adopt a monitoring fee for future Mills Act contracts.
Staff presented these concepts to the Santa Monica Conservancy and the Santa Monica Landmarks Commission in August of 2025; they are fully supportive of a new maintenance/rehabilitation plan at the 10-year renewal and cost recovery for Mills Act contracts.
Typically, property owners can expect a 20% to 70% savings on their property taxes.
Under State law, the lesser of 1) the current market value, 2) the Proposition 13 value, or 3) the restricted Mills Act value will be used to calculate your property taxes. It is possible that the Proposition 13 value may be lower than the restricted value, and the property would receive no property tax benefit. The property tax reduction is a substantial tax benefit for the property owners given the contracts do not expire and are passed along to subsequent buyers. Therefore, cost recovery for the initial application submittal, ongoing monitoring, and enforcement is warranted and reasonable. A proposed cost recovery fee will be included in the City’s next comprehensive user fee study, with planned implementation beginning in FY 2026-27.
Environmental Review
Execution of the Mills Act contracts are categorically exempt from CEQA pursuant to Section 15331 of the CEQA Guidelines. Section 15331 (Class 31) exempts projects limited to maintenance, repair, stabilization, rehabilitation, restoration, preservation, conservation or reconstruction of historical resources in a manner consistent with the Secretary of the Interior's Standards for the Treatment of Historic Properties with Guidelines for Preserving, Rehabilitating, Restoring, and Reconstructing Historic Buildings. The contracts provide financial incentives for preservation of historic properties and all work previously conducted on the property conforms to the Secretary of the Interior’s Standards for the Treatment of Historic Properties. Therefore, the contracts are exempt pursuant to Section 15331 of the CEQA Guidelines. 13 of 14
Additionally, the fees for enforcement and monitoring is exempt pursuant to Section 15273 of the CEQA Guidelines, which states that CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, and other charges by public agencies which the public agency finds are for the purpose of meeting operating expenses. Therefore, the proposed future fees are exempt pursuant to Section 15273 of the CEQA Guidelines.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action. Staff will return to Council if specific budget actions are required in the future.
Execution of these Mills Act Contracts would result in a reduction in annual property tax revenue to the City in the estimated amount of $12,018 for FY 2025-26 and subsequent years thereafter. A summary financial property tax analysis table is included as Attachment A.
The fees associated with this program that staff is exploring will be included in the comprehensive user fee study, with planned implementation beginning in FY 2026-27.
Any required budget changes will be included in the Proposed FY 2026-27 Budget.
Prepared By: Regina Szilak, Associate Planner
Approved Forwarded to Council
Attachments:
A. financial pdf 2025
B. 137 Hart Avenue Resolution of Approval of Mills Act Contract C. 1958 20th Street Resolution of Approval of Mills Act Contract 14 of 14
D. 226 Palisades Resolution of Approval of Mills Act Contract E. 25ENT-0084 (226 Palisades Ave) MA Application - No Tax Info F. 25ENT-0076 (1958 20th St) MA materials
G. 25ENT-0089 (137 Hart Ave) MA material
H. Levine-1928 20th
I. 137 Hart Ave (Simonsen)_Levine
J. 226 Palisades Levine 10.21.25
K. 226 Palisades Ave. Oaks
L. oaks-initiative-update-1958 20th
M. 137 Hart Ave (Simonsen)_Oaks Initiative 10.21.25
N. Written Comments
O. PowerPoint Presentation