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Home My WebLink About2025-06-10; City Council; 07; Mills Act Program AssessmentCA Review CKM Meeting Date: June 10, 2025 To: Mayor and City Council From: Geoff Patnoe, City Manager Staff Contact: Mike Strong, Assistant Director of Community Development mike.strong@carlsbadca.gov, 442-339-2721 Subject: Mills Act Program Assessment Districts: All Recommended Action Adopt a resolution directing staff to implement specific changes to the Mills Act program. Executive Summary Following the adoption of the Mills Act historical preservation program in 2022, the City Council directed staff to work with the Historic Preservation Commission to monitor its implementation. In response, the Historic Preservation Commission adopted a resolution that includes recommendations for improving participation in the program. Virtually all the recommendations are administrative in nature – i.e., increase program awareness, simplify forms, update website – and can be completed within the department’s current budget and staffing. One recommendation, to waive the city’s application fee, will be considered in future budget hearings, starting in fiscal year 2026-27. The City Council is being asked to adopt a resolution directing staff to implement specific changes to the Mills Act program. Explanation & Analysis Background The Mills Act is an economic incentive program enacted by the State of California to encourage the preservation of historic buildings. It grants local governments the authority to establish, administer and implement Mills Act historic preservation tax abatement programs that allow them to enter into contracts with owners of qualified historic properties who actively participate in the restoration and maintenance of their historic properties, while receiving property tax relief. Each local government establishes its own criteria for evaluating applications and determines how many contracts will be allowed within its jurisdiction. The City Council adopted a local Mills Act in June 2022, which included a measure to track the program’s success. This task was also included in the FY 2024-2025 Historic Preservation Commission Work Plan, which was approved by the City Council on May 21, 2024. (Exhibit 2) June 10, 2025 Item #7 Page 1 of 7 Docusign Envelope ID: 05F51DCB-3FC3-4798-A489-3C4CDA7F2A43 Mills Act Program assessment Following two and a half years of implementation, no one has taken advantage of the city’s Mills Act program. Even though several homeowners have expressed interest in the program, processing costs, improvement costs, and/or restoration requirements seem to be a barrier to participation and enrollment in the program. Following adoption of the FY 2024-25 Work Plan, the Historic Preservation Commission met on July 8, 2024, and on Jan. 23, 2025, and undertook a comprehensive assessment to evaluate the success and sustainability of the city’s Mills Act Historical Property Contract program. The Historic Preservation Commission adopted a resolution that includes recommendations to the City Council for improving participation in the program (Exhibit 3). In consideration of the commission’s discussion and recommendations, and public comments received to date, there are two main categories that staff have developed for the City Council’s consideration: 1) Administrative changes that the Planning Division would be able to implement without any fiscal impact or impact to staffing or staff resources 2) Other changes that require City Council approval during a future budget adoption process Based on currently available information regarding the work required to advance each measure, and the resources required to implement each measure, staff recommend a phased approach to implementation. The table below outlines the implementation timeframe of each of the commission’s recommendations. Recommendation Brief description Category Timeframe Outreach Use a targeted approach with stakeholders and community partners to help reach target audiences. Engage with property owners to share information about the benefits of a Mills Act contract Administrative 2025 Streamline the process Develop standardized templates for rehabilitation and maintenance plans (10- year work plan) and historical assessment reports Administrative 2025 Eligible expenses Encourage the use of the program to recover application (consultant) costs Administrative 2025 Public information Record a pre-application workshop to supplement existing collateral materials Administrative 2026 Amend the Master Fee Schedule Reduce or waive Mills Act Contract application fees (for a two-year period to jump start interest in the program) Budget1 2026-2027 Monitoring program Report on status of Mills Act program to the Historic Preservation Commission every two years Administrative 2027 1 The Historic Preservation Commission recommends the City Council consider setting aside program funding or reduce or waive fees for processing Mills Act program applications. It is recommended that consideration of this measure be delayed and be considered in future budget hearings, starting in FY 2026-27. June 10, 2025 Item #7 Page 2 of 7 Docusign Envelope ID: 05F51DCB-3FC3-4798-A489-3C4CDA7F2A43 The Historic Preservation Commission believes that improving accessibility to the Mills Act program will increase the interest and participation rate in Carlsbad. In consideration of the commission’s discussion and recommendations, staff are recommending initially focusing on outreach, education, and updating application forms. The suggested revisions are intended to be more user friendly, eliminate unnecessary redundancy and clarify ambiguities. Staff are recommending that the commission’s recommended measure to consider reducing or waiving application processing fees to encourage more Mills Act contract applications should be considered in the FY 2026-27 budget cycle. To date, application processing fees for new contracts are the only program fees currently collected that offset the city’s costs of administering those services. These are currently set at a reduced rate, such that the city is subsidizing some of the application processing costs. Funding for the balance of the program’s services, including periodic inspections, is supported by the city’s General Fund. Currently, the city charges a fee of $4,211 to process a Mills Act Program agreement and $1,964 for an application to be on the city’s inventory of historic resources. The commission’s recommendation to establish a monitoring program could be implemented through a report filed every two years. A monitoring program would provide informative progress updates and create on-going opportunities to solicit and incorporate community feedback. The commission is recommending that on-going program assessments are necessary to evaluate current policies and program efficacy and is recommending reassessment of the Mills Act program on a fixed, recurring schedule. The first re-assessment could occur in 2027. Fiscal Analysis The recommendations to the City Council requesting administrative changes to the Mills Act incorporate some of the approaches used by other agencies and would be processed with existing staff resources and existing budget. The fiscal impact associated with city processing fees is approximately $6,175 per application. City Council consideration of the cost of implementing this specific measure would be included in the proposed FY 2026-27 budget. Next Steps Planning Division staff will work with the City Attorney’s Office and the Communication & Engagement Department to implement the City Council direction. Environmental Evaluation The proposed action to direct staff resources to implement specific changes to the Mills Act program is exempt from environmental review under California Environmental Quality Act, or CEQA, Guidelines Section 15378 as it can be seen with certainty that there is no possibility the proposed action may have a significant effect on the environment. Exhibits 1. City Council resolution 2. City Council Resolution No. 2024-109 (on file in the Office of the City Clerk) 3. Historic Preservation Commission Resolution No. 2025-002 (on file in the Office of the City Clerk) June 10, 2025 Item #7 Page 3 of 7 Docusign Envelope ID: 05F51DCB-3FC3-4798-A489-3C4CDA7F2A43 Exhibit 1 RESOLUTION NO. 2025-122 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, DIRECTING STAFF TO IMPLEMENT SPECIFIC CHANGES TO THE MILLS ACT PROGRAM WHEREAS, the Historic Preservation Commission undertook a comprehensive assessment to evaluate the success and sustainability of the city’s Mills Act Historical Property Contract program. The Commission recently completed its study and adopted Resolution No. 2025-002 that included a set of recommendations for City Council consideration and possible direction; and WHEREAS, the City Council has determined that it is necessary to undertake an update to various policies and programs to encourage rehabilitation and re-use of historic buildings and more participation and enrollment in the Mills Act program. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1.That the above recitations are true and correct. 2.The proposed action to direct staff resources to implement specific changes to the Mills Act program is exempt from environmental review under California Environmental Quality Act Guidelines Section 15378 as it can be seen with certainty that there is no possibility the proposed action may have a significant effect on the environment. 3.That the City Manager or designee is authorized to begin working on or coordinating the following: A. Outreach. Use a targeted approach with outreach to engage with stakeholders and community partners to help reach target audiences. Engage with property owners to share information about the benefits of entering into a Mills Act contract. Ensure that the outreach has a broader reach. (Implementation timeframe – 2025.) B.Streamline the process. Develop standardized templates for: 1) rehabilitation and maintenance plans (10-year work plan); and 2) historical assessment reports. (Implementation timeframe – 2025.) C.Eligible expenses. Update city application forms to acknowledge any qualified rehabilitation and restoration work that commenced up to two years before the filing of a Mills Act contract application. Examples of eligible work should be June 10, 2025 Item #7 Page 4 of 7 Docusign Envelope ID: 05F51DCB-3FC3-4798-A489-3C4CDA7F2A43 expanded to also include consulting and professional fees. (Implementation timeframe – 2025.) D.Public information. Record a virtual pre-application workshop to supplement existing educational materials. (Implementation timeframe – 2026.) E.Amend the Master Fee Schedule. Consider reducing or waiving application fees as a part of the FY 2026-27 budget cycle. (Implementation timeframe – budget hearings, FY 2026-27.) F.Monitoring program. Report to the Historic Preservation Commission every two years regarding the status of the Mills Act Program. This will help provide oversight of the program where no monitoring mechanism is currently required. (Implementation timeframe – recurring every two years and starting in 2027.) PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 10th day of June, 2025, by the following vote, to wit: AYES: Blackburn, Bhat-Patel, Acosta, Burkholder, Shin. NAYS: None. ABSTAIN: None. ABSENT: None. ______________________________________ KEITH BLACKBURN, Mayor ______________________________________ SHERRY FREISINGER, City Clerk (SEAL) June 10, 2025 Item #7 Page 5 of 7 Docusign Envelope ID: 05F51DCB-3FC3-4798-A489-3C4CDA7F2A43 Exhibit 2 City Council Resolution No. 2024-109 (on file in the Office of the City Clerk) June 10, 2025 Item #7 Page 6 of 7 Docusign Envelope ID: 05F51DCB-3FC3-4798-A489-3C4CDA7F2A43 Exhibit 3 Historic Preservation Commission Resolution No. 2025-002 (on file in the Office of the City Clerk) June 10, 2025 Item #7 Page 7 of 7 Docusign Envelope ID: 05F51DCB-3FC3-4798-A489-3C4CDA7F2A43