HomeMy WebLinkAbout2023-02-14; City Council; ; Establishing Historic Preservation Permit Application FeesCA Review ___AF___
Meeting Date: Feb. 14, 2023
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Mike Strong, Assistant Director Community Development
mike.strong@carlsbadca.gov, 442-339-2607
Subject: Establishing Historic Preservation Permit Application Fees
District: All
Recommended Action
Hold a public hearing and adopt a resolution adopting new fees for the recovery of city costs for
processing of applications for inclusion into the Carlsbad Historic Resource Registry and
participation in the city’s Mills Act Program (Exhibit 1).
Executive Summary
California’s Mills Act provides cities with a mechanism to encourage the preservation of their
historic buildings. It allows the city to give owners of qualified historic properties who actively
participate in the restoration and maintenance of their properties a reduction in their
property tax.
The City Council approved the local Mills Act program on Nov. 3, 2022, when it approved
various amendments to the city’s historical preservation ordinance (Ordinance No. CS-438,
which amended Carlsbad Municipal Code Title 22).
The City Council is now being asked to hold a public hearing to consider adopting fees to
cover some of the necessary processing costs associated with implementing the city’s Historic
Resource Registry and Mills Act Program. At the conclusion of the public hearing, the City
Council may adopt a resolution, Exhibit 1, which would add these fees to the city’s Master Fee
Schedule. This item is being brought forward at this time so that the fees could be in place
before April, when property owners can begin submitting Mills Act contract applications.
Explanation & Analysis
Basis for fees
The city has two historic preservation programs, its longstanding historic properties registry and
the new Mills Act program. A property must be listed on the registry to be considered for a
Mills Act contract. Property owners can apply for both concurrently.
For a property to receive these historic designations, the city must review and analyze various
studies and documents to ensure the property’s historic eligibility, as detailed in Exhibit 2, the
city’s informational bulletin on historic preservation. This review and analysis requires
significant staff time.
Feb. 14, 2023 Item #6 Page 1 of 16
In developing a recommended fee for historic preservation applications, city staff calculated
both the direct and indirect costs such as operating expenses, i.e., the staff time spent on the
activity, the cost of time for the employee, and an overhead factor; as well as charges for use of
capital depreciation and debt service of city facilitates and equipment. This calculation
represents the actual total cost of processing historic preservation permit applications, which is
necessary to ensure that any adopted fees do not exceed the costs of the service being
provided.
Some city fees are intended to recover the full cost of providing the service, others only cover
part of the cost, so the service is subsidized with money from the city’s General Fund.
City staff analyzed the work effort required to process historic preservation permit applications,
conduct on-site inspections during the application review and every five years thereafter and
appropriately track and monitor the status of historic properties. The proposed fees included in
the draft resolution (Exhibit 1) do not exceed the estimated reasonable cost of providing the
services for which the fees are charged. They are being proposed to achieve some level of cost
recovery, as supported by the documentation of time and material costs provided as Exhibit 3.
The fees are set at the current cost recovery rate as calculated by or verified by the Finance
Department in a manner consistent with the city’s last fee study, which has been adjusted to
account for inflation.
In order to increase participation in the city’s historic preservation programs, staff are
recommending fees that recover part of, but not all, the city’s costs to process applications.
The applicants will be responsible for the costs of the third-party technical reports that may be
required in some cases. The table below, as supplemented by the information provided in
Exhibit 3, includes a breakdown of the user fees for both a full-cost recovery model and staff’s
partial cost recommendation.
Application type Full cost
amount
Recommended
fee amount*
Percent
subsidized
Applicant
pays
Local register application $5,420 $1,788 67% 33%
Mills Act application $3,834 $3,834 0% 100%
Concurrent applications (Registry + Mills Act) $6,654 $4,392 33% 67%
Third-party technical report review – Actual cost – 100%
Monitoring $705 $0 100% 0%
* Subject to annual inflation adjustment based on the Consumer Price Index in future fiscal years.
These fees would be reviewed periodically to determine if any adjustments are necessary to
reflect actual processing costs. These fees will be incorporated into the city’s Master Fee
Schedule, to be reviewed with future comprehensive fee updates.
• For local register applications, almost one-third of the planning costs would be borne by
the applicant and two-thirds would be subsidized by the General Fund.
• For Mills Act applications, 100% of the planning costs would be borne by project applicants
to account for the special services that benefit a limited number of property owners
seeking a reduction in property taxes.
• The cost allocation plan also provides for fee reductions for projects involving multiple
applications for the same project on the same property, to be processed concurrently.
Feb. 14, 2023 Item #6 Page 2 of 16
When a local register and Mills Act applications are processed simultaneously, the
proposed methodology recovers approximately 67 percent of its recoverable service-
delivery costs. The recommended $4,392 fee for processing concurrent applications is
nearly 50% of the full cost amount to process both separately, which is $9,254.
• The cost allocation plan requires an applicant to cover the full costs if there is any
circumstance where the city requires the assistance of an outside expert to review a
historic structure report.
Comparison of fees
More than 90 local governments across the state have established a local Mills Act program,
including eight other agencies in San Diego County: Chula Vista, Coronado, Encinitas,
Escondido, La Mesa, National City and the city and county of San Diego, according to the
California Office of Historic Preservation’s website. Below is a comparison of selected fees
between the eight local agencies.
Application type
Jurisdiction Registry
application
Mills Act
application Monitoring Total
Carlsbad (proposed) $1,788 $3,834 $0 *$5,622
Chula Vista $4,800 $8,725 $0 $13,525
Coronado $962 $106 $0 $1,068
Encinitas $0 $0 $0 $0
Escondido $500 $500 $0 $1,000
La Mesa $691 $2,001 $0 $2,692
National City $1,600 $2,265 $0 $3,865
San Diego $1,185 $471 $990 $2,646
County of San Diego -- $1,429 $0 $1,429
* The recommended fee for processing concurrent applications is $4,392.
The proposed fees included in the draft resolution (Exhibit 1) fund the program through a mix
of both participant fees and public resources, which are above the regional averages, but not
out of line with the San Diego region, except for the City of Encinitas, which fully subsidizes the
costs of its historic preservation program.
Community Engagement
This item was noticed in accordance with the Ralph M. Brown Act and was available for public
viewing and review at least 72 hours prior to the scheduled meeting date. In addition, notices
of the proposed fee were published in a newspaper of general circulation on January 20, 2023
and January 27, 2023 and sent to the Building Industry Association, SDG&E, and the Carlsbad
Historical Society. No comments have been received in response.
Fiscal Analysis
Adding the proposed fees will generate incremental revenues to the city that will offset the
costs of implementing the city’s historic preservation programs.
Depending on which option or options the City Council chooses, the fiscal impact to the General
Fund ranges from $0 to approximately $6,654 per application processed.
Feb. 14, 2023 Item #6 Page 3 of 16
Options
City staff provide the following options for recovering the cost of historic preservation
applications for the council’s consideration:
1. Full cost recovery. Set historic preservation fees so that they recover the city’s full costs.
User fees could also be incrementally augmented or phased-in over a pre-selected
period of time to reach full cost recovery.
Pros
• Fee amounts are proportional to the costs associated with providing the service
or program, which consists of both direct and indirect costs (i.e., revenue
neutral).
• Establishing full cost recovery fees would help ensure that those who utilize the
city’s services pay for those services in proportion to the benefit received.
• Full cost recovery can provide a transparent way for the city to identify and fund
the cost of undertaking this activity without the need to rely solely on revenue
secured through the budget process.
Cons
• The full cost recovery fee could discourage participation, which may reduce
historic preservation opportunities.
2. Partial cost recovery. The cost to process applications would be shared between the
applicant and the city.
Pros:
• Strikes a balance between public benefits and personal, participation costs. The
reduced fee in the initial years of the program is beneficial to the public as a
whole and the individual fee-payer.
• Under this scenario, the fee amounts could be more readily adjusted over time
to reflect changes in policy preferences or to re-align fee amounts with localized
cost recovery policies.
Cons:
• The General Fund absorbs the subsidized cost.
3. Not impose fees. The city could waive fees entirely. There would be no cost to the
applicant to file historic preservation applications with the city.
Pros:
• Waiving or reducing certain fees and charges may be within the public interest in
order to reduce barriers to participation.
Cons:
• The city would not recover any direct and indirect costs. Those who utilize these
city’s services would not pay the services, despite receiving considerable
property tax reductions through the Mills Act program.
• The General Fund would absorb the fully subsidized cost.
Staff recommend Option 2.
Feb. 14, 2023 Item #6 Page 4 of 16
Environmental Evaluation
Establishing user fees is not a project and is exempt from environmental review under Public
Resources Code Section 21080(b)(8) of the California Environmental Quality Act, which provides
an exemption for the establishment or modification of charges by public agencies that the
public agency finds are for the purpose of meeting operating expenses.
Next Steps
The new fees would go into effect no sooner than 60 days after the City Council’s adoption of
the resolution.
Exhibits
1. City Council resolution
2. Informational Bulletin - Historic Preservation
3. New user fees - process and fee justification
Feb. 14, 2023 Item #6 Page 5 of 16
RESOLUTION NO. 2023-053
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, ADOPTING NEW FEES FOR THE RECOVERY OF CITY COSTS
RELATED TO THE PROCESSING OF APPLICATIONS FOR INCLUSION INTO THE
CARLSBAD HISTORIC RESOURCE REGISTRY AND PARTICIPATION IN THE
CITY'S MILLS ACT PROGRAM
WHEREAS, the City Council of the City of Carlsbad, California has the authority to establish fees
for city services; and
WHEREAS, from time-to-time said fees are reviewed and evaluated to maintain an adequate
fee structure for recovering costs for city services; and
WHEREAS, the City Council has determined the cost of providing services for administering the
Carlsbad Historic Resource Registry and city's Mills Act program to support the preservation,
restoration and/or rehabilitation of historic resources; and
WHEREAS, the City Council finds it necessary to recover the costs for city services; and
WHEREAS, the City Council finds that the recommended fees are reasonable in that they seek
to recover the basic cost incurred by the city for administering the Carlsbad Historic Resource Registry
and Mills Act program; and
WHEREAS, the City Council now desires to establish the fees set forth in this resolution; and
WHEREAS, the City Council has held the necessary public hearing and allowed for public
comment on the establishment of said fees.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
l.That the above recitations are true and correct.
2.That the changes to the Master Fee Schedule as shown below are adopted and shall be
incorporated into the city's existing Master Fee Schedule.
Exhibit 1
Feb. 14, 2023 Item #6 Page 6 of 16
Planning Division -application type User fee
Historic Preservation Permit
Local Register application $1,788
Mills Act application $3,834
Concurrent Local Register and Mills Act applications $4,392
Third Party Technical Report Review -Contractor Cost Actual Cost
Mills Act inspections $0
3.The City Manager or designee may adopt such policies and prescribe such forms as are
necessary to implement and collect the fees provided for by this resolution.
4.This modification to the Master Fee Schedule shall become effective on April 16, 2023.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 14th day of February, 2023, by the following vote, to wit:
AYES:
NAYS:
ABSTAIN:
ABSENT:
Blackburn, Bhat-Patel, Acosta, Burkholder.
None.
None.
None.
L SHERRY FREISINGER, City Clerkl (SEAL)
Feb. 14, 2023 Item #6 Page 7 of 16
Community Development Department | 1635 Faraday Ave. | Carlsbad, CA 92008 | www.carlsbadca.gov
Historic Preservation
IB-161
The City of Carlsbad has a long and rich built
environment history with its origins dating back to
the late 19th century as a “whistle stop” on the new
California Railroad. The city’s namesake dates back
to the 1880s when John Frazier, a former sailor, dug
a well in the area and sold the water to train
passengers. It was found that the fresh water was
like that found in some of the most renowned spas
in the world, so the town was named after the
famed spa in the Bohemian town of Karlsbad.
As the area grew over the decades, many of the
historical structures and landmarks built in those
earlier years and later still remain. The city
recognizes the importance of restoring, preserving,
and protecting these older buildings in order to help
give people a sense of place and connection with the
past.
This Info-Bulletin provides an overview of the
historic designation process and various incentive
programs that are available to owners of these
historical structures. Through these programs, we
can help protect and maintain the city’s rich cultural
history for generations to come.
Designated Historic Resources
A potential historic resource can be more than just a
building or structure; it may be a landmark, site, landscape features, or artifact.
However, in order for a potential historic resource to
be considered a designated “Historic Resource” that
is subject to the benefits prescribed under the city’s
historic preservation code, the property owner must
provide reason and justification supporting why the
resource is significant and should be protected.
Documents Referenced
CA Mills Act - Contract; §50280-50290
CA Mills Act - Tax Code; §439
Secretary of the Interior’s Standards; website
State Historical Building Code; §18950
Carlsbad Historic Preservation Code; Title 22
Land Use Review Application; P-1
Historic Preservation Permit Form; P-40
Mills Act Supplemental Checklist; P-40(a)
Exhibit 2
Feb. 14, 2023 Item #6 Page 8 of 16
{city of
Carlsbad
Informational Bulletin
Page 2 of 7 IB-161_Historic Preservation
Step one in this process is to determine whether the
resource meets initial historic qualifications. The
property owner must show that the potential
historic resource is at least 50 years old and meets
at least one of the following criteria:
o It is associated with significant events that
contribute to our city’s, state’s or nation’s
history;
o It is identified with a person or persons who
significantly contributed to the culture and/or
development of the city, state, or nation;
o It is an excellent example of an architectural
style/period or work of known professionals
who significantly influenced local, state, or
national heritage; or
o It yields information important to the
prehistory or history of the area, state or
nation.
The potential historic resource must also retain
enough of its historic, cultural or architectural
character or appearance to be recognizable as a
historic resource and to convey the reasons for its
significance. Resources meeting this initial qualification step can then proceed to Step 2:
Application Submittal. Under this step, the property
owner must file a Historic Resource Designation
application to add the property to the Carlsbad
Historic Resource Register (Register), along with
documentation showing how the resource meets the criteria selected in Step 1 above. Such
supporting documentation may include site records,
reports and surveys prepared by qualified
professionals, or other similar documented evidence
showing the historical importance of the property.
Once filed and reviewed by the city’s 3rd party
historical consultant, the application and findings
are presented before the Historic Preservation
Commission (Commission) for consideration.
Following their review, the Commission makes a
recommendation to the City Council whether the
potential historic resource should be included in the
Register. Only those properties included in the
Register are eligible to participate in the historic
preservation incentives discussed in this bulletin.
Removal from the Register
Because this is a voluntary program, property
owners may request their property to be removed
from the Register. The Commission and City Council
consider the de-designation application.
Properties that are removed from the Register will
no longer be eligible for the incentives listed below.
HISTORIC PRESERVATION INCENTIVES
The city offers a number of incentives designed to
encourage property owners to enhance and
preserve important historic resources.
Bed & Breakfast Establishments
Although most residential zones only allow
residential use of property, city code §21.04.046 &
§21.42.140 allow some historic resources in some
multi-family and mixed-use zones to operate a
business that accommodates overnight guests,
commonly referred to as a bed & breakfast.
Feb. 14, 2023 Item #6 Page 9 of 16
IB-161_Historic Preservation Page 3 of 7
The specific zones that offer this incentive are
Multiple-Family Residential (R-3), Residential
Density-Multiple (RD-M), Residential Professional (R-
P), Residential Tourist (R-T) and Commercial Tourist
(C-T).
A discretionary permit (specifically, a Conditional
Use Permit, or CUP) is required, which may require
conditions be added by the city to ensure
compatibility with surrounding properties. For more
information on the city’s discretionary permit review
process, please see the Community Development
Department Permit & Service Delivery Guide.
State Historical Building Code
This alternative building code seeks to preserve
historic buildings by providing equivalent life safety
standards for repairs, alterations, and additions to
historic buildings.
The equivalent measures permitted by the code are
more sensitive to the historic conditions of a
building than standard building codes and allow
flexibility (often resulting in cost savings) in meeting
building code requirements for restored and
rehabilitated structures. The City of Carlsbad has
adopted the State Historical Building Code in the
city’s code (Chapter 18.08). General information
about the State Historical Building Code may also be
found at the California Office of Historic
Preservation’s website.
Federal Tax Credits
The Federal Historic Preservation Tax Incentives
program, and the 20% Rehabilitation Tax Credit,
may be available for buildings that are listed
landmarks in the National Register of Historic Places,
or that contribute to National Register Historic
Districts or certain local historic districts.
To qualify, properties must be income-producing
(i.e., commercial, industrial, agricultural, or rental
residential purposes, but not properties used
exclusively as the owner’s private residence) and
substantially rehabilitated according to the
Secretary of the Interior’s Standards for
Rehabilitation.
The historic building, the rehabilitation project
plans, and the completed project must all be
certified by the Secretary of the Interior. The
program is jointly administered by the National Park
Service and the Internal Revenue Service in
partnership with the State Historic Preservation
Office. More information about the Federal 20%
Rehabilitation Tax Credit may be found at the California Office of Historic Preservation’s website.
THE MILLS ACT
The Mills Act is often recognized in the state as
probably the single most important economic
incentive program offered to private property
owners for the restoration and preservation of
historic buildings, which is why this section provides
more attention to this city incentive.
Mills Act Origins
In 1971, the City of Coronado was pursuing a rezone
of the Hotel Del Coronado, which would have had
significant property tax implications if approved. In
response, State Senator James Mills from San Diego
Feb. 14, 2023 Item #6 Page 10 of 16
Page 4 of 7 IB-161_Historic Preservation
introduced in 1976 the Mills Act legislation, which
established an economic incentive program that
allows local jurisdictions to enter into contracts with
property owners who agree to preserve, restore,
and maintain their historic property in exchange for
a potential reduction in local property taxes.
Since its adoption, local Mills Act programs have
helped preserve thousands of historic structures
throughout California. The program’s regulatory
authority is described under state Government Code
(§50280-50290) as well as the Revenue and Taxation
Code (§439-439.4).
Program Eligibility
The city’s historic preservation code (Chapter 22.10)
establishes a voluntary program that incentivizes
owners to preserve their historic structures by
providing potential fiscal benefits and relief from
certain development standards and taxes. To
qualify, the owner of the historic resource must
agree to participate in the program, and the historic
resource being considered must meet certain
requirements, as summarized below.
Carlsbad Mills Act Program – Highlights
In 2022, the city established a voluntary Mills Act
program (Chapter 22.10). Application processing
steps for a Mills Act contract are provided later in
this info-bulletin, but some important program
highlights are provided below.
• According to the County Tax Assessor’s website,
properties under a Mills Act contract can
experience a reduction in property taxes for
most owners of between 40% and 60%
compared to what the property tax would be
without the Mills Act.
• The city and the property owner enter into a
Mills Act contract that is recorded on the property’s title.
• Contract term is for 10 years that automatically
renews each year. Either party can file a notice
not to renew the contract after 10 years.
Financial penalties are imposed for a breach of
the contract, including a state-mandated
penalty fee of 12.5% of the full market value at
the time of cancellation.
• Only privately-owned properties that meet
the definition of a “Qualified Historical
Property” (§22.02.040) are eligible to apply
for a Mills Act contract.
• Following submittal, the property will be
assessed by the city to confirm historic
significance and determine if any alterations are
in compliance with the Secretary of the
Interior’s Standards for the Treatment of
Historic Properties, in particular the Standards
and Guidelines for Preservation, Restoration &
Rehabilitation.
• The contract includes a work plan describing the
improvements or modifications required, if any,
for preserving, restoring, and maintaining the
historic property during the term of the
contract. Failure to timely complete the work
plan may result in cancellation of the contract.
• Improvements to the historic property under
the work plan must follow the aforementioned
Secretary of the Interior’s Standards.
• While under contact, the property owner may
build an addition to their property, so long as it
complies with the Secretary of the Interior’s
Standards for the Treatment of Historic
Properties with Guidelines for Rehabilitation. It
should be noted that the new construction
Feb. 14, 2023 Item #6 Page 11 of 16
IB-161_Historic Preservation Page 5 of 7
receives no property tax reduction. Please
contact the County Assessor's office for
information.
• The deadline for owners to apply for a Contract
is June 1. This deadline has been set to ensure
that contract applications can be approved,
executed, and recorded before the County Tax
Assessor’s lien date (December 31).
• State law requires the city to inspect the
property before the contract is approved and
recorded, and every five years afterward to
ensure contract requirements are being met.
Pre-Application Meeting
Owners interested in pursuing a Mills Act contract
must first contact the Planning Division to schedule
a meeting to go over program and application
requirements. This mandatory meeting must occur
before a contract application can be submitted.
Approved Mills Act contracts must be recorded by
the end of the year in order for the property tax
reductions to take place the next tax year. As such,
it is recommended that the pre-application meeting
occur within January through March of each year.
Refer to the calendar located on the next page for a
listing of critical deliverable dates.
Please note that the City of Carlsbad does not have
any role in the eventual valuation of the property
under a Mills Act contract. The County Tax
Assessor’s office is solely responsible for valuations
to determine property tax bills. Property owners are encouraged to contact the County Tax Assessor’s
office regarding potential savings under the Mills Act
as well as their tax professional prior to filing their
application with city.
Application Submittal
The following is a summary of the submittal
requirements required to request a Mills Act
contract. All required forms and supplemental
requirements need to be submitted by the June 1
deadline before the city will begin processing the
Mills Act contract application.
Failure to supply timely sufficient information during
the processing of the Mills Act contract application is
reasonable grounds for processing delays or the
withdrawal or disapproval of the application.
• Land Use Review Application (P-1)
• Historic Preservation Permit Application (P-40)
• Mills Act Supplemental Checklist (P-40(a))
• Verification of historical status from the
National Register, California Register or city
Register. If not available, a historical report
prepared by a qualified professional for a
concurrent city historic designation request. A
qualified professional is someone who meets
one or more of the applicable “Secretary of the
Interior’s Historic Preservation Professional
Qualification Standards” to the satisfaction of
the City Planner.
• A proposed 10-year work plan report, which
details the preservation, maintenance, repair,
restoration, and rehabilitation improvements
the owner anticipates completing within the
first 10 years of the contract. The work plan
shall either be prepared by, or submitted with a
statement of concurrence provided by, a
qualified professional as referenced in the preceding bullet.
Feb. 14, 2023 Item #6 Page 12 of 16
Page 6 of 7 IB-161_Historic Preservation
• Copy of Title Report, which must be current
within the six months prior to application
submittal. If the property has changed
ownership within those six months, it must be
supplemented by a copy of the current deed.
Please note that historical reports and work plans
can take time to prepare. It is strongly suggested that owners begin the process of hiring these
professionals during the year before you intend to
apply for the Mills Act.
Critical Dates Calendar
Below is an overview of the critical dates that must
be met in order to timely process a Mills Act contract
application.
Application Review Process
The following are processing steps the city will likely
take during its review of a Mills Act application and
supporting documentation.
• During review, the city may approximate the
amount of reduced property taxes. This is only
used to estimate the potential impact on city
revenues. Actual tax savings will be determined
by the County Tax Assessor.
• A site inspection will be conducted to assess the
physical condition and historic condition, known
as “integrity.”
• Once deemed complete, the application will be
scheduled for review by the Historic
Preservation Commission (typically in
September) followed by a final decision by the
City Council (typically in November).
• Once City Council approves the contract, the
city will execute and forward it to the county for
recordation within 20 days after approval.
Recordation must occur by December 31 in
order for the contract to take effect in the next
full property tax year.
• Once recorded, the city will notify the property
owner, the County Tax Assessor, and the State
Office of Historic Preservation.
• If all deadlines are met, the property owner will
see any property tax reduction in the next full
property tax year. Questions about the property
tax bill and valuation should be directed to the
County Tax Assessor’s office at (619) 531-5002.
Feb. 14, 2023 Item #6 Page 13 of 16
October
Latest date pre-application request
accepted by city
Latest date Mills Act Cont ract application
accepted by city
Latest date M ills Act Cont ract application
deemed complete by city
Historic Preservation Com m. makes a
recommendation on Mills Act Contract
City Council decides on t he M ills Act
Contract
Mills Act Contract recorded & Assessor's
Office notified for tax roll change
IB-161_Historic Preservation Page 7 of 7
Contract Monitoring
After the Contract is recorded, state law requires
the city to monitor the owner’s compliance through inspections. The owner will need to provide a signed
affidavit to the city prior to each inspection stating
the owner is complying with the terms of the
contract and written consent authorizing city staff
or designated third party to enter the premises.
Inspections occur every five years during the life of
the contract. The purpose is to verify that the
property owner is maintaining their building per
historic standards and is making progress on the
contract’s work plan in a timely manner.
Contract Nonrenewal or Cancellation
Every year on the anniversary date, a Contract is
automatically renewed for another year. This means
the Contract has a rolling, or perpetual, 10-year
term. However, state law provides two ways to end
a Mills Act Contract term.
• The first way is that either party to the contract
(city or owner) may file a “notice of
nonrenewal,” which is recorded with the county
and signals the tax assessor to value the
property that gradually increases the property
valuation while the years left decrease for the
remainder of the contract.
• The second way is for a local government to
cancel the contract. Cancellation could be
because of an owner’s breach of the contract
terms such as not maintaining and repairing the
property or making inappropriate alterations to
the property that do not follow required
guidelines.
Such a cancellation would follow due process
through a public hearing, but the city would
typically pursue administrative and legal remedies
to try to obtain the owner’s compliance before
cancelling the contract.
Cancellation could also be the result of an owner’s
request to cancel the contract, typically for reasons
of site development.
Unlike nonrenewal, cancellation is immediate and
state law requires the owner to pay a penalty fee
of 12.5% of the property’s full market value at the
time of cancellation.
YOUR OPTIONS FOR SERVICE
To schedule an appointment or to learn more about
the Mills Act Contract process, please contact the
Planning Division at (442) 339-2610 or via email at
Planning@carlsbadca.gov.
Feb. 14, 2023 Item #6 Page 14 of 16
Exhibit 3 Process and Fee Justification
User Fee Update – Back-Up Calculation Table:
The table below captures current estimates of staff time and resources necessary to process historic preservation applications.
Office
Specialist II
Assistant
Planner
Senior
Planner
Principal
Planner
Planning –
City Planner
Total Hours Total Full Cost
Recovery Fee
($176.26/hr)
Application Processing
Local Register application 0.75 hrs 20 hrs 4 hrs 4 hrs 2 hrs 30.75 hrs $5,420
Mills Act application 0.75 hrs 15 hrs 2 hrs 2 hrs 2 hrs 21.75 hrs $3,834
Total 52.50 hrs $9,254
Concurrent applications(s) 0.75 hrs 25 hrs 6 hrs 4 hrs 2 hrs 37.75 hrs $6,654
Other Fees
Mills Act re-inspection
after improvement plan
implementation (every 5 years)
0.5 hrs 3 hrs 0.5 hrs --- --- 4 hrs $705
Note: The cost of service analysis that informed the current fee structure occurred about four years ago, so the “total full cost” rate was calculated by or verified by
the Finance Department in a manner consistent with the last fee study, adjusted annually for inflation. The average hourly staff rate is calculated every fiscal year
by taking the actual position salary and benefits costs and adding a 60% overhead rate that is charged interdepartmentally (as set by the cost of service/cost
allocation plan).
Labor Hours/Fee Justification and Process:
City staff will review the application for completeness and review the 10-year work plan (type, order, and list) to determine if such
improvements conform to the required standards. Documentation by a Historic/Preservation Consultant showing property history is necessary
prior to submittal. The applicant will be notified after filing as to whether the application is complete or what additional information is required.
Prior to consideration of the application by City Council, all proposed improvements must be reviewed and approved by the city. Exhibit 3Feb. 14, 2023Item #6 Page 15 of 16
Once the City Council has approved the Mills Act Agreement, the property owner is required to execute the Mills Act Agreement. Staff will then
coordinate the execution of the Agreement by the city. After the Agreement is executed, the city will forward the Agreement to the County
Recorder for recordation. Upon receipt of the recorded copy from the County, the city will then forward the recorded Agreement to the County
Tax Assessor’s office for implementation.
After implementation, the city is responsible for ensuring that a property remains in compliance with the provisions of the Mills Act contract.
The city’s Mills Act program will require staff or a third party to conduct inspections every five years under a Mills Act contract. The inspections
allow the owner to demonstrate how they are maintaining the property and restoring or rehabilitating it if required in the contract’s 10-year
work plan. The city would note any maintenance issues and review compliance with contract requirements.
City staff is recommending that the City Council establish one-time fees to cover the costs to process a local Register and/or Mills Act Agreement
applications. The proposed fees are based on an estimate of staff time and resources necessary to process and conduct said actions. As such,
this proposal is intended to be generally revenue neutral because the one-time fees will cover the actual cost of implementing the ordinance. In
•Local Register application. In general, the cost to implement the ordinance should be paid for by the applicants. However, since there is
a public benefit associated with designating a property in a local Register for historical protection and preservation, staff is
recommending that a property owner pay only one third of the actual cost.
•Mills Act application and agreement. A Mills Act Agreement is an incentive to the preservation of historic building and structures that
benefits the property owner. Staff is recommending that a property owner pay 100% of the actual cost.
•Mills Act initial inspections. City staff is recommending postponing adoption of a Mills Act property re-inspection fee. It is not known
how many inspections will be required and when it is best to collect payment for inspections that would be recurring every five years for
an indefinite period of time. However, the city would have to perform an initial inspection before a contract is approved, and then
inspection monitoring every five years thereafter, which would be expected to cost about $700 for the inspection (which occurs every
five years for the life of the Mills Act agreement). Most cities establish fees to cover the cost of the application processing and
inspections, and staff is recommending that such fees be re-evaluated and potentially adopted in the future once the city can document
the actual costs experienced for performing these services.Feb. 14, 2023Item #6 Page 16 of 16
TO: CITY CLERK
AFFIDAVIT OF MAILING
NOTICE OF PUBLIC HEARING
DATE oF PUBLIC HEARING: ;2 /J 'i/doc2 3
SUBJECT: Y(}UA':>~ ~ ~h ai,.k.-b/~lzA1 c.
LOCATION: 01200 Carlsbad Village Drive, Carlsbad, CA 92008
D Other: ------------------
DATE POSTED TO CITY WEBSITE } I d,.f)Q3,
DATE NOTICES MAILED TO PROPERTY OWNERS: _________ _
NUMBER. MAILED:
I declare under penalty of perjury under the laws of the State of California that I am employed by
the City of Carlsbad and the foregoing is true and correct.
DEPARTMENT: [3't(TY CLERK'S OFFICE □OTHER _______ _
Jm ~ ,
Signature Date
SENT TO FOR PUBLICATION VIA E-MAIL TO: □ Union Tribune on ___ _
~ Coast News on· J/dO/cJ, .3
PUBLICATION DATE: Union Tribune --------------
I declare under penalty of perjury under the laws of the State of California that I am employed by
the City of Carlsbad and the foregoing is true and correct.
DEPARTMENT: Q-t:(TY CLERK'S OFFICE □ OTHER _______ _
Signature Date
Attachments: 1) Mailing Labels
2) Notice w/ attachments
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that the City of Carlsbad City Council will hold a public hearing on Tuesday, Feb .
14, 2023, at 5 p.m. at the Council Chamber, 1200 Carlsbad Village Drive, Carlsbad, California, to discuss
and consider adopting a proposed resolution that would change the City's Master Fee Schedule to
establish fees for the following city services:
• Local Register Application
• Mills Act Contract Application
• Mills Act Inspections
A copy of the proposed fee rates, the amount of costs, or estimated costs, required to provide the services
for which the fee or service charge is applied is available for review at the Planning Division at the Faraday
Offices {1635 Faraday Avenue, Carlsbad CA 92008) during normal business hours and on the city's website
at https://www.carlsbadca.gov/departments/community-development/planning/mills-act-program.
If adopted, the historic preservation application fees will be effective April 17, 2023.
Those persons wishing to speak on this item are cordially invited to attend the public hearing. If you have
any questions, please contact Mike Strong in the Community Development Department at 442-339-2721
or mike.strong@carlsbadca.gov. This meeting can be viewed online at https://www.carlsbadca.gov/city-
hall/meetings-agendas or on the city's cable channel.
In addition, written comments may be submitted to the City Council at or prior to the hearing via U.S. Mail
to the attention of the Office of the City Clerk, 1200 Carlsbad Village Drive, Carlsbad, CA 92008, or via
email to clerk@carlsbadca .gov. The staff report will be available on the city's website at
https://www.carlsbadca.gov/city-hall/meetings-agendas on and after Friday, Feb. 10, 2023. If you
challenge the adoption of fees in court, you may be limited to raising only those issues raised by you or
someone else at the public hearing described in this notice, or in written correspondence to the City of
Carlsbad, Attn: Office of the City Clerk, 1200 Carlsbad Village Drive, Ca rlsbad, 92008, at or prior to the
public hearing.
PUBLISH DATES: Jan. 20 and Jan. 27, 2023.
CITY OF CARLSBAD CITY COUNCIL