Historically designated homes recognized by the city — including many in the Point Loma and Ocean Beach communities — can save owners thousands in taxes.
The statewide Mills Act started in the 1970s. The city adopted a Mills Act program in 1995, but it recently came under the mayor’s budget microscope.
As a result, the City Council was recently put in the position of looking for ways to pay for the program while keeping checks on the estimated $1.1 million in tax breaks being given to homeowners so as to not to create a revenue drain.
“So our goal was to recover the actual staff costs,” said Cathy Winterrowd, a senior planner with the city. “We didn’t have a number in mind that we wanted to generate a certain amount of revenue; it was just to recover staff costs.”
Fee hikes totaling about $3,000 per home were among the changes adopted by the City Council in recent weeks.
To be fair to those waiting in line, the council also decided that homes awaiting designation would pay about $500 instead of $1,185 just to be considered for a historic designation. The designation is a requisite for a Mills Act deal with the city.
The city now requires that new applicants for a Mills Act agreement present a 10-year plan to reinvest savings back into the program. The City Council’s recently adopted changes also cap any tax losses to the city at about $200,000 per year for the program. The city loses a little under $100,000 in tax revenue every year because of new contracts, according to city reports.
Though the preservation community and the city butted heads over the proposed changes, at least one homegrown home historian said more fees for better regulation works to keep the historic ambiance of some 885 homes in the city’s Mills Act program.
“The fees would probably reduce some of the demand for the program, but the tradeoff is [that] we get better control over the properties in the program,” said Bruce Coons, executive director of the Save our Heritage Organisation.
Historic homes benefit the city economically, according to one study.
University of San Diego economics and real estate professors concluded in a report this summer that a historical designation can raise the value of a home as much as 16 percent. That’s no surprise, Coons said, but what’s interesting is the effect on surrounding properties.
“Some economists call it an externality, or the ‘halo effect,’ but the idea is simple. Having those [historical] houses in the neighborhood increases the values of all the houses in the neighborhood,” he said.
This is on top of the boon to local craftsmen and historic-home specialists like Ron May.
May, an archeologist and president of historic preservation company Legacy 106, compiles reports on historic homes looking for an official designation.
“It’s truly foolish to penalize this program, which is actually making money for the city at a time when we’re in a financial crisis,” May said.
He said homeowners either restore the home themselves or hire professionals to restore a historic home’s façade, keeping much of the exterior as close to its original condition as possible. Homeowners can invest thousands just to become designated for the Mills Act before entering into an agreement or contract with the city, he said.
The process to prove the property as historically significant requires extensive research of the property. The property must gain approval of the city’s seven-member historic resources board.
The home of Katheryn Rhodes and Conrad Hartfell in the community of La Playa in Point Loma is considered historic because the home was once the home of Frank L. Hope, Jr., a famous master architect.
Rhodes has worked over the past several years to get the La Playa community a historic designation similar to other communities, like the Ocean Beach emerging historical district, she said.
There are about 15 homes already designated as historic in La Playa, Rhodes said.
Ocean Beach has about 70 homes in the Ocean Beach Cottage Emerging Historical District program, said Kathy Blavatt, an Ocean Beach Historical Society board member.
Blavatt said it’s beneficial to the city’s historical integrity to preserve and encourage historic cottages in Ocean Beach.
“People go to these places because of these old houses,” she said. “It preserves the history of the place so it’s not just generic-looking.”
Historic districts along the Glenview Lane in La Jolla and the Gaslamp Quarter continue to drive tourism, according to city officials. Old Town San Diego and Balboa Park have nationally recognized historic designations, according to the San Diego Save Our Heritage Organisation website.