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  • Jeffrey Siegel

What reasons have the Los Gatos governing body given for not previously adopting the Mills Act?

Beyond the fact that many people in our governing body were not familiar with the Mills Act previously, there are several concerns that have been raised by various people in our town governing body. We look at each one of these concerns in turn and address them based on facts that dispel the need for caution.

The first concern raised – is that adopting the Mills Act will help the rich. First of all, the Mills Act was designed specifically to preserve historic properties, and does not discriminate against property owners based on their economic status. Also, whose definition of rich should we begin with? I cite one homeowner in the Glen Ridge neighborhood, Bunty, who is 92 years old and raised in the house that she still lives in, and that her grandfather built. One might suggest that she is ‘rich’ because her house is worth about $3 million. But in reality, she would be considered ‘house poor’ in the sense that nearly all of her net worth is in her home value, leaving her little discretionary income to maintain her home. As of the time of this writing, she is considering another question, where is she going to find the money to pay for deferred maintenance items like fixing or replacing some of the windows of her home? Should the Mills Act be available to her to help pay for the upkeep of her 140 years old house? Senator Mills, if he was alive today, and he was concerned about the preservation of California’s historic structures and not about people’s wealth, would certainly say it should be.

The second concern raised – is that by adopting the Mills Act it would have an adverse effect on the Los Gatos town finances. This is clearly not true and if it was, how in the world did the other 100 plus towns in California manage to rationalize adopting the Mills Act? In reality, based on the facts, your property taxes go primarily to the state and to the county, with very little going to the town. Los Gatos receives 8% of your property taxes. For example, if your property taxes are $10,000 a year, Los Gatos gets only $800 of those taxes. With the Mills Act, property taxes are not eliminated, they are merely reduced, and on average by around 50%. So even on a Mills Act related house, assuming property taxes of $10,000 (and many people have lower taxes than this), if cut in half, the town of Los Gatos would receive $400 less in taxes each year. Is that trade-off worth having our historic neighborhoods restored to their original beautiful condition? You bet it is! And considering that there are less than 300 historic homes remaining in Los Gatos, even if every one of these homeowners applied for Mills Act benefits (other towns that have dedicated resources to promoting the Mills Act and working closely with homeowners, have seen about a 30% participation rate. For Los Gatos, even working with the 300 homes figure, about 100 homeowners would apply for their Mills Act benefit. Staying with our $10,000 property tax number per home, applying the $400 in lost tax revenue for the town, this would equate to $40,000 a year. Of course, with administrative program fees that the town might charge, they would likely recapture a good portion of those potentially lost revenues. A very small price to pay for having a showcase historic neighborhood that would be on par with historic Palo Alto. The actual Mills Act funding that would collectively be received by the 100 homeowners of historic homes, would actually be computed as $10,000 (their property taxes) x .50 (92% or $9200 leaves our town in the form of property taxes collected by the Santa Clara tax assessor) which equals $5000 times the one hundred homes participating in the Mills Act totaling $5 million over a decade being invested in restoring our historic homes. Versus the town of Los Gatos lost revenue over that same decade of $400,000. That’s an incredible return on investment to our town of 1250%. No wondering why all of those other California towns have long ago saw the wisdom in reinvesting in their historic neighborhoods. It’s long overdue for the town of Los Gatos to get onboard and begin reaping the 1250% ROI that will provide an enormous boost to preserving our historic heritage. Where else will the town ever see this high of an ROI of any investment being made?

The third concern raised – by the town staff, has been that it would be an onerous burden on our town staff to take on one more project, and hence would require hiring additional staff. This is far from the truth. In reality, after we have spoken with the staff of quite a few other towns who have adopted the Mills Act, it’s a small part of one person’s job. It’s essentially just one aspect of their role. One of our town staff members, has previous experience in Berkeley working with the Mills Act. According to her, taking on the Mills Act would administratively be something that would be considered as part of the scope of her work. Now some towns, like the city of Anaheim, who have done the most exemplary work with the Mills Act, have gone beyond the administrative side of the work, and created and funded a part-time staffing role, in the form of a historic preservationist. That role is fully focused on driving success with their historic preservation mandate, from educating the public and promoting the virtues of the Mills Act and the importance of historic preservation, to working one on one with homeowners interested in participating in the town’s Mills Act program, and even producing a video each year showcasing the wonderful achievements for both residential and commercial properties. This would be really fantastic if the town of Los Gatos did more than pay lip service to our historic heritage, and actually developed a program and created the resources to get really serious. It’s fine to outsource this work as well, as the town did in conducting the 1991 historic survey. But prioritizing the funding, and assigning the funding for this purpose would be the first needed step, and one that would help our town get back on the path to become once again rightfully known as the Gem of the Foothills.

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