HomeMy WebLinkAbout2017-06-08 Historic Resources Board Summary MinutesCity of Palo Alto Page 1
Call to Order/Roll Call
Present: Chair Martin Bernstein; Vice Chair David Bower, Board Member Margaret Wimmer, Beth
Bunnenberg, Brandon Corey, Michael Makinen
Absent: Rodger Kohler
Chair Bernstein: Welcome to the June 8th meeting of the Historic Resources Board. Would staff please
call role? Thank you.
Oral Communications
Chair Bernstein: Next is oral communications. The public may speak to any item no on the agenda with
3-minutes per speaker. Are there any members of the public who would like speak to us and seeing
none?
Agenda Changes, Additions and Deletions
Chair Bernstein: Moving onto are there any agenda changes, additions, and deletions?
Mr. Jonathan Lait, Assistant Director: Only to report that Amy regrets not being here this morning. I’m
Jonathan Lait the Assistant Director for the Planning and Community Environment Department filling in
for Amy. I’m here with Emily to help in any way that we can with your study session discussion.
Chair Bernstein: Ok, thank you.
City Official Reports
1. Historic Resources Board Meeting Schedule and Assignments
Chair Bernstein: Next is City official reports. None to report for Board meeting schedule and assignments.
Study Session
2. Mills Act Discussion: Consideration of Potential Pilot Program for Palo Alto
Mills Act Properties
Chair Bernstein: Study session, public comment is permitted with 3-minutes per speaker. The study
session is on Mills Act discussion. Any introduction by Staff on this topic?
Mr. Lait: Let me just first introduce Sandy Lee, who an attorney with the City’s Attorney’s Office and I
don’t know if individually you have had a chance to meet her but she’s joining us on this discussion. Also,
HISTORIC RESOURCES BOARD MEETING
MINUTES: June 8, 2017
City Hall/City Council Chambers
250 Hamilton Avenue
8:30 A.M.
City of Palo Alto Page 2
to answer any questions that may come up from a legal perspective. So, welcome Sandy. Thanks for
being here.
Chair Bernstein: Welcome, Sandy.
Mr. Lait: We’re – we don’t have any formal presentation for this. I understand that this was an item that
was continued from a previous meeting and we’re here to listen to the Board’s conversation on the
matter.
Chair Bernstein: Great, ok, thank you. So, let’s then open that up to the Board for continuing the
conversation about Mills Act. Are there any Board Members who would like to start? Beth, you have your
light on? Beth, you have your light on? Ok. Any Board Members who would like to start with comments,
please? Vice Chair Bower.
Vice Chair Bower: If the Chair would allow, I would be happy to review what the subcommittee prepared.
It’s part of our packet but I think I’d actually like to hear from the City’s Attorney’s Office because I
presume that you’ve seen what we’re – the sketch of what we’re proposing and I’m curious to know what
the City’s Attorney’s Office has to add or suggest in regard to that or in any other capacity. I presume
that you are here to talk to use about this from the City’s Attorney’s Office perspective.
Ms. Sandy Lee: Good morning. I have had a chance to review this – the subcommittee’s work product to
date and there are several aspects of it that I think will potentially work in a program that the City puts
forth but there are some aspects that we would need to think about. As you know, the Mills Act Program
is authorized under State law so there are some State law limitations on what a local program can look
like. There’s also a significant local discretion in terms of the administration of the program. Typically, it’s
adopted – a formal program would be adopted by an ordinance. An informal program, for instance, a
pilot program that is contemplated, could be adopted by a resolution. The Mills Act contracts do run for a
minimum of 10-year. When notice of non-renewal is put forward, that basically means that it continues
for 10-years and then it will end. Then the property tax incentive will reduce over time and in the 10th-
return to what it would otherwise be; the tax rate. There are certain aspects like the amount of the tax
adjustment that may well be out of our hands as local jurisdiction. The Assessor’s Office for the County
would handle that and to my knowledge, jurisdiction by jurisdiction, that distinction is not made. I think it
would be administratively cumbersome, even if its authorized under the law. The primary focus, I think,
of Mills Act program would be determined eligibility. There are minimum eligibility requirements under
State law. The property must be on the National Register or a local register so if a property is not
currently on the local register, the application for a Mills Act contract would likely go forward with an
application to put that property on the local register. Those would both be – those could go through the
Historic Resources Board for recommendation together and would be acted upon by the City Council.
There’s one item on this list about properties being open to the public, that I think may be problematic.
In – I believe in 1985 – I can’t quite remember the year that the Mills Act was amended but previously,
there was a requirement that properties be open once a year but that item was removed from the State
law so we may not want to include that in case that conflict presents a problem. They application fee
item that is addressed in this recommendation is that we are limited in terms of what we can require for
an application fee. State law says that essentially, it’s based on cost recovery so unless a property of
significant value requires more administrative work on the park of staff, you wouldn’t be able to assess
different amounts for the application based on property value. These are all – this is just kind of an
outline of Mills Act requirements and our local discretion. My understanding is that staff will take the
recommendations from the Historic Resources Board and work to…
Mr. Lait: (Inaudible)
Ms. Lee: I’ll let the Assistant Director to speak to this.
Mr. Lait: Right, so this is sort of a starting place for developing a program and as you – I think you know
that you’re scheduled to have a meeting with the City Council – a joint meeting I think in August. So, that
City of Palo Alto Page 3
would be a time to present this and if we got Council direction, this is a starting place for us to go
forward in developing the program.
Chair Bernstein: The – I just – August – I’m not familiar if we have an established date yet but if there is
a date, that would be great.
Mr. Lait: Yeah, we think it’s August 28th but I’ll make sure that we confirm that and send an email out to
the Board Members.
Chair Bernstein: Ok, great. Thank you. CC and HRB. Vice Chair Bower, thank you for those comments.
Any other Board Member, including Board Members that were on that subcommittee? Any comments or
David, if you have more comments, yeah.
Vice Chair Bower: Thank you for that. That makes it a little bit easier to craft this. I think that – what I
would like to do is just go over this proposal. Again, I want to stress that this is a – it’s an outline of what
we think that we can do and there would be much more to add to this to actually make it qualify as an
ordinance to be presented – a proposed ordinance to be presented to the Council. When we put this
together and Corey and Margaret where the other two members of the subcommittee, the idea was to
summarize some of the past experiences of or attempts by the Historic Resources Board to create a Mills
Act that would help – Palo Alto could then offer to the community. In the eligibility section – again, I’m
not an attorney and I don’t write ordinance code either so I mean I am responsible primarily for the
language. The idea was that all Category One to Four building would have – would be eligible
automatically but also to capture other buildings that aren’t categorized currently. We have had those
properties come before the Historic Resources Board and ask to be included and then we as Board has
made a determination. Usually, they come before the Board because they are interested in the Historic –
California Historic Building Code application which helps historic buildings. Whatever language that we
use, I think the purpose of this first paragraph is to capture any build that not already categorized as a
one to four building. We don’t want to exclude any building that would have historic significant but just
hasn’t been on the register. Secondly, local requirements, of course, all of this has to comply with State
law. The structure would be a 10-year period, which I think is standard. The maximum – we’re proposing
one million dollars in property value as a redirection and I think what’s important to understand is that
when – the purpose of this proposal and the Mills Act Program, if it’s enacted in Palo Alto, is on to
eliminate property taxes but to redirect the same amount of property tax towards the rehabilitation and
the preservation of historic buildings. There’s going to be tax savings but there’s not going to be a dollar
for dollar saving. So, by being a member of this group of Mills Act participants, you are still going to
spend the money you would have spent on property taxes but it’s redirected to the preservation of the
building. The million-dollar amount is probably conservative. Then I am not sure how – I know that there
are three different ways the assessor can provide the number. So, I’ not – I read that over and over and
I don’t understand it. Somebody else is going to have to do that calculation but I think that we – the
three of us felt that maybe a million and a half dollars of asset value would be more appropriate.
Especially in a City like Palo Alto where the property values are extortionary high. A million – roughly a
million dollars of tax – redirected tax funds would be about $12,000 a year and if it ran for 12-years, it
would be about $120,000 for a single contract and we’re proposing to start with 10 to see if there is
interest and see how we can move this forward. If it went to $1.5 million, it’s a little higher but not
significantly higher. I think the projects of course are – have to be approved by planning. Presumably, I
would assume they would before the HRB but I am not sure that’s required and that’s not in this
proposal. I don’t know whether that’s necessary. Most important is that the kinds of projects that would
be appropriate for a Mills Act Contract would be those projects that retain the historic character of the
building as a requirement but also, ensure that the building is upgraded. In other Mills Act – other
communities that have adopted Mills Act programs, the first thing that they want is the building to be
anchored to the foundation, which typically is very difficult in a historic building and that usually requires
a new foundation or some kind of structural upgrade after that. Then the building is more resilient during
an earthquake. Other kinds of projects could include window replacement so that there -- the – which
tends to be a vulnerable point of historic buildings. Electrical upgrades because many historic buildings
have very old wiring systems and they don’t provide enough safe power to a modern house uses
City of Palo Alto Page 4
appliances and then weatherization projects. When one considers, say a 10-year program at – let’s just
say the million-dollar level and you have $12,000 to spend per year. $120,000 probably wouldn’t replace
the foundation of any building in Palo Alto so this is a relatively small amount of funding for major
projects and the purpose – in some way, I thought we should have language in here that allowed an
owner to accumulate the funding or to make a plan with the Planning Department that allowed for the
full 10-year funding to affect a project. I am not sure how that would work but – because you can’t
spend 10-years paying off your contractor for a new foundation. Somehow that has to be worked out in
language that I am – I can only imagine. The application fees in the projects that I reviewed in other
Cities – I’m sorry, the application fees for Mills contracts in other Cities varied a lot. Oakland waives all
design review fees in their program. In the seminar that I attended on the Mills Act that focused on
southern California communities, they also had very minimal fees and some didn’t charge any fees. The
purpose of that is, again to encourage that the funding for these projects – the construction projects is
focused on the needs of the building to preserve and extends its lifetime. That’s why in this, under item
six, the base application fee is just ‘x’. I don’t know – City staff would have to figure that out. Then
penalties, I think that’s a State law issue and I just took language right out of Dennis Backland’s earlier
proposal. I wanted to also address one other thing. In this proposal, we are focusing on residential
properties and I understand and appreciate that commercial properties have the same value to the
community but I think we felt that commercial properties have many other incentives. Especially in
downtown Palo Alto and as a result, the biggest incentive, of course, that a commercial property has is
that it has rent income that can accelerate rapidly and in many cases, triple net lease. There was less of
a need for that. Downtown Palo Alto buildings have TDR incentives so, at this point, we are focusing this
just on residential properties but I would hope that the rest of my Board Members would review that and
offer inside. I guess that’s my sort of overview of this.
Chair Bernstein: Vice Chair Bower has brought up a common theme that I have heard on the HRB,
including my common theme which is to encourage and foster the idea of historic preservation. That is to
lessen the burden of applicants who have historic buildings and so Vice Chair Bower talked about – on his
eligibility, if it’s a Category One through Four or National Registered or California Register, even eligible –
only – even only eligible for those listings. It’s – because of the applicant – it still has to have an
application process so I think you are proposing that this is not right. You still have to apply for it,
correct?
Vice Chair Bower: Exactly.
Chair Bernstein: So, having this proposal being not as a right to the Mills Act contract approval, it still
does have to have an approval process but just make it easier to enter into that application process. I
mean of the cultural goal of Palo Alto is to encourage historic preservation, make it easy. Again, it’s not --
- we are not proposing a right so it still has to be applied but just make it easier to apply. Does that
summarize one of your goals of eligibility?
Vice Chair Bower: Exactly and I think that for a – from a process standpoint, prior to any application –
prior to any Mills Act application, we ought to have a separate HRB hearing about the eligibility. So, that
we don’t move down the planning – we don’t start using planning staff time to review projects before
knowing whether the project could – the building is eligible. I think those – they could be combined but I
think the staff would have to tell us what’s the most appropriate way to do this.
Chair Bernstein: Other Board Members? Board Member Bunnenberg.
Board Member Bunnenberg: Yes, I would like to enquire about whether there is a yearly reporting that
the recipient of the Mills Act needs to do. It seems to me that that’s been one place where we’ve really
fallen down in terms of not asking – you receive so much money this year, what did you spend it on and
you know, if necessary, even some check by one member of the planning staff to see whatever progress
is there. Did you consider that?
City of Palo Alto Page 5
Vice Chair Bower: I think that’s required. I think that’s probably a State – isn’t that a State law
requirement?
Ms. Lee: The State law requires that an exterior and interior inspection be conducted every 5-years. We –
by City staff. However, an annual reporting requirement could be included. So, State law is silent as to
that but that would be within the purview of the local jurisdiction to include that in the program and then
include it in the contract.
Vice Chair Bower: I would certainly expect that to be the case. Can I ask one other question? I read the
contract -- the only existing contract we have in Palo A lot, which is with the Squire House owners. I
didn’t see any language in that contract and this is a very old contract, that required anything to be done
to the building. I – there was no requirement for – that I could see delineated. Am I missing something?
Ms. Lee: I haven’t seen that contract so I can’t really speak to that.
Mr. Lait: I’d only say that I – in speaking with Amy French about it, I had a similar question about it and
asking, so where’s the benefit going and it doesn’t seem that there’s any identified benefit in that
particular contract,
Vice Chair Bower: Yeah, well, that was my impression. This proposal is designed to actually specify a
benefit because there’s no point in the City of Palo Alto entering into an agreement that doesn’t benefit
the residents.
Board Member Bunnenberg: Of course, the Squire House also had the façade easement, which was I
assume, not part of the Mills Act but the front was to be preserved.
Vice Chair Bower: Right.
Chair Bernstein: City Attorney…
Board Member Bunnenberg: I think maybe the front two rooms.
Chair Bernstein: Sandy Lee?
Ms. Lee: I just wanted to add that what Board Member Bower or Vice Chair Bower observed is a reason
why the City may be better served by adopting some sort of program that would provide for those types
of requirements. I believe previously, the City of Palo Alto when it entered into this Mills Act contract and
there may have been one other. They were done pretty much on their own, without the vetting of a
process for general requirements for these contracts.
Chair Bernstein: Board Member Makinen.
Board Member Makinen: Yeah, so I had just a question of whether if a State law mandates any maximum
tax adjustment levels? I mean it’s just the pilot program here is proposing one million dollars. Is there
any language in the State law that restricts that or is this it?
Ms. Lee: No, there’s no restriction with respect to that. The City could decide that the value of the
property not exceed a certain dollar amount to be eligible for the program in this jurisdiction.
Chair Bernstein: Ok, other Board Members? Board Member Corey.
Board Member Corey: I did have one question as far as David’s comments on specifying. So, can we put
in language to say that since it’s not a right, that it – for instance, that it could only be applied to
residences or could only be applied to certain things that are within our jurisdiction?
City of Palo Alto Page 6
Ms. Lee: Yes. I just wanted to point out that this is a contract between the City and the property owners
so even if the City felt that a minimum threshold of the requirements were made, it’s still a negotiated
contract. I think what we would contemplate though is having a template agreement so that we don’t
have to do a lot of negotiation for each Mills Act contract.
Chair Bernstein: Vice Chair Bower.
Vice Chair Bower: Along those lines, it seems to me to make this a successful program, we need to have
examples of the kinds of projects that we want to encourage in the ordinance. Does that make sense? Is
that something that is valuable or useful?
Ms. Lee: Yes, absolutely. I think that is one major function of the adopted program and that is really
specifying what are the eligibility requirements, what types of structures – properties that the city would
like to see benefited through a Mills Act program?
Chair Bernstein: Board Member Corey, did you have you're – a question? Ok, yeah. Alright, Board
Member Wimmer.
Board Member Wimmer: Yeah, so I think there are several presidents of this program in other Cities and
we’ve had it here ourselves but there’s some information from the Office of Historic Preservation. I mean
I just have some information on – in my notes. I think – I mean we should just sort of follow the State
lead on what the State’s already established for this program. In terms of adopting it for ourselves, I
think that – I mean, first I think that we just have to find some willing participants but I mean, do we –
since it’s a State program and since the City of Palo Alto has already engaged in these contracts. I mean
what is holding us up from continuing this or having – do we have to get approval from the City Council
to do this? It seems like it’s an already established program and we just don’t have any participants
willing to go through the process. I mean obviously we have one contract and we’ve heard that they are
interested in canceling their contract but I just think that we are – I think, as a City, we just need to put
the opportunity out there and allow our residents to realize and maybe learn for the first time that this is
something that’s an established program and that it’s available. I guess the impact is on the City staff
because it does require more of their time and work but I think there – it just seems like there is a lot of
information that is already established on the program. Also, other Cities have applications and things
that we can use as a guideline and how other Cities have gone about offering this to their residents.
Chair Bernstein: City Council – City member – City Attorney Sandy Lee.
Ms. Lee: So, Cities that have programs typically adopt ordinances setting out more clearly what the
eligibility requirements are for that jurisdiction. I’m not sure I would describe this as a State program.
The State provided authorization for local jurisdictions to create a program consistent with State law.
There are different programs in every City so in terms of the number of contracts a City might want to
enter into per year, the types of buildings that they would like to eligible for the program, where the
historic preservation need is the greatest, what their preservation requirement needs to be supplement
by a requirement to rehabilitate, the amount of property values that the City is willing to include in the
program and monitoring requirements such as reporting. All of these things, I think to make sure that the
public is aware that this is available. It would be much more clear and transparent for the City to have a
true adopted program through an ordinance or by resolution.
Chair Bernstein: I do see on the – on our staff report the Mills Act pilot program in our packet that Vice
Chair Bower has referenced. It says the purpose of this program is to establish a basis for instituting a
permit incentive program. So, the program already exists, is that correct? Oh, City Attorney Lee.
Ms. Lee: I don’t think I would say a program exists. We have entered into one or two contracts. A
program is typically setting out the parameters for who may participate. As I mentioned, the State law
actually has a pretty minimal threshold for eligibility of properties so in order to truly – if the City wants
City of Palo Alto Page 7
to exercise its jurisdiction to specify something further, then that should be laid out in either a policy
adopted by a resolution or an ordinance.
Chair Bernstein: The process right now is if a property owner wants to enter into a Mills Act contract, the
City – they just make the request to – who do they make the request to?
Mr. Lait: I think – I don’t know how the Squire House got set up but I’d actually say we probably – we
don’t have a program. We don’t have a Mills Act program and so if somebody wanted to get – take
advantage of this incentive program, I’d say you are kind of out of luck right now. We need to establish
that program either by ordinance or resolution to get it established and then I think that’s by this Board is
tackling that important issue.
Chair Bernstein: Ok, good.
Board Member Wimmer: I just wanted to mention that we – there is somewhere online that the City of
Palo Alto is listed under Mills Act. It just – it has Mathew Weintraub on this matrix because it says that for
each jurisdiction, it lists who the contact person is and I think this is 20 – this document is February of
2015 but we are listed here with Mathew Weintraub and his email address. I don’t know who generated
this list because it’s like of all the Cities so someone is generating a list and we are identified on it. Just
an FYI.
Mr. Lait: Yeah and I am actually looking at that list now. It’s from the Office of Historic Preservation.
Board Member Wimmer: Right.
Mr. Lait: It’s got the list of everybody’s thing. We clearly need to update that and I think – while we don’t
have a Mills Act program, we have a Mills Act property and I think that we’re taking advantage of that
opportunity to sort of promote our historic preservation interest with the State and I think that there’s an
opportunity for us to take a giant step forward in enhancing that program.
Chair Bernstein: Ok, so that will support – I’m sorry, Board Member Corey.
Board Member Corey: I have seen that report and noticed that as well and when I talked to Shannon at
the State, she said if you have an existing Mills Act property, that they put you on that list but that
doesn’t mean you – we can actually add new properties. I will say that there clearly doesn’t seem to be
an existing program because I talked to a neighbor who actually told me that they called a couple years
ago and tried to get a Mills Act property and spoke to Dennis; I think it was about 5-years ago. They –
that was the best he could – the best they could figure out was there was no existing way for a new
applicant to apply. They said they would have to go the City Council at the very least but there was not
existing process. We had existing properties but we would have to put a new process in place so at least
that’s what the public is being told when they call to talk to planning.
Chair Bernstein: Yes, Historic planner Vance?
Ms. Emily Vance, Historic Planner: Great, good morning everyone. Happy to be here and I’m really
excited that we’re having this discussion altogether. I think we are all in agreement that a program
doesn’t currently exist so I would like to guide our discussion back to really flushing out some of the –
what we want this program to be. If we can create a strong, robust Mills Act program in Palo Alto instead
of this kind of picking here and there. My biggest questions to the HRB would be what are our – what are
the communities needs and priorities that can be addressed through this Mills Act program? What
properties do we want to prioritize and also, what kind of push back can you envision because I’ve been
hearing lots of chatter about resistance to this program? So, there are three major things that I would
like to continue our discussion on.
Chair Bernstein: The – thank you for that. Board Member Corey, did you have you're – yeah, yeah.
City of Palo Alto Page 8
Board Member Corey: So, resistance to the program, where has that been coming from? I’ve heard about
property taxes but that’s – or about – or the School Boards.
Ms. Vance: Yes, that’s what I have been hearing. Since our public schools get 71% of their money from
local property taxes, any kind of pulling from that fund is going to be seen as taking from them but I
believe there are some answers to that question. At least from a – the earlier paperwork.
Chair Bernstein: Board Member a – Beth, down there. Board Member Bunnenberg.
Board Member Bunnenberg: But that would include the right to make some monetary limits in terms of
how many contracts and what amount the contracts would be so that it’s something that we, in fact,
could pretty well control.
Chair Bernstein: Yeah, Vice Chair Bower.
Vice Chair Bower: I think historically in Palo Alto, there’s been pushback from the school district about
any revenue that would be redirected from their budget. I did some research on the 2016-17 school
district budget, just to get a sense of what funds they have to work with. Their budget for that – this is
the school year that is just ending and that was $231.5 million dollars and of that, they get 74.7% or
$165,772,079 from property taxes. Out of – and they – I learned from the Finance Department – the
Cities Finance Department that Palo Alto school district gets 54% of all property tax dollars, County gets
23%, then Palo Alto gets 8%, the Foot Hills college district gets 6%, Santa Clara Valley Water gets 4%
and then 5% goes to other places. In thinking about the cost of this program over a 10-year period,
which would be $1.5 million per year if we had 10 contracts time 10 and then looking at a $231 million
budget, which over 10-years would be $2.3 billion if it was just fixed and I am not making assumptions
about whether that taxes stay the same because they never do. They do go up and down, that’s a drop
in the bucket, really, for any of the entities that are collection property taxes. Since we have an equal
interest in having not only strong schools, which of course I support. I went 12-year in school in Palo
Alto, as did my parents, my children, and maybe my grandson. I don’t want any misunderstanding to
occur. It’s important to have strong schools in Palo Alto. It’s one of the reasons people want to live here
and that’s one of the reasons why I live here still. Nonetheless, we have lots of issues and lots of needs
in the City and we can’t focus entirely on one so I think it’s a reasonable amount of money to think about
spending. I think that that’s something that we address when we actually have a program to propose.
This is the flushing out period and we’re still trying to think about it. I wonder if we could go back to one
thing that I mentioned earlier, commercial versus residential. I’m open to commercial properties being
included in this program. I don’t think I really want to exclude them but I think we should have limits on
if a commercial property, for instance, has another source of an incentive then this would not – they
would not be able to apply for a Mills Act. I don’t want somebody who gets TDRs and sells them off, to
then get another benefit but maybe that’s not – I don’t know if that’s legal but I suppose we can define
the program in any way that we want. As long as we’re not contravening some law but I would like to
hear what my other Board Members…
Chair Bernstein: Historic planner Emily has a comment.
Ms. Vance: I would strongly encourage including all property types; industrial, any kind of public space,
commercial, residential because otherwise, these are going to be viewed as just private homes that can
only be enjoyed by a very small amount of people. As opposed to a commercial space or public place
where the entire community would be about to see the benefits of having a Mills Act property. I think it
should absolutely be open to all property types, include potentially even schools. If that would be
something that we could work in. I know, I understand that there are some issues with that but if there’s
some way that we can pick the buildings that we want to prioritize, that would be a good thing to do.
Chair Bernstein: Board Member Makinen.
City of Palo Alto Page 9
Board Member Makinen: Yes, thank you, Chair Bernstein. Is there any experience that we have with
other communities throughout California and whether they have like industrial sites or commercial sites in
their Mills programs? Does anybody have any knowledge on that?
Ms. Vance: Yeah, there’s – for example, in Beverly Hills, there is a theater that was a Mills Act property –
a historic theater that they renovated and put to wonderful use.
Board Member Makinen: Well, that’s a very good example. Some of the theaters right now, are in dire
need of preservation and also, what comes to mind is places like bowling alleys that are (inaudible) to
destruction. I think it makes a lot of sense to consider other than residential properties as part of this
program.
Chair Bernstein: Historic planner Emily Vance mentioned a question about the communities needs and as
Vice Chair Bower mentioned that school funding is a community need. Then also, the other need of or
value to be – that we are discussing is about just historic preservation in itself like the quality of
neighborhoods and look at historic districts. We’ve had the common comment about well, here’s another
historic structure in a historic district that is being demolished or being delisted and then that starts
degrading perhaps, the definition of the district. That’s another community need that some groups that
have expressed. Board Member Bunnenberg, yeah?
Board Member Bunnenberg: Yes, and I would point out that Palo Alto High School is on the historic
inventory so it could profit from.
Chair Bernstein: City Attorney Sandy Lee.
Ms. Lee: I just wanted to point out that understand State law, that a qualified historical property means a
privately-owned property that is not otherwise exempted from property tax.
Chair Bernstein: Ok, so that would eliminate commercial buildings. Oh, no, no, just public – ok, I
understand. Thank you. One of the goals is to get this program activated as a pilot program. Board
Member Corey.
Board Member Corey: The one thing that I would like to encourage as we – as I guess we finally put this
together is that we make it really simple. I want to – well, I want to make sure that we do keep the
balance between – if we are going to keep the balance between residential and commercial, that’s
assuming that everybody is ok with that and that sounds reasonable. I do want to make sure that we
have a process in place where we don’t have to review every one of the – I mean, it seems like it would
be a big burden to have to review every one of these or have every one of these go through the City
Council. Is there a way we can form this so that it’s generic enough that it doesn’t put a big burden per
property but also addresses the concerns like David has. I think when we talked about priorities for
people doing individual upgrades on their property, one of the things that we felt was that we did want
people to use it, for instance, remodeling kitchens and things of that nature. How do we word something
like that where we can say – we can prioritize things or have it so the process is a bit similar to that these
processes and just go through without a lot of intervention for every single one. I feel that if we’re going
to end up having a look at every single one, assuming we get activity and we get interest from the
public, that it could be kind of a big pain. How do we make this simple so that it’s – so that there’s rule
that kind of can get these through? I think that’s going to be important because nobody is going to want
to go to the City Council and have to deal with that. Not only do we not want that but I don’t think the
public is going to want that because that is a burden.
Chair Bernstein: Any response from the rest of the Committee on that question? Yeah?
Board Member Wimmer: I guess if an applicant came in and is wanting to benefit from this program, I
guess would that be a staff review? We were just saying that it wouldn’t have to necessarily come in
front of our Board but I guess the City Council would have to approve the overall program but I think
City of Palo Alto Page 10
you’re right in making it very easy to understand and user-friendly. So, maybe that’s our next step to
take on the great work that David has done and put together an actual package of some sort of
instruction sheet and sample application forms and things. Then maybe we can put a package together
that is more or less the instructional information and the application process; put a draft together of that.
Board Member Corey: I would propose that for instance if we were concerned about residential versus
commercial, we could put in out of the ten, six should be residential and four should be commercial or
something like that. Then if we hit those limits then we can have a conversation but that way again, you
have a process where you don’t have to say oh, well, we have nine commercials and should we really
approve another what have you?
Mr. Lait: Oh, we’re both – ok. I think we’re also – staff would be interested in having a process that was
streamlined and orderly and not burdensome not only to applicants but also to staff resources. I think
that there’s a tremendous number of examples that exist. I think there is some close to 90 Cities that are
participating in the Mills Act program in California and some of us have worked in organizations where
they have robust Mills Act programs. I think the staff that is before you even have a whole lot of
experience working with this. So, we can certainly put together some sort of flow chart and a path and a
process together that we would present to the HRB as a framework for how we want to do that. Because
the City is entering in with an agreement with the property owner, the Council is going to have to
involved on some level and so it doesn’t mean that there has to be a public hearing. It can be something
that is done on consent and we can move it along that way. I also don’t think that despite all of our best
efforts to develop a very robust and comprehensive program and that should something like that get
adopted. I don’t think we are going to get a whole rush of applications coming in. In my experience, if
we get one or two of these coming in a year, I think we would be excited about that and that’s a
workload that we can certainly can manage. I wouldn’t want to develop a program that was fearful of an
onslaught of applications. That should be – we should fortunate enough to be in a situation where we
can sort of pick and choose the projects that we want that go forward. I’m not concerned about that and
I’m usually the one waving the flag about impacts to staff resources and things like that but I’m not
concerned about it in this context.
Board Member Corey: I was – that’s great feedback. I guess my feeling was more about is there a lot of
processes involved for the applicants where it becomes so burdensome that they don’t actually want to
do it in the first place. I can imagine having a City Council meeting where they have to talk about it and
there are members of the public and from the School Board coming up saying oh, this is bad for the
schools and it’s just no one wants to – in our year process, no one is going to want to go through it. In
order to incentives, we should make sure that – that’s where I was more focusing on the streamline. I
agree that there’s going to be people knocking on the door but that’s great feedback.
Mr. Lait: Just to that point, I think that conversation is probably going to get vetted out in the
development of the program. Maybe for the first couple of application that comes in, we may hear some
comments from supporters and people who may be against the program. I think that gets ironed out
over time and you are right, you’ve actually mentioned the need for – to be thinking about our
application fees and making sure that the barrier to entry is not so high that we discourage people from
wanting to enter into the process.
Chair Bernstein: Board Member Makinen, yeah? Oh, did you – please.
Board Member Makinen: Yeah, that as exactly my thought. The application fees should be minimal or
perhaps non-existent just to encourage people to get into the program. If we decide that we have an
overwhelming subscription to the program, we can institute some fees on it at that time. I think for a
pilot program, you want to keep the fees almost down to nothing to see what types of interest you get.
Vice Chair Bower: I wonder if you could – staff could develop your part of this in some kind of outline
form and share it with the subcommittee so we could see what you're concerned are prior to having the
Board see it for the first time at say a Board meeting. I’m thinking that we’re at the beginning of this
City of Palo Alto Page 11
process and I can’t imagine this would actually now go before the Council because of the complexity of
developing a process like this. Summer is horrible for the Council and then when Council comes back
from vacation in the fall, there is always heavily compact Council agenda. We’ve been talking about this
for 2-years and we want to get this done and we want to get it done in a coherent manner. Maybe we
could try to share the program outline and the staff concerns with the Council when we meet with them
in August. Just as a preliminary of here’s what we have and tell us what you think about this approach.
Mr. Lait: Yeah, I think in response to that, I think that what we can do is – I think there’s probably more
information that we can give the Board or subcommittee, however you want to work through it and sort
of collect more information like pros, cons, pitfalls and things to be aware of. Just important priorities and
you’ve already talked a little bit about the types of structures that you want to see included. We’ve talked
about incentives such as waiving fees. We can put all of this together in some kind of report with the
intent that we’re trying to capture the Board’s interest in this program. So, that when you do have that
meeting with the City Council, all Board Members are aware of what your interests are and that we’ve
had some preliminary conversations about this. That can be presented to the City Council and they can
say hey, this sounds like a great idea or we have some concerns or go back and study this but at least
we have a foundation by which to think about the program. I think Emily would be more than happy to
be a participant in that process and working with the subcommittee and then coming back to the Board
and just kind of sharing what we have learned from some other Cities and how those might – you know,
put together the beginnings of this for you.
Vice Chair Bower: I’m recommending that the subcommittee because we can do that on an informal
basis. We can’t do anything with the whole Board without doing it in this room.
Mr. Lait: OK, so yeah, the subcommittee is fine.
Vice Chair Bower: The subcommittee can look at it and then, we can work through those issues and of
course, all Board Members have input when we get it to the point where we want to present it to the
public.
Male: That sounds great.
Vice Chair Bower: I’m not trying to exclude any Board Members but I’m just trying to make the process
more flexible.
Chair Bernstein: Board Member Corey.
Board Member Corey: One question, if we put together a framework that goes to the City Council and
gets approved for say 10 properties with a certain set of requirements and set of the objective. Does that
still mean that each property would actually have to go through the City Council to be approved, is that…
Mr. Lait: Each individual contract would be reviewed independently.
Board Member Corey: So, hypothetically, if the contract was identical but just had a different address and
there’s no way we could templatize that? That would have to go through each one.
Mr. Lait: Yeah, we could develop a template. There might be some fine tuning between one property and
the next. Your work group over the next 10-years of how you’re going to invest the property tax savings
into the work is going to be different for probably each project. The process could be one that is
streamlined and the only reason it would get pulled off consent is if there was kind of controversy
associated with it.
Board Member Corey: Do we have to lay out in the contract the actual work ahead of time or is there
something – don’t we have the flexibility to do that on an ongoing basis?
City of Palo Alto Page 12
Mr. Lait: My experience and others may have some different perspective on this but you are entering into
a contract for 10-years. I’d like to see 10-years’ worth of improvements that you are planning on your
structure. Now, that may change over time and we can amend it. We can amend the contract but we
want to have a sense that this money is being used to rehabilitate the historic resource.
Chair Bernstein: Board Member Bunnenberg.
Board Member Bunnenberg: Once it gets started, there is, of course, the process of putting it on the
consent calendar for the Council and if it becomes enough of a routine, they could put it on and then only
when Council Members ask to pull it, would they have a full discussion.
Mr. Lait: Yeah, that’s absolutely correct.
Chair Bernstein: So, a possible action plan is by August of our joint City Council and Historic Board, is that
– that could be a time where HRB then asks the City Council during that joint study session – joint
meeting. Council Members, what do you guys think about putting it on – adopting our pilot program?
Board Member Corey: Sounds good to me.
Chair Bernstein: Ok.
Vice Chair Bower: Can you confirm the Council/HRB meeting date? You mentioned August 28th?
Mr. Lait: Yeah, that’s my understanding and we’ll send an email confirmation about that date.
Vice Chair Bower: Because it gets tougher and tougher and the further we get into summer, summer
which seems not to arrive yet but…
Mr. Lait: I think we’ve been trying to schedule this for almost a year now.
Vice Chair Bower: I know and some years we meet with the Council because they have so many…
Mr. Lait: I think last year was one of them.
Vice Chair Bower: …higher priorities but any rate, you can – I know that it’s not your decision but if you
can get any information to us as soon as possible, that would be helpful.
Mr. Lait: So, yeah, certainly happy to do that. I wanted to just make one – I want to clarify our work
distinction. I mean, we’re going to put together some data from other Cities and talk about the
framework and outline – develop your outline further with the subcommittee. The work of developing the
program, getting some ordinance and some code language and vetting all that stuff out, that would
happen after the Council endorsed the program and asked us to go develop that. Ok.
Chair Bernstein: Any other discussion or comments on this agenda item? Ok, seeing none. Thank you for
your valuable comments to this.
Action Items
Chair Bernstein: Next, is – on our agenda is action items. I see none listed on our agenda.
Approval of Minutes
Chair Bernstein: Next is the approval of minutes of April 27th. Any motion to approve or amendments?
MOTION
City of Palo Alto Page 13
Vice Chair Bower: I saw no issues so I move that we approve the minutes.
Board Member Bunnenberg: Second.
Chair Bernstein: Ok, any comments? Seeing none. All those in favor say aye. That passes unanimously.
Thank you.
MOTION PASSES 6-0 WITH BOARD MEMBER KOHLER ABSENT
Subcommittee Items
Chair Bernstein: Next is subcommittee items. I think we’ve already addressed some of those already, I
believe.
Board Member Questions, Comments and Announcements
Chair Bernstein: Board Member question, comments, and announcements, any? Seeing none. That brings
us to adjournment. All those in favor of adjournment say aye. Ok, that’s – we’re done. Thank you.
Adjournment