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February 6, 2023
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Los Gatos considering historic-home tax break

Mayor supports studying ‘subsidy for rich people’ he might benefit from

Amid the minutiae of General Plan deliberations on Monday, the Los Gatos Town Council voted to move forward with a plan to consider a tax break for owners of historic properties.

Mayor Rob Rennie—who said the Mills Act provision “seems like a subsidy for rich people” and even confirmed it could affect his own property value—voted to study it as part of implementing the 2040 General Plan.

The Mills Act allows local governments to enter into contracts with people who own historic houses, as a way to encourage the preservation of Californian culture.

It’s named for James Mills, who was a state senator from San Diego.

The properties have to either be found in the National Register of Historic Places or included in another list of official sites; local governments are in charge of setting the rules in each area.

Dozens of other municipalities have already incorporated the Mills Act into their operations, including San Jose and Berkeley.

According to the City of San Diego, its tax savings program for historic preservation can be quite considerable.

“Typically, property owners can expect a 20-70% savings on their property taxes,” Gregory J. Smith, a County of San Diego clerk, wrote in an information sheet on the county’s website. “Under State law, the lesser of 1) the current market value, 2) the Proposition 13 value, or 3) the restricted value based on the rents will be used to calculate your property taxes. It is possible that the Proposition 13 value may actually be lower than the restricted value, and the property would receive no property tax benefit.”

Earlier this year, Jeffrey Siegel, the president of the Los Gatos Historical Society, told the Los Gatan his earlier attempt to bring the Mills Act to Los Gatos was rejected. He believes it could encourage people to spruce up the town.

“This town has suffered, because there’s certain old money families that have literally been in Los Gatos for 150 years…their names are on the street signs,” he said. “They’ve owned these properties for 100 years in their families, and they haven’t invested.

“They’ve allowed them to become tattered.”

Because Rennie lives in the historic Almond Grove district, his property value could rise if the Mills Act arrived in Los Gatos, said Siegel, who’s been in an ongoing dispute with the Town over renovations at his own residence.

Catherine Somers, the executive director of the Los Gatos Chamber of Commerce, said a program incentivizing owners of older commercial buildings—like the Greyhound bus terminal—to bring back some old school charm would be a plus for Los Gatos.

During Los Gatos’ Draft 2040 General Plan review process, staff had been neutral on whether exploring a local Mills Act program was a good idea or not.

Planning Commissioner Steve Raspe said it would be ideal for Los Gatos.

On Monday, Vice Mayor Maria Ristow said she thinks adopting the Mills Act in Los Gatos would amount to a tax break for wealthy Los Gatans.

“I don’t think this actually benefits our town,” she said, adding residents who live in historic homes—and already pay low taxes because of Prop 13—won’t necessarily end up giving the Town less each year.

The mayor appeared to agree it might not be right for the community.

“It seems like a subsidy for rich people,” he said.

Councilmember Matthew Hudes suggested the Mills Act might actually help poorer folks who have historic properties.

Councilmember Marico Sayoc explained she’d sit this one out, because adopting a Mills Act program could affect how much her own house is worth.

But Rennie—despite commenting that he’s likely in the same boat as Sayoc—decided not to.

With Ristow voting against and Sayoc abstaining, the motion passed 3-1.

The decision will have to be finalized with the adoption of the General Plan, which could happen as soon as June 30.

Drew Penner
Drew Penner is an award-winning Canadian journalist whose reporting has appeared in the Globe and Mail, Good Times Santa Cruz, Los Angeles Times, Scotts Valley Press Banner, San Diego Union-Tribune, KCRW and the Vancouver Sun. Please send your Los Gatos and Santa Cruz County news tips to [email protected]

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