BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 654
                                                                  Page  1

          Date of Hearing:   March 22, 2011

                   ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE
                                Jared Huffman, Chair
                  AB 654 (Hueso) - As Introduced:  February 16, 2011
          
          SUBJECT  :   Historical Property

           SUMMARY  :   Requires historical properties subject to historic 
          preservation contracts to be inspected prior to entering into a 
          new contract and every five years.   Specifically,  this bill  :

          1)Requires that contracts for preservation of historical 
            properties include a provision providing for an inspection of 
            the interior and exterior of the premises by the county 
            assessor, Department of Parks & Recreation (DPR), and the 
            State Board of Equalization (BOE) prior to a new agreement and 
            every five years thereafter to determine the owner's 
            compliance with the contract.

          2)Requires the owner of the property to record the contract with 
            the county in which the property is located.

          3)Requires that the administrative fee the owner of the property 
            is required to pay under existing law include the cost of 
            processing designation requests, contracts, monitoring, and 
            enforcement. 

           EXISTING LAW  :  Authorizes cities and counties to enter into 
          contracts with owners of qualified historical properties that 
          restrict the use of the property in exchange for lowered 
          property assessment values.  Requires that the contracts be for 
          a minimum period of ten years and provide for periodic 
          examinations of the premises, as necessary, by the assessor, DPR 
          and BOE.  Requires that the owner provide written notice of the 
          contract to the Office of Historic Preservation.  The city or 
          county entering into the contract is required to charge the 
          owner a fee not to exceed the reasonable cost of administering 
          the program. 

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   The author indicates this bill is needed to ensure 
          that a property tax break is not given to a property owner 
          without the property owner's compliance.  Under existing law 








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          known as the Mills Act, owners of historical properties can 
          enter into a contract with a city or county under which the 
          owner agrees to restrict the use of the property in exchange for 
          a lowered property assessment value.  The law sets forth 
          requirements for the contracts and calls for periodic 
          inspections of the property for compliance as needed.  According 
          to the author, the inspections are not specifically required and 
          do not always occur.  In addition, while the current law 
          requires the city or county to charge the property owner an 
          administrative fee, the fee is not necessarily sufficient to 
          recover all administrative costs of the program.

          This bill would require the local government entering into the 
          contract to inspect the property at the time of a new contract 
          and every five years thereafter.  This bill would also require 
          DPR and BOE to inspect the property prior to a new agreement and 
          every five years thereafter.  The author and committee may wish 
          to consider whether it is necessary that inspections be 
          conducted by all three entities - the local government, DPR and 
          BOE -- every five years, or whether five year inspections by one 
          or more of these entities would suffice.

          The author also indicates that the intent of the bill is to 
          ensure that the fee charged to the landowner by the local 
          government is sufficient to allow the local government to 
          recover all costs associated with administering the program.  
          However, it is not clear that this bill as currently drafted 
          will completely accomplish this objective since the language 
          still says that the property owner shall pay a fee not to exceed 
          the reasonable costs of administering this program.  The 
          language does clarify that administrative costs include but are 
          not limited to processing of designation requests, contracts, 
          monitoring and enforcement.

          Since this bill will require inspections every 5 years, and to 
          ensure that the costs of the inspections are covered, the author 
          and committee may also wish to consider an amendment clarifying 
          that the fee shall also cover the costs of inspections. 
           
          In addition, although the local government may recoup its costs 
          of administering the program through levying fees, this bill 
          would mandate state DPR and BOE inspections every five years on 
          each property in the program.  This bill does not include a 
          mechanism for these state agencies to be reimbursed for their 
          inspection costs.  According to information provided by the 








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          author, over 2,000 properties are registered as historic 
          properties under the Mills Act, though this number may not be 
          accurate due to underreporting.  This bill would also require 
          the owner to record the contract with the county.  

           Suggested amendments  :

          Amend Section 50281(b)(2) on page 2 to read as follows:

          (2) For an inspection of the interior and exterior of the 
          premises by the assessor,  the Department of Parks and 
          Recreation, and the State Board of Equalization  prior to a new 
          agreement, and every five years thereafter, to determine the 
          owner's compliance with the contract.   Periodic examinations may 
          also be conducted by the Department of Parks & Recreation and 
          the State Board of Equalization as may be necessary.  

          Amend Section 50281.1 on page 3 to read as follows:

          50281.1  The legislative body entering into a contract described 
          in this article shall require that the property owner, as a 
          condition of entering into the contract, pay a fee  sufficient to 
          cover but  not to exceed the reasonable cost of administering 
          this program, including, but not limited to, the processing of 
          designation requests, contracts, monitoring,  inspections  , and 
          enforcement, as needed.

          Amend Page 3, lines 17 through 21 to read as follows:

          this section.  Each contract shall also provide that after five 
          years, and every five years thereafter, the assessor  , the 
          Department of Parks and Recreation, and the State Board of 
          Equalization  shall conduct an inspection to determine the 
          owner's continued compliance with the contract.  If the property 
          owner or the      

           
          REGISTERED SUPPORT / OPPOSITION  :   

           Support
           
          None on file

           Opposition
           








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          None on file
           
          Analysis Prepared by  :    Diane Colborn / W., P. & W. / (916) 
          319-2096