City Council
Agenda Report

Erika Ramirez, Community Development Director

Michael Donovan, Associate Planner

This report provides City Council with the annual status of the remaining 5 out of the City's 30 active Mills Act Contracts, as required by South Pasadena Municipal Code Section 2.68. Staff evaluated each active contract based on each property owner's progress in completing the approved Rehabilitation and Restoration Plan ("work plan"). The contracts addressed in this report consist of four contracts in Group 3- properties that have not completed their existing work plans within the initial 10-year term of their respective contracts and have submitted updated work plans identifying when the remaining items will be completed. This report also features the contract for 851 Lyndon Street - the last remaining contract in Group 1 - properties that have completed their existing work plans and submitted new 10-year work plans. The Cultural Heritage Commission reviewed all contracts and recommended that the City Council accept each of the updated work plans and not issue a notice of nonrenewal.

Pursuant to South Pasadena Municipal Code (SPMC) Section 2.68(b)(1)(E)(vi), the City Council receives an annual report on the status of all active Mills Act Contracts. Due to staffing changes over the years, the City had not consistently reviewed active Mills Act Contracts. As a result, on July 16, 2025, the City Council directed staff to evaluate all active contracts and provide recommendations based on each property's compliance with its approved Rehabilitation and Restoration Plan ("work plan").

To facilitate the review, staff categorized the active contracts into three groups:

• Group 1 - Full Compliance: Properties that completed all work identified in their approved work plans and were directed to submit new 10-year work plans.
• Group 2 - Partial Compliance: Properties that remain within their approved work plan schedule or have approved modifications extending the completion timeline.
• Group 3 - Noncompliant: Properties that exceeded the initial work plan period without completing all required improvements and were directed to submit updated work plans identifying a schedule for completing the remaining work. Property owners who failed to submit an updated work plan within one year would be subject to a recommendation for contract cancellation pursuant to SPMC Section 2.68(b)(1)(D)(ix).

Since that direction was provided, the Cultural Heritage Commission (CHC) has reviewed each contract group.

On January 15, 2026, and February 19, 2026, the CHC reviewed the Group 2 contracts and received and filed the report.

On March 19, 2026, the CHC reviewed the new work plans for Group 1 contracts and recommended that the City Council continue renewing those contracts.

On May 21, 2026, the CHC reviewed the updated work plans for the Group 3 contracts and likewise recommended that the City Council continue renewing those contracts.

On August 19, 2026, the City Council received and filed the progress report, accepted the new 10-year works plans for five out of the six contracts in Group 1 (excluding 851 Lyndon Street) and continued renewal of those contracts. 

Mills Act Contracts have an initial 10-year term and automatically renew annually unless the City or property owner issues a notice of nonrenewal in accordance with the contract and South Pasadena Municipal Code. As part of the annual review, staff evaluates each property owner's compliance with the contract, including progress toward completing the approved Rehabilitation and Restoration Plan ("work plan"). 

South Pasadena Municipal Code Section 2.68(C)(i) requires that the estimated property tax benefit not exceed the property owner's proposed financial investment in the historic resource during the initial 10-year contract term. Each work plan identifies the anticipated restoration and rehabilitation activities, estimated costs, and completion schedule. Staff uses the approved work plan to evaluate compliance with the contract. 

Based on this review, staff categorized the contracts addressed in this report as Group 1 Full Compliance or Group 3 Noncompliant. 

                                                                                Table 1: Active Mills Act Contracts by Group

Group 1: Full Compliance

This group contains the contract for 851 Lyndon Street, the last remaining contract in the full compliance category. This contract was not reviewed as part of Group 1 at the August 19, 2026 City Council meeting because a new contract was required to continue its renewal. This group contains properties that have completed the restoration and rehabilitation tasks identified in their approved work plans. Consistent with the direction provided by the City Council on July 16, 2025, each property owner submitted a new 10-year work plan identifying future preservation and maintenance activities. Staff and the Cultural Heritage Commission reviewed the new work plans and found them to be consistent with the purpose and requirements of the Mills Act Program.

Because the property owner has fulfilled the obligations of their existing work plan and submitted a new work plan demonstrating continued investment in their historic property, staff finds that continued renewal of this contract is appropriate. 

Group 3: Noncompliant

Group 3 consists of 4 properties that did not complete their approved work plans within the initial 10-year term of their respective Mills Act contracts. The current status of each contract is summarized below.

                                                                                      Table 2: Group 3 Summary

Consistent with the direction provided by the City Council on July 16, 2025, the property owners submitted updated 10-year work plans addressing their remaining improvements. Staff and the Cultural Heritage Commission reviewed the updated work plans and determined that continued renewal of the contracts is appropriate and consistent with the purpose of the Mills Act Program.

Although the original work plans were not completed within the initial 10-year contract terms, the property owners remain active participants in the program and have demonstrated progress toward completing the required improvements. Accordingly, staff and the Cultural Heritage Commission do not recommend issuing notices of nonrenewal at this time.

Staff will continue to monitor each contract through the annual review process. Staff may recommend nonrenewal or cancellation in the future if a property owner does not demonstrate sufficient progress toward completing the approved work plan.

Alternatively, the City Council may:

1. Issue a Notice of Nonrenewal for one or more Mills Act Contracts if it is determined that continued renewal is not appropriate based on the property owner's compliance with the terms of the contract;
2. Direct staff to return with additional information regarding one or more contracts before making a determination; or
3. Provide other direction to staff regarding the administration of the City's Mills Act Program. 

The recommended action will not result in any additional fiscal impact beyond the existing Mills Act Contracts currently administered by the City. Continued renewal of the eligible contracts maintains the existing property tax reductions provided under the Mills Act Program.

The Mills Act Program provides qualifying historic property owners with a reduced property tax assessment in exchange for preserving and rehabilitating historic resources in accordance with an approved Rehabilitation and Restoration Plan. The City's estimated annual reduction in property tax revenue associated with the 30 active Mills Act Contracts is approximately $111,005.62. Over the initial 10-year term of all contracts, the estimated cumulative reduction is approximately $1,110,055.60. Because the contracts were executed over a period spanning from 2000 through 2024, these fiscal impacts occur over multiple fiscal years rather than during a single 10-year period.

Beyond the fiscal impact, the Mills Act Program encourages the preservation and rehabilitation of the City's historic resources by promoting private investment in historic properties, preserving neighborhood character, and supporting the long-term stewardship of South Pasadena's cultural heritage. 

The annual review process tracks property-owner progress in completing approved work plans, including the completion dates and estimated costs of restoration and rehabilitation activities. Property owners are also required to submit progress reports according to the schedule established in their contracts. Pursuant to SPMC Section 2.68(b)(1)(E)(vi), the Cultural Heritage Commission reports on its review of active Mills Act Contracts as part of its annual report to the City Council. 

At its meetings on January 15, February 19, March 19, and May 21, 2026, the Cultural Heritage Commission reviewed the respective contract groups and recommends that City Council continue renewal of the applicable Mills Act Contracts

The proposed action is exempt from the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines Section 15061(b)(3), the Common Sense Exemption, because the action consists of receiving and filing a status report and continuing existing Mills Act contract renewals. It can be seen with certainty that the action will not result in a direct or reasonably foreseeable physical change in the environment.