$5,000. we hope that will help us recoup the costs in processing the applications, while also allowing greater accessibility to the program. to provide comparison in what we investigated in other cities in california, we're far below the number of executed mills act contracts from many cities in california. san diego currently has 1100 active contracts. los angeles, i spoke with the historic preservation program officer last week, and they just approved their 601st mills act contract. oakland began their project in 2008, and they already have 20 four contracts in place, and they said they have a whole stack in the pipeline awaiting approval from their city council. to clarify a few other sort of

background items is in our analysis, the average savings for a property would be a around $17,000. it is hard to calculate how many buildings really would be eligible for the mills act program. we know the number of listed historic resources we have, but because the assessor's office uses a separate value calculations to determine the eligibility under the mills act program, we cannot simply look at the property tax value as an indicator of whether or not a property would be eligible. so it is hard to give a number, however, we know the universe of buildings that could potentially seek access to the mills act program. i did mention in the the monitoring report. finally, in terms of what the planning department resources are related to the application

process, we take about 40 hours to process these applications. we think that number will be significantly reduced by having a standard based contract in these established deadlines that will hopefully provide more predictability for homeowners on when they need to get all the materials in place. we do acknowledge that a lot of the information in our current application needs to be augmented to make this more clear to property owners so they know exactly what they're getting into and exactly what the timelines our milestones will be in relation to the program. we have already met with the assessor's office a couple times and we are working on collaborating in providing better application and outreach materials once this legislation moves forward. that concludes my presentation. i am happy to answer any questions you may have. thank you. >> thank you.

any public comment on this item? >> good afternoon. i did not plan to talk about this, but i had personal experience with this since i drafted the first version of the mills act ordinance with the late supervisor sue wiermbierma. although it is called the mills act, and senate terminals supported it, and our senator made it operable, and what we do is based on what he did. of course, the intention was to provide property owners who owned dilapidated historic buildings with the incentive to repair and upgrade those buildings. in san francisco, that particular relationship, which is the basis of the contract, may not necessarily be as

relevant as it was several years ago, because there are not as many dilapidated historic buildings around. so the sensible connection between the contract and the tax basis is an agreement by the property owner to properly maintain their building, which is a lot different than redoing the facade or so forth. still, i think it is a worthy goal. when supervisor bierman did the ordinance, it was designed to accommodate a large commercial project, which after the ordinance was passed, they decided it was more trouble than it was worth. you have to understand that this is not just a simple 25% tax bill. it is a rather convoluted a question involving the imputed rent and a capitalization factor. indeed, some people may find in san francisco that is more

trouble than it is worth. we have not experienced much, if any, interest in resident or property owners, which is unlike many other communities. i think part of it certainly comes from the cumbersome way we dealt with them here and the fact that the board of supervisors had to approved the contract. other cities have different city charters or may operate under municipal code. many of these contracts can be done expeditiously by a city staff. but we, being san francisco, are going to have to send these to the board. [bell rings] this will be the third version of the mills act and i think it is worth trying again. but based on my experience, this is not any kind of panacea and, you know, heritage has been advertising this as a great deal for many years and we have not had much activity. we may have more activity, but i

think one has to be realistic about what this is all about. thank you. >> thank you. any further public comment? seeing none, public comment is closed. commissioners? commissioner antonini? commissioner antonini: i have some questions for mr. frye. it is really incredible that the number is so low in san francisco. admittedly, some of the things brought up in this legislation could contribute to it. but just the higher-priced buildings, we have many older buildings in san francisco, many of whom have been remodeled and renovated over the years and you would think they would have taken advantage of this in the past. so that is kind of interesting, why that has not happened. and i assume that tdr's still be usable even with mills act.

could you do both? >> yes, you could. commissioner antonini: ok, great. that sounds good. the second question is in regards to the no limit on tax revenue loss, presumably, although not always, you may end up with a higher overall talks at -- tax after the mills act situation is done. in the case of 690 market, we ended up with all this condo units where the commercial space prior to the building of the condos at a very low rent, annual sales tax, and of course that was multiplied many times. that would not always be the case, but upon sale, it would certainly be a higher appraised value. >> that is a good point, commissioner. it is also important to point out that this is not just a tax break for a property owner with no strings attached.

there is a maintenance or rehabilitation programs so that money is being reinvested into the property. restores certain elements of it, but certainly to offset the expense of cost of maintaining an older home. so it will, at the end of the day, increase the property value of the building for that investment. commissioner antonini: ok. further questions -- why any property value limits at all -- i know they are dropping down to, i guess, it is $1.5 million for a single-family residence. is that the case now in the legislation? >> yes, correct. currently, it is only a matter of policy, and that was in response to some concerns from the assessor reporters office of putting some parameters around the use of the program. we had a $3 million sort of limitation on the residents of property and then $5 million for the commercial. now the legislation proposes to

reduce those further and codify them. that was one of the items that the historic preservation commission felt would be -- just pose another limitation to participation, and they believe that the monitoring report will help sort of offset some of the concerns that the assessor reporters office may have. we're still talking to the supervisor about whether or not he is a mental -- amenable to those changes, but we will work with him on that. the hpc ideally things that the $3 million and $5 million limitations are reasonable and should be continued to be implemented as a policy rather than codify it within the administrative code, and we will work with him on that aspect as well. >> so they want to keep the higher limits, is that what you're saying? >> is correct, but not to codify them. currently they reside in the application. if a property exceeds $3

million, residential property, in terms of the assessors of value, then certain criteria have to be met for the building to be considered by the board of supervisors. that information is just forward it to the board and to the hbc for them to consider when making their decision. there's nothing prohibiting the supervisors from granting any mills act application. this is just additional information for them to consider, and one of the things is the value of the property. through this, there would be some codification of those limitations, which the hpc thinks looks like a visual barrier to participation, at least on paper, and thinks it would discourage people. that is what they were requesting that it be removed from the code. >> you're saying that any property at any value could apply for this but the value is set to the board of supervisors

at a certain level. >> correct. anyone who applies for the mills act application, we would have to take that through the process to the board of supervisors for a decision. the city may want to opine on this as well. commissioner antonini: yes, yes or confused. >> and deputy city attorney here. i think there is a little confusion here. currently, there is no codified limit on who can apply for the mills act contracts based on property value. the only limit that exists right now is a planning department policy to encourage people to apply if there residential property is less than $3 million for single family residence and other properties are less than $5 million in value. that is only a planning department policy curley, so anyone who applies right now can

go through the application process, even if the building is worth $20 million. what end up happening is planning and its staff report to the hpc and the board of supervisors, and they know that the planning department has a policy to only recommend the properties that are below these limits, so it becomes part of the policy considerations that there are no codified limits. under the proposal in front of you, there would be a codified limit of $1.5 million for single family residences and $3 million for other buildings. but as set forth in the amendments, the hpc in always recommend that a property that is a greater value than those limits still get a mills act contract, and a think the conditions are extraordinarily important resource or other policy considerations. and the board of supervisors

always has a discretion to approve the contract record was of whatever limits are in this code. i think it seems like is more a matter of sort of where you're putting the policy that you want to have and what the limit on the policy is. wants to keep a handle on what we're talking about, and certainly an assessment should be part of the thing or some kind of evaluation. i am looking at perhaps considering no limits in this. mr. frye, you mentioned san diego, oakland, and l.a. and some other cities with contracts. to your knowledge, do they impose a similar kind of property assessment limitation? >> san diego does not have a limitation, but los angeles does. commissioner sugaya: just to

argue for no limitation, it seems to me that starting from the proposal in front of us, $1.5 million seems to be awfully low to me. to start there, and i think people will read that number and become discouraged, even though that they know there is an exemption. if you say there is an exemption, that means more paperwork, more consulting work, and whatever. just taking a look at the checklist that is currently used, and in our experience since the office i work with has one of five mills act contracts in the city, a bush street. we noted that experience and assisting others in the process, there are requirements that are currently composed and i assume

continue to be there, like the historic structures report. you have repair, rehabilitation, and maintenance plans. you have to have site plans and photographs. for all of that stuff in, i think a single-family homeowner, unless they happen to be an architect or something, you know, it is a considerable amount of things to try to put together. therefore, in our experience, they have turned to -- like our form, for -- our firm, for example, we assist people in doing that, but we do not do it for free. maybe we should. you know, so there is an added cost of the owner that is on top of the fees and on top of what the city charges for the mills act contract. so any lowering of fees would be great. i have heard some comments, i do not see it in the hpc notes, but

having some kind of hardship provision. that might be introduced. which -- was that addressed? >> taveras staff. we did discuss that yesterday at the hpc hearing. while we did make that explicit in article 10, there is a provision in the planning code that any application fee may be waived it a hardship is demonstrated. that would certainly apply to this as well as any other application. commissioner sugaya: ok, that is great. the only other comment -- is also a pretty much in agreement with the historic preservation commission's recommendations. i know heritage was proposing something to address neglect, sort of demolition by neglect or whatever their terminology is. but it seems that the hpc -- it says, with the exception of the proposed change regarding cases

of deliberate neglect. could you kind of run through the argument from their side about not accepting that? >> there was a fair amount of discussion around whether or not sort of intentional neglect on a property could be used as a way to leverage a mills act contract. in our discussions, a couple things, one is that the hpc felt that many of these homes are properties will already be in some state of deferred maintenance. that is why they're great candidates for the mills act program. they did not want certain of natural deferred maintenance, whether intentional or unintentional, to be a factor in considering whether or not a property is eligible for the mills act contract. the second was we felt there were already existing provisions with in the planning

code and the building codes that require a property to be maintained in a civil lender and to avoid an imminent hazard or public safety issue. we felt that it was already being addressed. commissioner sugaya: ok, thank you. >> thank you. commissioner moore? commissioner moore: thank you. first, what you think the department in supervisor wiener for bringing this forward. i see this as an exceptionally sustainable policy. a few years ago, the majority of people in this commission were not present. and it seemed to be an incredible undertaking given the amount of work which was in front of us to consider a building and supported for the mills act, but it seemed to be somewhat out of the mainstream of standard discussion because it touched on so many areas of special knowledge which eluded

us. doing what you're trying to do is really bringing it mainstream and into what i consider a sustainable building strategy, and i am glad that generally there is consensus around how this should be delivered. i would support commissioner sugaya and commissioner antonini's concerns about codifying or even including cost parameters, but i hope you'll work that out given it was pushed back from three commissioners on that subject matter. >> thank you. commissioner sugaya:? commissioner sugaya: thank you. i would like to make a motion, and i am not sure how to phrase it. i would like to support or parallel the recommendations from the historic preservation commission, including what ever they consider to be minor technical amendments that were proposed by heritage.

with the exception with respect to deliberate neglect and also not codifying the $1.5 million and $3 million limits, but staying with the $5 million limits and $3 million limits that are currently with in the policy of the department. is that adequate, ms. avery? >> second. my understanding, a commissioner, is that basically your motion is to parallel that of the hpc. commissioner sugaya: yes. >> sure, thank you. >> commissioner antonini? commissioner antonini: a couple comments and amendments. later on today we will be talking about the central market revitalization, and i think someone like this would play into that very well, as well as properties in the western addition, north beach, many of

whom are in need of renovation and might make it more possible economically for these things to occur. i think it is also very important that there be good outreach on this, because i think part of the reason we may not have this used as much is the fact that the public is not aware of this avenue to help in renovation of historic properties. so i think we have to really make sure that we get the word out. the only amendment, i guess, would -- i do not know that we really need to get into any sort of -- i realize the limit is not really a minute, as was justified by the city attorney, and you can apply at any level. but i certainly would ask the maker of the motion and the seconder to perhaps eliminate that or make sure that it is a very clear that preference is given to properties under $3 million and $5 million.

would that be acceptable? it makes it clear that you can apply at any level. >> i think that is already in the policy. i mean, the policy states $3 million and $5 million as the sort of limit, and then, again, i think that is the preference right now. >> that is correct. tim frye, department staff. it is, program priority criteria on page four. if the building is under those limits, it is considered to have priority in processing and for consideration. commissioner antonini: ok. well, that sounds like that is probably ok as long as it is made very clear that you can apply at any level. preference is given to those at the levels, and i would be supportive of the higher-stated preference levels. so i am in agreement with the motion as put forward.

>> commissioner borden? commissioner borden: i do not have a problem per se. but on the front page of this mills act contract, the language does say that the eligibility for historical property contract shall be limited to buildings and structures -- if our goal is to make it sound more suggested that prescriptive, the language on the front page of this package makes it sound like, you know, that there is a limit. in theory, i have no problem with the whatever limits. in practice, my only concern is if we are really successful, as a policy matter, do we want to be subsidizing property owners at much higher levels from taxes when we have, you know, if it becomes something that we have the utilization that you

have in places like los angeles where you have 1000 people using its? that would be my only thought. i guess we will have to cross that bridge when we get to it. right now is all theoretical and not real, but i believe that there is a lot of logic in having a policy thought around that. because i think we really want to encourage that among distressed buildings, those that are less expensive, to really have property owners want to invest in bringing these properties up to the standards and maintaining and keeping them and help us maintain our historical resources. to the extent that we have made this change and we want to make it more suggestive, you find with that, but it makes sense from a policy level not to focus on subsidizing people that have properties that much higher levels. many times, those properties are funded from multiple sources,

investors, and more, so there to recalculations and evaluations, and people are not making those choices. >> thank you. commissioner antonini? commissioner antonini: i agree with commissioner borden. the first page clearly does state shall be limited to buildings and structures with the $3 million or $5 million, less for commercial or industrial. i think in keeping with the motion before us, it probably should be preference will be given to, you know, and that should be a preference to level, but they can apply at any level. that is the way i would like to see it. and it is very easy for a building to have high value, even if it is a building that is, you know, regardless of where it is in the city, it is quite easy to have a value over

$5 million. again, i think taking the long view is very important. because a renovated building historically perhaps open to rents at higher levels will go on sale, and probably even sooner than that depending on how the assessor assesses improved buildings, will capture a much higher tax base and will end up rewarding the city with a lot more revenue. i think that concern my9 be as bad a one as we have heard. -- might not be as bad but one is we have heard. >> quickly, sorry to interrupt. but we're working very closely with our new communications manager. once this legislation moves forward, we are proposing a very large media blast and community outreach efforts to make sure as many folks are aware of it as possible. once we update the application materials and our bulletin,

we're happy to include those in the correspondence folders so you can see the changes we made in relation to the legislation. commissioner antonini: thank you. one final point i wanted to raise. i did not read closely the historical preservation commission's comments about concerns with neglect. again, we have to be very careful in this wording. because, again, older buildings have not had a lot of money or cannot be invested in, there was no economic return that it would ward's investment, but, you know, sometimes deterioration occurs from the aging of the building rather than necessary neglect. so we have to look closely at that and make sure we do not end up with a lot of problems with encouraging people dto fix up the buildings. >> commissioners, the motion on the floor is to parallel that of the hpc with the and additional amendment to change the language

from shall to preference. is that -- >> are we including that or no? the things that understands that they will be redoing the brochure and everything in. >> so that is not part of the motion be on that motion -- commissioner antonini: aye. commissioner borden: aye. commissioner miguel: aye. commissioner moore: aye. commissioner sugaya: aye. commissioner wu: aye. commissioner fong: aye. >> thank you, commissioners. >> secretary, if we can take a 20-minute