Title
PLN240184 - YEUNG GABRIEL M TR
Public hearing to make a recommendation on a Historic Property (Mills Act) Contract for the property located at 62 Yankee Point Drive, Carmel (Assessor's Parcel Number 243-152-005-000), which contains the "June Haas House".
Project Location: 62 Yankee Point Drive, Carmel, CA 93923
Report
RECOMMENDATION:
Staff recommends that the Monterey County Historic Resources Review Board (HRRB) adopt a resolution recommending that the Chief of Planning:
1) Determine that the property at 62 Yankee Point does not qualify for a Historic Property (Mills Act) Contract; and
2) Find that determining the property doesn’t qualify for such a contract would be statutorily exempt from CEQA pursuant to CEQA Guidelines section 15720.
SUMMARY:
The property is situated on a bluff on Yankee Point Drive in the Carmel highlands area, and contains a one-story single-family home constructed in 1969 (the “June Haas House”), a detached garage built in 1979, and a one-story detached guest unit built in 1980. The house was listed on the Monterey County Register of Historic Resources by the Board of Supervisors on November 8, 2023 (Exhibit C).
The applicants have requested a Historic Property (Mills Act) contract for the property, and while staff does see merit in many elements of the application, the property is over the value cap limitation for Mills Act Contracts established in Monterey County Code (MCC) section 18.28.040.C., and staff does not believe that the criteria can be met to grant a Value Cap Exception pursuant as set forth in MCC section 18.28.080.B. The value cap was established after the consideration of a Mills Act Pilot Program where it was found that one property with a high fair market value accounted for nearly 80% of the total reduction in property tax revenue experienced by the County as a result of the pilot program. Properties that have high fair market values may also require less financial assistance in the form of property tax reductions to maintain the historic resource. In this case, the Yeung property has a fair market value of over $5 million with an estimated property tax reduction of approximately $30,000 annually.
An exception to the value cap was established for particularly important resources that are highly visible to the public, provide a unique public benefit, and may be at risk of substantial adverse changes. This exception requires weighing the public interest against the costs.
Staff is recommending the HRRB determine the property is not eligible for a Mills Act contract (Exhibit A) as the value cap exceptions are not warranted in this case. An alternative resolution is attached to this staff report in case the HRRB disagrees with this analysis and desires to recommend approval of the project (Exhibit B).
DISCUSSION:
As a voluntary financial incentive program, the Mills Act helps identify historic properties and encourages investment in their maintenance in a manner that maintains their historic integrity. Approved and recorded contracts have an initial term of 10-years, which renews annually.
As the number of properties in the program increases, the overall financial impact of the program on services that rely on property tax funding increases. In consideration of last years Mills Act applications, there was significant discussion on the Mills Act. Individual Board of Supervisors members asked if an overall cap on the number of contracts has been considered, if the granting of tax relief to properties with high economic values truly fits the intent of the program to provide necessary financial relief, and whether a Board of Supervisors referral on the overall status of the program was warranted. It was suggested that discussions on the program should start at the Historic Resources Review Board (HRRB) level.
Historic Significance
As previously mentioned, the Yeung property is listed on the County’s historic register. The property is significant under the California Register of Historic Resources Criterion 2, “Associated with the lives of persons important to local, California or national history” for its association with the noted architect Mark Mills, and under the California Register of Historic Resources Criterion 3, “Embodies the distinctive characteristics of a type, period, region or method of construction or represents the work of a master or possesses high artistic values”. The historic report prepared for the residence (Exhibit D) states “The June Foster Haas House is a paean to Mark Mills genius as an architect. Her house is the epitome of Organic design in its best sense, and clearly qualifies for listing in both the National and California State registers of historic places, as well as in the Monterey County Historic Resource Inventory, under a theme of Modern Architecture in Monterey County.”
As an apprentice of Frank Lloyd Wright, Mills was, “taken by one of Wright’s Sunday lectures on the nature of ‘seashells as housing produced by god.’ Wright noted that even though the shell was finite there was never a limit on the design possibility that the forms infinite variety could lend,…” (Seavey, HCD-Planning File No. LIB240172, 2023). A number of Mills designs took inspiration from this seashell concept and other forms of nature, including the subject residence; the 1972 “Fan-shell Beach House” in Pebble beach, which appears eligible for the CRHR as noted in the Pebble Beach Historic Context Statement (Past Consulting LLC, 2013); and the “McDonald House” which the HRRB recommended be added to the Monterey County Register of Historic Resources on September 5, 2024 (HCD-Planning File No. PLN240186). “It was said of him [Mark Mills] that he was ‘an architect of an individual subtlety, rarely repeating designs. Each structure is unique and tailored to the landscape and client.’” (Exhibit D) A 2009 Architectural Digest issue referred to him as “as one of the world's top architects.”
The “June Haas” house employs this organic style by appearing to emerge from the earth. The design of the 1969 June Haas House was a response to a client’s request for a structure “which carried the memories of the traditions of a Greek island.” It retains a high degree of physical integrity, and its period of significance is 1969, and its character defining features include:
• its cruciform plan;
• barrel-and groin-vaulted building envelope;
• the use of gunite sprayed over an elastomeric webbing, then coated with a preservative mixture containing rough-ground walnut shells, for texture as a wall-cladding;
• Large lancet shaped window openings with sculptured hoods;
• round arched doors; and
• small porthole windows, sited at the sea's edge in the natural coastal landscape setting.
Mills Act Eligibility Criteria
To be eligible for a Historic Property (Mills Act) contract, five criteria detailed in Monterey County Code section 18.28.080.A must be met. The project is consistent with criteria 1 through 3. Staff do not believe the project is consistent with criteria 4 or 5.
Criteria 1: “The property that is the subject of the application is a qualified historical property as defined by this Chapter.”
To be considered a “qualified historical property,” the property must be individually listed on the local, state, or national historic registers; or be a contributing structure in a historic district. The project is listed on the County’s local register.
Criteria 2: “The application is consistent with the County's historic preservation goals and policies, as set forth in the County's General Plan and ordinances.”
Staff reviewed the application and found it consistent with the applicable policies of the 1982 General Plan and the requirements of Monterey County Code (MCC) Chapter 18.25. The property meets the criteria for a historic resource as defined in MCC section 18.25.070, the proposed work activities appear consistent with the review criteria in MCC section 18.25.170.D, and the use utilization of the tax savings from the Mills Act contract to preserve the resource would advance 1982 General Plan policy 52.1.5.
Criteria 3: “The application is consistent with the applicable Secretary of the Interior's Standards for the Treatment of Historic Properties, the rules and regulations of the Office of Historic Preservation of the California State Parks Department, and the California Historical Building Code.”
The application includes a work plan indicating how the received tax savings would be utilized for the rehabilitation and preservation of the residence (Exhibit F). The activities have been reviewed by staff and appear consistent with the Secretary of the Interior’s Standards for Preservation and Rehabilitation, as applicable:
• Tasks 1-3 consist of general exterior maintenance to doors, plaster and paint, exterior floors, and windows.
• Tasks 4 and 5 are to restore or replace deteriorated door and window hardware.
• Tasks 5 through 7 are all mechanical, electrical and plumbing maintenance, consisting of replacing mechanical vents to prevent further deterioration, electrical outlets and wiring, and assessment of the conditions of the plumbing and sewer line.
• Task 8 is a landscaping design to replace non-native species with appropriate native plantings
• Task 9 consists of sealing and caulking of all windows, repainting window frames, and repairing window screens.
• Tasks 10 through 12 are all regular maintenance activities, including grounds maintenance, HVAC and chimney maintenance, annual drain cleaning, septic system maintenance, home inspections, roof surface, penetration, and flashing inspections, and regular geologic hazard inspections.
Criteria 4: “The fair market value of the property that is the subject of the application is equal to or less than the valuation limits set forth in Section 18.28.040.C of this Chapter, unless an exception has been granted pursuant to this Chapter.”
A uniform residential appraisal was prepared by Sandra Cimo of S.A.C Appraisal Service, State Certification No. AR005902, which concluded that the fair market value of the property is $5,200,000, $2,200,000 over the value cap limitation for residential properties of $3,000,000 dollars. There are three criteria that would need to be met in order to grant the value cap exception. The exception criteria are inclusive, with all three required in order to grant the exception. In this case, staff suggests that the application may meet the first criteria and does not meet the second criteria. There is evidence that could support the third criteria in either direction, but based on the current circumstances staff have a difficult time finding there are enough additional factors to meet it.
The first criteria is “The site, building, object, or structure is a particularly important resource such as the last or only example of its kind, and it represents an exceptional example of an architectural style, the work of a master, or is associated with the lives of significant persons or events important to history; and”
The inclusion of the first phrase is important for this criteria. It isn’t sufficient that a resource be an exceptional example of an architectural style, the work of a master, or is associated with the lives of significant persons or events important to history. It must be especially important. A clear example is something that would be eligible on the National Register of Historic Places at the state or national level of significance, rather than just local/regional.
The residence is historically significant, as evidenced by its listing on the local register and historic report prepared by Kent L. Seavey (Exhibit C). However, there are other residences designed by this master architect that are examples of this style. Nevertheless, there are reasons that this resource is particularly important:
• A value cap exception justification letter was provided by historian Kent L. Seavey (Exhibit E), including a supplemental addenda dated August 27, 2024. It includes a letter from famous landscape photographer Ansel Adams speaking glowingly of the residence, stating it is “magnificent in several domains” and “I wish I could live in it!!”
• The addenda also discusses that the property was previously visited regularly by students at the Monterey Peninsula College as part of an annual class on local architectural history, and a 2004 article in Dwell Magazine as an “ingenious response to its site in the most Organic way imaginable, literally dropping over the edge of a cliff, to capture intimate views of the crashing waves and rocks below.”
• The relative significance of each of Mills designs is inherently difficult to weigh as Mills designs were often unique, each tailored to their specific environment.
With this supplemental evidence, the residence is sufficiently distinguished within Mills body of work as a master architect and meets this criteria.
The second criteria is that, “2. The historical property contract will result in the preservation of a site, building, object, or structure whose significance as a historical resource would otherwise be at immediate risk of substantial adverse change. A substantial adverse change in the significance of the historical resource means the physical demolition, destruction, relocation, or alteration of the resource or its immediate surroundings such that the significance of the resource would be materially impaired; and”
In this case the applicants have submitted a supporting property inspection report (Exhibit G) prepared by residential inspector Paul Murrer (License No. 200320) to document the necessity of the physical rehabilitation and maintenance activities. The report observed a number of potential deficiencies in the residence that should be evaluated and addressed, including areas of fungus and/or moss on the roof, lack of drainage on the exterior stucco, and mold like growth in the exterior area. The HRRB’s ad hoc site review subcommittee also conducted a site inspection on September 13, 2024 to evaluate the condition of the residence and environment, noting that hazard conditions associated with its location on a coastal bluff, with storms and coastal salt air, which can cause deterioration or destruction of the structure. The exterior gunite material is one of the character defining features of the resource.
Nevertheless, the residence has a high degree of physical integrity as discussed in the historical report. It doesn’t appear to be at immediate risk of adverse change without the approval of the Mills Act contract, and the applicants are pursuing the construction of new detached structures, a remodel of the residence, and site improvements. The location of the structure on a bluff and near the ocean is one of the reasons that the property is well over the fair market value cap.
The third criteria is that “3. The exception is warranted due to one or more of the following additional factors: a. The resource is highly visible to the public; b. The difference between the current property tax obligation for the property and the estimated property tax obligation under the Mills Act is within the same range as the expected estimated lost property taxes from historic property contracts for properties meeting the valuation limit; c. The work program proposes to provide for critical improvements immediately necessary to preserve the resource, and it provides for the best and most efficient use of the expected property tax savings; or d. Approval of the contract would generate heritage tourism, affordable housing, or similar public benefits.”
In summary this criteria boils down to, are there significant public policy benefits for allowing the contract over our own value cap limitation requirements? The value cap comes into play in two ways. First, the fiscal impact due to the reduction in property taxes is generally greater for properties with a higher value. Approximately 61% of property tax revenue goes to schools, 16% to special districts, 15% to Monterey County, and 8% to redevelopment successor agencies. Second, the higher the value of the property, the less likely it is that the owner does not have the fiscal means to maintain their property without tax relief.
For this project, in their value cap exception justification letter applicants have made the case that the project could support architectural heritage tourism (18.28.080.B.3.d), including that it may be added to the “AIA Guide to Contemporary Architecture of the Monterey Bay Region 1947-2008,” and have offered to include allowing a yearly public tour of the property per MCC code 18.28.050.B.9. This condition has been applied to similar situations for Mills Act contracts, though to date this provision has never been utilized to schedule a tour. Staff think that it would be premature to conclude that the residence will generate heritage tourism based in the AIA guide without some form of confirmation it will be added to a guide. However given the uniqueness of the residence and discussion regarding its use for local architectural historic courses above, it’s possible a Mills Act contract would contribute to heritage tourism.
The letter also states that the resource is visible to the public (18.28.080.B.3.a.). While the residence is visible, its most prominent features are on the ocean side, outside of the public viewshed. In this case that actually bolsters the value of public access to the site for tourism, as it would allow the public to experience architectural heritage that would otherwise be inaccessible without the Mills Act contract.
Staff assessed whether the difference between the current property tax obligation for the property and estimated tax obligations for properties that are within the value cap are in the same range, which is a potential reason to meet this criteria (MCC section 18.28.080.B.3.b). For this analysis, the assessor’s office provided the current base year / proposition 13 value and the Mills Act value for the 13 properties that were under contracts in the 2023-2024 fiscal year. This data doesn’t yet have the 2024-2025 assessments, which would add PLN230067 (the Ferris Bagley house at 4161 Sunridge Road, Pebble Beach), and PLN230088 (the Corey house at 100 River Road, Salinas). The average tax savings for the nine properties within the value cap is $15,949, and approval of the contract would result in a tax savings of $30,111.24 annually, a difference of $14,162.24 (or 89%), almost double the average tax savings of properties under the value cap. The median value of tax savings is slightly higher, at $17,365, but this still represents a significant difference, 12,746.24 (or 73%). Over the initial 10-year contract period this would be an additional cost of between $127,000 and $142,000 over the median or average contract that is within the value cap.
Looking at the program more broadly, the overall annual reduction in tax revenue from 2023 was approximately $317,459. Of that, four properties were over the value cap based on their Proposition 13 assessed value, and had a tax savings of $218,243, while the other nine represented a tax savings of $99,215. Based on the estimates of that year, the most valuable 31% percent of properties were receiving 69% of the benefits of the program. If you use the estimated tax savings provided in the PLN230067 and PLN230088 to add the contracts approved in 2023 to this consideration (both of which were under the value cap), the total savings increases to about $369,543.81 annually for the program, with properties under the value cap receiving $151,300.50. In this case the most valuable 26% percent of properties would be receiving approximately 59% of the savings from the program. Either way, this is a huge disparity, with the handful of properties that arguably require financial relief the least receiving the majority of the benefits of the program.
Criteria 5: “The application is consistent with the requirements of this Chapter.”
A Mills Act Contract application was submitted with the required contents detailed in MCC section 18.28.060. As discussed above, this application is consistent with MCC section 18.28.080.A criteria 1 through 3 but does not appear to be consistent with criteria 4, therefore the application would not be fully consistent with the requirements of the Mills Act.
Estimated Financial Impact
The 10-year rehabilitation and maintenance has a total estimate of $461,470 in activities over the initial 10-year contract term. $106,200 of this is in recurring maintenance activities, and $355,270 is one time rehabilitation activities.
Based on the property’s 2023 - 2024 tax bill, the Proposition 13 assessed value of the property is $2,916,189 while the total tax obligation for that year was $30,694.66. The estimated property taxes based on the Mills Act tax savings worksheet are $583.42, resulting in an approximate tax savings (or loss of revenue) of $30,111.24. Over a period of 10 years this would be a savings of $301,112.40 dollars for the property owner and unrealized property tax revenue for public services.
CEQA:
CEQA Guidelines section 15720 statutorily exempts applications that an agency disapproves or rejects, which would apply to the Chief of Planning making a determination that the project does not qualify for a Historic Property (Mills Act) contract. Should the Historic Resources Review Board recommend approval of the application, CEQA Guidelines section 15331 categorically exempts projects limited to the maintenance, repair, stabilization, rehabilitation, restoration, preservation, conservation, or reconstruction of historical resources in a manner consistent with the Secretary of the Interior Standards for the Treatment of Historic Properties. The project consists of listing approving a historic property contract to allow the on-going maintenance and preservation of a historic home, consistent with the intent of this exemption.
Prepared by: Phil Angelo, Senior Planner
Reviewed by: Craig Spencer, Acting HCD Director
The following attachments are on file with Housing and Community Development:
• Exhibit A - Recommended Draft Resolution
• Exhibit B - Alternative Draft Resolution
• Exhibit C - Board of Supervisors Resolution No. 23-454
• Exhibit D - Combined Phase I and II Historic Report (LIB220321)
• Exhibit E - Value Cap Exception Justification Letter (historic report and historic register listing attachments removed as these are separately attached)
• Exhibit F - 10-Year Rehabilitation and Maintenance Plan
• Exhibit G - Property Inspection Report
• Exhibit H - Landscaping Plan
• Exhibit I - Site Photos