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Committee delays vote on Mills Act contract for 166–178 Townsend Street after budget analyst flags delinquent taxes
Summary
Planning staff presented a Mills Act historical-property contract for a 6-story mixed-use project at 166–178 Townsend Street. The budget analyst recommended disapproval because the property owner owed $105,126 in delinquent property taxes; the sponsor said payment plans are in place and proposed limiting the Mills benefit to the historic volume. The committee continued the item for two weeks.
Planning Department staff told the Budget and Finance Committee that the project sponsor seeks a Mills Act historical property contract for 166To178 Townsend Street, a mixed-use redevelopment of a building that is a contributing structure to the South End Historic District. The proposal, amended since earlier review, now calls for a six-story development with 94 rental units, 45 parking spaces and rehabilitation of historic facades.
Budget analyst Harvey Rose recommended disapproval and reported that the property owner currently owes $105,126 in past-due property taxes (for multiple fiscal years), a fact Rose said weighed against granting a Mills Act contract. Rose also noted that, unlike prior Mills Act approvals that limited tax benefits to historic envelopes, the requested contract would appear to reduce taxes for the entire proposed 6-story building.
Project sponsor Patrick McNerney of Martin Building Company told the committee that payment plans had been established with the treasurer's office for prior supplemental and escape bills and that the sponsor had sought to limit the Mills Act application to the historic volume (post-1906 envelope) rather than the whole new building. McNerney said lenders and funding mechanisms (FHA/HUD, tax-credit financing) require the Mills Act to make the project feasible and that the Mills Act benefit would not come into effect for at least 12 years under the transaction structure presented.
Supervisors raised concerns about precedent, timing and whether the Mills Act should be applied to the entire new envelope. Supervisor Bevan Dufty and others asked for further documentation from the treasurer/tax collector and for analysis of how Proposition 13 and other tax rules would affect the project's financing and the city's long-term property-tax receipts.
The committee voted to continue the item for two weeks to give staff, the treasurer/tax collector and the budget analyst an opportunity to present additional detail and to allow the sponsor to provide supporting documentation on payment plans and the proposal to limit the Mills benefit to the historic volume.
What's next: The budget analyst said his office will incorporate issues raised in the committee report for the follow-up and the treasurer/tax collector was asked to appear at the continued hearing.
