Encinitas Municipal Code § 7.3 Historic Preservation Strategies

Any successful preservation program must include not only the identification of historic resources, but development of measures to protect them. Potentially landmark-eligible properties and other historic resources have been identified in the "Architectural and Historic Resources Inventory of the North 101 Corridor Specific Plan Area". This section of the Specific Plan outlines basic strategies that can be made available to assist in preserving the community's historic resources.

There are two broad approaches to historic preservation: one is regulatory, and the other is incentive-based. Since most of the resources listed in the inventory are under private ownership, and because there are real economic implications of preservation, a strictly regulatory approach is difficult to achieve. Furthermore, the local community has made clear its desire for a preservation program that is largely incentive-based and voluntary. With this in mind the following strategies for a preservation program were developed.

Beyond this specific plan, there are existing City and State regulations in place that provide a level of protection for identified historic resources. These regulations provide both restrictions for preservation, and a relaxing or restructuring of restrictions (such as development and parking standards) to achieve preservation.

A. California Environmental Quality Act (CEQA)

Virtually all development projects are subject to the environmental review process established by the California Environmental Quality Act (CEQA). Projects that would destroy or substantially alter a known historic resource could be deemed to pose a significant effect on the environment. Under CEQA, significant effects must be minimized to the extent feasible. Mitigation measures will vary depending on the project, but can range from photo-documentation or a narrative report recording the resource, to preservation by a variety of means: maintaining the basic structure while accommodating architecturally compatible additions, or granting a "facade easement" for the exterior appearance of the structure. Sometimes as a last resort, relocation of a historic structure is considered.

The City's General Plan establishes a Cultural Resources overlay that applies to historic resources. This overlay is implemented generally by the Municipal Code, which requires projects involving historical sites or structures to perform a site resource survey and impact analysis to determine a site's or structure's significance and the need for impact mitigation (Municipal Code Section 30.34.050 (A)(1)(b)). This Municipal Code requirement continues to apply in the specific plan area. The "Architectural and Historic Resources Inventory" is not to be used to determine when a site definitely has or does not have a significant architectural or historic resource; a site-specific resource survey per the Municipal Code would be required.

B. Specific Plan Provisions Affecting Historic Resources

There are features of the North 101 Corridor Specific Plan that, properly applied, will positively influence the continued viability of the area's historic resources. The design recommendations and development standards are crafted to preserve and maintain the existing desirable character of the North 101 Corridor Specific Plan area. An important part of that character derives from the area's historic resources.

1. Design Recommendations

The design recommendations of this Specific Plan were developed primarily to maintain and promote the existing unique pedestrian scale and village character of the North 101 Corridor Specific Plan area. Emphasis is placed on ensuring that new development is compatible in terms of bulk and scale to existing desirable development without unduly inhibiting creativity and innovative design. Choice of materials, colors, textures, etc., are also discussed.

The design recommendations provide specific discussion of rehabilitation of historic structures. No construction, demolition, or other development shall take place unless the provisions of the Design Recommendations section of this plan affecting historic rehabilitation have been met. Rehabilitation of existing resources should be done in a manner that preserves the original character and integrity of the structure. Remodeling should be done so that non-historic materials or features are removed in favor of restoring original features and intended uses of properties. Removal or alteration of historic material should be avoided, while deteriorated architectural features should be repaired rather than replaced, whenever possible.

2. Development Standards

In addition to the design recommendations, the specific plan guides development through development standards. Citywide zoning and development regulations sometimes run counter to preservation of historic properties. Contemporary regulations generally require larger lot sizes and setbacks than were traditional for urban areas. Because many of the existing lots are small and narrow, previous citywide standards made infill development difficult. Typically, newer development is found on large consolidated lots necessary to comply with setback, parking, and landscaping requirements. The inability to develop or re-develop on infill areas in a manner consistent with older structures, has eroded some of the village character found to be so desirable by the community.

The development standards for the commercial corridor provides for minimal lot sizes, setback and landscaping requirements. Designed to be more reflective of the existing development pattern and to promote a pedestrian-oriented village scale, the development standards provide for a more flexible building envelope that will enhance the viability of the area's historic structures. This will provide more incentive for rehabilitation and preservation, rather than encouraging demolition of the North 101 Corridor area's older properties. Additionally, the development standards for the commercial corridor permit a wide mix of both commercial and residential of uses. This broader range of uses will further enhance the viability of existing historic properties.

3. Parking Standards

Generally, the citywide off-street parking requirements make development of the small lots in the North 101 Corridor area difficult. The parking standards provided in Section 3.2 of the Specific Plan are designed to encourage the vitality of the commercial district through the application of a variety of strategies including credit for on-street parking, revised parking ratios, and flexible requirements for building additions and remodels. The streetscape design concepts (Section 4.7) include provisions for improved parking along side streets west of Highway 101, and for small parking nodes along the railroad right-of-way.

By restructuring off-street parking requirements, it will be easier for new businesses to occupy existing historic structures.

C. State Historic Building Code

Certain projects affecting historic structures may utilize the State Historic Building Code. Adopted by the City of Encinitas, provisions of the code allow flexible building standards for eligible structures. Eligible structures include those listed on a national, state, or local register; or listed in an official inventory of historical or architecturally significant resources. This has two advantages: utilization of the code allows rehabilitation that respects and conforms to older building methods, thus preserving the original architectural integrity; it also allows for continued use or adaptive re-use of old buildings that otherwise would not be allowed because of strict code requirements.

Projects eligible under this strategy include those properties listed in the Historic Resources Inventory, and shall be implemented on a case-by-case basis. No other implementation action by the City is required.

In addition to regulatory measures, another basic approach to preservation is based on financial and technical incentives. There are a variety of programs, grants, low-interest loans, tax credits, and deductions available to owners of historic properties. The City shall investigate the feasibility of all available programs, and develop other viable incentive programs for purposes of maintaining and rehabilitating historic properties. This section outlines existing incentives that are available through various state and federal agencies. Many of the incentives take the form of tax credits or deductions.

Some of the existing programs outlined below require that properties be listed on the National Register of Historic Places, or be included on a state or local listing to qualify for incentives. It is not required that the City approve or initiate an application for National Register recognition. The process for placing an eligible property on the National Register may be initiated by any individual or organizational entity. However, the City will support the efforts of such groups or individuals in having historic resources placed on the National Register.

The City should investigate the feasibility of a local historic registry program, in coordination with local historic preservation organizations. Such a program will be voluntary: any property that is placed on a local register must be done with the owner's consent.

Table 7-1 summarizes the preservation strategies outlined in this plan, and how they may be applied to the various significance categories of the historic resources.

Table 7-1 Historic Preservation Strategies Matrix

A. Tax Credits

Perhaps the most common preservation incentive takes the form of income tax credits. The federal Tax Reform Act of 1986 provides a tax credit equal to 20% of rehabilitation costs for commercial structures and rental residential buildings. To be eligible, the structure must be listed on the National Register of Historic Places or located within a certified historic district. For structures not on the National Register but which were placed in service before 1936, a 10% tax credit is available. Rehabilitation work must conform to the guidelines established by the Secretary of the Interior for historic structures. Certification requests of rehabilitation work are made through the State Office of Historic Preservation; certifications are issued by the National Park Service.

The credit (either 20% or 10%) is available to the taxpayer for five years from date of completion of rehabilitation work. Rehabilitated property may be depreciated over 27.5 years.

An investment tax credit is also available for substantial rehabilitation of low income housing properties. To be eligible for the credit, rehabilitation must meet certain tests relating to cost per unit, number of units occupied by households with income below area median income, and a 15-year compliance period. The credit amounts to 9% of rehabilitation costs for ten years.

For structures listed on the National Register, no action by the City is required for implementation of this strategy. However, the City and community may promote the availability of this program in coordination with local historic preservation groups.

B. Tax Deductions

Certified historic structures that grant a facade easement as a charitable contribution may deduct the calculated loss in property value from their federal income tax liability. Owners of qualified structures listed on the National Register may deed building facades to nonprofit or government entities in exchange for the deduction. The property owner must maintain the facade and preserve its historic value.

C. Mills Act

The Mills Act Tax Adjustment (California Government Code 50280 et seq.) allows cities to enter into contracts with owners of qualified historic properties to provide for their restoration and maintenance in exchange for a property tax reduction. In order to qualify, as with other incentive programs, the property must be a registered National or local landmark and rehabilitation work must conform to the standards established by the State Office of Historic Preservation. Periodic inspections of the property by the County Assessor, Department of Parks and Recreation, and the State Board of Equalization may be necessary to ensure continued compliance with the contract.

Mills Act contracts generally are effective for a period of 10 years, with a provision for automatic annual renewals after the initial time period. Depending on the specific circumstances of a property (commercial vs. residential use, mortgage interest rates, etc.), Mills Act tax reductions can be considerable.

Implementation of this strategy would be done on a case-by-case basis, at the initiation of a property owner. The community may promote the availability of this program in coordination with local preservation groups.

D. Community Development Block Grants (CDBG)

Certain rehabilitation projects can qualify for low-interest loans or grants through the CDBG program. Qualifying projects must meet a "national objective" such as providing affordable housing opportunities or improving targeted areas of "blight", as defined by the Department of Housing and Urban Development (HUD). The City currently applies its CDBG allocation primarily to serving low-income households.

To qualify for historic rehabilitation funds, in addition to meeting a national objective, properties must be either listed or eligible for listing on the National Register of Historic places; be designated as a state or local landmark by appropriate law or ordinance; or be listed in a state or local inventory of historic places. In allocating CDBG funds, the City will consider granting preference to projects affecting historically significant structures that also provide affordable housing opportunities. Furthermore, it is hereby established as City policy that any CDBG project affecting an historic site or structure must not result in any significant negative impacts to the historic resource.

Implementation of this strategy would require that the City consider establishing criteria for evaluating and prioritizing CDBG allocations to projects involving historic rehabilitation.

E. Facade Grant Program

Over the years, the Downtown Encinitas Mainstreet Association (DEMA) has administered a grant program to assist Downtown merchants in rehabilitating their store-fronts. The City should consider supporting a similar program for the North 101 Corridor Specific Plan area businesses to encourage historic preservation and rehabilitation. Rehabilitation work shall comply substantially with accepted standards (State Office of Historic Preservation) and should be consistent with the design recommendations of this Specific Plan. Such a grant program may potentially be funded through the City's General Fund or through CDBG allocations.

Implementation of this strategy would require funding support from the City, and administration by a qualified organization such as DEMA.

F. Fee Waivers

In order to encourage historic rehabilitation, the City could consider reductions or waivers of processing fees for building permits or design review. Fees may be paid from specially earmarked funds from the General Fund or other eligible sources. Implementation of this strategy would require that the City review which processing fees and which types of projects may be eligible for waivers and/or reductions.

A. Historic Preservation Ordinance and Commission

In the future, the City may find it desirable or necessary to establish an historic Preservation Ordinance and/or Commission in order to further coordinate and implement city-wide preservation strategies. An Historic Preservation Commission (HPC) can have several advantages. It can seek various funding sources and develop additional preservation programs, as well as implement those programs outlined in this Plan. With members meeting certain qualifications, it can enable Encinitas to become part of the Certified Local Government (CLG) program. CLG status will enable the City to qualify for certain other grant funds from the federal government earmarked specifically for the CLG program. These funds can be used to finance a number of preservation programs. Participation in the Certified Local Government program gives preservationists access to technical support from the Office of Historic Preservation and other sources.

A Commission would also have the expertise to review projects that affect historic properties. It could review historic resources to determine their historic significance; review National Register applications; make recommendations to the State Office of Historic Preservation; and play a key role in local landmark designation, should the City wish to consider such designation.

Establishment of an Historic Preservation Commission is not required by this specific plan, but would be consistent with the policies and programs of this plan.

B. Education Programs

Any historic preservation program may include activities to make the community aware of, and appreciate its historic resources. This function is being performed, in part, by private groups such as the Encinitas Historical Society, the San Dieguito Heritage Museum, and Cottonwood Creek Conservancy. To further awareness of our historic resources, the City supports the efforts of such groups. As mentioned previously, such local organizations are instrumental in promoting and carrying out certain preservation strategies.