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File No. C-14-012 Page No. 2 FACTS In 1972, California legislators adopted the Mills Act, which authorizes local governments to enter into a contract with the owner of a qualified historical property who agrees to rehabilitate, restore, preserve, and maintain the property in exchange for property tax reductions. The amount of tax savings varies, but Mills Act Agreements authorize up to 50 percent property 3 tax savings. The City of Santa Ana is a local government participant in the program and enters into Mills Act Agreements with qualified historical property owners. An owner of a qualified historical property who wants to participate in the Mills Act Program must submit an application to the City of Santa Ana, which is then reviewed and must be approved by the City of Santa Ana Historic Resources Commission and City Council. An approved application results in the formation of a Historic Property Preservation Agreement, which remains in effect for a minimum of ten years. The types of preservation conditions established by the Mills Act Agreement are 4 different for each property's specific needs, but all contracts must contain certain statutorily specified terms. A current member of the Santa Ana City Council owns a historical property which may qualify for participation in the City's Mills Act program, entitling the councilmember to receive property tax credits. However, according to your letter, there is concern that receipt of a tax credit would violate Section 1090, as the tax credit is a financial interest created through a Historic Preservation Agreement, which is required to be approved by the City Council. ANALYSIS Section 1090 generally prohibits public officers, while acting in their official capacities, from making contracts in which they are financially interested. Section 1090 is concerned with financial interests, other than remote or minimal interests, that prevent public officials from exercising absolute loyalty and undivided allegiance in furthering the best interests of their agencies. (Stigall v. Taft (1962) 58 Cal.2d 565, 569.) (City of Imperial Beach v. Bailey (1980) 103 Cal.App.3d 191, 197.) Under S (People v. Honig (1996) 48 Cal.App.4th 289, 333.) A contract that violates Section 1090 is void. (Thomson v. Call (1985) 38 Cal.3d 633, 646.) The prohibition applies regardless of whether the terms of the contract are fair and equitable to all parties. (Id. at pp. 646-649.) 3 See http://www.ci.santa-ana.ca.us/pba/planning/Historic_Preservation_Incentives.asp 4 Ibid.