14 Sep 2014
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City Would be 'Crazy' to Invest in Party House, Councilman Says

Outgoing councilman Bobby Shriver estimates property tax breaks sought by the owners of Santa Monica's "House of Rock" will total $2 million over 10-year period.

City Would be 'Crazy' to Invest in Party House, Councilman Says

How much is the city willing to spend subsidizing privately owned historic homes and buildings?

The City Council contemplated the question Tuesday but didn't arrive at an answer.

Instead, it postponed a decision on whether to reduce the property taxes paid by the owners of a 1920's mansion on La Mesa Drive, known locally as "The House of Rock" for its lavish charity fundraisers unpopular with neighbors. The tax breaks would be granted under California's Mills Act, an incentive program designed to encourage owners of historic structures to spend the money they save on renovating and preserving their properties.

Enrolling the estate at 2009 La Mesa Dr. could result in the city paying its biggest Mills Act subsidy to date. Recently listed at $22 million, its reduced property tax assessment would probably be higher than any of the 54 Santa Monica properties currently in the program.

Shriver estimated the reductions on the House of Rock would be in the ball park of $2 million over the course of the 10-year Mills Act contract.

"It’s just crazy to me [that we would] spend the money now," outgoing councilman Bobby Shriver said. "The city is in very tight financial circumstances."

City staffers have used the House of Rock's 2010 purchase price of $8 million to estimate the property taxes being lowered to $12,127 from $90,204. Of that, the city would receive $1,940 instead of $14,433. The average Mills Act property ends up paying about half that, city staffers told the council.

"In terms of loss of city revenue, most are about $5,000," said senior planner Scott Albright.

Based on a $22 million evaluation, councilman Kevin McKeown said, "I think I heard that this would be as much as $350,000 in city money—money that could have been used for police, fire things like that. Plus some unspecified amount to our schools."

The council should be wary of the investment for more reasons than the high price tag, Landmarks Commissioner Ruthann Lehrer said.

According to Lehrer, the Mills Act application was deficient. It didn't contain, she said, a plan and time line for the restoration work that would be performed for the duration of the contract.

"There’s never been a case before where there was any question about the... intent of the property owner, how the property would be preserved [and] maintained," she told the council.

In what Lehrer called a "truly unprecedented move,"  the commission voted unanimously for the first time to recommend the City Council not approve the contract.

The vote is now scheduled for Dec. 11.

In the meantime, councilwoman Gleam Davis said she wanted city staffers to find out if there are any outstanding code compliance issues. Additionally, she wants assurance from owners Greg Briles and Elaine Culotti that they won't throw any more big parties at the house.

After purchasing the home two years ago, the couple commissioned high-end designers to decorate rooms under the common theme of "music," then began using it as a venue for charitable fundraisers hosted by corporate sponsors, such as KISS FM and Verizon.

Earlier this month, the council adopted a law aimed at shutting down those events, the last one of which was scheduled for Dec. 6.

Davis and others contend the parties are a marketing ploy to sell the estate.

Having a Mills Act contract is also good for marketing a house, the city says on its website.

"Since Mills Act contracts run with the property, subsequent owners may realize greater tax benefits, as the assessed property value typically increases when the property is sold, resulting in an even greater difference between the property taxes under the assessed valuation method versus the property tax calculation permitted by the Mills Act contract," the site says.

Briles and Culotti's attorney Alex DeGood said past conflicts over the parties shouldn't influence the council's Mills Act decision. He contended the council has no reason to deny the contract, because it meets all of the city's criteria, mainly that it's an historic, landmarked structure.

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