Position: President, MJW Investments
Accomplishments: Spearheaded the $145 million, 800,000-square-foot Santee Village lofts projects and obtained Mills Act approval for individual condo buyers
On Getting Mills Act Approval: "It was a complicated process. It had never been done before and as we went along we were actually learning with the assessor."
For developer Mark Weinstein, the idea was simple: If the owner of a historic building is entitled to tax breaks, then condo buyers in a historic building should get those same breaks.
This seemingly straightforward idea proved groundbreaking as Weinstein and his company, MJW Investments, adapted a piece of legislation more than three decades old for an entirely new and innovative use.
"It had never been done before," Weinstein said. "It was complicated but we were persistent. We were told we couldn't get it done, but we did."
The Mills Act Program, enacted in 1972, was meant to provide tax relief for the restoration and preservation of historic buildings. The act had previously been used primarily by single-family homeowners and developers of commercial projects. According to the law, the benefit to the owner may be a "substantial reduction in property taxes," while the benefit to the city is the preservation of historic resources.
For more than 30 years after state Sen. James Mills penned the law, no developer tried to apply it to individual units within a single building. But Weinstein reinterpreted the legislation when he began developing several Fashion District buildings into what would become the largest adaptive reuse project in Los Angeles the Santee Village lofts.
"We looked at Santee Village as being a unique project, so we asked, 'What value-added propositions could we bring to the project? What could we do to distinguish ourselves?'" Weinstein said. "The buildings are unique we wanted to make the tax savings unique."
The buildings were all constructed during the 1910s or 1920s in an area teeming with textile manufacturing buildings. After a long and complicated approval process, Weinstein and his company managed to pass the tax savings along to the buyers by having the Mills Act applied to the individual condos.
Weinstein's innovative use of the act could save Santee Village condo buyers as much as 50 percent to 70 percent on their property taxes, amounting to thousands of dollars annually. And with this reduction, some buyers could afford a mortgage that's higher by as much $100,000. It's been an attraction to buyers in project where units range from $300,000 to $500,000.
"We've been doing no advertising and we've basically sold out," said Weinstein, noting that at least one of the buildings would not have been included in the development project if not for the Mills Act tax relief. "It's probably the single most powerful incentive that drives people to Santee Village."
Carol Schatz, president and chief executive of Central City Association, said Weinstein's contribution to the downtown housing market has been "pretty extraordinary." When most developers stayed away from the Fashion District, she said, Weinstein pushed ahead with an ambitious plan.
"I think he thought that downtown was ripe for housing for a younger, hipper clientele tired of the suburban lifestyle," Schatz said. "He saw the potential early."
Santee Village will include seven buildings of 445 for-sale and rental units. Three of the buildings opened in 2004 as Santee Village lofts and another opened in late 2005. The three remaining buildings are set to open by August 2007.
With the success of Santee Village, other downtown projects in the pipeline have tried to use the Mills Act to similar ends. The Rowan Lofts and the Tomahawk Building Lofts have both sought Mills Act approval, according to the Los Angeles County Assessor's Office.
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