Landmark Historic preservation

The Mills Act



What is the Mills Act? A historical designation in conjunction with a Mills Act contract can potentially provide a property tax reduction. The Mills Act, named for San Diegan James Mills, a former State senator, was enacted in California in 1972. The Mills Act provides an important monetary incentive designed to encourage the preservation, maintenance, and restoration of designated Historic properties. The Mills Act provides for potential property tax savings on a property that is subject to a historical property contract. Mills Act properties are to be valued using the rental income and expense that could be expected from that property rather than using comparable sales to establish the assessed value. This generally results in a much lower assessment especially when the property has been recently purchased. The property must meet qualifying criteria such as significant architecture, association with a historically significant event or person, or location in a historic district (such as certain sections of North Park). Once designated as a historical site, the owner can then apply for a voluntary contract with that city. The application and approval process is accomplished entirely through the city (or County for unincorporated areas) where the property is located. The County Assessor’s office only administers the property tax portion of the Mills Act. The term of the contract is a self-renewing, ten year agreement, however, either the property owner or the city can file for non-renewal. Because the contract follows the property and not the owner, the contract will transfer uninterrupted on the sale of the property. The cities of San Diego, Chula Vista, Coronado, Escondido, La Mesa, Encinitas, San Marcos, and National City have enacted ordinances to grant a Mills Act agreements. The County of San Diego has also passed an ordinance for historical properties in the unincorporated areas of the County. Currently, there are approximately 1,200 properties under contract with the various cities that receive this property tax benefit. How Much Will I Save? Typically, property owners can expect a 20% to 70% savings on their property taxes, however, there are many factors which determine how much of a property tax savings a particular home will receive. Under State law, the lesser of 1) the current market value, 2) the Proposition 13 value, or 3) the restricted Mills Act value will be used to calculate your property taxes. It is possible that the Proposition 13 value may be lower than the restricted value, and the property would receive no property tax benefit from a Mills Act contract. Some owners who would receive no property tax benefit still apply for the Mills Act. It can be a selling point to a potential buyer because the property would not be reappraised at its full market value upon sale if it were already under a Mills Act contract. The economic benefit of the Mills Act goes beyond the individual homeowner. Read Historic Designation and Residential Property Values, a 2008 academic research paper on the Mills Act, authored by University of San Diego Professors of Economics Andrew Narwold and Jonathan Sandy, and Associate Professor of Real Estate Charles Tu. Each city has its own ordinance and different criteria to determine if a particular property qualifies. Please contact the following departments to get further information: San Diego - Historical Resources Dept.: 619-235-5224 Chula Vista - Planning Dept.: 619-409-5465 or 619-585-5621 Coronado - Community Development Dept.: 619-522-7326 Encinitas – Planning Dept., Community Development: 760-633-2680 Escondido - Planning Dept.: 760-839-4553 La Mesa - Community Development Dept.: 619-667-1177 National City - Planning Dept.: 619-336-4310 County of San Diego - Dept. of Planning and Land Use, Historical Properties: 858-694-2981 or 858-694-3656 San Marcos Planning Dept.: 760-744-1050