California Government Code Sections 50280-50290 [Mills Act] represent legislation enabling local governments to voluntarily establish, implement and manage their own historic preservation program by incentivizing the private ownership, maintenance and preservation of qualified historical properties through reduced property taxes.
The City uses the Mills Act as a tool for historic preservation. A Qualified Historical Property must be privately owned and not exempt from property taxation; and, it must be listed on any federal, state, county, city or city and county’s official register of historical or architecturally significant sites, places or landmarks.
The property owner benefits by receiving property tax savings. This can be as much as 40% to 60% of their pre-Mills Act contract tax rate. The cost to maintain a qualified historical property is reduced by leveraging property tax savings; and, all Mills Act contract benefits are transferable if the qualified historical property is sold.
To benefit, the property owner must establish landmark designation for their property (if designation does not already exist); commit to a minimum ten (10) year Mills Act contract; identify all proposed work to be completed to their property under the Mills Act contract; record the executed Mills Act contract with the county recorder; implement the work provisions contained in the contract following the U.S. Secretary of the Interior Standards and the State Historic Building Code; and permit reoccurring (five-year) inspections to the interior and exterior of their premises. (City application) (List of Historical Architects)
If the property owner decides not to renew their Mills Act contract, a written 90-day notice of non-renewal must be given to the local legislative government and the contract expires ten (10) years later. The owner may have to pay a 12.5% penalty of the current fair market value of their property if the Mills Act contract is cancelled by the City due to breach of contract or because the site is no longer a qualified historical property.
For more information, visit the California Office of Historic Preservation site and the California Board of Equalization.