The California Mills Act is a preservation incentive program that allows private property owners of qualified historic buildings to receive a property tax reduction in exchange for agreeing to preserve the historical integrity of their property. Enacted in 1972, the act encourages the preservation and maintenance of Qualified Historic Structures. The Mills Act permits cities to enter into agreements with owners of Qualified Historic Structures to preserve and maintain their properties, in exchange for the County Assessor assessing their property at a lower rate by utilizing a formula established by the State
General information about California Mills act
To qualify, a building must be designated as a historic property under local, state, or federal criteria (e.g., being listed on the National Register of Historic Places or the California Register of Historical Resources). Property owners sign a contract with the local government, which lasts for a minimum of 10 years. During this time, the owners agree to maintain and, if necessary, restore the property according to established historic preservation standards.
Eligibility Criteria
Obtaining a California Mills Act designation involves several steps that require coordination with local government agencies and compliance with historic preservation standards. First and foremost, your property must be historically significant and meet certain criteria to qualify. Although the definition of historical significance can vary locally, your property needs to be listed on the National Register of Historic Places, California Register of Historical Resources, or a local landmark under your city or county’s historic preservation ordinance.
Local Application Rules
Locally – the rules, application process, and deadlines may vary by city or county. Therefore, contact your city’s Planning Department or Historic Preservation Office to: i) Confirm if the Mills Act program is available in your city or county; ii) Understand the specific requirements, procedures, and timelines; and iii) Obtain guidance on how your property fits within local preservation goals.
Application Process
Once you’ve confirmed eligibility, the next step is to prepare a Mills Act application as provided by the city or county and generally requires that you submit: i) Documentation on the property’s historic significance, including age, architectural style, and historical importance; ii) A description and photos of the current state of the property; iii) A detailed plan outlining the preservation, rehabilitation, or restoration work you intend to carry out; and iv) possibly estimates for the cost of maintaining or restoring the property, as well as details on how the tax reduction will help in the process.
Approval and Compliance
The approval process involves review by local officials, such as a Historic Preservation Commission or City Council, who will assess whether the property qualifies for the Mills Act program and whether your preservation plans are appropriate.
Once your property is under the Mills Act, you must maintain compliance with the terms of the contract which typically include: i) annual inspection to ensure compliance; and ii) annual reporting of preservation and maintenance.
Tax Reassessment Benefits
After the Mills Act contract is in effect, your property will be reassessed for tax purposes, often resulting in a significant reduction in property taxes based on the income-producing potential of the property rather than its market value.
Key Takeaways
The property taxes for the qualifying historic property are reduced, often significantly. The reduction is calculated by assessing the property’s income potential instead of its market value.
Please see our other related articles
Property Tax Assessments
Assessment Appeals
Homestead Exemption
Williamson Act
Disclaimer: Every situation is different and particular facts may vary thereby changing or altering a possible course of action or conclusion. The information contained herein is intended to be general in nature as laws vary between federal, state, counties, and municipalities and therefore may not apply to any given matter. This information is not intended to be legal advice or relied upon as a legal opinion, course of action, accounting, tax, or other professional services. You should consult the proper legal or professional advisor knowledgeable in the area that pertains to your particular situation.
