Mills Act
This
information is from the web site of the Office of Historic
Preservation ( link at bottom )
Purpose
of the Mills Act Program
Economic incentives foster the preservation of residential
neighborhoods and the revitalization of downtown commercial
districts. The Mills Act is the single most important
economic incentive program in California for the restoration
and preservation of qualified historic buildings by private
property owners.
Enacted in 1972, the Mills Act
legislation grants participating local governments (cities
and counties) the authority to enter into contracts with
owners of qualified historic properties who actively participate
in the restoration and maintenance of their historic properties
while receiving property tax relief.
Benefits
to Local Governments
The Mills Act allows local governments to design preservation
programs to accommodate specific community needs and priorities
for rehabilitating entire neighborhoods, encouraging seismic
safety programs, contributing to affordable housing, promoting
heritage tourism, or fostering pride of ownership. Local
governments have adopted the Mills Act because they recognize
the economic benefits of conserving resources and reinvestment
as well as the important role historic preservation can
play in revitalizing older areas, creating cultural tourism,
building civic pride, and retaining the sense of place
and continuity with the community’s past.
A formal agreement, generally known
as a Mills Act or Historical Property Contract, is executed
between the local government and the property owner for
a minimum ten-year term. Contracts are automatically renewed
each year and are transferred to new owners when the property
is sold. Property owners agree to restore, maintain, and
protect the property in accordance with specific historic
preservation standards and conditions identified in the
contract. Periodic inspections by city or county officials
ensure proper maintenance of the property. Local authorities
may impose penalties for breach of contract or failure
to protect the historic property. The contract is binding
to all owners during the contract period.
Benefits
to Owners
Owners of historic buildings may qualify for property
tax relief if they pledge to rehabilitate and maintain
the historical and architectural character of their properties
for at least a ten-year period. The Mills Act program
is especially beneficial for recent buyers of historic
properties and for current owners of historic buildings
who have made major improvements to their properties.
Mills Act participants may realize
substantial property tax savings of between 40% and 60%
each year for newly improved or purchased older properties
because valuations of Mills Act properties are determined
by the Income Approach to Value rather than by the standard
Market Approach to Value. The income approach, divided
by a capitalization rate, determines the assessed value
of the property. In general, the income of an owner-occupied
property is based on comparable rents for similar properties
in the area, while the income amount on a commercial property
is based on actual rent received. Because rental values
vary from area to area, actual property savings vary from
county to county. In addition, as County Assessors are
required to assess all properties annually, Mills Act
properties may realize slight increases in property taxes
each year.
Qualified Historic Property
A qualified historic property is a property listed on
any federal, state, county, or city register, including
the National Register of Historic Places, California Register
of Historical Resources, California Historical Landmarks,
State Points of Historical Interest, and locally designated
landmarks. Owner-occupied family residences and income-producing
commercial properties may qualify for the Mills Act program,
subject to local regulations.
Link
to Mills Act/ohp Parks Ca Government
