PRESERVATION + PROMOTION = PROSPERITY

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In California, the Mills Act is legislation that lets owners of historically designated buildings reduce their property taxes in exchange for restoring and maintaining those buildings. Each city must adopt the Mills Act. Owners sign a ten-year, endlessly renewable legal contract with their city (or, in some places, their county) stating what the responsibilities are.

The Mills Act is named for Senator James R. Mills, who sponsored the legislation over 30 years ago. Before he became a well-respected politician, Senator Mills was a noted historian, author, and preservationist.

In San Diego County, the Mills Act is available in the cities of San Diego, La Mesa, Escondido, Coronado, Chula Vista and National City. Plus the Mills Act is available for land under County of San Diego jurisdiction. Historic San Diego Marketing and Consulting has worked with owners of historic homes in several other cities within California to lobby their elected officials for the Mills Act. If you want help bringing the Mills Act to your city, please call us at 619-233-8833 or send us an e-mail. Below are some basic Q&As that will introduce you to the Mills Act.

What is the Mills Act?

The Mills Act is property tax reduction for designated historic properties. The tax savings can be used to help maintain that historic property.

Why is it called the Mills Act?

The legislation is named for the author of the legislation -- historian, statesman, and writer Jim Mills. Senator Mills is well known for being an advocate of mass transportation, for creating the current San Diego Trolley system, and for his many years as chairman of the board of the San Diego Metropolitan Transit Development Board (MTDB), now know as the Metropolitan Transit System (MTS). Although now retired from public life, Senator Mills has consistently been a strong supporter of historic preservation in our region.

Why would any city council vote to bring the Mills Act to its region?

Because it's very smart. By giving back a percentage of tax money, it creates incentive to restore older properties. A Mills Act contract reduces the amount of property tax collected by the city, but the city doesn't miss very much money. That's because for every dollar of property tax collected, about 55 cents goes to the school system and 11 cents goes to the County of San Diego. Each city gets back only between 14 and 18 cents. It is the County Assessor's Office that calculates the tax savings for Mills Act contracts. And the County knows that restoring historic buildings is good for everybody's property values. The homeowner wins, the city wins, and the neighborhood wins.

Currently, which San Diego County cities have the Mills Act?

The Mills Act has been very successful adopted in the cities of San Diego, Chula Vista, Coronado, Escondido, La Mesa, National City and the County of San Diego. The City of San Diego leads the state with the most designated buildings under Mills Act contract.

How can I check if my house (or the house I’m interested in buy) is already historically designated and if it has the Mills Act?

Contact the Planning Department of the city where the building is located to see if the building is already historically designated and if it is under Mills Act contract. For neglected buildings, it’s also good to call that city’s code compliance division to learn if there are any code violations against the property.

Will any old building qualify for the Mills Act?

No. In order to qualify, the structure must be a designated historic building. The designation can be at the local, state, or national level.

How do I get my home locally designated if it was not designated in the past?

Call the local planning department in the five cities that currently have the Mills Act in San Diego County. Each city has different local procedures for local historic designation. Your building may already be considered a contributing structure to an established historic area. Also, many buildings that were listed on past local historic building surveys were not designated when the survey was done but would qualify as historic now. As a general rule, to qualify as historic, a building must be at least 50 years old and be a good example of a particular architectural style or be associated with a person or event of local, statewide, or national historic importance.

I would like to benefit from the Mills Act, but I've heard that historic designation would place restrictions on my building. Is this true?

Yes and no. Historic designation is a means of helping preserve your building for the future, so preserving your building must be one of your goals. In theory, we should all be stewards of our property and should seek to be true to the building's original architectural style. By seeking historic designation, you are acknowledging your role and responsibility in keeping this structure safe as a contributing member to your city’s historic fabric.

If your building is granted historic status, then this means you would not replace wood windows with aluminum ones, not cover original wood with stucco or vinyl siding, and not put an addition on the building that is visible from the sidewalk in front of your home. In fact, if any of these unsympathetic "improvements" were done to your building, and your building does qualify as historic, you could use your tax savings under the Mills Act to undo the damage done by previous owners. By getting your building historically designated, you are helping preserve your area’s architectural legacy. You are adding your name to the ranks of those who care about where we live.

You mention "buildings," not "houses." Would buildings other than houses qualify for the Mills Act in National City if the ordinance in adopted here?

The Mills Act was written so that not only owner-occupied single homes can qualify, but also multi-unit homes like Brick Row in National City and commercial buildings could apply. If your city council can be convinced to take advantage of this preservation incentive, it is best if the local Mills Act ordinance is written so that historically designated commercial buildings will also qualify. It benefits the entire city if commercial buildings take advantage of this preservation tool.

If I apply for the Mills Act, what am I committing to doing?

The Mills Act is a 10-year, "endlessly renewable," legally binding contract with the city. After your building is historically designated, you would fill out a Mills Act application and submit it to your city with a minor fee. When your Mills Act application is approved, you will be sent a contract to sign and have notarized. By signing this document, you are agreeing, in principle, that in return for the tax savings you are going to preserve your building.

Your Mills Act contract, if you are in good standing and not in violation of the ordinance, is endless renewable: it will always have 10 more years on it, unless for some reason you wished to cancel the contract. (You won't want to cancel. See related question below.)

Can the city ever cancel the contract on me? If so, would I have to pay back the tax savings?

That depends on how that city adopted the Mills Act legislation. If the city cancels the contract because the owner of the historic building was not compliant with the contract, that noncompliant owner would be responsible for repaying back tax savings.

With the Mills Act, will I have to show what I spent the tax savings on each year?

The cities with successful Mills Act programs do not require submittal of receipts to prove that the tax savings were put back into the home. (The Mills Act is not a reimbursement program.) Not having to show how you spent the tax savings toward your historic building maintenance or restoration will save a lot of administrative time and money on the part of the city. You do have to make progress on your exterior restoration program. A number of cities will check back on your property every few years to see that you are doing the restorations stated on your Mills Act application.

How much money can I expect to save with the Mills Act?

Tax savings can be big often up to 60 percent. However, there are some properties in the city of San Diego that are benefiting from a savings of almost 90 percent. That's a lot of savings! The County Assessor's Office determines the tax savings by applying a complex formula to the current amount of taxes being paid to determine the new amount. (It is no simple calculation.)

When would I see the tax savings with the Mills Act?

In many cities, an owner would apply during that city’s specific time during the year, with usually in the first quarter of the year, in order for the application to be processed by that city then given to the County in the fall for the recalculation of the property taxes. The tax savings would be reflected in the following April tax bill.

Do I have to open my home to the public if I have a Mills Act contract?

No. In 1984 the Mills Act was changed so that you never have to open your home to the public as a condition of your Mills Act contract.

Under a Mills Act contract, will I have to open my home for inspection by city officials?

Often there is language as part of the ordinance that would allow for an inspection by city officials, but an inspection would usually only be requested if the city suspected that an owner was violating the Mills Act contract. In many cities, a yearly drive-by inspection is usually all that the local planning department does to be sure that the building under contract is being cared for.

What happens if I sell my historic building before I have the Mills Act for 10 years?

The new owner assumes the benefits of the Mills Act contract! Lucky for the new owner! This means that during less-than-robust economic times, your building with a Mills Act contract just got that much more desirable in comparison to other similar properties.

Why don't all the cities in California have the Mills Act?

Because each municipality must adopt the Mills Act, each local city government must make a decision to offer this preservation tool. Some cities do not embrace historic preservation as a revitalization tool; they wipe away old buildings and neighborhoods and encourage only new development. Wise city councils realize you need the old with the new (you need to have a "past" in order to see the "future") and that historic preservation brings cultural tourism and local reinvestment. By offering the Mills Act, your city would be saying that historic preservation is good for the city and good for the building owner. The revitalization of neighborhoods is contagious. Once unappealing and "remuddled" buildings have undergone positive restorations in the cities that have the Mills Act.

Can I ever cancel my Mills Act contract?

Why would you ever want to cancel? When you see what you save versus what you pay, you'll never want to give up the Mills Act. If for some reason you do want to cancel, you can give written notice that you want to cancel, and in 10 years your contract would be void. If you wanted to cancel sooner, you would have to repay your tax savings and possibly submit a fine. However, to date very few contracts in the State of California have been voided because of improper behavior of the applicant toward his historic home. The tax benefits had to be repaid, with penalty.

How do I learn more about the Mills Act and whether it will be beneficial to me?

Call your local planning department. If you have a vintage or historic building and live in a city that does not yet have the Mills Act, call Louise Torio at Historic San Diego Marketing & Consulting to learn more about how to organize to lobby your elected officials. Louise Torio can be reached at 619-233-8833 or via e-mail at HistoricSanDiego@aol.com.

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