What is the Mills Act Program?

The Mills Act is an incentive program for the preservation and restoration of qualified historic buildings by private property owners. Enacted in 1972, the state 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 preservation, restoration and maintenance of their historic properties while receiving property tax relief.

If I own a historic property am I obligated to participate in the Mills Act program?

No. Participation in the program is voluntary. The contracts are intended for property owners who have a strong commitment to historic preservation, and to assist property owners who plan to rehabilitate their property.

Who can apply for a Mills Act historical property contract?

See eligibility criteria at https://case.planning.lacounty.gov/preservation/program.

My property is located within an incorporated city in Los Angeles County. Is my property eligible for the county’s Mills Act program?

No. Only properties located within the unincorporated areas of Los Angeles County may be considered for this program. Please contact your city’s historic preservation or planning department for further information. For properties located within the City of Los Angeles, please contact the city’s Office of Historic Resources at (213) 978-1200.

What property improvements are eligible?

Most improvements are eligible for the Mills Act, as the intention is to encourage the preservation, rehabilitation, and restoration of historic properties. Properties with a Mills Act contract are held to high standards of preservation responsibility. As such, all completed work must be consistent with the Secretary of the Interior’s Standard for the Rehabilitation of Historic Properties.

How many Mills Act contracts may be approved annually?

Beginning in 2017, there is no limit on the number of contracts that may be approved.*

Are there exceptions to the priority criteria consideration or cost control provisions?

Yes, you may apply for an exemption request. The Board of Supervisors may approve an exemption request if the property is deserving of an historical property contract due to its exceptional nature, or because it is subject to special circumstances not generally applicable to other qualified historical properties (Sec. 22.52.2780).

What is the term of a Historical Property contract?

The contract is written for an initial term of 10 years. However, the contract automatically renews each year on its anniversary date. The contract, in effect, runs in perpetuity with the land. The initial 10-year term is the period of time in which major rehabilitation projects should be substantially completed. If an owner desires to be released from the contract, a letter of non-renewal is submitted to the County. The owner is released from the contract ten years after the notice of non-renewal is submitted.

How are my property taxes reduced?

Instead of basing your property tax on the purchase price of your property (Proposition 13, Base Year Value), the Assessor reassesses your property on its ability (or potential ability) to produce income (Income Approach). Using the Income Approach, the County Assessor values the property according to the capitalization of income, whereby the property’s potential income is divided by a pre-determined capitalization rate to establish a new assessed property value to be taxed. The Income Approach for an owner occupied property is based on its potential rental value. Commercial, industrial, or multi-family properties would have an actual income that is used for the calculation.

What type of property is likely to benefit?

Owners of properties with comparatively low property taxes because of Proposition 13 may not benefit by a Mills Act contract because the assessed value under the Mills Act will likely be higher than the existing base-year value of the property. Generally, owners who have purchased their properties within the last ten years are most likely to benefit from entering into a Mills Act contract. Property purchased more than 10 years ago would likely receive a minimal reduction. A Mills Act contract does not guarantee a reduction amount for any property. Each property owner should seek financial and legal advice before entering into a Mills Act agreement.

How much of a reduction will I receive?

Some program participants that have purchased property in the last 10 years report up to a 50% reduction in property taxes. Due to limited tax savings, contracts are not recommended for properties purchased more 10 years ago. A Mills Act contract does not guarantee a reduction in property taxes. Property owners should seek financial and legal advice before entering into a Mills Act agreement.

What happens if I want to sell my property after I have a Mills Act contract?

The contract will always remain with the property, and the new owner is obligated to meet the contract requirements. This can enhance the marketability of the property because it is not reassessed at its new market value when it changes hands. Rather, new owners will likely pay property taxes based on the existing or proximate Mills Act valuation notice.

Are there potential penalties for property owners with a Mills Act contract?

Yes. If a property is not maintained under the terms of the contract, is improperly altered, or if rehabilitation work is not performed, the owner could be found in breach of contract. If the breach of contract cannot be resolved to satisfy the contract, the contract is cancelled and the owner is assessed a 12.5% penalty based on the current fair-market value of the property.

How long does it take to get a contract?

The contracts are approved and recorded by the end of each year. Reassessments start after January 1 of the year following the contract recordation. You should see the Mills Act valuation notice as part of the next property tax bill.

If I apply for a Mills Act Historic Property contract, is the County obligated to enter into the contract?

No. The County will evaluate each individual contract application alongside a set of priority criteria and determine which applications are most likely to yield the greatest public benefit.

Am I required to open my property to the public?

No. The Mills Act Program does not require the property owner to grant public access to the property. The contract does specify that by prior appointment an inspection of the property may be made by County officials, as may be needed to determine compliance with the terms and provisions of the contract.

Where can I get additional Information?

The Program’s web page.

The California State Office of Historic Preservation (OHP) is responsible for administration of federally and state mandated historic preservation programs in California. The OHP website offers information on a wide range of historic preservation topics including the Mills Act.

The County Assessor website offers answers to questions related to assessments under the Mills Act program.