The Mills Act Property Tax Abatement Program

Although the Mills Act was enacted more than 30 years ago, many Californians are unaware of the significant property tax savings they can experience if they purchase a property that qualifies for historical designation under the Act. Such properties are generally at least 50 years old, exemplify a particular architectural style, and/or are associated with a specific historical person or event. Both single-family residences and income-producing commercial properties such as bed-and-breakfast inns often qualify.

Enacted in 1972, the Mills Act allows cities and counties to enter into contracts with owners of historic private properties requiring the owners to restore and maintain them according to certain specifications. For example, the authorities may require an owner to restore original architectural details to the exterior of a home that may have deteriorated or been removed. In return, the homeowners receive a significant savings in their property taxes, often a 40% to 60% reduction for newly purchased properties, after executing a Historical Property Agreement with the city or county.

To qualify for Mills Act property tax abatement, a property must be 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. In addition to the County of San Diego, the cities of Chula Vista, Coronado, Encinitas, Escondido, La Mesa, National City, and San Diego each participate in the Mills Act property tax abatement program.

A Mills Act Agreement 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.

Nugent Properties can help clients identify properties that qualify for Mills Act designation. We can also facilitate the necessary Historical Property Agreement and city or county approval process.