An Overview of the Mills Act
What is the Mills Act?
Named for former State Senator James Mills, the Mills Act is a 1972 state law offering monetary incentives via reduction in property tax to foster the preservation, maintenance and restoration of designated historic properties. The Act allows property subject to a historical property contract to be valued based on rental income that could be expected from that property rather than using comparable sales to establish assessed value. Generally, this results in a much lower assessment if the property has been purchased recently.
How does my property qualify for the Mills Act?
It must meet qualifying criteria such as significant architecture, association with a historically significant event or person, or location in a historic district. Once designated as a historical site, the owner can then enter into a voluntary contract with the City of San Diego.
How long is the contract?
Mills Act contracts are awarded in ten-year terms, automatically extended unless the property owner cancels the contract, either voluntarily or by not complying with the terms.
Does a contract transfer to a new owner if I sell the property?
Yes. Because the contract remains with the property, any new owner would receive the full benefit of the contract but also would be bound by the contract.
Am I required to open my property to the public?
No, there is no requirement to make Mills Act properties open to the public.
How much can I reduce my property taxes with the Mills Act?
Typically, property owners can expect a 20-70% savings on their property taxes. Under State law, the lesser of 1) the current market value, 2) the Proposition 13 value, or 3) the restricted value based on the rents would be used to calculate your property taxes.
If I already have a low property value assessment, is it worthwhile to apply for the Mills Act?
Some owners who would receive no benefit still apply for the Mills Act. The appeal to a potential buyer would be that the property would not be reappraised at its full market value upon sale if the property were already under a historical contract.
Once my property is listed on a historic register, are there any binding restrictions that will affect my property?
Yes, once a property is designated on a Federal, State, or local register, it is subject to the rules and regulations of the Office of Historic Preservation of the Department of Parks and Recreation, the US Secretary of the Interior’s Standards for Rehabilitation, and the Historic Building Code. In effect, the owner must protect, maintain and rehabilitate the property in perpetuity.
Who should I contact to apply for a Mills Act contract?
For properties in La Jolla, contact the San Diego Historical Resources Board at (619) 235-5224.
How can I get more information on the Mills Act?
A number of informative websites are available, including:
