Mills Act Offers Tax Savings On Historic Buildings
The California Office of Historic Preservation describes the Mills Act as “the single most important economic incentive program in California for the restoration and preservation of qualified historic buildings by private property owners.” In short, the Mills Act allows local governments to incentivize private owners of historic buildings to rehabilitate, restore, and maintain the building’s historic character by reducing the property tax burden on those properties.
Legislative History Of Mills Act And How It Works
The Mills Act was enacted in 1972 by the State of California to enable local jurisdictions to provide property tax relief to property owners of qualified historic properties who actively participate in the restoration and maintenance of those properties. The act allows each local government to establish its own criteria for designation of historic properties and how many properties it is willing to designate as historic.
Owners of properties can apply to participating local governments for a historic designation. If they are approved, the property owner then enters into a 10-year contract with the local government to maintain the property consistent with the U.S. Secretary of Interior’s Standards, to provide visibility of the historical resource to a public right-of-way, and to improve or rehabilitate the property based on the agreement’s specific terms. The agreement is then recorded with the County, which allows the County Assessor to reduce the property’s annual tax assessment.
The reduction in tax assessments for properties approved under the Mills Act is typically about 50%. Rather than the typical assessment, which is based on a property’s purchase price and annual adjustments, the property is valued based on the “income” method, i.e. the property’s income, minus expenses, divided by the capitalization rate. If the property is owner occupied, then the assessor determines what the property could reasonably expect as income if it were not owner occupied.
The Mills Act In Los Angeles
The Office of Historic Resources is responsible for administering the Mills Act in Los Angeles. Its website provides specific instructions on applying for historical designation. The City of Los Angeles first began administering the program in 1996, and since then over 700 properties have benefited from the program, including several buildings in Downtown. In Santa Monica, the Planning and Community Development office is responsible for the program’s administration.
For more information on the Mills Act, or if you would like to further discuss how Esquire Real Estate Brokerage, Inc. can help you in the Los Angeles real estate market, feel free to give us a call at 213-973-9439 or send us an email at email@example.com.