City of Anaheim
MILLS ACT PROGRAM May 22, 2000
What is the Mills Act? The Mills Act is a state law enacted in 1972 (and amended in 1984) that grants local governments the authority to directly implement an historic preservation program. This legislation provides for reduced property taxes on eligible historic properties if the owner agrees to maintain and preserve the property. In effect the Mills Act serves as an economic incentive to owners to preserve their historic properties for the benefit of the entire community.
Eligible properties: properties that are listed on an official local, state or national register. For Anaheim, it would be some or all of the 1,100 addresses on the Qualified Historic Structures list. City staff would accept a certain number of applications per year for review and approval
Basic points of a Mills Act program are as follows:
- The Agreement is between the City and the owner of a designated historic structure.
- Agreements require the property owner to maintain the property, and, where necessary, restore and rehabilitate the property in accordance with standards established by the U.S. Secretary of the Interior.
- Upon receipt of an executed Agreement, the County Tax Assessor is directed by State law to re-assess the value of the property, resulting in a reduction of property tax for the owner, which will vary depending on a number of factors, but typically, it achieves a savings of between 24 to 60% per year.
- Agreements extend for an initial term of ten years; however, at the end of each year, the term is automatically extended one year thereby maintaining the ten year term.
- The Agreement stays with the property, that is, the agreement automatically transfers to each new property owner and the property is not re-appraised at its full market value.
- The penalty for breach of agreement by the property owner is 12 ½% of the current property value.
- Because of the specific contractural obligations and high financial penalty for breach of contract, only owners with a strong commitment to preserve and restore their property volunteer to enter into Mills Act agreements.
Benefits of Mills Act Agreements:
- Assurance that historic properties have been/are being properly restored and maintained.
- Participation on the part of the property owner is completely voluntary.
- Reduction in property tax for the property owner
- Increases likelihood of preservation and assures mechanism to avoid deterioration.
- Can encourage sensitive homebuyers to purchase designated historic structures
- Fosters pride of ownership in the Historic District.
- The marketability of the historic property will be enhanced, because the lower tax rate is passed on to future owners.
- Its application is very flexible; there is no set of rules that dictate to what extent the city must apply the Act's provisions. Its use may be decided on a case by case basis.
- The historic property continues to be protected by the contract even when sold, so the reduced property tax valuation is passed on to the new owner.
Fiscal impact to the City: the City should anticipate an average annual property tax revenue loss of $100 to $400 per property per year.
The process:
- The owner of a property on the City's list of Qualified Historic Structures initiates the process by filing an application with the City.
- Applications will be accepted on a first come, first served basis.
- Following receipt of a completed application, a site meeting is scheduled to develop a list of improvements, if any, deemed necessary during the first 10-year period of the Agreement to restore the property's architectural and/or historic integrity.
- Following approval of the Agreement, the City will record the Agreement and forwards the Agreement to the Orange County Tax Assessor's office for calculation of the exact tax savings.
- Notice of Non-Renewal: Either party to the Agreement may file a notice of non-renewal at any time after entering into the Agreement.
- The exterior/interior of the property is subject to periodic inspections by city officials to ensure proper maintenance of the property.
Conclusion: Economic incentives contribute to the preservation of residential neighborhoods and the revitalization of downtown districts. The Mills Act is the single most important economic incentive program available in California for use by private property owners of qualified historic structures.
Printer Friendly Format
