Mills Act

Do you own a great historic building in Los Angeles? Is your property an existing City of Los Angeles Historic-Cultural Monument or a contributing structure in a designated Historic Preservation Overlay Zone? Are you interested in a financial incentive that can help you rehabilitate, restore and maintain your building? The City of Los Angeles can help.

The Mills Act Historical Property Contract Program allows qualifying owners to receive a potential property tax reduction and use the savings to help rehabilitate, restore and maintain their buildings. The Mills Act is the single most important economic incentive program in California for the restoration and preservation of historic buildings by private property owners. Enacted in 1972, the Mills Act legislation grants participating local governments (cities and counties) authority to enter into contracts with owners of qualified historic properties who actively participate in the restoration and maintenance of their properties to receive property tax relief. The City of Los Angeles adopted local Mills Act legislation in 1996. Since then, over 300 properties have benefited from the program.

Benefits of the Program

A formal agreement, generally known as a Mills Act or Historical Property Contract, is executed between the City of Los Angeles and the property owner for a revolving ten-year term. Contracts are automatically renewed each year so that the term of the contract always extends for ten years. 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 and County officials ensure proper maintenance of the property. The City may impose penalties for breach of contract or failure to protect the historic property. The contract is transferred to new owners if the property is sold, and is binding to all successive owners.

Benefits to Owners

Owners of qualified historic properties may apply for the program if they pledge to rehabilitate and maintain the historical and architectural character of their properties for the life of the Contract. The Mills Act program is especially beneficial for recent buyers of historic properties and for current owners of historic buildings who have made major improvements to their properties.

Mills Act participants may realize substantial property tax savings each year for recently improved or purchased older properties because valuations of Mills Act properties are determined by an Income Approach to Value rather than by the standard Market Approach to determining appraised value. The Income Approach, divided by a capitalization rate, determines the assessed value of the property. In general, the income potential for an owner-occupied residential property is calculated by examining comparable rents for similar properties in the area, while the income amount on a commercial property is based on actual rent received. Because rental values vary from area to area, actual property savings may vary. In addition, as County Assessors are required to assess all properties annually, Mills Act properties may realize slight increases in property taxes each year.

Qualified Historic Property

A qualified historic property in the City of Los Angeles is a property listed as a locally-designated Historic-Cultural Monument or Contributing Property to an approved Historic Preservation Overlay Zone. Additionally, single-family residences (with a property tax value assessment of not more than $1,500,000) and income-producing multi-family/commercial/industrial properties (with a property tax value assessment of not more than $3,000,000) are eligible to apply. Property values in excess of these limits may apply for an exemption if they meet certain criteria.

For Additional Information

The 2008 application was due on June 27, 2008.  However, you may want to review the program information and instructions, as well as see the 2008 application, which you can find at this link: 2008 Mills Act application. Be advised that the elements of the application are not contained on just one page. Each page contains links that you will need to click on in order to compile all the needed documents. Also, if you are a Mac user using Firefox, note that you may experience problems accessing the components of the application. We recommend that you use Safari.

If you have additional questions, contact Lambert Giessinger of the Department of City Planning’s Office of Historic Resources at (213) 978-1183. The 2009 applications will be available at the beginning of the new year.