Mills Act
for Historical Homes
Can I get the Mills Act on my historic home in San Diego County? Should I try?
The Mills Act provides a property tax cut to the owners for the maintenance, restoration and rehabilitation of historically designated properties. Sometime it’s a huge cut, saving the homeowner an average of 75% on property taxes.
Rough math: On a $1M home, that would be a savings of $800+ tax dollars per month. It’s a lot. Consequently, people are very motivated to have their homes declared Mills Act. But how?
It’s a process involving time, pictures, a Historic Resources Board panel review, an ungodly number of photocopies, and of course a certain amount of red tape.
Determining which homes are declared historic is more art than science. Sometimes it is based on the architectural features of a home, such as an exemplary model of a specific type of bungalow style.
In his 2007 book North Park: A San Diego Urban Village, Donald Covington notes my former home at 3525 Felton Street as the first house in San Diego that ever got a home loan. That is the kind of interesting characteristic that could possibly get a house declared historic.
Other criteria used to determine historic home status:
Famous architect designed the house
Famous person lived in the house
The house is historically noteworthy for some other reason
Ok great. I’m interested! Now how do I go about seeing if my San Diego house could be declared historic?
First, be realistic. If it’s a Corky McMillan tract house from the 1970’s and you’re just looking for the tax break, that probably won’t get you anywhere. Ditto if you have a classic bungalow that went through a dramatic change to the façade. But if it’s an old bungalow that looks substantially the same today as it looked originally, you may have a shot.
I’ve seen which houses go the distance so you can start by calling me and I will have a look. If you want to move forward, you can hire a professional or do it yourself.
If you hire a professional, and there are several in town, expect to pay something like $4000-$5000. There is at least one guy in town who charges something like $9000 (and for the record, was unable to adequately explain to me why he was so much higher than his peers).
The City encourages citizens to do it themselves. And you can. It just takes time.
As of this writing it is $471 to apply. There are excellent resources for the Mills Act Property Tax Reduction on the City of San Diego’s Development Services page that lead you through the process. For direct contact here is an email: DSDMillsAct@sandiego.gov.
NOTE: local historical designation is required before you can enter into a Mills Act agreement. Even if your property is listed on the National Register and/or California Register, but is not designated historical by the City of San Diego, your property is not eligible for the Mills Act.
Mills Act Benefits Add Value to Your Home
You now know of the wonderful tax advantages of Mills Act. It also adds value to your home when you go to sell. People will pay more for a home that has Mills Act. If you own a property that has been designated as historical by the Historical Resources Board and you have a Mills Act agreement recorded on your property, the Mills Act benefits go with it. The new owners "inherit" the agreement's benefits and responsibilities. That is very attractive to buyers.
So what are the disadvantages of the Mills Act?
Once your home is declared historic, you become restricted on modifications you can make if they affect the footprint of the home.
Adding a bedroom? Not so fast! There is actually a national standard put out through the U.S. Secretary of the Interior that governs changes to historic buildings.
Because buildings differ so much one to the next, that standard is subjective. In other words if you go to City Planning and talk to Planner A on Monday, and Planner B on Wednesday, you may very well get two different opinions on what is permissible for your home modification. Frustrating, but there it is.
How do I know? I lived it.
If you are in a neighborhood where a number of your neighbors have the designation, your home might be “suspected” historic. Any proposed home modifications are therefore subject to the same restrictions as if it were officially declared historic. I lived through that scenario myself with my 1923 bungalow.
My point is that even though you’re subject to restrictions if you have Mills Act, you could very well be subject to those same restrictions even without it.
City of San Diego Development Services website has excellent information on this. Here are some specifics pulled right from the Mills Act Info Sheet on the Development Services page:
“The Mills Act was enacted in 1972 by the State of California to enable local jurisdictions to enter into contracts with property owners of qualified historic properties who actively participate in the restoration and maintenance of their historic properties while receiving property tax relief
(Mills Act Property Tax Abatement Program, Technical Assistance Series, California Office of Historic Preservation).
The San Diego City Council adopted Council Policy 700-46 in 1995 ‘to provide a monetary incentive to the owners of historically designated properties in the form of a property tax reduction for the maintenance, restoration and rehabilitation of historic properties within the City of San Diego.’ The City’s first Mills Act agreement was recorded in 1995, during the past 12 years the number of agreements has increased substantially and the program is the most active one within the State. As of the 2007 tax assessment, there were 901 effective Mills Act agreements for historic properties within the City.
The Mills Act Program agreement is a legal contract binding the owner of a designated historical resource to maintain the subject property consistent with the U.S. Secretary of the Interior’s Standards, to provide visibility of the historical resource from the public right-of-way, and to improve or rehabilitate the property based on specific conditions included in the agreement. The agreement is recorded with the County which allows the Assessor to determine the property tax, based on a formula set in State Law that typically results in a substantial annual savings to the property owner. The average savings is 50 percent with a range of property tax reduction between 25 percent and 75 percent. This tax benefit, authorized by the State of California in Government Code Sections 50280- 50290, has been available in the City since 1995 and is authorized by Council Policy 700-46.”
Questions about The Mills Act in San Diego County?
Contact me for more resources and guidance on the Mills Act and historically designated homes and neighborhoods in San Diego County.