Mills Act is benefit to owners of historic properties

by John Neiuber

Enacted by the state in 1972, the Mills Act grants participating cities and counties the authority to enter into contracts with owners of qualified historic properties who actively participate in the restoration and maintenance of those properties. In return, the property owners receive a reduced property tax. The Mills Act is a vital economic incentive in California, and specifically in Claremont, for the restoration and preservation of qualified historic buildings by private homeowners.

Local governments adopt a Mills Act program because they recognize the economic benefits of conserving resources and reinvestment, the important role historic preservation can play in revitalizing older areas, promoting heritage tourism, building civic pride, enhancing sustainability efforts and retaining a sense of place and continuity with the community’s past.

A formal agreement, generally known as a Mills Act or Historical Property Contract, is executed between the local government and the homeowner for a minimum 10-year term. Contracts are automatically renewed each year and are transferred to new owners when the property is sold. Property owners agree to restore, maintain, and protect the property in accordance with specific historic preservation standards and conditions identified in the contract. The contract is binding to all owners during the contract period.

Local governments implement The Mills Act by adopting an ordinance or resolution that creates a formalized program for that community. Programs are designed to accommodate individual needs of the community and often make the eligibility criteria and program requirements more specific than the state code. 

Claremont’s Mills Act program was adopted by a city council resolution in 2000 and then amended in 2009 and 2012. The historic preservation element of the city’s General Plan sets the goal and policies that are the basis for the procedures of the program and criteria for approval of historical property contracts. The Claremont City Council approves no more than 6 contracts during any one calendar year period based on the following criteria:

“A. The subject property meets the eligibility requirements for a Mills Act contract pursuant to California Government Code Section 50280.1, in that it is a privately owned property which is not exempt from property taxation, and is listed in the National Register of Historic Places, located in a National Register or local historic district, or listed in a state or county official register of historic or architecturally significant sites, places or landmarks, or in the Register of Historic and Architectural Merit of the city of Claremont; and

B. The subject property contributes significantly to the quality, diversity, historical interest, and ambience of the community; and

C. Significant features that define the historical character of the subject property, and its buildings have not been destroyed or can be restored based on documentary physical, or pictorial evidence; and

D. The owner of the subject property proposes to make significant improvements to the property that will not impact the architectural, historical or aesthetic integrity of the resource; and

E. The subject property is residential.”

All 5 of the criteria must be met in order for the property to be eligible to receive a contract. Herein lies the pitfall for historic property owners.

Many times owners will embark upon improvements to historic properties and then apply for the Mills Act designation after the restoration or remodeling has been accomplished. This distinction is important for 2 reasons: 1) The city criteria clearly states the improvements must be proposed, not completed, and 2) Should the improvements already made have changed or altered the character defining features of the property that would have made it eligible for the Mills Act designation, then it would not qualify for the intended purpose of the Mills Act.

Applications are available through the Claremon’s Planning Department. Once the application is completed by the homeowner, it is submitted along with a $1000 application fee. Staff reviews the application and often more information is required. Homeowners are then required to submit additional fees to cover the expense of processing the application and can cost the homeowner, in total, in the neighborhood of $3000 to $4000.

Once the application has been processed by city staff and the city attorney has reviewed the proposed contract, the matter is then referred to the architectural commission. The architectural commission adopts by resolution a recommendation related to the application and it is forwarded to the city council. The city council considers the recommendation of the architectural commission and makes a decision on the proposed contract.  The city council has the complete and final authority to approve, deny or modify any historical property contract recommended by the architectural commission.

If approved, an historical property contract is entered into between the city and the homeowner and is recorded with the county, and the county issues a new, lowered property tax assessment.

The homeowner is expected to consult with and seek approval from the city to ensure that the character defining features are kept intact or restored as improvements are made. The owner provides the city with an annual report, along with a fee, describing the home improvements completed during the preceding year. The city reviews the contract and inspects the property to determine the property owner’s compliance.

Whereas many communities’ older neighborhoods become the victims of time and blight, Mills Act communities, like Claremont, recognize that preserving the historic housing inventory leads to increased property values and revitalizes existing neighborhoods. The Mills Act is a tool at the disposal of the city and homeowners to ensure that the historic fabric of the community is enjoyed by the citizens for generations to come.



Submit a Comment

Share This