ADMINISTRATIVE REPORT
MEETING DATE: November 10, 2025 AGENDA CATEGORY: New Business TO: Finance, Economic Development and Jobs Committee
FROM: Jennifer M. Byers, Economic & Community Development Director DATE: September 16, 2025
SUBJECT: Overview of the Mills Act Contract Program
and staff presentation
RECOMMENDATION:
Staff recommends to receive and file.
BACKGROUND: Enacted in 1972, the Mills Act legislation grants participating local governments the authority to enter contracts with owners of “qualified historic properties” who actively participate in the restoration and maintenance of their historic properties while receiving proper ty tax relief. Mills Act contracts are for 10 years initially with automatic yearly extensions and stay with the property when transferred. Subsequent owners are bound by the contract and have the same rights and obligations as the original owner who entered the contract.
A “qualified historical property” is
privately owned property, not exempt from property taxation listed in the National Register of Historic Places or located in a registered historic district. listed in any state, city, or county, offic ial register of historical or architecturally significant sites, places, or landmarks.
Terms of the Contract: The contract shall conform to the rules and regulations of the Office of Historic Preservation of the Department of Parks and Recreation, the Uni ted States Secretary of the Interior’s Standards for Rehabilitation, and the State Historical Building Code. The term of the contract shall be for a minimum period of 10 years. After first 10 years, a year shall be added annually to term of the contract unless notice of nonrenewal is given. If a contract is canceled, the owner shall pay a cancellation fee equal to 12.5 percent of the current fair market value of the property, as determined by the county assessor.
There shall be inspection of the premises by the city prior to a new agreement, and every five years thereafter, to determine the owner’s compliance with the contract.
Reassessment: The Mills Act lowers the assessed value of a property, which in turn reduces the amount of property tax owed, but only for the portion of the tax based on that assessed value. Under a Mills Act contract, the property's assessed value is determined using an income approach rather than the standard market approach, which can result in a lower value and therefore lower prop erty taxes. Mills Act only reduces the 1% General Levy Tax, not Special District assessments.
Example: If a property's assessed value is $100,000, the 1% General Levy Tax would be $1,000. Under a Mills Act contract, the assessed value might be reduced to $67,200, resulting in a tax of $672 (1% of $67,200). The savings vary from property to property and can range from 20% to 70% based on the County Tax Assessor's property valuations.
Who benefits from a Mills Act Contract Program?
City
The Mills Act allows the city to design preservation
programs to accommodate:
specific community needs and priorities
for rehabilitating entire neighborhoods
encouraging seismic safety programs
contributing to affordable housing
promoting heritage tourism
fostering pride of ownership
Local governments recognize the economic
benefits of conserving resources and reinvestment
as well as the important role historic preservation
can play in revitalizing older areas, creating cultural tourism, building civic pri de, and retaining the
sense of place and continuity with the
community’s past.
Historic Property Owners
Owners of historic buildings may qualify for
property tax relief to rehabilitate and maintain
the historical and architectural character of their
properties for at least a ten-year period.
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.
May realize substantial property tax savings each
year because valuations of properties under a
Mills Act contract are determined by the Income
Approach to Value rather than by the standard
Market Approach to Value.
Updated Cultural Resource Survey: This preliminary step of completing updated surveys was necessary to help the City identify properties that meet the criteria for cultural resource designation. The city had not completed a survey since the mid -1980s, and many structures built before 1975 need ed to be surveyed. Much of the city’s-built environment happened after the destructive earthquakes in the early 1950s and many of those structures have never been surveyed. Any property within the City can be considered for local designation if they meet the following criteria:
A. Exemplifies or reflects special elements of the city, community or neighborhood’s historical, archaeological, cultural, social, economic, political, aesthetic, engineering or architectural development; or
B. Identified with people or events significant in local, state, or national history; or C. Embodies distinctive characteristics of style, type, period, or method of construction, or is a valuable example of the use of indigenous materials or craftsmanship; or D. Representative of the notabl e work of a builder, designer, architect, engineer, landscape architect, interior designer, artist or craftsman; or
E. Its unique location or singular physical characteristic(s) represents an established and familiar visual feature of a neighborhood, community or the city.
Future Mills Act Contract Program: ECD is currently working with City Attorney’s office on a draft of the ordinance, resolution and agreement that are needed to implement the program. They will be brought back to the committee at a later date.
FISCAL IMPACT:
The implementation of a Mills Act Contract Program will reduce property tax revenues, depending on how many properties to choose to go through the process.
COUNCIL GOAL:
Community Character & Quality of Life
Innovative and Efficient City Government
ATTACHMENTS:
1. Final Historic Survey Report
2. Final City-wide Historic Context Statement