ADMINISTRATIVE REPORT
MEETING DATE: February 23, 2026 AGENDA CATEGORY: Staff Report TO: Finance, Economic Development and Jobs Committee
FROM: Jennifer M. Byers, Economic & Community Development Director DATE: February 10, 2026
SUBJECT: Mills Act – Historic Property Agreement Program
Draft Ordinance and Resolution to Establish a Historic Property Agreement Program per the Mills Act.
RECOMMENDATION:
Committee review and referral.
BACKGROUND: Enacted in 1972, the Mills Act legislation grants participating local governments the authority to enter agreements with owners of “qualified historic properties” who actively participate in the restoration and maintenance of their historic properties while receiving property tax relief. Mills Act Agreements are for 10 years initially with automatic yearly extensions a nd stay with the property when transferred. Subsequent owners are bound by the agreement and have the same rights and obligations as the original owner who entered the agreement.
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, official register of historical or architecturally significant sites, places, or landmarks.
Terms of the Agreement: The agreement shall conform to the rules and regulations of the Office of Historic Preservation of the Department of Parks and Recreation, the United States Secretary of the Interior’s Standards for Rehabilitation, and the State Historical Building Code. The term of the agreement shall be for a minimum period of 10 years. After first 10 years, a year shall be added annually to term of the agreement unless notice of nonrenewal is given. If a agreement 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 agreement.
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 agreement, 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 property taxes. Mills Act only reduces the 1% General Levy Tax, not special assessments.
Example: If a property's assessed value is $100,00 0, the 1% General Levy Tax would be $1,000. Under a Mills Act agreement, 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 Agreement 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 pride, and retaining the
sense of place and continuity with the
community’s past.
Historic Property Owners
Owners of historic buildings may qualify for
property t ax 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 valua tions of properties under a
Mills Act agreement 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. Of the 6,189 parcels in the survey area, 4,885 were built before 1975. The survey identified 501 properties that are potentially eligible individual properties or within potential historic districts.
Fiscal Impact: There are currently 20 properties that are designated and could apply for a Mills Act agreement; depending on reassessments, a 10-year property tax savings for all 20 properties could range between $62,000-$147,000, which would result in lost city revenues between $56,000 - $132,000. Of all potentially eligible properties there is an assessed land value of $254,404,465 with a general tax levy of $2,544,045. If all eligible surveyed sites became designated and then were approved for a Mills Act agreement, the total 10 -year tax savings could range from $930,000 to $2.2 million. This would be a potential 10-year revenue loss of $840,000 to $1.9 million. Note that each Mills Act property is reassessed each year based on income.
Proposed Mills Act Agreement Program: Only properties that are eligible as described above will be considered for historic property preservation agreements. Properties that are not designated may be considered if a nomination for designation is submitted before or concurrently with a Mills Act application and recorded with County Recorder before December 31st.
Every executed agreement must include a Rehabilitation/Restoration/Maintenance Plan and Timeline of future work to be completed. This plan is an extremely important component of the application as it is used to determine the need and to establish a nexus between tax savings and historic preservation by contractually requiring the property owner to complete the agreed-upon work program.
Historic property agreement applications will be considered through a competitive selection process.
Application criteria will include:
1. The project will require financial incentives in addition to any mortgage financing, private capital or public loans to help ensure the preservation of the structure.
2. The project will result in additional private investment in the building other than for routine maintenance that may include seismic retrofitting, substantial repair or rehabilitation work.
3. The project will support substantial reinvestment in a historic resource and/or rehabilitation of a historic building or structure in areas where the city is concentrating resources on façade improvements, home rehabilitation, or similar revitalization efforts.
4. The project s ubstantially contributes to the preservation of a historic resource threatened by deterioration, abandonment, or conflicting regulations.
5. The project enhances opportunities for maintaining and/or facilitate preservation and maintenance of a property in cases of economic hardship.
6. One bonus point may be issued for a agreement that will support extensive publicly visible rehabilitation projects, such as restorati on from non -contributing to contributing status, the removal of inappropriate publicly visible additions, restoration of altered or missing character - defining features, such as infilled openings, or missing features. Applicants must submit additional information in their applications to justify issuance of a bonus point.
7. Properties with outstanding/unresolved Code violations will not be selected unless and until the violations are resolved.
City staff will work with the owner during the review process to m odify the work program as may be necessary to meet the City’s historic preservation goals and ensure proper preservation of the historic resource. After inspection, a list of deficient, non -compliant items will be sent to owner, to draft a preservation plan to correct those items. Applications may be denied if the owner does not agree to complete projects required by City staff. The application should include all necessary financially feasible projects the owner expects to perform over a minimum 10 -year period. The table below outlines the application review and approval process:
January Annual Mills Act Agreement Program Workshop
May Application Due
June Staff will review for eligibility and conduct inspection of property, if eligible.
July The Historic Preservation Commission will review the applications using the program criteria; may recommend, not recommend, or forward without recommendation, to City Council.
August Staff will prepare final agreement and attachments for City Council consideration.
September In-person appointment with owner(s) to review and notarize final agreement.
October To City Council for approval, may also modify or deny the agreement.
November Record Agreement
After City Council recording of the agreement, staff will transmit the agreement and the documentation of description of the property to the Kern County Assessor. agreements that are recorded by December 31 are typically reassessed by June 30 of the following year. The County Assessor calculates the property values under the Mills Act program as described above.
Upon execution of a Historic Property Agreement, all agreed-upon projects must be completed by the end of the year established in the final work plan. Annual self -certification of completion of work, along with documentation (permits, agreement or invoices, before and after photographs, etc.) and/or inspections will be required to ensure required work is completed. Upon sale of the property, documentation of completed work should be provided to the new owner. A physical inspection of the property will be done every five years.
Due to the significant staff time to review applications, perform inspections, hold workshops, attend meetings with applicants, prepare reports for Historic Preservation and City Council a service fee will be charged for each application and five-year inspections conducted after initial 10 years.
Recommendation: Refer draft Mills Act ordinance and resolution establishing the application process, including fee authority for the implementation of the Bakersfield Mills Act Agreement Program to the City Council.
FISCAL IMPACT:
If approved by City Council, reduced Property Tax revenues would impact the General Fund.
COUNCIL GOAL:
Community Character & Quality of Life
ATTACHMENTS:
1. Proposed amendments to BMC Chapter 15.72 – Historic Preservation
2. Draft City Council Resolution to establish Mills Act Program