If you own a historic building in Los Angeles, your property is an existing City of Los Angeles Historic-Cultural Monument or a contributing structure in a designated Historic Preservation Overlay Zone then you have the chance to apply for the Mills Act Historical Property Contract Program which will allow you to receive a potential property tax reduction and use the savings to help rehabilitate, restore and maintain the 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 700 properties have benefited from the program.
How Does It Work
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.
A formal agreement, is signed between the City of Los Angeles and the property owner for a revolving ten-year term. 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. Contracts are automatically renewed each year so that the term of the contract always extends for ten years.
Benefits Of The Agreement
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 property annually, Mills Act properties may realize slight increases in property taxes each year.
2018 Mills Act Program
Applications are no longer accepted for the 2017 Mills Act cycle; the deadline was March 1, 2017. Applications for the 2018 cycle will be posted by the first part of January 2018.
The following documents provide information about the program.
- Mills Act Application Guide 2017
- Mills Act Application Check List
- Historical Property Contract (EXAMPLE)
- Exhibit A – Rehabilitation/Restoration/Maintenance Plan (EXAMPLE)
- Exhibit B – Maintenance and Rehabilitation Conditions (EXAMPLE)
- Tax Adjustment Worksheet 2017
- 2017 Mills Act Workshop Presentation
Winter 2018 Workshop
The workshop will provide an overview of the Mills Act Historical Property Contract Program and information about the City of Los Angeles’ application process for 2018. All prospective applicants and others interested in learning more about the program will be invited to attend.
If you need additional information, please contact the Department of City Planning’s Office of Historic Resources at (213) 978-1200 or email email@example.com
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