Incentives for Historical Properties - Mills Act



John Tuteur Assessor


Incentives for Historical Properties


Mills Act

In 1972 the California Legislature passed a program sponsored by Senator Mills to provide property tax incentive to promote historic preservation. Known as the Mills Act and beginning at Government Code section 50280, the law allows cities and counties to enter into contracts with owners of qualified historical buildings. A qualified historical property must be privately owned and not exempt from property taxes. The property must be listed in the National Register of Historic Places or located in a registered historic district or listed in any state, city, county, or city and county official register of historical or architecturally significant sites, places, or landmarks.

The contracts, modeled on the California Land Conservation (Williamson) Act, are for a minimum of ten years and renew automatically each year unless non-renewed by either party. During the term of the contract the owner agrees to preserve the qualified historical property and, when necessary, to restore and rehabilitate it. Once a contract is recorded prior to January 1 of any year, the assessor values the property using a formula set forth in Revenue and Taxation Code sections 439 through 439.4. The “restricted” valuation applies to both the improvements and land of reasonable size that is used as a site.

The restricted value is based on a fair market rental. In the case of owner-occupied residential property the rental is based on rents for like homes in the area. Any normal expenses for the property are then subtracted from the rent to arrive at a net rental income. The net income is then divided by a capitalization rate that is not derived from market rates. The higher the capitalization rate, the lower the value. The “restricted” capitalization rate is usually higher than the market rate. Thus, the restricted value of the qualified historical property under contract is usually lower than the true market value. The “restricted” value is then compared to the Proposition 13 base year value of the property and the owner receives the benefit of whichever value is lower.

In Napa County, only the City of St. Helena has adopted an ordinance authorizing these historical contracts. The Assessor has not received any information that the City of St. Helena has entered into any contracts. Property owners who contact the Assessor for information on property tax breaks for historical property are referred to the municipality in which they are located or to the county to see if that entity is interested in beginning the historical preservation program.

Should you have any questions please contact Napa County Assessor John Tuteur at (707)253-4459 or by e-mail