The Mills Act - Myths and Facts

Over half of the states have adopted laws creating credits against state income taxes to provide incentives for the appropriate rehabilitation of historic buildings. California is not one of them, therefore the Mills Act, which provides property tax relief to owners who invest in historic preservation and designation of their homes, is the sole tax incentive.  This incentive does little to offset the high cost of maintaining our homes in a manner that ensures that historical integrity is respected and preserved.

The Mills Act offers owners the chance to reinvest their tax savings in historic preservation, which benefits the entire city. Preservation supports economic sustainability by encouraging reinvestment in existing communities; it helps to alleviate urban flight and is an effective tool for protecting scarce environmental resources by encouraging reuse of sound older buildings instead of abandoning or demolishing them. Homes which are historic landmarks and historic districts both lead to the development of heritage tourism and employ thousands of highly-skilled craftsmen even during downturns in the development and real estate industry.

Contrary to what has been reported in the local press, the Mills Act does not result in an overall reduction in property tax revenue to the City.  In fact, the Mills Act serves to create a net increase in property tax revenue due to the"halo effect" that a historically designated home has on the property values of a neighborhood.

The Mid-City Communities Plan gives the Kensington-Talmadge Planning Group the charter to "Initiate actions to implement Plan proposals".  Among the goals and recommendations in the community plan related to historic preservation are:

• Preserve and upgrade all land and structures having significant historical interest.
• Preserve and enhance historic resources by means of acquisition, easements, agreements, assessment districts or other means.
• Preserve and enhance areas identified as historic districts.
• Encourage the retention and enhancement of non-historic structures which contribute to the character of Mid-City.
• Encourage the preservation of historic structures through identification, designation, tax relief, tax breaks and other neighborhood physical improvement and financing measures.
• Apply zoning that will act to conserve older areas of Mid-City which, although they are not historic, contain structures contributing to the overall character of the area.Expand the Greater Mid-City Historic Oversight Program to encourage and ensure the identification and designation of all eligible historic sites and districts in Mid-City to implement the 1987 Historical Greater Mid-City San Diego Preservation Strategy that surveyed that portion of the Mid-City communities west of Euclid Avenue and Home Avenue.
• Private owners of historic structures and those with property in historic districts are responsible for maintaining and enhancing their structures, in partnership with the community and the City.
• Economic incentives such as the Mills Act tax incentive should be identified and developed to assist property owners to maintain historic properties.
• Coordinate the continued evaluation and designation of historic resources within Mid-City.
• Historic scoring patterns and ID stamps should be retained or duplicated when sidewalks are replaced.

The City Council policy that implements the Mills Act is still in effect, although changes to the policy have been made.  The Neighborhood Historic Preservation Coalition, SOHO and various community planning groups and preservationists banded together to provide the City Council with reasoned input on why the changes proposed by the Mayor's staff in the Land Use Planning Department were not in the best interest of the residents of the City.