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City of Sacramento Mills Act Historical Property Contract Program

 

About the program

The Mills Act Historical Property Contract Program is intended to offset the cost of preserving historic properties by offering property owners a property tax reduction in exchange for agreeing to preserve and maintain their historic building. 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 Sacramento amended the Mills Act Section of the City Code (17.604.720) to clarify and streamline the process of applying for and obtaining a Mills Act Contract. 

Potential Tax Savings

The assessment of a property under a Mills Act agreement, usually, but not always results in tax relief for the property owner. Specific questions about property tax valuation should be directed to a tax professional or the county assessor’s office. For more information, the State Board of Equalization has published “Guidelines for the Assessment of Enforceably Restricted Historical Properties.”

Staff Contact Information

Sean de Courcy, Associate Preservation Planner 
Community Development Department
City of Sacramento
300 Richards Boulevard, Third Floor
Sacramento, California 95811
E-mail: sdecourcy@cityofsacramento.org
916.808.2796 (voicemail)

 

Carson Anderson, Preservation Director
Community Development Department
City of Sacramento
300 Richards Boulevard, Third Floor
Sacramento, California 95811
E-mail: canderson@cityofsacramento.org
916.808.8259 (voicemail)

 

 

How to Apply

A owner of a qualified historical property must submit the following items to the Planning Department to be considered for a Mills Act contract:

  1. Completed Mills Act Application

  2. Copy of the property’s grant deed

  3. Copy of the most recent property tax bill

  4. Clear color photos, labeled, minimum size 3”x5”. The photos should include all exterior sides of the structure or areas of the property, interior photos of relevant areas where work may be proposed, both overall and detail views

  5. Proposed work plan

Applications must be hand delivered to the Planning Division through the Community Development Department's Public Counter:

Community Development Department

300 Richards Blvd. 3rd Floor, Sacramento, CA 95811

The Public Counter is open Monday-Friday 9 a.m.- 4 p.m. unless otherwise noted on the Public Counter Hours page.

Eligibility Requirements

Enrollment in the Mills Act Program requires that the property be a designated historic resource listed on a local, State or Federal register of historic resources. The property may be an individually listed landmark or can be what is termed a contributing resource within a listed historic district. If the property is within the boundaries of a historic district but is classified as non-contributing or otherwise appears to qualify for listing in a local, State, or Federal register, the property must be formally listed on an official register prior to applying for a Mills Act Contract. Inquire with the City’s Preservation Staff about the nominating process and associated fees.

Summary of Mills Act Program Components

Under the terms of the Mills Act Program, a 10-year contract is required, to which the property owner and City are parties. The contract is recorded with the County, which allows the County Assessor to determine the property tax, based on a formula set by State law. That formula usually (but not always) results in substantial annual saving to the property owner. As a related component of the legally-binding contract, the owner must provide a rehabilitation and maintenance plan for their property, and update that plan on an annual basis. The owner completes a self-reporting form each year documenting progress in completion of projects proposed as part of the agreed to rehabilitation plan for the property. The City may arrange to visit the property from time to time to conduct on-site inspections. Either party may initiate non-renewal proceedings. Significant tax penalties may be imposed for breach of contract, which could include a failure to maintain the historic property, or refusal to proceed with the rehabilitation plan agreed to as part of the contract.

Basic Contract Terms

Mills Act contracts are subject to the requirements in California Government Code, Article 12, Sections 50280 – 50290, which can be found by visiting, GUIDELINES FOR THE ASSESSMENT OF ENFORCEABLY RESTRICTED HISTORICAL PROPERTY.

Evaluating Application

 

City Staff 

No more than 12 applications will be recommended for approval at one time. Applications will be evaluated by staff at least once each year or when 12 applications have been received (whichever comes first).  Applications not recommended for approval may apply during the next application cycle.  Staff will evaluate applications considering applicable criteria, which include:

  1. The property is significant due to its historic value, location, or other attribute

  2. The applicant has the ability to preserve and, when necessary, restore and rehabilitate the property

  3. The preservation and, when necessary, restoration and rehabilitation of the property will enhance the city’s inventory of historic and cultural resources

City Council 

City council may choose to approve, approve with conditions, or deny the application for a Mills Act agreement. If the city council fails to act on a Mills Act application within one year, the application shall be deemed denied. If a Mills Act application is not approved by city council, the applicant must wait one calendar year before reapplying for a Mills Act contract. Once a contract is signed, accepted, and recorded by the county recorder, the property subject to the contract shall be assessed under Article 1.9, section 439.2 of the California Revenue and Taxation Code on the ensuing lien date.

Fees

There are several fees associated with Mills Act contracts. Fees include an application fee ($135), a contract fee ($912-$1481), and an annual reporting and inspection fee ($202.50). 
Under most circumstances these fees will be greatly offset by the benefits received in the form of reduced property taxes. 

$135 Application Fee

When applying for a Mills Act contract agreement with the city an applicant will be required to pay $135 application fee. This fee is non-refundable and covers staff time to review the application and if-necessary conduct an inspection of the property. 

$912 Single Family Contract Fee

If the Preservation Director determines you qualify for a Mills Act contract and recommends City Council ratify the Mills Act contract agreement, and your residential property is 4-units or less, you will be charged one-time fee of $912. This fee covers the cost to negotiate your workplan and prepare your contract. This fee will also include staff time to prepare a staff report and if-necessary present the contract to the City Council for consideration. If for any reason City Council declines to ratify your Mills Act contract agreement, this fee will be refunded. 

$1481 Multi-Family & Commercial Contract Fee

If the Preservation Director determines you qualify for a Mills Act contract and recommends City Council ratify the Mills Act contract agreement, and your residential property is greater than 4-units or a commercial building, you will be charged a one-time fee of $1481. This fee covers the cost to negotiate your workplan and prepare your contract. This fee will also include staff time to prepare a staff report and if-necessary present the contract to the City Council for consideration. If for any reason City Council declines to ratify your Mills Act contract agreement, this fee will be refunded. 

$202.50 Annual Reporting and Inspection Fee

If you are a successful Mills Act contract recipient, you will be required to provide the city an annual report of the progress of your work plan. If you have fallen behind schedule on property maintenance or improvements city staff will work with you to establish a realistic priority list to ensure your property retains its historical significance and investment value. Each year when you submit your annual work plan you will be required to pay a fee of $202.50. This fee covers staff time to review your annual report, and conduct an inspection/adjust your workplan if-necessary. 

 

Reports and Inspections

The owner of a property subject to a Mills Act agreement is required to complete and submit the city’s annual reporting form and pay the annual contract administration fee. The city will conduct annual in-person inspections on an as-needed basis. At a minimum, each property subject to a Mills Act contract will be inspected in-person once every five years.

Download and complete the Annual Report Form and email it along with the required information to planning@cityofsacramento.org or by mail to: 

Community Development Department 
ATTN: Sean de Courcy
300 Richards Blvd 3rd Floor, 
Sacramento, CA 95818

 

 

Canceling a Contract

The city may cancel a Mills Act contract, or bring a lawsuit to enforce the contract, if after notice and a public hearing, the city determines that the owner has breached the conditions of the agreement.  If the contract is cancelled, the property owner must pay a cancellation fee equal to 12 ½ percent of the property’s current fair market value as determined by the county assessor.

Non-renewal

The city or property owner in any year may elect to not renew a contract by serving a written notice of non-renewal in advance of the annual renewal date. The notice of non-renewal shall be effective only if served by the owner upon the city at least 90 days prior to the renewal date, or if served by the city upon the owner at least 60-days prior to the annual renewal date. If the city or owner serve a notice of non-renewal the contract will remain in effect for the balance of the remaining term. No penalty will result if a property owner elects not to renew a contract.