"Mills Act" -
Tax-Saving Program for Historic Buildings
What is it?
A Mills Act Contract under State law is an agreement
between the City of Monterey and property owner of a City designated historical building.
The property owner benefits from a reduction in property taxes, and the City is ensured
that the historic building is preserved.
The program can reduce property taxes for owners of locally designated historic buildings. The tax savings can be substantial for property owners, particularly
if the building was purchased recently.
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Term of Contract
A Mills Act Contract is for a period of ten
(10) years with one (1) additional year being added on the anniversary of
the contract. The contract rights and obligations
are binding upon all successive owners of the property during the life of the contract.
This is a significant benefit because the property retains the lower Mills Act tax rate
when the property is sold. This could be an attractive selling point for your property.
To end the contract, either party may submit a Notice of Non-Renewal which will terminate
the contract at the end of the ten (10) year period. Cancellation of the contract by the
City due to non-compliance requires a public hearing and will result in the immediate
termination of the contract and a penalty equal to twelve and one-half percent (12.5%) of
the assessed market value of the property.
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Contract Requirements
- The contract will require that the historic elements of the
property are maintained in good condition. This will include a plan for maintenance and
may also include a program to restore deteriorated elements; and
- All recipients of Mills Act Contracts will be required to
prepare a maintenance plan and submit an annual report to the Community Development
Director, which will specify all work that has been done to maintain and preserve the
historic building over the year in accordance with the owners' maintenance plan. Any
maintenance work must be in accordance with the Secretary of Interior Standards for
Rehabilitation.
- Recipients may be required to install a plaque at their expense
recognizing the building as a historic resource.
- Recipients may be asked to make the historic resource open to the
public annually if a historic tour is organized.
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Selection Criteria
To grant approval of a Mills Act Contract Application, the
City Council must make the following findings:
The
structure is designated as a historic resource by the City of Monterey, such as
H-1 or H-2 designation; and
The
Mills Act Contract will serve to offset the costs of rehabilitating and/or maintaining the
cultural resource.
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How to apply
The following materials must be submitted to the Community
Development Department, Planning Division in order to process a Mills Act Contract
Application:
- City of Monterey Planning Division
Application Form; (PDF)
- Copy of the legal description of the property attached as
"Exhibit A";
- A maintenance plan for the historic building and a cost
estimate of the work to be done attached as "Exhibit B";
- Photos of the exterior of the property attached as
"Exhibit C".
These photos should be a minimum of 5"x7" in size and should show all elevations
of the structure; and
- See Planning Department's current
fee schedule.
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Review Process
A request for a Mills Act Contract begins with submittal of
a complete application to the City of Monterey Community Development Department. Staff
will then prepare a report for consideration by the Historic Preservation Commission. The
Commission reviews the application, required documentation, and the staff report and then
recommends approval, modification or denial of the request to the City Council. The City
Council will take final action on the request and either approve or deny it.
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Submittal
of Contract to City Clerk
Once the contract has been approved by the City Council, the City will mail the
contract with the appropriate recording fee to the County Recorders office The property
owner will be responsible for paying any filing
fees.
After recordation, the recorded contract must be sent to the County Assessor. The
assessor calculates the exact tax savings. The County Assessor must have the
recorded contract no later than December 31st for the contract to start the following
year.
Property owners are required to report to the State Office of Historic Preservation
that a Mills Act contract has been concluded. A copy of your completed contract will
be sent to:
State Office of Historic Preservation
1416 Ninth Street
Sacramento, CA 95814
If you need any help or have questions, please contact the Planning Division at
831.646.3759.
Submittal
Checklist
- City of Monterey Planning Division Application Form - this
can be picked up during business hours
- Copy of the legal description attached as "Exhibit
A"
- A maintenance plan for the historic building and a cost
estimate of the work to be done attached as "Exhibit B"
- Photos of the exterior of the property attached as
"Exhibit C" - These photos should be a minimum of 5" x 7' in size and
should show all elevations (sides) of the structure
Examples
Example 1: Commercial
Office Building
Example 2: Single
Family Residence
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