California State Assemblyman Ben Hueso has introduced Assembly Bill 654 to allow cities to charge higher fees for historic property owners to seek property tax abatements under the Mills Act. Initially, the bill required cities to charge more but it has since been modified to make higher fees permissive rather than mandatory. The Mills Act, authored by former Sen. Jim Mills, incentivizes historic preservation by giving property owners property tax breaks for investing in the “rehabilitation, restoration, preservation, and maintenance of their historic properties.” [State Board of Equalization Mills Act FAQs] Under the Act, property owners enter into 10 year renewable contracts with their municipality to restore and maintain their historic properties. Only certain historically designated properties qualify. The Act has received favorable reviews as an alternative to regulatory mandates whereby property owners voluntarily agree to historic restoration and preservation, and are compensated for the investment in restoration by way of property tax reduction and increased property values. However, some critics have expressed concern that already strained property tax revenues are diminished by the Act and that the locally administered programs are often not adequately supervised to ensure property owners comply with the agreements. Historic preservation advocates counter that Mills Act inspired investments have been instrumental in increasing the value of neighboring properties, and in revitalizing older communities, in turn raising the overall property tax base.
Photo: Craftsman Bungalow by Allan Ferguson, Flickr CC