Do you own a great historic building in Lawndale? Are you interested in a financial incentive that can help you rehabilitate, restore and maintain your building? Our Mills Act Program can help by allowing qualifying owners to use a portion of their property taxes to maintain their building.
Qualifying owners can potentially receive a property tax reduction and use the savings to help rehabilitate, restore and maintain their buildings. 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 city and county governments 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 Lawndale adopted the program in December 2010.
Benefits of the Program
A formal agreement, generally known as a Mills Act or Historical Property Contract, is executed between the City of Lawndale and the property owner for a revolving ten-year term. Contracts are automatically renewed each year so that the term of the contract always extends for ten years. Property owners agree to restore, maintain, and protect the property in accordance with specific historic preservation standards and conditions identified in the contract. Periodic inspections by city and county officials ensure proper maintenance of the property. Either the property owner or the City may elect not to renew for any reason. The effect of non-renewal is to terminate the contract at the end of the current ten year term. The owner may also petition the City to initiate an immediate cancellation. If cancelled, a penalty equal to 12 1/2 percent is imposed. The City may also cancel the contract, but only in the case of breach of the contract conditions. The contract is transferred to new owners if the property is sold, and is binding to all successive owners.
Benefits to Owners
Owners of qualified historic properties may apply for the program if they pledge to rehabilitate and maintain the historical and architectural character of their properties for the minimum ten year life of the contract. The Mills Act program is especially beneficial for recent buyers of historic properties and for current owners of historic buildings who have made major improvements to their properties.
Mills Act participants may realize substantial property tax savings each year for recently improved or purchased older properties because valuations of Mills Act properties are determined by an income approach to value rather than by the standard market approach to determining appraised value. The income approach, divided by a capitalization rate, determines the assessed value of the property. In general, the income potential for an owner-occupied residential property is calculated by examining comparable rents for similar properties in the area, while the income amount on a commercial property is based on actual rent received. Because rental values vary from area to area, actual property savings may vary. In addition, as counties are required to assess all property annually, Mills Act properties may realize slight increases in property taxes each year.
Qualified Historic Property
A qualified historic property in the city of Lawndale is a property listed on the National Register of Historic Places, the California Register of Historic Resources or the California Register of Historic Landmarks. For more information on the state registries go to: http://ohp.parks.ca.gov/?page_id=21238. For the National Register go to: http://www.nps.gov/history/nr/about.htm. Or call 916-445-7000.
For Additional Information
See the Mills Act Questions and Answers link below. If you need additional information, contact DeDe Davis Tran, Associate Planner at (310) 973-3232.
Resolution Establishing the Mills Act Program
Mills Act Sample Contract
Mills Act Application
Mills Act Questions and Answers