Mills Act Contracts for Historic Resources
Thank you for your interest in the City of Santa Barbara’s Mills Act Program.
Santa Barbara considers its historic resources to be one of the most important cultural attractions to the City. In 2009, Santa Barbara joined over 90 California communities that participate in the Mills Act Program. The Mills Act enables owners of designated historic structures to enter into a contract with the City to offset the cost of maintaining the historic resource through a reduction in property taxes. Participating property owners receive, on average, a reduction of 40 percent to 60 percent in property taxes to use for restoring and maintaining the property over the following 10 year contract period.
Before completing application material please read all the project description below.
Note: If your property has a new building on the parcel, it will likely not receive a large tax reduction as the reduction is for historic buildings and landscaping only.
Incomplete applications will not be considered. All applications will be evaluated and ranked using the qualification and eligibility criteria below:
1. In order for your property to be considered for a contract you must have a designated historic resource listed on any city, state or federal register. City designations are: Landmark, Structure of Merit, and contributor to a designated Historic District. You should be a designated resource prior to submitting an application.
2. The structure(s) requires repair, maintenance, or rehabilitation that meets the Secretary of the Interior’s Standards for Rehabilitation and the California Historical Building Code.
3. The structure(s) is visible to the public from the public right-of-way, as further described in SBMC section 22.22.160.C.3.a.(iv).
4. Estimated cost of the proposed work (realistic cost estimates shall be provided to demonstrate the financial commitment to the proposed scope of work). Cumulatively, the total cost of the proposed work to repair, maintain, or rehabilitate the structure(s) shall be equal to, or greater than, the total estimated property tax savings to the owner.
The following materials are required for staff review:
1. Completed application.
2. Copy of the most recent property tax bill.
3. Copy of the current grant deed with the property’s legal description.
4. Rehabilitation Plan, including a construction schedule and cost estimate over the next ten-year period.
5. Color photographs of the property, including the interior and exterior of the structure(s), and the surrounding grounds.
Applications should be submitted by June 30 each calendar year, with a non-refundable application fee. Applications received after June 30 will be considered for the following year.
1. The City Architectural Historian will review all complete applications, conduct site visits, and prepare reports for consideration by the Historic Landmarks Commission (HLC) Designations Subcommittee.
2. The HLC Designations Subcommittee will rank the applications based on the eligibility criteria in Section B above, and Santa Barbara Municipal Code section 22.22.160.C.4.g.
3. Conditions of Contract approval may include: substandard code compliance upgrades such as the completion of an electrical safety inspection and completion of a seismic retrofit as part of the scope of work.
4. The HLC Designations Subcommittee recommendations will be presented to the HLC for final recommendation to the Community Development Director.
1. Once the HLC accepts the application, the Mills Act Contract initiation fee is due to the City prior to contract processing and review by the Community Development Director. An additional processing fee is required if the application requires a City Council exception of the maximum total assessed property valuation.
2. Once all required processing fees are paid, City staff will prepare the contract for review and property owner approval and signature.
3. The signed contract will then be routed for required City signatures.
4. A fully executed contract will be filed by the City with the Santa Barbara County Recorder’s Office.
5. After recordation, the City provides the Santa Barbara County Assessor with a copy of the contract. The County Tax Assessor will calculate the property tax assessment and re-calculate the tax assessment on an annual basis.
6. City staff will notify the State Historic Preservation Office of the new contract address.
An application for a Mills Act contract may be rejected or denied by the City for one or more of the following reasons:
1. Incomplete or inaccurate information submitted;
2. The planned alterations or repairs would not substantially aid in the preservation or enhancement of the historic resource, or would not restore the resource to its original appearance;
3. The property exceeds a maximum total assessed valuation of $2.5 million for a single-unit, owner occupied residential property or $3 million for a multi-unit residential or commercial property;
4. Building code or zoning violations exist on the property and are not being abated as part of the proposed Rehabilitation Plan;
5. All work was completed (as evidenced by a final inspection from the Building & Safety Division) more than one year prior to application (note: if an owner was able to successfully complete a project without financial subsidy, there is no established need for granting a Mills Act contract);
6. City conditions of contract approval are not agreed to by the property owner;
7. Competing applications ranked higher due to proposed scope of work not providing as high a quality restoration as competing applications.
8. If the Mills Act Program has reached the annual revenue loss limit of $260,000, the applicant may reapply the following year.
The ten-year Rehabilitation Plan ensures that any work performed to the property (interior, exterior, and grounds) conforms to the Secretary of the Interior’s Standards for Rehabilitation, and the California Historical Building Code. The Architectural Historian and HLC shall review the proposed Rehabilitation Plan prior to contract approval, which must include sufficient information for them to understand the scope and estimated cost of the proposed improvements. The property may be subject to an inspection by the City’s Architectural Historian to assist in finalizing the Rehabilitation Plan.
All proper permits shall be obtained for the proposed work. Once work commences, the property will be re-inspected every five (5) years, or as required by the Architectural Historian, to ensure that proposed work has been completed per the contract and meets all applicable City standards.
The property owner shall submit annual reports to the Architectural Historian, documenting any completed project(s), along with copies of receipts and building permits, where applicable. The Rehabilitation Plan may be revised during the contract term, subject to approval by the City and the owner. Any proposed revisions to the Rehabilitation Plan shall be submitted to the Architectural Historian in writing prior to completion of the proposed work.
1. Mills Act contracts begin on January 1 of the year after the application is approved by the City and recorded with the County Recorder’s Office. Mills Act contracts have an initial ten (10) year term, with automatic renewal yearly on the anniversary of the contract date, unless otherwise terminated.
2. At least 12 months, but not more than 18 months, prior to expiration of the initial ten year term of the contract, if a property owner wishes to continue under the Mills Act Program the property owner will submit a new rehabilitation plan to the Community Development Director. The HLC will review the proposed scope of work within the rehabilitation plan and make a recommendation to the City Council whether or not to allow the contract to automatically renew for an additional period of time. If the property owner does not timely submit a new rehabilitation plan the City will assume no further rehabilitation will be done and the Community Development Director will send a notice of non-renewal pursuant to Government Code section 50282. Nothing in this section shall prohibit the City from serving a notice of non-renewal pursuant to section 50282 after the initial 10 year term, or any time thereafter, even if the property owner submits a new rehabilitation plan. Non-renewal is at the sole discretion of the City.
3. If a notice of non-renewal is given, the contract runs for its remaining term.
4. Immediate cancellation of the contract by either the City or the property owner requires a public hearing and may result in the immediate termination of the contract and a penalty equal to 12½ percent of the assessed market value of the property.
5. Non-renewal, termination of contract, or legal action to enforce the contract terms may result if the property owner does not fulfill all contractual obligations, including but not limited to spending property tax savings on the repair and maintenance of the historic property.
6. The City shall notify the applicant and the County Tax Assessor of contract termination or non-renewal.
7. The historical property agreement is binding upon successor owners of the qualified historical property. The new owner is required to sign an agreement to the rehabilitation plan of the contract and continual maintenance of the property.
Upon acceptance to the program you will be required to submit annual reports on completed project(s), along with copies of receipts and building permits where applicable. City staff may conduct property inspections at any time to ensure that proposed work has been completed per contract agreement and meets all applicable City standards.
Please review the Mills Act Application packet. If you have any questions please contact Nicole Hernandez, Associate Planner, Architectural Historian, at (805) 564-5536 or email at NHernandez@SantaBarbaraCA.gov.
The packet includes