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  • Jeffrey Siegel

Why was the Mills Act created, and why have over a hundred towns throughout the state adopted it?

The Mills Act was originally created by Senator Jim Mills, who in addition to being a California Senator, was also a historic preservationist. The Mills act was a heroic effort to save the majestic Hotel Del Coronado from demolition given at the time its poor condition and the enormous amount of money that was needed to restore and preserve it. Since its enactment in 1972, several billion dollars in property taxes have been returned to the owners of historic properties, to be used for restoration and preservation. Towns like Palo Alto, Berkeley, Saratoga, Pasadena, Anaheim, San Jose, Los Angeles, San Diego, San Francisco, Campbell, Menlo Park, Los Altos, Santa Clara, and ninety more have all seen the wisdom of accepting the funding designated for historic preservation. As a result, these towns have benefited greatly, and according to an economic study conducted by economists at UC San Diego, neighborhoods with Mills Act participating properties, enjoy a 16% increase in value, above and beyond the overall market value gains.

Why is this? For one, these neighborhoods are visually more attractive without the rundown, maintenance deferred properties which are difficult to sell except for people who relish the thought of living in a historic home. Second, these neighborhoods are in greater demand, when combining their typically desirable locations, complete with easy walking to town, and their gleaming beautifully reconditioned homes. Third, since the reduction in property taxes stays with the house when it is sold, its actually less expensive to buy a historic home than a non-historic home because while the mortgage payment may be the same, with property taxes on average half of the homes actual market valuation, far more buyers would qualify with the bank to buy the house. A walk through the historic districts of Palo Alto, or Anaheim, or San Diego for example, would reveal a very physical difference in the condition of the historic homes when compared to the historic neighborhoods in Los Gatos. Of course, it doesn’t need to be that way, and in fact, in less than a decade, that situation could be completely reversed. The same situation applies to the commercial historic downtown section of Los Gatos. If you go onto the website of the city of Anaheim, they actually showcase with a video each year the tremendous gains made in historic preservation and the beautifully reconditioned commercial and residential properties that have been restored thanks to the adoption of the Mills Act and the tax benefits that accrue to those property owners.

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