By Bruce Coons / SOHO / Newsletter November -December 2023
Despite the considerable rhetoric about making housing more affordable, the Mills Act remains San Diego’s sole effective incentive that makes houses more affordable.
Named after the late San Diegan James Mills, our former State Senator and a great friend of preservation, the Mills Act offers a compelling incentive to owners of designated historic properties in California. In exchange for taking on the responsibility of preserving, maintaining, and restoring these historic landmarks for public benefit, they may receive a reduction in property taxes. Beyond its cultural and aesthetic impact, the Mills Act also addresses a pressing concern in San Diego: the need for affordable housing.
Unlocking middle-class homeownership in a city where real estate prices are out of reach for the average homeowner, the Mills Act provides a lifeline. While it is true that owners of grand estates can benefit from the program, the heart of the Mills Act’s impact lies in its support for middle-class homeowners. These are individuals and families who might not be able to shoulder the burden of fully taxed historic homes. The Act’s provisions for property tax reduction offer some effective relief, making it feasible for regular working citizens to own and maintain pieces of the city’s history.
Affordable housing doesn’t always equate to low-income housing, though the Mills Act, if offered and promoted more effectively can and will make a major positive impact in significantly reducing the cost of housing for low income families. San Diego’s high-rent real estate market challenges the notion of affordability and demands innovative approaches to ensure affordability across different income brackets. The Mills Act champions this cause by offering middle-class homeowners an opportunity to participate in preserving the city’s heritage without succumbing to exorbitant property taxes.
The Mills Act doesn’t just save individual houses; it also safeguards the character and essence of San Diego’s historic neighborhoods. This preservation effort combats the trend of vapid development that can easily erode a community’s prized fabric. By encouraging homeowners to invest in the upkeep of historic properties, the Mills Act fosters a sense of pride and belonging, anchoring families within the city’s diverse neighborhoods.
The program’s accessibility extends beyond tax incentives. The qualifying criteria, including significant architecture, historical associations to people and events, and location within historic districts, reflect the varied range of properties that can benefit. Furthermore, the fact that the contract is tied to the property, not the owner, ensures continuity even through property sales.
As of now, approximately 1,600 properties or fewer in all of San Diego County are benefiting from the Mills Act. This number isn’t just a statistic; it represents families, individuals, and communities whose lives are positively impacted by the ability to own and maintain historic homes. These owners are also safeguarding our shared architectural and cultural heritage.
In a city grappling with the challenges of rapid urbanization and soaring real estate prices, the Mills Act emerges as a champion for middle-class homeownership and historic preservation, both of which benefit us all.
Bruce Coons is the SOHO Executive Director and was, at least, a resident of Point Loma.
{ 6 comments… read them below or add one }
Bruce Coons did a great job covering the Mill’s Act and the many benefits that help many people and communities. Preserving historic homes helps keep the community’s character and history. All this, including affordable housing, has helped keep OB… OB!
San Diego is very lucky to have SOHO. They do so much to preserve our history.
I read with interest Bruce Coons, Save Our Heritage Organisation’s article on the Mills Act. For those who complain about the loss of Property Tax income to the State of California, County of San Diego, and City of San Diego, allow me to educate everyone on the “Halo Effect” created to properties within 500-feet of each historically designated property. Studies by Andrew Narwold and colleagues at the University of California, Real Estate Division, show a minimum of 3.8% property value increase each time a house or historic district is designated and the halo effect drives the surrounding properties up in value by at least 3.8%. This means that as the non-historically designated properties sell, the State, County, and City reap higher property tax income that more than compensates for the Mills Act individual house or district “loss.” The State of California compensates schools for the lost revenue for each historically designated house. All those property owners benefit from increased property value. A program that increases property value and propert tax income benefits everyone.
With all the developer building, I don’t think anyone is complaining about lost property tax income. Higher taxes are another burden to ownership, eroding affordability, regardless of proposed value. The benefit is gains from sale and even then that has tax considerations as well. So the historical house gets a tax break while the neighborhood values go up? That kinda sucks for the neighbor next door.
Ah a way for people with expensive properties to lower their tax bills. It does not strike me as a way for the middle class to buy affordable housing.
The Mills Act is a pretty useful tool for promoting preservation of historic homes,but as practiced in San Diego it pretty much sucks. I had a friend who was excited to have the historic designation placed on her home, an not just for the tax break. She was genuinely proud of living in her historic home. She soon learned that she had to pay for an annual inspection, which I remember as costing hundreds of dollars. The inspection consisted of a windshield survey, which meant that a city employee would drive past her home once a year. She asked for copies of her inspection reports – there weren’t any written reports. America’s Finest City at its best.
The worst aspect of the Mills designation is the questionable reasoning for granting it. The criteria are pathetic. The bottom line is that an owner must pay an attorney and other pros to write up the house background and document reasons for historic status. Those who can afford this process do pretty well. Here’s one example of a winning write-up: “This design represents a vernacular approach that emerged shortly after the beginning of the 20th century, subtly foreshadowing the modern architectural trends that would later emerge. Notably, the house holds historical importance as it was constructed by three unmarried women who played a distinctive role in the growth and progress of San Diego.” Seriously? “Vernacular simply means “a type of local or regional construction, using traditional materials and resources from the area.” Well, guess what? Every house in the Greater Golden Hill area built before the 1930s was built historically and vernacularly using resources from the area, California (e.g., redwood lumber, shipped down on steamers from the Bay area). Just give us all a tax break! And take a look at the real estate listing for 3174 B St. Mills Act granted? Yes, but, frankly, the house looks generically like many suburban newly built houses all over San Diego.