By Bruce Coons / SOHO Jan-Feb 2025 Newsletter
The state Mills Act is widely recognized as one of San Diego’s most effective tools for protecting historic homes and commercial buildings. However, what often goes underappreciated is its role in addressing modern housing needs and environmental challenges.
By offering property tax reductions to owners of historic properties, the Mills Act makes owning and maintaining these buildings more financially feasible. The program provides meaningful financial relief, particularly for middle-income families, retirees, and others who might otherwise be priced out of the housing market.
As a result, the Mills Act has helped San Diego achieve a rare balance: preserving historic architecture while improving housing affordability to a broader range of people.
Many cities struggle with the urgent need for affordable housing. San Diego’s approach proves that preservation goals are not only compatible with this effort, but mutually reinforcing. The two goals can and do work hand in hand.
Historic neighborhoods in San Diego serve as naturally occurring affordable housing (NOAH)—homes that are more affordable and attainable than newly built developments due to factors like development fees, and labor and materials costs. Preserving these neighborhoods ensures they remain viable alternatives to expensive new housing construction. Without the Mills Act, many of these homes could be at risk of demolition, making way for higher-cost housing and market-rate, multi-unit developments that erode affordability and displace residents.
In addition to supporting affordability, the Mills Act is a powerful ally in the fight against climate change. Restoring and maintaining existing structures minimizes construction waste and reduces the environmental toll of new building projects. Historic homes also tend to incorporate durable, high-quality materials, including old growth wood, clay tiles, and wrought iron; as well as energy-efficient designs, such as passive cooling and heating.
Another major environmental benefit of preserving existing buildings lies in their embodied carbon—the energy and resources already invested in their original construction. Demolishing old and historic structures wastes this embedded energy and generates significant harmful emissions from debris and new materials. Alarmingly, construction and demolition waste makes up 34 percent of San Diego’s landfill content.
Beyond creating, often distinctive individual homes, the adaptive reuse of historic buildings transforms underutilized spaces into vibrant, functional assets for the community, further reducing the need for environmentally costly new development. Historic neighborhoods also support sustainable lifestyles with their walkable layouts that reduce car dependence, encourage walking and biking, and foster close-knit communities.
So the Mills Act isn’t just about preserving the past—it’s about building a resilient future. San Diego’s innovative use of the program demonstrates that preservation can coexist with financial accessibility, affordability, and sustainability. This is a successful model for other cities to follow.
Critics of the program sometimes point to the reduced property tax revenue it entails, but this argument ignores the broader benefits. A simple analysis shows the financial tradeoff is minimal: For an $800,000 home, a typical Mills Act contract reduces property taxes by about $4,000 annually. This reduction is shared across several taxing authorities and is offset by the proven “halo effect”—property values rise in homes near the historic property and in the surrounding neighborhoods. The bottom line: The Mills Act is a smart investment for cities.
The Mills Act is based on the Williamson Act, which empowers local governments to contract with private landowners to restrict their land use to agriculture and related open space. Today, this protection covers more than two-thirds of California’s 29 million acres of ranch and farmland. Similarly, the Mills Act protects historic properties, ensuring their value isn’t lost to short-term economic pressures. Both programs underscore the importance of safeguarding long-term community assets that benefit all.
San Diego’s commitment to the Mills Act must be reaffirmed by our city leaders. This innovative program is more than a heritage preservation tool—it’s a proven pathway to a livable, inclusive, and sustainable future. Rather than seeking new policies and procedures that would weaken or undermine this success, the city should focus on enhancing its effectiveness.
SOHO and the Neighborhood Historic Preservation Coalition have proposed several thoughtful, practical solutions designed to strengthen the Mills Act program and are eager to collaborate with the city’s Historical Resources Board. Unfortunately, despite repeated efforts and contacts, we have not yet been granted a meeting with city officials to discuss these ideas.
Together, we preservationists and our allies can ensure that the Mills Act remains a cornerstone of San Diego’s preservation, housing, and climate efforts. After all, the Mills Act is the sole San Diego program that makes purchasing and maintaining a home or apartment building more affordable.
We urge you to voice your strong support of the Mills Act by submitting your comments online via the city’s portal for the Preservation and Progress Initiative, the Planning Department’s sweeping, problematic update of preservation policies and programs. Currently, this web page is the only way to register your comments, opinions, and suggestions with city staff on this consequential initiative.
Thank you for standing with SOHO and NHPC to protect the essential Mills Act.
Is that Michael Mills? (sarcasm)
“…property values rise in homes near the historic property and in the surrounding neighborhoods.” — I’m not sure how this is a tool (let alone a “vital” tool) for the creation or sustainability of affordable housing.
Looking at the areas of San Diego with the highest concentration of Mills Act homes, it appears those parts (and those homes) are among the least affordable units in all of San Diego. Most Mills act homes on the Peninsula are well over $1.5MM, which is a $15K mortgage payment. Compare that to rents of $2K – $6K for newer buildings (and lower for older multi-family units), linking Mills to Affordability doesn’t really add up.
“…as well as energy-efficient designs, such as passive cooling and heating.”
Really? The historic SoCal homes my family owned had single pane windows, minimal or no insulation, super inefficient heaters and leaked air like no ones business.
If you mean they passively cooled when it was cold and heated up when it was hot- you are correct.
I read Edward Olsen’s comment about the Mills Act and welcome this opportunity to explain how the Mills Act helps the State of California, County of San Diego, and City of San Diego with increased property values that increase property taxes from houses withing 750 feet of the designated house. In 2008, Professor Anthrew Narwald, Real Estate Division, University of San Diego and two colleagues investigated the effects of historical designation on houses within Zip Code 92103 and that report demonstrated statistically that upon vote by the Historical Resources Board the designated house increases in value by 3.8% and has a hale effect of 500 feet in all directions and a slightly lower rate of increase up to 750 feet in all directions. As those surrounding houses sell, the new property tax increases and more than compendsat the loss created by designating the single house. Interestingly, the issue that caused the Narwold Study to be initiated was a claim by an opponent to historical designation that the program would reduce property values. That clearly is not the case and as a bonus all the surrounding houses go up in value and, as reported, the State, County, and City all reap increased property tax money and this happen each time a house is designated historical. Copies of this and a subsequent report can be obtained by contacting Save Our Heritage Organisation (SOHO).
Mr. May: Both can’t be true at once. The Mills Act can’t be a “Vital Tool for Affordable Housing” AND help generate more property taxes. SOHO and as Mr. Coons (in his write-up) each claim that Mills Act increases property value – and you even go on to say that “…all the surrounding houses go up in value…”. Objectively, higher costs do not equal affordability.
By now you should know that the Narwold Study is widely discredited with two fatal flaws. It ignores a Prop-13 reality by applying an immediate property tax increase to ALL 109 homes within 500 feet (not 750 feet…250’ and 250’-500’ is not additive), instead of only to the homes that sold (1.1 annually), resulting in up to a 100X exaggeration in increased property tax revenue. The Narwold Study also ignores clustering of Mills Act homes in areas like 92103 and 92104. There is no halo effect of increased tax revenue of one Mills Act home on another.
Historical designation tends to increase property values in the surrounding areas; there is nothing affordable about it at all. It is also a tool used by wealthy communities to lower their property tax burdens and to reduce the amount of affordable housing built near them.
Edward Olsen,
The Andrew Narwold Study was tested by himself and two other professors at the University of San Diego and SOHO can send you both copies if you request. I never addressed the so-called “affordable housing” issue when I wrote my response. The biggest complaint in 2008 was that historical designation would bring down property values and that would reduce property tax revenues for State, County, City and School Districts. Both the Narwold studies demonstrated property values increased and this resulted in increased government revenue through property taxes. I have yet to see any published article showing the Mills Act has been discredited and question where you got that impression? True, Proposition 13 has to be factored-in, but Proposition 19 is neutralizing that effect as children inherit the former Proposition 13 properties in the next ten years. And how significant is Proposition 13 given that so many Baby Boomers have sold their properties and relocated for affordable places elsewhere in the United States.
As to Gary’s comment on January 7, 2025, you seem to imply that people who can afford to buy a single family dwelling should be discredited because other people cannot afford to buy a house. The more expensive housing carries the higher property taxes that help defray the public infrastructure longterm money for street, lighting, storm drains, fire hydrants, and other facilities. Driving property values upward is good for the homeowner and even better for the Cities. Another thing you seem to miss is the fact the City of San Diego requires Mills Act contracts to re-invest a portion of the tax savings into restoring and maintaining the houses. This encourages neighbors to fix up and maintain their own homes.