The Mills Act in the San Gabriel Valley
A builder's-eye guide to California's most powerful historic-property tax incentive, audited city by city across the SGV.
A Note from Greg Anderson.
I’ve held a California real estate license for 36 years. I earned it as a licensed custom home builder running Anderson Construction. For years, one arm of that company was a dedicated finish carpentry crew, seven or eight specialists doing nothing but coffered ceilings, custom railings, custom cabinetry, doors, base, casing, and crown molding. The kind of work the Mills Act is designed to protect.
This guide exists because most Mills Act explainers describe the state law and then describe one city’s program. There are 17 cities I work across the San Gabriel Valley. Twelve of them have active Mills Act programs. One has paused new applications. Four don’t have programs at all. A buyer or seller of a historic property in the SGV needs that map, and as of the writing of this guide nobody had published it. So I did.
What follows is the statutory foundation, the 17-city audit, the parts most explainers skip (the downsides, the breach penalty, the cases where the Mills Act provides zero benefit), the builder’s view on what compliance actually requires on the ground, and an empirical layer drawn from Arroyo Casa’s Sell Odds Crystal Ball engine on how Mills Act properties actually perform in this market.
What Is The Mills Act?
The Mills Act is a California state law, enacted in 1972, codified at California Government Code Article 12, Sections 50280 through 50290, with the property tax assessment methodology at California Revenue and Taxation Code Article 1.9, Sections 439 through 439.4. It authorizes cities, counties, and cities-and-counties to enter into long-term contracts with owners of qualified historical properties. In exchange for the owner’s commitment to maintain and rehabilitate the property to the Secretary of the Interior’s Standards for Rehabilitation, the county assessor reassesses the property using an income-capitalization method rather than the standard market-comparable approach. The result, when it works, is a meaningful annual reduction in property tax.
The law is named for Senator James R. Mills, who carried the bill in 1972. The legislation itself was drafted by the late Raymond Girvigian, an acclaimed Southern California architect and preservationist who convinced Senator Mills to introduce it. Girvigian passed away in 2022; his family home in South Pasadena’s Oaklawn Historic District is, as of 2024, going through the Mills Act process his father created. That detail is worth holding on to. The Mills Act is not a generic tax program. It was written by a working preservation architect with a specific built environment in mind, and it has been the most consequential preservation incentive in California history.
The core mechanics that hold across every California jurisdiction:
- Initial 10-year term, automatically renewing each year. On each anniversary, the term resets to 10 years. Either party can give notice of non-renewal, which lets the term run out without further extension. The contract is recorded on the property’s title and transfers to subsequent owners on sale — successors take on identical rights and obligations.
- Qualified historical property has a specific statutory definition. A property must be (a) listed on the National Register of Historic Places or located in a federally registered historic district, or (b) listed on any state, city, county, or city-and-county official register of historical or architecturally significant sites. Most SGV programs further restrict eligibility to locally designated landmarks and contributing properties in designated landmark or National Register districts.
- Owner must notify the California Office of Historic Preservation in writing within six months of entering into the contract. This is a statutory requirement, not a city overlay.
- Periodic inspections are part of the deal. Statute authorizes examinations by the county assessor, the California Department of Parks and Recreation, and the State Board of Equalization. Inspections required by state law include one before the agreement is signed and every five years thereafter; many cities add their own annual self-certification or periodic on-site review.
- Cancellation for breach carries a 12.5% penalty calculated on the property’s current fair market value as determined by the county assessor. This is a material risk, not a paperwork formality.
The Mills Act is administered locally. The state authorizes; cities and counties opt in. Currently, more than 86 California jurisdictions have active Mills Act programs, including all four of California’s largest cities — though the City of Los Angeles has accepted no new contracts since 2020 pending a program assessment that, as of mid-2025, was still in public comment. That LA City suspension matters for the broader market context but does not affect the SGV cities audited below.
SOURCES California Government Code §50280; Gov Code Article 12 (§§50280-50290) full text; California Office of Historic Preservation — Mills Act; California OHP — Mills Act Contacts (master jurisdiction list); City of South Pasadena Cultural Heritage Commission Agenda — 203 Oaklawn Avenue Mills Act application, September 19, 2024.
The 17-City Mills Act Audit.
The San Gabriel Valley contains 17 cities Arroyo Casa works across. Each operates under its own city council, its own historic preservation ordinance, and its own posture toward Mills Act participation. The matrix below is the result of a direct audit of each city’s current program status, verified against city-published primary sources and the California Office of Historic Preservation’s master jurisdiction list.
| City | Mills Act? | Notes |
|---|---|---|
| Pasadena | Yes — Active | Program established October 2002. Caps at 20 single-family + 6 multi-family/commercial contracts per year. $2.0M single-family valuation cap (with exceptions for Greene & Greene works, designated Historic Monuments, individually National-Register-listed properties). Average City-reported tax savings of 51%, with the City noting savings range from 20% to 75% and are not guaranteed. As of 2021, 359 properties / 593 parcels enrolled. |
| South Pasadena | Yes — Active | Program operates through the Cultural Heritage Commission under South Pasadena Municipal Code Chapter 2.68. Application process requires a rehabilitation, restoration, or maintenance plan tied to the savings. |
| Altadena | Yes — via LA County | Altadena is unincorporated Los Angeles County, so the LA County Department of Regional Planning’s Mills Act program applies. Up to 8 contracts approved per application year. Administered by the Historical Landmarks and Records Commission. |
| Sierra Madre | Yes — Stayed | Important. Sierra Madre’s program is technically active but the City Council has stayed acceptance of new Mills Act applications pending a review of existing contracts. Properties already under contract continue. New applicants must wait for the review to complete. |
| San Marino | Yes — Active | Program adopted by the San Marino City Council in 2017 as part of a citywide historic preservation ordinance. Applications due June 30 each year. The program is comparatively new in a city long known for its historic estates. |
| La Cañada Flintridge | Yes — Active | City uses the Mills Act as a tool for historic preservation. City-published tax savings typical range of 40% to 60%. Properties must be on the LCF Official Register of Historic Properties, which the Council amends by resolution. |
| Arcadia | Yes — Active | Mills Act applications are processed after landmark designation, reviewed by the Planning Commission, then approved by the City Council. 10-year contract framework consistent with state law. |
| Monrovia | Yes — Active | Long-running program in a city with a substantial inventory of Craftsman and early-20th-century homes. Eligibility tied to local landmark designation or contributing status. |
| Claremont | Yes — Active | Active program listed on California OHP’s master Mills Act jurisdictions roster. City Planning at 207 Harvard Avenue is the program contact. |
| Alhambra | Yes — New | New. Alhambra adopted its first Historic Preservation Ordinance on August 25, 2025, with second reading September 8, 2025, effective mid-October 2025. The ordinance includes a Mills Act program alongside other incentives. Designation is the prerequisite; Mills Act applications are accepted annually once a property is designated as a local Landmark or contributing property in a designated Historic District. |
| San Gabriel | Yes — Active | Listed on California OHP’s master Mills Act jurisdictions roster. Eligibility tied to historic designation under the city’s preservation framework. |
| Glendora | Yes — Active | Active program for designated historic properties. Listed on both California OHP’s master Mills Act roster and the LA Conservancy’s historical jurisdiction list. |
| Covina | Yes — Active | Listed on California OHP’s master Mills Act jurisdictions roster. Program administered by the Planning Division at 125 East College Street. |
| West Covina | No | No Mills Act program. The City completed a Historic Resources Survey and Historic Context Report in 2006 but has not adopted a historic preservation ordinance. City’s published position is that incentive measures (including Mills Act) “can be enacted” once an ordinance is drafted. |
| Temple City | No | No Mills Act program identified in city ordinances or on the California OHP master roster. |
| Monterey Park | No | No Mills Act program identified in city ordinances or on the California OHP master roster. |
| Rosemead | No | No Mills Act program. The City’s 2021-2029 Housing Element does not reference Mills Act participation. |
A few patterns worth naming. The cities with the deepest historic-residential inventory — Pasadena, South Pasadena, San Marino, La Cañada Flintridge, Sierra Madre, Monrovia, Arcadia — either have well-established programs or, in Sierra Madre’s case, an active program currently paused for review. Alhambra’s October 2025 ordinance closed what had been a long-standing gap in the inner-SGV map; as of the writing of this guide it is the newest Mills Act program in the region. The four no-program cities — West Covina, Temple City, Monterey Park, Rosemead — share less of the early-20th-century architectural inventory the Mills Act was written to protect, though that does not mean no historic resources exist there.
For buyers and sellers, the practical takeaway is this: the city your property sits in is the most important single variable in whether Mills Act is even available. A Craftsman bungalow on one side of Huntington Drive may be inside an active Mills Act jurisdiction; an architecturally identical Craftsman on the other side may not. Confirm the city’s current program status before pricing in any tax benefit.
SOURCES California Office of Historic Preservation — Mills Act Contacts (master jurisdiction list); City of Pasadena Mills Act Program Guidelines; City of Sierra Madre Mills Act Program (currently stayed); City of San Marino Historic Preservation; City of La Cañada Flintridge Mills Act Program; City of Alhambra Historic Preservation; LA County Mills Act Program (covers unincorporated Altadena); City of West Covina Historic Preservation (no Mills Act program).
Why the Tax Math Is the Whole Point.
The Mills Act’s tax mechanism is the part most consumer-facing explainers gloss. It matters because the actual savings figure on any given property depends on the formula, not the headline.
Once a Mills Act contract is recorded by the city and transmitted to the Los Angeles County Assessor, the Assessor recalculates the property’s taxable value under California Revenue and Taxation Code Section 439.2 using an income-capitalization method rather than the standard market-comparable approach. In plain terms: the Assessor estimates what the property could earn as a rental, subtracts typical operating expenses, and divides by a capitalization rate derived from current interest rates and a statutory historic-property factor. The resulting figure becomes the new assessed value.
Critically, the law caps the Mills Act assessed value at the lower of three values: (1) the income-capitalization figure, (2) the Proposition 13 factored base-year value, or (3) the current fair market value. The Assessor uses whichever is lowest. Property taxes will not increase as a result of a Mills Act contract.
This “lower of three values” cap is the reason the Mills Act provides zero benefit to some owners. An owner who has held a property for many years and enjoys a low Proposition 13 base-year assessment may find that the income-capitalization formula would actually produce a higher number than their existing Prop 13 value. In that case the Assessor uses the Prop 13 value (the lower one), and the owner’s tax bill does not change. Recent buyers who paid current market prices typically benefit the most; longtime owners may benefit modestly or not at all. The City of Pasadena states this directly in its program guidelines, and other SGV cities echo the same warning.
City-reported savings figures vary in revealing ways. Pasadena’s published average is 51%, with a range from 20% to 75% across actual participants. La Cañada Flintridge cites a typical range of 40% to 60%. None of these figures are guaranteed; the assessment is reviewed annually by the County Assessor and can move with interest rates, rental comparables, and other inputs. Treat the headline percentage as a useful order-of-magnitude indicator, not a contract.
SOURCES California Revenue and Taxation Code §§439-439.4 (income-capitalization method for restricted historical property); City of Pasadena Mills Act Program Guidelines; City of La Cañada Flintridge Mills Act Program; California State Board of Equalization assessor handbook on Mills Act valuation.
The Downsides Most Guides Don’t Mention.
Mills Act content tends toward boosterism. It is, in fact, a real program with real obligations and real risk. Anyone considering a contract should understand the following before signing.
1. The 12.5% breach penalty is not theoretical
If a city determines that an owner has breached the contract by failing to maintain the property to the Secretary of the Interior’s Standards, by completing unpermitted work that damages historic character, or by neglecting the work plan, and the breach is not cured after notice, the city may cancel the contract. The cancellation fee is 12.5% of the current fair market value of the property as determined by the County Assessor. On a $2 million property, that is a $250,000 penalty.
2. The Certificate of Appropriateness is the real ongoing obligation
Mills Act tax savings come in exchange for permission to make work decisions in concert with the city’s preservation review staff. Future work affecting historic architectural features — interior and exterior — requires a Certificate of Appropriateness reviewed against the Secretary of the Interior’s Standards. Major projects go to the Historic Preservation Commission; minor projects may be reviewed by staff. This is a real timing and design constraint on every future renovation decision. Buyers who do not want preservation review obligations should think hard before taking on a Mills Act property.
3. Inspection rights persist for the contract’s lifetime
State law authorizes periodic interior and exterior inspections by the County Assessor, the California Department of Parks and Recreation, and the State Board of Equalization. State law requires one before the agreement is signed and every five years thereafter; many cities add an annual self-certification or scheduled on-site inspection. Inspections are by appointment, not unannounced, but they are part of the contract.
4. Annual contract caps mean not every applicant is approved
Pasadena’s program is capped at 20 new single-family contracts and 6 new multi-family / commercial / industrial contracts per calendar year. LA County’s program caps at 8 contracts per application year. Programs are competitive; applications are scored against city priorities such as affordable housing, substantial rehabilitation, threatened resources, and properties of highest architectural significance. A property may be eligible and still not selected in a given cycle.
5. Eligibility caps and exclusions exist at the city level
Pasadena’s single-family valuation cap of $2.0 million excludes many of the larger Bungalow Heaven, Madison Heights, and Orange Heights properties from Mills Act eligibility — with statutory exceptions for works of Greene and Greene, designated Historic Monuments, and properties individually listed in the National Register. Other SGV cities may have their own valuation caps, owner-occupancy preferences, or restoration-plan requirements that exclude properties that look eligible at first glance.
6. Program suspension and stay are real possibilities
The most recent reminder is in Sierra Madre, where the City Council has stayed acceptance of new Mills Act applications pending a review of existing contracts. The City of Los Angeles has accepted no new contracts since 2020 for a similar program assessment. A buyer or seller modeling Mills Act savings into a transaction in a stayed jurisdiction is modeling something that is not currently available.
None of these are reasons to avoid the Mills Act. They are reasons to model the contract honestly. For the right property and the right owner, the program is the strongest preservation incentive in California real estate. For the wrong property or the wrong owner, it adds obligations without delivering savings.
What Compliance Actually Requires.
The following is my professional perspective drawn from twenty years as a licensed custom home builder running Anderson Construction, with a finish-carpentry specialty. Framed as the opinion of someone who has done this work, not as universal market claim.
The Secretary of the Interior’s Standards for Rehabilitation are the operating manual every Mills Act contract is benchmarked against. They are not a vibe. They are ten specific principles that govern what can be replaced, what must be retained, what counts as a sensitive modification, and what counts as a destructive one. From a builder’s bench, that translates into a few practical realities.
Original materials should be repaired before they are replaced. A redwood front door that has weathered for 100 years and is held together by paint can usually be epoxy-consolidated, refinished, and reweatherstripped at a fraction of the cost of a period-correct replacement — and the Standards prefer it. The same logic applies to original window sash, original tile, original plaster, and original hardware. If something has to be replaced, the replacement should match the original in design, color, texture, and where possible material. Vinyl windows in a Craftsman are a fast track to a Certificate of Appropriateness denial.
Period-appropriate craft labor costs more than generic remodeling labor. A finish carpenter who can hand-replicate a missing section of beaded base or scribe a built-in to an out-of-plumb wall is not a $45-an-hour contractor. Period-correct millwork in quartersawn oak with ray fleck figure, leaded art glass restoration, hand-glazed Arts and Crafts tile from a maker who actually understands Batchelder-era practice, traditional plaster repair — these are skilled trades, and they are increasingly rare. Mills Act savings can offset some of this, but a buyer planning to do a full historic restoration should not assume the math is generous. Run the numbers.
Hidden conditions are common in homes built before 1930 and they are part of the budget. Plumbing systems frequently include galvanized steel pipe with significant corrosion. Electrical systems often include knob-and-tube wiring that an insurance carrier will require be replaced or capped. Foundations may be unreinforced concrete or unreinforced masonry that requires seismic retrofit. None of this disqualifies a property from a Mills Act contract, but the work plan you submit needs to be honest about what will be addressed and the budget needs to be honest about what it will cost.
My recommendation to anyone buying a Mills Act-eligible or already-contracted property in the SGV is to walk the property with someone who actually knows period construction before you finalize an offer. The differences between a sensitively-restored historic home and a flipped one that erased the character-defining features are not always visible at first glance, but they matter enormously to the Certificate of Appropriateness process you will inherit on closing.
Mills Act and the Other Tools.
Mills Act is the most common preservation incentive a SGV historic-property owner will encounter. It is not the only one. Architecturally literate buyers and sellers should know the broader landscape.
Williamson Act (California Land Conservation Act of 1965)
Structurally similar to Mills Act — a long-term contract restricting land use in exchange for reduced property tax assessment — but applies to agricultural and open-space land, not historic property. Codified at California Government Code §51200 et seq. Mostly irrelevant in the urban SGV, with rare exceptions for horse property or working orchards in the foothill margins. Owners sometimes confuse the two; they are different instruments for different property classes.
Federal Historic Preservation Tax Credit (20% Rehabilitation Credit)
A federal income tax credit equal to 20% of qualified rehabilitation expenditures on certified historic structures that are used for income production — commercial buildings, rental residential, mixed-use historic structures. Not available for owner-occupied single-family homes. Administered by the National Park Service and the IRS under Internal Revenue Code §47. For an owner of a historic rental duplex or a historic commercial building in the SGV, this federal credit can stack with a local Mills Act contract for combined benefit. For owner-occupants of historic homes, it does not apply.
California State Historic Tax Credit
Established by Senate Bill 451 (2019), this is California’s parallel state-level credit to the federal program. It provides a state income tax credit of 20% (and an enhanced 25% for properties meeting additional criteria) on qualified rehabilitation expenditures. Administered through the California Office of Historic Preservation. Like the federal credit, it is targeted at income-producing properties and certain non-profit-owned structures, not owner-occupied homes.
Preservation easements
A different mechanism entirely. The owner donates a perpetual restrictive easement on a historic property to a qualified easement-holding organization (typically a land trust or preservation nonprofit). The fair-market-value loss caused by the restriction is treated as a federal charitable contribution under Internal Revenue Code §170(h). This is a one-time income tax deduction rather than an ongoing property tax reduction, and the valuations are scrutinized closely by the IRS. Appropriate for some sophisticated owners; complex enough that it requires its own tax counsel and a qualified easement-holder partner.
Local landmark designation without Mills Act
Worth knowing: designating a property as a local landmark, or owning a contributing property in a designated landmark district, triggers the Certificate of Appropriateness review obligation for major work regardless of whether a Mills Act contract is in place. Some owners assume that opting out of Mills Act exempts them from preservation review. It does not. Designation is the trigger; Mills Act is an opt-in tax-reduction layer on top of designation. In a city like Pasadena, where landmark districts cover thousands of properties, this distinction matters.
What the Crystal Ball Sees Here.
Generic real-estate guidance about the Mills Act is abundant. Empirical data on how Mills Act properties actually perform in the San Gabriel Valley market is essentially non-existent. Arroyo Casa’s Sell Odds Crystal Ball engine is built on California Regional MLS sold-and-unsold outcomes, which lets us look at the questions buyers and sellers actually ask.
For Mills Act-protected properties across the SGV cities with active programs, the engine produces empirical answers to four questions in particular:
- Sold-to-list ratio. Do Mills Act-protected properties close at a premium or a discount to list price relative to comparable non-protected properties in the same micro-market?
- Days on market. Do Mills Act properties move faster or slower than matched comparables?
- Failure rate. Do Mills Act listings withdraw or expire without selling at a higher or lower rate than comparable non-protected properties?
- Price per square foot. What is the median $/sqft delta between Mills Act and non-Mills-Act properties in matched-comparable groups, by city?
If you are considering buying or selling a Mills Act-protected property in the SGV, I can run a Crystal Ball analysis on the specific property you are considering — listed or not — by request. The engine outputs an empirical probability profile and a comparable-set analysis specific to the address, not a generic estimate.
Mills Act Properties For Sale Now.
Let’s Talk About Your Move.
Mills Act is one of the most consequential decisions an SGV historic-property owner can make. I work this category every day, across all 17 SGV cities. My probability engine, Sell Odds, tracks every sold and unsold outcome, so you can model the decision with real data and not a marketing average.