California Government Code §50280 lets local governments grant property tax reductions to owners of designated historic properties who sign ten-year preservation contracts. Santa Clara County and several cities offer Mills Act programs, with savings averaging 40 to 60 percent.
Government Code §§50280–50290 authorize Mills Act contracts between local agencies and owners of qualified historical properties. Under the contract, the County Assessor reassesses the property using a capitalized income method instead of Proposition 13 base value, typically yielding 40 to 60 percent annual property tax savings. Owners commit to a ten-year preservation, restoration, and maintenance plan reviewed periodically by the Heritage Commission. Contracts auto-renew yearly unless either party files a non-renewal notice. Santa Clara County's program covers heritage-designated parcels in unincorporated areas; San Jose, Palo Alto, Mountain View, Saratoga, and Los Gatos run separate Mills Act programs for properties inside their borders.
Breach of a Mills Act contract triggers a 12.5 percent cancellation penalty on the property's current full cash value, plus retroactive recapture of tax savings and termination of the preservation incentive.
See how Santa Clara's mills act contracts rules stack up against other locations.
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