Benefits & Tax Incentives
To encourage historic preservation in Santa Monica, the City offers benefits to owners of designated Landmarks or Structures of Merit, and contributing structures in Historic Districts. These benefits include:
- Potential property tax savings through approval of a Mills Act Contract
- Waiver of Building Plan check and permit fees (Landmarks and contributing structures in a historic district only)
- Waiver of Planning permit fees for Administrative Approval applications (Landmarks and contributing structures in a historic district only)
- Waiver of fees for Certificates of Appropriateness
- Application of California State Historical Building Code to alterations
- Priority plan check processing
Mills Act Contract
The Mills Act is a California State law that enables cities to enter into contracts with property owners of qualified historic structures. The owner of any building that is either a designated local landmark, structure of merit or a contributing building in a designated historic district may file a Mills Act Contract Application. Once approved, a Mills Act contract requires the County Tax Assessor's office to determine the value of the historic property based upon its current income, rather than the Proposition 13 formula generally applied. In exchange for this reduction in property taxes, the contract requires the property owner to undertake specific restoration tasks, if necessary, and to properly maintain the historic structure.
Mills Act contracts can provide tax benefits for both owner-occupied and income producing properties. In the case of owner-occupied property, the income projection is based on comparable rents for similar property in the area or, if insufficient rental information is available, the income that it could reasonably be expected to produce. For income producing property, the income amount is based on rent actually received and on typical rents received for similar property in similar use. Mills Act contracts are for a ten-year term and are renewed automatically each year on the contract's anniversary.
Applying for a Mills Act Contract with City of Santa Monica requires the submission of the following documents and materials to the Planning Department.
- Completed Mills Act Application Form
- Restoration/Rehabilitation and/or Maintenance Plan
A ten (10) year Restoration/Rehabilitation Plan with estimate cost and schedule prepared by a certified architect. Please note that a Mills Act Contract only regulates exterior restoration/rehabilitation and general maintenance of your property. If you are also planning interior work, please include a description of this work in a separate section. A ten (10) year Maintenance Plan with estimate cost and schedule. Please describe all periodic/ongoing maintenance needs of the structure including plumbing, electrical, roofing and structural systems. If the building is already restored and in good condition, a maintenance plan must be submitted. Sample Maintenance and Restoration Plan
- Architectural Report
An Architectural Report identifying the status and condition of all character-defining features of the building and site prepared by a certified architect. Sample Architectural Report
- Financial Analysis Form with information required (two highlighted boxes only).
Staff will use this form to calculate an estimate of the Mills Act tax assessment with the information provided. Please note that this forthcoming analysis is only an estimate. The Los Angeles County Office of the Assessor will make a revised tax assessment that will be applicable for the next tax year.
- Photographs of all building elevations and character-defining features of the structure(s)
- Copy of the legal description for the property ("Exhibit A" on a Grant Deed)
- Copy of latest property tax bill
Please submit one (1) unbound, single-sided copy of each of the following items or one (1) digital copy of above listed items on a CD or USB flash drive at the Public Counter.
Mills Act Contract applications are reviewed by staff and then presented to the Landmarks Commission for review and recommendation to City Council. Once City Council approves the contract, notarized signatures of both the property owner and City officials are obtained, and the City submits the document to the Los Angeles County Recorder to be recorded. The City will then forward a confirmed copy of the document to the Los Angeles County Tax Assessor, who will recalculate the property owner's tax payment.
Applications must be received by May 31 in order to be processed and recorded in a timely fashion. Tax assessments are not retroactively revised.
Legal descriptions of the program may be found in SMMC 9.56.270, California Government Code Sections 50280-50290, and California Revenue and Taxation Code Sections 439-439.4.