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Downtown Los Angeles Mills Act Lofts
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For Downtown Los Angeles real estate, prospective home buyers want to know what the Mills Act is. #millsact #whatisit #dtla
What is Mills Act?
The California state law was created to help cities and property owners to better preserve beautiful historic buildings by providing financial assistance in the form of reduced property taxes. In return for developers restoring, and then for the home owners maintaining structures with their original architecture, the homeowners usually report savings of about 66% off of their annual property tax bill. That means they only pay about 1/3 of the typical amount. That’s a savings of thousands of dollars per year, or tens of thousands of dollars over the average residential stint, potentially hundreds of thousands of dollars of savings over the lifespan of he property.
There are some great historic buildings in Downtown L.A. Many of these have been converted to condominiums that are cultural monuments in designated Historic Preservation Overlay Zones. The home owners receive inancial incentives that can help to rehabilitate, restore and maintain the buildings. The City of Los Angeles provides assistance.
The Mills Act is easily the most powerful economic incentive program in California for the restoration and preservation of historic buildings by private property owners. Enacted in 1972, the Mills Act legislation grants participating local governments (cities and counties) authority to enter into contracts with owners of qualified historic properties who actively participate in the restoration and maintenance of their properties to receive property tax relief. The City of Los Angeles adopted local Mills Act legislation in 1996. Since then, nearly 900 properties have benefited, and thousands of homeowners have financially gained from the program.
A formal agreement known as a Mills Act or Historical Property Contract is executed between the City of Los Angeles and the property owner for a revolving ten-year term. Contracts are automatically renewed each year so that the term of the contract always extends for ten years. Property owners agree to restore, maintain, and protect the property in accordance with specific historic preservation standards and conditions of the contract. Periodic inspections by City and County officials ensure proper maintenance of the property. The City may impose penalties for breach of contract or failure to protect the historic property. The contract is transferred to new owners if the property is sold, and is binding to following owners.
Benefits to Owners
The Mills Act program is especially beneficial for recent buyers of historic properties and for current owners of historic buildings who have made major renovations to their properties.
Valuations of Mills Act properties are determined by an Income Approach to Value. The Income Approach, divided by a capitalization rate, determines the assessed value of the property.
