Big Changes Proposed for the Mills Act in L.A.—Here’s What Buyers, Sellers & Homeowners Need to Know
If you’ve ever fallen in love with a 1920s Spanish Revival in Highland Park or a Craftsman bungalow in Pasadena, you’ve probably heard of the Mills Act—maybe even factored it into your budget or investment strategy. It’s one of the most powerful preservation tools in California, offering substantial property tax savings in exchange for restoring and maintaining historic properties.
But those benefits? They might be changing.
In May 2025, the Los Angeles Department of City Planning proposed some big updates to how Mills Act contracts will be issued, enforced, and—potentially—phased out for some homeowners. If you currently own a Mills Act property in L.A., or you’re thinking of buying or selling one, these proposed changes are something you need to pay attention to.
What Is the Mills Act, and Why Is It So Important?
The Mills Act is a California state law that lets local governments offer property tax reductions to owners of designated historic properties. In L.A. and Pasadena, this usually means homes in a Historic Preservation Overlay Zone (HPOZ), or homes that are officially designated as landmarks.
Here’s why people love the program:
Property taxes drop dramatically—often by 40–60%.
In return, owners agree to preserve the home’s character-defining features.
Contracts last 10 years and auto-renew unless canceled.
It makes owning and restoring a historic home more financially accessible.
As a Realtor, I’ve worked with several buyers who specifically sought out Mills Act homes because of the tax savings. And for sellers, it’s often a major selling point—especially in a high-cost market like Los Angeles or Pasadena.
What’s Changing in Los Angeles?
Earlier this year, the city began drafting proposed updates to the program. These are not final yet, but they give us a clear signal of where things may be heading.
Here’s what you need to know:
1. Long-Term Contracts May Not Be Renewed
If you’ve had your Mills Act contract for 20 years or more, the city may opt not to renew it. That means your property taxes could go back to market rate within a decade.
The city’s goal here is to redistribute benefits toward:
Lower-income neighborhoods
Multi-family and income-restricted properties
Buildings at risk of being lost or neglected
This is part of a broader effort to use preservation as a tool for equity and access, but it could have major financial implications for homeowners in wealthier neighborhoods—think Hancock Park, Los Feliz, or parts of Pasadena.
I’ve worked with sellers who had been on Mills Act contracts for over 15 years and were still counting on those savings lasting another decade or more. If this goes into effect, that strategy may need to change.
2. New Contracts Will Prioritize Different Criteria
The city plans to update its scoring and selection process. Going forward, they’ll give priority to:
Affordable housing properties
Projects that retain long-term tenants
Buildings with high employment or community value
Homes that are especially rare or unique
Single-family homes—especially in high-income zip codes—may face more competition and scrutiny.
3. Annual Fees & Inspections May Be Introduced
The city is proposing an annual fee for all Mills Act properties. They may also ramp up inspections and penalize non-compliance more strictly.
This could be a good thing—after all, the whole point of the program is preservation—but it also means:
More red tape for homeowners
Higher ongoing costs, even with the tax break
Documentation required to prove you’re doing the work
How This Compares to the Current Mills Act
Let’s break down the current program vs. the proposed updates:
1. Contract Duration
Current: 10 years, automatically renews each year.
Proposed: Contracts older than 20 years may be non-renewed, ending the tax benefit after the remaining term.
2. Eligibility
Current: Open to any designated historic property (typically in HPOZs or landmarks).
Proposed: Still open to historic properties, but applications will be prioritized based on income level, housing type, and community benefit.
3. Property Type Focus
Current: Often favors single-family homes in well-preserved areas.
Proposed: Greater focus on income-restricted properties, affordable housing, and multi-family structures.
4. Oversight & Requirements
Current: Minimal oversight; reporting required every few years.
Proposed: Potential for annual fees, more frequent inspections, and stricter enforcement of preservation requirements.
5. Property Tax Savings
Current: Significant reductions (often 40–60% off normal property tax rates).
Proposed: Still offers savings, but those benefits may not last as long, depending on contract age and renewal status.
What This Means for Sellers, Buyers & Current Homeowners
For Homeowners on Mills Act Contracts
If you’re in year 5 of your contract, you’re probably fine—for now. But if your contract is older, pay attention to:
Renewal notices
Any city communication about ending your contract
Preparing financially for a potential tax hike in the next 5–10 years
Also, consider whether you want to sell before the contract expires, especially if the Mills Act is a major part of your home’s value proposition.
For Sellers of Mills Act Homes
This is where it gets tricky.
Historically, sellers have marketed Mills Act homes as offering "lower property taxes for life"—but that’s no longer guaranteed in L.A. You’ll need to:
Disclose the contract’s age and renewal status
Be transparent about upcoming changes
Possibly adjust pricing or expectations if buyers can’t bank on long-term tax savings
If I were representing a seller with an older Mills Act contract today, I’d make sure we had a detailed timeline from the city—and a smart pricing strategy that reflects both the home’s architectural merit and the uncertainty of the tax benefit.
For Buyers of Historic Properties
If you’re buying a Mills Act home, ask your agent (or the city directly):
When was the contract signed?
Will it renew automatically?
Has the home been in compliance with its restoration plan?
Also, ask yourself: would I want this home without the tax benefit?
What About Pasadena?
Pasadena has its own version of the Mills Act—and as of now, no similar changes have been proposed.
In fact, Pasadena’s program tends to be smaller, more stable, and better funded than L.A.’s. That’s great news for:
Buyers who want long-term stability
Sellers who can still advertise the program with confidence
Anyone passionate about historic preservation
That said, it’s always possible that Pasadena (or other cities) could follow L.A.’s lead eventually—so staying informed is key.
Final Thoughts: Is the Mills Act Still Worth It?
Yes—with eyes wide open.
The Mills Act is still one of the most effective tools we have for protecting historic properties. It makes preservation financially possible for many homeowners who otherwise couldn’t afford to maintain a 100-year-old structure.
But the landscape is shifting. These proposed changes in L.A. are a reminder that policy tools evolve, especially when city budgets tighten and priorities change.
If you own—or want to own—a historic home, you don’t just need a good contractor. You need:
A Realtor who understands local preservation laws
A plan for what happens after the tax benefit ends
Clear communication with the city
And if you’re unsure whether to buy, sell, or stay put, I’m happy to talk through your options. Preservation is a passion of mine, and I’m here to help you navigate it with clarity and confidence.
Need help buying or selling a Mills Act home in Los Angeles or Pasadena? Let’s connect. I’ve worked with dozens of clients on historic properties and can help you avoid surprises and make the most of the opportunities these homes offer.