The Mills Act is California's property tax program for historic buildings. A city or county signs a contract with the owner, the owner agrees to restore and maintain the property, and the county assessor values it from the rent it could earn instead of its sale price, which can lower the tax bill. For a mid-century house, the first hurdle is that it has to be historic on paper.
This guide covers how a contract works and is valued, which Bay Area cities and counties are on the state's list, what National Register, California Register and local designation mean for an owner, and what to check before you buy a house with a contract. It draws on state agency, Board of Equalization and city records read in November 2026.
How a Mills Act contract works
The Mills Act dates to 1972 (Chapter 1442 of the Statutes of 1972, effective March 7, 1973). As of November 2026, the rules are in Government Code sections 50280 to 50290 and Revenue and Taxation Code sections 439 to 439.4. The main points, from the California Office of Historic Preservation's Mills Act page and the Board of Equalization's 2005 guidelines for assessors (Letter To Assessors No. 2005/035):
Local programs. Cities and counties run the program. Each sets its own criteria and decides how many contracts it will allow. The state preservation office isn't a party to the contracts.
Term. A contract runs at least ten years and adds a year on each anniversary unless either side gives notice of nonrenewal.
It stays with the house. The contract binds later owners, who take on the same rights and obligations.
Owner duties. The owner agrees to restore, maintain and protect the property under the preservation standards in the contract. City or county officials inspect periodically, and the local government can impose penalties for a breach.
Eligibility. Under state law, a "qualified historical property" is privately owned, not tax-exempt, and either listed in the National Register of Historic Places or located in a registered historic district, or listed in a state, city or county official register.
State eligibility is only the floor. A June 2026 San Jose memo says only designated City Landmarks are eligible there, and a 2019 city memo says National Register listing alone doesn't make a house eligible. Oakland's 2024 staff report called City Designated Historic Property status a prerequisite. So a house in a National Register district, such as Palo Alto's Greenmeadow (listed in 2005), can meet the state definition but still needs its city's program to accept it.
How the assessor values a contract property
Section 439.2 bars the assessor from using sales of similar homes. Instead, each year the assessor capitalizes the rent the property could earn, which for a house is based on comparable rents in the area. As the Board's 2005 guidelines describe it, the capitalization rate adds four parts: an interest component the Board of Equalization sets each year, a historic property risk component (4 percent for an owner-occupied house, 2 percent for other property), a property tax component, and an amortization component for the buildings.
The taxable value each year is the lowest of three numbers: that restricted value, the current market value, and the factored base year value under Proposition 13. That last point decides who benefits:
The state preservation office says the program is especially helpful for recent buyers and for owners who have made major improvements.
Oakland's 2024 staff report says that for long-term owners with low Proposition 13 assessments, taxes can't rise because of a contract, but they won't fall either.
Because the value is recalculated every year from market rents, the same report says rising rents mean savings on an ongoing contract are almost certain to shrink over time.
A sale still sets a new base year value. The Board's 2005 guidelines say that value will typically be higher than the restricted value and so won't be enrolled, but the assessor needs it for the three-way comparison and for nonrenewal. For heirs using Proposition 19's intergenerational transfer exclusion, the Board's August 2026 guidance says the excluded amount is figured from the adjusted base year value, not the restricted Mills Act value. Our Prop 19 guide for heirs covers the rest of that rule.
Nonrenewal, cancellation and reinvestment rules
Either the owner or the local government can give notice of nonrenewal. The contract then runs out its remaining term, and under section 439.3 the value gradually rises toward the factored base year value as the end approaches. Oakland's 2024 report puts it plainly: ending a contract without penalty takes ten years' notice.
Cancellation is different. After notice and a public hearing, the local government can cancel a contract if the owner breached it or the property deteriorated so it no longer meets historic standards. The owner then owes a cancellation fee of 12½ percent of the property's current fair market value as if it had no contract, as set by the county assessor.
Cities add their own terms. Oakland's 2024 report says its program requires the owner to put the entire tax savings back into the property under a recorded work program. A San Jose contract proposed for the City Council's June 23, 2026 meeting would require reinvesting at least 10 percent of the tax savings each year and a ten-year preservation work plan. The June 2026 memo says San Jose contracts require work that follows the Secretary of the Interior's Standards.
Which Bay Area cities and counties are on the state's list
The state preservation office keeps a Mills Act contacts list. When we read it on November 6, 2026, it named contacts in these Bay Area jurisdictions:
Santa Clara County: Campbell, Gilroy, Los Altos, Palo Alto, San Jose, Santa Clara (city), Saratoga, Sunnyvale and the county itself.
San Mateo County: Redwood City, San Mateo (city) and South San Francisco.
Alameda and Contra Costa counties: Alameda County, Berkeley, Hayward, Oakland and Danville.
San Francisco, Marin, Napa and Solano: San Francisco, Belvedere, Napa County, St Helena, Benicia and Vallejo.
The office calls the list the latest information it has and says it's updating and expanding it, so a listing doesn't confirm that a program is active or taking applications, and a missing city may still have one. Ask your city's planning department. If your city doesn't take part, the office suggests asking it to consider adopting one.
San Jose's records show how a program has been used. The city's historic resources map, read on November 6, 2026, showed 86 properties with a Mills Act entry, and their recorded build years ran from the 1860s to 1939. None was a mid-century house. Since San Jose accepts only City Landmarks, an Eichler owner there would start with a landmark application. For San Jose's Eichler district, see our Fairglen Additions history.
What historic designation means for an owner
Designation and a Mills Act contract are separate things. San Francisco's planning department says historic designation of any kind doesn't change property taxes unless you have an active Mills Act contract. What listing does change:
National Register. The National Park Service says listing places no federal restrictions on a private owner unless a project gets federal funding, licensing or permits. Properties are generally at least 50 years old. In California, National Register properties are automatically on the California Register, and listing may bring local design review or review under the California Environmental Quality Act (CEQA). A property can't be listed over the objection of its private owner, or of a majority of private owners in a district.
California Register. A property can't be listed over the owner's objection, but the State Historical Resources Commission can still formally determine it eligible. The local government gets 90 days to comment on an application.
Local listing. San Jose's 2019 memo on the Fairglen Additions nomination said that once the district's homes were placed on the city's Historic Resources Inventory, exterior changes would need discretionary review. It also said California Register properties and City Landmarks are historical resources under CEQA.
Building code. Listed buildings can use the California Historical Building Code (Health and Safety Code 18950 to 18961), and the local building inspector must allow its alternatives. Section 18955 counts city and county registers too.
SB 9 and ADUs. HCD's 2024 SB 9 fact sheet says SB 9 lot splits and duplexes aren't available in a historic district, on a property on the State Historic Resources Inventory, or on a city or county landmark site. The statutes have been amended since (in 2025 and 2026). As of November 2026, the two-unit rule still excludes a contributing structure in a historic district on that inventory, which includes National Register listings (Gov. Code 65852.21(a)(5); Public Resources Code 5020.1(p)). In a California Register or local historic district, the lot split rule now bars a split only if it would require demolishing or altering a contributing structure or an existing exterior structural wall (Gov. Code 66411.7(a)(3)(F)). Ask the city how it applies these rules to your district. HCD's March 2026 ADU Handbook says ADUs are still allowed in historic districts, and a city's standards to protect California Register property must be objective (Gov. Code 66314(b)(1)).
Historic tax credits offer little to homeowners. The federal 20 percent rehabilitation credit applies only to depreciable buildings, such as ones used for business or as rentals, and the Park Service says owner-occupied residential properties don't qualify. As of November 2026, California's state historic tax credit page says funding for all categories has been exhausted and it isn't accepting applications.
This is general information as of November 2026, not legal or tax advice. Mills Act terms and local criteria vary, so check with your city's planning department, your county assessor and a tax advisor or attorney before you apply, buy or sign.
Frequently asked questions
Does National Register listing lower my property taxes?
Not by itself. San Francisco's planning department says designation doesn't change property taxes without an active Mills Act contract, and some cities, such as San Jose, accept only local landmarks for a contract. Check your city's criteria first.
Will a Mills Act contract lower taxes for a long-time owner?
It may not. The taxable value is the lowest of the restricted value, market value and Prop 13 value. Oakland's 2024 staff report says long-term owners with low assessments won't see an increase, but won't see a decrease either.
What happens to the contract when the house sells?
It stays with the property, and the buyer takes on the same duties. The assessor sets a new base year value, but the taxable value is still the lowest of the three, so the restricted value typically stays in use. Ask the seller for the recorded contract, the work program and any nonrenewal notice.
Related reading
Supplemental Property Tax in California: What Home Buyers Should Know
Greenmeadow Eichler History: Palo Alto's Jones & Emmons Tract
SB 9 Lot Split on an Eichler Lot: State Rules and City Overlays
More guides on this topic: Owning & Renovating a Mid-Century Modern Home
Thinking about a Mills Act contract, or buying a house that already has one? Call or text the Boyenga Team at Compass at (408) 373-1660 or (650) 383-8606, or contact the Boyenga Team to talk through what the contract and the designation mean before you commit.
