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HomeMy WebLinkAboutMills Act FAQs MILLS ACT QUESTIONS AND ANSWERS 1) Q: What is the Mills Act? A: The Mills Act is a state act providing property tax abatement to owners of historic properties. The purpose of the Act is to encourage rehabilitation, as well as ownership of historic properties, by providing a financial incentive through property tax reduction. The Act uses an alternative equation to calculate property taxes, with the requirement that the savings be spent on qualified improvements to the historic property. 2) Q: Who can apply for the Mills Act? A: Owners of designated historic properties can apply for the Mills Act. Designated historic properties include those individually listed as Landmarks, as well as contributors to an Historic District. 3) Q: How can I apply for the Mills Act? A: The Mills Act Applications are extensive and require calculations and research that will likely require assistance from a professional accountant. Previous examples are also available on request. Applications are available by: A. Picking up a copy up at the Department of Building and Safety, at City Hall. B. Contacting the Cultural Resources Administrator at 760-346-0611 or email at rgrance@cityofpalmdesert.org and requesting a copy via the US Mail, or C. Downloading a Mills Act Application off of the ‘Cultural Resources’ portion of the Building and Safety website at: http://www.cityofpalmdesert.org/Index.aspx?page=490 under ‘Mills Act.’ Complete applications can be dropped off at the Department of Building and Safety counter at City Hall or via US mail at the following address: Department of Building and Safety, 73-510 Fred Waring Drive, Palm Desert, CA 92260. 4) Q: How many Mills Act Applications are accepted annually? A: The City accepts 7 Mills Act contracts per year – five residential and two commercial, or up to seven residential if no commercial applications are submitted. If more applications than the allotted amount are received, the Mills Act contract recipients will be determined by a lottery system of the complete applications. 5) Q: When are the Mills Act Applications due? A: Mills Act Applications are accepted during the month of June and must be received by the last business day in June. 6) Q: What is the application fee? A: The application fee for Mills Act Contracts is $318.00 at the time of application submission. Once the Mills Act application is approved by City Council an initiation deposit fee of $1000.00 will be due. City of Palm Desert Department of Building and Safety 73-510 Fred Waring Dr., Palm Desert, CA 92260 (760) 346-0611 Fax (760) 776-6392 7) Q: How much will I save on my property taxes? A: The Mills Act uses an alternative equation to calculate the property taxes. This alternative equation can save property owners, especially those who have recently purchased property, up to 50% on the property tax bill. If the property has been owned for more than 10 years, the County Assessor does not recommend applying for the Mills Act as the savings will be negligible. 8) Q: When will I start to receive my savings on my tax bill? A: Savings will appear on the tax bill for the fiscal year (July 1st to June 30th) following the calendar year it is recorded with the County and finalized. For Example, Mills Act participants from the 2005 year received the first tax bill savings on the fall of 2006 tax coupon, which is typical. 9) Q: When do I start saving receipts from qualified property improvements? A: Start saving receipts for qualified improvements during the fiscal year (July 1st to June 30th) following the approval with the City. For example, Mills Act contracts approved in 2006 will start saving receipts from qualified improvements for the fiscal year July 2007- June 2008. 10) Q: Can I spend all of my 10 year savings in one fiscal year for one big improvement project? A: No, the 10 year savings cannot be spent on one big project. The proposed tax savings must be spent on the historic property on an annual fiscal year (July 1st to June 30th) basis. The goal is for ongoing financial contribution to the Mills Act property. For questions regarding the Mills Act contact the Cultural Resources Administrator in the Department of Building and Safety at (760) 346-0611. 11) Q: Is the Mills Act transferable if I sell my property? A: Yes, Mills Act contracts remain with the property and will be the responsibility of the new property owners when the property is sold. 12) Q: Does my property get reassessed if I sell my property, thus changing the monetary value of my savings? A: Yes, Mills Act contracts are reevaluated on an annual basis with the County Tax Assessor for tax savings. One of the factors the Assessor uses in determining the Mills Act tax bill is the current assessment value of the historic property. Were the property value to change, the tax savings could also see a change. 13) Q: During what time frame do the property improvements need to occur? A: Qualified improvements need to take place during the fiscal year (July 1st to June 30th) following the approval, and subsequent fiscal years thereafter for 10 years. For example, Mills Act contracts approved in 2006 will start completing qualified improvements during the fiscal year July 2007- June 2008. 14) Q: What property improvements are eligible? A: Most improvements are eligible for the Mills Act, as the intention is to encourage property owners to continue to provide maintenance for the historic properties. The improvements need to be a permanent part of the property and/or property. For example:  A new outdoor seasonal gazebo would not qualify, but a permanent gazebo that is attached to a foundation would qualify;  New furniture would not qualify, but new built-in cabinetry or shelving would qualify. 15) Q: Can I count the cost of labor for the improvements made to my property? A: Yes, the cost of labor can be included in the total cost of improvements to the property, as long as the labor has been completed by a qualified individual that can produce a verifiable receipt for the labor. Property owners cannot include the cost for the owner’s personal labor. For Example:  If a property owner were to have the outside of the historic property painted by a painting company, the full cost of the bill could be counted as a qualified improvement;  If a property owner were to paint the property utilizing the property owner’s own labor to apply the paint, the only costs that could count as an improvement are the cost of paint and paint prepping materials used to complete this qualified task. 16) Q: How do the property inspections work? A: Members from the Department of Building and Safety staff will do a drive-by visit the first year for preparation of the contract. Subsequent years on a case-by-case basis inspections may be monitored by applicant’s submitted photographs. Site inspections will be performed for clarification or as needed. These appointments will be scheduled in advance. 17) Q: Can I change things on my submitted “10 Year Rehabilitation plan” for work on my property? A: Yes, previous submissions on the “10 Year Rehabilitation plan” can be changed. Although Cultural Resource Administrator will ask for the Rehabilitation plan up front, changes are allowed on an annual basis. These changes must be submitted to the Cultural Resource Administrator in writing prior to completion of the proposed qualified task. 18) Q: How long is my Mills Act Contract good? A: Participants enter into a perpetual 10 year contract with the City. Mills Act contracts are automatically renewed each fiscal year (July 1st to June 30th). The contract is renewable at the City’s discretion for subsequent years after the 10 year contract is complete. 19) Q: Who approves the contract I have with the City for my Mills Act Property? A: The City Council approves the Mills Act contract before the end of the application’s calendar year. 20) Q: What happens if I do not fulfill my obligation to the Mills Act? A: The Mills Act is a privilege given to those who have willingly applied and been accepted through the extensive application process. The Mills Act is an incentive for those who own historic properties by providing financial assistance through tax savings. However, the Mills Act is also a legal contract and is enforceable by law. Penalties may incur if owners do not fulfill the obligation required by the contract to spend the tax savings on the repair and maintenance of the historic property.