The Mills Act Is a Partnership; Not a Gift
By Xavier Cortes
(unedited and published by permission)
As the City of San Diego continues its Preservation and Progress initiative, it is appropriate to review long‑standing programs to ensure they remain effective, equitable, and fiscally responsible. One of those programs is the Mills Act, which has become a focal point of recent discussion. Any evaluation of the program, however, should begin with a clear understanding of what it is—and what it is not.
The Mills Act is not a gift or an unconditional subsidy. It is a voluntary, contractual partnership between the City and owners of designated historic properties. In exchange for a reduction in property taxes, participating owners accept legally binding obligations to restore, maintain, and preserve historically significant buildings in accordance with approved plans. These obligations are monitored by City Planning staff, and contracts can be enforced. The public benefit is permanent protection of irreplaceable cultural, architectural, and historical resources.
The program works in two related ways. First, the availability of the Mills Act creates an incentive for owners to pursue historic designation and invest in the long‑term care of older buildings that might otherwise deteriorate or be lost. Once a property is designated, it is protected for future generations, regardless of changes in ownership.
Second, once a Mills Act contract is executed, the owner becomes a long‑term steward of the resource. Preservation requirements restrict alterations, impose ongoing maintenance responsibilities, and often require significant private investment. Through this structure, the City secures preservation outcomes without assuming full ownership or maintenance costs. Responsibilities and benefits are shared, and the public interest is protected through enforceable agreements.
Recent public discussions have focused largely on the program’s cost, with comparatively little attention to its benefits. A fair evaluation should consider both. Well‑maintained historic properties contribute to neighborhood stability, reinforce community identity, and support surrounding property values. Designated properties often command a market premium when sold, which can influence comparable sales and, in turn, assessed values for nearby properties. Any serious fiscal analysis of the Mills Act should account for these offsetting effects, rather than examining tax reductions in isolation.
It has also been suggested that San Diego’s relatively large number of designated historic properties reflects a problem. Another interpretation is that it reflects success. Cities that lack effective incentives for preservation frequently experience irreversible loss of architectural and cultural heritage through demolition and redevelopment. Once those resources are gone, they cannot be replaced.
Concerns about equity and oversight are legitimate and deserve attention. Like any program, the Mills Act should be monitored to ensure compliance, transparency, and fairness. There is also an opportunity to improve access to historic designation and preservation incentives in lower‑income communities. Reducing designation costs, providing technical assistance, or supporting nomination efforts for modest properties could broaden participation while strengthening preservation outcomes.
It is also worth keeping scale in mind. Historic properties represent a small fraction of San Diego’s overall housing stock. Adjustments to the Mills Act are therefore unlikely, on their own, to materially affect housing production citywide. At the same time, weakening or restricting the program would carry real risk for the long‑term protection of historic resources that define many of the city’s neighborhoods.
San Diego has a responsibility to safeguard its rich and diverse cultural patrimony. For decades, the Mills Act has helped do that by aligning private stewardship with public benefit. As the City considers potential reforms, it should recognize the program for what it is: a proven partnership that protects shared history, and one that should be strengthened thoughtfully rather than diminished.