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Quick Answer
A Mills Act contract is a voluntary 10-year deal between a California city or county and the owner of a historic home. The owner promises to preserve the property. In return, the property-tax bill drops. In Orange County, eleven jurisdictions offer it, and a home must be a designated historic property to qualify.
Mills Act details verified as of July 20, 2026, from the California Office of Historic Preservation and the state statute; analysis by Michael Mellgren, REALTOR® (DRE #02321556).
What is a Mills Act contract?
A Mills Act contract is California’s main property-tax break for historic buildings. State lawmakers created it in 1972, under Government Code sections 50280 to 50290. A participating city or county cuts an owner’s property taxes. In return, the owner keeps a designated historic property in good repair.
The state does not run the program or sign the contracts. Each local government does, so the terms differ from city to city. You can read the framework on the California Office of Historic Preservation’s Mills Act program page.
The deal runs for at least ten years, and it renews on its own. Each year on the anniversary, one more year is added automatically. So the term stays at a rolling ten years unless someone files notice to stop it.
The agreement stays with the property when the home sells. Its new owner then takes on the same benefits and the same duties.
How does the Mills Act lower your property taxes?
The Mills Act lowers property taxes by changing how the county values the home. Most California homes are taxed under Proposition 13. That value usually tracks the purchase price, plus small yearly increases. A home under contract is valued a different way, using the income approach.
The income approach estimates what the home could earn as a rental. It then divides that figure by a state-set capitalization rate. The result is often a much lower assessed value, and a lower tax bill. Savings vary widely, because the math depends on local rents and the yearly rate.
Reductions are commonly cited in the 40% to 60% range. Some Orange County programs report more. Anaheim and the County of Orange both cite savings of up to 70% for certain homes.
One catch is worth knowing up front. The county reassesses each enrolled home every year. So the tax bill can rise or fall from year to year rather than stay flat. The assessor compares three figures and applies the lowest: the Mills Act value, the Proposition 13 value, and current market value.
Which Orange County homes qualify for the Mills Act?
An Orange County home qualifies when two things are true. First, it sits in a city or county that runs the program. Second, it is a designated historic property. Both conditions must be met, because the break only exists where a local government has adopted it.
Eleven Orange County jurisdictions currently offer these contracts, as listed by Preserve Orange County. Participation can change over time, so it is worth confirming a city’s current program with its preservation office. The list stands as follows:
- Anaheim, which includes Anaheim Hills
- Brea
- Dana Point
- Fullerton
- Laguna Beach
- Orange
- San Clemente
- San Juan Capistrano
- Santa Ana
- Tustin
- The County of Orange, for unincorporated areas
Two nearby cities this site covers are missing from that list: Yorba Linda and Placentia. A historic home in either one cannot enroll today. Owners there can still ask their city to adopt the program. Placentia does levy other special taxes, but its Placentia Mello-Roos districts are unrelated to the Mills Act.
Availability can also change within a participating city. Orange, for one, is not currently accepting new Mills Act applications while it reviews the program, so a historic home there cannot newly enroll right now. Existing Orange contracts still stand, and they transfer with the property. Anyone counting on a new contract should confirm a city’s current status before relying on the savings.
The second requirement is historic designation. A qualifying home must be privately owned, and it must pay property tax. It also has to carry an official historic listing. State law recognizes several paths to that listing, shown below.
| Designation path | What it covers | Listing authority |
|---|---|---|
| Local landmark | A home individually designated historic by its city or county | City or county historic register |
| Local historic district | A home that contributes to a locally designated historic district | City or county historic register |
| California Register | A home listed on the California Register of Historical Resources | California Office of Historic Preservation |
| National Register | A home listed on the National Register of Historic Places, or a contributor to a National Register historic district | National Park Service |
How an Orange County home qualifies as a historic property for the Mills Act. Sources: California Government Code §50280.1; California Office of Historic Preservation.
Local rules vary. Still, many California cities look for a home at least several decades old, and a clear example of a style or era, before they will designate it. If a home is not designated yet, an owner can often apply for landmark status and a contract at once. Any later work then follows local preservation rules, like the historic-district conditions built into Orange’s ADU rules.
What does a Mills Act contract require from the owner?
The contract requires the owner to preserve and maintain the home. That duty runs for the life of the agreement, to recognized historic standards. Most cities apply the Secretary of the Interior’s Standards. Those standards favor repairing original features over replacing them.
The contract also lets the local government inspect the property. A city usually reviews the home before signing. After that, it inspects on a set schedule, often every five years. Some cities also charge fees; Fullerton, for one, lists a $1,520 application fee and an $85 yearly fee.
The agreement runs with the land. So these duties pass to each new owner automatically. A buyer inherits both the lower tax basis and the preservation commitments. That is why reviewing the recorded contract, alongside the usual Orange County closing costs, during escrow matters.
What happens if you cancel or don’t renew a Mills Act contract?
Ending the agreement works one of two ways, and the difference is expensive. An owner who simply wants out files a notice of non-renewal. That notice stops the automatic yearly extension. The contract then winds down over its remaining term, usually about ten years, with no penalty.
The owner must serve that notice at least 90 days before the anniversary date. During the wind-down, the home keeps its reduced assessment. That value then steps back toward a standard one as the term runs out. The city can also decline to renew, with 60 days’ notice to the owner.
Cancellation is the costly path. It happens when the government cancels because the owner broke the terms. State law then charges a fee of 12.5% of the home’s current fair market value, under Government Code section 50286. The county assessor sets that value as if no contract existed, so on a $1,200,000 home the fee comes to $150,000.
Frequently asked questions about the Mills Act in Orange County
Does the contract transfer when the home is sold?
Yes. A Mills Act agreement runs with the property, not the owner. So it stays in place when a historic home changes hands in Orange County. The buyer takes on the reduced assessment and the preservation duties, and the ten-year clock simply continues.
How much can the Mills Act save on Orange County property taxes?
Savings depend on the home and change every year, so no single number applies. The reduction is commonly put in the 40% to 60% range. Anaheim and the County of Orange report up to 70% for some homes. The county reassesses yearly, so the figure moves with local rents and the state rate.
Do Yorba Linda and Placentia offer the Mills Act?
No. Neither city appears among the eleven Orange County jurisdictions that run the program. So a historic home in Yorba Linda or Placentia cannot enroll today. Nearby Brea, Fullerton, and Anaheim, including Anaheim Hills, do participate.
Can any older Orange County home get a Mills Act contract?
No. A home must first carry an official historic designation. That can be local landmark status, a spot in a historic district, or a California or National Register listing. Age alone does not qualify a property.
Weighing a historic home in Orange County?
Whether a Mills Act contract pencils out depends on the home, the city that governs it, and the designation on record. Michael Mellgren, REALTOR®, follows Orange County’s historic-property landscape closely. He can help weigh how a preservation contract might affect the carrying cost of any address you are considering, from Old Towne Orange to the historic streets of Fullerton and Anaheim.
Email Michael Mellgren about an Orange County Mills Act question, or call or text (714) 420-6629. For the assessment on a specific parcel, contact the Orange County Assessor’s Special Properties division. For eligibility and application steps, contact the historic preservation office in the city that governs the home.
