Wednesday, April 16, 2008

Mills Act is NOT a Tax on Historic Districts

I guess we live too far on the edge of Lincoln Park. I received a couple of emails about a flyer that was being passed out in the district (but not on my street) warning residents of a new TAX that was going to be discussed at next Monday's city council meeting. The flyer is attributed to John Mendoza, who has run a series of petition drives for various subjects and was a candidate for School Board in the last election.

His scare flyer is wrong on many of the details, although to his credit he did include the notice for the issue.

Monday's meeting actually does include two items of importance to the residents of Lincoln Park as well as the other two districts, but it's NOT a new tax. The Mills Act was created as the main tool by the state to encourage owners of historic properties to renovate and maintain their property in a historically accurate manner. The Act allows property owners to enter into contracts with the city whereby the property will be taxed, not by the value of the property, but as if it were a rental business. This can result in tax savings of up to 60% depending on the assessed value of the property and the rental rates within the area.

In exchange for the property tax savings, the property owner agrees to use those savings to do an approved (within the contract) number of renovation projects. The idea is that this is a win-win as the property owner can use tax savings to improve the property and the city ensures that their historic properties are maintained in a historically accurate manner.

Pomona has had the Mills Act in place for some time. However, the original city version of the act was so restrictive that we only have three current contracts in the city. Pomona's Mills Act requirements were much more difficult than any of the surrounding cities. Pomona Heritage worked hard with city staff to review and revisit the act and to see how it could be improved to make it a better tool for historic Pomona.

The version of the Act that passed the Historic Preservation Commission will greatly enhance the way that Mills Act contracts are done in Pomona. Monday's meeting does have a twist that had not previously been discussed. Under the current Pomona version of the Act there is no fee. However state law allows cities to charge an application fee to recoup the costs of processing Mills contracts. The City Clerk has determined that cost to be around $2,400. Pomona Heritage is concerned that this upfront cost would be onerous, and hope to argue at Monday's meeting that the fee be more in line with other cities in the area whose fees range from nothing to under $500.

The other issue on Monday's agenda will be the use of alternative materials in the historic districts. This is an issue that was supposed to be discussed in the study sessions that were postponed and then canceled. So this will be the first opportunity that the council will have to hear this issue, and they're planning on voting on a policy.

If you're interested in either of these issues, we hope that you will be at the council meeting on Monday, April 21. Council meetings start at 7:00 pm in the council chambers at city hall.


Anonymous said...

Yes, I got the flyer. I wondered whether the flyer's author was purposely inaccurate in informing citizens that the Mill's Act is an increase in taxes, when it is in reality a substantial decrease. Or did the flyer's author just completely misunderstand the Act? Whatever the case, the flyers did a disservice to those who might have taken advantage of the significant tax reduction, but now won't.

Anonymous said...

John Mendoza, if he did author that flyer, is a crackpot.

PomonaQueen said...

Crackpot comment seemed a trifle rude. That flyer was the only notification I received at my home, much like the initial imposition of historic district status on the neighborhood. Thanks, John, for giving me the impetus to check this out. I'm a long time resident of Pomona and can't quite believe that the only way I'm supposed to find things out is by reading the public notices in the local newspaper. Ever heard of certified mail? Just a thought, Pomona. I am curious to find how how many of my neighbors enjoy a 40 to 60% reduction in property tax that this historic designation was to bring. Bless them if they do. I feel the proposed application assessment is exhorbitant. By the way, since the inception of the Hacienda District, how many people have entered into contracts and are benefitting from those tax reductions? Anyone know? Thanks!

Anonymous said...

From discussions that I have had with persons that would know....
only roughly a dozen properties in Pomona are now under Mills Act rates.

PomonaQueen said...

Thanks for the quick info. See everyone at the meeting!

Garrett Sawyer said...
This comment has been removed by the author.
Garrett Sawyer said...

Maybe it was mean't that it would increase taxes at a city level and not just to historic districts? I don't know, I don't live in a historic distict.

Anonymous said...

Rather than messing around with the Mills Act the city should be worried about the requests for reductions of tax assesments since everyones properties are worth alot less if you bought in the last few years.
That $ will add up.

John Clifford said...

Since my original posts I've been contacted by several folks in the city to clarify the application fee issue. It seems that the proposal is for a fee of .1% of the assessed value of the property, up to the $2,400 maximum. Thus if you have a home that is valued at $500,000, the application fee would be $500. This fee would be in line with a lot of the fees in local cities.

While I would argue for a smaller fee, it's not as out of line as it first appeared. I'm sure that it will be part of the discussion at Monday's city council meeting.


There are currently 3 Mills Act contracts in the city due to the draconian requirements that were in place. Under the current version of the act, you had to spend all of your tax savings for 10 years in the first 5 years. Not many could afford that up front cost.

I also agree that crackpot is a bit severe. While I think that John sometimes goes overboard (if this was even done by him), he's often made good points when speaking at council meetings. Unfortunately, any of us who care and are involved can from time to time be called a crackpot (I know that I've had to endure that label from some).


Mills act does not increase taxes at all. Since most of property taxes have been raided by the state, very little comes back to the city. It is estimated that a $500,000 loses the city about $500. Gee, does that figure sound familiar? This is about the same amount that the "white picket fence" initiative will cost.


Since we have Prop 13, you don't get to have your property "reassessed" unless you make major improvements. If it were so, those of us with low taxes because we bought when the market was down, would be assessed much higher. It's not necessarily fair, but it's what the voters of the state asked for. So it shouldn't result in any lost revenues for the state or city.

John Clifford said...


I just re-read your comment and want to ensure you that this is not an "automatic" tax savings from designation. You have to enter into a contract that you will use the tax savings on renovation and maintenance of the property. It's a way of encouraging people with historic properties to do just that. It's NOT a giveaway.

Anonymous said...

I just read the new Pomona, Mills Act ordinance. I believe this “progressive” application fee/tax is counter intuitive. If the City of Pomona is truly interested in preserving historic landmarks, they would not charge homeowners .1% of assessed value to apply for the Mills Act. The purpose of the Act is to let homeowners keep their money so they can restore and preserve their houses. Pomona is using it as an excuse to grab more money from its citizens. This seems to be the norm these days in Pomona.

In addition, it is not true that Pomona’s fees are in-line with other cities around us. Search Goggle on “Mills Act Application Fees”. Read the study that the City of Glendale did. Out of the 20 cities studied, over a third had no up front application fee and only 3 out of the 20 cities were above $350. As far as I can tell all 20 cities have flat fees. The fact that Pomona has chosen to go with a progressive fee just reinforces my beliefs about the mind-set of our local government.

John Clifford said...


I do agree that Pomona's fees are higher than a lot of other cities. However, that trend is changing. San Diego is looking at charging a fee as are some others.

The city IS strapped for money and it does cost to process the paperwork (although I think that the figures in the "justification" were a little inflated.

The .1% means an outlay of $500 for a $500,000 home. This actually brings it somewhat in line with other cities in the area. While we have homes that exceed $500,000 in Lincoln Park, the other two districts are lower than that and the fees would be less.

Again, my preference would be no fees which were very successful in San Diego, but I don't think the current city council would ever "give away" the tax revenue for nothing (remember, even though the state gets most of it, the city still loses a small amount from the lower taxes collected from Mills Act properties). There are those who don't agree that historic preservation has any benefit to the city and that this is not a "money grab" for the city, but a "give away" to those in the districts.

me said...

I agree with anon on this one. I think the .1% fee punishes newer homeowners, and discourages "poor" people from even applying for this program.

G of P

Anonymous said...

A few more points on this new .1% progressive fee/tax. My first post was on May 21st.

The last time I looked at my tax bill I paid my “fair share” based on my income and the value of my house. I agree with “me”. Anyone who had the misfortune of buying a house in last few years, is not only paying more for their mortgages but have to shoulder a greater share of taxes as well. A double whammy!

I would also question if the cost of processing paperwork for a $300K is that much different then $900K house. A door is a door and a window a window.

Some other points to be made: There are no guarantees that an application for the Mills Act will be approved. Therefore, the city is now asking its residents to gamble with money badly needed for the restoration and preservation of our historic homes. Considering how much time and effort it takes to complete the application properly, I wonder how many of us are going to be willing to go through the process.

Finally, I have a question. Has the city factored into the equation the requirement to open our houses to home tours every three years? How much revenue will the city realize from an increase in tourism and the selling of Pomona’s image as a place that values its rich history? How much will all property values rise when Pomona’s historic districts/homes are preserved? Pomona should do everything possible to encourage the preservation of our history. These new changes are not a positive step in that direction.

Anonymous said...

While I’m on a roll, I have just one more question. What is the expense to the city to process a Mills Act Application? Is the cost based on man-hours? Paper? Don’t we already pay taxes for those things? Why not stop paying taxes and just go with a fee based pay-as-you-go system. You can probably tell I really don’t like doing both!!!