Redwood City halts Mills Act

The cost to process the applications for these contracts, the limited pool of beneficiaries of the program and the loss of tax revenue are all reasons why the city is looking into its Mills Act program and related historical preservation ordinance. 

The current program awards contracts based on a schedule of proposed maintenance and improvements to be made over a 10-year period of time. After the 10 years, additional time in the contract may be awarded if the property continues to be maintained.

The Mills Act is credited for preserving iconic and historical properties throughout California, and was first enacted in 1972, but its necessity and efficacy as a program today is debated.

“I don’t necessarily think that that set of conditions holds true in Silicon Valley in the year 2026,” Councilmember Isabella Chu said. 

The city adopted the program in 1990 and, since then, 41 contracts have been approved. All existing agreements will continue to be honored during the program’s pause of new applications.

The average tax savings of the three most recent properties owners awarded Mills Act contracts is estimated to be $34,928, annually, according to the staff report.

Comparatively, the lost property tax revenue the city experiences due to Mills Act contracts is estimated at $123,000, according to a staff report. For the school districts, it’s an estimated loss of $313,000, and for other taxing entities it’s an estimated $178,000. 

It costs property owners $780 to submit an application, but the cost for staff to process a single application is estimated to be $6,500 or 32 hours of staff time. The fee recovers about 12% of the cost to process the app, and the remaining balance is subsidized by the city’s general fund. 

“We need to always have the cost, the man hours, [in mind],” Councilmember Marcella Padilla said. “We’ve had very humbling meetings about the budget situation we are in, I think we need to keep this top of mind.” 

Citing her own experience buying a home built in the 1940s, Chu said she invested in the home without consideration of any tax breaks. She questioned if restorations would still take place without the tax benefit. 

“The primary beneficiary of that [restoration] was us and that was going to take place because we loved the house and wanted to respect the history of the house,” Chu said. 

 Vice Mayor Kaia Eakin voted against pausing the program, stating that even a short pause in awarding Mills Act contracts will result in a loss of vibrant history within the city. 

“These buildings have what is called character defining features,” Eakin said. “When you’re standing here … you know you’re someplace special.” 

Redwood City, as the oldest city in San Mateo County, is special because of its historical feel, Eakin said. 

“Historic preservation — another word for that is culture, art. Historic preservation, it’s part of our soft arts, it’s a part of what speaks to our feelings,” Eakin said. 

The program will be paused until December 2027 when a progress report intends to be presented to the City Council for consideration. Property owners may prepare to apply for the program again by June 2028.