"The council directed this evaluation to be done in 2025, we're now looking in 2026, and facing potential considering advice that potentially any action we take probably should be prospective," Mayor Pro Tem Jesse Zwick told his colleagues in February. He warned that further delay could push any changes to Santa Monica's Mills Act program to 2027 or 2028.
The council voted 5-2 to shelve its own completed study anyway.
If you're looking at a landmarked bungalow near San Vicente or a contributing unit in one of Santa Monica's historic courtyard districts, that vote matters more than the listing sheet lets on. Buyers tend to treat a Mills Act contract as a line item, a lower tax bill baked into the deal. It's actually a ten-year rolling agreement with the city, and the rules governing that agreement are now sitting in limbo with no reopening date attached. The tax break is real. So is the uncertainty about what it looks like five years from now.
What a Mills Act Contract Actually Buys You
The mechanics are specific enough that most buyers never hear them explained. Under a normal Proposition 13 assessment, a home's taxable value tracks its purchase price. Under a Mills Act contract, the Los Angeles County Assessor throws that out and reassesses the property based on the income it could reasonably produce, using comparable rents for similar properties in the area. For an owner-occupied historic home, that income-based number is often well below market value, which is why the tax savings can be substantial.
The tradeoff is that the contract is not passive. The city requires a ten-year restoration and maintenance plan prepared by a certified architect, covering everything from roofing and drainage to plumbing and structural systems. That plan gets attached to the contract as a binding exhibit, and the contract renews automatically every year, meaning an owner is functionally always about a decade away from being free of it unless someone files a notice of non-renewal.
The Fine Print Nobody Reads at the Open House
Here's what a buyer actually inherits when they purchase a Mills Act property in Santa Monica, according to the city's own contract terms and the Santa Monica Conservancy's guidance for owners:
- The obligations are binding on successive owners. You don't get to renegotiate the maintenance plan just because you weren't the one who signed it.
- Exiting early is expensive. If an owner petitions to cancel the contract outright, the penalty is 12.5 percent of the property's assessed market value, due at cancellation.
- Approval isn't discretionary anymore, but it isn't automatic either. Santa Monica amended its ordinance to remove council discretion once three findings are met: no outstanding code violations, current on property taxes, and any alterations consistent with the Secretary of the Interior's standards. Miss one of those three and the application doesn't move.
The dollar stakes can be significant. In a past review of the program, the city cited one application, tied to a home known locally as the House of Rock, that would have taken its owner's annual property tax bill from roughly $90,000 to about $14,000. That's the kind of number that makes the contract worth the paperwork. It's also the kind of number that made some council members nervous about how much revenue the city was giving up, one property at a time, with no cap in place.
A Program That Grew Quietly, Then Stopped
Santa Monica never capped the number of Mills Act contracts it would issue, unlike Los Angeles, which limits its citywide revenue loss from the program to $1 million a year. Santa Monica's version simply expanded as more owners applied and qualified, contract by contract, year after year.
| Year | Active Mills Act Contracts in Santa Monica |
|---|---|
| 2015 | 57 |
| 2016 | 71 |
| 2018 | 75 |
That's the last publicly reported count. The city hasn't published an update since, and the freeze on the broader review means there's no obvious moment on the calendar when a fresh number, or fresh rules, will surface.
The February pause didn't happen in isolation. Planning Director Jing Yeo confirmed that preservation consultant Robert Chattel had already completed a scan of Mills Act practices in other cities and that staff had met with the Santa Monica Conservancy about potential options, only to have the analysis paused after the agenda item was published. The council folded the Mills Act question into a larger effort tied to the Landmarks Commission's equity report, "A Place for Everyone in Santa Monica's History," rather than acting on the standalone study. As of the city's May 2026 update on its boards and commissions, that pause was still the operative status. Zwick and council member Natalya Zernitskaya voted against the delay. The rest of the council didn't.
There's a reason the city isn't simply walking away from the program either. City Attorney's office staff noted that abandoning Mills Act contracts wholesale would expose the city to litigation, since these are legally binding agreements, not discretionary favors that can be revoked at will. So the likeliest outcome isn't cancellation. It's a slower, uncertain path toward whatever reforms eventually emerge, on a timeline the vice mayor himself pegged at 2027 or 2028 in the best case.
Why the Freeze Changes How You Should Underwrite This House
If you're comparing two similar-looking older homes in Santa Monica, and one carries a Mills Act contract while the other doesn't, the temptation is to treat the tax savings as a fixed number you can pencil into your monthly cost comparison and move on. That's the assumption worth revisiting right now.
The size of the discount depends on comparable rents in the area at the time of assessment, which means it can shift over the life of the contract, not just at signing. The restoration obligations you're taking on are real maintenance costs, not paperwork, and they're scheduled over ten years regardless of your own renovation plans. And the framework governing new applications, and potentially the terms of existing ones, is under review with no fixed end date. If you're planning to buy, hold for a few years, and sell, you're not just buying a discount. You're buying into whatever version of this program exists when the city eventually finishes what it started in February.
None of that makes a Mills Act property a bad purchase. Plenty of Santa Monica's most distinctive homes, from Ocean Front Walk landmarks to the courtyard buildings along San Vicente, carry these contracts precisely because their owners valued the tradeoff. It does mean the conversation with your agent should go past the tax bill and into the contract itself: what restoration items are scheduled, when the ten-year plan was last renewed, and what happens if you decide five years in that you want out.
A Few Questions Worth Asking Before You Write an Offer
Does the Mills Act discount transfer automatically when I buy a landmarked home? The contract does, along with its restoration and maintenance obligations. The tax reassessment itself is handled by the County Assessor's office once the sale records, and it's tied to the property, not the person who originally applied.
What happens if I want out of the contract? You can petition the city to cancel it, but that triggers a penalty equal to 12.5 percent of the property's assessed market value. Most owners instead let contracts run their course or simply don't file a non-renewal notice.
Is Santa Monica getting rid of the Mills Act? Not based on anything the city has said publicly. The pause is about reforming the program's rules, not ending it, and the City Attorney's office has flagged legal risk in abandoning existing contracts outright.
If you're weighing a historic Santa Monica property against a comparable home without the designation, the numbers on the tax bill only tell part of the story. Tessa Cosentino has spent years walking Westside buyers through exactly this kind of fine print, from what a listing's disclosures actually promise to what a neighborhood's zoning history means for your resale plans. If you're circling a landmark address in Santa Monica, or comparing it against homes across Pacific Palisades or Brentwood, let's talk before you write the offer, not after you're already reading the maintenance plan for the first time. Let's Chat — Schedule a Time to Connect.
