IMAGINE owning a 1915 Craftsman-style home with original gables, pergolas and its very own moniker. And then receiving annual property-tax savings of 50% for the privilege.
Architectural buffs Robert and Ursula Imboden are doing just that in the Edwards House in Old Towne Orange -- as participants in a statewide program designed to preserve historic neighborhoods through partnerships with qualified homeowners. There's prestige attached too.
"It's special to own a piece of local history," said Rodeo Realty agent Ian Brooks, who has brokered several historic home sales. "People love their designer clothes and cars, and now it's homes: 'Do you live in a Neutra? A Herzog?' "
Those bragging rights can come with property-tax breaks thanks to the 1972 Mills Act, under which participating local governments enter into contracts with owners of historic properties who agree to rehabilitate and maintain them. In exchange, the homeowners receive 40% to 60% savings, and sometimes more, on their property taxes. The intent of the tax break is for participants to use the savings to keep their properties in tip-top shape.
As a bonus, sellers of homes with Mills Act agreements can transfer the contracts to the new owners, ensuring the maintenance of the properties.
Statewide, there are 2,457 contracts in effect; in Los Angeles alone, 315 homes are under contract. In Orange, 132 owners currently participate.
Generally, to qualify, a property must be listed on a historic register, such as the National Register of Historic Places or the California Register of Historical Resources. Local jurisdictions may tailor their requirements for qualification -- for instance, requiring that a house be locally designated as a historical resource.
After receiving approval, the owners enter into an initial 10-year contract with the municipality. Each year, the contract is renewed automatically for a new 10-year term. In effect, the agreement is in force for perpetuity, as long as the owners fulfill their obligations -- such as replacing roofs, painting, and updating plumbing and electrical -- and if no action is taken by either party to cancel the contract. Owners also must keep the properties in compliance with current building and zoning codes.
City planners say it's a win-win situation. Owners save, through tax breaks, some or all of the money they put into fixing the homes, and cities "preserve the history, architecture and culture of the community," said Ili Lobaco, associate planner for Monrovia.
However the city may view it, the Imbodens are ecstatic with the way things turned out. The couple had coveted the Greene & Greene-inspired home for years, certain they could never afford it, Robert Imboden said.
When it came on the market about a year ago, Robert, a 40-year-old assistant professor of architectural history at American InterContinental University in Los Angeles, and Ursula, a 42-year-old hairstylist, jumped at the chance to buy it. They knew that with a Mills Act contract, they could restore the historic four-bedroom house to its original glory and still afford the payments and property taxes, Robert said.
They bought the 2,900-square-foot home for about $1.2 million. It was built by Nelson "Nels" Edwards, a prominent Orange politician and bank president. Legend has it that President Herbert Hoover once stayed in the house, which has an original sleeping porch upstairs that was enclosed by one of the later owners. Restoring its outdoor charm is high on the Imbodens' to-do list.
Without a Mills contract, the couple's property-tax bill would have been $12,000 annually, Robert said. With the contract, under which they have agreed to install a new roof, restore the original wood siding, complete seismic retrofitting and repair rain gutters, among other projects, the bill is $6,000 per year.
The overall savings may be less for some owners, depending on their federal income-tax rate. Nonetheless, most owners still save money by participating in the program.
Garrett Ngo, a 41-year-old certified public accountant, and wife Kristine, a 37-year-old Pilates instructor, also Old Towne residents, purchased their light-filled Prairie-style home six months ago. They are the third owners to "inherit" the property's Mills Act contract.
The 1930s three-bedroom house, which they agreed to fix up (renovations include refinishing the floors and updating the bathroom), cost about $1 million. Their tax bill, which would have been $12,000 per year, is $2,000 because they carried forward the Mills Act contract. It valued the property at about $260,000.
Property valuation is determined by a tax assessor formula that selects the lowest of three values: the current property tax assessment, the current fair market value or the Mills Act appraised value, which is based on the California Revenue and Taxation Code and on a property's income potential, minus allowed expenses.
Mills Act perks place premiums on participants' properties.
