The Mills Act in San Diego, and How It’s Helped Us With The Jade Manor

If you own a historic home in San Diego, or you are thinking about buying one, the Mills Act can be one of the most powerful financial tools available to you.

We went through the entire process with the City for The Jade Manor, and it has made a meaningful difference in how we operate the property long term. Here is what it is, how it works, and what it actually looked like for us.

What Is the Mills Act?

The Mills Act is a California state law that allows cities to enter into contracts with owners of designated historic properties. In exchange for maintaining and preserving the architectural integrity of the home, the city reduces the property taxes.

In San Diego, the program is administered through the city’s Historical Resources Board. Once approved, the property enters into a 10 year rolling contract.

The key benefit is that the property tax assessment is recalculated using an income approach formula rather than standard market value. For many owners, this results in a substantial reduction in annual property taxes.

Why We Applied for The Jade Manor

The Jade Manor already had historic designation. It had original architectural character, period details, and a historic plaque. From a branding perspective, that historic designation aligned perfectly with what we are building through The Carmine Collection.

But the financial side is what really made us lean in.

We are big believers in stacking advantages. If a property has charm, strong revenue, and long term tax benefits, that is a triple win.

So we decided to apply for the Mills Act through the City of San Diego.

The Process We Went Through With the City

Here is what it actually looked like:

1. Confirm Historic Designation

The property must already be historically designated or qualify for designation. In our case, that box was already checked.

2. Prepare the Application

The application requires:

• A detailed preservation plan

• A list of proposed improvements and maintenance

• Cost estimates

• Photographs

• Architectural documentation

This is not a quick, two page form. It requires real thought. You are essentially committing to protect the integrity of the home.

3. Submit to the City

We submitted the application to the City of San Diego’s planning department. There is a review period, and your application may go before the Historical Resources Board.

4. Approval and Contract Recording

Once approved, the 10 year contract is recorded against the property. It automatically renews each year unless canceled.

From start to finish, expect this to take several months.

The Savings We Receive at The Jade Manor

This is where it gets interesting.

After approval, the county recalculated our property taxes using the Mills Act formula. The result is a reduction of roughly 40 to 50 percent compared to what we would otherwise be paying under standard Prop 13 assessed value rules.

For us, that equates to approximately $8,000 to $12,000 per year in savings, depending on assessed calculations and income factors.

Over a 10 year period, that is potentially $80,000 to $120,000 in tax savings.

When you are running a high performing short term rental, that kind of reduction meaningfully increases your net return.

It is not just a feel good preservation move, it is a strategic financial decision.

The Trade Offs

It is not free money.

When you enter into a Mills Act contract, you agree to:

• Maintain the historic features

• Follow preservation standards

• Obtain proper approvals for certain exterior modifications

• Stick to your proposed maintenance plan

If you neglect the property or violate the contract, there can be penalties.

This program is best for owners who genuinely value the historic character of the home and are willing to preserve it properly.

Who Should Consider the Mills Act?

You should consider it if:

• You own a historically designated home in San Diego

• You are planning long term ownership

• You want to reduce your property tax burden

• You are comfortable maintaining historic integrity

• You see the value in combining charm with smart financial strategy

For investment properties, especially high revenue short term rentals, it can significantly improve cash flow.

Why It Fits Our Long Term Strategy

With The Jade Manor, we are building more than just a rental. We are building a brand rooted in design, history, and experience.

The Mills Act supports that vision.

It allows us to:

• Preserve the architectural character

• Protect the story of the home

• Increase long term profitability

• Reinvest savings into thoughtful upgrades

It aligns heritage with strategy.

Final Thoughts

Historic homes are not for everyone. They require care, intention, and patience.

But if you approach them correctly, and leverage programs like the Mills Act, they can be incredibly powerful assets.

If you are curious whether a property you own, or are considering buying, could qualify for the Mills Act in San Diego, I am happy to walk through it with you and share what we learned from doing it ourselves with The Jade Manor.

Preserve the charm. Protect the story. Improve the numbers.