The Quick Answer
By David Hernandez, Long Beach Loft Specialist | Radius Real Estate | DRE #01888249 | Updated November 2026
A Mills Act contract can lower the property taxes on a historic loft, often by 30% to 50% for new owners, according to the City of Long Beach. The contract stays with the property when it sells, so a buyer takes over both the tax benefit and the duty to maintain the building. Savings are never guaranteed, and the contract cannot raise your taxes. Before you buy, confirm the contract is recorded on title, review the work plan and any HOA obligations, and get a tax estimate based on your own purchase price.
What is the Mills Act, and how does it work in Long Beach?
The Mills Act is a 1972 California law that lets cities offer property tax relief to owners of historic buildings. In exchange, owners agree to restore and maintain the property to historic preservation standards. Long Beach adopted its program in 1993.
To qualify in Long Beach, a property must be a designated historic landmark, a contributing building in a historic district, or eligible for landmark status. The owner signs a contract with the city, and the Los Angeles County Assessor then values the property differently.
How the tax value is set: each year the Assessor compares three values and uses the lowest:
1. Trended base value: your purchase price, increased up to 2% a year under Proposition 13.
2. Market value: based on recent sales of similar non-Mills Act properties.
3. Income value: what the property could earn in rent, minus operating costs, divided by a capitalization rate set by state formula.
The income value is usually the lowest for a recent buyer, which is where the savings come from. Because the Assessor recalculates every year, your assessed value can rise over time.
How much can you save on a Mills Act loft?
The City of Long Beach says savings average 30% to 50% for new owners. That's an average, not a promise: the exact amount isn't known until the Assessor values the property, and it can change from year to year. The city also notes that a Mills Act contract will never make your property taxes go up.
Who benefits most: recent buyers. Your tax bill is based on your purchase price, and the Mills Act income value is often well below it.
Who benefits least: long-time owners. Someone who bought 15 or 20 years ago may already pay taxes on a low Proposition 13 base, so the Mills Act value may not be any lower.
What this means for you: the seller's tax bill tells you very little. Your savings depend on your own purchase price and the Assessor's income value, so ask for an estimate based on what you plan to pay.
What happens to the contract when you buy a Mills Act loft?
The contract transfers to you. Mills Act contracts run with the property, so the new owner takes on the same benefits and obligations as the seller.
• The term keeps rolling. Contracts last a minimum of 10 years and renew automatically each year, so there are always about 10 years left.
• You take over the work plan. Any restoration or maintenance the contract requires becomes your responsibility, or the HOA's for shared parts of the building.
• Your taxes are recalculated. As the new owner, you start from a new purchase-based value, and the Assessor compares it to the Mills Act income value. The city's materials also note buyers of Mills Act properties don't receive the usual supplemental tax bill after purchase.
• It can add value at resale. Because future buyers can also benefit, the city notes a contract may help a property sell for a premium.
What are the obligations and risks?
The tax break comes with real commitments, and the penalties for ignoring them are steep.
• Maintenance and restoration. Owners follow a 10-year work plan to historic preservation standards. The city prioritizes work like roofs, foundations, seismic upgrades, and exterior repairs.
• Permits for changes. Work on a Mills Act property needs a Certificate of Appropriateness from the city's Planning Bureau, plus any building permits.
• Annual reporting. Owners submit a yearly schedule of completed work to the city.
• Penalty for breaking the contract. If the city finds the contract has been breached, the penalty is 12.5% of the property's current market value, as set by the County Assessor.
• No quick exit. If the owner or the city ends the contract, the remaining 10-year term still has to run out.
How it works in a condo building: in a loft building with an HOA, the contract covers both the shared building and the individual units. When the city takes new applications, every owner must consent, the HOA files for the exterior and common areas, and each unit owner files for their own unit. In practice, that means the HOA's maintenance decisions affect every owner's contract, so a well-run HOA matters even more in a Mills Act building.
Which Downtown Long Beach loft buildings have Mills Act contracts?
Mills Act status varies by building, and sometimes by unit, so never rely on a listing description alone. The downtown loft buildings most often associated with the Mills Act are the historic conversions:
• Temple Lofts, the former Masonic Temple at 835 Locust Ave
• Kress Lofts, the 1925 Kress building at 100 W 5th St
• The Walker Building, the 1929 department store at 115 W 4th St
• Insurance Exchange Lofts, listed on the National Register of Historic Places
• Ebell Lofts, in the 1924 Ebell Theatre, a Long Beach Historical Landmark
Newer loft buildings like Promenade Lofts and City Place Lofts aren't historic, so they don't qualify. Each building's guide on this site covers what I've confirmed about its status. See how all the buildings compare in the Best Lofts in Downtown Long Beach guide.
Checklist: buying a Mills Act loft
Do these before you remove your contingencies:
1. Confirm the contract is recorded. Check the preliminary title report for a recorded Mills Act contract covering your unit, not just the building.
2. Get a copy of the contract and work plan. Ask the seller and HOA for the contract, the current 10-year work plan, and recent annual work schedules filed with the city.
3. Check compliance. Ask whether the city has flagged any missed work. You inherit any problems, and a breach can carry a 12.5% penalty.
4. Review HOA finances. Look at the reserve study, recent budgets, and board minutes for planned restoration work or special assessments tied to the contract.
5. Estimate your own taxes. Don't use the seller's bill. Ask me for an estimate based on your purchase price, or contact the LA County Assessor's South District office.
6. Plan your renovations carefully. If you want to change the unit, confirm what will need a Certificate of Appropriateness before you buy.
7. Ask the city if you're unsure. Long Beach's historic preservation staff can answer questions at MillsAct@longbeach.gov or (562) 570-6194.
Frequently asked questions
Does the Mills Act transfer when I buy a loft? Yes. The contract runs with the property, so you take on its benefits and obligations. Your taxes are recalculated based on your own purchase.
Can a Mills Act contract raise my property taxes? No. The City of Long Beach states that a Mills Act contract will never cause your property taxes to increase.
Are the savings guaranteed? No. The Assessor sets the value each year, so savings can change. The city's estimate of 30% to 50% for new owners is an average.
Can I get a new Mills Act contract for a loft that doesn't have one? Possibly. Long Beach accepts applications once a year, typically due in March, with contracts recorded in December and the new value showing on the following year's tax bill. In a condo building, every owner must consent, so it usually takes the whole HOA working together.
Is a Mills Act loft a good investment? It depends on the building and the unit. Lower taxes reduce your monthly cost and may help at resale, but you also take on maintenance duties. Weigh the savings against the work plan and the HOA's finances.
Thinking about buying a Mills Act loft?
A Mills Act loft can be one of the best values downtown, as long as you understand the contract before you buy. I can help you confirm a unit's status, review the work plan and HOA documents, and estimate your taxes based on your purchase price. Call or text David Hernandez at (213) 808-4324, or browse current Downtown Long Beach lofts for sale.
This article is general information, not tax or legal advice. Talk to a tax professional or attorney about your situation.
Sources
• City of Long Beach, Mills Act Program
• City of Long Beach, 2026 Mills Act Pre-Application Workshop (Jan. 24, 2026)
• California Office of Historic Preservation, Mills Act Program