By The Berns Team
A lot of buyers come to Pasadena and Monrovia looking for character and end up discovering something they didn't expect: the math can actually work in their favor. In most of California, buying an expensive home means paying taxes on what you paid for it — permanently. Mills Act properties break that logic entirely, and once buyers understand how the calculation works, it tends to change how they shop.
Key Takeaways
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Mills Act properties are assessed using an income approach to value, not market value, which is why savings can reach 40–60%
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Both Pasadena and Monrovia run independent Mills Act programs with their own application processes
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The contract is a 10-year auto-renewing agreement that transfers to new owners at sale
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Annual fluctuations in assessed value are normal and expected under the program
Why the Tax Calculation Is Different
Standard California property taxes are based on market value, or what a buyer pays for a property at the time of purchase. Under Prop 13, that assessed value grows at a capped rate annually. For a high-value historic home in Pasadena, that can mean a significant tax bill, even before any renovation costs.
Mills Act properties are assessed differently. Rather than market value, the Los Angeles County Assessor uses an income approach to determine assessed value; essentially calculating what comparable rents for similar properties would generate, divided by a capitalization rate. In most cases, that income-based value is substantially lower than the purchase price.
Mills Act properties are assessed differently. Rather than market value, the Los Angeles County Assessor uses an income approach to determine assessed value; essentially calculating what comparable rents for similar properties would generate, divided by a capitalization rate. In most cases, that income-based value is substantially lower than the purchase price.
What Drives the Savings
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The income approach typically produces a much lower assessed value than the sale price, especially for high-end historic homes
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The capitalization rate used by the County Assessor includes components for mortgage interest rates, property taxes, depreciation, and a historic property risk factor, all of which work together to calculate a final assessed value
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Once the assessed value is set, standard LA County tax rates apply to that lower number, not to what you paid
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Annual reassessment is required by the County, which means the bill may shift slightly year to year, but the structural advantage holds
How Pasadena and Monrovia Handle It Differently
Both cities participate in the Mills Act, but they run their programs independently, and the differences are worth knowing before you apply.
Pasadena's Historic Property Contract Program was established in October 2002 and operates under the Secretary of the Interior's Standards. It runs an annual cycle, accepting applications early in the year with contracts recorded by December. The City caps new approvals at 20 single-family contracts per year, which means timing your application matters. The City of Pasadena Mills Act program page has the current cycle guidelines and application.
Monrovia's program accepts Mills Act applications concurrent with Historic Landmark Nominations, and Historic Landmark or Contributor status within a Historic District is required for the contract process to be completed. The City of Monrovia Mills Act page outlines the current procedure. Monrovia also offers additional preservation incentives beyond the tax reduction, including reduced permit fees, parking requirement waivers, and setback flexibility for one-story additions.
Pasadena's Historic Property Contract Program was established in October 2002 and operates under the Secretary of the Interior's Standards. It runs an annual cycle, accepting applications early in the year with contracts recorded by December. The City caps new approvals at 20 single-family contracts per year, which means timing your application matters. The City of Pasadena Mills Act program page has the current cycle guidelines and application.
Monrovia's program accepts Mills Act applications concurrent with Historic Landmark Nominations, and Historic Landmark or Contributor status within a Historic District is required for the contract process to be completed. The City of Monrovia Mills Act page outlines the current procedure. Monrovia also offers additional preservation incentives beyond the tax reduction, including reduced permit fees, parking requirement waivers, and setback flexibility for one-story additions.
Key Program Differences at a Glance
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Pasadena: Annual application cycle, cap of 20 new single-family contracts per year, administered through the Design and Historic Preservation Section
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Monrovia: Applications processed concurrently with Landmark Nominations, reviewed by the Historic Preservation Commission, and approved by the City Council
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Both: Contract term is 10 years, auto-renews annually, transfers to new owners at sale, and is enforced by the LA County Assessor after recordation
What This Means in Practice for Buyers
The financial impact varies by property, but the structure of the benefit is consistent: buyers who purchase a Mills Act home in Pasadena or Monrovia inherit the existing assessed value rather than being reassessed at the purchase price. In a market where historic homes regularly trade well above a million dollars, that distinction can represent thousands of dollars per year in savings.
The LA Conservancy, one of the region's leading preservation advocacy organizations, notes that both Pasadena and Monrovia rank among the most active Mills Act participants in LA County, which reflects how seriously both cities take the program. That institutional commitment means the programs are well-staffed, well-documented, and more predictable than in smaller jurisdictions.
The LA Conservancy, one of the region's leading preservation advocacy organizations, notes that both Pasadena and Monrovia rank among the most active Mills Act participants in LA County, which reflects how seriously both cities take the program. That institutional commitment means the programs are well-staffed, well-documented, and more predictable than in smaller jurisdictions.
Questions to Work Through Before Closing
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Does the home currently have an active Mills Act contract, or would you be applying as a new owner?
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If there's an existing contract, what is the current assessed value, and when was it last reassessed?
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Are there any outstanding maintenance obligations tied to the existing contract that would transfer to you?
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Has the seller been in annual compliance, and is documentation available?
Frequently Asked Questions
Will my property taxes go up after I buy a Mills Act home?
Not the way they would for a standard purchase. Instead of being reassessed at your purchase price, you inherit the existing Mills Act assessed value. That number may fluctuate modestly each year as the County Assessor recalculates using current income data, but you won't face a full reset to market value at the time of sale.
Is the Mills Act calculation the same in Pasadena and Monrovia?
The tax math is handled the same way, by the LA County Assessor using the income approach, but each city administers its own contract program, sets its own application requirements, and determines how many new contracts it approves each year. The process for getting under contract looks different in each city, even though the tax mechanics are identical.
What happens to my Mills Act contract if I decide to sell?
The contract transfers automatically to the buyer at closing. They assume all obligations and benefits from that point forward. Neither party needs to reapply, and the assessed value does not reset to the new purchase price, which is often a meaningful selling point when you go to market.
Contact The Berns Team Today
The Mills Act is one of the most consequential financial details in any historic home transaction, and it rewards buyers who take the time to understand it before making an offer. We work in Pasadena and Monrovia's historic districts every day, and we know how to read an existing contract, evaluate compliance history, and help you model the real carrying costs of a property, not just the purchase price.
If you're exploring historic homes in either market, reach out to us at The Berns Team. We'd be glad to walk you through the numbers on any property you're considering.
If you're exploring historic homes in either market, reach out to us at The Berns Team. We'd be glad to walk you through the numbers on any property you're considering.
