The Squire House at 900 University Avenue is a 1904 Greco-Roman revival mansion, and for years it carried something almost as rare as its architecture: a Mills Act contract, the state program that trades a lower property tax bill for a promise to maintain a historic home to preservation standards. Then, around 2016 and 2017, the owner filed for non-renewal. City staff notified the Santa Clara County Assessor, the paperwork went to the County Recorder's office, and a ten-year countdown began that would gradually walk the property's tax bill back toward its standard Proposition 13 value. Nobody replaced that contract. As far as the public record shows, nobody has entered a new one in Palo Alto since.
That single detail matters more than it looks like it should, because Palo Alto still appears, right now, on lists of California cities that participate in the Mills Act. The state's Office of Historic Preservation includes it. Real estate write-ups going back a decade describe it as one of the Bay Area's Mills Act cities alongside Oakland, Sacramento, Los Altos, Redwood City, and Sunnyvale. If you're shopping for a historic home in Professorville or Green Gables and you've done even a little homework, you've probably read that a Mills Act contract could cut your property tax bill by something in the neighborhood of 40 to 70 percent, a range documented in other participating cities. It's a real number, attached to a real program, that is not currently something you can apply for in Palo Alto.
What the lists get right, and what they're missing
The lists aren't wrong that Palo Alto has a Mills Act history. It does. The city is a longtime member of the state's roster of participating jurisdictions, and that membership is what shows up when a database gets scraped or a blog post gets written. What the lists don't capture is the difference between having once issued a contract and currently accepting new ones.
Palo Alto's own planning department is unambiguous about this. A 2023 city FAQ on the Historic Resources Reconnaissance Survey states plainly that Palo Alto does not currently have a Mills Act program, and that a pilot program has been under discussion, pending additional public support, before it could be adopted. That's not a marketing document. It's the city answering its own residents' questions about what the Historic Inventory does and doesn't entitle them to.
The discussion didn't end there. A May 2024 Historic Resources Board staff report walked through a proposed "tailored" Mills Act pilot, modeled in part on cities that share Palo Alto's basic aid school funding structure, including Beverly Hills, Campbell, Los Altos, and Saratoga. An August 2024 HRB retreat document referenced pushing the pilot test off again for further study. Neither document describes a program a buyer can walk into city hall and apply for today.
Four districts, one gap
Palo Alto has four residential areas listed in the National Register of Historic Places: Professorville, the Ramona Street Architectural District, Green Gables, and Greenmeadow. Individually listed properties outside those districts, like the Squire House, can also qualify if they meet the criteria on the city's Historic Inventory, a list established in 1979 that once included roughly 500 sites concentrated downtown and in the neighborhoods that grew up around it.
Professorville is the oldest and largest of the four. The land was subdivided in 1889 for Stanford faculty who wanted to own rather than lease university property, and the district today runs roughly along Kingsley, Lincoln, and Addison avenues, crossed by Ramona, Bryant, and Waverly streets. It's dense with the brown shingled and Colonial Revival houses that gave the neighborhood its identity, including homes designed for some of Stanford's first professors.
None of that history changes because the tax program is dormant. A home in Professorville or Green Gables still comes with Historic Resources Board review for exterior alterations, still falls under the Secretary of the Interior's Standards if you want to remodel, and still requires the same conformance work whether or not a tax contract exists. The design obligations of historic status are current and binding right now. The tax benefit that's supposed to help offset the cost of meeting those obligations is the part that's on pause.
What the two claims actually mean for your numbers
| The claim you'll read | What Palo Alto's own documents say |
|---|---|
| Palo Alto participates in the Mills Act, per the state OHP list | Historically true. The city has had at least one contract, now non-renewed. |
| Historic homeowners get a 40-70% property tax reduction | That range comes from cities with active programs. Palo Alto isn't issuing new contracts to test it against. |
| A pilot program is "in development" | As of the most recent city documents reviewed, the pilot has been discussed since at least 2017 and pushed off again as of August 2024, with no confirmed council adoption since. |
| Historic district homes carry design restrictions | Current and enforced, independent of tax status. |
The gap between the first row and the third is the one that costs buyers money if they miss it. If you're underwriting an offer on a Professorville listing and mentally subtracting a Mills Act discount from your annual carrying cost, you're pricing in a benefit that doesn't currently exist to apply for. That's a different mistake than overpaying for a view or a lot line. It's building your monthly number around a program the city itself says isn't running.
What to actually ask before you write the offer
A few questions to put directly to Palo Alto's Planning and Development Services or the Historic Resources Board before you factor any tax scenario into your offer:
- Is the property individually listed on the Historic Inventory, located in one of the four National Register districts, or neither?
- Has the city adopted the tailored Mills Act pilot discussed in 2024, and if so, is it accepting applications?
- If a contract exists on the property already, since Mills Act contracts run with the land rather than the owner, what are its current terms and how many years remain?
- What discretionary review does the Historic Resources Board require for the specific work you're planning, independent of any tax question?
Those answers come from the city, not from a list that was accurate five or ten years ago and never got updated. A seller's disclosure package should tell you whether a contract is attached to the specific property you're buying. It won't tell you whether the citywide pilot has moved, and that's worth a direct call before you finalize your numbers.
A short FAQ
Does a Mills Act contract transfer when a historic property sells? Yes, under state law the contract runs with the property rather than the owner, so if a Palo Alto home still carries one of its legacy contracts, a buyer would generally take on both the tax treatment and the maintenance obligations that come with it.
Can a home be historic in Palo Alto without sitting in one of the four districts? Yes. The city's Historic Inventory includes individually listed properties outside Professorville, Ramona Street, Green Gables, and Greenmeadow, evaluated on the same design and significance criteria used for district properties.
If Palo Alto adopts the pilot later, would it apply to a home bought now? Mills Act contracts are entered into voluntarily after a property already qualifies, so a home purchased today could still become eligible for a future contract if the city adopts a program and the property meets its criteria at that point. The timing of your purchase doesn't lock you out.
Buying a historic home in Palo Alto is still a distinct and rewarding decision, and the design character that makes Professorville or Green Gables desirable isn't going anywhere regardless of what happens with the tax program. The mistake is pricing a specific tax outcome into your offer before confirming, directly with the city, that the program you read about is one you can actually enter. If you're evaluating a historic listing anywhere in Palo Alto and want a second set of eyes on what's real versus what's outdated online, reach out to Kristine Nguyen and the team at Dan Do Group. We'll help you separate the history worth paying for from the numbers worth double checking.
