San Francisco Planning's Mills Act application guide describes how contracted historic homes are valued.
In Pacific Heights, starting a contract has an entry limit. Under San Francisco Administrative Code §71.5(b), the single-family assessed-value limit is $3,000,000 as of December 31 of the year before the application. Multi-unit residential buildings have a $5,000,000 limit.
How the tax value is set
Under a contract, the Assessor-Recorder runs what the guide calls a three-way value comparison every January 1 and taxes the lowest of three figures. The first is a restricted income value, which capitalizes the rent the home could earn. The second is market value from comparable sales. The third is the factored base year value, the familiar Proposition 13 number.
Planning's worked example shows how far apart those figures can be. It uses a 2013 tax rate, so read it as an illustration of the method rather than a current estimate.
| Value in the comparison | Example figure |
|---|---|
| Restricted income approach | $610,000 |
| Market value from comparable sales | $1,500,000 |
| Factored base year value | $1,064,403 |
| Estimated tax under contract | $7,247 |
| Tax without contract | $12,645 |
| Estimated annual savings | $5,398 |
The income figure comes from a formula: market rent, minus vacancy and operating expenses, divided by a capitalization rate. The rate is built from an interest rate the State Board of Equalization sets each year, a risk rate, the property tax rate and an amortization rate. Since rents and rates move, the guide says savings are not guaranteed and will change from year to year.
The formula and the cap
Planning says reductions on past contracts have ranged from 5% to 64%.
The Historic Preservation Commission can recommend an exemption if it finds, among other things, that the building is a particularly significant resource. The Board of Supervisors makes the decision. The same $3 million figure appears in a Planning preservation bulletin first published in 2003 and still appears in the code today. The FY 2026-27 residential fee is $3,870, according to Planning's fee calculator.
What one Webster Street landmark shows
The Bourn Mansion at 2550 Webster Street, City Landmark No. 38, shows how close to the line a Pacific Heights application can come. Its Historic Preservation Commission file, case 2012.0679U, records an assessed value just under the $3 million residential limit when the owners applied, along with a ten-year rehabilitation plan.
The Board's 2013 agenda lists the Webster Street contract as File 130479. It lists another Pacific Heights-area landmark, the Burr Mansion at 1772 Vallejo Street, as File 130463. At the December 16, 2013 committee hearing, Planning staff said two applications in that batch needed exemptions because their values were above the $3 million residential or $5 million commercial limit. Staff said historic structure reports documented enough work to justify the incentive.
The program is still active. In December 2025 the Board adopted contracts for 530 Jackson Street, 1035 Howard Street and 331 Pennsylvania Avenue. None of those addresses is in Pacific Heights.
Maintenance and contract terms
Planning's guide describes the contract as one that "obligates future owners to the maintenance and care of the property." It also describes automatic annual renewal and City inspections by appointment.
The Webster Street Historic District
The Webster Street Historic District, bounded by Jackson, Buchanan, Fillmore and Clay Streets, sits inside Pacific Heights. Planning's district list was last updated in 2023.
Questions sellers and buyers ask
Does the City have to approve a qualified application? No. Planning ranks applications against priority criteria, and the Board has final discretion.
Is the 2024 guide still accurate? The PDF is dated January 24, 2024. Planning updated its application page in May 2026 and its fee schedule in August 2026. The current code also sets out the cap in more detail than the guide does, so check the current forms and code before relying on the PDF.
This post is general information about how the program works. It is not legal, tax or financial advice. Confirm your own situation with SF Planning, the Assessor-Recorder and your own tax and legal advisors.
At Amanda Jones Advisory, we work alongside your preservation, tax and legal advisors to document completed work, line up the calendar and present the contract clearly to buyers. Book a private consultation to go over your timeline.
