Owners of historic buildings in Santa Barbara may qualify for a tax break after the City Council unanimously approved a pilot program Tuesday to help preserve, maintain and rehabilitate older structures.

The city designated $300,000 over the next three years as part of an incentive program to designate historic properties under the California Mills Tax Abatement Act. The act allows local jurisdictions to administer economic incentives to preserve qualified historic structures.

Senior planner Jaime Limon introduced the resolution to the council. She said many other communities have adopted the act, and that the staff has been studying the approaches of other cities for the past two years.

“The idea behind the Mills Act is to have these property owners utilize these tax breaks and to hopefully restore them to their grandeur,” he said.

Tuesday’s resolution will require properties that qualify to have their values reassessed by the county tax assessor, which could result in a substantial reduction in property tax, Limon said.

A portion of tax revenue would be lost per year, and could range from $6,000 to $15,000 per year. Agencies that benefit from those taxes, such as the city, county and particularly local school districts, will be most affected, but they have been in contact and have not objected because of the limited scope of the project.

The $300,000 for the program’s tax breaks would not come out of city reserves, but out of future revenues, so the city would have to adjust to reflect that amount or find another source of income.

The city is in the process of surveying neighborhoods to help identify potential candidates, and 428 properties could be eligible if more historic districts around the city are designated.

Good candidates for the program will be screened by the city’s urban historian and the Historic Landmarks Commission.

Limon said the item will go before the Ordinance Committee next week, that there are already candidates waiting, and that the staff’s aim is to get to those by the end of the year.

A cap of eight properties per year will be considered, which could include two commercial properties.

Limiting the number of contracts will be crucial to capping the cost of the program, Limon said, and that an assessment cap on each property will apply. That number hasn’t been determined yet.

Other cities bring these types of projects individually before their city councils to approve, but Limon said that step wasn’t necessary because the city has the oversight of a historian and the HLC.

Also up for consideration are other incentives that could be added to the ordinance, including zoning and code relief for businesses trying to update and legalize their properties.

Urban historian Jake Jacobus attended Tuesday’s meeting and cited many of the Victorian-era buildings on Santa Barbara’s westside as an example of the kind of properties that could be good candidates.

“They’re often forgotten about … and many of them are in a state of disrepair,” he said. “It’s about preserving our architectural jewels that, a few more years from now, are not going to be salvageable.”

The opportunity will exist to modify the program down the road, and Limon said the council will review the program in three years.

— Noozhawk staff writer Lara Cooper can be reached at lcooper@noozhawk.com.