SAN DIEGO -- San Diego is short on police, can’t fill its potholes or clean up trash around the city.

However, the city offers tax breaks to an exclusive group of homeowners thanks to a program that is sparking concern and criticism in these economic times.

Historic properties are a hot commodity in San Diego.

City Tax Assessor Greg Smith said, “You’re looking at 50 percent savings on property taxes.”

That is just the average savings under the Mills Act.

The Mills Act was created to preserve historic property.

For instance, one particular house in La Jolla last sold for $3.2 million. Under the Mills Act, its taxable value is $647,000 with a property tax bill of $7,200 per year.

That figure is nearly the same as a typical 1,800 square foot tract home.

Bruce Coons of the Save Our Heritage Organisation said, “It’s a benefit to everybody, the citizens, the community. That’s why the program was set up.”

It is this fervor that drives the Mills Act in San Diego.

Why does San Diego have more Mills Act properties than anywhere in the state?

There are 2,132 Mills Act properties statewide, all at least 45 years old, designed or built by famous people with historical significance in their communities.

Smith said one-third of them (712) are in San Diego -- compared to one in all of San Francisco County.

“I think you have some zealots in the planning department,” said Smith.

These zealots, Smith said, take a $1 million bite out of local tax revenues.

“You can get a lot of services for $1 million like police, fire, salaries and equipment,” added Smith.

Some people believe the Mills Act is applied unfairly, as a perk for the wealthy.

It is not available in many average, older neighborhoods.

In the late 1950s, a Clairemont neighborhood offered young U.S. Navy families a chance to own a piece of the American dream in the form of California ranch-style homes.

“This neighborhood was the first suburb built in San Diego,” said realtor Rosemary Jole.

Jole called the homes classic mid-century architecture deserving of a tax break.

Jole added, “Not only would it benefit the neighborhood, but homebuyers trying to get into the market in San Diego. It would be a definite benefit.”

But this particular neighborhood is not even on the city’s radar.

“There may not be justification for a historical district,” said City Planner Betsy McCullough.

McCullough oversees the Mills Act Program in San Diego.

She said, “We are not selecting who can come and apply. We’re making this available to anybody and any neighborhood.”

One well-known property is now at the center of a Mills Act debate.

Once a ritzy hotel, the historic El Cortez is now home to nearly 100 condominiums.

The new homeowners want to keep their tax break, but the city is poised to take it away.

A public hearing is scheduled for next week.

For more information about the Mills Act and historical properties in San Diego, click here.