What Exactly Are Mello-Roos Taxes?

Simply put, Mello-Roos is what you are going to pay for schools, libraries, parks, streets, sewage, police and fire protection, water hookups, and other services.  And while it generally applies to new communities, the law has been around for over 25 years now so many re-sale properties are also affected by its provisions.

Before the passage of Proposition 13 in 1978, costs now covered by Mello-Roos were generally picked up by the cities (local government) in which the community was built.  But proposition 13 changed all that, for better or for worse, imposing a strict cap on property taxes of 1 percent of the assessed market value of the home.

In 1982, State Senator Henry Mello and Assemblyman Mike Roos developed the Mello-Roos Communities Facilities District or CFD's.  CFD's float millions of dollars in low interest bonds to pay for all the facilities and services. These low-interest bonds must eventually be repaid, so it's the homeowners located within the CFD's that are assigned the task of repayment.  (The good news: these homeowners also receive all of the benefits of the newer facilities and services).   

It is important to note:  Mello-Roos is not an ad valorem tax (tax based on value), such as property taxes.  Costs are usually based on the size of your house and lot. Generally, the amount of Mello-Roos special tax paid is based on a sliding scale (less for smaller units, more for larger ones).  Taxation and repayment continues each year for the life of the bond issue, usually 20 to 40 years. The Mello-Roos tax remains fairly constant throughout the life of the bond but there is usually a provision that allows for a slight increase of 1% to 2% of the amount paid.

Please feel free to contact me if you have any additional questions regarding property taxes.  I have direct access to all county property tax information and have the ability to provide you with a copy of a specific property's tax bill so that all of the property tax data can be accurately reviewed prior to writing a purchase offer.  My 24 hr. direct line phone number is 949-887-7578.