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Mello-Roos Taxes

Mello-Roos taxes are assessed to special tax districts, known as Mello-Roos Districts or Community Facilities Districts, for the purpose of financing public services and/or facilities including streets, police protection, fire protection, elementary schools, parks, libraries, museums, and cultural facilities.

California State Senator Henry Mello and Assemblyman Mike Roos spearheaded the successful passage of the Mello-Roos Community Facilities District Act in 1982. The Act passed in response to Proposition 13 (enacted in 1978), which limited the ability of local governments and developers to finance new projects.

Note:Proposition 13 does not restrict Mello-Roos taxes.

Mello Roos District
The Mello-Roos act authorized any county, city, special district, school district or joint powers of authority to create a Mello Roos District if two-thirds of the qualified voters in the district vote to approve.

Property Owners
The Mello Roos District can issue bonds to pay for public improvements. The district's property owners are responsible for payment of a "special tax" to repay these bonds. The act allows for considerable flexibility on how the special tax is calculated. The calculation often takes into account property characteristics such as square footage of the home and parcel size. Typically, the tax is included with your general property tax bill.

Time Limit
The special Mello-Roos tax stays in effect as long as needed to repay the principal and interest on the special bond along with any reasonable administrative costs. The tax may not stay in effect for a period longer than 40 years.

Property Sale
An increased value of the property does not affect the amount of the tax when property is sold.

MELLO-ROOS: FREQUENTLY ASKED QUESTIONS

Q. What are my Mello-Roos taxes paying for?

A. As mentioned on the front page, your taxes may be paying for both services and facilities. The services may be financed only to the extent of new growth. Services include police and fire protection, ambulance, paramedic, recreation and library services, the operation and maintenance of parks, parkways and open space, museums, cultural fac-ilities, flood and storm protection and services for the re-moval of any threatening hazardous substance.

Facilities which may be financed under Mello-Roos include property with an estimated useful life of five years or longer, parks, recreation facilities, parkway facilities, open space facilities, elementary and secondary school sites and structures, libraries, child care facilities, natural gas pipeline facilities, telephone lines, facilities to transmit and distribute electrical energy, cable television lines and others.

Q. When do I pay these taxes?

A. By purchasing an interest in a subdivision within a Community Facilities District you can expect to be assessed for a Mello-Roos tax which will typically be collected with your general property tax bill. These special tax payments are subject to the same penalties that apply to regular property taxes.

Q. How long does the tax stay in effect?

A. The tax will stay in effect until the principal and interest on the bonds are paid off along with any reasonable administrative costs incurred in collecting the special tax or so long as it is needed to pay the expenses of services, but in no case shall exceed 40 years.

Q. What happens if a general tax payment is not made on time?

A. Because the Mello-Roos tax is typically collected with your general property tax bill, the Facilities District that obtained the lien may withdraw the assessment from the tax roll and commence judicial foreclosure.

Q. What is the basis for the tax?

A. Most special taxes levied on properties within these districts have been structured on the basis of density of development, square footage of construction or flat acreage charges. The act, however, allows for considerable flexibility in the method of apportionment of taxes and the local agencies may have established an entirely different method of levying the special tax against property in the district in question.

Q. How much will the Mello-Roos payment be?

A. The amount of tax may vary from year-to-year, but may not exceed the maximum amount specified when the district was created. In the case of the purchase of a new house within a subdivision the maximum amount of the tax will be specified in the public report.

The Resolution of Formation must specify the rate, method of apportionment and manner of collection of the special tax in sufficient detail to allow each landowner or resident within the proposed district to estimate the maximum amount that he or she will have to pay.

Q. How is the special tax reflected on the real property records?

A. The special tax is a lien on your property, essentially like a regular tax lien. The lien is recorded as a "Notice of Special Tax Lien" which is a continuing lien to secure each levy of the special tax.

Q. How are Mello-Roos taxes affected when the property is sold?

A. The Mello-Roos tax is assessed against the land, but is not based upon the value of the property. Therefore, the possible increased value of the property does not affect the amount of the tax when the property is sold.

The amount of the tax may not exceed the original maximum amount stated in the Resolution of Formation. Any delinquent payments must be satisfied before the sale of the real property since the unpaid amounts are a lien against the property.