| The following information was taken from a recent flyer distributed by First American Title Company in Southern California. It defines "Mello-Roos" very well. My comments follow below. the definition. ************************************************** "Mello-Roos" refers to special tax districts. Senator Henry J. Mello and former Assemblyman Michael Roos won passage of the Mello-Roos community facilities act in 1982. This legislation authorized Mello-Roos Community Facilities District as a way to assist cities, counties and school districts to provide new infrastructure and facilities after governmental funds were cut by the passage of Proposition 13 in 1978. Before Proposition 13, state and local governments used income collected through property taxes to build new roads, schools and other community facilities. (Proposition 13 severely limited the amount and potential increase of property tax in California.) In order to continue building residential areas, these same governments were forced to require builders of new communities to pay for these public facilities. Consequently, (the cost of) these funds were added to the cost of (new) homes. Under Mello-Roos Community Facilities Act, landowners put up their land as collateral so that public agencies, like a school district, could raise money to pay for vital basic public facilities. The public agency forms a Mello-Roos Community District that sells bonds to fund the construction of these new facilities. A bond allows for payment over a specific amount of time through special taxes levied on property owners in that particular district. Mello-Roos taxes are paid by (to) the County Tax Collector as part of the normal property tax system. Not all new home communities are affected by Mello-Roos special taxes. For example, sometimes a new neighborhood is built within existing communities. Because public facilities are already in place, they are not subject to Mello-Roos taxes. ************************************************************** Although there are exceptions, Buyers should first assume that any home built after the mid-1980's may have a Mello-Roos Special Assessment. The true Mello Roos assessment has a set expiration date but, in some cases, can be renewed. The assessment varies by tract and is expressed as a defined, separate amount added to your tax bill. Your new Proposition 13 basic tax bill will be 1% of the purchase price of your home. The existing Mello-Roos or other Special Assessment (SA) amount is added to that. Know how much it is and decide whether you want to pay it before you seal the deal. Virtually every home in California, no matter when built, will have a certain amount of other special assessments on the tax bill. Some of the more common local improvement projects financed by special assessments are: Support of schools ... Flood control ... Street and sidewalks ... Irrigation ... Sewers ... Street lighting. Basically, you can expect to see $200-400.000 per year on your tax bill reflecting improvements that directly pertain to your property. The Mello-Roos Special Assessment goes on top of that. Most Mello-Roos assessments range from about $600-1200.00 per year per home. Occasionally, it can be quite high. Up to $3000.00 or more per year for certain tracts. When buying a newer home, make your offer subject to your approval of the ACTUAL CURRENT TAX BILL provided by the Seller. Your agent can do some verification for you by checking the tax rolls on the home you are considering. Tax rolls have been known to be wrong and do not break down the current total tax into defined components. The Natural Hazards Zone Disclosure, provided by the Seller for your approval, will also have reliable information about the exact amount of any Mello-Roos SA and date of expiration. Occasionally, you will find a large SA amount on a tax bill that is not Mello-Roos by definition but is essentially the same. The listing can rightfully state that there is "No Mello-Roos" but you could have a big surprise. Another reason to verify the actual tax bill! *********************************************************** I hope this definition of California's mysterious Mello-Roos special tax has helped you understand a topic that is very confusing to most Buyers. Please contact me with any questions you may have! Marlene Prescott Prudential California Realty 714 283-6643 marlenepre@aol.com |