Understanding Mello-Roos
In purchasing your new home, your future monthly payments will be made up of principal, interest, real property taxes and insurance, but what is the tax for the Community Facilities District, otherwise known as a Mello-Roos District? The CLTA has answered some of the questions most commonly asked about the Mello-Roos Community Facilities Act.
Q. What is a
Mello-Roos District?
A. A Mello-Roos District is an area where a special tax is imposed on those real property owners within a Community Facilities District. This district has chosen to seek public financing through the sale of bonds for the purpose of financing certain public improvements and services. These services may include streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly developing areas. The tax you pay is used to make the payments of principal and interest on the bonds.
Q. Are the
assessments included within the Proposition 13 tax limits?
A. No. The passage of Proposition 13 in 1978 severely restricted local government in its ability to finance public capital facilities and services by increasing real property taxes. The "Mello-Roos Community Facilities Act of 1982" provided local government with an additional financing tool. The Proposition 13 tax limits are on the value of the real property, while Mello-Roos taxes are equally and uniformly applied to all properties.
Q. What are my
Mello-Roos taxes paying for?
A. Your taxes may be paying for both services and facilities. The services may be financed only to the extent of new growth, and services include: Police protection, fire protection, ambulance and paramedic services, recreation program services, library services, the operation and maintenance of parks, parkways and open space, museums, cultural facilities, flood and storm protection, and services for the removal of any threatening hazardous substance. Facilities which may be financed under the Act 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 pro-posed 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 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.
The Title Consumer is
published by the California Land Title Association. Member companies of
the California Land Title Association are dedicated to facilitating the
transfer of real property throughout
For more information - Please call Paul Miller - Realtor @ 619-497-3415
Your San Diego real estate connection.
Serving the following areas:
San Diego, Allied Gardens, Alpine, Barrio Logan, Bay Park, Bonita, Carlsbad, Carmel Mountain Ranch, Carmel Valley, Casa De Oro, Chula Vista, City Heights, Clairemont, Coronado, Cottonwood, Crest, Crown Point, Cuyamaca, Dehesa, Del Cerro, Del Mar, Descanso, East Lake, El Cajon, Encanto, Encinitas, Escondido, Fairbanks Ranch, Fallbrook, Fletcher Hills, Flinn Springs, Golden Hill, Grant Hill, Grantville, Grossmont, Harbison Canyon, Hillcrest, Imperial Beach, Jamul, Julian, Kearny Mesa, Kensington. Kentwood in the Pines, La Costa, La Jolla, Lakeside, La Mesa, Lemon Grove, Leucadia, Linda Vista, Logan Heights, Loma Portal, Middletown, Midway, Miramar, Miramar Ranch, Mira Mesa, Mission Bay Park, Mission Beach, Mission Hills, Mission Valley, Mission Village, Moreno, Mount Helix, National City, Navajo, Nestor, Normal Heights, North Island, North Park, Ocean Beach, Oceanside, Old Town, Olivenhain, Otay, Otay Mesa, Pacific Beach, Paradise Hills, Pine Hills, Pine Valley, Point Loma, Poway, Ramona, Ranch Bernardo, Rancho Del Rey, Rancho Penasquitos, Rancho San Diego, Rancho Santa Fe, Rolando, Sabre Springs, San Carlos, San Diego, San Marcos, Santa Ysabel, Santee, San Ysidro, Scripps Miramar Ranch, Serra Mesa, Shelltown, Sherman Heights, Solana Beach, Sorrento Hills, Sorrento Mesa, Sorrento Valley, South Park, Spring Valley, Sunnyside, Talmadge, Tierrasanta, University Heights, Uptown, Vista, Winter Gardens. We also work in and are board registered in the Temecula and Murrieta areas and More.