Mello-Roos and Property Taxes

I frequently am asked about Mello-Roos Districts by those who aren't sure what they are or where they are located.

These districts were formed after the enactment of Proposition 13 in 1978 which was voted in to restrict public agencies' ability to increase property taxes based on assessed value. The 1982 Community Facilities Act was passed which gave government an alternative method to finance improvements and services.

While any county, city, school district, special district or joint power authority has the power to institute a Mello-Roos district, these districts, which are created to fund infrastructure such as streets, sewers, police protection, fire protection and similar services, are usually part of a new development which does not already have these services. They are more often found in areas such as Orange County or Riverside County where there are more post-1978 developments. The tax is not based directly on property value, but on other characteristics such as square footage and lot size of the property. It must be voted on by two-thirds majority vote by those residents living within the proposed boundaries. Large tax amounts may be funded through bonds issued by the District. There may be an ongoing maintenance fee even after the bonds are paid off.

The Community Facilities District does have the separate power to foreclose, making it all the more important to pay your taxes on time. Notice of the tax amount, if it is in your area, is found in the Notice of Special Tax which the seller must make a good faith attempt to provide to the buyer during escrow.

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