Mello-Roos Taxes

Mello-Roos refers to taxes which are assessed on 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.

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 with approval of a two-thirds margin of qualified voters in the district.

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.

How Much Will My Mello-Roos Be?
Some agents quote Mello-Roos as a percentage. But that's not really accurate. Mello-Roos is a fixed amount that is assigned to each specific property.  The only way to know what your tax bill will be is to look at the actual tax records.  The tax records will state the dollar amount (not a percentage) of the Mello-Roos taxes.  We've seen some properties with median prices that have extremely high Mello-Roos bonds.  We know of $700,000 properties that pay over $2000 per year in Mello-Roos and this is on top of already higher property taxes.  On the other hand, we know of properties that are valued at over $2 Million dollars that have Mello-Roos of under $500 per year.  So, the bottom line is, you have to ask for all of the details.  What is the basic property tax (percentage of value of property), what is the fixed Mello-Roos bond, and finally, when will the Mello-Roos bond end? Ask your Realtor^® to find out!

SPECIAL NOTICE - Some of the laws effecting Mello-Roos changed in 2007.  Some of these changes can greatly effect the amount you have to pay now AND how much the amount can change in the future.  Mello-Roos is no longer capped at 2% per year.  This is a major change and caution is advised.  See your agent for complete details.