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MELLO ROOS |
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.
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.
What Mello Roos taxes pay for are 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.
When you purchase 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. 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.
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.
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.
This 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.
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. |
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