UNDERSTANDING MELLO-ROOS TAXES

When buying a home in California, your monthly payments will be made up of principal, interest, property taxes and insurance and possibly additional taxes known as Mello-Roos. Mello Roos taxes are fairly common throughout the Inland Empire – in Riverside, Corona, Lake Elsinore, Murrieta, Temecula, etc. The Community Facilities District Act was a law enacted by the California State Legislature in 1982.  The name Mello-Roos comes from its co-authors, Senator Henry Mello (of the Monterey area) and Assemblyman Mike Roos (of Los Angeles). The Act enabled “Community Facilities Districts” (CFDs) to be established by local government agencies as a means of obtaining community funding.

What is a Mello-Roos District?

A Mello-Roos District is an area where a special tax is imposed on the homeowners 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.

 What are my Mello-Roos taxes paying for?

You might be paying for both services and facilities. Services may include: police and fire protection, ambulance and paramedic services, recreation programs, 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 may include: parks, recreation facilities, parkway facilities, open-space facilities, elementary and secondary schools, libraries, child care facilities, natural gas pipeline facilities, telephone lines, facilities to transmit and distribute electrical energy, cable television lines, and others. 

When do I pay these taxes?

Your Mello-Roos tax 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.

How long does the tax stay in effect?

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 it will never exceed 40 years.

How is the special tax reflected on the real property records?

This tax is a lien on your property, essentially like a regular tax lien. The lien is recorded as a "Notice of Special Tax Lien"

How are Mello-Roos taxes affected when the property is sold?

The Mello-Roos tax is not based upon the value of the property; therefore, any increased value of the property does not affect the amount of the tax when property is sold.  Any delinquent payments must be satisfied before the sale of the real property since the unpaid amounts are a lien against the property.