“We’ve been looking at homes in North County and sometimes we see an extra fee called Mello Roos for a few hundred bucks a month. I wouldn’t want to buy a property with an extra fee. What is that?”
Answer:
In California’s “taxpayer revolt” of 1978, voters passed Proposition 13 that:
1. Limited property taxes to 1% of assessed value, plus voter approved local bonds
2. Limited the annual assessment increase to 2%
Prop 13 didn’t provide enough property tax revenue for infrastructure in new areas. So State Senator Henry Mello and Assemblyman Michael Roos introduced the Community Facilities Act of 1982, creating bonds and fees to pay for new schools, roads, fire stations, etc. “Mello-Roos” shows up on your tax bill in addition to the 1.2%.
Most newer areas like Carmel Valley, Eastlake, Aviara, and Sabre Springs have Mello-Roos. It typically ranges from $50 to $300 monthly and usually expires in 30-65 years.
Be careful to read your disclosure forms to be sure you know if there’s a Mello-Roos fee.
Should avoid buying a property with Mello-Roos? In theory, if you have two identical developments and one has Mello-Roos and one doesn’t, the one with Mello-Roos should sell for a lower price reflective of the Mello-Roos fee. And I believe I see this in practice.
