Recently a client asked me to explain what is Mello-Roos and explain how it will affect his purchase. Mello-Roos is a California act from 1982 that enables community facility standards to be set up by local governments as needed providing funding for neighborhood infrastructure, schools, and other public works in areas where funding would not otherwise be available through local taxes. Mello-Roos is named after the two California legislators who co-authored the act, also known as the Community Facilities Act.
How does it affect a purchase of a home?
In 1978 Proposition 13 capped property taxes at an inflation factor not to exceed 2% per year, a shortfall used to provide funding for schools and public services especially in designated developments and communities. Mello-Roos is independent, not subject to Proposition 13 and can rise and fall.
Homeowners residing in Mello-Roos districts pay the fees that come as part of their annual property tax bill, though in some instances a Mello-Roos district will send out a separate bill. Check with your tax advisor for applicable tax deductions.
Newer homes are often surrounded by new schools, fire stations, and public works. Mello-Roos is a separate fee assessed to the people living in the new community. If you need additional help understanding the Mello-Roos fee, let us know. We are here to help.