When purchasing a new home, your future monthly payments will be made up of principal, interest, real property taxes and insurance. In certain areas there may also be a tax for the Community Facilities District, otherwise known as a Mello-Roos District.
Mello-Roos Community Facilities Act of 1982
The Mello-Roos Community Facilities Act of 1982 became law in January of 1983. This act allows local governments to establish a Mello-Roos special tax assessment district in a developing area to finance specific public facilities and services needed. This district has chosen to seek public financing through the sale of bonds for the purpose of financing certain public improvements and services. The tax you pay is used to make the payments of principal and interest on the bonds.
What are your Mello-Roos taxes paying for?
Your taxes may be paying for both services and facilities. The services may be financed only to the extent of new growth. Facilities and services include police and fire protection, ambulance and paramedic services, recreational facilities and program services, libraries and library services, the operation and maintenance of parks, parkways and open space facilities, museums, cultural facilities, flood and storm protection, removal of any threatening hazardous substance, elementary and secondary school structures, child care facilities, natural gas pipeline facilities, telephone lines, facilities to transmit and distribute electrical energy, cable television lines, and others.
What this means for you
Disclosure requirements (California Civil Code Section 1102.6b.) require that an owner who is selling a property in a Mello-Roos District, make a "good faith effort" to obtain a Notice of Special Tax from the local agency that levies the Special Tax, and provide it to the buyer. Buyers in the market to buy a home in California can proactively research whether the home they are interested in falls within a Mello-Roos District by contacting the local county assessor's office or by reviewing the Preliminary Title Report or the Natural Hazard Disclosure Report.
Source: California Land Title Association (www.clta.org/for-consumers/consumer-melloroos.html)
The information provided is for informational purposes and is subject to change without notice. Seek legal, tax or other professional advice before relying upon this information.