What is Mello Roos?

State and local governments use income from property taxes to build new roads, schools, and other necessary community facilities for new residential neighborhoods.  Because Proposition 13 limited property taxes, homebuilders began to be required to pay for these public facilities themselves.  The builder would then added the cost of these facilities onto the cost of the homes they were building.  These added on costs made it so that fewer people were able to afford the new homes. 

In 1982, Senator Henry J. Mello and Assemblyman Michael Roos won passage of what became the Mello-Roos Community Facilities Act.  This legislation authorized districts a way to provide new infrastructure and facilities to assist cities, counties, and school districts.

Under the Mello-Roos Community Facilities Act,  public agencies form a Mello-Roos Community District and raise money by selling bonds to fund the construction of these facilities.  The new home owners in the district then pay off these bonds by way of special taxes levied on the their property.  The tax will stay in effect until the principal and interest on the bonds are paid off.  Mello-Roos tax is not based on the value of the property, so the increased value of the property does not affect the amount of tax.

Sometimes a new neighborhood is built within in an area where the public facilities are already in place.   These homes would not be subject to Mello-Roos taxes.

Some of the more common local improvement projects financed by Mello-Roos assessments are:

 Support of schools Flood control   Streets and sidewalks 
 Irrigation Sanitary sewers  Street lighting 
 Police protection  Fire protection  Ambulance and paramedic services
 Library services  Electricity  The operation and maintenance of parks
 Museums Cultural facilities Telephone lines

 

Some types of improvements require ongoing maintenance finance by annual charges and continue after the special assessment has been paid (such as fire protection).