What are Mello-Roos taxes? (Irvine, Orange: sale, condo, how much)

[Roma]

What are Mello-Roos taxes? What is the percentage on the dollar for Mello-Roos taxes?
Thanks!

[shadow42]

I will explain as best I can....I believe these are 40yr bonds taken out by the county or state (not sure which) in order to develop an area (ie: build roads, schools, ...etc). The homeowner pays back the bond in what is called a mello-roos tax. Generally, property tax in OC is around 1.1% depending upon the town. I live in a new area in south county and pay 1.97% property tax. Many older areas around me pay around 1%. Not fun to pay that with home prices being what they are. I hope I explained clearly.

[Roma]

How much money does the home owner have to pay a year to pay back the bond?

[EscapeCalifornia]

Well, given Shadow's example, the owner of an $800,000 house would be paying an extra $7,000/yr because of Mello-Roos.

[Angel Bear]

I've noticed some (well, many) housing listings say that there is no mello-roos, so does it mean it's for that geographic area or specific to say a certain type of property--condo versus house? I'm just keeping an eye on condo prices in Laguna Niguel

[shadow42]

You can definately have a mello-roos tax on a condo or townhome. It is the area you live in that dictates the tax rate. For example....Costa Mesa is an older area and with no mello-roos tax. Even new homes there do not have mello-roos tax because the infrastructure of the area already exists...ie schools, roads, shopping centers...etc. However, a brand new area such as Ladera Ranch or any of the new communities in Irvine off the 405 will definately have a mello-roos because they will need to build all that stuff.

[Jenali]

All homes have property taxes and many have an accompanying special assessments. Mello Roos taxes are additional encumbrances added to basic property taxes. Not all homes in Orange County have this additional Mello Roos tax. When home shopping, your Realtor should let you know which homes you will be viewing do or don't have Mello Roos taxes. Usually only the newer areas where new schools, fire stations, libraries and such had to be built will have this addition property tax. There is no "standard calculation" for Mello Roos. One community may have very low Mello Roos, while the community across the street may have much higher Mello Roos, while another community bordering it has no Mello Roos at all.

A Mello Roos tax (bond) is a method of financing or underwriting the cost of public improvements or infrastructure such as utilities, roads, recreational facilities, schools, libraries, fire stations, etc. that are needed to support new development.

This method of financing came about in 1982 and was a direct result of the passage of Proposition 13 in 1978 in California, which limited the amount of revenue that could be raised to support new developments through traditional means. Only those new developments that choose to create a Community Facilities District impose this added tax burden on homeowners.

Bonds usually run for 20 to 40 years and are repaid by homeowners. This means for example that your "overall tax burden" when you purchase a home with Mello Roos financing can be 60%, 80%, or 100% higher than your basic property tax obligation would be if you purchased the same home without Mello Roos financing.

When purchasing a home with Mello Roos financing always investigate the basis for the tax, it’s duration and any potential for increase. Also, be aware that this added burden will affect your qualifying ratios.

http://www.orangecountycastles.com/o..._mello_roos.mv

Originally Posted by Angel Bear

I've noticed some (well, many) housing listings say that there is no mello-roos, so does it mean it's for that geographic area or specific to say a certain type of property--condo versus house? I'm just keeping an eye on condo prices in Laguna Niguel

Laguna Niguel has both homes with and without the Mello-Roos ,all homes built before the 90s in LN has no MR,most of the homes built in the early 90s has no MR too,and almost all homes built in the late 90s and the 2000s has the MR.All you have to do is to ask ,or check the listing .I heard that the MR can go up and down ,but ppl here say that it always goes up.. never down .

[shadow42]

I believe you are wrong. The mello-roos tax is a fixed $$$ amt that is paid per month. My tax rate in Ladera Ranch is 1.97% as an original home owner. If I sell my home, I believe the new owners will pay around 1.5%. The property tax can go up each year, and it does within the confines of the states limitations for property tax increases. But the mello-roos remains the same. I have never heard anything that you describe above.

[Jenali]

Originally Posted by shadow42

I believe you are wrong. The mello-roos tax is a fixed $$$ amt that is paid per month. My tax rate in Ladera Ranch is 1.97% as an original home owner. If I sell my home, I believe the new owners will pay around 1.5%. The property tax can go up each year, and it does within the confines of the states limitations for property tax increases. But the mello-roos remains the same. I have never heard anything that you describe above.

Honestly, I'm not sure about it ,that what I heard from some ppl here .I think ur right about that mello roos isn't based upon the sale price.

from here :

by law (Prop.13) the special tax cannot be directly based on the value of the property. special taxes instead are based on mathematical formulas that take into account property characteristics such as use of the property ,square footage of the structure and lot size .The formula is defined at the time of the formation ,and it will include a maximum special tax amount and a percentage maximum annual increase.

[nevercoldcall]

There are a lot of variables with Mello-Roos. A lot of it has to do what what infrastructure existed when the development was built and how much of the infrastructure costs were picked up by the developer.

For example, last week I looked at a house listed for $2.5 million in Newport Coast and the Mello-Roos is only $720 a year (!) because the developer picked up most of the costs. I looked at a much smaller house nearby for $1.2 million which had NO Mello-Roos even though the house is just a few years old, because the developer bought the land and got it zoned before Mello-Roos existed, therefore the houses are grandfathered in without the extra tax.