The 411 on Mello Roos

In my recent post, regarding the two homes in Saugus, I mentioned that both homes did not have any Mello Roos. The question was asked to me, “…What are Mello Roos?” Forgetting that readers across the country may not know what this is, I did not take the time to explain.

Mello Roos are special assement taxes, usually found in newer neighborhoods. Where I live, Santa Clarita, they are very common, largely because there is a significant amount of new housing here. In the San Fernando Valley, they don’t exist, because The Valley is already established with neighborhoods such as Studio City, Sherman Oaks and North Hollywood.

In California, Prop 13 dictates, property taxes are based on 1% of the purchase price of your home. Then each county charges their own additional tax to be tagged on to that 1%. In Los Angeles County that roughly works out to be ¼ % extra. However, if you are shopping for a new house in Valencia or Westridge (both neighborhoods in Santa Clarita), a Mello Roos tax is added on to the 1.25%. The Mello Roos is usually a school and/or police bond that the builder did not pay off and is passing that cost onto the homebuyer. That bond usually lasts for about 20-30 years, or until it are paid off. For example, a large luxury newer home in the master planned community, Tesoro del Velle, will cost approx. $950,000. The base property tax, plus the Mello Roos works out to be about 1.7%, that equals to about $16,000 per year.

Now historically, it has been proven in areas with a Mello Roos tax, these neighborhoods are most desirable. They have the lowest crime rate and the best schools. Santa Clarita is not the only city that has them. Many cities in Orange County, San Diego and Palm Springs have Mello Roos. No one likes to pay them, but they produce good quality neighborhoods.

  • Cary

    Would this be an example of how Prop 13 really has short changed our schools and state?

  • http://losangeles.redfin.com/blog/author/ron.degenova Ron DeGenova

    Cary,

    That’s a really good point that you have made. However, I tend to stay away from political issues such as this.

    I do invite others to offer their comments on Prop 13, and if they think it is a fair property tax system.

  • Garth

    Safe and better community my tail. It sounds to me like all politicals involved want to avoid all costs period. Our communities got built without Mello-Roos and way back before Prop 13; taxes were basically within reason unless the deed/title got changed. At that point, the property tax value suddenly had to increase just because a buyer was willing to out bid all other buyers. It has nothing to do with the cost of streets, schools, or police/fire. Most of the police and fire appear to be well over paid as their budgets are fat.
    $18,000 a year? Since 2001 the counties have reaped from $900 a year on a property to $5,000 per year. Tell me why over $4,000 needs to go to the county just because the title got transferred?

    Also, since 2001, when was the last time you heard the county claiming they have pulled in a landslide of funds just off of the newer property taxes just from change of ownership? It’s in the 10′s of billions yet no one mention’s how the county and cities have gotten fat bank accounts galore. Last time I checked, they are still claiming they have no money…come to think of it, they have claimed that for decades so, they aren’t short of cash, just short of mental ability as how it should be dispersed to provide maximum benefit to the slaves who paid into the fund.

    I don’t have a lot of respect for the added taxes since most of the current tax income is wasted on stupid ideals and high tech equipment for police that seems far too complex to manage common law keeping.

    Mello-Roos is just another scheme to stick it to the citizen so that the incumbents can continue their elevated lifestyles.