Mello-Roos

The Community Facilities District Act (more commonly known as Mello-Roos) was a law enacted by the California State Legislature in 1982.^[1] The name Mello-Roos comes from its co-authors, Senator Henry J. Mello^[2] (D-Watsonville) and Assemblyman Mike Roos^[3] (D-Los Angeles). The Act enabled "Community Facilities Districts" (CFDs) to be established by local government agencies as a means of obtaining community funding.

History

When California Proposition 13 passed in 1978, it restricted the ability of local governments to raise property taxes by more than an inflation factor. The budget for services and for the construction of public facilities therefore could not continue unabated. As a result, new ways to fund public improvements in respective locales were considered.^[1] The Mello-Roos fees are generally considered an end-run around Prop 13, which caps property taxes while Mello-Roos are not capped.

Districts and taxes

A Mello-Roos District is an area where a special property tax on real estate, in addition to the normal property tax, is imposed on those real property owners within a Community Facilities District. These districts seek public financing through the sale of bonds for the purpose of financing public improvements and services.^[4] These services may include streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly developing areas. The tax paid is used to make the payments of principal and interest on the bonds.

Mello-Roos is tax deductible in some cases but not in others.^[5]

New communities

Many communities requiring new schools and infrastructures such as public parks and roads impose Mello-Roos. While property tax is assessed as a percentage of the value of the home, Mello-Roos is independent and could rise or lower and is not subject to Proposition 13.^[6]

References

1. ^ ^{a b} "What is Mello-Roos?". mello-roos.com. http://www.mello-roos.com/pdf/mrpdf.pdf. Retrieved 2009-01-04. 
2. ^ Henry John Mello — born March 27, 1924 in Watsonville, California; died September 4, 2004 in Watsonville, California. http://www.joincalifornia.com/candidate/5826
3. ^ Michael Yancey Roos — born August 6, 1945 in Memphis, Tennessee. http://www.joincalifornia.com/candidate/5839
4. ^ "Orange County Mello Roos Taxes". Orange County Castles. http://www.orangecountycastles.com/orange_county_mello_roos.mv. Retrieved 2010-10-10. 
5. ^ "Are Mello-Roos taxes deductible on your personal income tax return?". State of California. http://www.ftb.ca.gov/individuals/faq/net/909.shtml. Retrieved 2009-01-04. 
6. ^ Fulton, William. "How We Pay For Growth". www.planetizen.com. http://www.planetizen.com/node/91. Retrieved 2009-01-04.