Mello-Roos: What is it and why?

Many people who are not from San Diego (and even some locals!) are often baffled on what this weird sounding fee is and why it’s applied to certain properties... So let’s break it down!

Starting with the weird name, this part is easy! It’s officially referred to as Community Facilities Districts (CFDs), but is more commonly known as Mello-Roos. The parcel tax is named after it’s creators: Henry J. Mello and Mike Roos.

In 1978 when Proposition 13 passed (officially named the People's Initiative to Limit Property Taxation) it limited the property tax rate and the ability of local governments to increase the assessed value of real property by not more than an annual inflation factor. So basically, an elderly person on a fixed income who has lived in their home for decades isn’t taxed at today’s prices, therefore forcing them out of their home even if they OWN it. However, once that property changes ownership- so does the tax rate. Well… how do we bridge the financial gap in the meantime? You guessed it! The Mello-Roos parcel tax.

So… How do you know if you have to pay this?! Mello-Roos community facilities districts are required to have two thirds voter approval. Sometimes a real estate developer is the only "voter" in such property owner elections that approve a Mello-Roos tax. It may pay for the following public improvements and services: streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly developing areas. So if you don’t have it on your current home already, you would need to have voter approval to apply this to your bill, meaning it’s voluntary.

That said, just about every new build community will have this tax in addition to the monthly HOA fees. In some areas, like Chula Vista for example, you will see this on homes being sold because the area was was built recently and the tax is not expired... The parcel tax can go away, but not all Mello-Roos taxes have an expiration. This is something that a County Assessor / Title Company can advise on depending on the specific property you are interested in. See below for a “cheat sheet” from Lawyer’s Title:

All these details can change significantly depending on the area, so please don’t let this discourage you!

Obviously, everything is relative to your goals, and if living in a newer home with great schools is your top priority then Mello Roos may not be an issue at all. It’s always better to know too much than too little. So please reach out and have me run the numbers for you and I hope this information helps you make the most educated decision on your home search!