Community Facilities District Act
Mello-Roos is a widespread name for a law called the Community Facilities District Act, approved in 1982 by the State of California Legislature. The
title of the act comes from Senator he Monterey area, Henry Mello of Monterey area and Mike Roos,a Los Angeles assemblyman, its co-authors. Mello-Roos facilitate the establishment of "Community Facilities Districts" (CFDs) by agencies of local governments as a way of acquiring community funding.
In 1978, the passage of California Proposition 13 severely limited local governments ability to appropriate local property taxes to build new public services and facilities. Consequently, fresh ways to obtain funds for new public developments in respective districts were contemplate.
Special districts and tax levies
A special tax on real property in selected areas is often called A Mello-Roos District, and is levied on top of normal property taxes when real property owners are contained inside a Community Facilities District. Public financing through bonds sales is sought in these districts for the express purpose of borrowing money for public services and improvements. Services may include water, streets, infrastructure, sewage and drainage, schools, electricity, police protection and parks to newly developing districts. The taxes collected are used to pay the principal and interest payments on these bonds. Generally, Mello-Roos fees may not be deducted for tax purposes.
A large number of new communities in need of new schools and other infrastructure such as roads and public parks compel Mello-Roos. While Mello-Roos fees are assessed as a percent of the home value, Mello-Roos remains independent of home values and may increase or decrease and Proposition 13 has no jurisdiction
Article by Gene Wright, Wright Realtors
Jan. 22, 2011