Home buyers sometime hate or pause at the idea of a home for sale having a Mello-Roos when shopping for a home to purchase in Irvine Newport Beach, and the surrounding areas in Southern California. But before jumping to conclusions, it’s important to separate fact from fear and understand the real impact of these special taxes.
If you’re considering investing in Irvine or Southern California real estate, chances are you’re drawn to the top-rated schools, prime location, and unmatched amenities—not to mention that Irvine has consistently been ranked as the safest large city in the nation for years!
Read what Forbs says and also check out what the Irvine Police say!
Believe it or not, Mello-Roos helped make Irvine one of the most desirable cities in California. From the master-planning of the community, the excellent schools, amazing university, landscaping, tech jobs, parks and cleanliness, Irvine is most often held in high regard and many homes have incredible values.
What is Mello-Roos?
Mello-Roos taxes are special assessments designed to repay bonds that fund community development. In 1978, California passed Proposition 13, which placed limits on property tax increases. To compensate for this, the state legislature introduced Mello-Roos taxes in 1982 as a way to generate funds for infrastructure and public services in growing cities.
These taxes are included in the annual property tax bills for certain areas in California and are paid monthly to help cover the costs of these community bonds. The funds were used to transform undeveloped land into buildable spaces, paving the way for the thriving cities we see today. Many sought-after communities in South Orange County also have Mello-Roos taxes as part of their property tax structure.
What areas of have no Mello-Roos taxes?
Some communities in Irvine do not have Mello-Roos taxes, while others do. Many neighborhoods built before the late 1980s were developed before these taxes became more common, making it less likely for homes in those areas to have Mello-Roos. For example, there is less of a chance of finding a home in Turtle Rock (Irvine) with a Mello-Roos tax (or none at all), but more likely to find some in Portola Springs (Irvine).
However, whether a home has Mello-Roos can sometimes be determined on a case-by-case basis, meaning that even within the same neighborhood, some properties may have it while others do not. If you are searching for a home in Irvine without a Mello-Roos, it is important to check individual listings as the presence of these taxes varies and it is NOT consistent across all homes in a given community.
Although some websites and people claim some areas “do not have a Mello-Roos”, it is best to find out for a fact while searching for a home to buy.
Where to find the Mello-Roos assessments for a home or property?
Here is an example out of many websites to look up some Mello-Roos taxes: http://www.californiataxdata.com/Reports/OrderForm2016.asp
Another example of where to look is the Orange County Property Tax website to enter the address (parcel number). Click on the most recent tax bill and look for Mello-Roos tax. If you do, or do not, see it, in either case call or visit the office to confirm if the home does or does not have a Mello-Roos just in case. There is also a free (PDF) “Property Tax Guide for New Homeowners” for you to review as well. Additionally, check with a Title company and see if there is any information they can offer as well.
Sometimes a Mello-Roos tax may not be labeled “Mello-Roos” and, instead, appear named differently, such as this example where it is labeled as a ‘CFD’ or “community facilities districts”
Additional information about Mello Roos can be found here.
While subject to change, here’s a shortened, friendly rundown on Mello-Roos:
What Are Mello-Roos Taxes?
Mello-Roos taxes are special assessments on properties in certain communities to fund public infrastructure like schools, parks, roads, and utilities.
Do Mello-Roos Taxes Expire?
These taxes typically last 20 to 40 years, though some may be extended if needed.
Who Creates Mello-Roos Districts?
Local governments—such as cities, counties, or special districts—establish Mello-Roos districts to fund essential community development.
Are Mello-Roos Taxes Only in California?
Yes. Mello-Roos was created after Proposition 13 (1978) limited how property taxes could fund public projects.
How Do They Impact Property Values?
Well-funded infrastructure can, but not always, increase property values, essentially making Mello-Roos an investment in the community.
How Do Mello-Roos Taxes Work?
The funds collected go toward financing and maintaining public projects like roads, schools, public safety services, and parks in the designated area. They help communities grow by funding infrastructure, making areas more desirable to residents and businesses.
Who Benefits from Mello-Roos?
Residents benefit from improved infrastructure and amenities, which enhance overall quality of life.
How Are They Financed?
Mello-Roos taxes are often used to repay bonds issued to fund public facilities. The assessments cover the debt over time.
Is There Oversight?
Unless otherwise indicated, local governments manage Mello-Roos funds and must follow transparency regulations to ensure proper use.
Do Mello-Roos Taxes Vary?
Yes, they can and the amount depends on property size, location, and services provided within the district.
Can Mello-Roos Taxes Be Extended?
Some expire after a set period, but in some cases they may b e some that can be re-voted on to continue funding current and/or additional projects.
Can Project Selection Change?
Yes, for example, local governments may determine which projects Mello-Roos taxes fund, which can vary by district.
Is Public Input Required?
Some districts hold public hearings to involve residents in decisions about project funding.
Are Mello-Roos Taxes Separate from Property Taxes?
They appear as an additional charge on property tax bills. Sometimes it may not be labeled “Mello-Roos” and, instead, might be labeled as a ‘CFD’ or “community facilities districts” or perhaps another name. Check on the appropriate authority to determine if there are a tax(es) that are a Mello-Roos.
Are Mello-Roos Taxes Transferable?
Typically, they transfer to the new homeowner when the property is sold.
Do They Affect Home Affordability?
Buyers should factor Mello-Roos taxes into their overall home budget and financial impacts.
Can Mello-Roos Districts Expand?
Some districts may expand to fund additional projects as communities grow.
Do Mello-Roos Taxes Have Sunset Clauses?
Some districts include provisions for early termination if funding is no longer needed. In some cases there may be an option to have it extended.
Remember, Mello-Roos taxes are an integral part of financing community development in Irvine, CA. It’s always a good idea to consult with local authorities or real estate professionals for specific details about Mello-Roos assessments in the area you’re interested in.
If you have thoughts of selling or buying in and around Irvine, including new home construction, reach out to me and let’s see what we can do to make your experience and process more comfortable and successful!
Tony Babarino, Broker
REAL Broker
Broker associate with REAL Broker
Call or text: (949) 633-6741
Add comment