What is Mello-Roos?

Background:
In 1978 Californians enacted Proposition 13, which limited many local public agencies
ability to finance new projects. In 1982, Senator Henry Mello and Assemblyman Mike
Roos affected the passage of the Community Facilities District Act (CFD). This act
authorized local governments and developers to create CFD's for the purpose of
selling tax-exempt bonds to fund public improvements. Subsequently, property owners
that participate in the CFD's pay a "special tax" to repay the bonds.

Mello-Roos Community Facilities District Act:
The Act allows any county, city, special district or joint powers of authority to establish a "Community facilities District" which allows for the financing of public services and facilities. The services and facilities Mello-Roos Districts can provide include streets, police protection, fire protection, ambulatory, elementary schools, parks, libraries, museums, and cultural facilities.

A requisite for the Mellow-Roos Districts' establishment is that it be approved by tow-thirds margin of qualified voters in the district. If there are fewer than twelve registered voters within the proposed district, the vote may be passed by current landowners. At the close of legal proceedings, an established Mello-Roos District has all the legal privileges of a legally sanctions governmental body.

Responsibilities of Property Owners in the Mello-Roos District:
Property owners in Mello Roos Districts are responsible for payment of the "special tax". The amount of the "special tax" is not (directly) based on the values of the property. Special taxes are based on mathematical formulas that take into account property characteristics such as square footage of the home and parcel size. The special tax is typically included in the annual County tax bill, however it can also be paid off on a monthly basis.

Legal Rights of the Community Facilities District:
A Mello-Roos District has the right to adopt stringent penalties and foreclosure priorities; in the event that the special tax payment is delinquent. Ergo, if the "special tax" is not paid, the District may exercise its legal right to foreclose and sell the property. Foreclosure rights can be initiated after 150-180 days in arrears.

Disclosure (California Civil Code §§11026):
Seller shall make a good faith effort to obtain a disclosure "Notice of Special Tax" from local agencies which levy on the property a special tax pursuant to the Mello-Roos Community Facilities District Act, and shall promptly deliver to the prospective buyer any such notice made available by those agencies. If the Transfer Disclosure statement or the Mello-Roos disclosure notice is delivered to Buyer after the offer is signed, Buyer shall shave the right to terminate this Agreement within three (3) days after delivery in person, or five (5) days after delivery by deposit in the mail, by giving written notice of termination to the Seller or Seller's agent.