Mello-Roos refers to a special tax district in California, formally known as a Community Facilities District (CFD), created by local governments such as cities, counties, or school districts to finance public infrastructure and services. These districts raise funds by levying special taxes on property owners within the district, which must be approved by a two-thirds majority of voters in the area
. The Mello-Roos tax was established under the Community Facilities Act of 1982 as a way to circumvent Proposition 13 (passed in 1978), which limited property tax rates and increases based on assessed property value. Unlike traditional property taxes, Mello-Roos taxes are not based on property value but are instead calculated using formulas considering factors like property size or use
. Funds raised through Mello-Roos taxes are used for a variety of public improvements and services, including roads, schools, parks, police and fire protection, sewer systems, and other community facilities. These taxes typically continue until any bonds issued to finance the projects are fully repaid, after which the tax may be reduced or discontinued
. Key points about Mello-Roos:
- It is a special tax assessment district created to fund local infrastructure or services.
- The tax applies only to residents within the district benefiting from the funded projects.
- Formation requires voter approval by a supermajority (two-thirds).
- Taxes are assessed based on property characteristics, not assessed value.
- The district can issue bonds to finance large projects upfront.
- Property owners must pay these taxes annually, and failure to pay can lead to accelerated foreclosure
In summary, Mello-Roos is a financing mechanism used in California to fund public improvements and services through special taxes on properties within designated districts, designed to provide local governments with funding options beyond traditional property taxes restricted by Proposition 13
