Mello-Roos Tax (Elk Grove, Rancho Cordova, Lincoln: sales, mortgage, how much)

[Archan]

I know that property tax is based on a percentage of the home appraised value. Does Mello-Roos tax work the same way? Or once it is set you are stuck with it.

How much of it is deductible? Thanks!

[Shawn_Estrada]

Once it is set you are stuck with it. Mellos-roos is just a developer's way of passing the buck to you. Let's just say you and I wanted to develop 10 acres of land into 80 homes. We would than vote on a mello-roos bond that simply says "future property owners shall be responsible for repayment of said improvement bonds" and for collateral we are putting up all 80 of these lots.

Thus is born a mello-roos. You are stuck with it until it is paid off. Want to pay it off quicker? Get all your fellow homeowners to agree to pay more than what is owed on bond. Fat chance in hell that will happen...

[Archan]

Originally Posted by Shawn_Estrada

Once it is set you are stuck with it. Mellos-roos is just a developer's way of passing the buck to you. Let's just say you and I wanted to develop 10 acres of land into 80 homes. We would than vote on a mello-roos bond that simply says "future property owners shall be responsible for repayment of said improvement bonds" and for collateral we are putting up all 80 of these lots.

Thus is born a mello-roos. You are stuck with it until it is paid off. Want to pay it off quicker? Get all your fellow homeowners to agree to pay more than what is owed on bond. Fat chance in hell that will happen...

Thanks for the info. With the way property values are dropping prop tax/mello roos can be 50% of a regular mortgage payment.

[NewToCA]

Originally Posted by Archan

Thanks for the info. With the way property values are dropping prop tax/mello roos can be 50% of a regular mortgage payment.

I don't think that is true, but with the way prices have dropped in some of the new development in Elk Grove and Rancho Cordova, it isn't unusual to see the Mello Roos actually be equal or greater than the Prop 13 rate. As a result, some properties recently sold have an annual property tax equal to 2% of the purchase price.

[Archan]

Originally Posted by NewToCA

I don't think that is true, but with the way prices have dropped in some of the new development in Elk Grove and Rancho Cordova, it isn't unusual to see the Mello Roos actually be equal or greater than the Prop 13 rate. As a result, some properties recently sold have an annual property tax equal to 2% of the purchase price.

I have been looking at houses in Lincoln. I saw one house that is priced at $275K that carries a prop/mello tax of $7,881.

A typical 30 year mortgage with a standard 20% down would be $1,181. The prop/mello tax divided by 12 equals $657.

That's hard to swallow!

[NinaN]

Originally Posted by Archan

I have been looking at houses in Lincoln. I saw one house that is priced at $275K that carries a prop/mello tax of $7,881.

A typical 30 year mortgage with a standard 20% down would be $1,181. The prop/mello tax divided by 12 equals $657.

That's hard to swallow!

You really have to separate out the property tax from the mella roos when looking to purchase. The property tax should adjust as a % of the sales price but the mella roos will stay the same.

[Archan]

Originally Posted by NinaN

You really have to separate out the property tax from the mella roos when looking to purchase. The property tax should adjust as a % of the sales price but the mella roos will stay the same.

I was surprised that it really didn't make that much difference in this case. If I recalculate the property tax portion it comes out to $619 per month for the prop/mello combo.

It is a great house, but I just have a tough time wrapping my head around this.

[Shawn_Estrada]

Originally Posted by Archan

It is a great house, but I just have a tough time wrapping my head around this.

If the mello-roos bond didn't exist, you wouldn't have the house located there. Think of it this way: Your paying your fair share to have a house in the sticks because somebody needs to pay for the roads in your subdivision, the water/sewer pipes, landscape, lighting, etc.

Obviously that should be you, the homeowner, in the sparkling new subdivision, not me, who may live in your city, but is no where close to gaining the benefits of new development.

[Curmudgeon]

Originally Posted by Shawn_Estrada

If the mello-roos bond didn't exist, you wouldn't have the house located there. Think of it this way: Your paying your fair share to have a house in the sticks because somebody needs to pay for the roads in your subdivision, the water/sewer pipes, landscape, lighting, etc.

Obviously that should be you, the homeowner, in the sparkling new subdivision, not me, who may live in your city, but is no where close to gaining the benefits of new development.

Disagree! I believe that the infrastructure should be the responsibility of government at all levels since government agencies approve the building of subdivisions and they all collect taxes. If government approves sprawl it should pay for it. If it can't afford it, don't approve it. That would cut down on over-crowding, jamb-packed schools, gridlock and any number of other ills.

Of course, government look at development as a revenue source and more money to spend irresponsibly trumps all other considerations, especially livability.

As always, just one man's opinion.

[Shawn_Estrada]

Originally Posted by Curmudgeon

If government approves sprawl it should pay for it. If it can't afford it, don't approve it. That would cut down on over-crowding, jamb-packed schools, gridlock and any number of other ills.

When did government ever approve sprawl? Try your elected officials. In the end, the people elect the officials, thus, in a representative democracy, the elected officials, who represent the people approve these projects.

Back in the pre-prop 13 days and similar to other parts of the country, when infrastructure needs and replacements occur, than property taxes go up, thus everyone pays in. Whether Prop 13 is good or bad is a discussion all on its own, but to blame "government" for sprawl shows a lack of understanding on how development in this state occurs, especially for large scale developments that typically implement mello-roos.

But i do respect your opinion, as you are entitled to it