Paying off Mello Roos early (San Diego, Poway: tax lien, for sale, new home)

[shmoov_groovzsd]

For anyone that does pay for MR, the rates are pretty terrible to wait and pay for the long haul. Thought I would share this.

Paying Off Mello-Roos | bubbleinfo.com

[BRinSM]

Pay $50k now to save $100k over 20 years just to add $20k of value to your home. something seems off here.

[shmoov_groovzsd]

Originally Posted by BRinSM

Pay $50k now to save $100k over 20 years just to add $20k of value to your home. something seems off here.

Really? It makes total sense to me if I were going to be in the house for 10+ years. Its has to be paid regardless, why bother paying the interest at those annual rates?

If you are planning on staying in the house for more than 5 years it totally makes sense and considering how long the MR expire.

[MovingAloha]

Originally Posted by BRinSM

Pay $50k now to save $100k over 20 years just to add $20k of value to your home. something seems off here.

If you have an otherwise great home and you want to put it on the market, having that Mello Roos paid off is a great benefit to offer a perspective buyer!

Shmoov is corrent here, even if you are staying in the home, one less onerous tax to have to pay each year is wonderful!! We had this tax on our new home up in the Bay Area in the 90s and I hated it. It was a heavy weight we had to bear when we put our home up for sale.

[earlyretirement]

Yes Shmoov. There is also some great information on paying off your Mello Roos (CFD) on the Piggington forum.

We have Mello Roos and plan to be in our house for the long term. We have the CFD 2 and CFD 4 and we plan on paying off the Mello Roos this year since we plan to keep our house until our kids are done with high school (i.e. over 12+ years away).

I posted some information on this on the Piggington website. You can call and request a quote. The thing that bites a bit is they charge you to get a payoff quote. Something like $400 just to get a payoff. But the great thing seems to be that once you pay it off you aren't subjected to all the 2% increases each year. They will DEFINITELY raise the rates the maximum of 2% a year.

This is the first time I've bought a home in a Mello Roos tax area. It's not fun paying the Mello Roos taxes, however the school district out here is so wonderful it's totally worth it to me. Not having to enroll my kids in private school and living out here is totally worth it to me. Plus we love the area. I'd buy again here in a heartbeat vs. other areas without the Mello Roos taxes.

[BRinSM]

if you purchased a house, paid the mello roos in full, and resold the house at year zero the buyer would save $150k+ over the next twenty years per the example in the article. that seems worth much more than a $20k increase in value to me. even if you sold at year 10 of a 20 year maturity, that's close to $80k savings for the buyer. i would think that the value to the home would at least be the present value of remaining fees unless i'm missing something.

[earlyretirement]

FYI. I posted this on the Piggington board but I thought I'd repost it here for others thinking about paying off their Mello Roos.


I called the Dolinka LLC group that is in charge of administrating the CFD #4. They are the entity whose phone number is on the property tax bill. I called them several times over several days and no one ever answered the phone. It always went to voicemail.
Finally about 4 days later someone called me back and said he would email me the details to pay it off.

He did email me this below which I'm cut and pasting. (He also gave me a general pay off quote of $15,000 to $20,000 for the CFD #4 Poway Unified). I get charged about $1,000 a year on my annual property taxes.

And he said that as it stands now the CFD #4 for PUSD doesn't end until 2041 and might get extended for further into the future. I imagine they will do the maximum % increase each year as well.

They did confirm once you pay it off it releases you from further obligation if they extend the bond. I'm leaving on a business trip but once I get back I'm planning on paying this off.
I also called to pay off my CFD#2 which is the main Mello Roos for Santaluz. That quote is $400 if you want to get the exact quote.

They gave me an estimate of $45,000 to $50,000 to pay it off completely but said once I want an exact quote to call back and then I need to pay the $400 and then they will apply it towards the pay off. (I get charged $4,600 per year on my annual taxes). And that bond isn't set to finish until 2030. It wasn't clear with me if they were able to extend this bond.
Again, I assume they will raise it the maximum % they are allowed to each year. But even without any % annual increase, it seems like a no brainer to pay this off as we plan to stay in our house 15 years until the kids are at least out of high school.

This is what they sent me below:

_______________________________________________

Prepayment of Annual Special Tax Lien Procedure

1. All requests for prepayment amounts must be received by the Poway Unified School District ("School District") in writing no less than 30 days prior to the date in which the party wishes to prepay and must include the following information:

a. The name of the party wishing to prepay;
b. The address of the property;
c. The development the property is within;
d. The valid Assessor's Parcel Number;
e. The Tract and Lot number; and
f. The Annual Special Tax the party is wishing to prepay (i.e. infrastructure or schools).
g. A payment of $100.00 for each prepayment to be calculated. The check(s) are to be made payable to “Poway Unified School District” and is/are to be included with the written request.

All prepayment requests are to be sent to:
Poway Unified School District
c/o Kari Zipp
13626 Twin Peaks Road
Poway, CA 92064

2. The School District will forward the request for prepayment to Dolinka Group, LLC. Dolinka Group will provide the requesting party with the prepayment
amount within thirty (30) days and send a letter informing the requesting party of such amount. A copy of the response will also be sent to the School District.

3. All parties wishing to prepay must send a check in the prepayment amount made payable to "Poway Unified School District" in writing and send to the School District at the address listed above. The prepayment should include a copy of the letter requesting the prepayment and a copy of Dolinka Group's response to the request.

4. When the School District receives the prepayment, the School District will send a copy of the prepayment check and accompanying paperwork to Dolinka Group so the parcel can be removed from the Special Tax levy for the following Fiscal Year. The School District will then send the prepayment to the Fiscal Agent to be deposited for the purpose of calling bonds or to be used by the School District at a later date to construct facilities. The School District will also record a "Notice of Cancellation of Special Tax Lien" on the property at the County of San Diego Recorder's Office.




_______________

I already sent in the $100 and request for my exact pay off quote. I'm planning on paying off both Mello Roos taxes completely. This seems like a no brainer for anyone staying in their house for the long-term. You have to remember that by law I think they have the right to increase the tax 2% each year and obviously they will keep increasing it the maximum each year. They have so far. So the tax exposure will only go up. What I like is by paying it off, it releases you of all these increases as well as if they extend the bond.

[shmoov_groovzsd]

Thanks for sharing that earlyretirement.

This would be something worth considering for us if we were living in an area which had MR.

[earlyretirement]

You're welcome Shmoov. Someone else mentioned on another thread that Poway was extending their bond further past 2041. I don't know enough about the ways in which they can get these bonds extended further. However, the shenanigans with the PUSD capital appreciation bonds was a clear signal to me that no one is really looking out for Joe Q. Taxpayer.

I figure it was a no lose situation for long term home owners in the PUSD to prepay it off early.

Also, for those that are curious. I found out once you pay off the Mello Roos on the annual property tax statement it will show $0.00 next to the various CFD that you pre-pay. So you can always see which homeowners have paid it off.

I've looked at tons and tons of properties online and I never came across anyone that paid it off at the properties we were looking to buy. But it sounds like more and more owners are using this strategy now, especially in this low/no interest rate environment.

[1AngryTaxPayer]

This whole thing sounds scary What areas in SD are MR? I want to know to stay away from them