Is It Time to do an End Run Around those Pesky Mello Roos Fees???

Those Pesky Mello Roos fees (also known as the Community Facilities District Act enacted by the California State Legislature in 1982) are hog-tieing communities in Southern California. Created as an "end run" around Proposition 13, not controlled by the inflation rate nor the will of the people but by developers and cities to fund infrastructure and improvements such as schools, roads, streets, water, sewage and drainage, electricity, parks and police protection have outlived their usefulness and need to be reconsidered. While property tax is assessed as percentage of the value of the home, Mello-Roos is independent and could rise or lower and is not subject to Proposition 13.

In this declining real estate market properties in communities with these pesky fees are almost impossible to sell. Before the buyer can even consider what the mortgage payment might be, they have to consider HOA fees and Mello Roos fees which can sometime add up to over $1,000 per month. Then add the mortgage payment and you have a recipe for failure. Frequently these communities are in areas without a huge tax base and in order to bring in builders and developers, the cities encourage imposing Mello Roos fees. Some of these communities now sit mostly vacant and incomplete because buyers are "scared" off by what it will cost them to get in the door.

Seabridge, an upscale marina community in Oxnard has Mello Roos Fees. The median price for homes at the moment is about $575,000; in RiverPark, a master planned community also in Oxnard has the same fees. Median price in this community is approximately $325,000. The demographic for both communities is very different and yet they are both saddled with these fees. It is tough to explain and justify to anyone buying in either place that the first $1,000 goes to just getting in the door.

Active confrontation and letter writing to your local representative would certainly be the way to start. If you have a listing that is hog-tied by Mello Roos fees, get on the band wagon and lets do an end run around these fees.