What is Mello-Roos?
Mello-Roos is a special tax levied by a community facilities district (CFD) to pay for public facilities and services, usually in newer developments. It is named after the Mello-Roos Community Facilities Act of 1982 (California Government Code section 53311 and following), which took effect in January 1983. The Legislature passed it after Proposition 13 limited the general property tax to 1%, to give local agencies another way to fund new roads, schools, parks and services for growing areas.
Once a CFD is formed, it can sell bonds to build the facilities and repay them with a special tax on the properties in the district. The county adds the special tax to your regular property tax bill and collects it with your other taxes. It is charged on top of the 1% general levy and voter-approved bonds explained in our California property tax guide.
Mello-Roos is common across the state. For reporting year 2023-24 (July 2023 to June 2024), the California Debt and Investment Advisory Commission (CDIAC) says 1,200 CFDs had to report on 1,864 bond issues, with $16.3 billion of principal outstanding and $790.6 billion of assessed value inside the districts. Riverside County had the largest CFD assessed value at $111.2 billion, followed by Orange County at $100.4 billion; Sacramento, San Diego and Santa Cruz counties completed the top five.
How a Mello-Roos community facilities district is formed
Starting a CFD: request or petition
A CFD can be started by a written request from two members of the local legislative body (a city council, county board or school board), by a petition signed by 10% of the registered voters in the area, or by a petition from the owners of 10% of the land. The agency then adopts a resolution of intention, holds a public hearing and considers written protests before it adopts a resolution of formation.
The two-thirds vote and landowner elections
The special tax and the bonds must be approved by two-thirds of the votes cast. If fewer than 12 registered voters lived in the proposed district during the 90 days before the hearing closed, the landowners vote instead, with one vote per acre. That is why most CFDs are formed on undeveloped land: the developer is often the only voter, approves the tax, and the homebuyers who arrive later inherit it.
What Mello-Roos can pay for
The San Diego County Assessor lists the facilities and services a CFD can finance: elementary and secondary schools; police protection and criminal justice facilities; fire protection, ambulance and paramedic facilities; recreation programs; flood and storm protection; libraries; natural gas pipelines, telephone lines and electrical transmission; and other government facilities the local agency owns and operates. Mello-Roos can only pay for new or additional facilities and services, not existing ones. CDIAC notes that bonds can fund facilities but not services, although a separate special tax can pay for services.
The notice of special tax lien
When a CFD is formed, a notice of special tax lien is recorded with the county recorder. The special tax is a lien on each property in the district. A title search and the preliminary title report will show that the home is in a CFD, but, as the San Diego County Assessor points out, the recorded notice does not state the amount of the tax or how long it lasts.
How the Mello-Roos special tax is set
The rate and method of apportionment
Each CFD has a rate and method of apportionment (RMA), approved with the resolution of intention and usually written by a special tax consultant or engineer. The RMA must give each owner enough detail to estimate the maximum special tax they could owe. It sets the formula for each type of property and the maximum tax per parcel.
Mello-Roos is not based on your assessed value
Unlike the 1% levy, the special tax is not a percentage of what you paid. The San Diego County Assessor says most districts allocate it by the benefit each parcel receives, for example by the square footage of a new home for school facilities or by street frontage for new roads. Two neighbors who bought at different prices can pay the same Mello-Roos tax, and a bigger house in the same tract usually pays more.
Annual increases: the 2% escalator
CDIAC says Mello-Roos bonds are generally fixed-rate with debt service that rises about 2% a year, and the special tax may rise by the same amount if the RMA allows it. The required seller disclosure states the percentage by which the maximum tax may increase each year, so read it rather than assuming the tax is flat.
How long Mello-Roos lasts
The tax lasts until the date set in the RMA, which is usually tied to repaying the bonds. Some CFDs also levy a special tax for ongoing services, which may not end when bonds are repaid. The disclosure notice must give the date until which the tax may be levied, so use that date in your budget.
What happens if the tax is not paid
Because the special tax is a lien, CDIAC says the local agency may, and typically must, foreclose to collect it if an owner does not pay. CDIAC's 2023-24 summary shows special taxes due of almost $5.6 billion statewide and unpaid special taxes of $54.4 million, under 1% of the total.
How to look up Mello-Roos on a California property
Step 1: Read the property tax bill
Look up the parcel on the county tax collector's website and open the current secured bill. Special taxes and assessments are listed separately from the 1% levy and bonds, usually under a heading such as direct charges or special assessments. A CFD line will name the district (for example "CFD 2004-1" or a school district CFD) and give a phone number.
Step 2: Find the CFD on the county's list of districts
Many counties publish a list of active CFDs with administrator contacts. The San Diego County Auditor and Controller, for example, keeps a list of active Mello-Roos districts for each fiscal year, grouped by cities, fire districts, schools, water districts and community service districts, with links to each district's details.
Step 3: Ask the CFD administrator for the notice of special tax
The district's designated office must provide a notice of special tax on request (Government Code section 53340.2). Ask for the current year's tax on the parcel, the maximum tax, the annual escalator, the final year and the prepayment amount if prepayment is allowed.
Step 4: Check the district's annual filings with CDIAC
Every issuer of Mello-Roos bonds sold since January 1, 1993 must file a yearly fiscal status report with CDIAC by October 30 until the bonds are retired. The reports show outstanding bonds, reserve funds, delinquent parcels and the assessed value in the district, and are published on CDIAC's DebtWatch site. A district with many delinquent parcels is worth asking about.
Mello-Roos disclosure duties for sellers and builders
Resale homes: Civil Code section 1102.6b
When a home of one to four units is sold, and it is subject to a Mello-Roos special tax lien or a 1915 Act bond assessment, the seller must make a good-faith effort to get a disclosure notice from each district that levies the tax and give it to the buyer. The seller can instead use a notice from a private source if it states the name of the district, the annual tax for the current year, the maximum tax that may be levied in any year, the percentage the maximum tax may increase each year, the date until which the tax may be levied and a contact phone number.
New homes: the public report and notice of special tax
For new subdivisions, the San Diego County Assessor points buyers to the Department of Real Estate public report, sometimes called the white paper, which must disclose debts that are liens on the subdivision. Civil Code section 1102.6b also refers to a separate notice of special tax under Government Code section 53341.5 that applies to some sales; ask the builder for every CFD notice and read them before you sign a contract.
Why buyers still miss Mello-Roos
The San Diego County Assessor notes that resale disclosure "may be problematic" because no public report is required on resales, escrow usually reports only current and delinquent taxes, and the title report shows the lien but not the amount. Ask for the disclosure early, and see our California seller disclosure guide for the other documents you should receive.
Worked example: what Mello-Roos adds to a home's cost
These numbers are hypothetical, to show the math. Use the figures from the district's notice for a real home.
| Item | Math | Annual amount |
|---|---|---|
| Price and assessed value | New home | $650,000 |
| General levy (1%) | $650,000 x 1% | $6,500 |
| Voter-approved bonds (0.10%) | $650,000 x 0.10% | $650 |
| Mello-Roos special tax, year 1 | From the district notice | $2,400 |
| Total, year 1 | $6,500 + $650 + $2,400 | $9,550 |
Effective tax rate with Mello-Roos
$9,550 / $650,000 = 1.47% of the price, against 1.10% without the special tax. Monthly, the Mello-Roos tax adds $2,400 / 12 = $200 to the housing payment.
Mello-Roos after five years at a 2% escalator
If the RMA allows 2% a year, the year-5 special tax is $2,400 x 1.02 x 1.02 x 1.02 x 1.02 = $2,597.84 (rounded). Over five years the owner pays $2,400 + $2,448 + $2,496.96 + $2,546.90 + $2,597.84 = $12,489.70 in Mello-Roos tax alone.
Comparing two homes at the same monthly cost
Suppose you can afford $9,550 a year in property tax. In a tract with no CFD and the same 1.10% rate, that budget supports a price of $9,550 / 1.10% = about $868,182. In the CFD tract it supports $650,000. A $200 monthly special tax changes what you can spend on the house itself, so compare total tax, not price alone.
How Mello-Roos affects affordability and resale
Mello-Roos and your mortgage approval
The special tax is part of your property tax bill, so it adds to the monthly housing cost a lender looks at. Ask your lender to include the CFD tax from the district notice in your preapproval, and ask whether it will be collected through your impound account. First-time buyers using assistance programs should check that the higher payment still fits the program's debt-to-income limit; see the first-time buyer guide.
Mello-Roos when you sell
Buyers will see the same notice you saw. A home whose CFD tax ends soon, or has already ended, may compare better against nearby tracts than one with decades left. Keep a copy of the district's notice and the final levy year to share with buyers, and ask your agent how local listings describe the tax.
Mello-Roos versus HOA dues
Mello-Roos and HOA dues are separate. A CFD tax goes to a public agency to repay public bonds or fund public services; HOA dues go to a private association for common areas. Many new communities have both, so add both to your monthly budget.
Paying off Mello-Roos early
CDIAC notes that an RMA may include provisions for prepayment of the special tax by property owners. Where it does, you can ask the CFD administrator for a prepayment quote calculated under the RMA's formula. Not every RMA includes prepayment terms, so ask before you count on it.
When prepaying Mello-Roos can make sense
- You plan to stay long enough for the saved tax to exceed what the money could earn elsewhere.
- You want a lower monthly cost and have cash after closing costs and reserves.
- A buyer for your home asks for the tax to be cleared as part of the deal.
Get the quote in writing, confirm whether part of the tax (such as a services portion) continues after prepayment, and keep the release for when you sell.
Common Mello-Roos mistakes
- Using the seller's bill as the full story. Ask for the maximum tax and the escalator, not just this year's amount.
- Assuming it ends soon. Check the final levy year on the notice.
- Missing a second district. A home can sit in more than one CFD, such as a city CFD and a school CFD.
- Relying on the title report. It shows the lien but not the amount or term.
- Comparing homes by price only. Compare total annual tax, as in the example above.
Mello-Roos is concentrated in counties with large newer communities. See the county guides for Riverside County, Orange County, Sacramento County, Placer County and San Diego County.