When shopping for a home in Folsom, make sure you ask your Realtor whether the homes in a neighborhood you are considering have a Mello-Roos assessment or not. A Mello-Roos is a special tax levied on homeowners living within a Community Facilities District (CFD) and can add from several hundred to over a thousand dollars to a home’s yearly cost depending on the assessment. Most buyers I encounter, especially those not from this immediate area don’t know what Mello-Roos is or that some neighborhoods in Folsom have a Mello-Roos assessment. Here is a quick primer on Mello-Roos:
· The Mello-Roos Community Facilities Act of 1982 was created to provide an alternative method of financing needed improvements and services.
· The Act allows for any county, city, special district, school district, or joint powers authority to establish a Mello-Roos CFD for the purpose of financing public improvements and services.
· Services or improvements financed by Mello-Roos may include: streets, basic infrastructure, police and fire protection, schools, parks, and libraries, among other items.
· A CFD is set up when no other source of money is available at the time a development is built.
· The special tax is not based on the value of the property but rather on a mathematical formula that takes into account square footage of the proposed structure, lot size, and the use of the property. (So that what one homeowner pays in annual Mello-Roos may be lower or higher than a neighbor’s tax).
· How long do they last? The special taxes are charged annually until the bonds are paid off in full. In some Folsom neighborhoods, they are in the 15 to 20-year range.
· Important to know: If a CFD property owner doesn’t pay their tax bill on time, the CFD has the right to foreclose on the property when the special taxes are delinquent for more than 90 days.
· A Mello-Roos assessment is a mandatory disclosure from sellers to buyers. Information on the tax is generally found in the Residential Disclosure Report.
