Mello-Roos Community Facilities District

A Mello-Roos Community Facilities District (CFD) is a special taxing district created under the Mello-Roos Community Facilities Act of 1982 (Government Code §§53311–53368.3). California local governments — cities, counties, and special districts — form CFDs to finance public infrastructure and services that would otherwise lack funding. Unlike general property taxes limited by Proposition 13, a Mello-Roos special tax is approved by a two-thirds vote of registered voters (or, if fewer than 12 voters reside in the district, by landowner vote weighted by acreage).

Because Mello-Roos taxes are special taxes — not ad valorem assessments — they are not based on the assessed value of the property. Instead, the tax is levied according to a Rate and Method of Apportionment (RMA) formula that may consider lot size, square footage, land use classification, or other factors defined at the time the CFD was formed.

CFDs may fund a wide range of public capital facilities and services, including:

• Schools, libraries, parks, and recreation facilities
• Streets, highways, and transportation infrastructure
• Water, sewer, and drainage systems
• Police and fire protection services
• Flood and storm protection facilities
• Electric, gas, and telephone utility infrastructure
• Childcare and ambulance services

Government Code §53313 enumerates the full list of eligible facilities and services.

California Civil Code §1102.6b and Government Code §53340.2 impose mandatory disclosure obligations on sellers of property within a CFD. Sellers must provide buyers with a Notice of Special Tax that includes:

• A statement that the property is subject to a Mello-Roos special tax
• The name and formation date of the Community Facilities District
• The maximum annual special tax that may be levied against the property
• The current year's special tax levy
• The total bonded indebtedness of the CFD (outstanding principal)
• The date the special tax obligation is scheduled to expire
• Whether the CFD has any authorized but unissued bonds

Failure to provide the required Mello-Roos disclosure may give the buyer a right to rescind the purchase agreement under Civil Code §1102.6b(d). The seller must deliver the notice as soon as practicable before the transfer of title.

Mello-Roos special taxes typically appear on the annual property tax bill issued by the county tax collector as separate line items, often labeled "Community Facilities District" or "CFD" followed by a district number and description. Key places to check:

• County tax collector website (secured property tax bill, direct charges section)
• County assessor parcel detail page
• The Natural Hazard Disclosure (NHD) report for the property
• Title company preliminary report or property profile
• The CFD's Rate and Method of Apportionment document (usually on file with the county clerk)

Mello-Roos CFDs are especially common in master-planned communities and new housing developments. Developers often petition to form a CFD to finance the infrastructure required to build the project — roads, utilities, schools, parks — transferring the cost from the developer's construction budget to the future homeowners' annual tax bills.

Buyers of new homes should pay particular attention to the Maximum Special Tax disclosed in the CFD formation documents, as the actual levy may increase up to that ceiling annually.

• Government Code §§53311–53368.3 — Mello-Roos Community Facilities Act of 1982
• Civil Code §1102.6b — Seller disclosure requirements for CFD special taxes
• Government Code §53340.2 — Notice of Special Tax requirements
• Government Code §53341 — Notice of Special Tax lien
• Proposition 13 (1978) — Limits ad valorem taxes; Mello-Roos created as alternative financing
• Proposition 218 (1996) — Right to Vote on Taxes Act; governs special tax procedures