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The Misuse of Mello Roos

In California property taxes can not be increased above 1% of assessed value without voter approval. Local government agencies can increase property taxes to pay for bond debt, but they must get 2/3's voter approval because it is the voter that must pay the debt.

Mello Roos was enacted in 1982 to allow local agencies to acquire bond debt from a select number of property owners if the money was to be used only in select areas. For example; if property owners living in one section of town wanted to put in a park or redo the roads in their area they could vote to increase their property taxes to pay for the improvements. It would not take a vote of from the entire district, only those voters directly effected by the increased taxes on their property.

The main violation in the Mello Roos Laws is in the circumvention of the people's vote.

To have a vote in California, you must be:

  • A United States citizen,

  • A resident of California,

  • 18 years of age or older on Election Day,

  • Not in prison, on parole, serving a state prison sentence in county jail, serving a sentence for a felony pursuant to subdivision (h) of Penal Code section 1170, or on post release community supervision (for more information on the rights of people who have been incarcerated, please see the Secretary of State's Voting Rights for Californians with Criminal Convictions or Detained in Jail or Prison), and

  • Not found by a court to be mentally incompetent.

Only qualified people have the right to vote and the main qualification is that the voter must be a person.

Proof of Residency assigns the voter to their district, but Mello Roos has a provision that allows property owners to vote on bond debt that will effect their property even if they are registered to vote in another district. But the voter still must be a person legally allowed to vote AND the owner of the property.

Throughout California local agencies have acquired billions in Mello Roos bond debt without voter approval by ignoring the basic requirements needed to qualify a property owner to vote. Cities have acquired millions in bond debt by giving a representative of a development company 'the vote'.

To add insult to injury; the bonds are written so the additional property taxes are paid not by the developer, but by the 'future property owners' when the developer sells the land. There is no provision in our law that allows one citizen to vote to on the debt to be paid by another citizen certainly not 'occupants of the future'.

In the last 20 years the City of Beaumont has acquired over $300 million in bond debt, but not one resident of Beaumont has voted for the debt. All 33 bonds were acquired by giving development companies that bought cheap/worthless land in the high desert 'the vote'. 'The vote' was cast by employees of the development companies, so they have no legal obligation to repay the debt. The bonds were issued not based on what the land was worth, but on a fantasy of what the land would be worth in the future. Some of the land that acquired bond debt 20 years ago was never developed, but the money is gone and the City is still responsible to repay the debt.

Private sector companies choose their investments based on risk and rate of return, but when the government assumes all risk the private sector has 'nothing to lose', so they will make riskier choices.

Throughout California, but specifically in Riverside and San Bernardino Counties, developers and cities acquired millions in bond debt to build tens of thousands of houses without any housing demand or overall environmental considerations. It flooded the housing market and was a major factor in the economic crash of 2007. Today the cities are responsible to repay the bond debt, there are thousands of empty homes and foreclosures, and the additional property taxes on the homes combined with their location have kept property values from rising at the same rate as the rest of California.

And the developers? Some are still around and now using 'warehouse development' as an excuse to acquire bond debt, but a lot of the development companies no longer exist. Some companies only existed long enough to 'vote' for bond debt to be paid by future taxpayers.

Mello Roos is an extension of RDA and like RDA, it must be closed down because the abuse has far exceeded its use. Laws are enacted as guidelines for our elected and appointed officials to follow, not to circumvent as it is the taxpayers that must pay the price for the government's poor choices.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Dawn Urbanek February 25, 2014 at 10:59 PM
Tony - That is illegal and is why the Capistrano Unified School District is having to end some Mello Roos - here are two articles- I am sure if you contact the Talega Board or Barbara Casserely they will help you end the overburdensome tax. http://sanjuancapistrano.patch.com/groups/eye-on-education/p/parent-barbara-casserly-makes-an-impassioned-plea-to-cusd-board --------------------------------------------------------------------------------- http://sanjuancapistrano.patch.com/groups/eye-on-education/p/cusd-board-to-reconsider-talega-melloroos-windfall-at-tonights-board-meeting
Libi Uremovic March 10, 2014 at 10:02 AM
i've started comparing the individual mello roos districts in beaumont - area 18 stetson .....their mello roos payments will total $79,000 for $837 worth of improvements - only 2% of their mello roos bond debt was used for their community ...... the city didn't follow the laws regarding mello roos - they just made up their own rules called: 'fair share' - charging future residences for city-wide improvements - http://banning-beaumont.patch.com/groups/audit-xxxxxii---stetson-area-18/p/mello-roos-debt-in-area-18 ------------------------------------------------------------------------------- the letter from the city of beaumont to the property owners in stetson can be read here: http://banning-beaumont.patch.com/groups/lloyd-whites-blog/p/the-stetson-cfd-letter
Mark Dickinson March 10, 2014 at 02:16 PM
@Libi. Wow! Talk about taking advantage of tax payers either past, present or future. This is criminal! I think any city, individual or company should be accountable and held liable for misrepresentation and misuse of Mello Roos funds.
Libi Uremovic March 12, 2014 at 08:13 AM
yea, it's illegal ... here's a breakdown of beaumont's area 14 ....they have liens on their property to pay $6 million/year for 30 years of additional property taxes for $3 million in area improvements ....the city makes $3 million/year profit off one development area - http://banning-beaumont.patch.com/groups/audit-xxxxxiii---area-14/p/area-14-bond-debt--special-taxes

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