written by Michelle Kolker

DEL SUR’S MELLO ROOS WILL BE PAID OFF EARLY

Mello Roos taxes. Some home owners have NO idea what the heck these are when they want to move to Del Sur, and get sticker shock at the monthly fees. Others understand them and willingly pay them to live in such an amazing community, but really wish they didn’t exist. Well good news for both of these categories of people — these bonds are being paid off early! Read how below.

IMPROVEMENT BONDS

When a builder carves out of a mountain (literally) and creates a master planned community like Del Sur, the City requires supporting infrastructure to be built to support it: roads, a library, a fire station, parks, and more. The developer incurs these costs, and then “bills” the school district for the cost of that infrastructure. To pay this” bill”, the school district issues an improvement bond, in order to pass along the cost to the homeowners in different tax districts (CFD’s) that comprise the community. In Del Sur, these bonds are the second line of your tax bill, where you will see something like “POWAY UNF CFD15 #B.”

SCHOOL SITE BONDS

In areas like Del Sur, where schools (in 2006 when Del Sur was first built) would not have been sufficient to accommodate the additional children that would live in newly built housing in Del Sur, the school district issues a second bond, which goes towards building a new school(s) or expanding current schools to accommodate these residents. The state of California will pay up to 50% of the cost to build a school, however, when a district applies for this money, it takes years to receive it. Think of it as standing in a very long line. Therefore, the school district issues this second bond to pay for the construction of the school, and similarly passes it on to the homeowners on their tax bills. In Del Sur, we’ll use Design39Campus (“D39C”) as an example. There were 7 initial tax districts that paid for the construction of D39C; this is why initially, only children in those tax districts (essentially 4S Ranch, Del Sur, the Lakes, and areas of Santaluz) could attend D39C. 

PAYING OFF MELLO ROOS TAXES EARLY

In 2019, the Poway Unified School District (“PUSD”) finally received their allocation of funds from the state towards the building of D39C. At that point, PUSD used part of the money to pay down CFD bonds 14 & 15. This money is currently being held in an escrow account and will enable CFD bond 14 to be fully paid off in the year 2033, 18 years earlier than it was set to be paid in full. This money will also enable CFD bond 15 to be fully paid off in 2023, which is 34 years earlier than it was set to be paid in full. This is INCREDIBLE NEWS, as the school bond mello roos can range from approximately $4-10K/year (they are based on square footage). This will save current and future homeowners between $333-$833/month! This is also what now allows any child who lives in the Poway Unified School District to attend D39C, since the mello roos taxes are no longer the sole source of the funds used to build the school.

PUSD also used some of this money to pay down the improvement bonds. In Del Sur, these are CFD 14 1A, CFD 15 1A, and CFD 15 1C. It is currently projected, per page three of this chart that these bonds will be paid off in 2035, 2042, and 2040, respectively. This is 16, 7, and 10 years earlier than the bonds were set to be paid off. 

Interestingly, CFD 15 Bond 1B and CFD 15 Bond 1D have not yet been issued, as Lennar, the builder of most new homes in Del Sur, has not yet “billed” the district for the supporting infrastructure that correlates to those bonds. Therefore, PUSD estimated how much would be needed, and homeowners have been billed since they moved in for the amount projected. (Mello Roos bonds are line item expenses on your tax bill. They can increase up to 2% per year). When the district receives the bill, they will apply the already collected tax dollars towards it, and will then issue the 2 remaining bonds in Del Sur. 

To add to a complicated topic, the district also asks yearly, “do we need to build or add on to any schools?” If so, the money will go towards those costs, rather than exclusively towards reducing the infrastructure bonds. Note that the money can only be used to build or expand schools due to more people living in the neighborhood; not to fix or modernize current schools.

DOES ALL NEW CONSTRUCTION HAVE MELLO ROOS?

NO. There are many new construction neighborhoods being built in San Diego. When these neighborhoods are built in an already well established community, and schools can support the increase in residents the homes will bring, and roads and other infrastructure are already in place, there are no mello roos. You will see a variance in the cost of mello roos, both because they are taxed based on the square footage of a home, and also because neighborhoods have varying needs of new/expanded schools and increased infrastructure.

Have questions about mello roos as they relate to homes? Contact us now.

Disclaimer: The information above is our best synthesis from a combination of sources on the PUSD website and from talking to a member of the district that is well versed in mello roos information. If we unintentionally erred in any of the above information, please verify it with PUSD if the information could have a detrimental effect on you personally.

This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.