Paying off Mello Roos

User Forum Topic
Submitted by paranoid on February 27, 2012 - 7:39pm

Interest rate is historic low now. MR in places like 4S ranch has a 40-year life, and has a rate close to 10% (my rough guestimate). MR can be increased by 2% every year. So my question is: is it worth it to pay off completely your MR now? This saves alot of money if you intend to stay for a long time. What do you guys think?

Submitted by earlyretirement on June 3, 2013 - 11:21am.

ocrenter wrote:
earlyretirement wrote:

As well, besides the 2% annual increases, it looked like they can extend out these CFD payments beyond the scheduled termination date. I liked the fact once you paid it off it forever releases you of ALL CFD obligations.

ER mentioned a very important point. With PUSD engaging in what can only be described as simply very creative financing, it is quite likely that they'll try to extend CFD obligations when the sh#$%$ hits the fan in a few years.

Just don't do what this guy in Stonebridge did:

substation view

So the owner pays off part of the MR. But then needs to sell in less than a year. The lot is a deficient lot due to the view of the substation in the backyard.

I would have simply spent some money to plant in some mature trees that would block off the substation view.

MR pay off is for folks that are done with all of the necessary home improvements and they are in for the long haul. It is not for everybody.

Absolutely OC Renter! That was one of the MAIN motivations for wanting to pay it off. I didn't do it immediately after buying because I figured with the low interest rate environment maybe they would refinance at a lower rate. Which they did.

But interest rates are so low I figured they can't get much lower and as well with all the shenanigans with the PUSD, I didn't know if by the time these CFD's come due they will just extend out the CFD further into the future. While I don't think it's likely, who the heck knows??!

I mean realistically, what would homeowners due if by 2045 (or whenever the last payment is due) all of a sudden they say it needs to get extended 5 more years... what recourse do homeowners have? If anyone knows that answer, please post. The legal paperwork for the CFD's was so long and complex that I think even most lawyers would get confused by the technical jargon in it. It's almost as if some lawyers sat around a room when drafting these CFD's and said, "let's make the wording so complex and difficult that no one will really be able to decipher the meaning.....".

And I TOTALLY agree with you that it doesn't make sense for everyone. Especially in a transitional town like San Diego where people seem to come and go all the time based on job losses, weak economy, etc. I'd only recommend it for people that know for sure they will stay in the area for the long-haul or at least for many many years.

In a hot housing market like now, I think you will ALWAYS be able to sell and get back all you prepaid and probably more. But in a recession or difficult housing market who is to say how difficult it might be to recover these pre payments. Especially from people that might not plan to stay in the house "forever".

I already knew that this was our "forever" house. It's plenty big even anticipating for having another child if we do.

But for people in a similar type situation, it seems like a no brainer to me to pay it off ahead of time and get rid of the obligation.

Submitted by xgliu128 on June 4, 2013 - 5:50pm.

without hitting AMT, I might think paying off mello roos might not be good based on some simple calculation. say 6K annual payment, pay-off amount is 10x, that is 60K, interest rate is 4%. 60K can become about 120K in 20 years. 6K annual payment with tax benefit will become about 4K annual payment. in 20 years, i will pay 80K total, still less than 120K.

but i agree long term uncertainty is another big factor...

Submitted by ocrenter on June 5, 2013 - 7:52am.

earlyretirement wrote:

I mean realistically, what would homeowners due if by 2045 (or whenever the last payment is due) all of a sudden they say it needs to get extended 5 more years... what recourse do homeowners have? If anyone knows that answer, please post. The legal paperwork for the CFD's was so long and complex that I think even most lawyers would get confused by the technical jargon in it. It's almost as if some lawyers sat around a room when drafting these CFD's and said, "let's make the wording so complex and difficult that no one will really be able to decipher the meaning.....".

And I TOTALLY agree with you that it doesn't make sense for everyone. Especially in a transitional town like San Diego where people seem to come and go all the time based on job losses, weak economy, etc. I'd only recommend it for people that know for sure they will stay in the area for the long-haul or at least for many many years.

In a hot housing market like now, I think you will ALWAYS be able to sell and get back all you prepaid and probably more. But in a recession or difficult housing market who is to say how difficult it might be to recover these pre payments. Especially from people that might not plan to stay in the house "forever".

I already knew that this was our "forever" house. It's plenty big even anticipating for having another child if we do.

But for people in a similar type situation, it seems like a no brainer to me to pay it off ahead of time and get rid of the obligation.

Of course, very few people look at and plan for 2045, and how many of us will truly stay in the same home until 2045. This is what PUSD is banking on. They figure the great majority will just keep paying and not even realize the MR was suppose to stop.

Submitted by ocrenter on June 5, 2013 - 7:57am.

xgliu128 wrote:
without hitting AMT, I might think paying off mello roos might not be good based on some simple calculation. say 6K annual payment, pay-off amount is 10x, that is 60K, interest rate is 4%. 60K can become about 120K in 20 years. 6K annual payment with tax benefit will become about 4K annual payment. in 20 years, i will pay 80K total, still less than 120K.

but i agree long term uncertainty is another big factor...

I would not do it just for long term uncertainty. How realistic is it that you'll still be at the same house 30 years from now?

I agree with your calculation. Except to say most folks on the hook for a $6k MR generally have the income that pretty much guarantee they'll be on the hook for AMT yearly as well. Unless you are one of the lucky few that can deduct most of it away.

Submitted by earlyretirement on June 5, 2013 - 3:27pm.

ocrenter wrote:
earlyretirement wrote:

I mean realistically, what would homeowners due if by 2045 (or whenever the last payment is due) all of a sudden they say it needs to get extended 5 more years... what recourse do homeowners have? If anyone knows that answer, please post. The legal paperwork for the CFD's was so long and complex that I think even most lawyers would get confused by the technical jargon in it. It's almost as if some lawyers sat around a room when drafting these CFD's and said, "let's make the wording so complex and difficult that no one will really be able to decipher the meaning.....".

And I TOTALLY agree with you that it doesn't make sense for everyone. Especially in a transitional town like San Diego where people seem to come and go all the time based on job losses, weak economy, etc. I'd only recommend it for people that know for sure they will stay in the area for the long-haul or at least for many many years.

In a hot housing market like now, I think you will ALWAYS be able to sell and get back all you prepaid and probably more. But in a recession or difficult housing market who is to say how difficult it might be to recover these pre payments. Especially from people that might not plan to stay in the house "forever".

I already knew that this was our "forever" house. It's plenty big even anticipating for having another child if we do.

But for people in a similar type situation, it seems like a no brainer to me to pay it off ahead of time and get rid of the obligation.

Of course, very few people look at and plan for 2045, and how many of us will truly stay in the same home until 2045. This is what PUSD is banking on. They figure the great majority will just keep paying and not even realize the MR was suppose to stop.

I totally agree with you ocrenter. I've found in life that the vast majority of the people out there are financially clueless. As well, they only think about today/tomorrow/next week. They don't really project and think out into the long-term. Especially here in San Diego where many people kind of have the "live for today" attitude.

PUSD is fortunate that most of the property owners are almost "financially retarded". (and no offense to the mentally disabled). These PUSD homeowners are also to blame for these ridiculous capital appreciation bonds. They can blame the Board but they also share in the blame for voting for such a horrible thing. Sometimes 1+1 really does = 2.

What the PUSD is simply banking on is homeowners continuing to be clueless as always and just keep paying these CFD's. After all, most don't even have ANY clue how long they are for, what the scheduled pay off date is, what the interest rate is on them or really ANY details at all. All they know is they see it on their property tax bill each year and they pay it each year.

Heck, I'd venture to guess that most PUSD homeowners don't even have any clue what the APR is on their credit cards! LOL.

Submitted by xgliu128 on June 6, 2013 - 1:16pm.

found an interesting presentation from PUSD about bonds issued.
http://www.powayusd.com/news/PDF_Files/2...

slides page 49 contains might be the most controvercial bond

Prop C-Ser. B 2011

principle: $105,000,150 terms: 40-Years
total payment: $981,362,327 payment ratio:9.3463

anyone knows which item in tax bill is for this bond?

Submitted by ocrenter on June 6, 2013 - 2:02pm.

earlyretirement wrote:

I totally agree with you ocrenter. I've found in life that the vast majority of the people out there are financially clueless. As well, they only think about today/tomorrow/next week. They don't really project and think out into the long-term. Especially here in San Diego where many people kind of have the "live for today" attitude.

PUSD is fortunate that most of the property owners are almost "financially retarded". (and no offense to the mentally disabled). These PUSD homeowners are also to blame for these ridiculous capital appreciation bonds. They can blame the Board but they also share in the blame for voting for such a horrible thing. Sometimes 1+1 really does = 2.

What the PUSD is simply banking on is homeowners continuing to be clueless as always and just keep paying these CFD's. After all, most don't even have ANY clue how long they are for, what the scheduled pay off date is, what the interest rate is on them or really ANY details at all. All they know is they see it on their property tax bill each year and they pay it each year.

Heck, I'd venture to guess that most PUSD homeowners don't even have any clue what the APR is on their credit cards! LOL.

If I recall, I don't think PUSD residents actually voted for the capital appreciation bonds. I think how it went down was they voted against further tax increases, and the PUSD board had to go out and find creative financing to complete the projects after the vote. How the board members justified it was very passive aggressive: aka, voters wanted the improvements, they refused to pay for it with higher taxes, so we were left with no choice.

What I find outrageous is the cost of these public funded projects. $150 million for Del Norte High? Hey, but that looked like a total bargain for the $1 billion for Palomar Medical Center. and remember, even at $1 billion they still ran out of money to build the maternity ward.

btw, I'm guilty of your last example. I have no idea what the APR is for my credit cards. :) but then again, we are the worse type of customers for the credit card companies as we never keep a balance for them to make money off us.

Submitted by SK in CV on June 6, 2013 - 4:28pm.

xgliu128 wrote:
found an interesting presentation from PUSD about bonds issued.
http://www.powayusd.com/news/PDF_Files/2...

slides page 49 contains might be the most controvercial bond

Prop C-Ser. B 2011

principle: $105,000,150 terms: 40-Years
total payment: $981,362,327 payment ratio:9.3463

anyone knows which item in tax bill is for this bond?

Unlikely it would appear on a tax bill. It's a general obligation bond of the school district, not tied to any property.

Submitted by earlyretirement on June 6, 2013 - 6:28pm.

ocrenter wrote:

If I recall, I don't think PUSD residents actually voted for the capital appreciation bonds. I think how it went down was they voted against further tax increases, and the PUSD board had to go out and find creative financing to complete the projects after the vote. How the board members justified it was very passive aggressive: aka, voters wanted the improvements, they refused to pay for it with higher taxes, so we were left with no choice.

What I find outrageous is the cost of these public funded projects. $150 million for Del Norte High? Hey, but that looked like a total bargain for the $1 billion for Palomar Medical Center. and remember, even at $1 billion they still ran out of money to build the maternity ward.

btw, I'm guilty of your last example. I have no idea what the APR is for my credit cards. :) but then again, we are the worse type of customers for the credit card companies as we never keep a balance for them to make money off us.

The Board members of PUSD were DEFINITELY shady. No doubt I put the majority of the blame on them. NONE of them should ever hold public office again! The point I was making is what you touched upon, ocrenter. That the voters wanted the improvements, they refused to pay for it with higher taxes. But they listened when the PUSD said that they found a way to do it without raising taxes.

Palomar is a monster. I read today where they just laid off a bunch of employees. They still aren't getting the traffic that they anticipated.

And people like you don't count for that credit card APR I mentioned. LOL. I'm like you. I never keep a credit card balance and just pay it off each month so my APR is simple. 0% same like you.

But you get the gist of what I was saying.... it's not pretty...

Submitted by ocrenter on June 6, 2013 - 8:35pm.

earlyretirement wrote:

The Board members of PUSD were DEFINITELY shady. No doubt I put the majority of the blame on them. NONE of them should ever hold public office again! The point I was making is what you touched upon, ocrenter. That the voters wanted the improvements, they refused to pay for it with higher taxes. But they listened when the PUSD said that they found a way to do it without raising taxes.

Palomar is a monster. I read today where they just laid off a bunch of employees. They still aren't getting the traffic that they anticipated.

And people like you don't count for that credit card APR I mentioned. LOL. I'm like you. I never keep a credit card balance and just pay it off each month so my APR is simple. 0% same like you.

But you get the gist of what I was saying.... it's not pretty...

I hear ya. There's no such thing in life as a free lunch. Of course nobody bothered asking "how" when the free lunch was offered. :)

http://www.smartvoter.org/2004/11/02/ca/...

Found the old proposition BB back in 2004 approved by the voters. Looks like they went over-budget by 1/2 a billion... whoopsie, what a silly mistake!

Pretty sad really. The voters get screwed if they vote yes for added property tax. The voters also get screwed if they vote no for added property tax. There is simply no oversight and no accountability for elected officials.

Submitted by earlyretirement on June 7, 2013 - 8:10am.

ocrenter wrote:
earlyretirement wrote:

The Board members of PUSD were DEFINITELY shady. No doubt I put the majority of the blame on them. NONE of them should ever hold public office again! The point I was making is what you touched upon, ocrenter. That the voters wanted the improvements, they refused to pay for it with higher taxes. But they listened when the PUSD said that they found a way to do it without raising taxes.

Palomar is a monster. I read today where they just laid off a bunch of employees. They still aren't getting the traffic that they anticipated.

And people like you don't count for that credit card APR I mentioned. LOL. I'm like you. I never keep a credit card balance and just pay it off each month so my APR is simple. 0% same like you.

But you get the gist of what I was saying.... it's not pretty...

I hear ya. There's no such thing in life as a free lunch. Of course nobody bothered asking "how" when the free lunch was offered. :)

http://www.smartvoter.org/2004/11/02/ca/...

Found the old proposition BB back in 2004 approved by the voters. Looks like they went over-budget by 1/2 a billion... whoopsie, what a silly mistake!

Pretty sad really. The voters get screwed if they vote yes for added property tax. The voters also get screwed if they vote no for added property tax. There is simply no oversight and no accountability for elected officials.

Exactly. But then again I think deep down inside people probably knew there was some "catch" but as long as they could 'kick the can down the road' to the future taxpayers then they would rather do that then face some tough issues.

It's not just government leaders that do that. Ordinary everyday citizens (taxpayers) are very guilty of that mentality as well.

Thanks for taking the time to post that BB. It's an eye opener and just highlights the problems with these projects using taxpayer dollars. They NEVER finish on time and they ALWAYS go way over budget. And ultimately all they have to say is "oops...we need more money" and the taxpayers are on the hook.

That was the big part of getting my Mello Roos taxes pre-paid off. As well, I wouldn't be surprised if there are too many people starting to pay them off if they ban the pre-payment in the future. The thing with these types of things is you just never know.

A few years from now I wouldn't be surprised if they quietly stop accepting pre-payments on Mello Roos taxes. And the pay off dates conveniently get extended out further into the future. In such a scenario, the people that have paid them off already will be laughing all the way to the bank.

Submitted by all on June 7, 2013 - 9:55am.

SK in CV wrote:
xgliu128 wrote:
found an interesting presentation from PUSD about bonds issued.
http://www.powayusd.com/news/PDF_Files/2...

slides page 49 contains might be the most controvercial bond

Prop C-Ser. B 2011

principle: $105,000,150 terms: 40-Years
total payment: $981,362,327 payment ratio:9.3463

anyone knows which item in tax bill is for this bond?

Unlikely it would appear on a tax bill. It's a general obligation bond of the school district, not tied to any property.

It's funded by extending the payout of the original 2002 bond ($55 per $100K) for another 11-14 years.

Submitted by CA renter on June 7, 2013 - 1:16pm.

earlyretirement wrote:

That was the big part of getting my Mello Roos taxes pre-paid off. As well, I wouldn't be surprised if there are too many people starting to pay them off if they ban the pre-payment in the future. The thing with these types of things is you just never know.

A few years from now I wouldn't be surprised if they quietly stop accepting pre-payments on Mello Roos taxes. And the pay off dates conveniently get extended out further into the future. In such a scenario, the people that have paid them off already will be laughing all the way to the bank.

Totally agree with this. Very smart of you to pay off the Mello-Roos on your property; the fact that you plan to hold it for the long-term makes it a no-brainer.

What's odd to me is that more people don't grasp how valuable pre-paid Mello-Roos are when they look at houses. I would definitely pay more for a house where these bonds are permanently paid off, but have seen some people totally not grasp the value of this.

Also concur about people who want all kinds of high-quality public goods and services, but complain about having to pay for it. There is no public infrastructure fairly, no matter how badly people would like to believe in one. All too often, though, when the private sector and public money intersect, there is often a lot of fraud and abuse, and it seems especially bad where real estate and development are concerned.

Submitted by xgliu128 on June 7, 2013 - 1:50pm.

Is original 2002 bond ($55 per $100K = tax rate 0.055% ) for all properties in PUSD?

Will it be able to cover the Prop C-Ser B 2011 bond total payment 1 billion dollar by extending 11-14 years?

Submitted by all on June 7, 2013 - 1:55pm.

xgliu128 wrote:
Is original 2002 bond ($55 per $100K = tax rate 0.055% ) for all properties in PUSD?

No. The areas covered by Mello Roos don't pay that tax.

xgliu128 wrote:

Will it be able to cover the Prop C-Ser B 2011 bond total payment 1 billion dollar by extending 11-14 years?

No idea.

Submitted by xgliu128 on June 7, 2013 - 2:02pm.

by a simple calculation, i would think it is a mission impossible.

1 billion / 20 years = 50 M / year.

50 M / 55 * 100K = 100K * 1M

that needs 100K Million dollar home!

Submitted by kkun on June 7, 2013 - 3:50pm.

By any shape or form, this is a ridiculous bond. The original structure is bad. Additionally, I don't know why it was not refinanced in this historially low interest rate period. In my job I deal with investments, etc and my boss would have fired me if I agreed on this bond. For sure.

I generally agree that we share the responsibility of not being engaged enough to oppose when these proposals come up.

As an individual, if I had
(a) $60k in the bank earning close to 0% interest
(b) my income in AMT bucket (meaning no tax deduction benefits from MR)
then I would pay back the MR bond now. It is a better option rather than paying a 6%+ bond rate for at least 30 years if not more

I know many in the forum have different view (eg don't pay back MR if you are not planning to stay in thouse for at least 10 years). The main fear is the next buyer will not pay higher price for one house in neghborhood where all the house has MR. Somehow, I thibk there will be knowledgable buyer who will pay me $60k instead of signing up for $500 payment per month for 30- 40 years.

Submitted by ocrenter on June 7, 2013 - 4:01pm.

Quote:
Thanks for taking the time to post that BB. It's an eye opener and just highlights the problems with these projects using taxpayer dollars. They NEVER finish on time and they ALWAYS go way over budget. And ultimately all they have to say is "oops...we need more money" and the taxpayers are on the hook.

Problem ultimately is there is zero accountability. So what if a hospital went over budget by 1/2 billion? Pay is not reduced, no one got fired, you don't even hear any investigations or news articles on this major mishandling of public funds. On the other hand, let's say the administrators did complete the hospital on time and on budget, there's zero reward for that type of accomplishment either. End result is projects run into problems, we'll just throw more money at the problem because it really is just other people's money.

Submitted by ocrenter on June 7, 2013 - 5:31pm.

kkun wrote:
By any shape or form, this is a ridiculous bond. The original structure is bad. Additionally, I don't know why it was not refinanced in this historially low interest rate period. In my job I deal with investments, etc and my boss would have fired me if I agreed on this bond. For sure.

I generally agree that we share the responsibility of not being engaged enough to oppose when these proposals come up.

As an individual, if I had
(a) $60k in the bank earning close to 0% interest
(b) my income in AMT bucket (meaning no tax deduction benefits from MR)
then I would pay back the MR bond now. It is a better option rather than paying a 6%+ bond rate for at least 30 years if not more

I know many in the forum have different view (eg don't pay back MR if you are not planning to stay in thouse for at least 10 years). The main fear is the next buyer will not pay higher price for one house in neghborhood where all the house has MR. Somehow, I thibk there will be knowledgable buyer who will pay me $60k instead of signing up for $500 payment per month for 30- 40 years.

I do agree about finding that buyer who does recognize the benefit of a property with paid off MR.

I do feel most folks recommending MR payoff are being very conservative with their 10 years or more recommendation simply because there's been very little transactions to point to.

Submitted by earlyretirement on June 7, 2013 - 6:55pm.

CA renter wrote:
earlyretirement wrote:

That was the big part of getting my Mello Roos taxes pre-paid off. As well, I wouldn't be surprised if there are too many people starting to pay them off if they ban the pre-payment in the future. The thing with these types of things is you just never know.

A few years from now I wouldn't be surprised if they quietly stop accepting pre-payments on Mello Roos taxes. And the pay off dates conveniently get extended out further into the future. In such a scenario, the people that have paid them off already will be laughing all the way to the bank.

Totally agree with this. Very smart of you to pay off the Mello-Roos on your property; the fact that you plan to hold it for the long-term makes it a no-brainer.

What's odd to me is that more people don't grasp how valuable pre-paid Mello-Roos are when they look at houses. I would definitely pay more for a house where these bonds are permanently paid off, but have seen some people totally not grasp the value of this.

Also concur about people who want all kinds of high-quality public goods and services, but complain about having to pay for it. There is no public infrastructure fairly, no matter how badly people would like to believe in one. All too often, though, when the private sector and public money intersect, there is often a lot of fraud and abuse, and it seems especially bad where real estate and development are concerned.

Hi CAR. I do think people are starting to realize how valuable a pre-paid off Mello Roos is. We have received SEVERAL unsolicited offers to purchase our home from private individuals. They were via letters in the mail from actual individuals. And they did research that we paid off our Mello Roos and were willing to more than compensate us for paying it off.

I just think that the actual % of people paying it off is so very low that most people never come across a home with a pre-paid off Mello Roos. I don't think many people even know that is a possibility. I was having dinner the other night with a certified financial planner here in San Diego and he lives here in a Mello Roos area. I mentioned that I paid mine off and he thought I was kidding at first.

He had no clue that you could pay this off. I figure if a guy like that doesn't know then the majority out there have NO clue you can pay it off ahead of time. And the PUSD likes that just fine that way.

I'd be curious how many times you SD real estate pros come across a paid off Mello Roos. How often do you come across properties like this?

I do believe that anyone paying off a Mello Roos that lives in a desirable area in this kind of market will EASILY get more than reimbursed for all pre payments they might have made. I don't know how easily it would be in a bear market but I don't foresee the real estate market getting ANYWHERE near the levels it got at the depths of the lows.

We are polite with the people that send the letters and I've taken the time to answer them back. I have a feeling some are pouncing on other properties as some properties in my neighborhood have went into escrow within a few HOURS of being listed. Others just a few short days.

I think this entire matter of people prepaying off their Mello Roos is so very small. I looked at a ton of houses in San Diego over the course of a few years and I would always look up on the Tax Assessor's website and I never once came across anyone that had pre-paid off their Mello Roos.

And I TOTALLY agree with you that there is so much potential for fraud and abuse when the private sector meets public money. So very true.

ocrenter wrote:

Problem ultimately is there is zero accountability. So what if a hospital went over budget by 1/2 billion? Pay is not reduced, no one got fired, you don't even hear any investigations or news articles on this major mishandling of public funds. On the other hand, let's say the administrators did complete the hospital on time and on budget, there's zero reward for that type of accomplishment either. End result is projects run into problems, we'll just throw more money at the problem because it really is just other people's money.

ABSOLUTELY agree! This happens all the time like this. There is NO incentive typically for people to do things the right way. Especially with OUR taxpayer dollars.

Unfortunately I don't think too much will change in the future until taxpayers as a collective group DEMAND changes with the way things are done. The only good thing about this PUSD Capital Appreciation Bonds issue is taxpayers seem to be more aware of things.

Submitted by CA renter on June 7, 2013 - 6:58pm.

ER,

Good to hear that more people are catching on WRT Mello-Roos bonds. Personally, I detest this type of financing because it's like everything else in this credit-crazed market: "How much per month?" Whenever I hear about "payments" when I ask about price, it makes me want to scream.

It's a crazy market, isn't it?

Submitted by earlyretirement on June 7, 2013 - 8:17pm.

CA renter wrote:
ER,

Good to hear that more people are catching on WRT Mello-Roos bonds. Personally, I detest this type of financing because it's like everything else in this credit-crazed market: "How much per month?" Whenever I hear about "payments" when I ask about price, it makes me want to scream.

It's a crazy market, isn't it?

Oh, I totally agree with you CAR that I hate these types of bonds. I wasn't crazy about buying at first in a Mello Roos area but I can honestly say 100% that I totally don't regret it at all.

I'm so thrilled with our area, the schools are excellent and I love our community that we ended up in. In principle I understand why they have Mello Roos bonds if they stick with the original amounts, they don't squander the money and everything is above board and transparent.

Unfortunately with governmental entities here, that isn't always the case as we all know.

Your point CAR about "how many payments" is so spot on target! That drives me nuts as well.

Absolutely it's a crazy market. Certainly not "normal" at all. And I get a bit of a kick out of people that think this is a "normal" market. Normal real estate market, normal stock market, etc.

Submitted by UCGal on June 12, 2013 - 10:59am.

On the topic of mello roos:

http://www.kpbs.org/news/2013/jun/12/hom...

Looks like some folks in Del Sur were overcharged by thousands/year. It pays to pay attention.

Submitted by earlyretirement on June 12, 2013 - 3:05pm.

UCGal wrote:
On the topic of mello roos:

http://www.kpbs.org/news/2013/jun/12/hom...

Looks like some folks in Del Sur were overcharged by thousands/year. It pays to pay attention.

No offense to these clueless owners but if they don't know what their Mello Roos is supposed to be and it's double and they paid it, they should feel embarrassed and silly. This goes along with what some of us are saying is most people have absolutely NO clue at all. They will just pay whatever the government says to pay.

I'm not saying the government isn't idiotic either but "mistakes" like this will probably always be made. Ultimately John Doe taxpayer needs to know what their taxes are and make sure they aren't overpaying.

It should NOT take an investigative reporter to tell YOU that you are paying double the taxes that you should be.

Submitted by xgliu128 on June 14, 2013 - 11:06am.

do some research on mello roos, by taking PUSD CFD #6 IAA as example.

seems mello roos is not only used for paying the issued bonds which has clear maximum amount, it also pays for some accounts which I consider as an open ended fund. you may think in 25 years, you can pay off the original bond, but actually every year, there are quite certain amount is allocated for other purpose than paying off original bond.

i.e CFD #6 IAA original intention is to pay off $13,000,000 bond issued in 2002.

but from CFD #6 IAA annual report, page 11/12 of
http://www.californiataxdata.us/docs/Adm...

a large portion of annual mello roos collected is not only used to pay for interests and principles of the 2002 bond. it also pays for Improvement Area Surplus Account, Lease Revenue Bond Account etc.

now I know why 25 years could be extended, since the payment is not really paid to original bond principles.

Submitted by xgliu128 on June 14, 2013 - 11:32am.

Here is open statement for CFD #6 IAA

http://www.californiataxdata.us/DisplayT...

Summary:
Community Facilities District No. 6, Improvement Area A was established pursuant to the Mello-Roos Community Facilities Act of 1982. Qualified electors authorized the district in 2002 along with the issuance of up to $18,000,000.00 in bonded indebtedness. Bonds were issued to pay for certain public facilities and/or services that benefit the district. A special tax is levied on properties in the district to pay the interest and principal on the bonds as well as administrative expenses.

Submitted by xgliu128 on June 14, 2013 - 2:09pm.

original principle is $18,000,000. after 8 years, the unpaid principle is $17,790,000. only $210,000 is paid down to principles. (annual mello roos collected for CFD #6 IAA is about $1,400,000).

check page 10 of the annual report for unpaid principle by 2010.

http://www.californiataxdata.us/docs/Pow...

Submitted by CA renter on June 14, 2013 - 3:30pm.

Thanks for highlighting these bond issues, xgliu. That's exactly why some of us would prefer to pay off the Mello-Roos ASAP. IMHO, they should never be allowed to extend or expand these bonds.

Submitted by earlyretirement on June 14, 2013 - 8:30pm.

CA renter wrote:
Thanks for highlighting these bond issues, xgliu. That's exactly why some of us would prefer to pay off the Mello-Roos ASAP. IMHO, they should never be allowed to extend or expand these bonds.

EXACTLY. The thing that bothered me so much is it's all very murky and hard to really understand. Even for people that have extensive experience in law or accounting or finance..... it seems like there are so many ways they can potentially screw you in the future.

On that KPBS article, I asked the reporter to address other Mello-Roos issues including in which cases the CFD's can legally extend these bonds out past their ORIGINAL pay off dates. She said that they are working on more stories about Mello Roos.

I REALLY hope they address some specific things like:

1) When is the original expected/planned pay off date of these Mello-Roos taxes in each area?

2) In what specific circumstances can these CFD taxes be extended out from their original targeted/planned pay off dates?

3) Which CFD areas have refinanced the bonds at today's record low interest rates? To note the CFD's that HAVE refinanced at today's record low interest rates? And list specifically why the ones that haven't refinanced at today's record low interest rates haven't done so already? If they haven't, is there any legal reason why they can't refinance at today's record low rates?

4) I'd love to see the original balance of each CFD tax along with a year by year balance of how much has been paid down each year and what the current balance is?

5) Are there any CFD areas where they can already project out that they will need to be extended past their ORIGINAL pay off dates?

There are probably other interesting things to note but I'd love to see them address these questions above in future stories.

Submitted by earlyretirement on June 17, 2013 - 12:21pm.

FYI, the reporter did a follow up story on Mello-Roos here.

http://www.kpbs.org/news/2013/jun/17/mel...

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