What are Mello Roos?

by Jacque on April 23, 2010

What are Mello Roos?

In a nutshell, they are the costs of the roads, sewer system, and other infrastructure needed to build new neighborhoods. Instead of passing the costs onto the 1st homebuyer in the form of purchase price, they are spread out over a period of time, usually 25-35 years and appear on the property tax bill.

Are they a bad thing?

Not necessarily.  The homebuyers will have to pay the costs of the infrastructure one way or another.  Home prices are kept lower initially, the improvements are made, and the costs spread out over time.  Rather than the 1st homeowner paying the whole bill, it can be spread over all the owners of the home for the length of the term.  If you only live in the home for ten years before selling it, then you only pay for ten years mello roos and the next owner pays their share.

What are Mello Roos?

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