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Entries in Buying - Info For Buyers

Mello-Roos Explained

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Courtesy of Lawyer’s Title

When purchasing your new home, your future monthly payments will be made up of principal, interest, real property taxes, and insurance, but what is the tax for the Community Facilities District, otherwise known as a Mello-Roos District?

What is a Mello-Roos District?

Mello-Roos District is an area where a special tax is imposed on those real property owners within a Community Facilities District. The district has chosen to seek public financing through the sale of bonds for the purpose of financing certain public improvements and services, which may include streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection for newly developing areas. The tax you pay is used by the district to make the payments of principal and interest on the bonds.

Are the assessments included within the Proposition 13 tax limits?

No. The passage of Proposition 13 in 1978 severely restricted local government in its ability to finance public capital facilities and services by increasing real property taxes. The “Mello-Roos Community Facilities Act of 1982” provided local government with an additional financing tool. The Proposition 13 tax limits are on the value of the real property, while Mello-Roos taxes are equally and uniformly applied to all properties within the district.

What are my Mello-Roos taxes paying for?

Your taxes may be paying for both services and facilities. The services may be financed only to the extent of new growth, and services include: police protection; fire protection; ambulance and paramedic services; recreation program services; library services; the maintenance and lighting of parks; parkways, streets, roads, and open space; museums and cultural facilities; flood and storm protection; and services for the removal of any hazardous substances. Facilities which may be financed under the Act include: property with an estimated useful life of five years or longer; parks, recreation, parkway, and open-space facilities; elementary and secondary school sites and structures; libraries; child care facilities; construction and undergrounding of water transmission and distribution facilities; natural gas pipeline facilities; telephone lines; facilities to transmit and distribute electrical energy; cable television lines; and others.

When do I pay these taxes?

By purchasing real property in a subdivision within a Community Facilities District you can expect to be assessed a Mello-Roos tax which will typically be collected with your general property tax bill. These special tax payments are subject to the same penalties that apply to regular property taxes.

How long does the tax stay in effect?

The tax will stay in effect until the principal and interest on the bonds, along with any reasonable administrative costs incurred in collecting the special tax, are prepaid, permanently satisfied, and canceled in accordance with law or until the special tax ceases to be levied and a notice of cessation of special tax is recorded in accordance with law.

What is the basis for the tax?

Most special taxes levied on properties within these districts have been structured on the basis of density of development, square footage of construction, or flat acreage charges. The Act, however, allows for considerable flexibility in the method of apportionment of taxes, and the local agencies may have established an entirely different method of levying the special tax against property in the district in question.

How much will the Mello-Roos payment be?

The amount of tax may vary from year-to-year, but may not exceed the maximum amount specified when the district was created. In the case of the purchase of a new house within a subdivision, the maximum amount of the tax will be specified in the public report. The “Resolution of Formation” establishing the district must specify the rate, method of apportionment, and manner of collection of the special tax in sufficient detail to allow each landowner or resident within the proposed district to estimate the maximum amount that he or she will have to pay.

How is the special tax reflected on the real property records?

The special tax is a lien on your property, essentially like a regular tax lien. The lien is recorded as a “Notice of Special Tax Lien” which is a continuing lien to secure each levy of the special tax.

How are Mello-Roos taxes affected when the property is sold?

The Mello-Roos tax is assessed against the land, but is not based upon the value of the property, therefore, the possible increased value of the property does not affect the amount of the tax when property is sold. The amount of the tax may not exceed the original maximum amount provided in the Resolution of Formation. Any delinquent payments must be satisfied before the sale of the real property since the unpaid amounts are a lien against the property.

5 Top Reasons To Purchase A Home In The Palm Springs Area

Courtesy of Haley Kieser

The scenic city of Palm Springs is located in the Sonoran Desert of southern California. This gorgeous little city is known for glamorous hotels, resorts, spas and natural hot springs thereby making Palm Springs the perfect destination for tourists and potential residents alike. The city is noted for examples of mid-century modern architecture giving the town a feeling of old-world glamour.

1. Outdoor Recreation

One of the many perks of settling down in Palm Springs is the vast opportunities for outdoor recreation. If you or someone you love is an avid golfer, Palm Springs will without a doubt become near and dear to their heart. If you have not tried the sport, it would be wise to give it a shot after relocating. Golfing would be an excellent hobby to learn given that Palm Springs has been given the high praise of being colloquially known as the “Golf Capital of the World,” and it truly does live up to its nickname. Palm Springs and the surrounding area is home to over 20 lush golf courses, most notably the world-renowned Arnold Palmer Classic Course at SilverRock Resort and the PGA WEST Golf Club & Resort to name a few.

The Palm Springs area offers majestic views of the Santa Rosa Mountains that are downright breathtaking. The mountains can be viewed from the golf course and enjoyed both up close and afar. Hiking trails are found throughout the mountains. It should be heeded that visitors to the mountains should strictly follow their map, and be sure to head back when half of your water is depleted as the mountains are situated in the middle of a dessert. The good news is that due to the climate of the southern Californian Sonoran Desert, both the hiking trails and the golf courses can be enjoyed year-round.

2. Beautiful Weather

Palm Springs is a desert city - the weather gets hot. The best time of the year to enjoy the southern Californian weather would be between January and April when the weather is most hospitable. During the summer months, temperatures will regularly reach triple digits.

Palm Springs is the perfect location for those who like the heat. Moving to Palm Springs not only means embracing the heat, but embracing the wind farms. Wind farms are a fact of life in the desert and are churned all year long. The windy season in Palm Springs is generally the end of the summer leading into fall. On top of clean energy sources, the added breeze will be a nice touch as the summer heat ratchets up.

3. Rich History

Many notable American figures have visited Palm Springs, including Frank Sinatra, Fred Astaire, and Ronald Reagan. In its early years, Palm Springs attracted more visitors than potential property owners. Following World War II, there was a boom of development. At first, visitors flocked to Palm Springs to enjoy the natural bathhouses and hotels cropping up within the quiet desert town. Soon the quaint town would attract the attention of philanthropists, moguls, and starlets who would eventually settle in the area. It is likely they settled after watching the glittering town be advertised on the silver screen.

The desert was routinely selected as a choice spot for filming silent films and would grow to become an oasis for Hollywood stars outside of film sets. Today, Palm Springs still maintains a sense of old-world glamour wrapped in plenty of modern entertainment options. In fact, one of Palm Springs quintessential historical landmarks, including Walter and Leonore Annenberg’s Sunnylands Estate. Since 2012, the 200-acre estate and historic residence operates as a place of hospitality for international leaders to convene to “promote world peace and facilitate international agreement.” Tours are available for small groups but require a ticket booked in advance.

4. Minimal Traffic

An added bonus that will be felt at every turn, is that there is virtually no traffic in Palm Springs. No more days of sitting in traffic for 2-hours for a commute that should, in theory, should take only 20 minutes. City dwellers throughout the country understand the plague of heavy, bumper-to-bumper, stop-and-go traffic. Moving to Palm Springs means making traffic a woe of the past. A drive to the grocery store will be just that, without the need for planning added time to consider for traffic and delays. Even during the busiest times of the year, traffic will always be minimal. The average commute time is about 22 minutes, which is lower than the national average.

5. Affordable Living

Compared to huge metropolitan areas like San Francisco or New York, the smaller city of Palm Springs can offer a much cheaper alternative for housing prices without any void of things to do. Although California tends to be expensive as a whole, the Palm Springs area tends to be comparatively cheaper. The median price for a single-family home in Palm Springs is about $300,000, which is subject to change year over year. With the added pocket change, this allows for greater flexibility for leisure around the town and the ability to enjoy the city’s boutiques and fine dining nestled along Palm Canyon Drive.

Summer Tips for Maintaining Your Desert Home

For Homeowners, Buyers and Sellers

Watch this one minute video on how to keep your home healthy and maintained during the summer months in the desert.

New Hotel Complex in Development for Indian Wells

A new hotel development that marries homes, condos and conventional hotel rooms is planned for Indian Wells.

Developers announced a proposal to build roughly 300 units – in the form of multi-bedroom villas as well as hotel rooms – in a project aimed at attracting multi-generational travelers who are looking for the space and privacy offered by a short-term rental with the careful standards seen in hotels.

The project, located near the Indian Wells Tennis Garden, is also planning the development of 60 to 80 condos, which can be managed by the hotel as vacation rentals.

“When we look at the way people are traveling, when we look at the evolution of the travel space, when we look at the rise of multi-generational travel, we think we’re on the cusp of another change in hospitality,” Phil Bates, a partner with TMC Group, a real estate development firm from Irvine, told residents in Indian Wells on Tuesday.

RELATED HOTEL DEVELOPMENT COVERAGE: Montage breaks ground on luxury resort in La Quinta

An architect's rendering of a new development planned for the corner of Highway 111 and Miles Avenue in Indian Wells. The project would build roughly 300 hotel rooms, along with condos and villas. (Photo: Submitted photo: TMC Group)

An architect's rendering of a new development planned for the corner of Highway 111 and Miles Avenue in Indian Wells. The project would build roughly 300 hotel rooms, along with condos and villas. (Photo: Submitted photo: TMC Group)

TMC Group officials, along with representatives from Fogelson Group, a Chicago-based real estate development firm, held a community meeting Tuesday at the Indian Wells Golf Resort to unveil the plans for the development proposed for the corner of Highway 111 and Miles Avenue near the Indian Wells Tennis Garden. The project would occupy about 10 acres.

The development team anticipates construction beginning early next year, with completion in 2019 or 2020.

The hotel building with its 300 rooms could be up to 85 feet tall, and is proposed for the back of the site away from Highway 111. Its height was of a concern to some of the roughly 100 residents attending the forum Tuesday.

HISTORY: First airport in Palm Springs was built for El Mirador Hotel guests

“I have a problem with 85 feet,” remarked Andy Elchuck, who lives nearby.

When asked about views of Eisenhower Mountain and other areas, Bates said, “some will be compromised.”

Development plans for the site go back more than a decade when the Fogelson Group proposed building 129 residences and villas. The Fogelson Group is headed by Jerry Fogelson, well-known for his local philanthropy and generous contributions to the Palm Springs Art Museum. He also serves on the board for the Desert Town Hall speaker series.

The property's future was put into question again in 2014 when Phoenix developer Denny Ryerson was unable to finalize an agreement with YAM Capital that would have provided the money he needed to buy out Fogelson and meet critical deadlines connected to his proposed condo development in Indian Wells.

READ MORE: Jerry Fogelson's Indian Wells project faded over decade

The project announcement comes as officials in La Quinta broke ground Monday at SilverRock, marking the start of development on a luxury resort that brings the Montage brand to the Coachella Valley. The project includes two luxury hotels which are scheduled to open simultaneously in October 2019.

Skip Descant is The Desert Sun’s tourism reporter. He can be reached at edescantjr@palmspri.gannett.com and @TDSskip