CUSD and developer agree to special tax on new Wavecrest homes

At the last (closed) meeting of the School Board, the board voted to sign a letter of agreement with Wavecrest developers to create a special district [pdf] that would tax market-value homes in the development $1,000 per house per year for 30 years. The revenue for this Mello-Roos community facilities district would be earmarked for middle school construction and facilities. There are 178 market-rate homes planned for Wavecrest.

Mello-Roos was a response to the restrictions that Proposition 13 placed on raising money via taxes. It allows the creation of special tax districts for capital facilities and services. According to the state, the principal risk of setting up a Mello-Roos district is that it could create a sense of spiralling taxation among its residents and make it more difficult to raise taxes at a later date.  For example the 178 homeowners in Wavecrest would theoretically be less inclined to vote for new parcel taxes to support the schools.

California Land and Title has a good explanation of how this would be represented to home buyers. The state’s page on Mello-Roos is less helpful.

This is good news, producing genuine revenue for the district. It’s less clear what incentive Wavecrest had to go along with this plan. According to Superintendent John Bayless, who negotiated for the district, the main advantage to the developers was the assurance to home buyers that the middle school would be kept up and that this would have some tangible impact on property values. But it seems to me that the special fee would have a depressive effect on the selling price for new homes.