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Posted by on Jan 9, 2014 in Bubbleinfo TV, Builders, Mello-Roos | 11 comments | Print Print

Impact of Monthly Fees

mello-roosThese new homes next to the Crosby look reasonably priced – well, except for the HOA and Mello-Roos fees. They have five of these Plan-2 houses for sale, starting at $250/sf, which isn’t bad for homes with the master suite downstairs, private guest suite, and lot sizes that average 18,000sf.

But the monthly fees will make your head spin, and probably why they have standing inventory.

HOA fee at build-out = $536/mo.

Mello-Roos = $543 to $887 per month, depending on size of house/lot.

Combined total = $1,079 to $1,423 per month.



  1. I assume people run the numbers and realize the combined HOA/Mello equates to about 250k in borrowing power. Catch is that you can’t pay them off, they are forever. Well, technically the mellos should expire and hypothetically you should be able to pay them off early if you want, but I doubt anyone does. The big kicker for me has been that you pay all that, and then you still need to join the club if you want to golf or use the facilities, which will bring your nut to well over $2k a month, before you get to mortgage and property taxes. Crosby and Santaluz both have this problem.

  2. nice house but those fees are over the top.

    These new builders know how to put on a show. Those models are loaded with upgrades and highly staged. The base model I’m sure looks nothing like that.

    As far as tile goes it seems commonplace to put tile in the kitchen and bathrooms these days. what % more value do you think tile in these areas adds to a homes value compared to like linoleum and fiberglass shower/tub enclosures?

    I recently did some tiling and its a lot of work and the material costs add up.

  3. To help compensate for the high fees, buyers should go all out on upgrades. These are already over a million, so on resale you’ll want to get more.

    They say all-inclusive, but this is basic granite going in – here are a couple of the production homes:

    The big yards seem like a plus – but once you go this far, you gotta go all the way. Expect another six-figure expense there.

  4. “Well, technically the mellos should expire” – not sure what you are talking about but there is absolutely no world in which MR does not expire. There is also no world in which you cannot pay it off early. MR is California state law, not some developer / HOA scam. It’s a bond, and you can pay it off early. Heck, it might even make financial sense – you can just consult Jim:

    MR fees are also legitimately tax-deductible at this point.

    The HOA and club fees, however, will know no upper bound. And, you’re at the mercy of the competence / crookedness of the board.

  5. @Bode
    “not sure what you are talking about but there is absolutely no world in which MR does not expire.”

    The devil is in the proverbial details. It entirely depends on how the bond was written and issued. The newer builds in Carlsbad have very low MR’s (e.g. The Foothils) because those MR’s were piggy backed to an earlier bond. There are some MR’s bonds that were written in such a way that the length of re-payment can be extended through legislative action. JtR had a post about one such bond…I think Encinitas Ranch??…a couple of years ago that was dealing with such an issue.

    However, you are correct that MR’s will expire or you can pay them off early. But paying $500 – $800/mo is just plain stupid in a low interest rate environment. MR’s are deductible from income……for now. Expect that be a hot button issue in the very near future.

    My MR’s will be done right around the time the kids are off to college and I am near retirement. Good timing there.

  6. MR’s pay for improvements. Basically a loan to finance the initial construction cost of the infrastructure. Regardless of what anyone says, I have always figured that after the 30 or 40 years or whatever of paying off the loan for the initial construction cost, there would be a new fee slapped on for the repair/replacement/maintenance of this now aged infrastructure. Maybe for once in the history of mankind, the folks that set up the bonds accounted for a proper sinking fund, or maybe I am a cynic or just not well informed. Never read the text of the bonds myself; doubt I ever will.

  7. The room just inside the door is perfect for a staging area, CA’s version of a mudroom. Especially you have kids and pets.

    Put in some decorative cubbies and hooks and now there is a place for backpacks, coats, shoes, leashes, etc.

  8. This home by Lennar is in “the lakes”…which has the highest hoa + mello roos and no club. Crosby is slightly less expensive with more amenities. Santa Luz is actually the best value…lowest density of the three 40% less hoa -mello than the lakes… cable/internet/security included. When you consider 4S ranch has $600-700 of hoa + mello…Santa luz and the crosby seem decent.

  9. Great layout, but the master bath, with the potential wet slippery floor, with those extremely sharp edges on the tub… that bathroom should be autographed by William Holden.

  10. Here’s a great overview of Mello Roos

    Unlike an HOA, with Mello Roos there is a definitive maximum payment and rules about how much it can increase. It is theoretically possible (but rare) that it goes up a large (i.e. 50%) amount. Protections against totally screwing homeowners (i.e. maximum term 40 years and maximum increases) exist. Worst case would typically be what happened in Encinitas, where one of the parties essentially defaulted (MR also goes up when your neighbor stop paying their bill – bond holders need to get paid). True, important to read the documents – they are extremely flexible agreements. But it’s very rare to have it go up appreciably (i.e. > 10%).

    @elbarcosr – I have no idea what you are talking about in terms of being on the hook for more money in the future. Can you cite a recent example of a new voter-approved CFD in an already populated area of San Diego? You do realize that setting up a Mello Roos / CFD district requires a 2/3rds vote? It works for a developer because there aren’t actually any people in the district! But once every lives there, passing a CFD aka tax is basically impossible (the bar is a bit lower for schools, and that does happen). Put another way, we’d be seeing these assessment in older communities everywhere – and they don’t exist because no one would ever vote for this sort of thing (even when the streets are crumbling, good luck!).

  11. Well, the older neighborhods are taken care of (poorly in some cases) but the applicable city or county or whatever agency based on the fees and taxes they collect. I guess our fully-funded California cities and counties are going to gladly undertake the on-going cost of all the new infrastructure once the MR’s are done. They have so much extra cash lying around burning a hole in their pockets and will do so quite happily I am sure. I am sure they have set aside all the funds required. This is a good article on Poway using MR funds for schools not even in the MR district:

    Everything’s fine. Nothing to see here. Move along.

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