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| 5/25 |
| 2008/2/24-26 [Politics/Domestic/California, Reference/Tax] UID:49225 Activity:low |
2/24 I'm about to buy a home in an unincorporated city, what are
some of the ramifications of having a home in an unincorporated
city? Does that men we're screwed if the road/sewage/water
need repairs? What about tax and other ramifications?
\_ I live in an unincorporated area. A lot of it depends on who
provides your services. It's usually the county. If you live in
a rich county it can be good. A poor county might mean you
don't get good services. Taxes will be less. In my particular
case, we get better police and fire services, worse roads
and utilities, more freedom when it comes to building codes
and ordinances (can be a plus or a minus), worse humane society,
and worse library system.
case, we get better police and fire services, worse roads, worse
electric utility, more freedom when it comes to building codes,
zoning and ordinances (can be a plus or a minus), worse humane
society, and worse library system. No difference with schools in my
situation (which again can be better or worse - some uninc.
areas have their own school system and others use a nearby district
and it can vary which is better). The sewer and water are handled
by my county either way. In short, the bad part is that there's no
one to complain to and the good part is that there's no one
placing restrictions on you. If you like HOAs you might not like an
unincorporated area. If you like more freedom you will. My
county has more money and so a plus is that when we want
something expensive all we have to do is convince our county
supervisor. That means we can get expensive things a small city
may not be able to afford if we can make a case for them. (A certain
amount is budgeted by the county for our district and that is not
true in incorporated areas where the county figures the city should
pick up the cost.) Essentially, we have access to a bigger
pool of funds to use on pet projects like redevelopment zones,
parks, and libraries. (Even though our library system is worse
than the nearby city that's just because theirs is really
extensive. Ours is very nice for an area our size.) Over the
years there have been many votes to incorporate or to be
annexed to the nearby city and they have all failed, so the
majority of people must like the status quo (probably don't
want to pay the additional 0.25% property tax in exchange for
being told what to do).
\_ Thanks Unincorporate City Guru! It's very very useful!
May I ask which county or city you live in?
\_ The answer is: it depends. Who provides sewer, water, power
and heating gas? Is there a chance your neighbors are going
to get together and vote you all a tax increase to pay for
more services? Read up on what a Mello-Roos is:
http://en.wikipedia.org/wiki/Mello-Roos
\_ Communities, incorporated or not, can vote taxes for
themselves. It's not really relevant to the discussion.
Mello Roos is tangential as well. Unincorporated areas don't
necessarily have Mello Roos fees. I would guess most don't.
\_ An area without water, electricity or sewer is much more
likely to vote a tax increase to fund those things than
an area that already has them.
\_ Sure, but what does that have to do with incorporated
vs. unincorporated? Absolutely nothing.
\_ You know of incorporated areas with no sewer, water
or electricity? In America???
\_ Yes. All you have to do is leave the cities. Go to
the central coast of CA for instance and you will
find homes which are part of a city but which get
water from a well and use septic for waste. Hell, La
Canada Flintridge just got a sewer system in the last
10 years and it's a wealthy city. The residents voted
to pay for it and some people got majorly screwed.
My boss had a $40K bill for his portion *and* he
had just installed a new septic system just a few
years before. Yes, it is an incorporated city (1976). |
| 5/25 |
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| en.wikipedia.org/wiki/Mello-Roos The name comes from its co-authors, Senator Henry Mello of the Monterey area and Los Angeles assemblyman Mike Roos. Mello-Roos enabled "Community Facilities Districts" (CFD's) to be established by local government agencies as a means of obtaining community funding. California Proposition 13 passed in 1978, it severely limited the ability of local governments to use property taxes to construct public facilities and services. As a result, new ways to fund public improvements in respective locales were considered. edit Districts & Taxes A Mello-Roos District is an area where a special tax is imposed on those real property owners within a Community Facilities District. This district has chosen to seek public financing through the sale of bonds for the purpose of financing certain public improvements and services. These services may include streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly developing areas. The tax you pay is used to make the payments of principal and interest on the bonds. Mello-Roos taxes cannot be deducted if they are assessed to fund local benefits and improvements that tend to increase the value of your property. Mello-Roos taxes may appear on annual county property tax bill with other deductible property taxes. One may only be able to deduct a portion of the total property tax shown on your bill. Most of the time, one cannot deduct real estate taxes assessed for local benefits and improvements. However, one can deduct them if they are for maintenance, repair, or interest charges related to those benefits. Some examples of local benefits are: * Sidewalks * Streets * Sewer lines * Water mains * Public parking facilities * Other similar improvements To deduct local benefit taxes, one must be able to show the amount of the taxes that are for maintenance, repair, or interest. If one cannot show what part of the local benefit taxes are for these charges, one cannot deduct the taxes. edit New Communities Many new communities in California, especially those that require new schools and infrastructures such as public parks, roads, etc require Mello-Roos. While property tax is assessed as a percentage of the value of the home, Mello-Roos is independent and could rise or lower and is not subject to Proposition 13. Many builders in California explain the cost of Mello-Roos through the increased percentage of existing property tax, while other builders in California explain it in terms of the amount of payment per month or yearly cost. The extra Mello-Roos payments are billed with the standard property taxes and are due twice a year, and are not subject to Prop 13 increase protections. For example it is not unusual for new Orange County homes ranged in the $500-700K price range to have $6500/year Mello-Roos and $350-$500/month HOA fees in addition to the existing property tax. In rare cases some of the luxury homes and condominiums are known to have $1500/month HOA maintenance and management fees, which happened to be managed by builder's affiliates (Irvine Ranch homes could be managed by the Irvine Management Corporation for example). Many builders in the housing boom of 2001-2007 realize the extra fees turn off potential buyers and cleverly hide the true costs of ownership by calculating Mello-Roos as a percentage of property tax or other clever explanations. For example, it is much more marketable to explain that the property tax bill is approximately 185% of the property instead of "one needs to pay $8000/year Mello-Roos extra on top of the property tax, and Mello-Roos could rise independently of the property assessment." Regardless of Mello-Roos, HOA fees for many of these new Orange County communities rise tremendously by the 2nd or 3rd year-- it is not unusual to see a rise of 10-20% a year, though the increase usually plateaus after 5 years. As builders are competing against each other in an extremely tight market it is not uncommon to see them throwing incentives such as giving away free plasma TVs, free counter-top upgrades, free hardwood flooring, waiving the HOA for the first few months, or splitting the HOA fees as "master community vs. building" or "North vs South parks" and such, all in order to diffuse the buyers from realizing the true costs of ownership. Interestingly, even though California has one of the lowest property tax rates in the nation, the true total cost of property ownership in terms of property tax, Mello-Roos, and HOA management fees is close to other states. Example 1: Take any typical new Rosedale home in Azusa with Mello-Roos + N HOA + S HOA fees, the total cost relative to the property value is close to 26%. Example 2: A typical Irvine Ranch home in the $650,000 range requires 28% of 1) property tax 2) total HOAs 3) Mello-Roos added, which is comparable to many other states. |