Irvine Housing Blog

A Change in Trend for Irvine Housing: No New Mello Roos?

Posted: 04 Apr 2012 05:00 AM PDT

An IHB post from last week was about one of Irvine’s most recent housing development, Lambert Ranch. As Zovall stated in that post, a sneak preview of the homes in this new development occurred recently. Some TalkIrvine participants attended the preview and gave some interesting and differing opinions. You might want to take a look at their comments.

Today's post is another twist on this new housing development in Irvine.

Lambert Ranch might start a new trend in the financing and marketing of new homes in Irvine. Mello-Roos taxes on homes in new Irvine developments has been a given for some time now. And this given usually means a big increase in the homeowner’s property tax bill.

However, the Lambert Ranch developer, The New Home Company (TNHC), “has announced there will be no Mello-Roos taxes at Lambert Ranch, making the development the only new home community in Irvine to offer no additional tax assessment.” Partner and CEO Larry Webb goes on to say, “Families have a hard enough time paying normal real property taxes, let alone the special taxes imposed by Mello-Roos.”

Many of you know about Mello-Roos taxes, but for those who don’t, here is a brief history:

With the passage of Proposition 13 in 1978, the property tax money that had been available to build infrastructure and provide services (for example, schools, roads, and libraries as well as police and fire protection) was reduced. One of the results was that cities and local governments required that developers bear more of the burden in providing the infrastructure and services that would be needed in new communities. Passage of California’s Mello-Roos Community Facilities District Act in 1982, which lets developers obtain the funds needed to pay for the infrastructure and services through the sale of bonds, was seen as a partial solution to this problem. The obligation to repay the bonds is usually transferred from the developer to the homebuyer and shows up as an additional fee on the homeowner’s property tax bill.

So will TNHC recoup the cost of providing the needed services without the aid of Mello-Roos taxes by charging higher housing prices? CEO Webb commented on this:

“Some of the cost may be passed to the homebuyer. However, this does not significantly impact the cost of the home. In fact, our prices will be comparable per square foot with projects in Irvine that are subject to Mello-Roos fees. And buyers in those communities will have to pay these fees every year.”

This seems like doublespeak to me. First he seems to say that the overall cost will be higher, and then he seems to say that the overall price will be comparable to new developments in Irvine that have Mello-Roos fees. I’ll let you compare overall costs between Lambert Ranch homes and homes in other recent Irvine developments. After you factor in the costs with and without Mello-Roos taxes, you can come to your own conclusion. And for those of you who make this comparison, please let me know what your conclusion is.

TNHC describes their Lambert Ranch development as “private family residences in the hills of Irvine.” The development, which will include three neighborhoods (The Field, The Grove, The Hill) as well as three pocket parks, the Ranch House recreational center, and the .75 acre Children’s Adventure Park, goes on sale this month.

For some history on Lambert Ranch, which includes Ray Lambert’s purchase of the land in 1915, see an Orange County Register article.

Lambert Ranch then…