Definition
A Mello-Roos Community Facilities District (CFD) is a special tax district formed under the Mello-Roos Community Facilities Act of 1982 (Government Code § 53311 et seq.). CFDs allow local agencies and school districts to levy special taxes on property within a defined district to finance public infrastructure and services that benefit the district. The CFD mechanism is one of the primary tools California cities use to fund infrastructure for large new developments without drawing on the general fund.
How a CFD Works
Formation of a CFD involves several steps:
- The legislative body initiates formation by adopting a resolution of intention.
- A public hearing is held, after which property owners may protest. If more than 50% of registered voters (or owners of more than 50% of the assessed value) protest, formation fails.
- An election is held among registered voters in the district, or — if there are fewer than 12 registered voters — among property owners (one vote per acre).
- If the election succeeds (two-thirds approval required), the CFD is formed and bonds may be issued.
- The special tax appears on the property tax bills of owners within the CFD and is used to repay the bonds.
What Can Be Financed
Mello-Roos CFDs can finance a wide range of capital facilities and services, including:
- Roads, bridges, and traffic signals
- Water, sewer, and drainage infrastructure
- Parks, recreation centers, and libraries
- Fire stations and police facilities
- School facilities
- Ongoing services (police, fire, park maintenance) in addition to capital facilities
Disclosure Requirements
Sellers of property within a CFD must disclose the existence of the CFD and the estimated annual special tax to prospective buyers. Failure to disclose gives the buyer the right to rescind the purchase contract within three days of receiving the disclosure. This disclosure requirement is one of the most frequently litigated aspects of Mello-Roos law.
CFD formation and administration requires precision at every stage — from the formation election to ongoing special tax administration and bond disclosure. Legislaide helps agencies structure CFD programs that are legally defensible and administratively efficient.
Frequently Asked Questions
What is a Mello-Roos Community Facilities District?
A Mello-Roos CFD is a special tax district formed under the Mello-Roos Community Facilities Act of 1982 (Government Code § 53311 et seq.) that allows local agencies to levy special taxes on property within a defined district to finance public infrastructure and services benefiting the district.
How is a Mello-Roos CFD formed?
Formation requires: a resolution of intention, a public hearing where property owners may protest, and an election — typically requiring two-thirds approval among registered voters (or property owners if fewer than 12 registered voters exist in the district). The special tax then appears on property tax bills and funds bond repayment.
What can Mello-Roos CFDs finance?
CFDs can finance: roads, bridges, water and sewer infrastructure, parks and recreation facilities, fire stations, police facilities, schools, and even ongoing services like park maintenance or public safety in some configurations — making them more flexible than some other local infrastructure financing tools.
What are the mandatory disclosure requirements for Mello-Roos properties?
Sellers of property within a CFD must disclose the existence of the CFD and the estimated annual special tax to prospective buyers before close of escrow. Failure to disclose gives the buyer the right to rescind the purchase contract within three days of receiving the required Mello-Roos disclosure.
How does a Mello-Roos special tax differ from a standard property tax?
A standard property tax is tied to assessed value and capped by Proposition 13. A Mello-Roos special tax is set at a fixed amount per parcel or per square foot and requires two-thirds voter approval — not subject to Proposition 13 limits, allowing it to fund infrastructure that property tax revenues alone cannot support.
Published June 15, 2026 by Legal Team at Legislaide.