The newest of Rancho Mission Viejo’s neighborhoods, Rienda, just got access to as much as $165 million in special property taxes to build the backbone for new homeowners coming in the next few years. 

The revenue, typically provided up front by the use of Wall Street bonds, will provide new roads and other basic infrastructure like bridges, storm drains, utilities and regional hiking and biking trails. Along with those, the money can be spent on facilities like fire and sheriffs’ department stations, along with new library facilities and equipment. 

It’s a mechanism often used to fund new housing developments, particularly in South Orange County.

Yet it’s one that local homeowners typically know very little about. 

The OC Board of Supervisors approved a series of new bond debts for the Rancho Mission Viejo development at their meeting on Nov. 23.

The total debt could run as high as $165 million in the initial bonds, but will soar above that after factoring in interest when the bonds are created and paid off over the next 30 years. 

The debt will be paid off by the new homeowners in the form of an annual Mello-Roos property tax. 

Orange County supervisors approved the new debt with just over a minute of discussion.

Supervisor Lisa Bartlett asked to speak on the approval before the final vote, making a point that the tax wouldn’t affect residents countywide.  

“Just so everyone is clear on this, this pertains to Rancho Mission Viejo planning area 3,” Bartlett said at the meeting. “It’s not all taxpayers throughout Orange County…it’s a great thing to move forward.”

Much of South Orange County has been developed using Mello-Roos taxes, including most of Irvine’s villages and the Great Park. 

To build one of these districts, the supervisors have to call for a vote of the property owners, but the taxes are generally established before homeowners move in, when developers are the only ones on the property. 

These taxes help developers sell homes at a lower price tag by funding the construction of most of the infrastructure that developers would be responsible for, like new roads and utilities.

After the developers sell the property, the new homeowners pick up the tab with a higher property tax for the first few decades after construction, after which point the higher taxes end. 

Either way, new residents end up having to pay for the development, but the taxes make it easier to sell the homes at a lower price instead of factoring in all of the developer’s overhead at once. 

However, those taxes sometimes come back to haunt residents and local officials years later.

Irvine’s Great Park is being developed almost exclusively off of Mello-Roos taxes from nearby homeowners, who have started to question over the last year why they don’t have more of a say in where their tax dollars are being spent for a park the entire city uses. 

[Read: More Transparency Coming for New Great Park Homebuyers in Irvine]

The supervisors are set to discuss the issue again next Tuesday, when they’ll formally be approving the developer’s decision to put a Mello-Roos tax in place. 

Noah Biesiada is a Voice of OC Reporting Fellow. Contact him at nbiesiada@voiceofoc.org or on Twitter @NBiesiada.

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