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Mello-Roos Community Facility District Taxes a Focus at 'Information Social'

The event, 6 p.m. to 8 p.m. Thursday Feb. 9 at Beaumont Civic Center, is billed as 'City with a Heart Pre-Valentine's Day Information Social with Hot Cocoa.'

City of Beaumont officials are planning an "information social" Thursday evening at Beaumont Civic Center.

Community Facility District taxes - also known as Mello-Roos for the authors of state legislation that enabled them - are a focus at the Thursday event, in part because Beaumont resident Nathan Hultgren brought them up at a December meeting of the Beaumont city council.

Mello-Roos taxes came to Beaumont in the mid-1990s, according to a city web page titled "Benefits of CFD (Mello-Roos) Taxes."

More than a decade earlier, the California Legislature passed the Mello-Roos Community Facilities Act of 1982 to provide local governments a method of financing public improvements and services.

Hultgren, 28, and his wife, 27, have a 10-month-old boy and they are planning to sell their home and move out of their Mello-Roos district because they can no longer afford their monthly tax bills, Hultgren said.

"It's cheaper to sell my house at a $25,000 loss than it is to stay and continue to pay the Mello-Roos," Hultgren said. "I would save more than $70,000 by moving out of the Mello Roos, even including the $25,000 loss."

Hultgren works in downtown Riverside for Riverside County. His wife is a credentialed teacher who couldn't find work. She stays home and cares for their child.

"We're talking about an issue that's a very hot topic that . . . concerns thousands of homeowners in Beaumont," Hultgren said in a recent interview. "All homeowners who own a home built on 1993 or after, are affected by these CFD bonds.

"There's a number things that are very concerning about these bonds. One, these bonds started off way too high. When you look across different cities in our region, very comparable cities, like the city of Yucaipa, their rates are more affordable, more reasonable," Hultgren said.

"We're talking in the realm of $1,000 to $1,500 per home. But in the city of Beaumont, we're looking at Mello-Roos in between $1,500 and more than $4,000 per home. And a lot of these homes are well over the $3,000 range, not including regular taxes," Hultgren said.

"So when you add regular taxes, we're well over $5,000, $6,000 on a $170,000 assessment. But that's not the end of it. The CFDs in the city of Beaumont are increasing by a minimum of 2 percent every year.

"If my Mello-Roos was $3,000 this year, that means it's $3,100 next year even if my home value decreases. And that's going to go up for 30 years. So today my Mello-Roos is about $3,200 but a few years down the line it's going to be I believe $5,000, a year, not including regular taxes. If you include regular taxes and assuming my home value goes up every year, we're talking $9,000, $10,000 a year in taxes, which is ridiculous," Hultgren said.

"And a lot of folks in Beaumont, once they bought their house, they realized, yes, Beaumont does have high taxes, but they have no clue that their Mello-Roos is increasing every year, and they have no clue what Mello Roos even is or why it's there.

"And this is very alarming to me, because if you didn't know that it was there, it could increase your monthly payment as much as $300 a month. And if you're maxed out purchasing a home, that will make or break your family. Some people can't afford that monthly payment if it jumps up 300 bucks a month," Hultgren said.

"That's why I spoke Dec. 6. It's a lot of money.

"We bought our house at a good price. We bought it in November 2009 for $219,000, so it was very reasonably priced. But we didn't know about the Mello-Roos and that was kind of the kicker for us," Hultgren said.

"Our disclosure statement was more than 150 pages. We had multiple paper signing sessions. I did read the disclosure but I didn't understand it. I had assumed it was the full tax rate. But it wasn't, it was just my Mello-Roos. That's how high it was.

"The tricky thing about the disclosure is, they won't disclose your current year Mello-Roos. It's a 15-page formula on how to calculate current year value," Hultgren said.

"They give you the value that it was when it started in 2006, and the city of Beaumont assumes you're automatically going to add 2 percent and compound it off the previous year until you get to the current year. And then that would give you the bulk of the Mello-Roos, and there's the service portion that's determined by city council, so you would have to research even further to see what the service fee is for that year, and that increases with CPI, so it's a very complex formula and it's hard for regular folks to understand it. . . .

"I didn't understand at first,  but when I got my tax bill, I thought the county had improperly billed me. I thought they had billed me twice. That's how far off these Mello-Roos taxes are. They double your taxes pretty much. In our case, our Mello-Roos is more than our taxes.

"When our current bond started it was $2,555 of Mello-Roos," Hultgren said, pointing at a print-out table of figures. "This is year one here, $2,555, and this is where it's headed, $4,720.

"This is just our Mello-Roos here. We pay $3,182, and towards the end of the bond we're going to be paying $5,359. These are real numbers. I showed these to Alan Kapanicas, the city manager, and he's like 'Yup, you calculated everything right.'

"If they had told us the true taxes, we wouldn't have qualified for the home.

"We had a FHA safe loan, a government-regulated bond. We did everything responsibly, and we got into a safe loan, but if our lender had the correct numbers they would have found out that our debt-to-income ratio would have been too high including the Mello-Roos," Hultgren said.

"So our payment ended up ballooning by about $250 a month, so our total monthly tax payment was more than $500. We paid our first year $6,000 just in taxes. Technically we shouldn't have qualified for that amount."

The Hultgrens live on Freesia Way, a new street in the Sundance Community subdivision. They were among the last move-ins when they bought their place in 2009.

"There are 20 homes on that street, built 2006 and 2009," Hultgren said.

Many of Hultgren's neighbors on Freesia Way are surprised with the amount of Mello-Roos taxes they are paying, Hultgren said.

"Two are in the short-sale process, and one is a standard sale, mine," Hultgren said.

"We're moving because our taxes are increasing every year. We're going to move somewhere that doesn't have Mello-Roos. We just want to pay our regular taxes.

"The city of Beaumont, people move there because it's a quaint, small town, and people move there because they want to get a good deal on housing. I think it's important to let all potential homeowners know as well as the folks that live there, why the taxes are so high," Hultgren said.

"I don't have anything against Mello-Roos, but when it's done in excess, that's when the city crosses the line. Something needs to be done.

"One thing that's very alarming to me is that the city of Beaumont has a very high population of seniors in the community, lots of 55+ communities, and these folks are living on a fixed income. Their Mello-Roos are rising every year.

"This is wrong. This is affecting our grandmas and our grandpas. Not just young families. That's wrong too. Some people may know about Mello-Roos, but they may not know they're rising every year," Hultgren said.

"Something needs to be done to stop these increases and bring them back down to reasonable levels. I just want to call out the city council to do that, to protect their residents. That's why we put them in office. To protect our residents, and they're struggling because of the burden placed on them.

"It's a lot of money the city takes in. If you look at the Beaumont general budget, the city took in $17.1 million citywide in CFDs, and their bonds, the pay-off CFDs, they only had to pay $13.5 million in fiscal year 2010-2011," Hultgren said.

"There was admin costs of $3 million. Where does the extra money go?"

Hultgren said he plans to make the following recommendations at the Thursday information social event:

- Refinance the bonds to keep the Mello-Roos tax from rising further.

- Lower the service tax portion of the Mello-Roos to $100 a year and freeze it instead of $300 and raising it every year another 3 percent.

- Stop creating and activating CFD areas that require the buyer to pay for the infrastructure. Let the developer pay for this.

- Require all new home developers to post current year Mello-Roos tax rates.

City of Beaumont officials plan to host information socials on a quarterly basis, Starr said.

The event, scheduled 6 p.m. to 8 p.m. Thursday Feb. 9 at Beaumont Civic Center, is billed as "City with a Heart Pre-Valentine's Day Information Social with Hot Cocoa."

Beaumont Civic Center is at 550 E. 6th St. For more information, call (951) 769-8520. For information on upcoming events, visit the city's website at www.ci.beaumont.ca.us.

BMF2012 February 09, 2012 at 03:25 PM
Wake up Beaumont. Kapanicas & Deepak Moorjani profit from the CFD's. They will not refinance them. They don't care if people are losing their homes. They are no different than the fat cats that the government bailed in recent times. Beaumont is ran like a business, a business to make money. This event tonight will do nothing to change the CFD's. Good luck. Why do you think Dave Castaldo walked away from his house in a high CFD area here in Beaumont? His CFD's were over 4K a year. With the CFD's lowering home values and the high CFD's, home prices will never rebound.
Brandon February 09, 2012 at 03:43 PM
Valentines Social? The only lovers in the crowd will be the creators of this nightmare. If the "city with a heart" had a heart or pulse, they would reduce the tax bills. At least reduce them to what is needed to cover the improvements only. 3 million for ADMIN is absurd. I think it is amazing that an official is authorized to enter into new CFD's on the city's behalf, and then receive a percentage of that deal in the form of additional salary. I wish i knew about this meeting a bit earlier, go get em Nathan!
Nancy Gall February 09, 2012 at 04:12 PM
Not only does Kapanikas get his share of those administrative costs, he is paid a handsome salary from the city thanks to the 4 votes of my fellow councilmen.
Victor S Dominguez February 09, 2012 at 04:26 PM
This is no revelation, Tax Fighting Citizens have been advocating for property owners in Beaumont for years, including myself. Take a look into these quick facts. 1. Beaumont City Council meetings are NOT viewed on TV, or the Internet. Citizens can not see what is going on unless they attend meetings in person. WHY ? 2. At the meetings their is no video, or photography standing sections in the meetings, I know this because, at a city council meting in January 2012, I could only take video and pictures from a seated position in the audience. The Beaumont Police Chief forced me to sit down. Why cant I take pictures or video facing the speaker. See attached video for example. http://youtu.be/HZAb3A2ZByo Question, Mayor Berg, Brain Deforge, Jeff Fox, David Castaldo, you all say your Republicans, you talk like Republicans. Why don`t you start acting like Republicans and do your part to keep government out of our pockets. Unless your all fakes hiding behind ignorance. The Truth gentleman will either make you tolerant or intolerant, what have you become ?????
kim murphy February 09, 2012 at 07:28 PM
I agree with her 100% we do not need a bridge especially with our city streets in such shambles!! As far a video taping that is a great idea, do we not have a contract with verison?? Last question was that Roger Berg that spoke to her so rudley??
Victor S Dominguez February 09, 2012 at 09:23 PM
Kim, yes Beaumont property owners are paying for the State Highway 60 Interchange in part with other funds. Question to the public, WHY do Beaumont Property Taxpayers have be the sole responsible funding partner on a State Highway Interchange? Do Beaumont Families pay these high property taxes for State Highway projects? I thought they paid HIGH taxes for their own community up keep and services. City Council voted not to air council meetings via internet, or Tv, because according to the city manager it was too expensive. I have the audio cast maybe, I will play for all to hear. Kim, yes that was Mayor Berg, speaking to BCRG President Mrs. Bingham, her website is www.beaumontgate.org Please follow the link, page 2, item 9 under the title responsibilities, this is the city agenda for the State Highway Interchange were it states in black and white print "City is sponsor for 100% of project" read for yourself, then ask yourself, why would my city council spend my property tax dollars to this State Highway Interchange ? http://ca-beaumont.civicplus.com/DocumentView.aspx?DID=3166
Beverly Rashidd February 10, 2012 at 01:55 AM
Just want to know when Beaumont plans to pay their share of the last Mello-Roos they committed to when the overpass was built over Highland Springs Ave. Will they collect again and then keep the money?
BMF2012 February 10, 2012 at 02:36 AM
Alan Kapanicas has told many that the bonds cannot and will not be refinanced. Why then did Yucaipa last year refinance two seperate bonds to help the residents of Yucaipa? I'll tell you- because the city manager and directors do not directly profit from the CFD's. Kapanicas is "The Bond King". See this article.... http://articles.ivpressonline.com/2011-01-20/cfds_27040759 Also, see http://www.heber.ca.gov/site_documents/Public_Announcements/CFD_Annual_Report_2010_Heber_Meadows_2005-1.pdf He is still the bond king in other cities as of 2010 when he was a full time city manager for Beaumont. Making money everywhere! JUst ask Kapanicas to show proof of what he actually makes off the CFD's in Beaumont. Remember there are many all with different developments. He will retire a fat cat for sure!
Victor S Dominguez February 10, 2012 at 04:57 AM
Great Links BMF2012.....
Inside Informer February 10, 2012 at 03:43 PM
Am I supposed to feel sorry for Mr. Hultgren? You signed the deal, now you pay the price. As for the funds being misappropriated, that is a whole other matter and should be looked into. But for anyone who signed the papers and moved into a newly developed community, this was part of the deal. I don't see this as being much different than those who bought homes in Sundance for $200,000, then when the value increased to $400,00 pulled all the money out and now cry that they have a $400,000 mortgage on a now back down to $200,000 house.
Adam W February 10, 2012 at 03:48 PM
So Nathan.... or anyone.... how did the "information social" go last night? Get anything answered? Have more questions now? Please update your experience.
Evolved6 February 10, 2012 at 04:13 PM
Yea I am also interested in hearing what happened last night unfortunately I wasnt able to make it.
Mushka K. February 10, 2012 at 04:23 PM
Inside Informer, what are you smoking? We moved to Beaumont almost two years ago. The value of my brand new home has decreased since then probably another $50 000, so I cannot understand who came up with idea to rise the taxes (over $600 a month!) based on the current value. HOUSES ARE GOING DOWN! Something is wrong here, who does take that money??? And I don't want that road project at all, nobody needs it (besides the city officials and their friends/family contractors), maybe you are one of them?
BMF2012 February 10, 2012 at 04:55 PM
Mushka: I agree with you. Informer must not know Beaumont home price trends the past 8 years. The administration fees are paid to GGMS (General Government Management Services) ie Alan Kapanicas. Go into the city and ask for a detailed reporting of what is paid out on the CFD accounts. YOU WILL NEVER GET ANYTHING. They will give you bits and peices, but they will HIDE the actual accounting of it. Alan has the girls there all wrapped up and scared to give out anything. The bridge and freeway project off the 60 Fwy only benefit the city and it's contractors. It keeps people busy in slow times. Again, ask yourself why the city of Beaumont will not refinance the CFD's like other cities have done, including Yucaipa. http://www.pe.com/local-news/san-bernardino-county/san-bernardino-county-headlines-index/20111123-yucaipa-flood-control-bonds-refinanced.ece
Victor S Dominguez February 11, 2012 at 08:04 PM
http://banning-beaumont.patch.com/blog_posts/beaumont-mayor-berg-wags-his-finger-at-concerned-citizen-about-taxes
Adam W February 12, 2012 at 03:33 PM
It all boils down to the fact that thousands of residents of Beaumont are being over taxed with these rediculous CFD's but these same residents either don't understand them, don't realize they pay them, or flat out don't care. It's sad that they will continue to let the same people get away with this and get rich on the backs of residents.
Inside Informer February 15, 2012 at 06:47 PM
Actually Mushka & BMF, it is you than do not know what you're talking about. You refer to current house prices BUT Mello Roos have nothing to do with property value!!! Mello Roos is a "tax" to repay the bonds taken out to build the schools, parks, sewers, roads, etc that you enjoy in your subdivisions. Now, as I stated before, if GGMS is misappropriating those funds, that is an entirely different matter. But for you to act surprised about the fees shows your ignorance. I shopped for a home over 10 years ago in the then new Cougar Ranch, Mountain View, and Three Rings Ranch areas. I directly asked about Mello Roos and all provided all the information requested. I even attempted to "buy out" my mello roos with a separate loan when I saw those tables and how much the rate could increase.
BMF2012 February 15, 2012 at 11:27 PM
Inside informer: It is YOU who doesn’t understand property values. With high (or any) CFD's comes lower property values. Property values are based on what the market will bear. And when potential homeowners see the high tax bills Beaumont homes have, they are willing to pay less for the home to compensate the monthly payment. Just look at surrounding areas and how much higher property values are. Even in Yucaipa, the going dollar per sq ft is around $120 give or take, but in Yucaipa’s Chapman Height’s area, which has CFD's, the going rate is right at $100 a sq ft. Now is that just coincidence? I doubt it. Mello Roo's have everything to do with property values!!! A person considering buying a house with a Mello Roo of $3,900 yearly can afford 55K more for a house with no Mello Roo. That’s almost 60K more you can pay for a house with NO Mello Roo and have THE SAME MONTHLY PAYMENT. Now tell me Mello Roos don’t affect property values? Do your research before you write again please. Just so you know, Standard Pacific and Lennar were not disclosing the CFD’s clearly when you went to their model homes. Lennar straight out told me that there is NO CFD in the area. They lied to get you to buy houses. Of course in the escrow paperwork there was a single page telling you about it, but after signing 300+ pages, you never read every one. Yes, I will say that is my fault. Trust me, it will never happen again.
Isaias Sanchez March 31, 2012 at 04:02 AM
Is there someone in Sacramento we can complain to? This is straight highway robbery and.. Yah after signing tons of paperwork for our house, we did not read mello roos.
BMF2012 April 06, 2012 at 01:56 AM
Good luck. The city promised help BUT NOTHING HAPPENED!
Johnny Lang May 10, 2012 at 03:35 PM
Beaumont, CA boasts some of the most aggresive property tax in the state. Here are the REAL tax rates based off an 185k assesment SUNDANCE Real Tax Rate Range = 1.95% - 3.58% Mello-Roos Range: $1,063 - $4,076/yr, Increases by a minimum of 2% every year. HOA: $41.50/month ($498/year) Seneca Springs Real Tax Rate Range = 2.76% - 3.12% Mello-Roos Range: $2,563 - $3,232/yr Increases by a minimum of 2%/yr FAIRWAY CANYON Real Tax Rate Range = 2.73% - 3.60% Mello-Roos Range: $2,501 - $4,110/yr Increases by a minimum of 2%/yr HOA: $145/mo Tournament Hills Real Tax Rate Range = 2.26% - 3.38% Mello-Roos Range: $1,639 - $3,714/yr Increases by a minimum of 2%/yr HOA: $112/mo Oak Valley Greens Real Tax Rate Range = 2.22% - 2.38% Mello-Roos Range: $1,567 - $1,867/yr Increases by a minimum of 2%/yr K’Hovnanian (55+) Real Tax Rate Range = 1.72% - 3.55% Mello-Roos Range: $633 - $4,021/yr Increases by a minimum of 2%/yr HOA: $215 - $298/month Solera (55+) Real Tax Rate Range = 2.22% - 2.38% Mello-Roos Range: $1,567 – $1,867/yr HOA: $177/month Three Rings Ranch Real Tax Rate Range = 1.96% Mello-Roos Range: $1,081/yr Increases by a minimum of 2%/yr Cougar Ranch Area, Real Tax Rate Range = 1.56% - 2.34% Mello-Roos Range: $337 – $1,787/yr Increases by a minimum of 2%/yr Brookside & Deodar Dr. / Morgan Ave. Area Real Tax Rate Range = 2.57% - 2.84% Mello-Roos Range: $2,215 – $2,703/yr Increases by a minimum of 2%/yr

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