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Comments made by Earl_Lee

Homeowners Overcharged Thousands In Special Property Taxes

Part 2:

What we are going through now is NOTHING compared to the "bubble" we saw the last time around. Because the last time around it was largely caused by banks/lenders doling out credit to ANYONE with a heart beat. This time around there are LOTS of cash buyers, people have good FICO scores, income is all documented and most people are bringing large down payments to the table. (Quite different vs. the last time).

Still, what we are seeing now is NOT normal at all. Anyone that believes this housing market or this stock market is "normal" is deluding themselves. It is NOT normal. Far from it.

I tried picking up a few investment properties last year and earlier this year but I gave up. I was certainly NOT going to chase the market. I was making near all cash offers near/at the asking price only to see people bidding over asking prices and saw prices going up quickly. I certainly wasn't going to chase this market up with the conditions it is in with a still alarmingly high amount of people with NO equity/negative equity or near no equity.

You have this artificial situation where the Federal Reserve has created a situation where retirees and "savers" are being HORRIBLY punished with the low/NO interest rate environment. People that are in retirement or seniors that should NOT have all their eggs in one "basket" and should NOT be in volatile investments ARE in fact investing in these sectors that they should NOT be in for their ages/situations. Why? Because they can't make any return in safe investments.

They see the stock market continuing to go up so they jump in at the wrong time. I had lunch with an elderly friend the other day and she actually was telling me that she just bought Tesla stock! Another friend told me they just picked up a rental property. These people are all "chasing yield".

So as to your question if I think we are in a bubble? I'd say it isn't the same type of bubble as before. People need to understand the market dynamics and differences of today's price increases and the true "bubble years" increases. Quite different.

I'm actually one of those people that predicted that desirable areas like San Diego and other areas of coastal Southern California will see prices surpassing peak prices. However, I thought it would take a decade to 15 years. I did NOT expect to see housing skyrocketing upwards so quickly! That is NOT healthy at all.

June 13, 2013 at 11:52 a.m. ( | suggest removal )

Homeowners Overcharged Thousands In Special Property Taxes

Hi JeanMarc. I'm NO expert on the San Diego housing market at all. However, I can say that I was fortunate enough to have figured out that real estate in San Diego was a GREAT time to buy back in mid-2011. I caught just about the absolute bottom in the San Diego real estate market.

I'm one of those guys that saw the housing crash coming many many years ago. I think several of us had our "aha" moments where we took a look what was going on and figured out that the market was going to crash. My "aha" moment was when I started seeing my maid that was cleaning my house that could barely speaking English buying a $400,000 house. Same with my gardener.

I mean these were people that could barely speak English, got paid cash so they had no documentation and just used stated income loans. I took a good look at that and started to do some due diligence how the banks were getting away with it. I started seeing that they were packaging the debt and selling it via CDO's, SIV's SCDO's and other monstrosities. I sold my house and ended up renting for many many years while the US real estate market crashed.

It pretty much played out how I said it would. There was a LOT of denial at the time. Everyone thought real estate only moved in one direction (i.e. UP UP UP). I explained to them why the market was going to fall but most didn't want to listen.

Alternatively, once the market crashed to obscene levels, you had "perma-bears" that thought real estate prices would fall to $0. If you went to sites like you'd have people arguing how good properties were worth almost nothing. Like their predecessors before them (perma-bulls that thought housing would go up forever). These 'doomsdayers' thought prices would fall forever. They again made the mistake of thinking that prices would only move in ONE direction (down down down).

The thing is. Things don't move in straight lines. I don't care if it's gold or oil or other commodities, real estate, stocks or bonds. Things don't move in one direction forever.

I'm DARN glad that I bought back in 2011. Back then at least there was some inventory to select from. In the past year there was barely anything to select from. It IS getting better lately as I see more for sale signs going up. But it's alarming how quickly it's selling. One of the houses in my development went into escrow 12 HOURS after listing it. And I'm not talking about chump change. These are houses over $1.25 million dollars.

June 13, 2013 at 11:52 a.m. ( | suggest removal )

Homeowners Overcharged Thousands In Special Property Taxes

@JeanMarc - I forgot to mention something in my posts above. IMHO, I believe that if too many people find out about pre-payment of the Mello-Roos taxes and end up prepaying it, then the various CFD's might ban the ability to pay them off ahead of time.

In speaking to both companies that administer the bonds and handle the pre payments for both CFD #2 and CFD #4 they both said it is rarely done. In fact, I don't think they even want people pre-paying these Mello Roos off. I figured it was better to prepay it off now while they still allowed it.

While reading wording like this below, it didn't give me a good feeling.


Notwithstanding the foregoing, no prepayment will be allowed unless the amount of
Annual Special Taxes that may be levied on Taxable Property, net of Administrative
Expenses, shall be at least 1.1 times the regularly scheduled annual interest and
principal payments on all currently outstanding Bonds in each future Fiscal Year and
such prepayment will not impair the security of all currently outstanding Bonds, as
reasonably determined by the Board. Such determination shall include identifying all
Assessor's Parcels that are expected to become Exempt Property".

But I LOVED this part,

"With respect to any Assessor's Parcel that is prepaid, the Board shall indicate in the
records of IA No. 1 of CFD No. 2 that there has been a prepayment of the Annual
Special Tax obligation and shall cause a suitable notice to be recorded in compliance
with the Act to indicate the prepayment of the Annual Special Tax obligation and the
release of the Annual Special Tax lien on such Assessor's Parcel, and the obligation of
such Assessor's Parcel to pay such Annual Special Tax shall cease."

* Also a footnote to say that the $500 fee they charged me for the exact pay off quote for the CFD #2 I got that $500 applied towards my pay off so it's not like I lost that money. But it seems like they want to charge a high enough amount where it dissuades people from getting a pay off quote.

June 12, 2013 at 11:48 p.m. ( | suggest removal )

Homeowners Overcharged Thousands In Special Property Taxes

@ Joanne - I'm really looking forward to reading more of your reports regarding the Mello Roos issue. I've always thought that it's an issue that needed to get more exposure and that most homeowners living in a CFD area have no clue about.

@ JeanMarc - YES, once you pay off your Mello Roos taxes then your property is forever released from those CFD taxes. When you sell your house the new owner will NOT have to pay CFD taxes in the future.

In this kind of hot market, you can DEFINITELY get back all of your taxes that you prepaid. In fact, I've gotten several unsolicited offers to purchase my home. We aren't interested in selling our home and probably never will so we aren't interested but the people that made the offers obviously have checked with the City of SD tax rolls because they specifically mentioned, they knew we didn't have the CFD exposure. It shows as $0.00 on our online tax bill.

I have NO doubt at all should we want to sell our house, we would NOT have any problems at all in recouping that $61,000+ we spent pre-paying off our CFD's.

As a new buyer looking at houses in a CFD area, I'd definitely find the fact that a given house might not have any future CFD liability a HUGE plus. I just don't think that many owners pre pay them off.

In fact, we were waiting on the sidelines for several years waiting for the real estate market to crash here in San Diego. We looked at several houses and I always look up the properties on the tax websites and I never came across a property that we were interested in having their Mello Roos taxes paid off. I just don't think the education is there out in the public about these taxes.

As well, I think in a town like San Diego there are a lot of people that would take that $60,000 to $100,000 in Mello Roos prepayments and blow the money on things they THINK they need more or more important. (i.e. luxury car leases, expensive vacations, or other things they probably shouldn't spend their money on).

June 12, 2013 at 11:30 p.m. ( | suggest removal )

Homeowners Overcharged Thousands In Special Property Taxes

Also, I wanted to comment on something else since this topic is Mello Roos taxes.

We originally were going to buy a house in La Jolla. My wife did NOT like the idea of paying Mello Roos taxes. We have never lived in any areas before where they had an additional tax beyond the annual property tax. It truly felt like a rip off to her and at first she did not want to even look at any houses in Mello Roos (CFD) areas.

However, the more due diligence and looking we did, the more we found how much more desirable it was to raise kids in this area where we ended up buying (Santaluz). I found the school district more appealing, we could find a house that was more our style as well.

Buying where we did was the best decision we ever made. The weather is so much nicer being just a few miles inland vs. La Jolla or Del Mar where we originally thought we would end up.

I mention this because people often wonder if it's worth it to buy a property in a CFD area. I know from our experience it was TOTALLY worth it. I didn't want to have to end up sending my kids to a private school. Not just for the expense of a private school so much as the "bubble" it might have been for them. We wanted to send them to public schools that were excellent.

I know CFD areas often have a bad reputation of being "not worth the extra taxes" but I can honestly say it was the best decision we ever made buying where we did and it's well worth any Mello Roos taxes we pay. It was well worth the premium for us and we know tons of other parents raising families that also believe the same thing.

The only suggestion I'd have is for ALL homeowners buying in a CFD area to be intimately aware of all the details of their Mello Roos taxes. I still can't fathom how someone could be billed for almost 100% more than what they were actually supposed to pay and not notice it.

The positive thing is the exposure that an article like this can do for CFD awareness and I do hope you do follow up articles/stories on some of these things I mentioned above.

June 12, 2013 at 6:55 p.m. ( | suggest removal )

Homeowners Overcharged Thousands In Special Property Taxes

Again, it does probably NOT make sense for all home owners to pre pay off their CFD obligations. But I strongly believe that for those that will be around for the long haul this makes sense. It's a total "no brainer" to pay it off and forever end your Mello Roos obligation if you plan on staying in the house.

By law they can raise the CFD each year. I believe it's different for each CFD but it looked like the typical average is 2% per year. I do believe moving forward most CFD districts WILL raise the maximum % they are allowed to by law.

As well, it was unclear all the ways in which these Mello Roos taxes could get extended in the future. My fear was in 2041 the PUSD will say, oops....your CFD #4 obligation was SUPPOSED to end this year but we need to extend it out 5 more years. I'm not sure legally if this is possible but my attitude was "why take the chance"?

June 12, 2013 at 6:30 p.m. ( | suggest removal )

Homeowners Overcharged Thousands In Special Property Taxes

Sorry for so many separate posts but this system limits the # of words I can post so I have no alternative to post separate posts.

Anyway, I was happy to get the exact pay off and it came in at the lower end of the estimate of around $15,000 to pay off my CFD #4 (PUSD).

Keep in mind I read from another post on another Internet forum that the PUSD has now instructed the Dolinka Group NOT to give general pay off quotes now without paying a fee. I'm NOT sure if that is true or not but I wouldn't doubt it.

I also paid off my CFD #2 for Santaluz and the process was similar. Another entity handles the pay off for the CFD #2.

The procedures for that are to send in a $500 check to this address below:

David Taussig & Associates
5000 Birch Street, Suite #6000
Newport Beach, CA 92660

You need to send in a $500 check made payable to the entity listed above. Also, include your Parcel # and request for a payoff quote for CFD #2.

I did that and about 10 days later in the mail I got an exact pay off quote. I went ahead and paid it off.

They did give me me an estimate on the phone before I sent in the check. I asked them if they could check and give me a ballpark figure of a similar sized/priced house in my area. I guess they can only give you a ballpark "pay off quote" estimate if there was a recent pay off of CFD in the area. For me there was so they told me between $45,000 to $50,000.

When I got the exact pay off quote in the mail it was about $46,000 which I gladly paid to forever end my obligation to pay Mello Roos taxes.

I mentioned Chuck Wilcox in my previous post. There was some confusion because they made some mistake in my pay off quote. It was a bit confusing but the way I was explained was that the City works with the County in releasing the obligation. So they told me the easiest way to solve it was pay an additional $2,000 and they would get it worked out with the County and then send me a refund check a few weeks later.

It was a bit confusing but Mr. Wilcox, the City's Debt Coordinator explained that was the cleanest way to handle it. He assured me that I would get a refund check. True to his word, I did get that $2,000 refunded to me shortly after that.

As well, almost immediately on my property tax bill online it showed as $0.00 for CFD #2 which was a GREAT feeling.

June 12, 2013 at 6:30 p.m. ( | suggest removal )

Homeowners Overcharged Thousands In Special Property Taxes

My experience paying off my CFD #4. I hope it's helpful to other owners.

I called Dolinka LLC that is in charge of administrating CFD #4. They are the entity whose phone # is on the property tax bill. I called them several times over several days & no one ever answered the phone. It always went to voicemail.
Finally about 4 days later someone called me back and said he would email me the details to pay it off.

He did email me this below. (He also gave me a general pay off quote of $15,000 to $20,000 for the CFD #4). I get charged about $1,000 a year on my annual property taxes for reference.

And he said that as it stands now the CFD #4 doesn't end until 2041 and might get extended for further into the future. I imagine they will do the maximum % increase each year as well.

They did confirm once you pay it off it releases you from further obligation if they extend the bond.

Prepayment of Annual Special Tax Lien Procedure

1. All requests for prepayment amounts must be received by the PUSD in writing no less than 30 days prior to the date in which the party wishes to prepay and must include the following information:

a. The name of the party wishing to prepay;
b. The address of the property;
c. The development the property is within;
d. The valid Assessor's Parcel Number;
e. The Tract and Lot number; and
f. The Annual Special Tax the party is wishing to prepay (i.e. infrastructure or schools).
g. A payment of $100.00 for each prepayment to be calculated. The check(s) are to be made payable to “Poway Unified School District” and is/are to be included with the written request.

All prepayment requests are to be sent to:

c/o Kari Zipp
13626 Twin Peaks Road
Poway, CA 92064

2. The School District will forward the request for prepayment to Dolinka Group, LLC. Dolinka Group will provide the requesting party with the prepayment
amount within thirty (30) days and send a letter informing the requesting party of such amount. A copy of the response will also be sent to the School District.

3. All parties wishing to prepay must send a check in the prepayment amount made payable to "Poway Unified School District" in writing and send to the School District at the address listed above. The prepayment should include a copy of the letter requesting the prepayment and a copy of Dolinka Group's response to the request.

4. When the School District receives the prepayment, the School District will send a copy of the prepayment check and accompanying paperwork to Dolinka Group so the parcel can be removed from the Special Tax levy for the following Fiscal Year. The School District will then send the prepayment to the Fiscal Agent to be deposited for the purpose of calling bonds or to be used by the School District at a later date to construct facilities. The School District will also record a "Notice of Cancellation of Special Tax Lien" on the property at the County of San Diego Recorder's Office.

June 12, 2013 at 6:14 p.m. ( | suggest removal )

Homeowners Overcharged Thousands In Special Property Taxes

FYI. This is a really good read and worthwhile for anyone with CFD tax obligations to read:

The biggest problem I have with Mello Roos is there seems to be a lack of transparency with these taxes and quite a bit of information that you try to find out and you might ask different entities and get different answers.

I don't plan on moving out of our house so it made sense to me to pre pay off ALL CFD obligations (Especially the PUSD after the Capital appreciation bond shenanigans).

June 12, 2013 at 6:11 p.m. ( | suggest removal )

Homeowners Overcharged Thousands In Special Property Taxes

Thanks for taking the time to post back. I just mistakenly assumed that the CFD #4 was Poway and that all the districts that were part of the PUSD had that CFD #4. It's good to know that isn't the case.

I for one think it's WONDERFUL you are going to do more reporting on this issue. I think you should do follow up stories on the CFD on topics including how/when they are refinanced at a lower APR. And to congratulate the areas that have refinanced at lower interest rates & ask tough questions why other areas have NOT refinanced at today's record low interest rates.

It would also be interesting to read about when each CFD area is scheduled to have their debt retired & paid off in in full. As well, it would be interesting to read about under what circumstances the taxes can be extended past the original expiration dates.

I totally agree with you that it can be a complicated system but quite honestly the homeowner should have spotted that they were paying so much more than usual. It should have been a dead give away the % of their total tax they were paying relative to their existing property tax as well as the value of their home.

Anyone that does any amount of due diligence on this issue can see the way they structured these is all quite murky. Look at the verbiage on some of the documents and even a skilled lawyer would probably get confused on the documents with the jargon they use.

I agree with sandiego92064's general premise that this probably isn't happening on a wide scale. It honestly sounds like these were legitimate mistakes by the City of SD. I doubt they would be widespread problems or that there was an intent to cheat taxpayers out of $$.

But I do applaud you for finding out about this & the scary thing is that these taxpayers could have went many years without finding out about it.

I dealt with Chuck Wilcox with the City of SD (mentioned in your article) earlier this year when I prepaid off my CFD taxes. He was an absolute pleasure to deal with. He always got back to me in a timely fashion and was a total professional while I was dealing with him.

This is another part of the story you might want to explore and let your audience know about. The fact that one has the ability to pre-pay off their CFD obligations ahead of time. You don't have to wait until 2041 to pay off your PUSD obligation!

It does NOT make sense for everyone but for those that know they will stay in their "forever house" it makes sense to prepay off their CFD obligation today. It might be interesting to note that once you pay off your CFD taxes, it forever ends your obligation to pay in the future. The CFD could get extended in the future, but it won't matter for those that pre paid off their CFD. Those people are forever released from those Mello Roos taxes.

I think that people should do all they can to understand Mello Roos taxes & ways in which they can limit their future obligation and tax exposure.

June 12, 2013 at 5:49 p.m. ( | suggest removal )