The Bren Tax

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EvaLSeraphim_IHB

New member
Got together with family today in the SGV, and we decided to check out some model homes in the new Rosedale community in Azusa/Glendora/Monrovia area. We saw some great homes on good sized lots in $700s and $800s. I was really surprised by how much house you got for the money there. The HOA was $169/mo, and the Mello Ro... excuse me, "community facilities district" fee, is .7 percent, bringing the total property tax basis to nearly 2 percent (Portola Springs, anyone?).





The Edgemont models (by Christoper Homes) were particularly nice, and the largest model (a 4/3, 2858 sq. ft with pretty good "upgrades" as standard, on an approx 6,000 sq. ft lot) was only $870,000 - the same price as Plan 1 at The Gables or some of the Stonetree detached condos. More info here: http://www.christopher-homes.com/edgemont/index.html





Check out what you can get from the mid-$600s: http://www.christopher-homes.com/mapleton/index.html





Damn that Bren tax ...
 
Mello-roos is the function of the public land needed to put new roads + parks + schools; therefore, we are talking about current land cost. You might see older neighborhoods where roads, parks, and schools are already there then Mello-roos tax is almost none. Land in city like Irvine were $500,000/acre in 1998, now they are going for $3.5M/acre. That is why Mello-roos tax are so much higher. In addition, building materials cost also 80% higher since 1998.
 
Mello Roos fees are a function of how much cost the developer thinks they can pass on to builders and ultimately homeowners. These fees are created as part of a communities facilities district created by the developer. Developers will generally include all of their impact fees because they can get 100% reimbursement from the CFD. Sometimes they will include direct construction costs, but they don't get the full value, so sometimes they wont bother. Mello Roos often raises the tax rates a half percent or more. The CFD floats bonds which are paid off over time. This is why older communities do not have Mello Roos: they did at one time, but the bonds have since been paid off.


The main point here is that Mello Roos fees are controlled by the developer who is using the money to increase their bottom line.
 
<strong>Bren tax</strong> <em>n</em> [Donald <em>Bren</em> (owner of The Irvine Company) + <em>tax</em>] The amount of extra money a consumer must pay for a good that is offered by a business who does business with or leases land from The Irvine Company (as in paying $0.05 more per gallon of gas in Irvine than in surrounding communities where the gas station does not lease the space from The Irvine Company).








Used in the context above, the Bren Tax is the amount of extra money a homebuyer must pay for a similar or smaller home in a similar development. {And yes, I know that Irvine is far more desirable than any master planned community in Azusa, particularly for those with school-aged children, but the costs of comparable new homes in Irvine seems to exceed the location premium.}
 
Here's a random question: Do all CFD bonds have the same duration? I've heard 20 years, 25 years, 35 years...is there a set timing on all of these bonds, or does it vary by district?





-OCR
 
OCR - CFD bonds are all different. The city council will hold a public meeting with the homebuilder and/or developer and vote for approval of the bonds. The type of bond or the interest rate and duration of the bond I would imagine is determined by what is going to be the least amount passed on to the home buyer. I could be wrong on that but it makes sense to me. Also I would imagine what the bond issuer is willing to issue would be a factor as well. Of course you are welcome to go to the meetings and express your opinion of the bonds.
 
<p>OCR,</p>

<p>I called the OC Accessor Office often and always get to talk to a live person. Some bonds are 7-year, 12-yr, 13-yr, 20-yr, 30-yr, 50-yr. You do have to call them to get the exact bond length for each development.</p>
 
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