HUNTINGTON BEACH : City Moving Toward Special Tax Districts

Mello-Roos districts, a development-financing tool commonly used in recent years in growing areas of eastern and southern Orange County, may soon be introduced to Huntington Beach.

The City Council on Monday took initial steps to establish the city’s first community facilities district, which would impose a higher, special property tax on 113 houses being built between Golden West and Edwards streets and Garfield and Ellis avenues. The extra tax revenue would pay for an array of street and utility improvements, as well as additional police and fire services for the area.

The council on Monday adopted four resolutions stating its intent to establish the district.

The city also tentatively plans to set up Mello-Roos districts to pay for similar facilities in the Holly-Seacliff and Bolsa Chica developments planned nearby, City Administrator Michael T. Uberuaga said.

Under the state’s Mello-Roos Community Facilities Act of 1982, cities are allowed to levy a special property tax in addition to the 1% maximum tax allowed by Proposition 13, with the approval of voters in the targeted district. That enables cities to build roads, storm drains or other improvements in developing areas that they otherwise could not afford.

Huntington Beach’s proposed Mello-Roos district, approved by the developer, would impose a 1.6% total property tax on each of the homes, which are scheduled to be completed within two years and will range in cost from $678,000 to $843,000. Home buyers initially will pay an average of about $2,800 in property tax, a sum that would escalate each year to nearly twice that figure by 2020.

The Mello-Roos tax revenues would pay for $3.5 million in improvements and expanded police and fire services, according to a city staff report. Ellis Avenue, now a ragged, two-lane farm road west of Golden West Street, would be widened and improved to accommodate more traffic and provide better storm drainage.

Several members of the council, which is scheduled to vote on the plan on June 18, said they may reduce the amount of special tax being considered so it does not deter potential home buyers.