East Garrison infrastructure is paid for by buyer-held bonds – meaning higher fees.

There are signs of life at East Garrison, where about 40 homes of a total planned 1,400 are built or under construction. The houses, with names like “the Ventana” and “the Steinbeck,” start in the $400,000 range and compared to smaller, older houses on the Peninsula for similar prices, might seem like a good deal.

It’s barely a town now, but one day there will be parks and maybe a school. The infrastructure, from the streets to the streetlights, is being paid for with Mello-Roos bonds, a method designed in 1982 to let developers pass along the debt burden to their buyers, in theory allowing them to move new construction faster.

The county created the East Garrison Community Services District in 2005 to issue the bonds.

“Mello-Roos allows you to do a more full and complete development,” County Economic Development Director David Spaur says. “Mello-Roos helps [developers] share risk. That’s the motivation, to lower their carrying cost by selling lots as quickly as possible to transfer the debt from the developer to the homebuyer.”

But that means doubling property taxes, and additional monthly payments above the sticker price that might send some prospective buyers packing.

Sotheby’s Realtor Juliette Ferguson has shown East Garrison homes to three clients, but hasn’t sold any yet.

One reason, she says, is the extra cash for the bonds. She does lots of business at Seaside Highlands, where she says HOA fees run about $150 a month; at East Garrison, there’s the HOA plus Mello-Roos, bringing the total – depending on square footage – closer to $420. “That’s a significant difference,” she says.

Still, Ferguson sees these as a great buy. “They’re beautiful homes, and I think it’s a really good price,” she says.

That good price is owed largely to the Mello-Roos bonds, says County Assessor Steve Vagnini. In most areas, property taxes are 1 percent; school bond measures can add on fractions of a percent.

“In extreme cases you may pay 1.1 percent of the assessed value in property taxes,” Vagnini says. “With Mello-Roos, they add a whole other 1 percent.”

Homeowners normally have five years to pay back delinquent property taxes; with Mello-Roos bonds, they have just one year before the tax collector seizes the property. It doesn’t mean these houses are a bad deal, Vagnini says, just that buyers should read the fine print.

Through a spokesperson, representatives of development firm UCP declined to comment; they were preparing for a quarterly earnings call later in the week.