INDIO, Calif. -

Gracie Nilson, a resident of the Terra Lago development is one of the people behind a petition drive that has forced the city of Indio to examine a special tax known as the Mello Roos tax.  People living in the first phase of the community have been burdened with the tax since the development opened in 2006.
     
"When we bought in here we were told about the Mello Roos, so we were aware of it, but what we were not aware of is this misallocation," said Nilson.

The special tax is designed to help with the costs needed for the infrastructure of new communities.  But - what bothers Nilson and others living in the so-called Area 1 of the community is that their tax dollars have gone toward financing the infrastruture of the development's Area 2 -- where homes have not been built yet.

"We didn't know that our area number one had paid for the infrastructure for area two which is what makes our tax so high," said Nilson.

To help bring down the rate of the special tax that shows up on property tax bills, the city is proposing cutting the tax rate by almost 20 percent, but the city's proposal isn't close to what Terra Lago residents are looking for.

"That would save us Terra Lago residents approximately 17.8 percent.  We're looking for savings of 40 to 50 percent," said Nilson.  "We feel the amount owed to us in the $8 to $9 million range."

In response, the city feels it's going above and beyond the laws involving the Mello Roos tax.  "A Mello Roos district is not required nor is the city required to "compensate" the homeowners," said Indio City Attorney Roxanne Diaz.  "The homeowners are receiving the benefits of the infrastructure that makes their piece of property a home."

The residents behind the petition drive don't agree with the city's figures on the amount they should be credited with.  They want to see the city conduct a forensic accounting investigtion on how much of their money went toward the Area 2 portion of the development.

If the City Council approves a resolution Wednesday night calling for about a 17.8 percent reduction in Mello Roos taxes for Terra Lago residents, a public hearing will follow on March 19.

Petition drive supporters say on average residents of Terra Lago currently pay between $3,500 to $4,000 dollars a year in Mello Ross taxes.