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August 17, 1994|Debora Vrana / Times staff writer

Cutting Interest Costs: To reduce interest costs of its Mello-Roos bonds, Orange County has quietly sold $240 million of low-interest debt to pay off high-interest debt sold by eight Mello-Roos districts in the southern part of the county.

In addition, some of the bonds will pay for roads, fire stations and schools in planned communities in South Orange County.

Though the new arrangement slashes costs to the county by an estimated $11 million, homeowners are not likely to see any initial tax relief, county officials said.

Mello-Roos districts are created by local governments and impose an extra levy called a Mello-Roos tax on homeowners who live in the district. The money is used to pay for infrastructure improvements. Orange County has 16 Mello-Roos districts.

Homeowners in Mello-Roos districts in Foothill Ranch, Rancho Santa Margarita, Coto de Caza and Mission Viejo should not expect to see a reduction in their payments, at least not yet, said Eileen Walsh, director of finance for the county.

Homeowners in Coto de Caza might even see Mello-Roos rates go up because of the financing arrangement, said Peter Conlon, senior staff analyst for Orange County.

"It will have an eventual effect on their Mello-Roos taxes. But it will be different for each district, depending on several issues." Conlon said.

The new bonds, sold on Aug. 5 at a 5.96% interest rate, will retire Mello-Roos bonds carrying interest rates of more than 7%, according to Securities Data Co.

--Compiled by Debora Vrana / Times staff writer

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