CITY OF MENIFEE
SUBJECT: Proposed Bond Issuance for Community Facilities District No. 2023-1, Rockport Ranch
MEETING DATE: July 9, 2024
TO: Finance Committee
PREPARED BY: Lauri Lockwood, Financial Analyst
REVIEWED BY: Travis Hickey, Chief Financial Officer
APPROVED BY: Armando G. Villa, City Manager
-------------------------------------------------------------------------------------------------------------------------------
RECOMMENDED ACTION
1. Review the proposed bond issuance request for Community Facilities District No. 2023-1, Rockport Ranch, by Lennar Homes, located at the southwest corner of Newport Road and Briggs Road to finance the costs of certain public improvements.
DISCUSSION
The developer, Lennar Homes, owns a residential tract approved for 305 homes within the city.
The tract is located at the southwest corner of Newport Road and Briggs Road, as shown in the attached project map.
Community Facilities District No. 2023-1, Rockport Ranch, (“CFD No. 2023-1”) was approved one year ago, with the City Council setting a not-to-exceed limit of $23 million in bonds that could be issued within the district.
Construction on the development is under way, and as of last month, building permits have been issued for 180 homes. Of those homes, 110 have sold and closed, and 7 have sold and are in escrow.
With 59% of the building permits issued and 36% of the homes sold and closed, the builder has requested that the city authorize the issuance of the first round of bonds to fund eligible facilities.
Given the development status, the city’s tax consultant, Spicer Consulting Group, estimates that $9.1 million in bonds could be issued at this time. A second bond issuance would be requested in the later stages of development.
A preliminary bond analysis was prepared by Spicer Consulting Group to evaluate the viability of the initial bond issuance estimating the valuation, delinquency history, and effective tax rate. The
City of Menifee Staff Report
Proposed Bond Issuance for Community Facilities District No. 2023-1, Rockport Ranch June 6, 2024
2 2
6 9
development has a strong value-to-lien ratio of 12.56:1, greater than the City’s policy of 4:1 and an estimated tax rate ranging from 1.78% to 1.83%, which is less than the City’s 2% limit.
Based on current interest rates, it is anticipated that the bonds would finance approximately $7.82 million in eligible facilities and fees within the boundaries of the City of Menifee and Eastern Municipal Water District.
Staff proposes to select Raymond James as the underwriter for this transaction based on the newly formed “Rotating CFD Underwriters Pool” brought forward as an earlier item in this agenda.
TABLE 1: Summary of CFD 2023-4, Rockport Ranch, Activity:
Description Date
Finance Committee CFD Formation Review October 4, 2022
Resolution of Intention May 3, 2023
Resolutions of CFD Formation (City Council Approval) June 7, 2023 / June 21, 2023 Request for Bond Issuance Series 1 Review July 2024
FISCAL IMPACT
There is no fiscal impact associated with the recommended action.
ATTACHMENTS
1. CFD 2023-1 Proforma Summary
2. CFD 2023-1 Project Map
3. CFD 2023-1 Preliminary Bond Sale Analysis
4. CFD 2023-1 Boundary Map
5. CFD 2023-1 Annex 18 Maintenance Exhibit
6. CFD 2023-1 Series 1 Bond Issuance Request