CITY OF MENIFEE
SUBJECT: Proposed Change to Community Facilities District No. 2022- 3, Legado, by BLC Fleming
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
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RECOMMENDED ACTION
1. Review the changes for Community Facilities District 2022-3, located northwest of Antelope Road and Chambers Avenue and south of Rouse Road, proposed by BLC Fleming, to amend the financing plan and for certain public improvements within the residential development and recommend submittal to the City Council for consideration.
DISCUSSION
In early 2022, BLC Fleming initiated plans to form a Community Facilities District (CFD) that would include 1,022-homes within a residential development located northwest of Antelope Road and Chambers Avenue and south of Rouse Road. In August 2022, the City Council approved Resolution 22-1187 declaring its intention to establish CFD 2022-3, Legado; and in October 2022 the City Council approved Ordinance 2022-353 authorizing the levy of special taxes within CFD 2022-3. Since then, BLC Fleming entered into a contract to sell the project to Lennar Homes, however, the property is to be acquired in three separate phases.
When the CFD was formed in 2022, the property was divided into two “improvement areas,” Improvement Area No. 1 (“IA 1”) and Improvement Area No. 2 (“IA 2”), as shown in the attached project map. Lennar has purchased the property within IA 1 (491 homesites). Lennar also is under contract to purchase the property within IA 2, but that future acquisition would occur in two phases as shown in the attached amended project map. The boundary of IA 1 is entirely within the Phase 1 property. But the IA 2 property is divided between Phase 2 ( 201 homesites) and Phase 3 (330 homesites).
Amendments to the approved financing plans are being requested in order to align the CFD financing program with the three phases of the sale, making a cleaner process for the bond issuances and reimbursement processes. It is possible that Phase 2 and/or Phase 3 could
City of Menifee Staff Report
Proposed Change to Community Facilities District No. 2022-3, Legado, by BLC Fleming July 9, 2024
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ultimately be acquired by a developer other than Lennar. If that happens, having a separate improvement area for each builder in the CFD will avoid the potential for different developers wanting to access the same bond proceeds for their respective development costs.
In connection with the closing of Phase 1, BLC Fleming and Lennar entered into partial assignment agreements for the Reimbursement Agreement, the Acquisition, Construction and Funding Agreement, and the Joint Community Facilities Agreement to effectively assign IA 1 to Lennar. Because Phases 2 and 3 will be acquired at different times, BLC Fleming and Lennar would like to amend the boundaries for IA 2 and create a new Improvement Area No. 3 (“IA 3”).
The boundaries for IA 2 would take in the Phase 2 property and the boundaries for IA 3 would encompass the Phase 3 property. No new property would be added to the CFD.
As originally planned, the CFD has multiple tax zones in each improvement area. The tax zone structure that currently exists within IA 2 will stay the same as it is carved into IA 2 and IA 3. Those tax zones are shown in the attached amended boundary map.
In addition to new boundary maps, the project adjustments would necessitate the following changes:
An amendment to the Rate and Method of Apportionment (“RMA”) for IA 2, and the creation of an RMA for IA 3. The developed property tax rates will remain at the amounts previously approved.
A reduction to the existing bond authorization for IA 2 and a new bond authorization for IA 3. Amendments to the existing Joint Community Facilities Agreements with Eastern Municipal Water District to incorporate the addition of IA 3.
The recordation of a special tax lien for IA 3 and the removal of the existing IA 2 tax lien on properties within the new IA 3.
No changes are requested to the fees and improvements currently authorized to be funded by the CFD.
FISCAL IMPACT
There is no fiscal impact to the General Fund.
ATTACHMENTS
1. CFD 2022-3 IA 2 Proforma Summary
2. CFD 2022-3 (Legado) Initial Project Map and Amended Project Map
3. CFD 2022-3 (Legado) IA 2 Change Proceeding Proforma
4. CFD 2022-3 (Legado) IA 3 Change Proceeding Proforma
5. CFD 2022-3 (Legado) Use of Bond Proceeds
6. CFD 2022-3 (Legado) Proposed Amended Boundary Map
7. CFD 2022-3 (Legado) IA 2 Amendment Request