CITY OF MENIFEE
SUBJECT: Proposed Bond Issuance for Community Facilities District No. 2023-2 Improvement Area 1, Cimarron Ridge
MEETING DATE: November 12, 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 (“CFD”) No. 2023-2 Improvement Area 1, Cimarron Ridge by Pulte Homes, to finance the costs of certain public improvements in connection with the development of 424 homes in a community located south of Rouse Road and west of Byers Road within the City of Menifee; and
2. Recommend that the Finance Department proceed with the preparation of the Official Statement and other legal documents related to the transaction for presentation to the City Council at a future City Council meeting.
DISCUSSION
Pulte Homes (“Developer”) owns a residential tract approved for a total of 756 homes within the City of Menifee (“City”). The project is divided into two improvement areas, known as Improvement Area 1 (“IA1”), consisting of 424 homes, and Improvement Area 2 (“IA2”), consisting of 332 homes.
Last month, the City received a request from the Developer to move forward with the issuance of bonds for CFD No. 2023-2 IA1, which is situated south of Rouse Road and west of Byers Road, to fund eligible City facilities. This size of this bond issuance (the “Series 1” bonds) would be based on the 288 lots within IA1 for which building permits have been issued. A future bond issuance would cover the cost of facilities for the remaining 136 lots in IA1.
As of early October, of the 288 homes for which building permits have been issued, 197 homes (68%) have sold and closed, and 53 homes (18%) have sold and are in escrow. Based on the
City of Menifee Staff Report
Proposed Bond Issuance for CFD 2023-2 IA1, Cimarron Ridge November 12, 2024
2 4
2 0
development’s status, the City’s tax consultant, Spicer Consulting Group, estimates that $4.6 million in bonds could be issued.
A preliminary bond analysis prepared by Spicer Consulting evaluated the viability of the bond issuance, estimating the valuation, delinquency history, and effective tax rate. The development has a strong value-to-lien ratio of 14.15:1, greater than the City’s policy of 4:1 and an estimated average tax rate ranging of 1.92%, which is less than the City’s 2% limit. The first year the CFD taxes were levied was Fiscal Year 2023/2024 and the district has a 0% delinquency rate, which is below the 5% limit established in bond covenants.
Based on current interest rates, it is anticipated that the IA1 bonds would finance approximately $3.9 million in eligible City of Menifee facilities and fees.
Table 1: Summary of CFD 2023-2 IA1, Cimarron Ridge, Activity:
Description Date
Finance Committee CFD Formation Review December 13, 2022 Resolution of Intention March 15, 2023
Resolutions of CFD Formation
(City Council Approval) April 19, 2023 / May 3, 2023
ATTACHMENTS
1. CFD 2023-2 IA1 Proforma Summary
2. CFD 2023-2 IA1 Project Map
3. CFD 2023-2 IA1 Preliminary Bond Sale Analysis
4. CFD 2023-2 IA1 Boundary Map
5. CFD 2017-1 Annexation 22 Boundary Map
6. CFD 2023-2 Public Hearing Report
7. Bond Issue Request