City Council Chambers
29844 Haun Road
Menifee, CA 92586
Ricky Estrada, Mayor
Dean Deines, District 4
AGENDA
Finance Committee
Regular Meeting Agenda
Thursday, January 30, 2025
4:00 PM Regular Meeting
Travis Hickey, Chief Financial Officer
Edna A. Aguilar, Meeting Clerk
REGULAR MEETING (4:00 PM)
1. CALL TO ORDER
2. ROLL CALL
3. PRESENTATIONS NONE
4. PUBLIC COMMENTS (NONAGENDA ITEMS)
This is the time for members of the public to address the Committee Members about items which are NOT listed on the agenda. The Ralph M. Brown Act limits the Committee’s ability to respon d to comments on nonagendized matters at the time such comments are made. Each speaker will be limited to three minutes on any single item.
5. APPROVAL OF MINUTES
5.1 December 10, 2024 Minutes
6. DISCUSSION ITEMS
6.1 Proposed Bond Issuance for Community Facilities District No. 20232 Improvement Area 1, Cimarron Ridge
RECOMMENDED ACTION
1. Review the proposed bond issuance request for Community Facilities District (CFD) No. 20232 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 in the City of Menifee; and
2. Recommend the Finance Department to proceed with preparation of the Official Statement and other legal documents related to the transaction for presentation to the City Council at afuture City Council meeting.
7. STAFF COMMENTS
8. COMMITTEE MEMBER UPDATES AND COMMENTS
9. FUTURE AGENDA ITEMS
10. ADJOURNMENT
Decorum Policy Notes
The Committee anticipates and encourages public participation at its meetings, both on agenda items and during the public comments period. Please turn your cell phones off, refrain from talking in the audience or outbursts that may be disruptive. We encourage participation and ask for a mutual respect for the proceedings.
Staff Reports
Materials related to an item on this agenda, including those submitted to the Committee after distribution of the agenda packet, are available for public inspection by contacting the City Clerk Department, at (951) 6726777, or by coming into City Hall located at 29844 Haun Road, Menifee, CA, 92586 during normal business hours.
Compliance with the Americans with Disabilities Act
If you need special assistance to participate in this meeting, you should contact the City Clerk Department at (951) 6726777, or by coming into City Hall located at 29844 Haun Road, Menifee, CA, 92586 during normal business hours. Notification 72 hours prior to the meeting will enable the City to make reasonable arrangements to assure accessibility to this meeting.
Menifee Finance Committee
January 30, 2025
City Council Chambers
29844 Haun Road
Menifee, CA 92586
Ricky Estrada, Mayor
Dean Deines, District 4
AGENDA
Finance Committee
Regular Meeting Agenda
Thursday, January 30, 2025
4:00 PM Regular Meeting
Travis Hickey, Chief Financial Officer
Edna A. Aguilar, Meeting Clerk
REGULAR MEETING (4:00 PM)
1. CALL TO ORDER
2. ROLL CALL
3. PRESENTATIONS NONE
4. PUBLIC COMMENTS (NONAGENDA ITEMS)
This is the time for members of the public to address the Committee Members about items which are NOT listed on the agenda. The Ralph M. Brown Act limits the Committee’s ability to respon d to comments on nonagendized matters at the time such comments are made. Each speaker will be limited to three minutes on any single item.
5. APPROVAL OF MINUTES
5.1 December 10, 2024 Minutes
6. DISCUSSION ITEMS
6.1 Proposed Bond Issuance for Community Facilities District No. 20232 Improvement Area 1, Cimarron Ridge
RECOMMENDED ACTION
1. Review the proposed bond issuance request for Community Facilities District (CFD) No. 20232 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 in the City of Menifee; and
2. Recommend the Finance Department to proceed with preparation of the Official Statement and other legal documents related to the transaction for presentation to the City Council at afuture City Council meeting.
7. STAFF COMMENTS
8. COMMITTEE MEMBER UPDATES AND COMMENTS
9. FUTURE AGENDA ITEMS
10. ADJOURNMENT
Decorum Policy Notes
The Committee anticipates and encourages public participation at its meetings, both on agenda items and during the public comments period. Please turn your cell phones off, refrain from talking in the audience or outbursts that may be disruptive. We encourage participation and ask for a mutual respect for the proceedings.
Staff Reports
Materials related to an item on this agenda, including those submitted to the Committee after distribution of the agenda packet, are available for public inspection by contacting the City Clerk Department, at (951) 6726777, or by coming into City Hall located at 29844 Haun Road, Menifee, CA, 92586 during normal business hours.
Compliance with the Americans with Disabilities Act
If you need special assistance to participate in this meeting, you should contact the City Clerk Department at (951) 6726777, or by coming into City Hall located at 29844 Haun Road, Menifee, CA, 92586 during normal business hours. Notification 72 hours prior to the meeting will enable the City to make reasonable arrangements to assure accessibility to this meeting.
Menifee Finance Committee
January 30, 2025
City Council Chambers
29844 Haun Road
Menifee, CA 92586
Lesa Sobek, District 3
Dean Deines, District 4
MINUTES
Finance Committee
Regular Meeting Minutes
Tuesday, December 10, 2024
1:30 PM Regular Meeting
Travis Hickey, Chief Financial Officer
Edna A. Aguilar, Meeting Clerk
REGULAR MEETING (1:30 PM)
1. CALL TO ORDER
Mayor Pro Tem Deines called the meeting to order at 1:31 PM.
2. ROLL CALL
Mayor Pro Tem Deines and Councilmember Sobek were present.
3. PRESENTATIONS - NONE
4. PUBLIC COMMENTS (NON-AGENDA ITEMS)
None.
5. APPROVAL OF MINUTES
The following minutes were approved unanimously:
5.1 November 12, 2024, Minutes
6. DISCUSSION ITEMS
6.1 Proposed amendment to the Development Agreement with Pulte Home Company LLC. for the Cimarron Ridge Development (Cimarron Ridge Specific Plan) Community Development Director Cheryl Kitzerow introduced the item and provided a brief overview of the project and the proposed changes to the Development Agreement with Pulte Home Company, LLC. The Councilmembers asked questions of Staff. Staff was able to address the Committee’s questions.
ACTION
1. Reviewed the proposed Amendment No. 3 for the existing Development Agreement between the City of Menifee and Pulte Home Company, LLC. dated June 7, 2017, for the Cimarron Ridge Development and recommended submittal to the City Council for approval.
Item: 5.1
Item Page Number: 1
Menifee Finance Committee January 30, 2025 Page 3 of 106
8. COMMITTEE MEMBER UPDATES AND COMMENTS
None.
9. FUTURE AGENDA ITEMS
None.
10.ADJOURNMENT
The meeting was adjourned at 1:53 PM.
______________________________
Edna A. Aguilar,
Meeting Clerk
7. STAFF COMMENTS
None.
Item: 5.1
Item Page Number: 2
Menifee Finance Committee January 30, 2025 Page 4 of 106
CITY OF MENIFEE
SUBJECT: Proposed Bond Issuance for Community Facilities District No. 2023-2 Improvement Area 1, Cimarron Ridge
MEETING DATE: January 30, 2025
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 in the City of Menifee; and
2. Recommend the Finance Department to proceed with 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 in 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 within the previously formed CFD No. 2023-2.
In October 2024, 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 facilities. The 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. The bonds would not be general obligations of the City and would be secured solely by the special taxes levied in CFD No. 2023-2 IA1.
Item: 6.1
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City of Menifee Staff Report
Proposed Bond Issuance for CFD 2023-2 IA1, Cimarron Ridge
2 5
4 0
In November 2024, the Finance Committee reviewed the bond issuance request and recommended that staff advance it to the City Council for review while coordinating with the City’s consultants to develop the required documentation for the bond issuance.
In the process of working with the Developer and the City’s consultants, staff was made aware that Invitation Homes, a Real Estate Investment Trust (“REIT”), had purchased 54 homes in the community and is under contract to purchase more homes that would be included in a subsequent parity bond issuance. The REIT intends to maintain ownership and rent out those homes.
Invitation Homes currently owns 19% of the 288 homes included in the initial bond issuance.
Although the Developer has the right to sell the homes to any party, the acquisition agreement between the City and the Developer requires an additional security be established if any entity is responsible for more than 20% of the special taxes. This is designed to offset the concentration risk and protect bondholders. Due to the REIT’s current ownership percentage being right under the threshold, staff requested that the special tax consultant conduct an analysis to determine the percentage of special taxes for which Invitation Homes would be responsible. That analysis determined the REIT would have responsibility for less than 15% of the special taxes associated with the bond issuance and therefore no additional security is required. The percentage of taxes the REIT is responsible for is lower than the percentage of homes it owns because the homes in IA1 range in size from 1,959 square feet to 3,961 square feet and the REIT purchased the smaller homes, which are assessed a lower tax.
The REIT is expected to ultimately own 127, or 30%, of the 424 homes within IA1. Before any subsequent bond issuance, another analysis would be completed to determine the entity’s share of the tax responsibility. If the REIT would be responsible for more than 20% of the special taxes the language of the acquisition agreement would need to be amended and an additional security could be imposed at that time.
There have been no changes to the terms associated with the proposed initial bond issuance since the Finance Committee recommended it be forwarded to City Council, however, the REIT’s ownership stake was not known at that time, therefore it was not mentioned in the staff report.
The status of the 288 homes included in the proposed bond issuance is shown in Table 1.
TABLE 1: CFD No. 2023-2 (Cimarron Ridge) Improvement Area No. 1 (Series 1 Bonds):
Development Status Pulte Homes
(For Sale)
Invitation
Homes
(For Rent)
Total Homes Pct of Total
Closed Homes 191 54 245 85%
Model Homes 5 0 5 2%
Under Construction* 36 0 36 13%
Finished Lots 2 0 2 1%
Total 234 54 288 100%
Percent of Total 81% 19% 100%
*20 Homes Under Construction are in Escrow
Item: 6.1
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City of Menifee Staff Report
Proposed Bond Issuance for CFD 2023-2 IA1, Cimarron Ridge
2 5
4 0
Based on the 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 Group 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 from 1.84% to 1.93%, 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, the Series 1 bonds are expected to fund approximately $3.9 million for eligible City fees and facilities, including traffic signals, improvements to McLaughlin Road, and park improvements.
FISCAL IMPACT
There is no fiscal impact associated with the recommended action.
ATTACHMENTS
1. CFD 2023-2 IA1 Proforma Summary
2. CFD 2023-2 IA1 Project Map
3. CFD 2023-2 IA1 Boundary Map
4. CFD 2023-2 Lot Map
5. CFD 2023-2 IA1 Preliminary Bond Sale Analysis
6. CFD 2023-2 CFD Report
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