Menifee City Council
April 2, 2025

CITY OF MENIFEE
SUBJECT: Local Agency Formation Commission’s Municipal Services Review Update and Consideration of Menifee’s Sphere of
Influence
MEETING DATE: October 19, 2022
TO: Mayor and City Council
PREPARED BY: Doug Darnell, Senior Planner
REVIEWED BY: Cheryl Kitzerow, Community Development Director APPROVED BY: Armando G. Villa, City Manager
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RECOMMENDED ACTION

1. Review and discuss Local Agency Formation Commission’s Municipal Services Review; and

2. Discuss considerations for Menifee’s Sphere of Influence as it relates to the City’s Strategic Plan regarding pursuing a Sphere of Influence amendment.

DISCUSSION
This report is an update to the City Council on the status of the County of Riverside Local Agency Formation Commission’s (LAFCO) Municipal Services Review (MSR) and Sphere of Influence (SOI) update including LAFCO recommendations on the City’s SOI.

LAFCO is the county-wide oversight agency that coordinates logical and timely changes to local government boundaries. A primary objective of the MSR is to provide LAFCO with a recommendation on SOI over unincorporated areas.

On July 28, 2022, the LAFCO Board approved MSR recommendations for 28 governmental agencies within Riverside County. The MSR determinations reflect those municipal services that are generally being provided in an adequate manner, and that anticipated revenues are adequate to support the current levels of municipal service provision and future needs. The MSR determinations identify any local governmental issues that should be addressed. The SOI determinations identify any opportunities for expansion, with specific attention to the delivery of services to Disadvantaged Unincorporated Communities (DUCs).

City of Menifee Staff Report
October 19, 2022

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Background
Since the City’s formation, the City has had an interest in potentially amending its SOI in the future. This is reflected in the City’s General Plan and Strategic Plan for years 2018 through 2023 as noted on the following page.

General Plan Land Use Element, Page 3.
“Land use planning does not necessarily stop at a city’s boundaries. A city’s sphere of influence (SOI) addresses unincorporated lands adjacent to city boundaries that are defined by the Riverside County Local Agency Formation Commission (LAFCO) as areas likely to be serviced or annexed by the city sometime in the future. Cities do not have regulatory control over these lands, but they do have the authority to designate their preferences for land use planning in the county areas if the properties are annexed to the city sometime in the future. As was established upon incorporation, the City’s SOI boundary is contiguous with the City boundary.

Over time, the City of Menifee may wish to consider annexation of adjacent unincorporated areas or engage in discussions with LAFCO that could lead to a future revision of the City’s current SOI boundaries. It should be noted that no annexations of the unincorporated county areas adjacent to the City or amendments to the SOI boundaries are proposed as part of this General Plan.

Applications to amend the City’s existing SOI will require appropriate California Environmental Quality Act (CEQA) review and a General Plan Amendment to update the Land Use Plan.” City of Menifee Strategic Plan 2018-2023, Land Use Objective 2.1.

Sphere of Influence Analysis to Determine Future Ultimate City Limits.

Based on the General Plan and Strategic Plan Objective indicated above, the City Council conducted an SOI workshop on December 18, 2019, in which staff presented an analysis of various SOI amendment alternatives for Council discussion and input. The purpose of the workshop was to begin discussion of issues related to amending the City’s SOI and obtain City Council direction on moving forward with a potential amendment to the City’s SOI boundary.

Three SOI alternatives were presented. Alternatives 1 and 2 depicted two different variations on the SOI extending to Leon Road and Alternative 3 depicted the City’s SOI extending easterly to Highway 79. At the Workshop, the Council expressed a preference for SOI Alternative 3, and directed City staff to reach out to the County and community to begin the process of an SOI study and amendment.

Following the Council Workshop, City staff attended a January 2020 Winchester/Homeland Municipal Advisory Council (MAC) meeting, where City staff informed the MAC of the City’s efforts to study alternatives for a potential SOI amendment easterly of the current City limits/Briggs Road.

In response, the Winchester/Homeland MAC and the Winchester Town Association expressed opposition to any proposal by the City for an SOI amendment that would include unincorporated area easterly of the City.

Follow Up Meetings with the County and Community Representatives. • Meeting with County TLMA/Planning Staff. In early 2020, City staff met with County staff to share the SOI alternatives and begin discussions with the County regarding the possibility of a mutually agreeable SOI amendment. City staff expressed concerns with City of Menifee Staff Report
October 19, 2022

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development occurring outside City limits and effects on the City (particularly traffic impacts) and the possibility of Memorandum of Understanding (MOU) between the City and County as provided by the County’s General Plan. County staff provided an update and information on their pending draft Winchester Community Plan and was generally not receptive to or supportive of the possibility of an SOI amendment or MOU between the City and County.
• Other Meetings. The City reached out to other community representatives to share information and clarify the City intentions for a possible SOI amendment including:
o Winchester/Homeland MAC Representatives
o Supervisor Washington’s staff
o Winchester Town Association
These representatives have clearly stated they do not support amending the City’s SOI to the east and expressed their opposition publicly at the Winchester/Homeland MAC meeting March 12, 2020. Beyond reaching out to these key entities that represent the unincorporated communities to the east of Menifee; more exhaustive and extensive outreach to all potentially affected property owners, business and residents would be required for any effort to amend the City’s SOI.

At the Strategic Visioning Workshop held March 15, 2021, the City Council discussed the City’s SOI. At that time, staff indicated that LAFCO was preparing a MSR update and that staff was participating in the effort and providing input to LAFCO. Per the discussion, staff would pause on any further efforts on an SOI amendment until the MSR update was completed by LAFCO, as the MSR would help inform how the City moves forward. This was discussed again by the City Council at another Strategic Visioning workshop held by the Council on February 16, 2022. LAFCO has now completed the MSR updates, further discussed below.

LAFCO MSR Update and SOI Recommendation for Menifee.

Over the last two years, LAFCO has been working on Municipal Services Reviews and SOI recommendations for all jurisdictions in Riverside County. Recently, City staff provided input to LAFCO on their Public Review Draft MSR released in March 2022, indicating the City’s interest in potentially amending its SOI to the east towards Highway 79 as is contemplated in the General Plan and Strategic Plan Objective. This was not a formal request or application to amend the City’s SOI. The intent was for LAFCO to be aware of the City’s interest in amending its SOI to be reflected in their MSR/SOI recommendations. City staff has been aware that a formal SOI submittal would require, at the direction of City Council, further study to define a proposed SOI amendment boundary, a General Plan Amendment to establish land use for the proposed SOI boundary, environmental analysis in compliance with the California Environmental Quality Act (CEQA), meeting and working with the County toward a mutual agreement on planning and zoning standards and extensive community outreach.

MSR/SOI Recommendations for the City of Menifee.

On June 23, 2022, the LAFCO Board held a public hearing to consider MSR/SOI recommendations where they received extensive written and oral public testimony. Because there was a substantial amount of new information to consider, LAFCO continued the MSR/SOI item to their July 28, 2022, meeting.

City of Menifee Staff Report
October 19, 2022

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At their meeting of July 28, 2022, the LAFCO Board adopted MSR and SOI determinations as amended since the June 23rd meeting. Specifically, the LAFCO Board, adopted the required MSR and SOI Statement of Determinations for each of the twenty-eight cities for the three subregions, and approved the Final MSR & SOI Report. The Report included the following MSR recommendations for the City of Menifee:

• Population, Growth and Housing: Menifee grew rapidly over the last decade, at an annualized growth rate of 2.28 percent, adding almost 20,000 to the City’s population.

Menifee is expected to continue growing, albeit at a slower rate, over the next 15 to 25 years, roughly at the same rate as the County of Riverside. The City added 5,406 housing units between 2010 and 2020, and made significant progress towards meeting its RHNA allocation, exceeding the allocation in both moderate and above-moderate income housing unit categories. However, the development community in Menifee did not produce sufficient very low- and low-income housing units, falling 2,467 units short in those categories, to meet the City’s very low- and low-income housing RHNA allocations. • Disadvantaged Communities: Menifee’s SOI is coterminous with its corporate City boundary and therefore does not contain any DUC.
• Present and Planned Capacity of Facilities: Because Menifee is a rapidly growing and developing city, the present capacity of facilities may not be keeping up with demand. The City is requiring Community Facility District (CFD) approval for all new developments to ensure that service and infrastructure needs of new developments have a built-in funding mechanism.
• Financial Ability to Provide Services: The City has improved its fiscal health in recent years with the addition of property tax in-lieu of Vehicle Licensing Fee (VLF) revenues and the approval of Measure DD one percent transactions and use tax. The City has built up reserves of at least 35 percent of operating expenditures. The City’s pension and Other Post-Employment Benefits (OPEB) liabilities have been suppressed and the City is able to pay off any liabilities that accumulate.
• Opportunities for Shared Facilities: No opportunities for shared facilities were identified. • Accountability for Community Service Needs: The City connects with residents through at least four (4) different social networks. The City recently hired a public information officer to provide regular updates to residents and coordinate communications. The City’s Menifee Matters magazine is distributed to every household and business on a quarterly basis to provide updates to the residents of the City. The City put three (3) new software solutions in place recently that are intended to connect and provide greater access to the community.
• Any Other Matter Related to Effective or Efficient Service Delivery as Required by Commission Policy: The City did not identify any other matters related to effective or efficient service delivery as required by Commission Policy.

Regarding SOI recommendations, the City of Menifee along with other Western region jurisdictions were identified as cities interested in a potential future SOI amendment. LAFCO’s July 28, 2022, staff report clarified that since no general planning work has been completed by City of Menifee Staff Report
October 19, 2022

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these cities, SOI amendments were not before the Commission and that LAFCO could not make a recommendation for changes to the existing SOIs.

The Final MSR & SOI Report, approved by LAFCO on July 28, 2022, included the following SOI recommendations for the City of Menifee:
“RSG is recommending coordination with the City of Menifee on expansion of the Menifee SOI.

Menifee’s SOI is coterminous with its incorporated municipal boundary. As the City and Western Riverside County region continues to grow, much of the future development will begin to occur beyond Menifee’s eastern boundaries in unincorporated areas. In an effort to manage sprawl, LAFCO may consider extending Menifee’s SOI boundary eastward towards State Route 79. City staff indicated that there is interest in expanding the City’s SOI and municipal boundary to the east. Per City staff, the City Council adopted a Strategic Plan that included an item aiming to expand the Menifee SOI eastward as far as State Route 79. During the Public Review of this MSR, 112 signatures opposed to any annexation or SOI expansion in the Winchester-Homeland MAC were gathered at the Winchester-Homeland Municipal Advisory Council meeting, Valley- Wide Recreation and Park District Board Meeting, and the Highland Palm community.

1. Present and Planned Land Uses: Menifee’s coterminous SOI includes proportionally higher concentrations of single-family housing and retail commercial uses, when compared to the Countywide distribution of land uses.

2. Present and Probable Need for Public Facility and Services: Because Menifee has grown rapidly in recent years and is projected to continue growing at an above-average rate through 2045, there may be shortfalls related to meeting demand for public facilities and services.

3. Present Capacity of Public Facilities: City staff did not identify any deficiencies with present capacity of public facilities located in the SOI.

4. Social or Economic Communities of Interest: The Winchester/Homeland Municipal Advisory Council area is located east of the City’s corporate boundary.

5. Disadvantaged Unincorporated Community Present and Planned Need for Facilities and Services: Menifee’s coterminous SOI does not contain any DUCs.” Regarding Menifee’s SOI, the LAFCO Board adopted the following recommendation:
“1. Confirm the current spheres of influence for the cities of Western Region: Canyon Lake, Corona, Eastvale, Hemet, Jurupa Valley, Lake Elsinore, Menifee, Moreno Valley, Murrieta, Norco, Perris, Riverside, Temecula, Wildomar, Pass/Mtn Region: Banning, Calimesa, Beaumont, San Jacinto, Blythe, Coachella/Valley /Eastern Region: Cathedral City, Desert Hot Springs, Indian Wells, La Quinta, Palm Springs and Rancho Mirage.” The July 28, 2022, LAFCO staff report, as revised since the June 23, 2022, report, also included the following Policy recommendations/determinations specific to the City of Menifee:
“Since 2012, the County of Riverside is undergoing community efforts on developing the Winchester Community Plan and Land Use Study. The City’s proposed SOI boundary to City of Menifee Staff Report
October 19, 2022

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the east will encroach upon the County’s Winchester Community Plan. Prior to the City of Menifee submitting an application for a SOI amendment, the City of Menifee first hold discussions and coordinate with the County of Riverside, Valley-Wide Recreation & Park District and the Winchester /Homeland MAC, to reach an agreement or consensus if possible.

After further analysis of the Winchester Community Plan boundaries, within Commission Policy 2.1.5 "LAFCO shall support agency boundaries that include rather than split existing identifiable communities, commercial districts, or other areas having social or economic homogeneity which are located within the applicable sphere of influence" staff believes it is appropriate to strike out portions of the original policy text regarding "smoother transition for future annexations." Per Commission policy, staff believes it should not divide the Winchester Community and that the entirety of the WCP remains intact as one united community.

Staff recommends that the City of Menifee re-evaluate its SOI expansion plans to the east of State Route 79 after Riverside County takes final action and updates the General Plan for the Harvest Valley/Winchester Area Plan (two additional areas in red as depicted on Exhibit "SR4").

Staff had the intention of referencing Government Code Section §56425 (b) in the last report but opted out since this is a LAFCO initiated SOI review. However, staff recommends that if the City of Menifee anticipates filing an application for a SOI amendment, the city must be cognizant of Govt. Code, §56425 (b):

Sphere of Influence Government Code Section 56425 (b) City-County meeting and agreement.

Prior to a city submitting an application to the commission to update its sphere of influence, representatives from the city and representatives from the county shall meet to discuss the proposed new boundaries of the sphere and explore methods to reach agreement on development standards and planning and zoning requirements within the sphere to ensure that development within the sphere occurs in a manner that reflects the concerns of the affected city and is accomplished in a manner that promotes the logical and orderly development of areas within the sphere. If an agreement is reached between the city and county, the city shall forward the agreement in writing to the commission, along with the application to update the sphere of influence. The Commission shall consider and adopt a sphere of influence for the city consistent with the policies adopted by the commission pursuant to this section, and the commission shall give great weight to the agreement to the extent that it is consistent with commission policies in its final determination of the city sphere.”
Social or Economic Communities of Interest
Staff has identified, to the east of the City of Menifee's city limits is the Winchester Municipal Advisory Council (MAC) as depicted on Exhibit "SR4." (See Attachment 1- Reference Maps, of this report which includes Exhibit “SR4.”) City of Menifee Staff Report
October 19, 2022

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Related Item – Winchester Community Plan.

On July 5, 2022, the County released their Winchester Community Plan Draft Environmental Impact Report (DEIR) for public review and comment (public review and comment period to end on September 23, 2022). The Plan encompasses all unincorporated area east of the City, and involves a General Plan Amendment to:
• Expand the boundaries of the Winchester Policy Area (PA); and • Amend the boundaries of the County General Plan’s Harvest Valley/Winchester, Sun City/Menifee, and Southwest Area Plans so that the entire expanded Winchester PA will fall within the boundaries of the Harvest Valley/Winchester Area Plan only; and • Amend General Plan land use designations within the Winchester PA; and • Amend existing Highway 79 Policy language to remove the 9 percent reduction in density for residential projects; and
• Adopt design guidelines.

As proposed, the Winchester Community Plan would encompass all unincorporated area east of Menifee, such that each the potential Menifee SOI amendment areas that were studied and previously presented to the Council in 2019 would completely overlap with the Plan.

Attachment 1 – Reference Maps includes Exhibit 3-10 of the Winchester Community Plan DEIR, and depicts area plan amendments (i.e., proposed areas to be added to the Proposed Harvest/Winchester Area Plan). The proposed amendments include expanding the boundary of the current Harvest Valley/Winchester Area plan by approximately 1,900 acres, consisting of an area that is bounded by Old Newport Road to the north, Scott Road to the south, Briggs Road to the west and Leon Road to the east. This proposed change takes all this area east of the City of Menifee and currently within the Sun City/Menifee Valley Area Plan and places it into the Harvest Valley/Winchester Area Plan.

In conclusion, the above LAFCO recommendations places substantial emphasis on the County’s pending Winchester Community Plan and County planning for the unincorporated area east of the City. The City would need to consider the implications of the LAFCO recommendations and the challenges this presents for the City if it wishes to pursue an SOI amendment in the future.

STRATEGIC PLAN OBJECTIVE
Livable and Economically Prosperous Community

FISCAL IMPACT
There is no additional fiscal impact resulting from this report since it is an informational item only.

City of Menifee Staff Report
October 19, 2022

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ATTACHMENTS

1. Reference Maps and LAFCO Report & Winchester Community Plan DEIR

2. City SOI Alternative Study Maps 1-3

3. Final MSR & SOI Report

4. Notice of Results & Resolution for MSR Determinations

5. Notice of Results & Resolution for SOI Determinations LAFCO MSR Report Map

Winchester Community Plan DEIR Map of Area Plan Amendments

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MENIFEE RD

NEWPORT RD
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Sphere Of Influence Option
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RIVERSIDE COUNTY
Rural Community - Estate Density Residential
Rural Community - Very Low Density Residential
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Estate Density Residential
Very Low Density Residential
Low Density Residential
Medium Density Residential
Medium High Density Residential
High Density Residential
Very High Density Residential
Highest Density Residential
Commercial Retail
Commercial Tourist
Commercial Office
Community Center
Light Industrial
Heavy Industrial
Business Park
Public Facilities
Mixed Use Area
Rural Residential
Rural Mountainous
Rural Desert
Agriculture
Conservation
Conservation Habitat
Open Space Recreation
Open Space Rural
Water
Mineral Resources
Indian Lands
City
Freeway
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RIVERSIDE COUNTY
Rural Community - Estate Density Residential
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Estate Density Residential
Very Low Density Residential
Low Density Residential
Medium Density Residential
Medium High Density Residential
High Density Residential
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Highest Density Residential
Commercial Retail
Commercial Tourist
Commercial Office
Community Center
Light Industrial
Heavy Industrial
Business Park
Public Facilities
Mixed Use Area
Rural Residential
Rural Mountainous
Rural Desert
Agriculture
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Conservation Habitat
Open Space Recreation
Open Space Rural
Water
Mineral Resources
Indian Lands
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RIVERSIDE COUNTY
Rural Community - Estate Density Residential
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Rural Community - Low Density Residential
Estate Density Residential
Very Low Density Residential
Low Density Residential
Medium Density Residential
Medium High Density Residential
High Density Residential
Very High Density Residential
Highest Density Residential
Commercial Retail
Commercial Tourist
Commercial Office
Community Center
Light Industrial
Heavy Industrial
Business Park
Public Facilities
Mixed Use Area
Rural Residential
Rural Mountainous
Rural Desert
Agriculture
Conservation
Conservation Habitat
Open Space Recreation
Open Space Rural
Water
Mineral Resources
Indian Lands
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Freeway
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RIVERSIDE COUNTY
Rural Community - Estate Density Residential
Rural Community - Very Low Density Residential
Rural Community - Low Density Residential
Estate Density Residential
Very Low Density Residential
Low Density Residential
Medium Density Residential
Medium High Density Residential
High Density Residential
Very High Density Residential
Highest Density Residential
Commercial Retail
Commercial Tourist
Commercial Office
Community Center
Light Industrial
Heavy Industrial
Business Park
Public Facilities
Mixed Use Area
Rural Residential
Rural Mountainous
Rural Desert
Agriculture
Conservation
Conservation Habitat
Open Space Recreation
Open Space Rural
Water
Mineral Resources
Indian Lands
City
Freeway
SPHERE OF INFLUENCE ALTERNATIVE 3A

Local Agency Formation Commission for the County of Riverside

6216 Brockton Avenue, Suite 111 -B
Riverside, CA 92506

City Municipal Service Review and
Sphere of Influence Update

Riverside County

LAFCO 2021-06-1, 2, 3, 4, 5
Final Draft approved on July 28, 2022

City of Menifee
City Municipal Service Review and Sphere of Influence Update Riverside County

Final Draft – July 28, 2022
201

CITY OF MENIFEE
The City of Menifee is one of Riverside County’s newest cities, having incorporated in 2008 as a general law city. 102 Menifee is located in the County’s Western Region. The City’s northern boundary extends to the City of Perris and unincorporated Riverside C ounty territory; its eastern boundary is unincorporated area, its southern boundary is the City of Murrieta, Murrieta SOI, unincorporated County territory, and the City of Wildomar. The City’s western boundary is coterminous with the boundaries for the cities of Wildomar, Lake Elsinore, Canyon Lake and Perris. The City's incorporated area is 46.5 square miles and its SOI is coterminous with the City boundary. 103
The City’s demographic profile is presented in Figure 72.

Figure 72: Demographic Profile - Menifee

102 Source: City of Menifee
103 Source: Riverside LAFCO
Menifee City County
Population as of 2020 97,093 2,442,304
Population as of 2010 77,519 2,189,641
Annual Pop. Growth Since 2010 2.28% 1.10%
Housing Units 35,675 867,637
Persons / Housing Unit 2.72 2.81 Land Area (sq mi) 46.5 7,206.0
Persons / Square Mile 2,088 339 Median Household Income $66,867 $67,369
Projected Population in 2035 115,690 2,995,509 Annual Proj. Growth 2020-2035 1.18% 1.37%
Projected Population in 2045 129,750 3,251,705 Annual Proj. Growth 2020-2045 1.95% 1.93%
Sources: California Department of Finance, Southern California Association of Governments, US Census, ESRI Business Analyst Online (Growth rates are presented as annual growth rates)
City of Menifee
City Municipal Service Review and Sphere of Influence Update Riverside County

Final Draft – July 28, 2022
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Menifee’s population increased by an annual rate of 2.28 percent between 2010 and 2020, which is more than double the County -wide growth rate. The City’s housing population, presented as persons per housing unit, is similar to the County -wide average while the City’s population density, measured as persons per square mile, is significantly higher than the County -wide average. The population density (persons per square mile) is about average for incorporated cities in Riverside County. And the median househo ld income for the City is similar to the County - wide average. Future growth projections indicate slower growth over the next 15 to 25 years, with annualized growth rates more in line with the County -wide average.

City staff noted that the 2020 Census indi cated that the City’s population is now 102,527, which is about 5.6 percent higher than the Department of Finance population estimate for 2020. City staff indicated that this results in an increase in population density to about 2,083 persons per square mile. Finally, according to Ci ty staff, the median income in Menifee increased to $70,224.

The City’s RHNA allocation for the 5 th Housing Element Cycle (2013 -2020) was 6,245 housing units. The City permitted 2,671 market rate and 1,291 affordable housing un its during the 5 th Cycle but the development community did not produce sufficient housing units to meet the 5 th Cycle RHNA allocation. The City’s RHNA allocations are discussed in greater detail later in this MSR.

Menifee has substantially more retail deve lopment, representing 58.1 percent of all commercial square footage in the City, when compared to the County average. Additionally, the City’s single - family housing units (85.6 percent) represent a disproportionately larger share of all housing units in th e City, when compared to the County average (54.8 percent).

Menifee has an estimated 1,637 businesses and 13,350 employed persons. 104 The City’s largest employers include three (3) school districts, including Mt San Jacinto College District (1,068 employees), Menifee Union School District (1,040 employees) and Romoland School District (595 employees), four (4) retail operators, including T arget (364 employees), Stater Brothers (270

104 Source: ESRI Business Analyst Online
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employees), Texas Roadhouse (167 employees), and Lowes (154 employees), two (2) medical providers, including Menifee Valley Medical Center (356 employees) and Life Care Cen ter of Menifee (161 employees), and one utility – Southern California Edison (202 employees). 105 While the City has a large concentration of retail square footage, in proportion to other Riverside County communities, the City has a diverse array of business operations.

Menifee’s land use summary is presented in Figure 73
Figure 73: Land Use Summary - Menifee

According t o City staff, development proposals are being required to provide infrastructure to meet the needs of the new development. The City is utilizing Community Financing Districts (“CFD”) to address infrastructure and service needs for all new developments. CFD s are a method of financing public improvements and services that were established under the Mello -Roos Community Facilities Act of 1982. The CFD is a special tax on property that must be approved by

105 Source: City of Menifee, 2018-19 Comprehensive Annual Financial Report Menifee County
Residential Units Units % %
Single Family 30,552 85.6% 54.8%
Multifamily 2,534 7.1% 43.6%
Mobile Home 2,589 7.3% 1.6%
Total Units 35,675 100.0% 100.0%
New Units Since 2010 5,406
Commercial Gross SF
Retail 2,272,600 58.1% 26.6%
Industrial 1,194,229 30.5% 61.8%
Office 442,633 11.3% 9.6%
Other 2,400 0.1% 2.0%
Total 3,911,862 100.0% 100.0%
New Commercial Since 2010 613,566
Sources: California Department of Finance (2020) and Costar (Other includes hospitality, healthcare, specialty, sports and entertainment)
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two-thirds of the registered voters or landowners within the CFD. The City is requiring CFD approval prior to approving new development permits.

CURRENT SPHERE OF INFLUENCE
The City of Menifee’s SOI is coterminous with its corporate City boundary. Menifee’s City and SOI boundary are illustrated in Exhibit 11. Because Menifee’s SOI is coterm inous with the City’s corporate boundary, the SOI does not contain an y DUCs. However, there are five (5) DUCs near the City that are described below:
• DUCs 1, 2, and 3 are commonly known as Romoland , and are located north of the City’s corporate boundary along Menifee Road and south of San Jacinto Avenue. • DUCs 4 and 5 are commonly known as Nuevo, and are located north of San Jacinto Avenue on opposite sides of M enifee Road.

The City of Menifee’s boundary was previously reconfirmed in the September 2014 City of Menifee MSR (LAFCO 2014- 02-5) (the "2014 MSR").

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Exhibit 11: Current City and SOI Boundaries - Menifee

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FORM OF GOVERNMENT AND STAFFING
The City of Menifee operates under a "Council – Manager" form of government, with the City Council elected according to districts to staggered four (4) year terms. The City’s Mayor is directly elected at- large to a four (4) year ter m. The City Council also appoints a City Manager, who serves as the head of the administrative branch of the City government.

The City of Menifee has several commissions and committees that carry out assignments at the direction of the City Council, inclu ding the Planning Commission, Parks Recreation and Trails Commission, Senior Advisory Committee, Quality of Life Measure DD Oversight Committee, and Menifee Citizens Advisory Committee.

The City Manager, as head of the administrative branch of the City’s government, reports directly to the City Council. The City Manager oversees a staff of 199 full time personnel and 9.89 part time full time equivalent personnel, and an annual operating budget that ranged from $55.3 million to $64.7 million between 2016 -17 and 2018 -19. City staff indicated that the 20 21-22 adopted Capital Improvement Plan appropriated $28 million.

According to City staff, the City’s rapid development pace has stretched the capacity of the City’s staff – the City will require increases to st affing across the board as the City continues to grow, including increases to information technology, street maintenance, community development, public works, and policing staff. The City is able to temporarily address these challenges with contract staff.

SERVICES PROVIDED
City staff provide the community with law enforcement, building and planning, housing, code enforcement, streets and road maintenance, stormwater drainage, and innovation and technology services. City staff provide parks and recreation services within Council Districts #1 and #2 , and some services in Council Districts #3 and #4. The following section describes municipal services provided within Menifee and identifies the service provider. Figure 74 presents a matrix summarizing the services provided by the City of Menifee and other service providers.

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Figure 74: Service Provider Matrix - Menifee

Government Services
General government services in Menifee are provided by the elected City Council , and appointed staff, including the City Manager and City Clerk. The City Manager is responsible for the daily operation of City functions and staff, fulfil lment of policy and programs established by the Council, providing direction to departments that administer programs and services, developing and implementing strategic plans, coordinating economic development, intergovernmental relations, and public infor mation efforts. The City Clerk is responsible for the preparation and distribution of City Council agendas, maintaining accurate records and legislative history, managing the planning commission and committee actions, handling liability claims, and the sto rage of City records.

Law Enforcement
Law enforcement services in the City of Menifee are provided by the Menifee Police Department.

The Department provides general policing services to the City such as patrols, traffic accident Public Service Service Provider
City Department
County
Small Independent
Special District
Large Independent
Special District
Small Dependent
Special District
Large Dependent
Special District
Private Contractor
Franchise
Shared Service
Other
Law Enforcement Police Department X
Fire Protection Fire/CalFire X
Emergency Medical Fire/CalFire X
Building/Planning Community Development and Building and Safety X Housing Community Development X
Code Enforcement Code Enforcement Department X
Animal Control Animal Friends of the Valleys X
Parks and Recreation Community Services, Valley-Wide RPD, CSA X X X Library Library System X
Museum Menifee Valley Historical Association X
Landscape Maintenance Valley-Wide RPD, LLMD & CFD, CSA X X X Streets/Road Maintenance Public Works, CSA X X
Streetlights CSA & CFD, CSA X X
Lighting LLMD & CFD X
Utilities Edison, So Cal Gas X
Solid Waste Waste Management X
Stormwater Drainage Public Works, Flood Control & Water Conservation X X Innovation and Technology Information Technology, Spectrum, AT&T X X Airport N/A
Cemetery * Perris Valley Cemetery District X
Healthcare * Valley Health System Hospital District X
Water * Eastern Municipal Water District X
Wastewater * N/A
* Not included in this MSR
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response , code enforcement , investigations, training, and community outreach. Up until July 1 st, 2020 the Riverside County Sheriff Department provided policing and law enforcement services to the City. According to City staff, this was part of a coordinated effort over several years to switch from contracted work to in -house City staff.

According to City staff, the Menifee Police Department currently has 60 sworn personnel and 23 professional un -sworn civilian staff. Per City staff, a local Police Department allows the City to provi de exceptional services and attract highly qualified and experienced personnel . According to City staff, the City’s Police Department currently has at least 1,000 years of combined experience across all staff members. 106
Fire Protection
Fire Protection services are provided by Riverside County Fire Department/CalFire in Menifee.

Since 1921, the Riverside County Fire Department has been in a contractual relationship with CalFire to provide wildland fire protection services. In 1946, the co ntract between CalFire and Riverside County Fire Department was expanded to include fire protection services. Services provided by Riverside County Fire Department/CalFire include fire protection and prevention, medical response, review of planning cases, review and inspections of construction and developments, fire and life safety inspections of state -regulated occupancies, information on ordinances and standards for construction, and information bulletins and standards for fire protection.

Fire Stations 7, 68, and 76 are located within Menifee. According to City staff, the City’s Capital Improvement Plan includes funding for a new Fire Station, which is currently in the design phase.

According to City staff, the new Fire Station will replace the existing Station #5 in Quail Valley.

The Riverside County Fire Department/CalFire provides fire protection services to 20 cities in Riverside County and the Rubidoux community services distric t. The Riverside County Fire

106 Source: City of Menifee City staff. RSG was unable to substantiate with publicly available information.

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Department/CalFire also responds to calls for service in seven (7) additional Riverside County cities and the Idyllwild Fire Protection District through mutual and automatic aid agreements.

Emergency Medical
Emergency medical s ervices are provided by the Riverside County Fire Department/CalFire.

Please refer to the previous section for more on the Department.

Building/Planning and Housing (Community Development)
Building, planning, and housing services are provided by the City’s Community Development Department. The Department is responsible for monitoring and updating development code, ensuring development is consistent with the General Plan, reviewing planning applications, and advising the Planning Commission. According to City staff, the City has over 10,000 approved housing units yet to be built, with consistent annual increases in building permits. City staff added that the City is a CDBG Entitlement City.

Code Enforcement
Code enforcement services are provided by the Menif ee Police Department Code Enforcement Division . The Department is responsible for enforcing City codes and health and safety regulations, providing neighborhood education programs, illegal dumping abatement, weed abatement, and vehicle abatement.

Animal Control
Animal control services are provided through a third -party contract with Animal Friends of the Valley (“AFV”). AFV is a nonprofit organization that runs animal shelter services for Menifee, in addition to other cities in southwestern Riverside Count y. AFV provides services such as animal care and control, humane education and euthanasia, animal licensing, lost animal services, spay/neuter services, microchipping, vaccinations, and wildlife services.

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Parks and Recreation
Parks and recreation services are provided by two (2) entities, the City’s Community Services Department and the Valley Wide Recreation and Park District (“VWRPD”). The Community Services Department is responsible for maintaining and developing parks and open spaces as well as improvi ng the quality of life for residents through fun and safe recreational programs. The VWRPD was established in 1972 by a general election vote of the residents of Hemet and San Jacinto. In about 1987, VWRPD expanded its service area to include the Menifee V alley at the request of County of Riverside Supervisor Kay Ceniceros. VWRPD is an independent special district governed by five (5) elected board members with four -year terms , of which two (2) Director Divisions (#4 and #5) are elected by voters in the Men ifee Valley portion of the City of Menifee, and represent the service area in the Menifee Valley . The District maintains several parks and landscapes throughout Hemet, Menifee, and San Jacinto , as well as unincorporated areas of Winchester, Murrieta, Frenc h Valley, Homeland, Romoland, Valle Vista, Sage, and Aguanga. The District also runs recreational programs like youth and adult basketball, baseball, softball, flag football, indoor soccer, and volleyball leagues in addition to providing landscape maintena nce services.

According to staff, the City pursued detachment of the VWRPD, proposing to take over all parks and recreation services in the City. Upon review of the application for detachment, VWRPD proposed compensation in exchange for detachment. According to City staff, LAFCO approved a one-time $500,000 payment in exchange for detachment. In December 2014, the Commission reviewed the SOI for VWRPD and recommended expanding the VWRPD SOI to encompass the remainder of the City in recognition of the contr actual arrangement between the City and VWRPD in effect at the time. The City, which had started to evaluate other alternatives for future provision of parks and recreation services, opposed the SOI expansion. The Commission agreed with the City and declin ed to expand the VWRPD SOI. The Commission action also included a request that the District work with the City to develop a long -term plan for the orderly transition of park and recreation services. In response, the City of Menifee filed the proposal for d etachment of all City territory from VWRPD in 2016.

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According to staff, the City submitted an application to LAFCO for detachment from VWRPD in 2016, proposing to take over all parks and recreation services in the City , which would have left VWRPD with d isconnected and noncontiguous services boundaries, and would have undermined the constitutional validity of the existing VWRPD LMD that would have been bifurcated by the City’s proposal . According to City staff, following a series of public meetings in 201 7, LAFCO approved the City’s application for detachment subject to conditions . The City did not agree with the conditions. The City filed a law suit challenging the validity of several terms and conditions imposed by LAFCO in its approval of the detachment. Because the City lost its suit, and failed to meet the conditions of Riversid e LAFCO’s approval the detachment was never finalized.

City staff indicated that the City could mitigate this issue by expanding its parks and recreation district boundary to include the entire City of Menifee .

The 2014 MSR made the a determination abo ut the City’s inventory of parkland, which is summarized below :
• The City of Menifee required a minimum of five (5) acres of public open space per 1,000 residents. At the time of the 2014 MSR, Menifee had 1.68 acres of open space per 1,000 residents.

According to City staff, the city has made progress towards improving its inventory of parkland.

The City notes that seven (7) new parks totaling about 37 acres have been constructed since the 2014 MSR , totaling 15 parks and 81 acres . The City currently has five (5) additional parks under construction that will add another 27 acres of parkland in 2022. City staff estimates that by the end of 2022, the City of Menifee will provide 2.34 acres of parkland per 1,000 residents .

Additionally , VWRPD currently provides 4 .27 acres of parkland per 1,000 residents within the Menifee Valley Service Area and is responsible for maintaining over 13.7 million square feet of landscaped sports fields, street landscaping, paseos, and other public areas, including 26 parks in additio n to two (2) gymnasiums, and one (1) recreation headquarters/community center.

VWRPD has three (3) additional parks under construction that will add another 23 acres of parkland totaling 177 acres within VWRPD’s Menifee Valley s ervice area.

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Library
Library services are provided by the Riverside County Library System. The County Library provides reading materials, literacy programs, computers, and broadband access to residents.

There are two (2) County operated librar ies in Menifee , known as Sun City Library located at 26982 Cherry Hills , and Menifee Library located at 28798 La Piedra Road . The Sun City Library is a 14,000 square foot facility with 28,000 items and 21 computers . The Menifee Library is 20,000 square feet and includes 35,000 materials, 16 computers, furniture with plug -in technology for personal devices, and multiple study rooms .

Museum
The Menifee History Museum opened in 2016 and is located at 26301 Garbani Roa d in Menifee.

The Museum is operated by the Menifee Valley Historical Association, a 501(c)(3) public charity.

Landscape Maintenance
Landscape maintenance services are provided by the City’s Community Services Department and administered with funding from various Lighting and Landscape Maintenance Districts and Community Facilities Districts. The Department provides oversight of various landscaping projects funded by the districts.

According to City staff, Valley -Wide Recreation and Park District oversees maintenance of right - of-way landscaping on the east side of the City.

Streets/Road Maintenance
Streets and roads maintenance services are provided by the City’s Public Works Department.

The Department provides m aintenance of City owned streets and roads, administers capital improvements, and assists with graffiti, weed, and illegal dumping abatement. City staff indicated that the City has adopted a Pavement Management Program, designed to extend the pavement life cycle of City roadways.

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Streetlights
Streetlight related services are provided by the City’s Public Works Department. The Department is responsible for the regular maintenance of streetlights in the City, as well as retrofitting them with newer LED bulbs. According to City staff, Menifee took over control of the streetlights from the utilities.

Utilities (Gas, Electric)
Utility services are provided by Southern California Edison (“SCE”) and Southern California Gas (“SoCal Gas”). SCE provides general electr icity generation, and grid operations. SoCal Gas provides natural gas energy services to the City for various uses, such as heating and cooking.

Solid Waste
The City has a franchise agreement in place with Waste Management for solid waste collection servi ces. Waste Management is a private solid waste disposal company provides solid waste disposal and recycling services to Menifee residences. Waste Management is one of the largest solid waste companies in North America with more than 45,000 employees servin g over 20 million residential, industrial, municipal, and commercial customers.

Storm Drainage
Menifee’s Public Works and Engineering Department provides storm drainage and stormwater management to the City. Public Works oversees the City’s National Pollu tant Discharge Elimination System (“NPDES”) permit and helps provide maintenance of City storm drains.

Engineering is responsible for overseeing the City’s stormwater management program. According to City staff, the south side of the City has issues with u nderdeveloped drainage facilities and infrastructure, but this is partially by design as residents have pushed to keep the rural community feel of the area. City staff indicated that larger infrastructure, including pipes in excess of 38 inches, is managed and constructed by Riverside County Flood Control District.

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Innovation and Technology
The Menifee Information Technology Department handles all matters relating to innovation and technology in the City government. The Department ensures organizational ef fectiveness between departments, manages computer hardware and software, and provides IT support.

According to City staff, the City is preparing a Smart Cities Strategic Plan to implement a City - wide broadband plan.

Airport
There are no airport facilities in the City of Menifee.

Extraterritorial Services Provided
The City does not provide any services to areas outside of the City of Menifee . Government Code Section 56133 requires LAFCO approval for extension of services outside a sphere of influence in res ponse to an existing or impending threat to public health or safety.

RECENT AND PLANNED MAJOR CAPITAL IMPROVEMENTS
The City of Menifee Capital Improvement Division administers the City’s Five -Year Capital Improvement Plan. The Division prepares an updated CIP annually and utilizes GIS software to provide detailed geographic locations for future, design -stage, under construction, and completed capital improvement projects.

According to City staff, the City’s list of capital improvements once grew to a budg et of $ 474 million and the City would like to accomplish twice as many projects as they have funding for.

The City is actively seeking financing from State and Federal grants and Measure DD funds for infrastructure projects.

The City’s Five -Year CIP includ es projects to address bridge and overpass construction, street and road improvements, interchange construction, park development, and construction of City facilities including a new fire station and City Hall.

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HOUSING NEEDS AND HOUSING ELEMENT REPORTING
The City submitted its 5 th Cycle Housing Element to HCD on February 25, 2014 and HCD designated the Housing Element in compliance with Housing Element Law on March 5, 2014. The City submitted 5 th Cycle Housing Element Annual Progress Reports every year bet ween 2014 and 2019. According to City staff, t he City’s General Plan was adopted in December 2013 and the City was not required to submit an Annual Progress Report in 2013 . The City’s 5 th Cycle housing needs and production are presented in Figure 75.

Figure 75: 5th Cycle Housing Element Summary - Menifee

The City’s combined 5 th Cycle RHNA allocation amounts to 6,245 housing units. The City permitted 3,962 housing units during the 5 th Cycle and fell short of meeting its RHNA allocation in the very low - and low - income categories. The City permitted just 11 very low -income housing units and 17 low- income housing units, leaving deficits of 1,477 very low -income units and 990 low-income units. But, the City did manage to produce a surplus of 123 housing units designated for moderate income households and 61 market rate, or above -moderate income housing units.

With the 5 th Cycle concluding in 2020 and an outstanding shortage of 3,962 housing units, the City of Menifee is not expected to fulfill its RHNA allocation.

The City’s 6 th Cycle RHNA allocation increases by just 6 percent (349 additional units) to 6,594 housing units. City staff noted that the final RHNA allocation was 6,609 housing units. To accomplish this, the City would need to target production of 824 housing units annually over the eight (8) year cycle. The City’s housing production trends over the 5 th Cycle are notable, as the City increased total unit production year -over-year every year and in 2018 and 2019 exceeded the 5 th Cycle annual goal of 781 units. Very few cities have managed to produce encouraging Menifee
5th Cycle Housing Needs
RHNA Allocation 1,488 1,007 1,140 2,610
Permitted Units 11 17 1,263 2,671
Allocation Surplus/(Shortage) (1,477) (990) 123 61
Source: HCD Annual Progress Report Permit Summary, October 6, 2020 Very Low
Income Low Income
Moderate
Income
Above
Moderate
Income
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housing production trends, and even fewer have exceeded annual production goals. The City of Menifee’s 5 th and 6 th cycle RHNA al locations and the 5 th Cycle historical housing unit production is presented in Figure 76.

Figure 76: 5th and 6th Cycle RHNA Allocation and Production - Menifee

Menifee is one of 289 California jurisdictions that have not made sufficient progress toward either moderate -income RHNA unit production or failed to submit the latest (2019) Annual Progress Report. As a result, the City is subject to streamlined ministerial approval process for proposed housing developments with at least 10 percent affordable units. The streamlined ministerial approval process was introduced as part of Senate Bill 35 (Chapter 366, Statutes of 201 7) in 2017.

FISCAL HEALTH
The City’s fiscal health evaluation, including audit findings, revenue sources, expenditure categories, long -term obligations, reserves, and California State Auditor assessment is presented in the sections that follow. Figure 77 presents the City’s net position as annual revenues less expenditures for fiscal years 2016 -17 through 2018 -19. While the City had a $5.6 million deficit in 2016 -17, the City had $19.8 and $24 .0 million surpluses in 2017 -18 and 2018- 19, respectively. -
200
400
600
800
1,000
1,200
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Housing Units
Market Rate Built Affordable Built Annual Goal
RHNA 5th Cycle RHNA 6th Cycle
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Figure 77: Net Position - Menifee

Operating Revenues
In 2018 -19, the City’s total revenues exceeded $88.7 million. The City’s revenue history, inclusive of tax revenues and non- tax revenues, for fiscal years 2016 -17 through 2018- 19 is presented in Figure 78.

Menifee 2016-17 2017-18 2018-19
Total General Tax Revenues $24,807,944 $40,877,577 $45,426,095 Other Tax Revenues 1,619,512 1,664,930 1,918,407 Other Revenues 23,300,979 32,865,139 41,387,874 Total Revenues 49,728,435 75,407,646 88,732,376 Total Operating Expenditures 35,013,008 47,701,743 58,281,673 Debt Service 1,311,721 1,302,588 1,305,488 Capital Outlay 19,015,330 6,554,000 5,143,341 Total Expenditures 55,340,059 55,558,331 64,730,502 Net Position ($5,611,624) $19,849,315 $24,001,874 City of Menifee
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Figure 78: Operating Revenue History - Menifee

The City has developed a substantial tax revenue base, reaching $45.4 million in 2018 -19. The City’s total general tax revenues represented just 51.2 percent of total revenues, with non -tax revenues accounting for the remaining portion. The City’s largest tax revenue sources include sales tax ($20.4 million in 2018- 19), property tax ($14 million), and property tax in -lieu of VLF ($6.7 million). The City receives a variety of non -tax revenues, with the largest sources be ing miscellaneous revenues ($12.9 million) and charges for services ($9.4 million).

The City’s tax revenue base grew from $24.8 million in 2016 -17 to more than $45.4 million in 2018- 19, a 79 percent increase). Much of this growth came in sales tax revenue s, and as a result of the State of California’s decision on property tax in -lieu of VLF revenues. Sales tax revenues Menifee 2016-17 2017-18 2018-19
General Revenues
Property Tax $12,248,014 $12,688,989 $14,005,917 Sales Tax 8,661,218 18,005,117 20,384,878 Transient Occupancy Tax 225,956 232,117 238,464 Property Tax in-lieu of VLF - 6,110,514 6,680,540 Franchise Tax 2,973,633 3,109,879 3,357,585 Business License Tax 116,186 115,628 134,910 Property Transfer Tax 582,937 615,333 623,801 Utility User Tax - - - Other Tax Revenues - - - Total General Tax Revenues 24,807,944 40,877,577 45,426,095 Transportation Tax 1,619,512 1,664,930 1,918,407 Parking Tax - - - Voter-Approved Taxes - - - Functional Tax Revenues - - - Total Tax Revenues 26,427,456 42,542,507 47,344,502 Charges for Services 5,024,450 8,134,151 9,419,895 Special Benefit Assessments 3,575,738 4,091,073 4,254,666 Use of Money 170,507 652,386 2,045,266 Fines and Forfeitures 584,362 623,798 881,643 Licenses and Permits 4,958,133 5,820,848 6,542,785 Intergovernmental 4,449,888 4,970,387 5,359,911 Other Taxes in-Lieu - - - Miscellaneous Revenues 4,537,901 8,572,496 12,883,708 Total Revenues $49,728,435 $75,407,646 $88,732,376 Source: California State Controller's Office
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increased by 135 percent and now represent 44.9 percent of the City’s general tax revenues, mostly as a result of the voter -approved one percent Quality of Life Measure DD increase transactions and use tax. With the restoration of property tax in -lieu in 2017 -18, the City added more than $6 million to its annual revenues. While the City has very low proportions of revenues derived from transi ent occupancy tax, no single category of general tax revenue is outsized when compared to the average Riverside County and California cities.

The City’s general tax revenues are compared to the average for all Riverside County and California cities in Figure 79.

Figure 79: General Tax Revenues Comparison - Menifee

Sales Tax, Quality of Life Measure DD
Cities receive one percent of gross receipts from the sale of tangible personal property sold within their jurisdiction. Additionally, with the Menifee electorate voting in favor of Measure DD in 2016, the City doubled its sales tax rate to two (2) percent of gross sales. The City’s sales tax revenues increased from $8.7 million in 2016 -17, prior to the implementation of Measure DD, to $20.4 million in 2018 -19.

Property Tax 30.8%
Property Tax 19.0%
Property Tax 31.2%
Sales Tax 44.9%
Sales Tax 39.9%
Sales Tax 24.7%
TOT 0.5%
TOT 9.5%
TOT 8.5%
Property Tax in-lieu

14.7%
Property Tax in-lieu

13.2% Property Tax in-lieu

11.2%
Other Tax 9.1%
Other Tax 18.4% Other Tax 24.3%
Menifee All Riverside Cities All California Cities
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Measure DD was approved by more than 68 percent of Menifee voters in 2016. The City stated that the revenues gene rated by Measure DD would be utilized to reduce traffic congestion, improve and repair local interchanges, overpasses, streets, roads, bridges and potholes, maintain local police, fire, paramedic, and 911 emergency response times, prevent cuts to senior, d isabled and youth programs, and provide other general services.

Anecdotally, City staff indicated that the COVID -19 pandemic did not result in a decrease in sales tax revenues.

Property Tax and Property Tax in-lieu of Motor Vehicle License Fees The City’s second - and third -largest general tax revenue sources are property tax and property tax in- lieu of VLF, accounting for 30.8 and 14.7 percent of general tax revenues in 2018 -19. The City’s property tax revenues grew by 6.9 percent annually betwee n 2016 -17 and 2018 -19.

Property tax is assessed on land, improvements, and personal property, which combined for a total of $9.6 billion in 2018 -19. The City’s assessed land value amounted to $3.1 billion while the total improvement value was more than $6 .5 billion. 107 The City of Menifee’s $14 million property tax revenues represented 14.6 percent of property tax revenues collected in Menifee, which is an above average rate, and among the highest, compared to other cities in Riverside County.

The City of Menifee and the County of Riverside do not have a Master Property T ax Exchange Agreement in place. 108
The City’s property tax in -lieu of VLF revenues amounted to almost $6.7 million in 2018 -19, or about 14.7 percent of all general tax revenues. The State of California restored property tax in - lieu of VLF to new cities in 2017 -18, representing a windfall of more than $6.1 million in 2017 -18.

107 Source: California City Finance, “Assessed Valuation of Property by City” 108 Source: Riverside LAFCO
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Prior to the decision, many of the new cities in California and Riverside County were facing uncertain fiscal futures.

Miscellaneous Revenues
The City’s miscellaneous revenues account for $12.9 million in 2018 -19, repre senting about 14.5 percent of the City’s total revenues. Most of the City’s miscellaneous revenues can be attributed to development impact fees, which reached almost $11.2 million in 2018 -19. The City also received other miscellaneous noncategorized revenu es ($1.6 million) and contributions from nongovernmental sources ($48,000) in 2018 -19. City staff indicated that the City’s development pace has exceeded expectations and some development impact fees may not be reflect the needs of the City at this point.

Charges for Services
Charges for services represented 10.6 percent of the City of Menifee’s total revenues in 2018 - 19, amounting to $9.4 million. Charges for services in Menifee include engineering and inspection fees ($5.5 million), other noncategorized charges for services ($2.9 million), plan check fees ($432,000), parks and recreation fees ($326,000), zoning and subdivision fees ($230,000), and first aid and ambulance charges ($51,000). According to City staff, the City is preparing to perform a master fee study and cost allocation plan that will study all City fees and aim to recover costs.

Operating Expenditures
The City’s total operating expenditures increased from $55.3 million in 2016 -17 to more than $64.7 million in 2018 -19. The City’s operating expenditures between 2016 -17 and 2018 -19 are presented in Figure 80.

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Figure 80: Operating Expenditures - Menifee

The increase in operating expenditures occurred despite a decrease in capital outlay expenditures, from $19 million in 2016 -17 to $5.1 million in 2018- 19. Expenditures in all other operating expenditure categories, including salaries and wages, employee benefi ts, materials and supplies, and contract services increased over the same time frame.

The City’s contract services expenditures grew by 21.2 percent annually between 2016 -17 and 2018- 19. By 2018 -19, the contract services represented about 49.3 percent of t otal expenditures, at almost $31.9 million. As previously mentioned, the City took over law enforcement services in July 2020, which means that the historical contract service expenditures prior to fiscal year 2019 - 20 reflect the costs associated with cont racting with the Riverside County Sheriff’s Department for law enforcement services.

The City’s largest current expenditure category in 2018 -19 was public safety, which grew at a

14.7 percent annual growth rate between 2016 -17 and 2018- 19 to $27.3 million . Meanwhile, all current expenditures grew by just 8.2 percent annually during the same time frame. The City’s current expenditures by function between 2016 -17 and 2018 -19 are presented in Figure 81.

Menifee 2016-17 2017-18 2018-19
Operating Expenditures
Salaries and Wages $4,396,610 $5,661,060 $7,479,631 Employee Benefits 1,955,109 2,428,519 3,594,658 Materials and Supplies 6,973,565 9,948,833 15,327,105 Contract Services 21,687,724 29,663,331 31,880,279 Other Operating Expenditures - - - Total Operating Expenditures 35,013,008 47,701,743 58,281,673 Debt Service 1,311,721 1,302,588 1,305,488 Capital Outlay 19,015,330 6,554,000 5,143,341 Total Expenditures $55,340,059 $55,558,331 $64,730,502 Source: California State Controller's Office
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Figure 81: Current Expenditures - Menifee

If debt service and capital outlay are removed from the total current expenditures, the City’s public safety costs represent about 46.8 percent of all current expenditures, which is in line with the average of all cities in Riverside County (52.2 percent) and California (47.3 percent). It is understandable, however, with 14.7 percent annual growth rate associated with public safety, that the City would internalize public safety services.

It is also notable that the City has increased expenditures on community development from about $6.9 million in 2016 -17 to over $17.3 million in 2018 -19. Most of these expenditures can be attributed to construction and engineering regulation ($7.7 million) and planning expenditures ($2.2 million). This increase in community development expenditures is likely a response to the City’s rapid development pace in recent years.

Reserve Fund Balance
The City aims to retain 25 percent of annual operating expenditures as reserves. The reserves include a 10 percent natural disaster and catastrophic event reserve, 10 percent economic slowdown due to recession or other economic crisis reserve, and 5 percent reserv e to offset Menifee 2016-17 2017-18 2018-19
General Government $4,241,238 $5,427,879 $7,115,488 Public Safety 20,757,522 25,259,132 27,295,472 Transportation 2,438,141 3,934,839 5,937,109 Community Development 6,893,311 12,499,463 17,345,430 Health - - - Culture and Leisure 682,796 580,430 588,174 Public Utilities - - - Debt Service 1,311,721 1,302,588 1,305,488 Capital Outlay 19,015,330 6,554,000 5,143,341 Total Current Expenditures $55,340,059 $55,558,331 $64,730,502 Source: California State Controller's Office
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timing of grant reimbursements and collections of property taxes. The City’s reserves amounted to $26.5 million in 2020 -21 and met the City’s reserve policy. 109 Pension and OPEB Obligations
The City of Menifee’s pension and OPEB obligations are outlined in Figure 82.

Figure 82: Pension and OPEB Obligations - Menifee

Qualifying employees are eligible to participate in the City’s Miscellaneous or Safety Pension Plans. The City also offers an OPEB policy, which is a single -employer retiree healthcare plan.

In 2019 -20, the City’s combined benefit liability grew to almost $901,000, which is relatively low in comparison to most other cities in Riverside County. According to staff, the City does not have “unfunded liabilities” and they are able to pay as they go.

The City’s pension indicators are pre sented in Figure 83, including the City’s employer contribution compared to the actuarially determined contribution, the City’s total covered payroll, and the contribution rate as a percent of covered payroll. Th ese indicators provide measures of the health of the City’s pension plans.

Figure 83: Pension Indicators - Menifee

109 Source: City of Menifee, 2019-20 Budget
Menifee 2017-18 2018-19 2019-20
Net Pension Liability/(Surplus) $551,431 $499,769 $23,598 Total OPEB Liability/(Surplus) 181,271 250,648 876,974 Total Benefit Liability/(Surplus) $732,702 $750,417 $900,572 Source: 2017-18, 2018-19 and 2019-20 ACFR
Menifee 2017-18 2018-19 2019-20
Actuarially Determined Contribution $524,088 $1,360,520 $1,089,277 Employer Contribution 524,088 1,360,520 1,089,277 Covered Payroll $5,130,794 $6,773,265 $10,202,569 Employer Contribution Rate 10.2% 20.1% 10.7%
Source: 2017-18, 2018-19 and 2019-20 ACFR
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As illustrated in Figure 83, the City has made employer contributions equivalent to the minimum actuarially determined contribution in each of the three (3) fiscal years between 2017 -18 and 2019- 20, even as the City’s covered payroll doubled over this peri od. The City’s employer contribution rate (10.2 to 20.1 percent) is below average when compared to all Riverside County cities, which ranged from 26 to 32 percent. This is indicative of a healthy pension plan.

Annual Audit Findings
RSG reviewed the City’s Annual Audits from 2017 -18 through 2019- 20. The Annual Audits did not present any findings and the auditor stated that the financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information of the City.

Additionally, the City’s Annual Audits between 2017 -18 and 2019 -20 were awarded Certificates of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association.

California State Auditor Fiscal Health Evaluation
The City of Menifee ranked 381 out of 471 jurisdictions and received an overall risk rating of low.

The City is considered higher risk than 90 peer cities in Califor nia, or about 19 percent of cities.

The City received low risk ratings on eight (8) indicators, including liquidity, debt burden, general fund reserves, pension obligations, pension funding, pension costs, future pension costs, and OPEB obligations . One indicator, revenue trends , was given a moderate risk rating. One indicator, OPEB funding, scored a high -risk rating.

MSR DETERMINATIONS
Requisite CKH determinations for Menifee are presented by topic below:

1. Population, Growth, and Housing
Menifee grew rapidly over the last decade, at an annualized growth rate of 2.28 percent, adding almost 20,000 to the City’s population. Menifee is expected to continue growing, albeit City of Menifee
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at a slower rate, over the next 15 to 25 years, roughly at the same rate as the County of Riverside. The City added 5,406 housing units between 2010 and 2020, and made significant progress towards meeting its RHNA allocation, exceeding the allocation in both moderate - and above- moderate income housing unit categories. However , the development community in Menifee did not produce sufficient very low - and low -income housing units, falling 2,467 units short in those categories, to meet the City’s very low - and low -income housing RHNA allocations.

2. Disadvantaged Unincorporated Communities in SOI
Menifee’s SOI is coterminous with its corporate City boundary and therefore does not contain any DUC.

3. Present and Planned Capacity of Facilities
Because Menifee is a rapidly growing and developing city, the present capacity of facilities may not be keeping up with demand. The City is requiring CFD approval for all new developments to ensure that service and infrastructure needs of new developments have a built -in funding mechanism.

4. Financial Ability to Provide Services
The City has improved it ’s fiscal health in recent years with the addition of property tax in -lieu of VLF revenues and the approval of Measure DD one percent transactions and use tax. The City has built up reserves of at least 25 percent of operating expenditures. The City’s pens ion and OPEB liabilities have been suppressed and the City is able to pay off any liabilities that accumulate.

5. Opportunities for Shared Facilities
No opportunities for shared facilities were identified.

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6. Accountability for Community Service Needs
The City connects with residents through at least four (4) different social networks. The City recently hired a public information officer to provide regular updates to residents and coordinate communications. The City’s Menifee Matters magazine is distributed to every household and business on a quarterly basis to provide updates to the residents of the City.

The City put three (3) new software solutions in place recently that are intended to connect and provide greater access to the community.

7. Any Other Matter Related to Effective or Efficient Service Delivery as Required by Commission Policy.

The City did not identify any other matters related to effective or efficient service delivery as required by Commission Policy.

SOI RECOMMENDATIONS
RSG is recommending coordination with the City of Menifee on expansion of the Menifee SOI.

Menifee ’s SOI is coterminous with its incorporated municipal boundary. As the City and Western Riverside County region continues to grow, much of the future development will begin to occur beyond Menifee’s eastern boundaries in unincorporated areas. In an effort to manage sprawl, LAFCO may consider extending Menifee’s SOI boundary eastward towards State Route 79. City staff indicated that there is interest in expanding the City’s SOI a nd municipal boundary to the east. Per City staff, the City Council adopted a Strategic Plan that included an item aiming to expand the Menifee SOI eastward as far as State Route 79.

During the Public Review of this MSR, 112 signatures opposed to any annex ation or SOI expansion in the Winchester -Homeland MAC were gathered at the Winchester -Homeland Municipal Advisory Council meeting, Valley -Wide Recreation and Park District Board Meeting, and the Highland Palm community .

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1. Present and Planned Land Uses
Menife e’s coterminous SOI includes proportionally higher concentrations of single- family housing and retail commercial uses, when compared to the Countywide distribution of land uses.

2. Present and Probable Need for Public Facility and Services Because Menifee has grown rapidly in recent years and is projected to continue growing at an above- average rate through 2045, there may be shortfalls related to meeting demand for public facilities and services.

3. Present Capacity of Public Facilities
City staff did not identify any deficiencies with present capacity of public facilities located in the SOI.

4. Social or Economic Communities of Interest
The Winchester /Homeland Municipal Adviso ry Council area is located east of the City’s corporate boundary .

5. Disadvantaged U nincorporated Community Present and Planned Need for Facilities and Services
Menifee’s coterminous SOI does not contain an y DUCs.

City of Banning
Caroline Patton, City Clerk
99 E. Ramsey Street
Banning, CA 92220
City of Beaumont
Steven Mehlman, City Clerk
550 E. 6th Street
Beaumont, CA 92223
City of Blythe
Mallory Sutterfield Crecelius, City Clerk
235 N. Broadway
Blythe, CA 92225
City of Calimesa
Darlene Gerdes, City Clerk
908 Park Avenue
Calimesa, CA 92320
City of Canyon Lake
Ana Sauseda, City Clerk
31516 Railroad Canyon Rd.

Canyon Lake, CA 92587
City of Cathedral City
Tracey R. Hermosillo, City Clerk
68700 Avenida Lalo Guerrero
Cathedral City, CA 92234
City of Coachella
Angela Zepeda, City Clerk
1515 Sixth Street
Coachella, CA 92236
City of Corona
Sylvia Edwards, City Clerk
400 S. Vicentia Avenue
Corona, CA 92882
City of Desert Hot Springs
Jerryl Soriano, City Clerk
65950 Pierson Blvd.

Desert Hot Springs, CA 92240
City of Eastvale
Marc Donohue, City Clerk
12363 Limonite Av., Suite 910
Eastvale, CA 91752
City of Hemet
John Paul Maier, City Clerk
445 E. Florida Ave.

Hemet, CA 92543
City of Indian Wells
Angelica Avila, City Clerk
44-950 Eldorado Drive
Indian Wells, CA 922107497
City of Indio
Sabdi Sanchez, City Clerk
P.O. Drawer 1788
Indio, CA 92202
City of Jurupa Valley
Vicki Wasko, City Clerk
8930 Limonite Avenue
Jurupa Valley, CA 92509
City of La Quinta
Monika Radeva, City Clerk
78-495 Calle Tampico
La Quinta, CA 92253
City of Lake Elsinore
Candice Alvarez, City Clerk
130 S. Main Street
Lake Elsinore, CA 92530
City of Menifee
Sarah Manwaring, City Clerk
29844 Haun Road
Menifee, CA 92586
City of Moreno Valley
Brian Mohan, City Clerk
PO Box 88005
Moreno Valley, CA 925520805
City of Murrieta
Cristal McDonald, City Clerk
One Town Square
Murrieta, CA 92562
City of Norco
Dana Roa, City Clerk
2870 Clark Avenue
Norco, CA 92860
City of Palm Desert
Niamh Ortega, City Clerk
73-510 Fred Waring Drive
Palm Desert, CA 92260
City of Palm Springs
Anthony Mejia, City Clerk
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
City of Perris
Nancy Salazar, City Clerk
101 North "D" Street
Perris, CA 92570
City of Rancho Mirage
Kristie Ramos, City Clerk
69-825 Hwy. 111
Rancho Mirage, CA 92270
City of Riverside
Donesia Gause, City Clerk
3900 Main Street
Riverside, CA 92522
City of San Jacinto
Julia Espinoza, City Clerk
595 S. San Jacinto Ave.

San Jacinto, CA 92583
City of Temecula
Randi Johl, City Clerk
41000 Main Street
Temecula, CA 92590
City of Wildomar
Janet Morales, City Clerk
23873 Clinton Keith Rd., Suite 201
Wildomar, CA 92595

City of Banning
Caroline Patton, City Clerk
99 E. Ramsey Street
Banning, CA 92220
City of Beaumont
Steven Mehlman, City Clerk
550 E. 6th Street
Beaumont, CA 92223
City of Blythe
Mallory Sutterfield Crecelius, City Clerk
235 N. Broadway
Blythe, CA 92225
City of Calimesa
Darlene Gerdes, City Clerk
908 Park Avenue
Calimesa, CA 92320
City of Canyon Lake
Ana Sauseda, City Clerk
31516 Railroad Canyon Rd.

Canyon Lake, CA 92587
City of Cathedral City
Tracey R. Hermosillo, City Clerk
68700 Avenida Lalo Guerrero
Cathedral City, CA 92234
City of Coachella
Angela Zepeda, City Clerk
1515 Sixth Street
Coachella, CA 92236
City of Corona
Sylvia Edwards, City Clerk
400 S. Vicentia Avenue
Corona, CA 92882
City of Desert Hot Springs
Jerryl Soriano, City Clerk
65950 Pierson Blvd.

Desert Hot Springs, CA 92240
City of Eastvale
Marc Donohue, City Clerk
12363 Limonite Av., Suite 910
Eastvale, CA 91752
City of Hemet
John Paul Maier, City Clerk
445 E. Florida Ave.

Hemet, CA 92543
City of Indian Wells
Angelica Avila, City Clerk
44-950 Eldorado Drive
Indian Wells, CA 922107497
City of Indio
Sabdi Sanchez, City Clerk
P.O. Drawer 1788
Indio, CA 92202
City of Jurupa Valley
Vicki Wasko, City Clerk
8930 Limonite Avenue
Jurupa Valley, CA 92509
City of La Quinta
Monika Radeva, City Clerk
78-495 Calle Tampico
La Quinta, CA 92253
City of Lake Elsinore
Candice Alvarez, City Clerk
130 S. Main Street
Lake Elsinore, CA 92530
City of Menifee
Sarah Manwaring, City Clerk
29844 Haun Road
Menifee, CA 92586
City of Moreno Valley
Brian Mohan, City Clerk
PO Box 88005
Moreno Valley, CA 925520805
City of Murrieta
Cristal McDonald, City Clerk
One Town Square
Murrieta, CA 92562
City of Norco
Dana Roa, City Clerk
2870 Clark Avenue
Norco, CA 92860
City of Palm Desert
Niamh Ortega, City Clerk
73-510 Fred Waring Drive
Palm Desert, CA 92260
City of Palm Springs
Anthony Mejia, City Clerk
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
City of Perris
Nancy Salazar, City Clerk
101 North "D" Street
Perris, CA 92570
City of Rancho Mirage
Kristie Ramos, City Clerk
69-825 Hwy. 111
Rancho Mirage, CA 92270
City of Riverside
Donesia Gause, City Clerk
3900 Main Street
Riverside, CA 92522
City of San Jacinto
Julia Espinoza, City Clerk
595 S. San Jacinto Ave.

San Jacinto, CA 92583
City of Temecula
Randi Johl, City Clerk
41000 Main Street
Temecula, CA 92590
City of Wildomar
Janet Morales, City Clerk
23873 Clinton Keith Rd., Suite 201
Wildomar, CA 92595

Commission Reviewed & Confirmed SOI: July 28, 2022
Exhibit “O”