CITY OF MENIFEE
SUBJECT: Community Facilities District Goals & Policies Amendment MEETING DATE: September 3, 2025
TO: Mayor and City Council
PREPARED BY: Lauri Lockwood, Financial Analyst
REVIEWED BY: Travis Hickey, Chief Financial Officer
APPROVED BY: Armando G. Villa, City Manager
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RECOMMENDED ACTION
1. Approve the amended City Council Special Assessment and Community Facilities District Goals and Policies (Policy No. CC-20).
DISCUSSION
Community Facilities Districts (CFDs) are authorized through the Mello-Roos Community Facilities Act of 1982, which provides a mechanism to fund public improvements and services. By establishing a CFD, an additional property tax is assessed to fund the specific improvements or services identified when the CFD is formed. The City Council originally approved a policy related to CFDs and debt financing in September 2011 (FN-09, Special Assessment and Community Facilities District Debt Financing Programs). Policy FN-09 was replaced in April 2020 by CC-20, Special Assessment and Community Facilities District Goals and Policies.
As part of the City’s goal to regularly re-evaluate policies to address changes in the business environment, City staff is recommending Policy No. CC-20 be updated. The proposed amendments were presented to the Finance Committee at the July 8, 2025, meeting. The Finance Committee provided feedback and recommended presenting the revised Policy for City Council consideration. The proposed changes of substance include:
Additional Security Requirements for Developments Smaller than 100 Units: The City will analyze on a case-by-case basis whether to offer CFD financing for projects with fewer than 100 units. An additional security in the form of a secondary reserve may be required for these developments at the City’s discretion. This change is proposed because a development of fewer than 100 units can represent a delinquency risk due to each homeowner being responsible for a larger share of the bond debt payment than are
City of Menifee Staff Report
Policy Amendment – Community Facilities District Goals & Policies September 3, 2025
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owners in larger communities. An additional security from the developer in the form of the collection of an additional reserve could be used to offset the increased delinquency risk. Bulk Sale of Property for Rental Purposes: The City shall not offer CFD financing for projects that consist of condo or single-family homes where 10% or more of the proposed units are intended for or used as rental property unless the developer receives express advance written approval from the City. This change is proposed in light of the changing development landscape. Recently, the Cimarron Ridge development entered into a contract to sell roughly 20% of the homes in one of its two sections to a real estate investment trust that intended to lease those homes.
Required Deposit for CFD Formation/Changes Costs: Specifying that the developer deposit for CFD formations or change proceedings is $70,000 and authorizing the Chief Financial Officer to increase this required deposit if formation costs rise substantially. This deposit is designed to cover costs the City incurs to pay consultants who work on the CFD formation. Previously, the policy allowed for a deposit ranging from $50,000 to $70,000 based on the development size. The elimination of the lower end of the deposit range is proposed because the majority of the consultants involved in the formation process charge a set fee that does not vary based on the size of the development, so there is no substantial reduction in costs for smaller developments. Proactively Assessing Opportunities to Alleviate Residents’ Debt Burden:
Memorializes the Menifee City Council’s previously verbalized intent to reduce property owners’ debt burden whenever possible by diligently monitoring the economic environment and taking advantage of refunding opportunities when doing so would lead to a reduction in the special assessment paid by property owners. Line of Credit Requirements: Included language authorizing the City Manager and/or the Chief Financial Officer to waive Line of Credit requirements on a case-by-case basis in instances where homes are technically “sold” but not officially closed by the Preliminary Official Statement posting.
STRATEGIC PLAN OBJECTIVE
Regular City Business
FISCAL IMPACT
There is no fiscal impact associated with the recommended action.
ATTACHMENTS
1. Special Assessment and CFD Goals and Policies
2. Special Assessment and CFD Goals and Policies – Redline