28202 CABOT ROAD| SUITE 620 | LAGUNA NIGUEL, CA 92677
PHONE: (949) 542-7070 | FAX: (949) 542-7076
www.zimmermangroup.com
April 25, 2023
Rochelle Clayton
Assistant City Manager
City of Menifee
29844 Haun Road, Menifee, CA 92586
[email protected]
Re: CFD for Tentative Tract No. 38525
Ms. Clayton:
I am writing on behalf of Global Investment & Development LLC to request the City of Menifee (“City”) consider the formation of a new community facilities district for a residential development project within the City boundaries. I have prepared the enclosed CFD financing plan that provides details regarding the project and the proposed structure of the CFD , and I have attached the City’s Special Funding District Application. An application for annexation into the City’s CFD No. 2017-1 for maintenance services has also been submitted under separate cover.
We would appreciate your review of the attached and the opportunity to discuss in further detail with City staff and finance team members . Thank you in advance for your consideration, and please feel free to contact me with any questions or comments.
Sincerely,
Jim Zimmerman
cc: Joseph Rivani; Global Investment & Development
Nathan Rivani; Global Investment & Development
Shane Spicer; Spicer Consulting Group
CFD Financing Plan
Proposed City of Menifee CFD
April 25, 2023
Global Investment & Development, LLC (“Developer”) is developing approximately 40 acres within Tentative Tract Map No. 38525 (“Project”) in the City of Menifee (“City”). The Project is planned for 51 single family residential units and is located at the northwest corner of Menifee Road and Coastline Ave.
The Project is also within th e boundary of Eastern Municipal Water District (“EMWD”) and Romoland School District (“RSD”). The Tentative Tract Map showing the location of the Project is attached as Exhibit A. Developer is proposing the formation of a community facilities district (“CFD”) to finance certain development costs of the Project related to City, EMWD and R SD facilities. The following outlines the proposed structure of the new CFD. Although the Project size is relatively small in terms of unit count, the amount of bonds to be issued for the proposed CFD is expected to be the same as the bond amount for the City’s CFD 2019-1 for which the City recently issued bonds.
1. Lead Agency – The City would act as the lead agency in forming the new CFD. The City would not incur any costs in forming the CFD since the Developer would deposit funds with the City to pay for the costs of forming the CFD and entering into the associated agreements. All deposits made by, or on behalf of, Developer would be reimbursed from proceeds of the CFD special tax bonds when issued.
2. CFD Boundary – The boundary of the CFD would include only the property within the Project.
3. CFD Facilities – The CFD would be authorized to fund City facilities, EMWD water and sewer facilities, and RSD school facilities. The attached Exhibit B shows the estimated costs of the facilities anticipated to be financed by the CFD. Included in the City facilities section is a “ City Projects Fee” which would be funded from CFD bond proceeds and provide a special City benefit.
4. JCFAs – Developer, City, and EMW D would enter into a Joint Community Facilities Agreement (“JCFA”) to allow for the funding of EMWD facilities, and Developer, City, and RSD would enter into a separate JCFA to allow for the funding of RSD facilities.
5. CFD Special Taxes and Property Tax Rates – The attached Exhibit C details the proposed special tax rates and expected total effective property tax rate for the Project . As shown in Exhibit C, the total property tax rate is expected to be approximately 1.90% of the anticipated home prices. The CFD special taxes and bond debt service would escalate by 2% each year.
6. Term of Special Tax – In order to allow for sufficient time for the CFD to issue bonds once the Project begins to develop, the special tax es would be authorized to be levied until the earlier of (i) the final maturity of the bonds or (ii) fiscal year 2063/2064.
7. Priority Administration Costs – $25,000 as a first priority of special taxes has been assumed for annual costs of administering the CFD. Additional administration costs may be funded from special taxes not needed to pay for bond debt service.
8. Bond Issuance – The CFD would issue bonds with a term of not less than 30 years in the amount that could be supported based on the special tax revenues providing 110% debt service coverage every year.
Developer and City would work together to issue the bonds once there is sufficient development within the Project and subject to sound municipal financing practices . The attached Exhibit D shows the estimated bond proceeds and corresponding estimated debt service schedule.
9. Funding Agreement – Developer and City would enter into a funding agreement regarding the terms of the CFD, the issuance of the bonds, and the funding of the authorized facilities.
TRACTNO.32664
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DESCRIBE
ADJACENT
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Exhibit B
Global Investment & Development
Proposed City of Menifee CFD - Map No. (38525)
Proposed List of CFD Eligible Facilities
April 25, 2023
Per Unit Total
Units 51
City of Menifee Development Impact Fees
Law Enforcement 250$ 12,750$
Fire Facilities 665 33,915
Circulation 5,060 258,060
Storm Drainage - -
General Government 1,106 56,406
Public Use Facilities 167 8,517
Parks - Land Improvements 233 11,883
Parks - Improvements 716 36,516
Subtotal - City DIF 8,197$ 418,047$
City Projects 1,639 83,609
Fair Share Traffic Impact Fee ESTIMATE 392 20,000 Quimby Fees ESTIMATE 1,961 100,000
Total 12,189$ 621,656$
EMWD Fees
Sewer Financial Participation Charge 3,391 172,941$ Sewer Treatment Plant Capacity Charge 6,428 327,828 Water Financial Participation Charge 7,235 368,985 Water Supply Development Fee 392 19,992
1" Meter Drop-In Fee 377 19,227
Total 17,823$ 908,973$
Romoland School District
Square Footage 3,000 153,000
Estimated School Fees (50% Premium) $5.18 / SF 15,525$ 791,775$ Total Eligible Fees 45,537$ 2,322,404$
Exhibit C
Global Investment & Development
Proposed City of Menifee CFD - Map No. (38525)
CFD Effective Tax Rate & Funding Analysis
April 25, 2023
Bond Issuance Assumptions Estimated Sources & Uses of Funds Allocation of Improvement Fund Weighted Average Bond Yield 5.00% Sources 2,925,000$ Agency Per Unit Total Priority Administrative Expense 25,000 City Impact Fees 10,550$ 538,047$ Capitalized Interest (Months) 6 Uses City Projects 1,639 83,609 Underwriter Discount 2.00% Reserve Fund 262,194$ EMWD Fees 17,823 908,973 Debt Service Coverage 110% Capitalized Interest 71,666 Romoland Schl Fees 14,745 752,010 Debt Service Escalation 2.00% Underwriter Discount 58,500 Total 44,758$ 2,282,640$ Total Annual Special Taxes 189,742$ Cost of Issuance 250,000 Improvement Fund 2,282,640
Total Uses 2,925,000$
Land Use Information & Total Property Tax Rates Special Tax Revenues Ad Other Project CFD Annual
Home Sq. Ft. Base Valorem Fixed Special Tax Total Tax Total Tax CFD Special Annual Tax Plan Size (a) Category Price (a) Taxes (b) Charges (c) Per Unit (d) Per Unit Rate % Tax Unit Mix (a) Collections 1 2,500 < 2,750 575,000$ 6,355$ 1,048$ 3,522$ 10,925$ 1.90% 3,522$ 17 59,870$ 2 3,000 2,751 - 3,250 600,000 6,632$ 1,048 3,720$ 11,400 1.90% 3,720 17 63,247 3 3,500 > 3,250 625,000 6,908$ 1,048 3,919$ 11,875 1.90% 3,919 17 66,625 3,000 600,000$ 6,632$ 1,048$ 3,720$ 11,400$ 1.90% 3,720$ 51 189,742$ Footnotes:
(a) Product and pricing estimated by developer.
(b) Ad Valorem taxes total 1.10529% of the assessed value for FY 22-23. (c) Estimated other fixed charges and assessments for FY 22-23: Amount Flood Control Stormwater / Cleanwater 3.88
City of Menifee Maintenance CFD No. 2017-1 (Estimate) 1,000.00 MWD Standby Charge 6.94
EMWD Infrastructure Availability Charge 26.00
EMWD Standby Charge 11.00
Total Fixed Charges 1,047.82
(d) Represents the 2022/23 Special Tax Rates for the proposed City of Menifee CFD. Rates assumed to increase by 2% per year.
Exhibit D
Global Investment & Development
Proposed City of Menifee CFD - Map No. (38525)
Estimated Debt Service & Bond Sizing Schedule
April 25, 2023
ISSUANCE ASSUMPTIONS ESTIMATED SOURCES AND USES
Closing Date 3/1/2024 Sources
Special Tax Rev. Escalation 2.000% Par Bond Amount 2,925,000$ Annual Admin. Expense 25,000$
Admin. Expense Escalation 2.000% Uses
Debt Service Coverage Ratio 110% Reserve Fund 262,194$
Underwriter Discount Est. 2.000% Capitalized Interest 71,666 Issuance Costs Est. 250,000$ Underwriter Discount 58,500 Months of Cap. Interest 6.00 Costs Of Issuance 250,000 Construction Fund 2,282,640
Total Uses 2,925,000$
BOND DEBT SERVICE
Period Fiscal Gross Priority Capitalized Net Debt Debt Service Ending Year Revenues Admin Principal Yield Interest Interest Service Coverage 9/1/2024 2023/2024 189,742$ 25,000$ -$ 2.512% 71,666$ 71,666$ -$ NA 9/1/2025 2024/2025 193,537 25,500 5,000 2.712% 143,332 - 148,332 113.28% 9/1/2026 2025/2026 197,408 26,010 10,000 2.912% 143,196 - 153,196 111.88% 9/1/2027 2026/2027 201,356 26,530 15,000 3.112% 142,905 - 157,905 110.72% 9/1/2028 2027/2028 205,383 27,061 15,000 3.312% 142,438 - 157,438 113.26% 9/1/2029 2028/2029 209,491 27,602 20,000 3.512% 141,942 - 161,942 112.32% 9/1/2030 2029/2030 213,681 28,154 25,000 3.712% 141,239 - 166,239 111.60% 9/1/2031 2030/2031 217,954 28,717 30,000 3.862% 140,311 - 170,311 111.11% 9/1/2032 2031/2032 222,314 29,291 35,000 4.012% 139,153 - 174,153 110.83% 9/1/2033 2032/2033 226,760 29,877 40,000 4.162% 137,748 - 177,748 110.76% 9/1/2034 2033/2034 231,295 30,475 45,000 4.312% 136,084 - 181,084 110.90% 9/1/2035 2034/2035 235,921 31,084 50,000 4.462% 134,143 - 184,143 111.24% 9/1/2036 2035/2036 240,639 31,706 55,000 4.562% 131,912 - 186,912 111.78% 9/1/2037 2036/2037 245,452 32,340 60,000 4.662% 129,403 - 189,403 112.52% 9/1/2038 2037/2038 250,361 32,987 70,000 4.712% 126,606 - 196,606 110.56% 9/1/2039 2038/2039 255,368 33,647 75,000 4.762% 123,308 - 198,308 111.81% 9/1/2040 2039/2040 260,476 34,320 85,000 4.812% 119,736 - 204,736 110.46% 9/1/2041 2040/2041 265,685 35,006 90,000 4.842% 115,646 - 205,646 112.17% 9/1/2042 2041/2042 270,999 35,706 100,000 4.872% 111,288 - 211,288 111.36% 9/1/2043 2042/2043 276,419 36,420 110,000 4.902% 106,416 - 216,416 110.90% 9/1/2044 2043/2044 281,947 37,149 120,000 5.012% 101,024 - 221,024 110.76% 9/1/2045 2044/2045 287,586 37,892 130,000 5.012% 95,009 - 225,009 110.97% 9/1/2046 2045/2046 293,338 38,649 140,000 5.012% 88,494 - 228,494 111.46% 9/1/2047 2046/2047 299,205 39,422 150,000 5.012% 81,477 - 231,477 112.23% 9/1/2048 2047/2048 305,189 40,211 165,000 5.012% 73,959 - 238,959 110.89% 9/1/2049 2048/2049 311,293 41,015 175,000 5.112% 65,689 - 240,689 112.29% 9/1/2050 2049/2050 317,518 41,835 190,000 5.112% 56,743 - 246,743 111.73% 9/1/2051 2050/2051 323,869 42,672 205,000 5.112% 47,030 - 252,030 111.57% 9/1/2052 2051/2052 330,346 43,526 220,000 5.112% 36,551 - 256,551 111.80% 9/1/2053 2052/2053 336,953 44,396 240,000 5.112% 25,304 - 265,304 110.27% 9/1/2054 2053/2054 343,692 45,284 255,000 5.112% 13,036 - 268,036 111.33% Total 8,041,179 1,059,486 2,925,000 5.000% 3,262,789 71,666 6,116,123 110.27%