CITY OF MENIFEE
SUBJECT: Public Safety Services Community Facilities District (CFD) MEETING DATE: September 9, 2025
TO: Finance Committee
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. Recommend that staff forward the fiscal impact analysis related to a potential public safety services CFD to the City Council for consideration.
DISCUSSION
Since incorporation in 2008, the City of Menifee has experienced steady population growth, with an estimated 115,300 residents as of January 2025. As development continues, maintaining high standards of public safety while managing the financial pressures of growth remains a top priority.
The City’s Strategic Plan identifies public safety as a core pillar, emphasizing the importance of a safe and vibrant community. While current funding sources—such as sales tax (including Measure DD), property tax, and other general revenues—support public safety services, the City is exploring additional, dedicated revenue streams to ensure long-term sustainability. One such opportunity is the formation of a public safety services CFD, which would apply a special tax to all new residential development to offset the costs associated with the development’s increased demand on public safety services, including police and fire.
The Mello-Roos Community Facilities Act of 1982 (Government Code §53311 et seq.) allows cities to form CFDs to finance public improvements and services. A public safety services CFD provides a legally defensible and sustainable funding mechanism to ensure that new development contributes its fair share toward the cost of public safety.
Ten years ago, the City initiated the process of forming such a CFD, including adoption of a Resolution of Intention. However, the City ultimately chose not to proceed at that time. Since then, several neighboring cities—including Murrieta, Lake Elsinore, Hemet, San Jacinto, Wildomar, and Perris—have successfully implemented similar CFDs.
City of Menifee Staff Report
Public Safety Services Community Facilities District (CFD) September 9, 2025
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At a City Council meeting in June, it was suggested the City explore the idea of a public safety services CFD again. The first step in doing so is to determine the approximate cost of providing public safety services to each new residential unit.
At its July 2025 meeting, the Finance Committee reviewed and approved staff’s recommendation to proceed with a Fiscal Impact Analysis to evaluate the long-term financial impact of new residential development on the City’s General Fund. The analysis was conducted by Spicer Consulting Group, which had conducted a similar analysis for the City previously.
The 2025 General Fund Public Services Analysis Update confirms that new residential development in the City of Menifee will result in a significant net fiscal impact on the General Fund at full build-out. Population is projected to grow from an estimated 115,300 in 2025 to nearly 148,000 by 2045, representing an anticipated increase of 32,700 residents. Based on this growth, new residential development is expected to generate approximately $36.9 million in annual General Fund revenues. This includes $7.4 million from property taxes, $19.6 million from sales and use taxes (inclusive of Measure DD), and $1.8 million from franchise fees, with the remainder derived from property transfer taxes, off-site sales tax, recreation program fees, fines, and miscellaneous sources.
In contrast, the annual cost of providing General Fund services to new development at build-out is projected to be approximately $43.1 million. The resulting net fiscal impact is a negative $6.2 million annually. Public Safety – composed of Police, Fire, and Animal Control -- remains the largest cost driver, representing 60% of General Fund expenditures and totaling $792 per resident. This cost burden translates to an annual shortfall of $562 per new single-family residence and $440 per new multi-family residence.
To offset this impact, the study recommends forming a CFD with an annual levy of $562 per single-family home and $440 per multi-family unit, including a 4% annual escalator to account for cost growth. These proposed rates are competitive with regional peers, falling just below the regional average of approximately $605 per single-family unit. Menifee’s proposed rate is positioned between the high of $1,548 in Coachella and the low of $257 in Hemet.
Compared to the previous fiscal impact analysis completed in 2021, which identified a $7.5 million annual shortfall and recommended rates of $465 per single-family home and $332 per multi-family unit, the 2025 update shows a slightly lower overall deficit but higher per-home impacts. This shift is due to a combination of fewer projected housing units at build-out and rising per-capita service costs, particularly in public safety.
Based on the results of the analysis, staff is recommending the Finance Committee recommend that the City Council consider the possibility of forming a public safety services CFD to ensure that new development covers the costs associated with providing essential services to new residents.
ATTACHMENTS
1. SCG Report - General Fund Services Analysis Findings