CITY OF MENIFEE
SUBJECT: Proposed Amendment No. 1 to the Development Agreement with BLC Fleming and Lennar, LLC for the Legado project (Legado Specific Plan)
MEETING DATE: October 14, 2025
TO: Finance Committee
PREPARED BY: Margarita Cornejo, Deputy Finance Director REVIEWED BY: Travis Hickey, Chief Financial Officer
APPROVED BY: Armando G. Villa, City Manager
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RECOMMENDED ACTION
1. Review the proposed Amendment No. 1 for the existing Development Agreement (2018-277) between the City of Menifee and BLC Fleming, LLC and Lennar, LLC dated June 3, 2020 for the Legado development and recommend submittal to the City Council for approval.
DISCUSSION
The City of Menifee and BLC Fleming, LLC entered into a Development Agreement (DA) for the Legado project on June 3, 2020. Since then, Lennar LLC, has acquired Phase 1, and is in the process of acquiring Phase 2 of the project and subsequently is the successor-in-interest to the rights and obligations of BLC Fleming, LLC as it relates to these phases and the DA.
As of September 2025, construction activity for the 1,022 single family lot project as well as various landscape and park improvements in well underway in the northern portion of the project. Lennar has been actively processing the park and paseo plans, in addition to processing and constructing various road and infrastructure improvements. The DA as approved in 2020 established a maximum developer contribution for the cost of the parks. Any costs beyond the established maximum contributions will require either a city contribution or scaling back of the respective improvements. Since 2020 construction costs, including supplies, materials and labor have exponentially increased reflecting sustained elevated inflation. The associated park and paseo improvements of Tracts 37408 and 37409 were listed at an aggregate cost of $3 million in the original DA and are now estimated at $5.9 million based on current construction costs, resulting in revised costs exceeding the maximum contribution by $2.9 million.
City of Menifee Staff Report
Proposed Amendment No. 1 to the DA with BLC Fleming and Lennar, LLC for the Legado project (Legado Specific Plan)
October 14, 2025
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Working collaboratively with the developer, Lennar, staff has identified a multi-faceted funding solution involving various components to help bridge the existing gap between the park construction costs and the maximum developer contribution within the adopted DA while maintaining the amenities desired by the community and the developer. The proposed funding solution incorporates various elements, including but not limited to: Community Facilities District (CFD) bond premium use of the Legado Phase I project, Quimby & Park Fees reimbursements, maintenance period and phased point of connection turnover, bond release credits and the DA amendments listed as follows:
Add a definition for Lennar Phase 1 (Section 1.1.58 Definitions) Extend the Development Impact Fee Freeze for lots within Lennar’s Phase 1 from 2027 to 2029, which includes:
Tracts 37408-1 (Lots 1-73)
Tracts 37408-2 (Lots 1-49)
Tracts 37408-3 (Lots 1-115)
Tracts 37408-4 (Lots 1-42)
Tract 37409-1 (Lots 1-86)
Tract 37409-2 (Lots 1-67)
Tract 37409-3 (Lots 1-59)
Lennar’s Phase 1 includes 491 lots. It is anticipated that of the 491 lots, only 81 homes would fall outside of the existing Development Impact Fee (DIF) freeze, resulting in an estimated cost savings of $44,064. The cost savings would be applied to the cost of the park and paseo improvements. (Section 5.1 Development Fees)
Extend the Timing for Completion of the West Park and Paseo from before the 140 th Certificate of Occupancy to the 200th Certificate of Occupancy in Tract TR37408. (Section
6.2.2 Tentative Tract Map No. 37408 and Section 6.2.3 Tentative Tract Map No. 37409) Move up the Timing for Completion of the East Park and Paseo from the 140th Certificate of Occupancy to the 95th Certificate of Occupancy in Tract 34709. (Section 6.2.2 Tentative Tract Map No. 37408 and Section 6.2.3 Tentative Tract Map No. 37409) Reduce the required contingency for Park Cost Estimates to 5% from 15%. Reduction in the contingency amount is anticipated to reduce the park construction bid estimates by $469,844. The cost savings would be applied to the cost of the park and paseo improvements. (Section 6.2.2 Tentative Tract Map No. 37408 and Section 6.2.3 Tentative Tract Map No. 37409)
Update language to reflect bonds and acceptance of Parks and Points of Connection/Right of Way Maintenance timing to occur after 90 day maintenance period but before the 1 year maintenance period required by Menifee Municipal Code. Moving the acceptance timing up would result in an estimated savings of $345,139 for Lennar. The cost savings would City of Menifee Staff Report
Proposed Amendment No. 1 to the DA with BLC Fleming and Lennar, LLC for the Legado project (Legado Specific Plan)
October 14, 2025
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be applied to the cost of the park and paseo improvements. (Section 3.12 Bonds and Acceptance of Parks and Points of Connection/Right of Way Maintenance) Update language to confirm Lennar agrees to bear all costs of design, planning, and construction of the 37409 Park Improvements in a manner consistent with the Plot Plan conceptual designs (as modified to exclude the bathroom facility and comply with all applicable building and fire codes) without any additional reimbursements or contributions from the City. This would result in an estimated savings of $237,000 for Lennar. The cost savings would be applied to the cost of the park and paseo improvements. (Section 6.2.2 Tentative Tract Map No. 37408 and Section 6.2.3 Tentative Tract Map No. 37409) Update language of DA adding additional indemnification language for the City and/or CFD 2022-3 regarding the applicability of prevailing or non-prevailing wages. It is Lennar’s intent to not utilize public funds for the construction of the East Park & Paseo improvements. These improvements will be bid out by Lennar separately and at non- prevailing wage. This would result in an estimated savings of $763,498 for Lennar. The cost savings would be applied to the cost of the park and paseo improvements. (Section
9.1.2 Prevailing Wage Indemnity and Notice of Labor Code Section 1781) Lennar is “construction-ready”, with the permits in hand and a contractor secured, and can begin work on the TR37408 West Park and Paseo immediately upon approval of the DA amendment. This amendment would provide additional time to complete the TR37408 West Park and Paseo but accelerates the delivery of the TR37409 East Park and Paseo.
The start of construction on the TR34708 West Park and Paseo improvements were delayed due to increased construction costs as well as joint efforts by the City and developer to explore ways to align costs with the DA.
Upon review and recommendation by the Finance Committee, the proposed Amendment No. 1 would be presented for City Council consideration.
FISCAL IMPACT
The proposed DA adjustments included within the proposed Amendment No. 1 represent a reduction in DIF fee revenue collection in the amount $44,064 with the extension of the DIF fee freeze, as well as cost savings of $469,844 to Lennar resulting from the reduction of the required contingency from 15% to 5%. These cost savings help offset the existing funding gap for the Tracts 37408 and 37409 paseo and park improvements. Additionally, the update in the timing of maintenance acceptance would result in an estimated savings of $345,139 and the update on the 37048 Park Improvements plot plan conceptual designs would result in an estimated savings of $237,000 to Lennar, the bidding of the East Park and paseo improvements with no public funds would result in an estimated savings of $763,498; all savings which would be passed towards the completion of the park and paseo improvements.
City of Menifee Staff Report
Proposed Amendment No. 1 to the DA with BLC Fleming and Lennar, LLC for the Legado project (Legado Specific Plan)
October 14, 2025
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ATTACHMENTS
1. Proposed Amendment No.1 to DA (Redline)
2. Partial Assignment and Assumption of DA
3. Executed DA (Original)
4. Legado DA Amendment Presentation