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4937-6965-4131v2/200299-0011
COMMUNITY FACILITIES DISTRICT NO. 2022-3
OF THE CITY OF MENIFEE (LEGADO)
FIRST AMENDMENT TO
ACQUISITION, CONSTRUCTION AND FUNDING AGREEMENT
(IMPROVEMENT AREA NO. 1 ONLY)
THIS FIRST AMENDMENT TO ACQUISITION, CONSTRUCTION AND FUNDING AGREEMENT (IMPROVEMENT AREA NO. 1 ONLY) (the “First Amendment (IA No. 1 Only)”) is made and entered into by and among, the CITY OF MENIFEE (the “City”), acting for and on behalf of itself and COMMUNITY FACILITIES DISTRICT NO. 2022-3 OF THE CITY OF MENIFEE (LEGADO) (the “Community Facilities District” or “CFD”), and LENNAR HOMES OF CALIFORNIA, LLC, a California limited liability company (“Lennar”) (each individually a “Party” and collectively the “Parties”) and amends that certain Acquisition, Construction and Funding Agreement entered into as of September 22, 2022 (the “Original Agreement” and together with this First Amendment (IA No. 1 Only), the “Agreement”), but only as to Lennar and Improvement Area No. 1. Capitalized terms used and not defined herein have the meanings ascribed thereto in the Original Agreement.
WHEREAS, the CFD consists of three improvement areas: Improvement Area No. 1 being developed by Lennar (“IA No. 1”); Improvement Area No. 2 (“IA No. 2”) being developed by BLC FLEMING LLC, a Delaware limited liability company (the “BLC”); and Improvement Area No. 3 (“IA No. 3”) being developed by BLC; and
WHEREAS, the City and BLC entered into the Original Agreement to provide for, among other matters, the financial and other obligations and responsibilities related to the formation of the Community Facilities District and the Improvements to be financed by the Community Facilities District; and
WHEREAS, on March 8, 2024, BLC, Lennar, and the City entered into the Partial Assignment and Assumption Agreement [Phase 1], whereby the Original Agreement was assigned to, and assumed by, Lennar with respect to Phase 1 only, which is coterminous with IA No. 1; and WHEREAS, Lennar and the City have entered into an “Agreement Between the City of Menifee and Lennar Homes of California, LLC Regarding Compliance of Tentative Tract Map No. 38346 with Government Code Section 66477”, dated as of ______, 2025 (the “Quimby Act Agreement”) relating to the application of certain Quimby Act fees for the Heritage Village project (which is adjacent to the CFD) being developed by Lennar (“Heritage Village Project”); and WHEREAS, Section 26.2 of the Original Agreement provides that the Parties may amend the Original Agreement in writing signed by each Party thereto; and WHEREAS, this First Amendment (IA No. 1 Only) impacts only the property in IA No. 1 and expressly does not impact IA No. 2 or IA No. 3; and
WHEREAS, the City and Lennar, as the owner of the property in IA No. 1 and the sole party to the Original Agreement with respect to IA No. 1, desire to amend the Original Agreement as it applies to IA No. 1 only, as set forth herein; and
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WHEREAS, the effectiveness of this Agreement is expressly contingent upon the City Council’s approval of Amendment No. 1 to the Development Agreement for the Legado Specific Plan Project, and in the event such amendment is not approved, this Agreement shall be deemed null and void and of no further force or effect.
NOW, THEREFORE, it is mutually agreed between the respective Parties as follows:
1.Amendment to Section 2.2(a). The first paragraph of Section 2.2(a) of the Original Agreement is hereby amended and restated as follows:
“(a) Concurrently with the issuance and sale of each series of the Bonds, the owner of any land within an Improvement Area which the City has determined, in its sole discretion, to use in the sizing of such series of Bonds (the “Sizing Property”), together with any Sizing Property owned by any affiliate (collectively, an “Account Party”), for which the Maximum Special Taxes for the then- current fiscal year (as defined in the Rate and Method of Apportionment of Special Tax for such Improvement Area (“Rate and Method”) and such Special Tax referred to herein as the “Special Tax” or “Special Taxes”), are equal to or exceed 20% of the aggregate Maximum Special Taxes authorized to be levied on the Sizing Property in such fiscal year, shall deliver to the City either (i) a renewable irrevocable instrument of credit from a financial institution (rated “A” or better, or otherwise approved by the City) and approved by the City, or (ii) cash in-lieu thereof (a “Security”). The Security shall be in an amount calculated by multiplying the Special Tax Requirement (as defined in the related Rate and Method) for the then current and following fiscal year, by the percentage of the Maximum Special Taxes for the current fiscal year allocable to the Developer Property owned by the Account Party (the “Stated Amount). The Security shall be maintained by the Account Party in each fiscal year until terminated in accordance with Section 2.2(c) below. While the Security is still required the Stated Amount of such Security shall be reduced as set forth in a Certificate of Reduction or Termination (as defined in Section 2.2(c) below).”
2.Amendment to Section 2.2(c). The first paragraph of Section 2.2(c) of the Original Agreement is hereby amended and restated as follows:
“(c) Following the sale or transfer by the Account Party of any property to a person other than the Account Party, or upon the prepayment of the Special Tax obligation for a parcel owned by the Account Party, the Account Party shall notify the Community Facilities District of such event, in writing, and, if requested by the Account Party, the Stated Amount of the Security shall be reduced and be recalculated in accordance with this Section 2.2; provided, however, that any costs associated with the recalculation and reduction shall be borne by the Account Party. Subject to Section 2.2(d) below, the Stated Amount may be reduced to an amount determined by the method of calculation set forth in Section 2.2(a) hereof. The Security shall be terminated upon the earlier of (i) when the Sizing Property owned by, or under option to, the Account Party is responsible for less than 20% of the Maximum Special Taxes applicable to all of the Sizing Property or (ii) when the Account Party has paid (or cause to be paid) all Special Taxes owed by the Account Party in the current fiscal year and the Sizing Property owned by, or under option to, the Account Party is expected to be responsible for less than 20% of the Maximum Special Taxes in the next fiscal year.”
3.Amendment to Section 2.4. Section 2.4 of the Original Agreement is hereby amended and restated as follows:
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“2.4 Bond Issuance Parameters. The terms and conditions upon which each series of the Bonds shall be issued and sold, the method of sale of the Bonds and the pricing of the Bonds shall be determined solely by the City in its legislative discretion in conformance with the Act, the Policy, and this Agreement. Each series of Bonds shall be issued with a term not to exceed 35 years from the date of issuance of the Bonds. The proceeds of the Bonds shall be used in the following priority to (1) fund a reserve fund for the payment of principal and interest with respect to the Bonds in an amount equal to the least of (i) ten percent (10%) of the total bond issue, (ii) maximum annual debt service on Bonds, or (iii) 125% of average annual debt service; (2) fund capitalized interest through the interest payment date on the Bonds for which Special Taxes are not available for payment of debt service on the Bonds or such longer period as requested by the Developer and approved by the City, subject to the Act; (3) reimburse the Developer or its designee pursuant to Section 1 hereof for CFD formation costs advanced by the Developer pursuant to the Reimbursement Agreement which have not already been reimbursed to the Developer from collected Special Tax; (4) pay for costs of issuance of the Bonds including, without limitation, underwriter’s discount, bond counsel and disclosure counsel fees, appraisal and special tax consultant fees, printing, fiscal agent fees, and reasonable Developer legal and financial consultant costs; (5) pay for the costs of forming the Community Facilities District; and (6) pay for the actual costs of the Improvements. At the request of the Developer, the City, in consultation with the underwriter of the Bonds, may consider providing for surety or bond insurance in lieu of all or a portion of the reserve fund in order to generate additional proceeds to fund Improvements. The Community Facilities District shall maintain records relating to the disbursements of proceeds of the sale of the Bonds. The Indenture or Resolution or Fiscal Agent Agreement (hereinafter “Indenture”) for the Bonds shall establish an acquisition and construction fund or improvement fund (herein, the “Improvement Fund”) to be held by the fiscal agent (“Fiscal Agent”) into which shall be deposited initially the proceeds of the Bonds net of the amount of proceeds required to fund items (1) through (5) in the second preceding sentence. The Indenture shall also establish separate accounts of the Improvement Fund designated the “City Improvements Account,” “City Fee Facility Improvements Account,” and any Miscellaneous Improvement Account(s) for the Miscellaneous Improvements described in Exhibit “C,” into which shall be deposited such portions of the Improvement Fund as agreed by the Parties and directed by the City in writing at or subsequent to the closing of the sale of the Bonds consistent with the following priorities:
(a) An amount sufficient to fund the reasonable, current estimated cost of the City Fee Facility Improvements applicable to IA No. 1 and anticipated to be funded out of the Bonds being issued shall be deposited in the City Fee Facility Improvements Account, except that there shall be no deposit to the City Fee Facility Improvements Account for the City Projects amounts shown on Exhibit B.1 to the Original Agreement that would otherwise have been funded by IA No. 1. For the avoidance of doubt, the City agrees to allocate the amount of proceeds that would have otherwise been utilized for City Projects to the City Improvement Account to be applied to finance the costs of City Improvements applicable to IA No. 1, including park facilities to be constructed by Lennar; (b) An amount sufficient to fund the reasonable, current estimated costs of the City Improvements associated with IA No. 1 shall be deposited, or later transferred, to the City Improvements Account. Any Special Taxes levied in IA No. 1 and collected by the CFD remaining after the payment of administrative expenses of the CFD for IA No. 1 and the reimbursement of Lennar for CFD formation costs pursuant to Section 1 hereof shall be deposited into the City Improvements Account at the time of Bond issuance, unless otherwise directed in writing by Lennar; and (c) If applicable, an amount to be agreed upon between Developer and the CFD prior to the issuance of Bonds sufficient to fund the reasonable, current estimated cost of the 4 5
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Miscellaneous Improvements described in Exhibit “C” hereto, anticipated to be funded out of the Bonds being issued shall be deposited, or later transferred, to the applicable Miscellaneous Improvement Account(s).
Interest earned on moneys deposited in each of the City Fee Facility Improvements Account, the City Improvements Account and the Miscellaneous Improvement Account(s) shall remain in such accounts until such time as all of the Improvements have been funded. Additionally, the Developer may direct the CFD to transfer excess moneys in any of the City Fee Facility Improvements Account, the City Improvements Account or the Miscellaneous Improvement Account(s) to another Account.
The Indenture shall provide that amounts remaining in the Improvement Fund after funding all proposed Improvements (such completion of funding to be agreed by the City and the Developer) shall be deposited in the special tax fund or bond service fund and be applied to pay debt service on the Bonds and/or to call Bonds in advance of maturity.
4.Amendment to Section 10. Section 10 of the Original Agreement is hereby amended by adding the following as the last paragraph thereof:
“The Quimby Act Agreement provides that the Quimby Fees paid by Lennar in connection with the Heritage Village Project will be earmarked by the City to be used exclusively to pay the public neighborhood parks and paseos required to be constructed in IA No. 1 (“West Park and Paseos”). To the extent that such Quimby Fees are actually applied by the City to fund the West Parks and Paseos, Lennar hereby agrees that the total Acquisition Price of the West Park and Paseos to be paid to Lennar from the proceeds of bonds or special taxes of the Community Facilities District for Legado shall not include that portion of the $492,500 actually received by Lennar. For example, if the total cost of the West Park and Paseos is $2 million, and Lennar was reimbursed $492,500 of that cost from the Quimby Fees, then the maximum that Lennar may seek for the Acquisition Price of the West Park and Paseos would be $1,507,500 (i.e., $2,000,000 cost less $492,500). Nothing in this Section 10 shall prevent the Quimby Fees paid in connection with the Heritage Village Project from being returned to Lennar upon receipt by the City of bond proceeds or special taxes of the community facilities district for the Heritage Village Project allocated to such Quimby Fees in equal amount.”
5.Amendment to Section 20. The following paragraph hereby amends and restates Section 20 of the Original Agreement as it applies to IA No. 1 only:
“Lennar shall assume the defense of, indemnify and save harmless, the City, its officers, employees and agents, and the Community Facilities District, its officers, employees and agents, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subject or put, by reason of, or resulting from such person’s or entity’s performance of its obligations under this Agreement and the construction of the City Improvements and the Miscellaneous Improvements, the failure of Lennar to provide notice of the Special Tax to be levied by the Community Facilities District pursuant to Section 53341.5 of the Act (but only if Lennar is required by law to provide such notice), or arising out of any alleged misstatements of fact or alleged omission of a material fact made by Lennar, its officers, directors, employees or agents to the City, the Community Facilities District, the underwriter of the Bonds and its counsel, the appraiser, the special tax consultant, the market absorption consultant or bond counsel regarding Lennar, its proposed developments, its property ownership, and any contractual arrangement it may enter into in a disclosure document describing the Community Facilities District and the risks relating to the Bonds. No provision of this Agreement shall in any way limit the extent of Lennar’s responsibility for payment of damages resulting from the operations of Lennar and its contractors; provided, however that Lennar 5 5
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shall not be required to assume the defense or indemnify and save harmless any person or entity as to actions, damages, claims, losses or expenses resulting from the breach of this Agreement, the willful misconduct of such person or entity or their officers, agents, consultants or employees. Under no circumstances shall Lennar have any liability under this Section 20 for actions taken by the owners of property outside of IA No. 1.”
6.General Provisions.
(a) Incorporation into Original Agreement. Except as expressly amended hereby, all provisions of the Original Agreement remain in full force and effect, and this First Amendment (IA No. 1 Only) is incorporated as a part of the Original Agreement to comprise the Agreement in effect as of the date hereof but only as to IA No. 1 only.
(b) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one instrument.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year written below.
DATED: November 5, 2025
CITY OF MENIFEE, a political subdivision of
the State of California
By:
Armando G. Villa, City Manager
ATTEST:
By:
Stephanie Roseen, City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY FOR THE CITY OF
MENIFEE
By:
Jeffrey T. Melching, City Attorney
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4937-6965-4131v2/200299-0011
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LENNAR HOMES OF CALIFORNIA, LLC,
A California limited liability company
By:
Name:
Title: