CITY OF MENIFEE
SUBJECT: Agreement Amendment with Lennar Homes of California, LLC for Community Facilities District 2022-3, Legado
MEETING DATE: November 5, 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 and authorize the City Manager to execute the First Amendment to the Acquisition, Construction and Funding Agreement for Community Facilities District 2022-3, Legado, located northwest of Antelope Road and Chambers Avenue and south of Rouse Road.
DISCUSSION
In June 2020, BLC Fleming entered into Development Agreement (DA) No. 2018-277 with the City of Menifee for the 331-acre Legado property located northwest of Antelope Road and Chambers Avenue and south of Rouse Road. As part of that agreement, BLC Fleming was required to construct certain neighborhood parks and paseos.
Two years later, BLC Fleming worked with the City to form Community Facilities District (CFD) No. 2022-3 to issue bonds to finance public facilities required for the 1,022 homes planned within the residential development. As a condition of using bond proceeds to finance project-related Development Impact Fees (DIF), BLC Fleming agreed to pay a 20% premium to the City on all DIF amounts funded with such proceeds. The Legado development ultimately was divided into three separate Improvement Areas (IA) or phases, known as IA1, IA2, and IA3, each of which has an associated City premium.
Last year, BLC Fleming entered into a contract to sell the project to Lennar Homes of California, LLC (Developer) in three separate transactions corresponding to the three separate improvement areas.
Lennar Homes has closed on the land in IA1 and is under contract to purchase IA2 and IA3. When Lennar purchased IA1 it assumed all responsibilities assigned to the developer for that area, including the requirement to construct the parks and paseos.
City of Menifee Staff Report
First Amendment to the Acquisition and Construction Funding Agreement, CFD 2022-3 November 5, 2025
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At this time, the estimated cost to build the parks and paseos has nearly doubled, rising from an estimated $3 million to nearly $5.9 million. Separately on the November 5, 2025, City Council agenda is the proposed Amendment No. 1 to DA No. 2018-277 that addresses the resulting $2.9 million funding gap associated with the construction of the parks and paseos. To assist in closing that funding gap, the City is proposing to amend the Acquisition, Construction and Funding Agreement to waive the City’s interest in the IA1 City premium in the amount of $219,477, making that amount available to be reimbursed to the Developer. The Developer would adhere to all standard reimbursement processes and could only be reimbursed for eligible facilities after bond issuance. The City premium is intended to be used for projects in the general area of the development that provide a specific benefit to residents of the development, and allocating the premium to go toward eligible CFD improvements would meet that goal.
In recent years the City revised the standard language in the acquisition, construction and funding agreements regarding the calculation of the letter of credit/cash deposit requirements at the time of bond issuance. Because the original Acquisition, Construction and Funding Agreement for CFD 2022-3 was approved in 2022, one additional amendment proposed is to align the provision for the calculation of the letter of credit/cash deposit with the method by which the City has been calculating that amount for CFDs formed in the last year.
In a separate action on this agenda, the City Council is considering approval of a Quimby agreement with the Developer that would allow Lennar to use $492,500 it owes in Quimby fees for the nearby Heritage Village development toward the building of Legado’s West Park and Paseos. In recognition of that, the Legado Acquisition, Construction and Funding Agreement, is requested to be amended to specify that when Lennar seeks reimbursement for the West Park and Paseos, the acquisition price would be reduced by $492,500.
Execution and implementation of the proposed Amendment to the Acquisition, Construction and Funding Agreement is contingent on City Council’s approval of Amendment No. 1 to DA No. 2018- 277, listed separately on this agenda. In the case Amendment No. 1 to DA No. 2018-277 is not approved, the proposed Amendment to the Acquisition, Construction and Funding Agreement would be void.
STRATEGIC PLAN OBJECTIVE
Regular City Business
FISCAL IMPACT
With approval of the proposed amendment, the City would forfeit collection of CFD premium revenue in the amount of $219,477. Instead, this would increase the available funds for developer reimbursements from CFD bond proceeds associated with CFD No. 2022-3 IA1. In doing so, this would help mitigate the existing funding gap for the IA1 parks/paseo improvements. These funds are restricted for use on public improvements that directly benefit the development area.
City of Menifee Staff Report
First Amendment to the Acquisition and Construction Funding Agreement, CFD 2022-3 November 5, 2025
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City of Menifee Staff Report
First Amendment to the Acquisition and Construction Funding Agreement, CFD 2022-3 November 5, 2025
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5 8
ATTACHMENTS
1. Resolution Approving Acquisition Agreement, CFD 2022-3
2. First Amendment to Acquisition Agreement IA1, CFD 2022-3
3. Original Acquisition, Construction & Funding Agreement