CITY OF MENIFEE
SUBJECT: First Reading and Introduction of an Ordinance Approving Amendment No. 1 to the Legado Specific Plan Development Agreement
MEETING DATE: November 5, 2025
TO: Mayor and City Council
PREPARED BY: Molly Binnall, Management Analyst II
REVIEWED BY: Orlando Hernandez, Community Development Director APPROVED BY: Armando G. Villa, City Manager
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RECOMMENDED ACTION
1. Introduce an ordinance approving Amendment No. 1 to the Development Agreement with BLC Fleming, LLC and Lennar Homes of California, LLC for the Legado Specific Plan, located south of Rouse Road, west of Antelope Road, north of Chambers Avenue and east of Encanto Drive.
DISCUSSION
Amendment No. 1 to Development Agreement (DA) No. 2018-277 proposes the first amendment to the DA between the developer (BLC Fleming, LLC and Lennar Homes of California, LLC) and the City of Menifee. The amendment seeks to:
1) Extend the Development Impact Fee (DIF) freeze for lots within Lennar Phase 1. 2) Modify the timing for completion of park and paseo improvements. 3) Reduce the required contingency for Park Cost Estimates from 15% to 5%.
These additional amendments to the DA will assist in the successful completion of the Project amenities.
Quimby Agreement
In connection with the proposed DA amendment, on October 2, 2025, the Parks, Recreation and Trails Commission reviewed a Quimby Assessment for Heritage Village TR38346. The Quimby Assessment for Heritage Village TR38346 ensures the project satisfies its parkland dedication requirements under the Menifee Municipal Code Chapter 7.75 and establishes the foundation for moving forward with the Quimby Agreement to support timely, cost-effective park development.
The Quimby Agreement would result in the City foregoing direct receipt of the Quimby Fees from
City of Menifee Staff Report
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Heritage Village TR38346 into its Local Park (Quimby) Fund, and reallocate these fees to the developer (Lennar) to construct the public park improvements in Legado Phase 1 (West Parks and Paseos) at a significantly lower cost than if constructed by the City. The Commission voted unanimously (5-0) to recommend the City Council approve the Quimby Agreement, which is also on the November 5, 2025 City Council agenda for consideration.
It is important to note, if the City Council does not approve the proposed DA Amendment No. 1, the proposed Quimby Agreement would be void.
Planning Commission Recommendation
On October 8, 2025, a public hearing was conducted to present DA Amendment No. 1 to the Planning Commission. The Commission suggested the City request Lennar to provide the infrastructure to the East Park to facilitate the installation of a restroom facility in the future at the City’s discretion. The Commission voted unanimously (5-0) to recommend the City Council approve DA Amendment No. 1.
First Amendment to the Acquisition, Construction and Funding Agreement At the October 14, 2025 Finance Subcommittee Meeting, staff presented a proposed bond premium waiver for Community Facilities District (CFD) No. 2022-3, Legado Improvement Area 1, as well as an overview of the DA Amendment No. 1 provisions to the Finance Subcommittee.
The bond premium waiver is proposed to waive the normal 20% fee on the financed fees against the CFD funds. The Subcommittee voted unanimously to recommend the bond premium waiver and the DA Amendment No. 1 to the City Council for approval.
The proposed bond premium waiver for CFD No. 2022-3 is also on the November 5, 2025 City Council agenda for consideration in the form of an Amendment to the Acquisition, Construction and Funding Agreement.
Similar to the Quimby Agreement, if the City Council does not approve the proposed DA Amendment No. 1, the proposed First Amendment to the Acquisition, Construction and Funding Agreement would be void.
Background of the DA
The Legado Specific Plan, DA No. 2018-277, and Tentative Tract Maps were recommended for approval unanimously by the Planning Commission at a public hearing on May 13, 2020. The City Council approved the project on June 3, 2020, with adoption of the Specific Plan, zoning ordinance and DA No. 2018-277 occurring on June 17, 2020. The Specific Plan and Tentative Tract Maps provided for the development of 1,022 single-family residential lots and parks.
On March 8, 2024, Lennar purchased Phase 1 from BLC Fleming, LLC and assumed all construction responsibilities and improvement requirements as outlined in DA No. 2018-277.
Phase 1 includes the northern portion of the Specific Plan, the neighborhood parks, recreation center site, and several paseos as identified in the proposed DA Amendment provisions.
The property for Phase 2 (which includes the community park) and Phase 3 are still owned by BLC Fleming, LLC and are therefore not addressed as part of the proposed DA Amendment. Any City of Menifee Staff Report
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potential modifications to these phases would occur as needed in the future as development progresses.
IMAGE 1 - SITE PHASE MAP
Since the approval of the project, several of the tract maps have been recorded and home construction and occupancies have commenced within Phase 1. Lennar has been actively processing the park and paseo plans, in addition to processing and constructing various road and infrastructure improvements.
City of Menifee Staff Report
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IMAGE 2 - PHASE 1 PARKS & PASEOS
Paseos, Parks and Recreation Center
The paseos will serve as a major pedestrian corridor along Paseo Legado and will provide eight- foot walkways with shade trees and rolling turf areas, entry monuments, and enhanced crosswalks across all roadways. They will feature interactive art stations and fitness stations evenly distributed on both the east and west sides of the paseo.
IMAGE 3 - WEST PASEO
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IMAGE 4 - EAST PASEO
The East Park is approximately two acres and will feature shade structures and a picnic area.
The West Park is approximately 1.4 acres and will include a music-themed tot lot playground with shade structures and four fitness stations. The West and East Parks are approximately one-third mile apart. The recreation center will adjoin the West Park on the south side, and will include a 34’ x 76’ pool with cabana, spa, covered patio areas, fire pit, BBQ and picnic tables. The 2,644 square feet recreation center building will feature a small gathering room, kitchen and restroom facilities.
IMAGE 5 - EAST PARK
City of Menifee Staff Report
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IMAGE 6 - WEST PARK & RECREATION CENTER
Proposed DA Amendment Provisions
DA No. 2018-277 established a maximum developer contribution for the cost of the parks. As noted in the Fiscal Impact Section of the City Council Staff Report from June 6, 2020, if the park construction costs were to increase, the park facilities may need to be scaled back to be consistent with the maximum developer contributions, or if the City wanted to maintain or add additional amenities, the City would be required to provide funding.
At the time of the adoption of DA No. 2018-277, City staff analyzed the maximum developer contributions towards parks and preliminary cost estimates and believed that the contributions from the developer would be sufficient to construct the parks as shown in the conceptual plans.
However, the significant inflation that has occurred in the construction industry during the course of the last five years impacting both construction materials and labor were not anticipated. The extreme inflation has resulted in significant increases in the cost required to construct the parks and paseos.
City of Menifee Staff Report
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TABLE 1 – DEVELOPER EXCESS CONTRIBUTION COST ESTIMATE
In an effort to work collaboratively with the developer (Lennar) to reduce the park construction costs to be more in line with the maximum developer contribution identified in DA No. 2018-277 while maintaining the amenities desired by the community and the developer, an amendment to the DA has been proposed for Phase 1. The amendment includes the following changes:
• Add a definition for “Lennar Phase 1”
• Extend the DIF Freeze for lots within Lennar’s Phase 1, which includes:
oTracts 37408-1 (Lots 1-73)
oTracts 37408-2 (Lots 1-49)
oTracts 37408-3 (Lots 1-115)
oTracts 37408-4 (Lots 1-42)
oTract 37409-1 (Lots 1-86)
oTract 37409-2 (Lots 1-67)
oTract 37409-3 (Lots 1-59)
Lennar’s Phase 1 includes 491 lots. It is anticipated that of the 491 lots, only 81 lots would fall outside of the existing DIF freeze, resulting in an estimated cost savings of $44,064.
The cost savings would be applied to the cost of the park improvements. • Extend the timing for completion of the West Park and Paseo from before the 140th Certificate of Occupancy to the 200th Certificate of Occupancy in TR37408. • 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 TR34709.
Lennar is “construction-ready”, with 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 will accelerate the delivery of the TR37409 East Park and
City of Menifee Staff Report
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Paseo. The start of construction on the TR34708 West Park and Paseo improvements was delayed due to increased construction costs as well as joint efforts by the City and developer to explore ways to align costs.
• Reduce the required contingency for Park Cost Estimates from 15% to 5%.
Reduction in the contingency amount is anticipated to reduce the park construction bid estimates by $469,844.
• Removal of restroom building from TR37409 East Park.
After consideration of the size of East Park and its close proximity to surrounding homes, it was determined the removal of the restroom building would not affect the park’s intended function as a neighborhood park. This action will help reduce ongoing maintenance costs for the City. As suggested by the Planning Commission, Lennar has agreed to install the water and sewer infrastructure to the East Park to allow for the addition of a restroom facility at the City’s discretion in the future. • Update language indicating East Park & Paseo improvements will be bid out by Lennar at non-prevailing wage.
Additional Provisions
In addition to the proposed DA Amendment provisions listed above, additional provisions were agreed upon between the City and the developer, including:
1) Preparation of the First Amendment to the Acquisition, Construction and Funding Agreement for the CFD Bond premiums.
2) Preparation of a Quimby Agreement for the Quimby fees from Heritage Village TR 38346 3) Acceptance of Points of Connection/Right of Way after the 90-day maintenance period. with the provision for a one-year warranty period.
4) Expedited review of bond exoneration efforts for previously completed tracts.
As noted in Table 2 on the following page, all provisions are estimated to contribute an additional savings of $2,860,046 to the overall construction costs, leaving a remaining shortfall of $21,629, which would be covered by Lennar.
City of Menifee Staff Report
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City of Menifee Staff Report
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TABLE 2 - PROPOSED PROVISIONS
ITEM DA SAVINGS REDUCTION REMAINING
Original Variance - $2,881,676
DIF Freeze Extension ($44,064) $2,837,612
Non-Prevailing Wage for
East Park & Paseo ($763,498) $2,074,114
Phased POC Landscape
Turnover ($345,139) $1,728,975
East Park Restroom
Removal ($237,000) $1,491,975
Contingency Reduction from
15% to 5% ($469,844) $1,022,131
ADDITIONAL FISCAL PROVISIONS
Bond Premium Waiver for
CFD No. 2022-3 ($219,477) $802,654
Quimby & Park DIF from
Heritage Village TR38346 ($731,025) $71,629
Bond Releases ($50,000) $21,629
New Variance (shortfall) - $21,629
Under the terms of the existing DA, Lennar is required to contribute a maximum of $3 million to the City in lieu of constructing the East and West Parks and Paseos. However, as noted above, construction costs have since increased to $5.8 million. This DA Amendment is intended to aid Lennar in offsetting those increased costs through measures such as a Quimby Agreement and reduction in the CFD Bond Premium. If City Council does not approve the DA Amendment, all proposed revisions and agreements will be void.
Environmental Determination
The Environmental Impact Report (EIR) for the Legado Specific Plan (SCH No. 2009091118) was adopted by the City Council on June 3, 2020 and adequately identified any potential impacts associated with this project. Additional environmental review of the proposed amendment to DA No. 2018-277 is not required since DA No. 2018-277 was specifically included in the project description for the EIR prepared for the Legado Specific Plan and certified by the City Council in 2020. The EIR analyzed and mitigated all potentially significant effects from the development of the project including the DA. The Legado FEIR can be accessed for review on the City website at https://www.cityofmenifee.us/DocumentCenter/View/15206/Legado-Specific-Plan-Final-EIR.
Public Notice
The proposed amendment was noticed on October 26, 2025 for the November 5, 2025 City Council public hearing. A public notice was published within The Press Enterprise. All relevant public agencies were also notified of the public hearing.
City of Menifee Staff Report
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STRATEGIC PLAN OBJECTIVE
Thriving Economy
FISCAL IMPACT
The proposed adjustments included within the proposed DA Amendment No. 1 represent a reduction in DIF revenue collection in the amount $44,064 with the extension of the DIF freeze.
Additional indirect fiscal impacts to the City include the timing of when elements of the parks and paseos are turned over to the City. These items will change the timing and nature of expenditures for CFD maintenance and will have offsetting effects. Lennar will realize cost savings of $469,844 from the reduction of the required contingency from 15% to 5% to assist in meeting the amenities desires by the community. These cost savings help offset the existing funding gap for the TR37408 and TR37409 paseo and park improvements.
ATTACHMENTS
1. Ordinance
2. Exhibit A – DA Amendment No. 1
3. Public Hearing Notice
4. June 3, 2020 City Council Staff Report
5. 2020 Legado Development Agreement