Agenda packet, first session — Menifee City Council, January 21, 2026

City Council Chambers
29844 Haun Road
Menifee, CA 92586
Ricky Estrada, Mayor
Bob Karwin, District 1
Ben Diederich, District 2
Dan Temple, District 3
Dean Deines, District
AGENDA
Menifee City Council
Special Meeting Agenda
Wednesday, January 21, 2026
4:00 PM Special Meeting
Armando G. Villa, City Manager
Jeffrey T. Melching, City Attorney
Stephanie Roseen, City Clerk
SPECIAL MEETING (4:00 PM)

1. CALL TO ORDER

2. ROLL CALL

3. PLEDGE OF ALLEGIANCE

4. DISCUSSION ITEMS

4.1 Public Safety Services Community Facilities District RECOMMENDED ACTION

1. Discuss and provide direction on establishing a Public Safety Services Community Facilities District (CFD) to help fund essential City services for new development projects.

5. ADJOURN
Decorum Policy Notes
The Council anticipates and encourages public participation at its Council meeting on agenda items.

Please turn your cell phones off, refrain from talking in the audience or outbursts that may be disruptive.

We encourage participation and ask for a mutual respect for the proceedings.

Staff Reports
Materials related to an item on this agenda, including those submitted to the City Council after distribution of the agenda packet, are available for public inspection by contacting the City Clerk Department at City Hall located at 29844 Haun Road or by calling (951) 6726777 during normal business hours.

Compliance with the Americans with Disabilities Act
If you need special assistance to participate in this meeting, you should contact the City Clerk Department at (951) 6726777. Notification 72 hours prior to the meeting will enable the City to make reasonable arrangements to assure accessibility to this meeting.

Affidavit of the Posting
I, Stephanie Roseen, do hereby certify, under penalty of perjury, that the January 21, 2026 City Council special meeting agenda was posted at least 24 hours prior to the meeting in the following locations per Cal. Gov. Code, § 54956, subds. (a) and (c): Menifee City Hall, 29844 Haun Road, Kay Ceniceros Community Center, 29995 Evans Road, and the City of Menifee website.

Menifee Mayor and City Council

January 21, 2026
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1. CALL TO ORDER

2. ROLL CALL

3. PLEDGE OF ALLEGIANCE

4. DISCUSSION ITEMS

4.1 Public Safety Services Community Facilities District RECOMMENDED ACTION

1. Discuss and provide direction on establishing a Public Safety Services Community Facilities District (CFD) to help fund essential City services for new development projects.

5. ADJOURN
Decorum Policy Notes
The Council anticipates and encourages public participation at its Council meeting on agenda items.

Please turn your cell phones off, refrain from talking in the audience or outbursts that may be disruptive.

We encourage participation and ask for a mutual respect for the proceedings.

Menifee Mayor and City Council

January 21, 2026
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CITY OF MENIFEE
SUBJECT: Public Safety Services Community Facilities District MEETING DATE: January 21, 2026
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. Discuss and provide direction on establishing a Public Safety Services Community Facilities District (CFD) to help fund essential City services for new development projects.

DISCUSSION
The City of Menifee’s current Strategic Plan identifies both a thriving economy and safe and vibrant community as strategic priorities. Since its incorporation in 2008, the City of Menifee has experienced consistent population growth, expanding from approximately 50,000 residents to more than 115,000 as of January 2025. In the midst of this growth, the City Council has underscored its commitment to public safety by establishing the Menifee Police Department and designating public safety as a foundational pillar of the community. This prioritization has yielded measurable results, with Menifee being recognized as one of the 20 safest cities in California for the last two consecutive years.

As development continues, the City remains focused on maintaining high standards of public safety while addressing the financial demands of a growing community. To support long-term fiscal sustainability, the City is actively exploring opportunities to diversify revenue streams. While current funding sources – such as sales tax (including Measure DD), property tax and other general revenues – help fund public safety services, they are also needed for other priorities, including infrastructure improvements and recreation amenities and services. This underscores the importance of identifying additional, dedicated funding mechanisms to meet the community’s evolving needs.

Item Title: 4.1
Public Safety Services Community Facilities District
Item Page Number: 1
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City of Menifee Staff Report
Public Safety Services Community Facilities District (CFD) January 21, 2026

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Continued local control over City revenue sources is needed to ensure long-term fiscal sustainability and allow for the City to be self-reliant in the future.

Most recently, the City completed a comprehensive update of development-related fees, including park impact fees, traffic/circulation impact fees, and law enforcement fees.

While these development fees help offset the impacts that new development has on community infrastructure and facilities, those revenues do not provide funding for expansion of essential City services to serve new development’s service demands.

With significant development activity already underway and more homes forecast to be built over the upcoming years, the City is exploring options to diversify its existing funding sources and a public safety CFD is an option to consider.

Public Safety Services CFD
The Mello-Roos Community Facilities Act of 1982 (Government Code §53311 et seq.) allows cities to form Community Facilities Districts (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.

At the June 4, 2025 City Council meeting, the City Council inquired about the possibility of creating a public safety services CFD, which would apply a special tax to all new residential development to offset the costs associated with the increased demand for police and fire services created by residents of the new development. The first step in that exploration is to determine the approximate cost of providing public safety services to each new residential unit, so staff engaged Spicer Consulting Group to provide an updated Fiscal Impact Analysis to evaluate the long-term financial impact of new residential development on the City’s General Fund.

The 2025 General Fund Public Safety Services Analysis Update illustrates that new residential development in the City of Menifee will result in a significant net negative fiscal impact on the General Fund at full build-out.

Menifee’s population is projected to grow to nearly 148,000 residents by 2045, representing an anticipated increase of approximately 32,700 residents. In order to maintain current per capita staffing ratios, the City would need to hire at least 26 additional sworn officers and as many as 10 non-sworn support staff. Increasing staffing would be Item Title: 4.1
Public Safety Services Community Facilities District
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City of Menifee Staff Report
Public Safety Services Community Facilities District (CFD) January 21, 2026

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difficult, however, given that projections show that revenues generated by new development are insufficient to cover its associated expenses.

According to the General Fund Public Services Analysis Update, new residential development is expected to generate approximately $41.2 million in annual General Fund revenues at build-out in 2045. This includes $17.4 million from property taxes, $13.3 million from sales and use taxes (inclusive of Measure DD), and $2.3 million from franchise fees, with the remainder derived from miscellaneous sources. In contrast, the annual cost of providing General Fund services to new development at build-out is projected to be approximately $47 million. The resulting net fiscal impact is a negative $5.8 million annually. Public Safety – composed of Police, Fire, and Animal Control -- remains the largest cost driver, representing 60% of General Fund expenditures and totaling $179 per resident. This cost burden translates to an annual shortfall of $525 per new single-family residence and $411 per new multi-family residence.

To offset this impact, the study recommends forming a CFD with an annual levy of $525 per single-family home and $411 per multi-family unit, including an annual escalator with a maximum of 4% to account for rising costs. 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 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.

The proposed public safety services CFD would apply exclusively to new residential developments and would exclude commercial properties, which are expected to generate sufficient revenue to cover related General Fund expenditures. This CFD would be disclosed to potential homebuyers before their purchase and would not increase their overall tax rate beyond the 2% cap outlined in CC-20 (Special Assessment and CFD Goals and Policies). Instead, it would reduce the amount a developer is eligible to be reimbursed through a facilities CFD tied to their project. Unlike a facilities CFD, the City would retain discretion over the amount levied and could lower the rate of escalation, or even reduce or eliminate the tax altogether in future years, particularly if the commercial base grows to a point where sales tax revenues become a more significant portion of the City’s revenues and the supplementary tax is not as necessary.

Based on the results of the analysis, staff is recommending the City Council consider forming a public safety services CFD to ensure that new development covers the costs associated with providing essential services to new residents. If the City Council opts to Item Title: 4.1
Public Safety Services Community Facilities District
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Menifee Mayor and City Council
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City of Menifee Staff Report
Public Safety Services Community Facilities District (CFD) January 21, 2026

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move forward with creating a public safety services CFD, the next residential development submitted to the City would serve as the cornerstone for its formation.

Finance Subcommittee Review
This item was presented before the Finance Subcommittee at its September 2025 Committee meeting, with a recommendation that it be brought forth for the City Council to review and provide direction on how to proceed.

During the Finance Committee review, some feedback included considering lower rates for senior housing, that the tax would go on in perpetuity, and that it only applies to new development after the CFD is formed.

STRATEGIC PLAN OBJECTIVE
Safe and Vibrant Community

FISCAL IMPACT
The proposed public safety services CFD would have no immediate fiscal impact on the City’s General Fund. If formed, the property taxes generated of $525 per single-family home and $411 per multi-family residence would be paid by property owners and would offset the projected annual shortfall for public safety services that would result from new development.

ATTACHMENTS

1.General Fund Services Analysis Findings
Item Title: 4.1
Public Safety Services Community Facilities District
Item Page Number: 4
Menifee Mayor and City Council
January 21, 2026
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General Fund Public Services
2025 Analysis

DRAFT REPORT
Item Title: 4.1
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Item Page Number: 5
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General Fund Analysis 2025 Update Page | 1
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Background
The City of Menifee (“City”) incorporated October 1, 2008. Immediately following incorporation, the Riverside County (“County”) Transportation Department continued to approve tract maps that were already submitted for approval. During the following two years, the County transitioned the development approval process to the City. As a function of approving various land use, zone changes, or specific plan amendments submitted by development applicants, the City must evaluate the impacts of these changes.

One type of impact that needs consideration is whether there are fiscal impacts to the City’s General Fund for services associated with these changes.

Consequently, developers will submit Fiscal Impact Analyses (“FIAs”) that include the proposed development, estimated revenues, and estimated costs that may occur because of the proposed development. These FIAs present various assumptions and statements that analyze proposed development impacts based on the City’s adopted budget, plan of services, and financial constraints. The City’s budgets are required to be balanced at the time of adoption by the City Council. This is appropriate for the near term evaluation of the City’s financial condition but is not, by itself, a prediction or forecast of the long term fiscal condition of the City’s General Fund.

For long term planning purposes, additional factors also need to be considered. These factors include the City’s policies relat ed to service levels for each City service department (particularly Public Safety), remaining development capacity within the City , population growth, property tax valuation, sales tax performance, and increases in service costs over time. It is necessary to evaluate these factors collectively to determine whether future growth is fiscally sustainable and what additional revenues, if any, are required to maintain existing service levels as the City builds out.

This 2025 update provides a revised evaluation of the City’s General Fund based on the FY 2025-26 and FY 2026-27 Proposed Biennial Budget, revised growth projections, updated persons-per-household assumptions derived from the City’s adopted Development Impact Fee (DIF) Study, updated housing value assumptions, and refined escalation assumptions for both revenues and expenditures. It reflects more current conditions, including new staffing levels, increased public safety service costs, and the City’s updated revenue outlook.

Approach
Spicer Consulting Group (“SCG”) was engaged to evaluate the City’s General Fund impacts associated with future residential development. SCG obtained information germane to the analysis including: the FY 2024-25 Annual Comprehensive Financial Report (ACFR); the Proposed Biennial Budget for FY 2025-26 and FY 2026-27; the City’s General Plan; the Development Impact Fee (DIF) Study; Fire cost information including related County agreements; and detailed line item General Fund budget data.

From this information, a detailed line item database was prepared, identifying the eligible budget items relevant to providing ongoing General Fund services to the community. The analysis first identifies the appropriate set of General Fund revenues and expenditures in FY 2025-26 and converts them to a per capita (Service Unit) basis.

We then evaluate these per capita costs and revenues under a build out scenario through 2045, allocating the proportionate share of General Fund costs and revenues associated with the develo pment of new residential properties. Operating expenditures are projected forward using a 3.5 percent annual escalator for most service categories and a 4.5 percent annual escalator for Polic e and Fire services, reflecting the higher cost growth observed in public safety. General Fund revenues are projected using a 2.0 percent annual growth rate for property driven revenues (ad valorem property tax, Property Tax in Lieu of VLF, and real property transfer tax) and a 3.0 percent annual growth rate for sales tax, Measure DD, franchise fees, and other elastic revenues, calibrated to the City’s recent budget experience.

All costs and revenues are calculated in nominal dollars, allowing us to compare FY 2044-45 General Fund expenditures and revenues under build out conditions and derive a levelized annual funding requirement per Service Unit. This funding requirement is then translated into per home amounts for single family and multi family units based on the City’s DIF based household size assumptions.

Future
Growth
Based upon the City’s approved General Plan and Development Impact Fee (DIF) Study, we evaluated the estimated build out horizon for the City, the applicable land use categories, and t he specific plans that govern remaining residential development.

Using these sources, we confirmed the population and household growth assumptions that underlie the City’s long range capital Item Title: 4.1
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and infrastructure planning. The current population for the City is estimated at 115,316 and is anticipated to grow to 147,972 by the year 2045, an increase of approximately 32,656 residents and a long term annual growth rate of roughly 1.2 to 1.5%.

The DIF Study applies an overall household size of 2.80 persons per dwelling unit for future residential growth. For purposes o f this FIA, that DIF based household size has been allocated by product type to reflect the City’s expected mix of single family and multi family housing while remaining consistent with the overa ll 2.80 persons per unit assumption. Specifically, the analysis assumes 2.94 persons per single family residential (SFR) unit and 2.30 persons per multi family residential (MFR) unit. These values were developed using the DIF Study ratios and calibrated so that, when applied to the anticipated SFR/MFR unit mix, they reproduce the DIF Study’s citywide household size and remain consistent with observed occupancy patterns from available DOF/SCAG and City demographic data.

In addition, the FIA assumes that 80% of new residential units w ill be single family and 20% will be multi family. This 80/20 distribution is generally consistent with Menifee’s predominantly single family housing pattern while modestly increasing the share of multi family product in line with the City’s General Plan and Housing Element objectives. Applying the DIF based household size factors (2.94 SFR, 2.30 MFR) and the 80/20 unit mix to the projected population increase of 32,656 residents yields approximately 26,125 new single family units and 6,531 new multi family units at build out.

These household size factors are also used as Service Unit (SU) factors in the CFD analysis, such that each SFR unit is assigned

2.94 SUs and each MFR unit is assigned 2.30 SUs. This approach directly ties the CFD rate structure to the City’s adopted DIF assumptions while recognizing the different average household sizes associated with each residential product type.

Expenditures
The General Fund expenditure analysis includes five primary service categories:
 General Government – Core administrative, legislative, and internal support services.  Community Development – Planning and economic development functions.  Public Works/Engineering – General Fund–supported engineering and public works activities.  Community Services – Parks, recreation, and other community service programs.  Public Safety – Police and Fire services.

General Government - The General Government category includes City Attorney, City Clerk, City Council, City Executive Office, Communications, Finance, General Services, and Human Resources. Combined, these departments are budgeted at $19.2 million in FY 2025-26 and $20.7 million in FY 2026-27. General Government functions provide policy direction, legal support, public information, financial management, human resources, an d internal services that support all operating departments, including Public Safety. These costs are largely fixed or semi-fixed and tend to grow with staffing levels, compensation, and regulatory requirements rather than directly with population. For long range projections, the FIA applies a 3.5% annual escalat or to General Government to reflect anticipated growth in staffing, benefits, and operating costs over time.

Community Development - Community Development includes Community Development/Planning and Economic Development.

These departments are responsible for long range planning, current development review, zoning, code updates, and economic development initiatives that support job creation and investme nt in Menifee. Community Development expenditures total $9.6 million in FY 2025-26 and are projected to increase to $10.4 million in FY 2026-27. Because planning and economic development workloads are closely tied to development activity and long term growth in the City, these costs are expected to increase over time with both population and employment. In the FIA, Community Development is escalated at 3.5% annually, consistent with other non public safety operating departments..

Community Services – Community Services includes the City’s parks, recreation, and community services programs.

Expenditures in this category are budgeted at $5.8 million in FY 2025-26 and $6.0 million in FY 2026-27. Costs are driven by park and facility inventories, program offerings, and participation levels. As the City continues to grow and new parks and facilities are brought online, the cost of maintaining and operating these amenities is expected to increase. In the FIA, Community Services is projected forward at 3.5% per year, consistent with the other non public safety categories.

Public Works/Engineering – This category consists of the Public Works Department’s General Fund–supported activities, including engineering services, right of way management, and certain maintenance and administration functions that are not funded through special funds. Public Works expenditures are budgeted at $8.6 million in FY 2025-26, increasing to $9.0 million in FY 2026-27.

These costs rise over time as the City accepts additional street s, signals, and related infrastructure from new development and Item Title: 4.1
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as maintenance standards evolve. Consistent with the other non public safety functions, Public Works/Engineering is escalated at 3.5% annually in the long range FIA.

Public Safety - The Fire program reflects the City’s contract costs for fire and emergency medical services, including station operations, personnel, equipment, and overhead provided through the County/Cal Fire contract. Fire expenditures are budgeted at $20.3 million in FY 2025-26 and $20.3 million in FY 2026-27.

The Menifee Police Department provides law enforcement, traffic enforcement, investigations, and related public safety services.

Police expenditures are budgeted at $35.9 million in FY 2025-26 and $37.6 million in FY 2026-27, making Police the single largest General Fund expenditure line item.

Over the past four years, Menifee’s combined Police and Fire costs have increased by approximately 7% per year, significantly outpacing other General Fund categories. To reflect this trend while still remaining conservative, the FIA applies a 4.5% annua l escalator to both Police and Fire costs over the 20 year projection period. Taken together, Police and Fire account for approximately $56.1 million (56.5%) of the FY 2025-26 General Fund budget, and their faster growth relative to other departments is a primary driver of the projected General Fund shortfall associated with new residential development.

For FY 2025-26, the City’s General Fund operating expenditures in these categories are summarized as follows (rounded):

General Fund Expenditures FY 2025-26
Description Amount
General Government $19,219,992
Community Development $9,609,189
Public Works/Engineering $8,596,692
Community Services $5,816,301
Public Safety $56,129,969
Total Direct Costs $99,372,143
General Fund Expenditures FY 2026-27
Description Amount
General Government $20,684,175
Community Development $10,402,182
Public Works/Engineering $8,936,201
Community Services $5,975,221
Public Safety $57,836,051
Total Direct Costs $103,860,830
These expenditures represent the recurring costs of providing the basic level of services approved by the City Council and exclude one time capital projects. For long term forecasting, these categories are projected forward using the escalation assumptions described above (3.5% for non public safety functions and 4.5% for Police and Fire).

Under these assumptions, total General Fund expenditures at build out in FY 2044-45 are projected to be approximately $213.2 million, including:

General Fund Expenditures FY 2044-45
Description Amount
General Government $38,420,632
Community Development $19,321,941
Public Works/Engineering $16,649,049
Community Services $11,098,908
Public Safety $127,729,691
Total Direct Costs $213,220,220
On a per capita basis, combined Police and Fire services are projected to cost approximately $845 per resident.

Item Title: 4.1
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Revenues
The General Fund revenue analysis includes the following primary categories:
 Property Driven Revenues – the City’s share of the 1% ad valorem property tax, real property transfer tax, and Property Tax in Lieu of Vehicle License Fees (VLF).
 Sales and Use Tax – the City’s 1% share of the statewide sa les tax; and Measure DD (Quality of Life Sales Tax) – an additional 1% transactions and use tax dedicated to Menifee.  Franchise Fees – fees collected from utility, cable, and solid waste providers under franchise agreements.  Other Revenues – development related fees, business license taxes, fines and forfeitures, recreation program fees, interest earnings, and miscellaneous revenues.

General Fund Revenues FY 2025-26
Description Amount
Property Taxes $37,720,846
Sales Tax $34,621,807
Franchise Fees $5,875,000
Other Revenues $21,726,110
Total Direct Revenues $99,943,763
Property Tax - Property Taxes are derived from the assessed valu e of all properties within the City of Menifee. The Riverside County Auditor-Controller-County Clerk levies a 1% tax on the assessed valuation of all taxable parcels in the County, consistent with statewide practice. Under Proposition 13 (1978), Article XIII of the State Constitution established that the maximum increase in assessed valuation for existing properties is the lesser of 2% annually or the change in the California Consumer Price Index (CPI). Of this 1% ad valorem levy, the City of Menifee receives an average 12.64% share, based on the County’s apportionment formula.

For purposes of this FIA, the Property Taxes category includes:
 The City’s share of the 1% ad valorem levy,
 Property Tax in Lieu of Vehicle License Fees (VLF), and  Real Property Transfer Tax.

In FY 2025-26, these components are projected as follows (rounded):
 Ad Valorem Property Tax: $24.3 million
 Property Tax in Lieu of VLF: $12.5 million
 Real Property Transfer Tax: $0.95 million
For a combined Property Taxes total of $37.7 million, which represents approximately 38% of all General Fund revenues. In FY 2026-27, these revenues are projected to increase to approximately $40.3 million, an increase of about 6.9%, reflecting growth in assessed valuation from both new development and appreciation of existing properties.

This combined property tax category provides a stable and growin g stream of funding that scales with assessed valuation and serves as the primary “property driven” revenue base used later in the FIA to allocate a share of incremental property driven revenues to Police and Fire services.

Sales Tax - Sales Tax revenues are derived from 1% of all taxable sales occurring within the City of Menifee. The statewide base sales tax rate is 7.25%, with additional local and countywide components (including a 0.5% countywide sales tax in Riverside County dedicated to transportation). The City’s 1% Bradley-Burns share is deposited in the General Fund.

In addition, the City benefits from the lo cal voter approved Measure DD Quality of Life Sales Tax, adopted by Menifee voters in November 2016, which added a 1% transactions and use tax specifically for the City. Measure DD revenues are accounted for in the Quality of Life Fund and are dedicated to enhancing public safety, maintaining streets and infrastructure, and improving community services.

For FY 2025-26, the combined Sales Tax category in the FIA reflects both the base 1% sales tax and Measure DD, with the following projections (rounded):

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 Base 1% Sales and Use Tax: $13.6 million
 Measure DD (Quality of Life) Transactions and Use Tax: $21.0 million For a combined Sales Tax total of $34.6 million, representing approximately 35% of total General Fund revenues. In FY 2026-27, these revenues are projected to increase to approximately $35.3 million, an increase of about 2.1%.

Together, the base Sales Tax and Measure DD account for more than one third of the City’s flexible discretionary revenues. These funds are critical to sustaining Police and Fire services which have been the City Council’s top priority as well as supporting the City’s expanding infrastructure and service delivery needs. While Measure DD significantly strengthens fiscal resiliency, sales tax revenues are inherently sensitive to fluctuations in consumer spending, interest rate conditions, and regional economic growth, making long term forecasting and fiscal prudence essential.

Franchise Fees - Franchise Fees are collected under agreements with utility providers, cable companies, and the City’s solid waste hauler. Menifee currently has several active franchise ag reements, including electric and gas utilities, multiple cable television providers, and a solid waste franchise.

For FY 2025-26, Franchise Fee revenues are projected at $5.9 million, increasing to approximately $6.2 million in FY 2026-27 an increase of about 4.9%. Franchise Fees provide a relatively stable, though smaller, portion of the General Fund and are tied to utility usage, customer counts, and contractual terms.

Other Revenues - Other General Fund revenues in the FIA include all remaining General Fund revenue sources beyond Property Taxes, Sales Tax (including Measure DD), and Franchise Fees. These revenues provide meaningful support to City operations and diversify the General Fund revenue base. The primary components are:
 Development Related Fees (building, planning, engineering): Projected at $12.8 million in FY 2025-26 and $12.9 million in FY 2026-27, reflecting a high but moderating level of development activity.  Business License, Transient Occupancy Tax (TOT), Charge s for Services, Fines and Forfeitures, and Recreation Program Income: Together projected at approximately $1.8 million in FY 2025-26 and $1.9 million in FY 2026-27, representing ongoing activity in business licensing, hotel stays, recreational programming, and municipal code enforcement.
 Miscellaneous Revenues, Pass Through Revenues, Interest Earnings, and Transfers In: Including pass through and miscellaneous revenues, interest on invested funds, and mi nor transfers, these sources are projected at approximately $7.1 million in FY 2025-26 and $7.1-$7.2 million in FY 2026-27.

In total, Other Revenues are projected at $21.7 million in FY 2025-26 and $21.9 million in FY 2026-27, representing roughly 22% of the City’s General Fund revenues and growing at about 0.7% year over year. While smaller and more volatile than Property Taxes and Sales Tax, these revenues prov ide important diversification and are infl uenced by development cycles, changes in state subventions, interest rate conditions, and service demand from the community.

Findings
According to the City’s DIF Study, the population of Menifee is projected to grow from 115,316 residents in 2025 to 147,972 residents by 2045, an increase of approximately 32,656 residents. This equates to an average annual growth rate of roughly 1.2% to 1.5% and provides the basis for estimating the number of new dwelling units and associated service demands evaluated in this FIA.

At build out in FY 2044-45, ne w residential develop ment will be responsible for approxim ately $47.1 million in annual General Fund expenditures. The majority of these costs are attributed to Public Safety (Police and Fire), which remains the City’s sing le largest service responsibility. On a per capita basis, combined Police and Fire services are projected to cost approximately $845 per resident, with the remaining General Fund costs attributable to General Government, Community Development, Public Works/Engineering, and Community Services.

On the revenue side, new residential development is projected to generate approximately $41.2 million annually at build out. This includes:
 $17.4 million in property driven revenues, consisting of the City’s share of the 1% ad valorem Property Tax, Property Tax in Lieu of VLF, and Real Property Transfer Tax;
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 $13.3 million in Sales and Use Tax, inclusive of the City’s base 1% sales tax and Measure DD (Quality of Life) transactions and use tax;
 $2.3 million in Franchise Fees; and
 $8.2 million in other General Fund revenues, including de velopment related fees, business license taxes, fines and forfeitures, recreation program income, interest earnings, and miscellaneous revenues.

Comparing 2045 costs and 2045 revenues yields a net General Fund deficit of approximately $5.85 million per year attributable to new residential development at build out. On a per resident basis, this equates to a levelized annual shortfall of $179.08 p er Service Unit (resident). Using the DIF based household size assumptions (2.94 persons per single family unit and 2.30 persons per multi family unit), the per home funding requirement is:
 Single Family (SFR): 2.94 × $179.08 = $526 per unit per year; and  Multi Family (MFR): 2.30 × $179.08 = $412 per unit per year.

These results indicate that new residential development is projected to fully fund the cost of all non–Police and Fire General Fund services and to fund a substantial portion but not all of the incremental Police and Fire costs associated with growth. The remaining $179.08 per resident represents the levelized annual funding requirement needed to close the General Fund gap for Police and Fire services generated by new households.

Recommendations
Given the persistent net negative impact of new residential development on the City’s General Fund, each future residential project approved will need to mitigate its impact on Police and Fire services. The recommended approach is the formation of a Community Facilities District (CFD) Services Tax or equivalent recurring funding mechanism. While one time in lieu fees collected at perm it issuance may be considered, they do not provide the sustainable revenues necessary to address ongoing operating costs for public safety.

The proposed Menifee CFD 2025-S Services Tax would establish an annual levy of:
 $526 per single family residence (SFR), and
 $412 per multi family residence (MFR).

These amounts directly reflect the fiscal shortfall identified in this study and are necessary to ensure new development pays i ts proportionate share of General Fund service costs for Police and Fire. Because the CFD is based on the DIF consistent Service Unit factors (2.94 persons per SFR and 2.30 persons per MFR), larger households pay proportionally more than smaller households, while maintaining a consistent per resident cost basis.

When benchmarked against neighboring jurisdictions, Menifee’s proposed CFD rate is competitive and near the regional average.

For FY 2025-26, SFR public safety levies in comparable Sout hern California cities range from approximately $257 in Hemet (lowest) to $1,549 in Coachella (highest). The regional average is about $605 per SFR, placing Menifee’s proposed rate of $526 below the average and well within the established range:
 Below Lake Elsinore ($1,037), San Jacinto ($699), Corona ($783), and Coachella ($1,549);  Comparable to Palm Springs ($528), Murrieta ($580), Beaumont ($643), and Wildomar ($674); and  Above Desert Hot Springs ($360), Perris ($456), Hemet ($257), San Bernardino ($408), and Santee ($382).

This comparison demonstrates that Menifee’s proposed CFD 2025-S rates are aligned with regional norms neither at the extreme high end nor unusually low. By adopting rates consistent with this analysis, the City supports fiscal sustainability without pl acing an excessive burden on new homeowners.

Recommendations to Council:

1. Proceed with CFD 2025-S formation at $526 (SFR) / $412 (MFR) with a 4% annual escalator.

2. Highlight regional comparisons during outreach to show Menifee’s rates are consistent with neighboring jurisdictions.

Item Title: 4.1
Public Safety Services Community Facilities District
Item Page Number: 11
Menifee Mayor and City Council
January 21, 2026
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General Fund Analysis 2025 Update Page | 7
City of Menifee

3. Emphasize that the CFD rate represents a levelized, policy neutral funding requirement for Police and Fire services associated with new residential growth, not a prepayment of “future” costs. Both Ge neral Fund expenditures and revenues have been trended through FY 2044-45 using consistent escalation assumptions, so the $179.08 per resident shortfall and resulting $526 (SFR) / $412 (MFR) rates reflect the real, inflation adjusted annual cost of serving new development over the build out period, ensuring that new development pays its fair share without relying on existing residents to subsidize future service demands.

Item Title: 4.1
Public Safety Services Community Facilities District
Item Page Number: 12
Menifee Mayor and City Council
January 21, 2026
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Appendices
Item Title: 4.1
Public Safety Services Community Facilities District
Item Page Number: 13
Menifee Mayor and City Council
January 21, 2026
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City of Menifee DRAFT Population as of 2025 115,316
General Fund Fiscal Impact Analysis Estimated Population Growth (thru 2045) 32,656 Summary Analysis Population at Build-out (2045) 147,972 FY 2025-262
Projected Build-Out 2045
General Fund Expenditures Service Unit 1 Per Service Unit Build-Out LOS General Fund Expenditures Operating
Budget
$ Per
Capita % of Total Escalator
Operating
Budget
$ Per
Capita % of Total
General Government 147,972 $259.65 $38,420,632 General Governmen t $8,596,692 $75 6% 160% $38,420,632 $260 18% Community Development 147,972 $130.58 $19,321,941 Community Development $19,219,992 $167 13% 160% $19,321,941 $131 9% Public Works/Engineering 147,972 $112.51 $16,649,049 Public Works/Engineering $56,129,969 $487 37% 160% $16,649,049 $113 8% Community Services 147,972 $75.01 $11,098,908 Community Services $9,609,189 $83 6% 160% $11,098,908 $75 5% Public Safety Public Safety
Police Services 147,972 $542.78 $80,316,439 Police Services $34,760,951 $301 254% $80,316,439 $543 Fire Services 147,972 $302.51 $44,763,197 Fire Services $20,257,044 $176 254% $44,763,197 $303 Animal Control Services 147,972 $17.91 $2,650,055 Animal Control Services $1,111,974 $10 254% $2,650,055 $18 Total Public Safety 147,972 $863.20 $127,729,691 Total Public Safet y $56,129,969 $48 7 37% $127,729,691 $863 60% Total General Fund Expenditures $1,440.95 $213,220,220 Total General Fund Expenditures $149,685,811 $1,298 100% 42% $213,220,220 $1,441 1 00% Total Service Units at Build-out 147,972
New Residential Service Units 32,656 Notes:
% of Build-out Service Units 22%
1Service Unit defined as estimated residential population 2FY25-26 Expenditure totals are budget totals from City Annual Operating Budget Fiscal Year 2025-26 Allocable Share of General Fund Expenditures $47,055,656 3Sales and Use Tax estimated using FY 2044-45 budget per capita rate ($406.68) applied to estimated population growth.

General Fund Revenues - New Development New Homes Per New Home Totals Property Tax Revenues
Property Tax 11,726 $942.83 $11,055,645
Property Transfer Tax 11,726 $55.78 $654,087 Property Tax in Lieu of VLF 11,726 $484.53 $5,681,613 Subtotal Property Tax Revenues $1,483.14 $17,391,345
Sales and Use Tax3 11,726 $1,132.56 $13,280,390 Franchise Fee 11,726 $197.37 $2,314,378
Misc. Revenues 11,726 $701.13 $8,221,482
Subtotal Other Revenues $2,031.06 $23,816,249
Total General Fund Revenues $3,514.21 $41,207,595
General Fund Impact Service Unit1 Per Service Unit Totals Expenditures 32,656 $1,440.95 $47,055,656
Less: Revenues 32,656 $1,261.87 $41,207,595 Shortfall 32,656 ($179.08) ($5,848,061)
CFD Tax Rates Factor Per Service Unit Tax Rate
Single Family Residential 2.94 $179.08 $526 Multi-Family Residential 2.30 $179.08 $412 Item Title: 4.1
Public Safety Services Community Facilities District
Item Page Number: 14
Menifee Mayor and City Council
January 21, 2026
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City of Menifee DRAFT
General Fund Fiscal Impact Analysis
Tax Detail
Residential Development Factor Total Population Estimation Total Cumulative SFR Units 8,886 2025 Actual 115,316 Total Cumulative Residents 2.94 26,125 Estimated Growth 32,656 Constructed SFR Assessed Values $808,355 $7,183,045,937 2045 Total Population 147,972 Total Cumulative Multi-Family Units 2,840 80% SFR Growth 26,125 Total Cumulative Residents 2.30 6,531 20% MFR Growth 6,531 Constructed MFR Assessed Values $549,801 $1,561,433,524 Total Cumulative Residents 32,656
SFR Units 8,886
Residential Property Tax Factor Total MFR Units 2,840
Constructed Assessed Values $8,744,479,461 Total Units 11,726 Ad-Valorem 1.00% $87,444,795
Residential Tax Rate 12.64%
Total Residential Ta
x $11,055,645
Residential Property Transfer Tax Factor Total
Residential Property Tax Turnover Rate 13.60%
Transfer Tax Rate 0.055%
Total Residential Property Transfer Ta
x $654,087
Property Tax in Lieu of VLF Factor Total
Assessed Valuation (FY 24-25) $19,200,000,000
Property Tax in Lieu of VLF $12,474,953
Implied VLF Swap Factor 0.065%
Total Property Tax in Lieu of VLF $5,681,613
Total Tax Revenues $17,391,345
Residential Dwelling Units
Item Title: 4.1
Public Safety Services Community Facilities District
Item Page Number: 15
Menifee Mayor and City Council
January 21, 2026
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City of Menifee DRAFT
General Fund Fiscal Impact Analysis
FY25-26 Escalated Estimates
Year Escalator
General
Government
Community
Development
Public
Works/Engineering Community Services Public Safety Police Services Fire Services Animal Control
Services
Total Public
Safety Total
2026 N/A $19,219,992 $9,609,189 $8,596,692 $5,816,301 N/A $34,760,951 $20,257,044 $1,111,974 $56,129,969 $99,372,143 2027 7.62% $20,684,175 $10,402,182 $8,963,201 $5,975,221 4.62% $36,367,313 $20,268,792 $1,199,946 $57,836,051 $103,860,830 2028 3.50% $21,408,121 $10,766,258 $9,276,913 $6,184,354 4.50% $38,003,842 $21,180,888 $1,253,944 $60,438,673 $108,074,320 2029 3.50% $22,157,405 $11,143,077 $9,601,605 $6,400,806 4.50% $39,714,015 $22,134,028 $1,310,371 $63,158,414 $112,461,307 2030 3.50% $22,932,915 $11,533,085 $9,937,661 $6,624,834 4.50% $41,501,146 $23,130,059 $1,369,338 $66,000,542 $117,029,037 2031 3.50% $23,735,567 $11,936,743 $10,285,479 $6,856,704 4.50% $43,368,697 $24,170,911 $1,430,958 $68,970,567 $121,785,059 2032 3.50% $24,566,311 $12,354,529 $10,645,471 $7,096,688 4.50% $45,320,289 $25,258,602 $1,495,351 $72,074,242 $126,737,242 2033 3.50% $25,426,132 $12,786,938 $11,018,063 $7,345,072 4.50% $47,359,702 $26,395,240 $1,562,642 $75,317,583 $131,893,788 2034 3.50% $26,316,047 $13,234,480 $11,403,695 $7,602,150 4.50% $49,490,888 $27,583,025 $1,632,961 $78,706,874 $137,263,246 2035 3.50% $27,237,109 $13,697,687 $11,802,824 $7,868,225 4.50% $51,717,978 $28,824,262 $1,706,444 $82,248,684 $142,854,528 2036 3.50% $28,190,407 $14,177,106 $12,215,923 $8,143,613 4.50% $54,045,287 $30,121,353 $1,783,234 $85,949,874 $148,676,924 2037 3.50% $29,177,072 $14,673,305 $12,643,480 $8,428,639 4.50% $56,477,325 $31,476,814 $1,863,479 $89,817,619 $154,740,115 2038 3.50% $30,198,269 $15,186,871 $13,086,002 $8,723,642 4.50% $59,018,805 $32,893,271 $1,947,336 $93,859,412 $161,054,195 2039 3.50% $31,255,209 $15,718,411 $13,544,012 $9,028,969 4.50% $61,674,651 $34,373,468 $2,034,966 $98,083,085 $167,629,686 2040 3.50% $32,349,141 $16,268,556 $14,018,053 $9,344,983 4.50% $64,450,010 $35,920,274 $2,126,540 $102,496,824 $174,477,556 2041 3.50% $33,481,361 $16,837,955 $14,508,684 $9,672,058 4.50% $67,350,261 $37,536,686 $2,222,234 $107,109,181 $181,609,239 2042 3.50% $34,653,208 $17,427,283 $15,016,488 $10,010,580 4.50% $70,381,022 $39,225,837 $2,322,234 $111,929,094 $189,036,654 2043 3.50% $35,866,071 $18,037,238 $15,542,065 $10,360,950 4.50% $73,548,168 $40,991,000 $2,426,735 $116,965,903 $196,772,228 2044 3.50% $37,121,383 $18,668,542 $16,086,038 $10,723,583 4.50% $76,857,836 $42,835,595 $2,535,938 $122,229,369 $204,828,915 2045 3.50% $38,420,632 $19,321,941 $16,649,049 $11,098,908 4.50% $80,316,439 $44,763,197 $2,650,055 $127,729,691 $213,220,220 Year AV Sales Other Property Taxes Sales Tax Franchise Fees Other Total 2026 N/A N/A N/A $37,720,846 $34,621,807 $5,875,000 $21,726,110 $99,943,763 2027 6.90% 2.10% 0.72% $40,323,086 $35,347,388 $6,160,000 $21,882,485 $103,712,959 2028 2.00% 3.00% 3.00% $41,129,548 $36,407,810 $6,344,800 $22,538,960 $106,421,117 2029 2.00% 3.00% 3.00% $41,952,139 $37,500,044 $6,535,144 $23,215,128 $109,202,455 2030 2.00% 3.00% 3.00% $42,791,181 $38,625,045 $6,731,198 $23,911,582 $112,059,007 2031 2.00% 3.00% 3.00% $43,647,005 $39,783,797 $6,933,134 $24,628,930 $114,992,866 2032 2.00% 3.00% 3.00% $44,519,945 $40,977,311 $7,141,128 $25,367,798 $118,006,182 2033 2.00% 3.00% 3.00% $45,410,344 $42,206,630 $7,355,362 $26,128,831 $121,101,168 2034 2.00% 3.00% 3.00% $46,318,551 $43,472,829 $7,576,023 $26,912,696 $124,280,099 2035 2.00% 3.00% 3.00% $47,244,922 $44,777,014 $7,803,304 $27,720,077 $127,545,317 2036 2.00% 3.00% 3.00% $48,189,820 $46,120,324 $8,037,403 $28,551,680 $130,899,227 2037 2.00% 3.00% 3.00% $49,153,617 $47,503,934 $8,278,525 $29,408,230 $134,344,305 2038 2.00% 3.00% 3.00% $50,136,689 $48,929,052 $8,526,881 $30,290,477 $137,883,098 2039 2.00% 3.00% 3.00% $51,139,423 $50,396,923 $8,782,687 $31,199,191 $141,518,224 2040 2.00% 3.00% 3.00% $52,162,211 $51,908,831 $9,046,168 $32,135,167 $145,252,377 2041 2.00% 3.00% 3.00% $53,205,456 $53,466,096 $9,317,553 $33,099,222 $149,088,326 2042 2.00% 3.00% 3.00% $54,269,565 $55,070,079 $9,597,079 $34,092,199 $153,028,921 2043 2.00% 3.00% 3.00% $55,354,956 $56,722,181 $9,884,992 $35,114,965 $157,077,093 2044 2.00% 3.00% 3.00% $56,462,055 $58,423,847 $10,181,541 $36,168,414 $161,235,857 2045 2.00% 3.00% 3.00% $57,591,296 $60,176,562 $10,486,988 $37,253,466 $165,508,312 Item Title: 4.1
Public Safety Services Community Facilities District
Item Page Number: 16
Menifee Mayor and City Council
January 21, 2026
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City of Menifee DRAFT
General Fund Fiscal Impact Analysis
Population Growth
Year Population Pop Increase Units/Yr Units/Mo Growth
2026 115,316 1,610 555 46 N/A 2027 117,035 1,719 593 49 1.49% 2028 118,754 1,719 593 49 1.47% 2029 120,473 1,719 593 49 1.45% 2030 122,192 1,719 593 49 1.43% 2031 123,911 1,719 593 49 1.41% 2032 125,630 1,719 593 49 1.39% 2033 127,349 1,719 593 49 1.37% 2034 129,068 1,719 593 49 1.35% 2035 130,787 1,719 593 49 1.33% 2036 132,506 1,719 593 49 1.31% 2037 134,225 1,719 593 49 1.30% 2038 135,944 1,719 593 49 1.28% 2039 137,663 1,719 593 49 1.26% 2040 139,382 1,719 593 49 1.25% 2041 141,101 1,719 593 49 1.23% 2042 142,820 1,719 593 49 1.22% 2043 144,539 1,719 593 49 1.20% 2044 146,258 1,719 593 49 1.19% 2045 147,972 1,714 591 49 1.17% Item Title: 4.1
Public Safety Services Community Facilities District
Item Page Number: 17
Menifee Mayor and City Council
January 21, 2026
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City of Menifee DRAFT
Safety Tax Comparisons
FY25-26 Rates
Agency District Service
Single Family
Residential
Multi-Family
Residential
Apartments/
Mobile Home
Affordable
Housing Unit
Residential
Desert Hot Springs PTAX 2(1) Public Safety $360.21 $201.35 $115.26 Palm Springs CFD 2005-1(2) Public Safety $528.00 $445.03 CFD 2005-1-Police(2) Police Services $961.43 $961.43
CFD 2005-1-Police(2) Fire Services $587.30 $587.30
CFD 2005-1 Total Public Safety $1,548.73 $1,548.73
Indio CFD 2004-1(3) Public Safety $534.93
CFD 2001-3(3) Public Safety $394.22 $78.84
CFD 1-S(3) Public Safety $455.98 $227.99
Hemet CFD 2005-1(3) Public Safety $257.05
San Jacinto CFD 2003-1(4) Public Safety $699.63
CFD 2003-1(3) Public Safety $463.79 $231.90
CFD 2007-1(3) Public Safety $594.15 $297.08
CFD 2015-1(5) Public Safety $1,037.15 $634.40
CFD 2025-2(5) Public Safety $1,037.15 $634.40 $150.00
CFD 2013-1(7) Public Safety $430.09 $304.94
CFD 2022-1(8) Public Safety $494.22 $350.55
CFD 2025-S(8) Public Safety $674.07 $414.24
Corona CFD 2016-3(7) Public Safety $783.14 $543.34
CFD 2016-2(7) Public Safety $643.19
CFD 2016-3(7) Public Safety $643.19
CFD 2016-4(7) Public Safety $643.19
CFD 2018-1(7) Public Safety $643.19
CFD 2019-1(7) Public Safety $643.19
CFD 2021-1(7) Public Safety $643.19 Note:

San Bernardino CFD 2018-1(6) Police Services $408.41 $379.77 (1) Escalates at lesser of CPI or 3% per year.

San Marcos CFD 98-01(3) Public Safety $390.20
(2) Escalates at CPI annually.

Santee CFD 2017-2(9) Public Safety $382.21
(3) Escalates at 2% per year.

CFD 2025-1(10) Public Safety $580.00 $468.00
(4) Escalates at CPI with Min. 2% - Max. 6% per year.

CFD 2025-S(10) Public Safety $580.00 $468.00 $150.00
(5) Escalates at greater of CPI or 4% per year.

Menifee Proposed CFD 2025-S Public Safety $526.50 $411.89 (6) Escalates at 2% per year, beginning FY 24-25.
(7) Escalates at greater of CPI or 5% per year.

High $1,548.73 $1,548.73
(8) Escalates at greater of CPI or 5% per year, not to exceed 6%.

Low $257.05 $78.84
(9) Escalates at greater of CPI or 3.5% per year.

Average $604.06 $448.92
(10) Escalates at 4% per year.

Murrieta
Classification
Coachella
Perris
Lake Elsinore
Wildomar
Beaumont
Item Title: 4.1
Public Safety Services Community Facilities District
Item Page Number: 18
Menifee Mayor and City Council
January 21, 2026
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Item Title: 4.1
Public Safety Services Community Facilities District
Item Page Number: 19
Menifee Mayor and City Council
January 21, 2026
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Menifee City CouncilJanuary 21, 2026

Menifee City Council
January 21, 2026