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.
City of Menifee Staff Report
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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 City of Menifee Staff Report
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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 City of Menifee Staff Report
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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