CITY OF MENIFEE
SUBJECT: Community Benefit Agreement (CBA) for Double Butte Project
MEETING DATE: March 16, 2026
TO: Finance Committee
PREPARED BY: Margarita Cornejo, Director of Strategic Programs and Initiatives
REVIEWED BY: Travis Hickey, Chief Financial Officer
APPROVED BY: Armando G. Villa, City Manager
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RECOMMENDED ACTION
1. Review proposed Community Benefit Agreement (CBA) for Double Butte Project and recommend submittal to the City Council for approval.
DISCUSSION
As a fast-growing community with many needs, the City of Menifee’s financial management focus is on long-term financial stability that fosters a thriving economy, for its residents and businesses, as well as continuously looks for opportunities to diversify revenues. This strengthens the City’s financial position to incorporate a multi-faceted revenue approach to support municipal services.
One area staff regularly examines is analyzing development activity’s impact on city services and revenue support.
Most recently, the City has been reviewing the proposed Double Butte Project, which is further detailed in the next section. Based on the proposed project and alternative uses for the site, staff has negotiated a proposed Community Benefit Agreement (CBA) that will provide the City with:
One-time $4 million community benefit donation payment ($546,000 of the payment will go towards the future Roads & Bridge Benefit District (RBBD)); and Purchase of Equipment/fixtures associated with the construction of the project will source the City as the point of sale location, directing associated sales tax/Quality of Life revenue to the City.
Project Description
The Double Butte Project (Plot Plan No. PLN 22-0282) proposes the construction and operation of a 500-Megawatt (MW) utility-scale (lithium-ion, flow or other technology) battery energy storage
City of Menifee Staff Report
Community Benefit Agreement (CBA) for Double Butte Project March 16, 2026
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system on 27.3 net acres. This proposed facility will interconnect with the nearby Valley Substation that is owned and operated by Southern California Edison (SCE). The primary electrical equipment includes battery modules and power conversion equipment. The battery modules will be racked (akin to server racks) within hundreds of modular, external access-only containers that will connect to associated electrical equipment. Each container would be eight to ten feet tall and would be located within a metal framed outdoor-rated storage container with insulation and robust thermal management systems.
The project would include a seven-foot wall along the project boundary. The project would include a permanent parking area for operations and maintenance workers (six parking stalls). According to the Applicant’s project narrative, 12 permanent onsite workers are anticipated.
The interconnection to the SCE Valley Substation will include an overhead gen-tie line. The gen- tie line alignment would begin at the proposed onsite substation and extend approximately 1,500 feet to the east crossing over Case Road and will connect to the existing SCE Valley Substation.
Conditional Use Permit No. PLN 22-0281 proposes to allow for the utility-scale battery energy storage system use.
Tentative Parcel Map No. PLN 22-0283 proposes to consolidate seven parcels into one industrial parcel. The project site is approximately 27.3 net acres.
Location
The project is located on an approximately 27.3-net acre site located north of McLaughlin Road and a drainage channel, south of Matthews Road, east of San Jacinto Road, and west of Palomar Road (APN 331-190-014, -010, -017, -011, -047, -056, and -060). The current proposal includes two points of access off Palomar Road and an access off San Jacinto Road.
Proposed Community Benefit Agreement (CBA)
A fiscal study was prepared to review the project’s fiscal impacts where the study analyzed the project’s fiscal impact and compared the proposed BESS facility to alternative uses on the site, including a general warehouse ("Scenario 2") or a warehouse with fulfillment ("Scenario 3"). The proposed BESS would result in a net positive fiscal impact compared to a general warehouse use. There are significant sales and property tax benefits associated with the BESS that exceed those of a general warehouse use. However, when compared to a warehouse with fulfillment, there is a large gap in potential annual revenue to the City.
Staff has negotiated the Benefit Fee to be approximately two times the average net annual impact of the Scenario 3 alternative. This equates to a one-time payment of $4,000,000. Within ten days of obtaining all building permits for the Project, Developer will deposit 50% of the donation into the City’s General Fund. Within 90 days of starting construction, the remaining 50% will be deposited. All deposits are non-refundable.
Future RBBD Contribution
The Double Butte Project is located within the proposed boundaries of a future city Road and Bridge Benefit District (RBBD) which will collect funding to support critical infrastructure, specifically road and bridge improvements, within the designated benefit area. They are designed City of Menifee Staff Report
Community Benefit Agreement (CBA) for Double Butte Project March 16, 2026
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to mitigate traffic and circulation needs arising from new development by assessing fees on developers. A portion of the one-time $4 million payment, specifically $546,000, will be reserved and directed towards the future RBBD.
Sales Tax (Bradley Burns & Quality of Life) for Purchase of Equipment Pursuant to Regulation 1808 (Title 18, Division 2, Chapter 4, Article 19) of the California state law and Audit Manual, Chapter 12, Construction Contractors, Section 1207.25 from the California Department of Tax and Fee Administration, for contracts or subcontracts for $5,000,000 or more, the contractor may elect to obtain a sub-permit for the jobsite. Tax would then be sourced to the specific jurisdiction of the specific jobsite. The size of the Double Butte Project will exceed the $5 million construction threshold, and the proposed CBA incorporates a corresponding clause (Section 3: Purchase of Equipment), where the developer agrees that equipment and fixtures associated to the construction of the project will be designate Menifee as the point of sale location, thereby providing the City will associated sales tax (Bradley Burns and Quality of Life).
The requested action of the Finance Committee is to review the proposed Double Butte Project CBA and provide a recommendation on whether to move forward with presenting the agreement to the Planning Commission, and subsequently to the City Council.
FISCAL IMPACT
Acceptance of the proposed CBA agreement will result in one-time general fund revenues of $4 million, of which $546,000 will be directed towards the future RBBD district. Additionally, as the project moves to construction, sales tax (regular Bradley Burns and Quality of Life) associated with construction activity (fixtures and equipment) will provide the City with one-time sales tax revenues to support city needs.
ATTACHMENTS
1. Project Site Map
2. Proposed Community Benefit Agreement (CBA) with Double Butte Project.