CITY OF MENIFEE
SUBJECT: Declaration of Exempt Surplus Land and Agreement with Eastern Municipal Water District for the Exchange of Real Property and Joint Escrow Instructions to support the Ethanac Road/Highway 74 Realignment Project
MEETING DATE: March 18, 2026
TO: Mayor and City Council
PREPARED BY: Kristen Jensen, Financial Analyst
REVIEWED BY: Nick Fidler, Public Works Director
APPROVED BY: Armando G. Villa, City Manager
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RECOMMENDED ACTION
1. Adopt a resolution declaring a City-owned parcel located at 27930 Watson Road (Assessor Parcel No. 329-050-049) as “exempt surplus land” pursuant to the Surplus Land Act (Gov.
Code, §§ 54220 et seq.); and
2. Approve and authorize the City Manager to execute an Agreement for Exchange of Real Property and Joint Escrow Instructions (Agreement) with Eastern Municipal Water District (EMWD) for the transfer of one City-owned parcel located at 27930 Watson Road (Assessor Parcel No. 329-050-049) and $197,500 for redesign costs to EMWD in exchange for one EMWD-owned parcel located at 27995 Ethanac Road (Assessor Parcel No. 331-150-027) to be transferred to the City to support the City’s Ethanac Road/Highway 74 Realignment, Capital Improvement Program Project No. 25-13, subject to completion of the Surplus Land Act process described in the resolution declaring the City-owned parcel as “exempt surplus land”; and
3. Authorize the City Manager to execute any additional documents required for the exchange of real properties contemplated in the Agreement, subject to completion of the Surplus Land Act process described in the resolution declaring the City-owned parcel as “exempt surplus land”; and
4. Adopt two budget amendment resolutions appropriating $100,000 in corresponding revenue within the Trust Fund 8350 and expenditures within the Capital Improvement Program Projects Fund 4320 to the Project account.
City of Menifee Staff Report
Agreement for Exchange of Real Property CIP25-13
March 18, 2026
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DISCUSSION
The Ethanac Road/Highway 74 Realignment, Capital Improvement Program (CIP) Project No. 25-13, (Project) would construct a grade separation to traverse the existing railroad tracks and realign State Highway 74, Ethanac Road, and Antelope Road. The Project would improve multi- modal transportation by adding sidewalks and dedicated bicycle lanes within a realigned corridor that bypasses the existing railroad barrier. It would also incorporate drainage, street lighting, and traffic signal enhancements throughout the Project.
Through regular CIP coordination meetings with EMWD the City was notified of EMWD’s plans to construct a domestic water booster station known as the Matthews and Romoland Booster Facility (Matthews and Romoland Project) to be located at 27995 Ethanac Road, APN 331-150-027 (EMWD Parcel); a parcel of EMWD-owned land within the City Project area. The timing of the Matthews and Romoland Project would result in it being constructed ahead of the City’s Project, creating a significant conflict with the City’s proposed grade separation Project.
Staff coordinated closely with EMWD to identify an alternate location for EMWD’s future Matthews and Romoland Project which would better support and benefit both agencies in moving forward with their respective projects. Discussions with EMWD included the potential for the City to purchase a parcel outside of the Project area that could serve as the future site for EMWD’s Matthews and Romoland Project. Once an alternate parcel was identified and purchased by the City, the City could then transfer ownership of that parcel to EMWD for use as the future site of their Matthews and Romoland Project. EMWD would, in turn, transfer ownership of the EMWD Parcel to the City to support the realignment Project.
Prior Project Activities
On February 19, 2025, the City Council authorized the purchase of real property located at 27390 Watson Road, identified as Assessor Parcel Numbers (APN) 329-050-049 (City Parcel). The City and EMWD are now prepared to enter into the Agreement by which ownership of the City Parcel would be transferred to EMWD and ownership of the EMWD Parcel would be transferred to the City. Under the Agreement, the City would be responsible to pay $197,500 (approximately 50%) of additional redesign costs incurred by EMWD resulting from relocation of the Matthews and Romoland Project to the City Parcel.
On August 20, 2025, the City Council authorized a Professional Services Agreement with Parsons Transportation Group, Inc., to provide Architectural and Engineering Services, including conducting an initial study (Study) for the Project layout options. The Project would ultimately realign California State Route Highway 74 (Hwy 74) to connect with Ethanac Road at the existing Riverside County Transportation Commission (RCTC) Railroad corridor that parallels Hwy 74 to the west of Antelope Road and Matthews Road to the East of Antelope Road. The realignment of Hwy 74 through Ethanac Road is part of a larger regional transportation facility project referred to as the “Ethanac Expressway”, which would ultimately connect Hwy 74 to Interstate 15 through the cities of Perris and Lake Elsinore, as well as unincorporated portions of Riverside County.
The Study is focusing on the realignment/connection of Ethanac Road and Hwy 74 in the vicinity of the existing railroad tracks from Trumble Road to Palomar Road. The Study is evaluating the existing challenges associated with the ultimate configuration of a grade separation and exploring City of Menifee Staff Report
Agreement for Exchange of Real Property CIP25-13
March 18, 2026
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environmental concerns, development growth, existing and future traffic volumes, connectivity and mobility opportunities, utility conflicts, right-of-way, drainage, design alternatives and provide estimated costs associated with the project. Based on the potential configurations of the proposed grade separation, the Project would require the EMWD Parcel, located at 27995 Ethanac Road, to facilitate any of the proposed alternatives.
Surplus Land Act Requirements
The Surplus Land Act (Gov. Code §§ 54220 et seq., the "Act") requires that before a local agency takes final action to “dispose of” land, the local agency must declare the property to be either “surplus land” or “exempt surplus land.” The Act requires local agencies to take further actions depending on whether the property is declared “surplus land” or “exempt surplus land.” The Act defines “exempt surplus land” to include, among other things, (1) property that an agency is exchanging for another property necessary for its use, and (2) property that an agency is exchanging with another agency for the receiving agency’s use.
Since disposition of the City Parcel pursuant to the Agreement constitutes “exempt surplus land,” the Act requires the City Council to take the following actions prior to disposition of the City Parcel:
1. Adopt a resolution declaring the City Parcel as exempt surplus land; and
2. Provide a notice of exemption determination to the California Department of Housing and Community Development; and
3. Provide the California Department of Housing and Community Development with at least 30 days to review the notice of exemption prior to executing the Agreement or taking any other action related thereto.
STRATEGIC PLAN OBJECTIVE
Connectivity and Mobility
FISCAL IMPACT
The total fiscal impact of the proposed Agreement is in the total amount not-to-exceed $200,000, which includes $197,500 for payment to EMWD for project redesign and approximately $2,500 for escrow/closing costs.
A portion of the funding for the Agreement is available within the Trust Fund which holds a balance of $725,000 collected under the Nova Power Bank Project Community Benefit Agreement (CBA) and was established for a future Road and Bridge Benefit District (RBBD) in the Project area. The proposed Agreement in support of the City’s Project, is an eligible expense under the future RBBD.
Accordingly, $100,000 from the $725,000 currently held in trust would be recognized as revenue in the Trust Fund (8350-438850). The funding would then be transferred out of the Trust Fund and transferred into the Capital Projects Fund where the corresponding expenditures would be appropriated (4320-PWD-CIPS-900-04320-690050) for the Project. Per Resolution No. 25-1593 the Chief Financial Officer and/or designee is hereby authorized to process corresponding transfers (transfer appropriations) of all approved CIP Program expenditure appropriations, City of Menifee Staff Report
Agreement for Exchange of Real Property CIP25-13
March 18, 2026
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including FY2025/26 and 2026/27, and prior years’ carryover appropriations to Capital Projects Fund (Fund 4320) for purposes of consolidating CIP program expenditures under one fund. A summary of the recommended transfers is summarized in Table 1 below.
TABLE 1 – BUDGET APPROPRIATION
Fund Account Description Account Revenue
Appropriation
Expenditure
Appropriation
Trust Fund Revenue - NOVA CBA fees 438850 $100,000
Trust Fund Transfer Out 904320 $100,000
Capital Projects Transfer In 808350 $100,000
Capital Projects Expenditures - CIP
Transportation
690050 $100,000
Additional funding necessary to support the full fiscal impact of the Agreement is available in the approved Fiscal Year 2025/2026 Project budget from the Transportation Uniform Mitigation Fee (TUMF) Fund (4320-PWD-CIPS-900-02310-652800). If approved, all funding for the Agreement would be available as shown in Table 2 on the following page.
TABLE 2 – PROJECT BUDGET
Fund Account Description Available
Budget
Anticipated
Expenditure
Capital Projects CIP25-13.4320.PRE.CAE $100,000 $100,000 TUMF CIP25-13.2310.PRE.CAE $100,249 $100,000
ATTACHMENTS
1. Resolution (Surplus Land – APN 329-050-049)
2. Resolution Exhibit A - City Property Location Map
3. Resolution Exhibit B - EMWD Property Location Map
4. Agreement
5. Budget Amendment Resolution - Trust Fund
6. Budget Amendment Resolution – Capital Projects