4929-4925-4992v3/200299-0000
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0 CITY OF MENIFEE
City Council Policy
Policy Number: CC-20
Approving Authority:
City Council
Effective Date: 9/6/11
Last Modified: 9/3/25
Subject
Special Assessment and
Community Facilities District
Goals and Policies
Page | 1
1. PURPOSE
Pursuant to Section 53312.7 of the California Government Code, the City Council of the City of Menifee (hereafter the “City Council”) hereby states its goals and policies concerning the use of Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (hereafter the “Mello-Roos Act”) in providing adequate public capital infrastructure, facilities and equipment for the residents of the City of Menifee (the “City”). The following goals and policies shall apply to all community facilities districts (each a “Community Facilities District” or “CFD”) and to all assessment districts (each an “Assessment District” and together with any Community Facilities District, the “Districts” or individually, a “District”) under the improvement acts of 1911, 1913, 1915 and 1972 (the “Improvement Acts”) hereafter formed by the City. Any policy or goal stated herein may be supplemented or amended or deviated from upon a determination by the City Council that such supplement, amendment or deviation is necessary or desirable, and any policy or goal stated herein shall be deemed amended or supplemented in the event, and as of the date, if ever, that such amendment or supplement is required to ensure compliance with the Act or any other laws of the State of California or federal laws of the United States of America.
2. POLICY
The City has developed the following Policies and Procedures on debt financing as guidelines to assist concerned parties in following the City’s approach to special assessment and community facilities district debt financing. It is the City’s goal to support projects that address a public need and provide a public benefit. Proposed projects requesting special assessment or community facility district debt financing will be evaluated to determine if such financing is financially viable, and in the best interest of the City, and current and future City and project residents. These Policies and Procedures are designed to comply with Section 53312.7 of the Government Code.
The City of Menifee will consider developer or property owner initiated applications requesting the formation of community facilities or special assessment districts and the issuance of bonds to finance eligible public facilities and/or public services necessary to serve newly developing residential projects, and may consider commercial and/or industrial projects. The following criteria will be applied to all districts by the City staff with final determination and findings to be made by the City Council:
A. When tax-exempt financing of project public facilities will result in a significant public benefit.
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Special Assessment and Community Facilities District Goals and Policies B. When a Specific Plan has been adopted on the property or the City has negotiated and executed a Development Agreement addressing project implementation either of which includes requirements to form a District to finance public improvements or services.
C. Each time a District is formed for the benefit of a development project where the maintenance requirements will exceed normal City standards or where such development requires the provision of additional services, the City will require the creation of an alternative financing mechanism to pay for such maintenance requirement or such additional services, including but not limited to annexation to a City maintenance District.
D. Existing neighborhoods may apply to the City for the use of a District to finance local or neighborhood serving facilities. The City will apply applicable provisions of these policies to those financing programs for existing neighborhoods.
E. The City shall make the determination as to whether a proposed District shall proceed under the provisions of the Improvement Acts or the Mello-Roos Act. The City may confer with consultants and the applicant to learn of any unique district requirements such as facilities serving the regional area or long-term development phasing prior to making any final determination.
F. All City and consultant costs incurred in the evaluation of new development district applications and the establishment of districts will be paid by the applicant(s) by advance deposit increments. The City shall not incur any non-reimbursable expense for processing assessment or community facilities districts. Expenses not chargeable to the district shall be borne by the applicant.
G. The City shall not offer CFD financing for projects that consist of condo or single family homes where 10% or more of the proposed units are intended for or used as rental property unless the developer receives express advance written approval from the City. The foregoing restriction shall not apply to multifamily residential or commercial property.
H. The city shall make a determination on whether to offer CFD financing for projects with fewer than 100 units on a case-by-case basis. An additional security in the form of a secondary reserve may be required for these developments at the city’s discretion.
I. With the goal of reducing property owners’ debt burden whenever possible, the Finance Department will diligently monitor the economic environment and take advantage of refunding opportunities when doing so would lead to a reduction in the special assessment paid by property owners.
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Policy CC-20
Special Assessment and Community Facilities District Goals and Policies
3. FINANCE COMMITTEE
All proposed Districts shall be reviewed by the City Finance staff for adherence to policy prior to being presented to the Finance Committee and City Council. Any variances from policy as well as any other material information will be noted by the Finance staff and reported to the City Council with recommendation for action.
4. RESOURCE CONSULTANTS
Bond Counsel Financial
Advisor Assessment
Engineer Special Tax
Consultant Appraiser
Economist/Market Absorption Specialist
Bond Underwriter
Disclosure Counsel
Fiscal Agent
The City shall have the sole discretion as to selection of consultants and determination of fees and expenses of all consultants necessary for the formation of a Special District and the issuance of bonds. Prior consent of the Proponent(s) shall not be required in the determination by the City of the consulting and financing team. Costs of the Proponent(s) and any costs of consultants working on behalf of the Proponents(s) are not eligible for reimbursement from a future issuance of bonds.
No firm may serve as both design engineer and engineer of work and assessment engineer or special tax consultant on the same project, pursuant to Section 87100 of the Government Code.
5. PROCEDURE
A. ELIGIBLE PUBLIC FACILITIES; PRIORITY
Priority for Community Facilities District financing shall be given to public facilities directly benefiting the City as well as those improvements identified by the City as the most necessary to serve the specific needs of the portion of the City in which the Community Facilities District will be located. The financing of public facilities to be owned and operated by public agencies other than the City shall be considered on a case-by-case basis. The list of eligible public facilities include but are not limited to the following and may include facilities included as part of the City’s or another public agency's development impact fee program to the extent permitted by the Mello-Roos Act or the Improvement Acts:
Streets, highways and bridges Flood control facilities
Street lighting Libraries
Traffic signals and safety lighting Public utilities
Parks Police and fire protection facilities
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Special Assessment and Community Facilities District Goals and Policies Governmental facilities Recreation facilities, including golf courses
Sanitary sewer facilities
Storm drain facilities
Biological mitigation measures
involving land acquisition, dedication
and revegetation
Potable and reclaimed water facilities Landscaping
In general, streets, highways and bridges; street lighting; traffic signals and safety lighting; parks; and storm drain facilities will have priority over the others, however, the City will evaluate the needs of the project area and has final determination as to any facility’s eligibility for financing, as well as the prioritization of facilities to be included within a financing district. Use of bond proceeds for grading and right-of- way acquisition will be reviewed by the City and bond counsel on a case-by-case basis.
It is secondarily the policy of the City to assist in the provision of other public facilities when to do so is necessary, in the sole discretion of the City Council acting as the legislative body of the affected Community Facilities District, to serve taxpayers residing within or owning property within the City boundaries.
Additionally, the City may finance any one or more of the types of services specified in Section 53313 of the Act. Priority for Community Facilities District financing shall be given to services provided by or directly benefiting the City and, if multiple services are to be financed, with no service having priority over another service; provided, however, the City has final determination as to any service’s eligibility for financing. The City shall not finance services on behalf of other public agencies.
It is acknowledged the Mello-Roos Act permits the financing of fee obligations imposed by governmental agencies, the proceeds of which fees are to be used to fund public capital improvements. The City will consider applications to finance fee obligations on a case-by-case basis. The City may condition the financing of facilities included as part of the City’s or another public agency’s development impact fee programs on the applicant’s agreement to participate in the financing of City services for public safety. The City will condition the financing of city facilities through a facilities CFD or through participation in a JCFA agreement on the applicant’s agreement to provide a funding mechanism to cover on-going public safety costs associated by the respective residential project, including participation in a public safety CFD.
When it is determined by the City that fees are to be financed, the City may collect a premium of the total fees to be financed. Such premium shall not exceed twenty percent (20%) of the total fees to be financed. The City may use the premium to finance public facilities and improvements directly benefiting and identified by the City as the most necessary to serve the specific needs of the portion of the City in which the Community Facilities District will be located.
B. CREDIT QUALITY – VALUE-TO-LIEN RATIO
Credit quality will be determined in part by the District (or improvement area) City of Menifee
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Special Assessment and Community Facilities District Goals and Policies property value-to-lien ratio which will be at a minimum 4:1, including the value of the financed public improvements to be installed, and considering all prior or City of Menifee
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Special Assessment and Community Facilities District Goals and Policies pending special taxes or improvement liens and debt. Value-to-lien ratios of individual parcels will be reviewed to analyze credit quality. Acceptance by the City of the value-to-lien ratio will be determined by an appraisal with recommendations from bond counsel, any financial advisor, and the underwriter with consideration of the project and diversification of land ownership.
The appraisal shall be coordinated by, under the direction of, and addressed to the City. The applicant shall pay all costs associated with the preparation of the appraisal report through an advance deposit of funds with the City. The appraiser should be credentialed by the State of California Office of Real Estate Appraisers and be a Member of the Appraisal Institute (MAI). The appraiser should have demonstrated prior experience in appraising property subject to special assessments or taxes in conjunction with a bond offering.
The appraisal shall be conducted in accordance with criteria, standards and assumptions in accordance with the California Debt and Investment Advisory Commission Appraisal Standards for Land-Secured Financings, and based upon the recommendations from the City’s financing team. In every case, the appraisal shall reflect national Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and employ all, or a combination of: discounted cash flow, bulk sale comparable, raw land value as is, and project build-out values.
Upon receiving an appraisal, determining the value-to-lien ratio, and evaluating the project and current underwriting criteria, the City will require letters of credit or other security to secure payment of the special taxes to be levied annually on properties within the District. Letters of credit or other security may also be required for individual parcels of specific property ownership within a District.
For projects with a significant amount of development or the refunding of outstanding special assessment and community facilities district debt, the assessed value of property or other mass appraisal techniques may be options for the establishment of credit quality.
Depending on the circumstances of the development, a market absorption study may be required. City will retain the consultant to prepare a report to verify market absorption assumptions and projected base sales prices of the properties subject to the special taxes or assessments in the District. The market absorption study shall be completed prior to completion of the appraisal, and the appraisal shall take into consideration the conclusions of the market absorption study. The City may require a mortgage study to analyze existing types of mortgages in the District to provide additional information to potential bond investors.
C. SECURITY
The City may, at its discretion, require additional credit enhancement to be provided by one or more developers and/or landowners to increase the credit quality of any CFD bond issue and to reduce the potential for a bond default. Such credit enhancements may be required in situations where there is an insufficient value-to-lien ratio, where a substantial amount of the property within a CFD is City of Menifee
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Special Assessment and Community Facilities District Goals and Policies undeveloped, where property ownership is concentrated, where tax delinquencies are present in parcels within the CFD, and in any other situation as required by the City. The form of any credit enhancement is subject to approval by the City, and the City shall impose specific requirements with respect to such credit enhancement; however, such credit enhancement will generally be in the form of an irrevocable standby letter-of-credit or a cash deposit, will be required to be in an amount not less than 200% of the share debt service or a 2-year security payment of the special tax requirement allocable to the applicable developer- owned parcels for which such credit enhancement is required, and will be required to remain in effect until the share of debt service allocable to such developer- owned parcels is less than 20% of the annual debt service on all outstanding bonds for such CFD. The Chief Financial Officer or the City Manager have discretion to waive this requirement in the face of extenuating circumstances.
6. EQUITY OF SPECIAL TAX FORMULAS AND MAXIMUM SPECIAL TAXES Special tax formulas for Community Facilities Districts shall provide for minimum special tax levels that satisfy the following expenses of all Community Facilities Districts: (a) at least 110 percent debt service coverage for all Community Facilities District bonded indebtedness, (b) the reasonable and necessary administrative expenses of the Community Facilities District, and (c) amounts equal to the differences between expected earnings on any escrow fund and the interest payments due on bonds of the Community Facilities District. Additionally, the special tax formula may provide for the following:
(a) any amounts required to establish or replenish any reserve fund established in association with the indebtedness of the Community Facilities District, (b) the accumulation of funds reasonably required for future debt service, (c) amounts equal to projected delinquencies of special tax payments, (d) the costs of remarketing, credit enhancement and liquidity facility fees, (e) the cost of acquisition, construction, furnishing or equipping of facilities, (f) lease payments for existing or future facilities, (g) costs associated with the release of funds from an escrow account, and (h) any other costs or payments permitted by law, including, but not limited to, financing any one or more of the types of services specified in Section 53313 of the Mello-Roos Act.
The special tax formula shall be reasonable and equitable in allocating public facilities’ costs to parcels within the Community Facilities District. Unless the City determines that special circumstances warrant a change, the special tax formula originally accepted for the Community Facilities District shall remain the same in order to ensure equity as originally envisioned at the time of Community Facilities District formation. At the time of formation of the Community Facilities District, exemptions from the special tax may be given to parcels that are publicly owned, are held by a property owner’s association, are used for a public purpose such as open space or wetlands, are affected by public utility easements making impractical their utilization for other than the purposes set forth in the easements, or have insufficient value to support bonded indebtedness.
It is the goal of the City that maximum special taxes or assessments on residential owner- occupied property, when taken together with ad valorem taxes, any other special taxes levied pursuant to the Act and assessments applicable to such property, do not exceed in any year two percent (2%) of the greater of the assessed value or appraised value of such property. Nevertheless, special taxes on residential owner-occupied property, when taken City of Menifee
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Special Assessment and Community Facilities District Goals and Policies together with ad valorem taxes, any other special taxes levied pursuant to the Act and assessments applicable to such property, may exceed in any year two percent (2%) of the greater of the assessed value or appraised value of such property if the City determines at the time of formation of a Community Facilities District that over the term of the bonds, the special taxes, ad valorem taxes and assessments are expected to average two percent (2%) or less per year of the greater of the assessed value or appraised value of such property. It is further the policy of the City to comply with the provisions of Section 53321 of the Act with respect to the escalation of maximum taxes.
Special taxes will only be levied on an entire County Assessor’s parcel, and any allocation of special tax liability of a County Assessor’s parcel to leasehold or possessory interest in the fee ownership of such County Assessor’s parcel shall be the responsibility of the fee owner of such parcel (except where the City is the fee owner of the parcel and has, subsequent to the date of adoption of these goals and policies, leased the parcel pursuant to a lease with a term of at least 5 years, in which case the lessee shall have the responsibility for the special tax liability) and the City shall have no responsibility therefor and has no interest therein. Failure to pay or cause to be paid any special taxes in full when due shall subject the entire parcel to foreclosure in accordance with the Act.
The City shall have a report prepared that: (a) recommends special tax rates and methods of allocation among parcels in the proposed Community Facilities District, and (b) evaluates the special tax proposed to determine its ability to adequately fund identified public facilities, City administrative costs, services (if applicable) and other related expenditures.
A. The City shall retain a special tax consultant to prepare a Rate and Method of Apportionment and the report described above that:
B. Recommends a special tax formula for the proposed Community Facilities District.
C. Evaluates the special tax proposed to determine its ability to adequately fund identified public facilities and proposed services, City administrative costs, services (if applicable) and other related expenditures. The Rate and Method of Apportionment of special taxes shall be designed to ensure sufficient revenues are produced in case of final development at lower densities than anticipated.
D. The special tax consultant shall also address the resulting aggregate tax burden of all proposed special taxes plus existing special taxes, ad valorem taxes and assessments on the properties within the Community Facilities District.
7. TERMS AND CONDITIONS OF BONDS
The City shall establish all terms and conditions of the bonds. The City will control, manage and invest all District-issued bond proceeds. Each bond issue shall be structured to adequately protect bond owners and to not adversely impact the bonding capacity or credit rating of the City. Unless otherwise authorized by the City, the following shall serve as bond requirements:
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Special Assessment and Community Facilities District Goals and Policies A. A reserve fund equal to the lesser of (i.) 10% of the issue price of the bonds, (ii.) maximum annual debt service or (iii.) 125% of average annual debt service, or as otherwise deemed appropriate by the City.
B. For Districts containing residential property, the timing of bond sales(s) and/or Rate and Method of Special Tax Apportionment shall be such that special taxes or special assessments are levied no later than the first fiscal year following the occupancy of residential units. For all Districts, interest shall not be funded (capitalized) beyond what is permitted in the Mello-Roos Act or the Improvement Acts.
C. The repayment of principal shall begin on the earliest principal payment date for which sufficient special tax revenues can be made available.
D. Beginning with the commencement of the repayment of principal, annual debt service shall be level. The City may consider an increasing annual debt service, but such increases shall not exceed 2% per year for the term of the bonds.
E. The maximum special tax shall be established to assure that the annual revenue produced by levy of the maximum special tax shall be equal to at least 110% of the maximum annual debt service plus administration. Under no circumstances shall the coverage be used to support the issuance of Bonds.
F. Prior to the issuance of the bonds, the City shall authorize its bond counsel to commence and process to final judgment an action establishing the validity of the proceedings, special tax and issuance of bonds, unless advised to the contrary by such bond counsel.
G. In instances where multiple series of bonds are to be issued, the first series shall include public facilities of highest priority acceptable to the City.
H. All statements and materials related to the sale of special assessment or Community Facilities District bonds shall emphasize and state that neither the good faith, nor the taxing power of the City is pledged to the security or repayment of the bonds. The sole sources of revenues to secure bond owners are special taxes, annual assessments or foreclosure proceeds.
8. AGREEMENTS
Agreements will be prepared incidental to District formation proceedings in a form satisfactory to the City and consistent with these policies. These agreements may include, but not be limited to:
A. Deposit and Reimbursement Agreement.
B. Funding and Acquisition Agreement.
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Special Assessment and Community Facilities District Goals and Policies C. Joint Community Facilities Agreements with any other public agency entitled to receive any portion of the bond proceeds or entitled to own and operate any of the public facilities financed by bond proceeds.
Prior to the formation of a District, all of the agreements specified shall be duly approved and executed by the relevant parties; provided that any Joint Community Facilities Agreement may be approved and executed prior to the approval of the issuance of bonds.
Prior to execution of any agreements, such agreements shall be reviewed and approved by bond counsel and the City Attorney and approved by the City Council.
9. USE OF CONSULTANTS
The City shall have the sole discretion as to selection of consultants and determination of fees and expenses of all consultants necessary for the formation of the District and the issuance of bonds, including the underwriter(s), bond counsel, financial advisor, assessment engineer, appraiser, trustee, paying agent, market absorption consultant, and the special tax consultant after reasonable consultation with the applicant. Prior consent of the applicant shall not be required in the determination by the City of the consulting and financing team.
The City shall also be responsible for determining the structure of the bonds to be issued, including the method of sale (negotiated or competitive), the need for bond ratings, the need for escrow provisions, investment of bond proceeds, and all other terms and conditions incidental to structuring and closing a bond issuance.
Consultants of the City for the District shall comply with the requirements of the Fair Political Practices Commission and of the California Government Code.
10. ACQUISITION PROVISIONS
The City shall have final determination as to whether it will allow the financing of public facilities through acquisition or if the improvements will be constructed by the City.
In the event the acquisition provisions of the Municipal Improvement Act of 1913 or the Mello-Roos Act are utilized, the City, at its sole discretion, will determine the facilities to be acquired, the priority of acquisition of completed facilities and the method of determining reasonable acquisition costs. Applicable bidding and prevailing wage requirements are extensive and will be addressed during the preparation of the funding and acquisition agreement.
The City has determined (pursuant to Section 53329.5(c) of the Government Code) that the public interest will not be served by allowing property owners to elect to enter into agreements with the City to perform construction work after competitive construction bids have been received. The City Council will make such a determination in the resolution of intention regarding the formation of a Community Facilities District.
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Special Assessment and Community Facilities District Goals and Policies
11. DISCLOSURE TO PURCHASERS
Developers who are selling lots or parcels that are within a Community Facilities District shall provide disclosure notice to prospective purchasers that complies with all of the requirements set forth in Section 53341.5 of the Government Code. The disclosure notice must be provided to prospective purchasers of property at or prior to the time the contract or deposit receipt for the purchase of property is executed. Developers shall keep an executed copy of each disclosure document as evidence that disclosure has been provided to all purchasers of property within a Community Facilities District.
Owners of land securing 20% or more of the debt service on bonds will be required to provide financial information, as deemed appropriate by the City, for inclusion in the continuing disclosure document the City must provide annually and will also be required to provide written undertakings to provide financial and operating data as required by the SEC’s Rule 15c2-12 and by the underwriter of the bonds.
Additionally, the continuing disclosure document shall be reported to City Council annually, to receive and file.
12. PROPERTY OWNER SUPPORT
In the instance of multiple property owners, the applicant shall be required to produce letters evidencing other property owners’ support for the scope and establishment of the District as an attachment to the application. The applicant must have concurrence of at least 60% of the other property owners to be included in the proposed District, unless there is an overriding need for the public facilities, or the applicant is willing to separately fund the facilities for non-participating property.
13. LAND USE APPROVALS
Properties proposed for inclusion in a District must possess a land use determination such that proposed development land uses and specific facility requirements can be adequately assessed.
14. EXCEPTIONS TO THESE POLICIES
The City may find in limited and exceptional instances that a waiver to any of the above stated policies is reasonable given identified special City benefits to be derived from such waiver. Such waivers are granted only by action of the City Council based upon specific public purpose and/or health and safety findings.
A waiver of certain provisions of these policies may also be relevant for the refunding of outstanding special assessment and Community Facilities District debt.
15. APPLICATION PROCESS
Early communication with the City is encouraged to assist applicants in evaluating the feasibility of available financing programs and to discuss program procedures.
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Special Assessment and Community Facilities District Goals and Policies A.Preapplication Conference: Applicant meets with City to discuss the proposed project and application procedures.
B.Application Submission: Applicant/developer shall submit an application to the City with a deposit and reimbursement agreement in the amount of $70,000 as of September 2025. The Chief Financial Officer is authorized to increase this required deposit if formation costs increase in the future. The deposit will be handled as set forth in the Deposit and Reimbursement Agreement as established by the City and approved by the applicant/developer. This deposit is for the purpose of application processing, preliminary costs, retention of appropriate consultants, and the compensation of staff time devoted to the formation of the District. The City will conduct an initial evaluation of the application to determine if it is complete and whether additional information is required.
C.Project Review: Applicant and City staff meet to discuss initial application, including any issues raised and further information that might be required. If necessary, applicant submits revised application.
D.Application Processing: Upon City determination that the application is complete, staff prepares a staff report, which forwards the request for district formation and project financing and staff recommendation to the Finance Committee for review.
E.City Council Consideration: The City Council grants or denies the application.
F.Project Initiation: Staff submits consultant contracts, reimbursement agreements and other similar items for City Council consideration.
G.Project Implementation: Applicant, staff and consultants meet to determine preliminary project schedule and begin work necessary to initiate district formation.
This document outlines district formation procedures.
16. SPECIAL ASSESSMENT DISTRICT FORMATION PROCEEDINGS FORMAT Assessment district proceedings under the Municipal Improvement Act of 1913 normally provide for the construction of improvements by the City and the financing of such improvements with improvement bonds, which are secured by a fixed lien assessment on the benefited property. In certain instances, if authorized by the City, the developer may construct the improvements (or portion thereof), which would be acquired by the City as provided in the proceedings.
The formation proceedings are subject to and contingent upon satisfaction of all environmental zoning and land use regulations. The following is a summary of the proceedings under the Municipal Improvement Act of 1913 for the formation of an Assessment District. All such proceedings are subject to the requirements of the Improvement Acts, as applicable.
A.Initiation of Proceedings. An applicant or landowner petition for City Council action initiates a request to form the District. Upon initiation, the design engineer City of Menifee
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Special Assessment and Community Facilities District Goals and Policies prepares plans, specifications and cost estimates of the proposed public improvements. The assessment engineer begins preparing the Engineer’s Report, including the assessment diagram, assessment roll, description of improvements and preliminary cost spread. If required, the Environmental Impact Report “EIR” consultant begins processing the appropriate environmental documentation for the public improvements.
B.Presentation of Report. Upon completion of the preliminary engineering work, the City Council adopts a resolution of intention to form the assessment district, approves the Engineer’s Report, calls for construction bids, authorizes the future sale of bonds, sets the date, time and place for the public hearing and directs assessment notices to be mailed.
C.Bid Process. Finance Department receives construction bids. Assessment engineer modifies the assessment roll and Engineer’s Report and notifies property owners of revised assessments.
D.Public Hearing. City Council holds public hearing at which written protests are presented and public testimony is taken. If a majority protest has not been received, City Council approves district formation, awards bids, orders construction work, confirms the assessments, directs the Chief Financial Officer/Treasurer to mail assessment notices and approves the bond sale.
E.Cash Collection Period. Treasurer may receive cash payments during the 30 days following confirmation if property owners elect to pay off the assessment or portion thereof prior to the issuance of bonds.
F.Authorize Issuance of Bonds. City Council determines the balance of unpaid assessments and provides for the issuance of bonds to be secured thereby.
G.Sale of Bonds. Bonds are issued in exchange for the cash proceeds of the sale, which are held by the City or its fiscal agent (or paying agent/registrar) and utilized for the construction of public improvements described in the Engineer’s Report.
17. MELLO-ROOS COMMUNITY FACILITIES DISTRICT FORMATION PROCEEDINGS A Community Facilities District is a legally constituted governmental entity created for the purpose of financing public facilities and services.
The formation proceedings are subject to and contingent upon satisfaction of all environmental, zoning and land use regulations. The following is a summary of the proceedings for the formation of a Community Facilities District under the Mello-Roos Act.
All such proceedings are subject to the requirements of the Mello-Roos Act.
A.Initiation of Proceedings. Proceedings must be instituted when a written request is made by a petition signed by 10% of the registered voters or 10% of the landowners by area. The petition shall be accompanied by payment of a deposit in an amount determined by the City Council to be sufficient to pay for costs incurred in conducting the proceedings.
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Special Assessment and Community Facilities District Goals and Policies B.Resolution of Intention. Within 90 days of the receipt of a written request or petition, the City Council will adopt a resolution of intention to establish a Community Facilities District. The resolution will state the name of the proposed CFD, the types of facilities or services to be financed and that, except where funds are otherwise available, a special tax to pay for such facilities and services will be annually levied. The resolution of intention shall also fix a time and place for a public hearing between 30 and 60 days after the adoption of the resolution of intention, describe the method of levy and apportionment of the special tax and describe the proposed voting procedure. In addition, the resolution may specify conditions under which the obligation to pay the special tax may be prepaid and permanently satisfied. The City Council directs its responsible officers to study the proposed district and to file a report at or before the public hearing describing the proposed public facilities and services and an estimate of costs.
C.Public Hearing. Protests against the establishment of the Community Facilities District, the extent of the CFD or the furnishing of specified types of public facilities or services may be made orally or in writing by interested persons or taxpayers. If 50% or more of the registered voters, or 6 registered voters, whichever is more, residing within the proposed CFD or the owners of 1/2 or more of the area of land in the proposed CFD file written protests against the establishment of the CFD, the proceedings are abandoned. If the protests are directed toward certain types of facilities or services, or against a specified special tax, those specific items may be eliminated from the resolution forming the CFD. The hearing may be continued for up to 30 days without special findings and up to 6 months if the City Council makes specified findings.
D.Resolution of Formation. If the City Council decides to establish the Community Facilities District, it will adopt a resolution of formation containing similar information as contained in the resolution of intention.
E.Election. If the City Council determines to form the Community Facilities District, it submits the question of whether special taxes should be levied to an election of the voters (or landowners if fewer than 12 registered voters reside within the boundaries of the proposed CFD for each of the 90 days prior to the date of the public hearing) of the proposed CFD. Combined with the tax proposition, there may be a proposition on the question of incurring bonded indebtedness. The tax, in order to be levied, must be approved by two-thirds of the votes cast and thereafter levied by adoption of an ordinance of the City Council. The Mello-Roos Act provides that the election shall be at the next general election or at a special election to be held between 90 and 180 days following the close of the protest hearing. The unanimous consent of the qualified electors within the proposed district and the concurrence of the election official conducting the election may shorten the election time limits.
F.Special Tax Bonds. A Community Facilities District may be created solely to provide the services permitted by statute. However, most CFDs have been created specifically for the purpose of levying special taxes to service bonded indebtedness incurred by the CFD in order to finance the construction of facilities.
Maintenance Districts may also be created. The proceedings to authorize and incur City of Menifee
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Policy CC-20
Special Assessment and Community Facilities District Goals and Policies bonded indebtedness usually parallel the proceedings for formation of the CFD and the authorization to levy the special tax, although the bond proceedings could be conducted separately and at a later date. The proceedings to authorize bonded indebtedness involve a resolution of intention, public hearing and election; all conducted in a manner very similar to proceedings to form the community facilities district and levy the tax. CFD bonds may be sold competitively or through negotiated sale and may bear fixed or variable interest rates.
In some cases, a Community Facilities District may provide specified facilities for only a portion of the land within the CFD. In that event, the Act provides for the formation of improvement areas for which separate elections are conducted and to which a specified special tax applies.
18. ROLES AND RESPONSIBILITIES
A. The City Manager or designee is responsible for administering this policy and procedure.
B. All employees are responsible for compliance with this policy and procedure.
C. The annual continuing disclosure document shall be reported to City Council, to receive and file.
D. An annual review of outstanding bonds shall be evaluated for refunding.
19. DEFINITIONS
Unless the context otherwise requires, the terms employed in the following policies shall have the meanings specified below:
“Bonds” means bonds authorized and issued under the Mello-Roos Community Facilities Act of 1982 or the Municipal Improvement Act of 1911 and the Improvement Bond Act of 1915.
“City” means the City of Menifee.
“Community Facilities District” means a special tax district established by a local government under the Mello-Roos Community Facilities Act of 1982 to finance public infrastructure and services in a specific geographic area. “District” means a Community Facilities District formed under the Mello-Roos Community Facilities Act of 1982 or an assessment district formed under the Improvement Act of 1911 or the Municipal Improvement Act of 1913, as amended. “Improvement Acts” means current enabling legislative Acts of 1911, 1913, 1915 and 1972.
“Mello-Roos Act” means the Mello-Roos Community Facilities Act of 1982.
City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies "Public Facilities" means improvements authorized to be constructed or acquired under the Mello-Roos and Improvement Acts including, but not limited to, fees for capital facilities imposed by public agencies as a condition to approval of the development encompassed by the district or as a condition to service the district. "Value" or "Fair Market Value" means the value established by the appraisal undertaken to establish value-to-lien ratios for a land-secured financing.
20. Revision History
Revision No.
Date
Approve Approved By: Comments
0 9/6/2011 City Council Original Policy (FN-9)
1 4/15/2020 City Council Revision, Policy No. Changed to CC-20 2 9/3/2025 City Council Revision, Security/Deposits/Sale as Rentals 3 TBD City Council Revision, Public Safety CFD
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Ricky Estrada, Mayor