CITY OF MENIFEE
SUBJECT: Proposed Formation of Community Facilities District No. 2026-2, Quail Hills
MEETING DATE: July 15, 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. Adopt resolution of intention to establish Community Facilities District No. 2026-2, Quail Hills, located between Williams Drive and Goetz Road; and
2. Adopt a resolution of intention to incur bonded indebtedness for Community Facilities District No. 2026-2, Quail Hills.
DISCUSSION
Quail Hills LP, a California Limited Partnership, (Developer), is proposing to develop a residential community of 130 homes on approximately 43 gross acres within the City. The property is located between Williams Drive and Goetz Road, as shown in the attached Location Map. The Developer has requested that the City form a Community Facilities District (CFD No. 2026-2) in accordance with the Mello-Roos Community Facilities Act of 1982, as amended, to finance the costs of certain public improvements through the levy of a special tax and the issuance of bonds in an amount not-to-exceed $6 million. Any bonds issued by CFD No. 2026-2 would not be obligations of the City and would be secured solely by the Special Taxes levied on properties within CFD 2026-2.
The Developer has requested that the boundaries of CFD No. 2026-2 include the area described in Exhibit A of the Resolution of Intention to Establish CFD No. 2026-2 (Resolution of Intention) and that special taxes be levied within the boundaries of CFD No. 2026-2 in accordance with the Rate and Method of Apportionment (RMA) as described in Exhibit C to the Resolution of Intention.
The Resolution of Intention includes approval of the proposed reimbursement agreement between the City of Menifee and the Developer. The reimbursement agreement outlines that the Developer would advance funds to cover the City's costs associated with the formation of Community Facilities District No. 2026-2, Quail Hills. If the District is formed and bonds are issued, the
City of Menifee Staff Report
Proposed Formation of Community Facilities District No. 2026-2, Quail Hills July 15, 2026
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Developer would be reimbursed from bond proceeds (excluding a nonrefundable $5,000); otherwise, the City would reimburse the Developer any of the deposit that had not been spent on District formation costs.
This proposed CFD No. 2026-2 was presented to the Finance Committee in July 2025 and was recommended for submittal to the City Council for review.
The Resolution of Intention is the first step in the process to form CFD No. 2026-2. The attached resolutions declare the City’s intention to establish CFD No. 2026-2, the intention to incur bonded indebtedness by CFD No. 2026-2 and call for a public hearing. If the resolutions are approved, a public hearing on the matter would take place on August 19, 2026, and at that time the City Council would formally consider approving the formation of CFD No. 2026-2 and holding an election on the proposed special taxes and the incurring of bonded indebtedness within CFD No. 2026-2.
The Developer is proposing that CFD No. 2026-2 include 130 residential units. The home sizes in CFD No. 2026-2 are planned to range from 1,898 to 2,850 square feet. The total effective tax rate is estimated at just less than 2% of projected home prices, which is the allowable tax rate limit in the City’s Financing Goals and Policies. Under the RMA, the estimated assigned annual tax rates range from $1,468 for homes less than 2,000 square feet to $1,816 for home sizes greater than 2,800 square feet. Such rates would escalate at 2% per year.
The anticipated bond issuance amount based on estimated rates would be slightly more than $3.1 million, which would cover a reserve fund, financing costs, and generate approximately $2.5 million in net bond proceeds for facilities. The proposed facilities that may be funded with proceeds of the bonds are:
•$425,926 – City priority facilities, a 20% premium for project-specific priorities • $2,129,630 – City Development Impact and Quimby Fees
The amount of the foregoing facilities costs that exceed available bond proceeds would be funded by the Developer. In addition to the costs of the foregoing facilities, proceeds of the special tax may be expended to pay administrative costs.
STRATEGIC PLAN OBJECTIVE
Regular City Business
FISCAL IMPACT
The Developer made a deposit to pay for the costs of the formation proceedings, which may be reimbursed to the Developer in accordance with the reimbursement agreement to be entered into by the City with the Developer. CFD 2026-2 would annually levy special taxes on all of the taxable property within CFD 2026-2 in accordance with the RMA in order to pay for the costs of facilities, debt service on bonds and administration of CFD No. 2026-2. Any bonds issued by CFD No. 2026-2 would not be obligations of the City and would be secured solely by the Special Taxes levied in CFD 2026-2.
City of Menifee Staff Report
Proposed Formation of Community Facilities District No. 2026-2, Quail Hills July 15, 2026
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ATTACHMENTS
1. Project Location Map
2. Resolution of Intention to Establish CFD 2026-2
3. Resolution of Intention to Incur Debt CFD 2026-2
4. Landowner Petition CFD 2026-2
5. Reimbursement Agreement CFD 2026-2