CITY OF MENIFEE
SUBJECT: Formation of Community Facilities District (CFD) 2026-3, Cypress Sands, and formation of Public Safety CFD, 2026-S MEETING DATE: September 14, 2026
TO: Finance Committee
PREPARED BY: Lauri Lockwood, Financial Analyst
REVIEWED BY: Travis Hickey, Chief Financial Officer
APPROVED BY: Bryan Jones, Assistant City Manager
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RECOMMENDED ACTION
1. Review the proposed Community Facilities District (“CFD”) 2026-3 to finance certain costs of public improvements for the development of 132 townhomes located at the southwest corner of Chambers Avenue and Antelope Road, and recommend submittal to the City Council for consideration.
2. Review the proposal for Cypress Sands to be the cornerstone project for the City’s formation of Public Safety CFD, 2026-S, and recommend submittal to the City Council for consideration.
DISCUSSION
FB Cypress Sands, a Delaware-based LLC, (the “Landowner”) is proposing a 132-unit townhome project at the southwest corner of Chambers Avenue and Antelope Road. The project includes 126 market-rate units and six affordable housing units.
The addition of the affordable housing units makes this townhome development somewhat unique. All units are intended to be sold to individual owners, not to an entity that would lease them.
The Landowner is requesting the City assist in forming CFD 2026-3 to finance public improvements and infrastructure necessary to support the development as well as maintenance of those public improvements.
City of Menifee Staff Report
Formation of CFD 2026-3, Cypress Sands, and formation of Public Safety CFD, 2026-S September 14, 2026
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The home sizes of the market-rate units would range from 1,312 to 1,510 square feet (“SF”), with sales prices ranging from an estimated $450,000 to $510,000. The six affordable housing units would have 1,364 SF and the sales price for those units is estimated at $106,134.
Special tax rates for the facilities CFD would vary by home size, ranging from $2,630 for market-rate homes under 1,400 SF to $3,137 for market-rate homes over 1,499 square feet. Those rates could escalate by 2% per year. The affordable housing units would be exempt from the special tax associated with the facilities district.
The annual property tax burden, including ad valorem and fixed charges, is estimated to range from 1.61% for the affordable housing units to 2% for the market-rate units.
The proposed facilities CFD would fund a portion of the costs associated with City facilities and Menifee Union School District facilities. The cost of these public improvements would be financed through the levy of a special tax and the issuance of approximately $4.7 million in bonds.
Public Safety CFD (CFD 2026-S)
In June 2026, the City Council authorized the Finance Department to move forward with plans to form a new Public Safety CFD, which would provide a dedicated revenue stream that would allow the City to maintain public safety levels as growth continues. The City Council also indicated that all new residential developments that have not received their Conditions of Approval (“COAs”) will be expected to annex into the Public Safety CFD.
Although Cypress Sands has received its COAs and was not conditioned to annex into CFD 2026-S, the Landowner has agreed to participate in the public safety CFD in exchange for certain concessions, including the City waiving the 20% premium associated with the facilities CFD, which is estimated at approximately $379,000.
The landowner also sought to eliminate the special taxes associated with the City’s maintenance CFD and the Public Safety CFD for the six affordable housing units, and allowing the homeowners association (“HOA”) to assume maintenance of certain public right-of-way items that would otherwise be maintained by the City, which would reduce the special tax levy for the maintenance CFD.
According to recent City Council direction, if a development has already received its COAs, city staff may consider reducing or waiving the premium on a case-by-case basis.
The Landowner noted this project is providing six affordable housing units, thereby moving the City closer to meeting its Regional Housing Needs Assessment allocation.
City of Menifee Staff Report
Formation of CFD 2026-3, Cypress Sands, and formation of Public Safety CFD, 2026-S September 14, 2026
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City staff sees the value in Cypress Sands’ affordable units and in the landowner’s willingness to have this development serve as the cornerstone project for the new Public Safety CFD. The Finance Department worked to reach a compromise with the landowner, who was concerned about the limited financing capacity of the facilities district given the 2% tax rate ceiling and the number of overlapping special tax districts applicable to the development. After meeting with the Landowner, staff recommend the City agree to not deduct the 20% premium out of the bond proceeds. The development would contribute $66,150 to the public safety CFD in its first year, and potentially more than $1.75 million over the next 20 years, which exceeds the one-time flat amount of $379,000 for the premium. Alternately, the City could still choose to recapture the premium through ongoing assessments collected after bonds are issued.
Additionally, rather than exempting the six housing units from paying all special taxes for the maintenance CFD and the Public Safety CFD, staff is recommending these special tax amounts be reduced for the affordable housing units from $440 to $125 for the maintenance CFD and from $525 to $150 for the Public Safety CFD. And City staff does not recommend approving the request to have the HOA maintain facilities in the right-of- way, in order to maintain consistency with City-established service levels.
This project would be the first project in the City’s new Public Safety CFD, which would include a special tax levy of $525 on market rate homes and $150 for affordable housing units. All future residential developments that have not already received COAs would be required to annex into CFD 2026-S. The special tax for this CFD could escalate as much as 4% per year, and the escalator is subject to an annual review by the City Council.
Because the City’s maintenance fee would be discounted for the six affordable units, this development does not meet the requirements to annex into CFD 2017-1 for maintenance.
The annual maintenance cost is therefore incorporated into CFD 2026-3 to ensure the City can still recoup money for maintenance services.
Staff seeks a recommendation to forward both the formation of CFD 2026-3 and the formation of CFD 2026-S to the City Council for consideration.
City of Menifee Staff Report
Formation of CFD 2026-3, Cypress Sands, and formation of Public Safety CFD, 2026-S September 14, 2026
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ATTACHMENTS
1. CFD 2026-3 Proforma Summary
2. CFD 2026-3 Project Map
3. CFD 2026-3 Proforma
4. CFD 2026-3 Boundary Map
5. CFD 2026-3 Maintenance Exhibit
6. CFD 2026-3 RMA
7. Facilities CFD Application
8. Cypress Sands CFD Premium Waiver Request
9. CFD 2026-S Boundary Map
10. CFD 2026-S Potential Annexation Area
11. CFD 2026-S RMA