TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: Jennifer Terry, Finance Manager
SUBJECT:
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Declaring Intention to Form Community Facilities District No. 2026-1 (Gierson Ranch) of the City of Murrieta and to Annex into Community Facilities District No. 2025-2 (Maintenance Services) and Community Facilities District No. 2025-S (Safety Services)
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ABSTRACT
The Resolutions initiating the formation of Community Facilities District (CFD) No. 2026-1 (Gierson Ranch), authorize up to $8 million in bonded indebtedness, and declare its intent to annex the Gierson Ranch project into CFD No. 2025-2 (Maintenance Services) and CFD No. 2025-S (Safety Services).
The proposed 107-unit single-family residential development, located between Washington Avenue and Adams Avenue, will finance public infrastructure, Development Impact Fees (DIF), and eligible maintenance and safety services through the levy of special taxes under the Mello-Roos Act. The recommended actions set public hearings for April 21, 2026, and initiate landowner voting proceedings required to establish the district and approve the proposed special taxes and bonded indebtedness.
RECOMMENDATION
recommendation
Adopt Resolution No. 26-4915 entitled: Resolution of Intention of the City Council of the City of Murrieta to Establish Community Facilities District No. 2026-1 (Gierson Ranch) of the City of Murrieta, to Authorize the Levy of a Special Tax to Pay the Costs of Acquiring or Constructing Certain Facilities and to Pay Debt Service on Bonded Indebtedness;
Adopt Resolution No. 26-4916 entitled: Resolution of Intention of the City Council of the City of Murrieta to Incur Bonded Indebtedness in an Amount Not To Exceed $8 Million Within Proposed Community Facilities District No. 2026-1 (Gierson Ranch) of the City of Murrieta;
Adopt Resolution No. 26-4917 entitled: Resolution of the City Council of the City of Murrieta Acting as the Legislative Body of Community Facilities District No. 2025-2 (Maintenance Services) of the City of Murrieta, Declaring Its Intention to Consider Annexing Territory to Community Facilities District No. 2025-2 (Maintenance Services) of the City of Murrieta (Annexation No. 3-Gierson Ranch);
Adopt Resolution No. 26-4918 entitled: Resolution of the City Council of the City of Murrieta Acting as the Legislative Body of Community Facilities District No. 2025-S (Safety Services) of the City of Murrieta, Declaring Its Intention to Consider Annexing Territory to Community Facilities District No. 2025-S (Safety Services) of the City of Murrieta (Annexation No. 1-Gierson Ranch); and
Approve a Reimbursement Agreement regarding the Community Facilities District No 2026-1 (Gierson Ranch) and authorize the City Manager to execute the agreement.
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PRIOR ACTION/VOTE
On January 21, 2003, the City Council adopted the Land Secured Financing Policy for Special Assessment and Mello-Roos Community Facilities District Financing (Vote: 5-0).
On April 5, 2016, the City Council adopted a Resolution amending the Land Secured Financing Policy (Vote: 5-0).
On October 3, 2023, the City Council considered an Amendment to the Community Facilities District Goals and Policies and directed staff to present the recommendations in a workshop (Vote 3-2).
On December 5, 2023, the City Council held a workshop on and adopted the proposed Amendment to the Community Facilities District Goals and Policies (Non-Action Item).
On December 5, 2023, the City Council Adopted Resolution No. 23-4717, amending and restating Community Facilities District Goals and Policies (Vote 5-0).
On May 6, 2025, the City formed Community Facilities District No. 2025-2 (Maintenance Services) (Vote 5-0).
On July 15, 2025, the City formed Community Facilities District No. 2025-S (Safety Services).
STRATEGIC ALIGNMENT
The City Council’s goal of maintaining a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency is associated with this administrative priority.
DISCUSSION
The Gierson Ranch Project and Community Facilities District No. 2026-1
The property owner of the proposed Gierson Ranch project within the City is Century Communities of California, LLC, a Delaware Limited Liability Company (the “Property Owner”), and the Property Owner has submitted a petition requesting that the City form Community Facilities District No. 2026-1 (Gierson Ranch) of the City of Murrieta (CFD No. 2026-1). The property to be included in the proposed CFD No. 2026-1 (Property) is located between Washington Avenue and Adams Avenue, near the corner of Washington Avenue and Ivy Street. The Gierson Ranch project is proposed to include approximately 107 single-family homes at full buildout and will be developed by the Property Owner.
The Property Owner has requested that the City form CFD No. 2026-1 to encompass the Property, in accordance with the Mello-Roos Act, to finance the costs of certain public improvements through the levy of a special tax and the issuance of bonds. The maximum amount of bonded indebtedness proposed is $8 million. The proceeds of bonds issued by CFD No. 2026-1 are expected to be used to finance public facilities to be owned and operated by the City, as well as financing the payment of DIF owed by the Property Owner to the City, and to finance fees and public facilities to be owned and operated by the Murrieta Valley Unified School District and Western Municipal Water District.
The Property Owner has requested that the boundaries of CFD No. 2026-1 include the area described in Attachment A of the Resolution of Intention to Establish CFD No. 2026-1 presented at this meeting (CFD No. 2026-1 Resolution of Intention), and that special taxes be levied within the boundaries of CFD No. 2026-1 in accordance with the Rate and Method of Apportionment for CFD No. 2026-1 (CFD No. 2026-1 RMA) described in Attachment C to the Resolution of Intention. The proposed rates of the special tax range from $3,956 per unit for single family homes less than 1,950 square feet to $4,179 per unit for single family homes greater than 2,150 square feet, and also include tax rates of $51,476 per acre of multi-family property and non-residential property. The special tax rates within CFD No. 2026-1 will increase two percent (2.00%) annually on July 1 of each year, commencing July 1, 2026.
The CFD No. 2026-1 Resolution of Intention is the first step in the process of forming CFD No. 2026-1. The attached resolutions declare the City’s intention to establish CFD No. 2026-1, its intention to incur bonded indebtedness by CFD No. 2026-1, and call for a public hearing. A public hearing on the matter of the formation of CFD No. 2026-1 will take place on April 21, 2026, and at that time, the City Council will formally consider the establishment of CFD No. 2026-1; and hold elections on the approval of the special taxes and the need to incur bonded indebtedness within CFD No. 2026-1. It is expected that there are no registered voters residing within the boundaries of the proposed CFD No. 2026-1, and accordingly, the election will be a landowner voting election.
Annexation to CFD No. 2025-2 (Maintenance Services) and CFD No. 2025-S (Safety Services)
New development projects (such as the Gierson Ranch Project) meeting certain design criteria are required by the City’s Community Facilities District Goals and Policies, as amended in December 2023, to annex to Community Facilities District No. 2025-2 (Maintenance Services) of the City of Murrieta and Community Facilities District No. 2025-S (Safety Services) of the City of Murrieta. Accordingly, the Property Owner has also submitted petitions requiring that the Property be annexed to CFD No. 2025-2 (Maintenance Services) and Community Facilities District No. 2025-S (Safety Services).
On May 6, 2025, the City Council approved the formation of Community Facilities District No. 2025-2 (Maintenance Services) of the City of Murrieta, and CFD No. 2025-2 is authorized to levy a special tax in accordance with the Mello-Roos Act on parcels of residential property to finance public maintenance services. Services eligible to be financed by CFD No. 2025-2 include maintenance and lighting of parks, parkways, streets, roads, and open space, maintenance and operation of water quality improvements, including storm drainage and flood protection facilities, and public street sweeping. At the time of formation, a “Potential Annexation Area” was designated for CFD No. 2025-2, which consisted of all areas of the City not originally included in CFD No. 2025-2. If approved by the City Council and the Property Owner, the property within the Gierson Ranch Project would be annexed to CFD No. 2025-2 as “Tax Zone 3.” The special taxes within Tax Zone 3 of CFD No. 2025-2 are $376 per residential unit and will increase on each July 1, commencing on July 1, 2026 by i) the year-over-year percentage increase for the month of March in the Consumer Price Index (All Items) for all Urban Consumers for the Riverside-San Bernardino-Ontario California Standard Metropolitan Statistical Area, or a comparable replacement index for the area if this index is no longer published, since the beginning of the preceding Fiscal Year, or ii) by two percent (2.0%), whichever is greater.
On July 15, 2025, the City Council approved the formation of Community Facilities District No. 2025-S (Safety Services) of the City of Murrieta, and CFD No. 2025-S is authorized to levy a special tax in accordance with the Mello-Roos Act on parcels of residential property to finance public safety services. At the time of formation, a “Potential Annexation Area” was designated for CFD No. 2025-S, which consisted of all areas of the City not originally included in CFD No. 2025-S. Services eligible to be financed by CFD No. 2025-S include police protection services (including but not limited to criminal justice services), fire protection and suppression services, and paramedic services. The special taxes within CFD No. 2025-1 are $150 per unit of affordable housing residential property, $468 per unit of multi-family residential property, and $580 per unit of single-family property, and the special taxes for each category of property will increase annually each July 1 by four percent (4%), commencing July 1, 2026.
The resolutions of consideration for CFD No. 2025-2 and CFD No. 2025-S presented at this meeting are the first step in the process of annexing the Property to CFD No. 2025-2 and CFD No. 2025-S, respectively. The attached resolutions declare the City’s intention to annex property to CFD No. 2025-2 and CFD No. 2025-S and call for public hearings on the matters of the proposed annexations to take place on April 21, 2026, and at that time the City Council will formally consider the proposed annexations to CFD No. 2025-2 and CFD No. 2025-S and hold elections on the proposed annexations. Similar to the election for CFD No. 2026-1. It is expected that there are no registered voters residing within the boundaries of the property proposed to be annexed to CFD No. 2025-2 and CFD No. 2025-S, and accordingly, the elections will be landowner voting elections.
BACKGROUND
Community Facilities Districts
Community Facility Districts (CFDs) are formed pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Mello-Roos Act) and are a widely used financing mechanism, frequently used to fund infrastructure associated with new significant (large) development projects, such as water and sewer facilities, storm drain facilities, roads, and parks and to finance the provision of certain municipal services.
A simplified example of CFD implementation is as follows:
• A developer submits a petition to form the CFD to the city or special district (water districts frequently form CFDs) to start formation proceedings;
• In the city’s case, staff presents the petition to the City Council for approval;
• The District is formed by a vote of the property owners;
• Once approved, the city approves the issuance of bonds, which are sold to investors;
• Proceeds from the sale of the bonds are used to build the infrastructure associated with the project; and
• The bonds are paid off over time (typically 30 years) by the buyers of homes within the project as a part of their property tax bill.
Community Facilities District Goals and Policies
On December 5, 2023, the City Council adopted amendments to the Community Facilities District Goals and Policies. In addition to changes related to State law, other changes contained in the amended policy include:
• A list of eligible facilities that can be financed;
• Adding an escalator of up to two percent (2%) per year for facilities;
• Adding an escalator for service or maintenance CFDs to cover increases in the cost of providing services;
• Allowing DIF to be financed; and
• Increasing the maximum cap on the assessed value of a property from 1.8% to 2%.
Additional Authorized Services
The Mello-Roos Act also authorizes the City to establish a CFD to finance certain public services through the levy of a special tax. The services that can be funded include the following:
• Police protection services, including, but not limited to, criminal justice (limited to providing services for jails, detention facilities, and juvenile halls).
• Fire protection and suppression services, and ambulance and paramedic services.
• Recreation program services, library services, maintenance services for elementary and secondary school sites and structures, and the operation and maintenance of museums and cultural facilities.
• Maintenance and lighting of parks, parkways, streets, roads, and open spaces.
• Flood and storm protection services, including, but not limited to, the operation and maintenance of storm drainage systems, plowing and removal of snow, and sandstorm protection systems.
• Maintenance and operation of any real property or other tangible property with an estimated useful life of five or more years that is owned by the local agency or by another local agency (by agreement).
PUBLIC NOTICING
The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item).
CEQA AND REGULATORY OVERVIEW
This action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly.
FISCAL IMPACT
The Property Owner has made a deposit of $65,000 to pay for the costs of the formation proceedings which may be reimbursed to the Property Owner from proceeds of a future bond issuance in accordance with the reimbursement agreement with the Property Owner. If established and subject to necessary City Council and voter approvals, each of the CFDs will annually levy special taxes on all of the taxable property within the applicable district in accordance with the applicable rate and method of apportionment. Such special taxes will be used to pay for the costs of services or facilities, administration of the CFDs and, in the case of CFD No. 2026-1, debt service on bonds. Any bonds issued by CFD No. 2026-1 are not obligations of the City and will be secured solely by the Special Taxes levied within CFD No. 2026-1. The levying of the special taxes for services is expected to alleviate some of the financial impact of the new development on the costs of providing such services to the Property by the City.
Additionally, the Property Owner provided additional deposits of $30,000 to cover the annexation costs associated with the property annexing into CFD No. 2025-2 (Maintenance Services) and CFD No. 2025-S (Safety Services).
ATTACHMENTS
ATT 1 - Landowner Petition to Form Community Facilities District No. 2026-1 (Gierson Ranch)
ATT 2 - Resolution No. 26-4915
ATT 3 - Resolution No. 26-4916
ATT 4 - Reimbursement Agreement regarding Community Facilities District No. 2026-1 (Gierson Ranch)
ATT 5 - Landowner Petition to Annex to Community Facilities District No. 2025-2 (Maintenance Services) (Annexation No. 3-Gierson Ranch)
ATT 6 - Resolution No. 26- 4917
ATT 7 - Landowner Petition to Annex to Community Facilities District No. 2025-S (Safety Services) (Annexation No. 1-Gierson Ranch)
ATT 8 - Resolution No. 26-4918