TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: Javier Carcamo, Finance Director
SUBJECT:
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Community Facilities District No. 2025-4 (Rustic Meadows) of the City of Murrieta
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RECOMMENDATION
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Hold a public hearing regarding the formation of Community Facilities District (CFD) No. 2025-4 (Rustic Meadows) of the City of Murrieta;
Adopt Resolution No. 25-4876 entitled: A Resolution of the City Council of the City of Murrieta, California, Establishing Community Facilities District No. 2025-4 (Rustic Meadows) of the City of Murrieta, Authorizing the Levy of a Special Tax Therein, Calling an Election and Approving and Authorizing Certain Actions Related Thereto;
Adopt Resolution No. 25-4877 entitled: A Resolution of the City Council of the City of Murrieta, California, Acting as the Legislative Body of Community Facilities District No. 2025-4 (Rustic Meadows) of the City of Murrieta, Determining the Necessity to Incur Bonded Indebtedness in an Amount Not to Exceed $5,000,000, within the Community Facilities District No. 2025-4 (Rustic Meadows) of the City of Murrieta and Calling an Election Therein;
Direct the City Clerk to hold an election within CFD No. 2025-4;
Adopt Resolution No. 25-4878 entitled: A Resolution of the City Council of the City of Murrieta, California, Acting in its Capacity as the Legislative Body of Community Facilities District No. 2025-4 (Rustic Meadows) of the City of Murrieta Certifying Election Results; and
Introduce Ordinance No. 622-25 entitled: An Ordinance of the City Council of the City of Murrieta, California, Acting in its Capacity as the Legislative Body of Community Facilities District No. 2025-4 (Rustic Meadows) of the City of Murrieta Authorizing the Levy of Special Taxes.
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PRIOR ACTION/VOTE
On April 5, 2016, the City Council adopted Resolution No. 16-3536 amending the Land Secured Financing Policy.
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
On May 6, 2025, the City formed Community Facilities District No. 2025-1 (Safety Services), Community Facilities District No. 2025-2 (Maintenance Services) and Community Facilities District No. 2025-3 (Discovery Village) (Vote: 5-0).
On June 3, 2025, the City Council adopted a Resolution of Intention to establish Community Facilities District No. 2025-4 (Rustic Meadows) and set a public hearing for the formation of Community Facilities District No. 2025-4 (Rustic Meadows) for July 15, 2025 (Vote: 5-0).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
DISCUSSION
Community Facilities Districts
Community Facility Districts (CFDs) are formed pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the “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.
• 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.
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 Development Impact Fees (DIF) to be financed; and
• Increasing the maximum cap on the assessed value of a property from 1.8% to 2.0%.
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 (5) or more years that is owned by the local agency or by another local agency (by agreement).
The Rustic Meadows Project and Community Facilities District No. 2025-4
The owner of the property within the proposed Rustic Meadows project within the City is Whitewood-Murrieta, L.P. (the “Property Owner”), and the Property Owner submitted a petition requesting that the City form Community Facilities District No. 2025-4 (Rustic Meadows) of the City of Murrieta (“CFD No. 2025-4”). The property to be included in the proposed CFD No. 2025-4 (the “Property”) is located at the southeast corner of the intersection of Clinton Keith Road and Whitewood Road. The Rustic Meadows project is proposed to include approximately 153 single-family homes at full buildout and will be developed by Century Communities of California, LLC. (the “Developer”).
The Property Owner has requested that the City form CFD No. 2025-4 to encompass the Property in accordance with the Mello-Roos Act in order 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 $5 million. The proceeds of bonds to be issued by CFD No. 2025-4 are expected to be used to finance public facilities to be owned and operated by the City and by Murrieta Valley Unified School District. Additionally, the bond proceeds will be used to finance the payment of DIF owed by the Property Owner to the City.
The Property Owner has requested that the boundaries of CFD No. 2025-4 include the area described in Attachment A of the Resolution of Intention to Establish CFD No. 2025-4 adopted by the City Council on June 3, 2025 (the “CFD No. 2025-4 Resolution of Intention”), and that special taxes be levied within the boundaries of CFD No. 2025-4 in accordance with the Rate and Method of Apportionment for CFD No. 2025-4 (the “CFD No. 2025-4 RMA”) described in Attachment C to the Resolution of Intention. The proposed rates of the special tax range from $1,659 per unit for single family homes less than 1,500 square feet to $2,108 per unit for single family homes greater than 1,700 square feet and also include tax rates of $41,763 per acre of multi-family property and non-residential property. The special tax rates within CFD No. 2025-4 will increase two percent (2%) annually on July 1, of each year, commencing July 1, 2026.
The CFD No. 2025-4 Resolution of Intention was the first step in the process of forming CFD No. 2025-4 and, together with the Resolution of Intention to Incur Bond Indebtedness by CFD No. 2025-4 adopted by the City Council on June 3, 2025, declared the City’s intention to establish CFD No. 2025-4, its intention to incur bonded indebtedness by CFD No. 2025-4, and called for a public hearing to take place on July 15, 2025. Notice of the public hearing was published in The Press Enterprise and mailed to the Property Owner.
In connection with the public hearing, Spicer Consulting Group has prepared a Public Hearing Report which describes and analyzes the facilities to be financed by CFD No. 2025-4 and the estimated costs of such facilities. Following the close of the public hearing, the City Council will be asked to adopt the Resolution of Formation for CFD No. 2025-4 and the Resolution Determining Necessity to Incur Bonded Indebtedness by CFD No. 2025-4 which, together, approve the formation of the CFD No. 2025-4, the levy of the special taxes in CFD No. 2025-4 in accordance with the CFD No. 2025-4 RMA and determines the necessity for the Facilities CFD to issue bonds in an amount not to exceed $5,000,000. Such resolutions call for an election to submit to the qualified voters of the CFD No. 2025-4 ballot measures on the approval of the special taxes, the issuance of bonds, and an appropriations limit for the CFD No. 2025-4.
The CFD No. 2025-4 Resolution of Formation also approves the execution and delivery of an Acquisition, Construction and Funding Agreement with the Developer (the “Acquisition Agreement”). The Acquisition Agreement sets forth the terms pursuant to which CFD No. 2025-4 will acquire improvements constructed by the Developer from bond proceeds from CFD No. 2025-4 and how the Developer will be reimbursed for development impact fees from bond proceeds. In order to be eligible for acquisition, such facilities must be constructed in accordance with the terms and conditions of the Acquisition, Construction and Funding Agreement. The City and CFD No. 2025-4 are only required to pay for the acquisition of such facilities from the proceeds of bonds or special taxes levied in CFD No. 2025-4 and not from any other source.
The CFD No. 2025-4 Resolution of Formation also approves the execution and delivery of a Joint Community Facilities and School Facilities Mitigation Agreement among the City, the Murrieta Valley Unified School District (the “JCFA”). The JCFA sets forth the terms pursuant to which the Developer will be reimbursed from bond proceeds from CFD No. 2025-4 for certain school facility fees the Developer is required to pay to the Murrieta Valley Unified School District. In order to be eligible for acquisition, such facilities must be constructed in accordance with the terms and conditions of the Acquisition, Construction and Funding Agreement. The City and CFD No. 2025-4 are only required to pay for the acquisition of such facilities from the proceeds of bonds or special taxes levied in CFD No. 2025-4 and not from any other source.
On file with the City Clerk is a Certificate of the Registrar of Voters of Riverside County certifying that there are no registered voters residing within the boundaries of the CFD No. 2025-4. Accordingly, under the Mello-Roos Act, only property owners owning land in CFD No. 2025-4 are eligible to vote at the election for CFD No. 2025-4, with each owner having one vote for each acre (or portion thereof) that they own within CFD No. 2025-4. The Property Owner has executed a consent and waiver of certain election procedures with respect to the election, including certain timing requirements with respect to the election, in accordance with the Mello-Roos Act. Accordingly, if the City Council approves the Resolution of Formation and the Resolution Determining Necessity to Incur Bonded Indebtedness, the City Clerk will conduct the election. The Property Owner will have delivered its ballot to the City Clerk in advance of the public hearing, and the City Clerk will announce the election results, and the City Council will be asked to adopt the Resolution Certifying the Election Results. Upon certification that 2/3rds of the votes cast are in favor of the propositions voted upon in CFD No. 2025-4, the Resolution Certifying the Election Results will direct the City Clerk to record a notice of special tax lien on the property within CFD No. 2025-4. The City Council will then be asked to introduce an ordinance authorizing the levy of the special tax within CFD No. 2025-4, in accordance with the CFD No. 2025-4 RMA.
The Rustic Meadows project is also required to either annex to or request the formation of a public safety services CFD and a maintenance services CFD. Accordingly, the Property Owner has also requested the formation for Community Facilities District No. 2025-S (Safety Services) and that the Property be annexed to Community Facilities District No. 2025-2 (Maintenance Services) and on June 3, 2025, the City Council also adopted resolutions declaring its intention to form CFD No. 2025-S (Safety Services) and approve the annexation of the Rustic Meadows project into CFD No. 2025-2 (Maintenance Services), and set public hearings for July 15, 2025.
FISCAL IMPACT
The Developer has made a deposit of $80,000, 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 Developer. If established and subject to necessary Council and voter approvals, CFD No. 2025-4 will annually levy special taxes on all of the taxable property within CFD No. 2025-4 in accordance with the CFD No. 2025-4 RMA. Such special taxes will be used to pay for the facilities, administration of the CFDs, and debt service on bonds. Any bonds issued by CFD No. 2025-4 are not obligations of the City and will be secured solely by the Special Taxes levied within CFD No. 2025-4.
ATTACHMENTS
1. Landowner Waiver (CFD No. 2025-4)
2. Public Hearing Report (CFD No. 2025-4)
3. Resolution No. 25-4876
4. Resolution No. 25-4877
5. Resolution No. 25-4878
6. Ordinance No. 622-25
7. Certificate of the Registrar of Voters (CFD No. 2025-4)
8. Acquisition, Construction, and Funding Agreement (CFD No. 2025-4)
9. Joint Community Facilities and School Facilities Mitigation Agreement with Murrieta Valley Unified School District