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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Intent to Form Community Facilities District No. 2025-4 (Rustic Meadows) of the City of Murrieta and Incur Bonded Indebtedness
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RECOMMENDATION
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Adopt Resolution No. 25-4839 entitled: Resolution of Intention of the City Council of the City of Murrieta, to Established Community Facilities District No. 2025-4 (Rustic Meadows) 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; and
Adopt Resolution No. 25-4840 entitled: Resolution of Intention of the City Council of the City of Murrieta, to Incur Bonded Indebtedness in an Amount Not to Exceed $5,000,000 within Proposed Community Facilities District No. 2025-4 (Rustic Meadows) of the City of Murrieta.
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PRIOR ACTION/VOTE
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 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. 2025-1 (Safety Services), Community Facilities District No. 2025-2 (Maintenance Services) and Community Facilities District No. 2025-3 (Discovery Village) (Vote 5-0).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
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 for a bonded district 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.
• Increasing the maximum cap on the assessed value of a property from one point eight percent (1.8%) to two percent (2.0%).
Additional Authorized Services
The Mello-Roos Act also authorizes the City to establish separate CFDs to finance certain public services through the levy of a special tax. The services that can be funded through a CFD 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).
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. (Property Owner), and the Property Owner has 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 (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 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 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, as well as financing 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 presented at this meeting (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 (2.0%) annually on July 1 of each year, commencing July 1, 2026.
The CFD No. 2025-4 Resolution of Intention is the first step in the process of forming CFD No. 2025-4. The attached resolutions declare the City’s intention to establish CFD No. 2025-4, its intention to incur bonded indebtedness by CFD No. 2025-4, and call for a public hearing. A public hearing on the matter of the formation of CFD No. 2025-4 will take place on July 15, 2025, and at that time the City Council will formally consider the establishment of CFD No. 2025-4 and hold elections on the approval of the special taxes and the need to incur bonded indebtedness within CFD No. 2025-4. It is expected that there are no registered voters residing within the boundaries of the proposed CFD No. 2025-4 and accordingly the election will be a landowner voting election.
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). There are two separate agenda items on tonight’s City Council Agenda requesting formation of an annexation to the Safety Services and Maintenance Services CFDs.
FISCAL IMPACT
The Property Owner 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 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 RMA (as attached to the Resolutions of Intention). 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. 2025-4, 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 Petition to Form Community Facilities District No. 2025-4 (Rustic Meadows)
2. Resolution No. 25-4839
3. Resolution No. 25-4840
4. Reimbursement Agreement - Community Facilities District No. 2025-4 (Rustic Meadows)