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-S (Safety Services) of the City of Murrieta
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RECOMMENDATION
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Adopt Resolution No. 25-4838 entitled: A Resolution of the City Council of the City of Murrieta, Declaring its Intention to Establish Community Facilities District No. 2025-S (Safety Services) of the City of Murrieta, to Authorize the Levy of a Special Tax on Property Within the District to Pay the Costs of Providing Public Safety Services.
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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 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 bonded districts 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.
The implementation of a maintenance CFD follows the first three steps above. Once approved, a special tax can be levied on the property tax bill in accordance with the RMA. Such special taxes will pay for the costs of maintenance services and administration of CFD No. 2025-S.
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 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 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).
Community Facilities District No. 2025-1 (Safety Services)
On May 6, 2025, the City Council and the landowner for the Discovery Village project approved the formation of Community Facilities District No. 2025-1 (Safety Services) in order to finance public safety services. CFD No. 2025-1 currently consists only of the property within the Discovery Village development project and designated the remainder of the City as a “Potential Annexation Area,” whereby new development projects meeting certain design criteria would be required by the City to annex to CFD No. 2025-1. However, the Rate and Method of Apportionment of Special Tax for CFD No. 2025-1, as approved by the City Council and the landowner within CFD No. 2025-1 on May 6, 2025, included special tax rates for multi-family residential property and single-family residential property, and the special taxes for each category of property will increase annually each July 1, by four percent (4.0%), commencing July 1, 2026, but does not include a special tax for affordable housing residential property. In approving the Rate and Method of Apportionment of Special Tax for CFD No. 2025-1, the City Council directed that a new public safety services safety CFD be formed for future development projects within the City which includes a special tax on affordable housing residential property, multi-family residential property and single-family residential property which includes an annual escalation of the special tax for each category of property. Therefore, it is not expected that future development projects within the City will be annexed into CFD No. 2025-1.
The Rustic Meadows Project, the Kensington Apartments Project and Community Facilities District No. 2025-S (Safety Services)
The owner of property within the proposed Rustic Meadows development project and the owner of property within the proposed Kensington Apartments development project (collectively, the “Property Owners”) are required by the City’s Community Facilities District Goals and Policies, as amended in December 2023, to either annex to or request the formation of a Public Safety Services CFD. Accordingly, the Property Owners have submitted petitions requesting that the City form a new public safety services CFD, which includes a special tax on affordable housing residential property, multi-family residential property and single-family residential property which includes an annual escalation of the special tax for each category of property. The new public safety services CFD is expected to be called Community Facilities District No. 2025-S (Safety Services) of the City of Murrieta.
Similar to CFD No. 2025-1, CFD No. 2025-S will initially consist only of the property within the Rustic Meadows development project and the Kensington Apartments development project; however, the remainder of the City will be designated as a “Potential Annexation Area” and new development projects meeting certain design criteria will be required to annex to CFD No. 2025-S.
If formed and approved by voters, CFD No. 2025-S will levy a special tax in accordance with the Mello-Roos Act on parcels of residential property to finance public safety services. 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-S 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 (4.0%), commencing July 1, 2026.
The Resolution of Intention presented at this meeting is the first step in the process of forming CFD No. 2025-S. The attached resolution declares the City’s intention to establish CFD No. 2025-S and calls for a public hearing on the matter of the formation of CFD No. 2025-S to take place on July 15, 2025, and at that time the City Council will formally consider the establishment of CFD No. 2025-S and hold an election on the approval of the special taxes within CFD No. 2025-S. It is expected that there are no registered voters residing within the boundaries of the proposed CFD No. 2025-S, and accordingly, the election will be a landowner voting election.
The owner of the property within the proposed Rustic Meadows project within the City is Whitewood-Murrieta, L.P. The Rustic Meadows project is located at the Southeast corner of the intersection of Clinton Keith Road and Whitewood Road. At full build-out, the proposed Rustic Meadows project is proposed to include approximately 153 single-family homes and will be developed by Century Communities of California, LLC.
The owner of property within the proposed Kensington Apartments project is Murrieta Pacific Associates, Inc. The Kensington Apartments is a proposed affordable housing project located near the corner of Washington Avenue and Magnolia Street and is proposed to include approximately 126 units.
FISCAL IMPACT
The Property Owners have made deposits to pay for the costs of the formation proceedings of CFD No. 2025-S. The deposit made by Century Communities may be reimbursed to Century Communities from proceeds of a future bond issuance by a separate facilities CFD being formed in connection with the Rustic Meadows development. If established and subject to necessary Council and voter approvals, CFD No. 2025-S will annually levy special taxes on all taxable property within the CFD No. 2025-S in accordance with the RMA (as attached to the Resolution of Intention). Such special taxes will be used to pay for the costs of safety services and administration of the CFD No. 2025-S. 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.
ATTACHMENTS
1. Landowner Petition to Form Community Facilities District No. 2025-S (Safety Services) (Rustic Meadows)
2. Landowner Petition to Form Community Facilities District No. 2025-S (Safety Services) (Kensington)
3. Resolution No. 25-4838