MEETING DATE:
MARCH 24, 2026
SUBJECT:
Title
RESOLUTION NO. 2026-9558 - ANNEXATION NO. 161 AND DESIGNATE IMPROVEMENT AREA NO. F-59 OF COMMUNITY FACILITIES DISTRICT NO. 98-02 (LIGHTING, LANDSCAPING, OPEN SPACE, AND PRESERVE MAINTENANCE)
Body
Recommendation
Recommendation
ADOPT a resolution declaring intention to annex territory as Annexation No. 161 and designate Improvement Area No. F-59 of Community Facilities District No. 98-02 (Lighting, Landscaping, Open Space, and Preserve Maintenance), City of San Marcos, County of San Diego, State of California (the “CFD No. 98-02”) and other actions related thereto.
Body
Board or Commission Action
On October 24, 2023, the City Council approved the entitlements for the AOA West (Paloma Townhomes) project. City Council’s approvals included a Specific Plan (SP22-0003), General Plan Amendment (GPA22-0001), Rezone (R22-0001), Multifamily Site Development Plan (MFSDP22-0002), Tentative Subdivision Map (TSM22-0002), Conditional Use Permit (CUP22-0002), Tentative Parcel Map (TPM22-0001), and Site Development Plan (SDP22-0003). On November 14, 2023, the City Council adopted Ordinance 2023-1537, approving the Specific Plan (SP22-0003).
On December 12, 2023, the City Council approved the entitlements for the Restaurant Row project. City Council’s approvals included a Specific Plan (SP22-0004), General Plan Amendment (GPA22-0002), Rezone (R22-0002), Tentative Subdivision Map (TSM22-0003), and Site Development Plans (SDP22-0006 and SDP23-0004). On January 9, 2024, the City Council adopted Ordinance 2023-1540, approving the Specific Plan (SP22-0004). On February 4, 2026, the City administratively approved a Substantial Conformance (SC25-0004).
On December 2, 2024, the Planning Commission approved the entitlements for the Sears project. The Planning Commission approvals included Site Development Plan (SDP24-0006), Tentative Subdivision Map (TSM24-0002), and Conditional Use Permit (CUP24-0002).
Executive Summary
This item is to initiate proceedings pursuant to the petitions submitted by the property owners of the projects known as AOA West (Paloma), Restaurant Row, and Sears to annex certain territory to be known as Annexation No. 161 (“Annexation No. 161”) and to designate Improvement Area No. F-59 (“IA No. F-59”) of Community Facilities District No. 98-02 (Lighting, Landscaping, Open Space, and Preserve Maintenance), City of San Marcos, County of San Diego, State of California (the “CFD No. 98-02”). These proceedings are intended to provide notice to the public of the City Council’s intent to annex territory within the City to IA No. F-59 and establish the boundaries of the intended annexation.
Discussion
CFD No. 98-02 was formed pursuant to the Mello-Roos Community Facilities Act of 1982, commencing with California Government Code section 53311 et seq. (the “Act”) and the City of San Marcos Community Facilities District Procedural Ordinance enacted pursuant to the powers reserved by the City of San Marcos under Sections 3, 5 and 7 of Article XI of the Constitution of the State of California to provide funding necessary for the maintenance of the City’s lighting, landscaping, parks, medians, open space, and preserve space. Special improvement areas are formed as separate zones within CFD No. 98-02 to provide special tax funding necessary for the maintenance of development improvements and impacts above and beyond what is normally maintained by the City.
Annexation No. 161 is proposed to include three project sites known as AOA West (Paloma), Restaurant Row, and Sears. The conditions of approval for these projects require mitigation of certain development impacts on the City, and the property owners have elected to annex the properties into CFD No. 98-02 and establish Improvement Area No. F-59 to mitigate such impacts. Accordingly, each of the property owners has submitted a petition requesting that the City Council initiate proceedings for annexation into CFD No. 98-02 and the establishment of Improvement Area No. F-59. The proposed projects are described below:
• The AOA West (Paloma) project proposes to develop the 4.99-acre site west of the intersection of Grand Ave and Linda Vista Dr.). The project proposes to develop 102 multi-family residential condominiums. The property owner is Paloma Townhomes, LLC.
• The Restaurant Row project proposes to develop the 9.62-acre site at 1020 West San Marcos Boulevard (northwest corner of W San Marcos Blvd and Via Vera Cruz). The project proposes to develop 190 multi-family residential condominiums, and 10,400 square feet of mixed-use commercial space. The property owner is SB-HS Lot Option Pool 02, L.P.
• The Sears project proposes to develop the 2.72-acre site at 1100 W San Marcos Blvd. The project proposes to develop 71 multi-family residential condominiums and 2,916 square feet of mixed-use commercial space, and 2,981 square feet of resident amenity space. The property owner is SB-HS Lot Option Pool 01, L.P.
It is also contemplated some property will require detachment from the City’s existing community facilities districts and assessment districts. The required detachment proceedings will be completed, as applicable, for each property following the successful annexation to, and designation of IA No. F-59, as a separate proceeding or proceedings as required.
The map of the proposed boundaries of IA No. F-59 and Annexation No. 161 are attached as Attachment A.
City staff has determined that creating IA No. F-59 for new development, and potential redevelopment of certain properties, provides a benefit to the property owners by consolidating the maintenance services into a single district rather than utilizing multiple existing or future special districts, each of which provide only partial maintenance of the required services. IA No. F-59 also provides a benefit to the City by reducing the administrative burden of having to administer multiple districts to provide the combined services required to be maintained by the properties.
To initiate the annexation proceedings, the City Council must approve the attached Resolution of Intention (Attachment B). By adopting the attached Resolution of Intention, the City Council will establish the date and time for the public hearing and special land owner election to complete the annexation and to designate IA No. F-59.
It is expected development in the future will be annexed to IA No. F-59. To authorize future annexation proceedings the City Council will also consider an additional item this evening to authorize future annexation to IA No. F-59 as part of a concurrent proceeding.
The special taxes proposed for IA No. F-59 will be levied at the rates shown in the Rate and Method of Apportionment (“RMA”) attached to this staff report (Attachment C). The taxes levied ensure sufficient funding to maintain the proposed services into perpetuity. The proposed services to be maintained by IA No. F-59 are included in Exhibit “A” of the resolution of intention attached as Attachment B.
Environmental Review
The proposed annexation is not a project subject to the California Environmental Quality Act (CEQA) as per Section 15378 of the State CEQA Guidelines, as it is an organizational activity of government and there is no potential to result in a physical change in the environment. Even if the annexation can be considered a project subject to CEQA, it is categorically exempt per State CEQA Guidelines Section 15301 (Existing Facilities), as it does not involve changes to approved development. The annexation is also categorically exempt per State CEQA Guidelines Section 15319 (Annexations), as the properties contain private structures developed to existing zoning and utilities to the sites will only have capacity to serve the existing structures. Finally, the annexation is exempt per Section 15061(b)(3) because it can be seen with certainty that there is no possibility it would have a significant effect on the environment. None of the exceptions to the categorical exemptions in State CEQA Guidelines Section 15300.2 apply to the annexation.
Fiscal Impact
The annual maximum special tax for IA No. F-59 for Fiscal Year 2025-26 will be $651.67 per equivalent dwelling unit and $1,726.93 per acre for non-residential. The total annual maximum special tax is $238,140.36 for the full development of the AOA West (Paloma), Restaurant Row, and Sears projects in 2025-26 dollars. The maximum special tax is the maximum amount that can be levied in any given tax year. It is escalated every fiscal year based on the Consumer Price Index (CPI) or 2.0%, whichever is greater. Details and the break-down of special taxes have been provided within the RMA in Attachment C.
Attachment(s)
Attachment A: IA No. F-59 Boundary Map
Attachment B: City Council Resolution of Intention
Attachment C: Rate and Method of Apportionment
Prepared by: Song LeBaron, Sr. Management Analyst
Submitted by: Song LeBaron, Sr. Management Analyst
Reviewed by: Isaac Etchamendy, Director of Development Services/City Engineer
Approved by: Michelle Bender, City Manager