Consultant: Menifee Valley should have enough funds to incorporate

By: BRIAN ECKHOUSE - Staff Writer | Wednesday, August 29, 2007 11:04 PM PDT ∞

MENIFEE -- A week after Wildomar incorporation proponents successfully convinced a regional commission to put the question of cityhood on a ballot, Menifee Valley's cityhood bid got some good news of its own:

A financial analysis released Wednesday found the valley should have more than enough money to support itself as a city.

That's true in the would-be city's first 10 years of operation for all three boundary options proposed, but there are variations in the bottom line among the alternatives, said consultant Gary Thompson, who conducted the analysis on behalf of the Menifee Valley Incorporation Committee. The new city would encompass more than 40 square miles north of Murrieta and consist of Menifee, Sun City and Quail Valley, and -- depending on which boundary is chosen -- possibly portions of Romoland.

For the next month, the public is invited to comment on Thompson's analysis to the regional Local Agency Formation Commission, which determines whether cityhood bids can be put on the ballot. The analysis is available at the commission's Web site, www.lafco.org.

Once the public comment period ends, Thompson is expected to issue a final analysis before the question of cityhood reaches the commission. Incorporation proponents hope the commission will consider their bid in October, which would allow a vote on the question in June. The proponents hope to incorporate Menifee Valley as a city on Oct. 1, 2008.

"It's great: We're feasible," said Joe Daugherty, Menifee Valley Incorporation Committee's president. "We're ready to move forward."

One alternative proposes a city encompassing Menifee, Sun City and Quail Valley. Another option includes those three communities plus a chunk of Romoland to the north to about Rouse Road. Those options would create a city with a population between 55,300 and 56,300.

Those territories would be financially feasible as a city, Thompson said, but wouldn't be as strong as the third alternative, which includes an even wider swath of Romoland. That boundary would stretch to Mapes Road to the north and Briggs Road to the east, and have a population of about 60,500.

Of the third alternative, Thompson said: "You're looking at a reserve (fund) capacity of 20 to 30 percent depending on the year. Those are really good numbers."

The third alternative appears the most attractive, in part because it offers the most land for commercial development, which is key to boosting sales tax revenues, Thompson said.

"The population-driven revenues are higher, as well," he said.

The reserve would be built up through net savings, which is projected to happen in eight of the would-be city's first 10 years of operation under the third alternative.

Under Option 3, Thompson projects annual net gains of $1.8 million to $4.5 million in the first four years of operation, followed by a deficit of about $332,000 in Year 5. There would be annual gains of $17,000 to $2.1 million in years 6 through 9, then a deficit of $349,000.

But because the annual gains under the third option would be at least $1 million in seven of the first 10 years, the would-be city's reserve fund could absorb two years of deficits. At its lowest point, the prospective city's reserve fund would be $4.5 million. By year nine, the fund would be $14.9 million.

The fifth and 10th years would have deficits coinciding with the anticipated openings of new fire stations in the valley, Thompson said. Developer fees would pay for the stations, but the proposed city -- possibly with help from the county -- would have to cover operational costs, including salaries and benefits.

The other two options also have positive reserve funds, though at their peak, the reserve funds would be $8 million to $9 million -- not Option 3's $14.9 million.

The county would help a city of Menifee Valley in its first 10 years of operation by returning the net savings of the incorporation to the valley, which would range from $331,500 to $1.58 million depending on the boundary chosen.

In late July, the county Board of Supervisors approved transferring its annual net savings of Menifee Valley's and Wildomar's incorporation up to 10 years, if needed.

The regional commission -- not the Menifee Valley Incorporation Committee -- will chose a boundary for the valley, if it approves cityhood.

Daugherty prefers Option 3, though he noted his committee wouldn't take a position on the proposed boundaries.

"I like the one that's most feasible," he said. "I want to give us the one that gives us the greatest chance for success. We want to get cityhood."

Wildomar, which is between Lake Elsinore and Murrieta, is a little further along in the incorporation process. Last week, the commission approved Wildomar's bid, allowing the question of cityhood to reach voters, probably Feb. 5.

Both proponent groups share the same reason for incorporation: having local control of their growing communities.

"I think the community's ready for it," Daugherty said of Menifee Valley. "We've become urban now, and we have different needs (than before). The county doesn't serve urban needs; cities serve urban needs."

-- Contact staff writer Brian Eckhouse at (951) 676-4315, Ext. 2626, or beckhouse@californian.com.