MENIFEE -- In its first four years as a city, Menifee Valley would be financially viable, but it could have problems in subsequent years, according to a preliminary analysis of the area's potential for cityhood.

Under three different proposed boundaries for a city of Menifee Valley, there would be a budgetary shortfall at some point in the first 10 years if the valley had to absorb all operating costs for up to three new fire stations, according to the analysis released earlier this month.

It is the same issue threatening to hold up an incorporation bid by the nearby community of Wildomar -- how to pay to staff future fire stations.

"The Fire Department is projecting a need. Some are doubting it, but it's up to the subjectivity of who's deciding that," said Gary Thompson, a financial consultant who prepared the analyses for both Menifee and Wildomar.

The county Board of Supervisors has directed officials to negotiate a cost-sharing agreement with Wildomar over the future fire stations if that community is allowed to incorporate. It's possible the board could do the same with Menifee, as Supervisor Jeff Stone has been outspoken in his support for the valley's incorporation.

Proponents of the incorporation of Menifee Valley believe the issue won't derail cityhood efforts.

"The study is based on very conservative growth (of revenues), but the future fire stations are based on a different methodology … one of aggressive growth," said Joe Daugherty, president of the Menifee Valley Incorporation Committee. "So it's like comparing apples to oranges."

All three cityhood proposals encompass Menifee, Sun City and Quail Valley.

One option is limited to those communities. That proposed city of 51,000 people could wind up in the red in its sixth year if the county doesn't defray part of the operational costs for two new fire stations, according to Thompson's report.

The other two proposals include portions of Romoland, one of which proposes a northern boundary around Rouse Road. That plan appears to be the committee's best alternative, as it would add commercial property to the city -- thus bringing in more sales tax dollars -- and would need just two new fire stations, Thompson said. Without county assistance for the stations, Menifee could be financially sound until its 10th year under this scenario.

The third option, which includes a sizable piece of Romoland through Mapes Road to the north and Briggs Road to the east, appears to be the least desirable option, financially. Under that plan, the valley would need three new fire stations, placing Menifee in a deficit by its fifth year, according to the analysis.

Stone's chief of staff, Verne Lauritzen, acknowledged Thursday that the first and third options are "a little disconcerting."

But Lauritzen added: "I don't think it dooms (Menifee's incorporation). Some of those things have to be worked out."

One critical piece is boosting the valley's sales tax revenue, which cityhood proponents say will happen -- and fast.

"There's going to be a huge infusion of tax dollars," Lauritzen said.

Orange County developer Donahue Schriber has broken ground on a 735,000-square-foot marketplace at the southwest corner of Interstate 215 and Newport Road. The shopping center, anchored by a Target and Best Buy, will be Menifee's largest. It also will be home to several restaurants, including BJ's Restaurant & Brewhouse, T.G.I. Friday's and Red Robin.

"That one large center is really big," Thompson said. "It'll generate a lot of revenue for (Menifee). And there are other retail projects in the pipeline. When you add it all up, there's a lot of potential there."

Menifee cityhood leaders hope an updated financial analysis will be completed next month -- a document that will be reviewed by county agencies over 30 days and made available to the public. Further tweaks will be made in the ensuing months.

"We're still several months away from selecting final boundaries," Thompson said.

Once boundaries are selected, the proposed incorporation would then be reviewed by the county's Local Agency Formation Commission and the Board of Supervisors. If both agencies approve, the issue would be placed before voters, possibly in June.

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