Study Paints a Rosy Financial Picture if Encinitas Incorporates

If residents of this North Coast community decide to incorporate next year, theirs would be one of the richest cities in the county--rich enough to support neighboring communities that are pushing for area-wide incorporation.

That is the conclusion of a study by Public Affairs Consultants Inc., which shows that the proposed City of Encinitas would have a $12-million surplus in its treasury by its fifth year of cityhood unless it went on a wild spending tear.

The study, commissioned by the Greater San Dieguito Town Council and filed with the Local Agency Formation Commission by Encinitas-only incorporation boosters, lends support to the case of a rival incorporation group seeking to create a single city out of the San Dieguito communities of Encinitas, Leucadia, Cardiff and Olivenhain.

Revenues “far in excess of what the reasonable costs of operating such a city are projected to be” are predicted for an incorporated Encinitas by the San Diego-based consulting firm. In fact, the consultants state, Encinitas’ tax base could support a far larger area --including, perhaps, those other communities.

The study recommends that LAFCO “examine alternative boundaries to those limited ones studied in this analysis. The large revenue generation of the areas studied here (Encinitas and Leucadia) compared to the projected costs appear to argue from the standpoint of fiscal soundness for a larger boundary than those considered here.”

The consultant submitted the report to the Town Council May 8, but Bob Weaver, spokesman of People for Incorporation of Encinitas (PIE) did not submit the supporting study to LAFCO until recently. He commented that the study “looks very favorable for Encinitas. Leucadia could support its own service needs, but the others (Olivenhain and Cardiff) would be a drain on a new city.”

Weaver said he favors incorporation of Encinitas alone, followed by a study and possible annexation of adjoining territories by the new city. He intends to submit 3,000 signatures in support of his Encinitas-only incorporation effort to LAFCO in the near future. As of Thursday, he was about 170 signatures shy of that goal.

Bob Bonde, leader of North Coast Incorporation Coalition, which supports incorporation of the four-community area as a single city, was elated with the rival group’s study.

“We couldn’t have gotten a better endorsement for our cause if we had paid for it,” Bonde crowed. His group submitted its study and petitions to LAFCO in May, before a deadline set by the agency for incorporation proposals seeking to be on the June, 1986, ballot.

The study, Bonde said, supports the findings of a 1982 county study and the study completed by his group in support of the incorporation of the four San Dieguito communities.

Public Affairs Consultants studied only the feasibility of incorporation for Encinitas alone or for Encinitas and Leucadia. In the first year of incorporation, the Encinitas area would receive an estimated $3.8 million in road funds, taxes and other tax revenues, and the two-city area would receive $4.8 million in revenue. City spending that first year, when county government would continue to provide many city services free to the area, would be $842,000 for Encinitas and $949,000 for the Encinitas-Leucadia area, the report stated.

City costs would jump to $4 million and $5 million, respectively, for the one-city and two-city areas, as the incorporated cities took on the entire load of urban services. But revenue also would increase to $6 million for Encinitas and $7.5 million for Encinitas-Leucadia, the study reported.

In five years, the projected surplus of revenues over costs would be $12.3 million for Encinitas, and $14.4 million for Encinitas-Leucadia.

County government would lose net revenue if either incorporation occurred, confirming what San Dieguito residents have suspected: county government gains more revenue from the San Dieguito area than it spends there, the report indicated.

Based on past county expenditures and revenue in the fiscal year 1984-85, county government would suffer a net loss of about $1.4 million a year if Encinitas incorporated and $1.5 million if the Encinitas-Leucadia area became a city.

The consultant warned that sales taxes--the Encinitas-Leucadia area’s largest source of revenue--are subject to fluctuation with the economy, but added that the proposed incorporation areas had more than enough surplus funds to weather any economic slump.

The study’s recommendations included:

- Creation of a city council-manager form of government, contracting for police protection and using present fire, sewer and water district services after incorporation.

- Early funding of road projects, which would cost about $1 million in Encinitas and $1.55 million for the two-city area, to remedy substandard conditions caused by lack of county funds.

- Accelerated development of parks and passage of a parkland dedication ordinance that would allow park acreage to keep up with population growth.

- Contracting with the county or state to provide a higher level of lifeguard service because of recent damage suits in which cities have been found liable for multimillion-dollar damages in swimming accidents.

- Seeking the “loan” of an experienced county administrator to help the new city get organized and to help with selection of a city manager.

- A study by LAFCO of a “considerably expanded” area for incorporation beyond Encinitas-Leucadia, because a larger area could be provided with urban services “without significantly altering the fiscal feasibility of incorporation.”