New Study Cited : Rancho Santa Fe Says It <i> Can</i> Afford Cityhood

Civic leaders piloting an incorporation campaign in this wealthy community have produced a revised economic study that they say proves that the area has the financial wherewithal to support home rule.

The report, released Monday, comes three weeks after a county agency hinted that, despite its well-to-do residents and their splendid estates, Rancho Santa Fe might not generate enough sales tax revenue to support a local government.

That suggestion by officials at the Local Agency Formation Commission, which must approve all incorporation bids before they can appear on the ballot, alarmed cityhood boosters, who view home rule as the key to protecting their community’s exclusive ambiance. In response, the proponents asked their consultant to reexamine his figures and suggest ways around the revenue shortfall.

The new report by consultant William R. Zion accomplishes just that. Combining the elimination of staff positions, the abolition of City Council salaries and reductions in administrative budgets with other cost-saving tactics, Zion predicts a budget surplus of $181,856 after the city’s first year of operation.

That figure compares with the paltry $40,000 first-year surplus originally forecast by LAFCO, which was based on data submitted by the Rancho Santa Fe group. That amount represented less than 3% of projected first-year revenues for the city, well below the 15% level normally required by LAFCO before incorporation proposals are approved.

“We’re very optimistic at this point because these new numbers put us in very good shape,” said Ed Foss, chairman of the Study Committee on Home Rule, which hopes to place the incorporation question before voters next June. “We can see no reason why (LAFCO) wouldn’t approve cityhood now.”

LAFCO officials, however, said they have not yet concluded whether the new figures substantially change the financial picture. Moreover, the final decision rests in the hands of commissioners, who will hold a public hearing on the cityhood proposal Dec. 3.

“We’re still busy conducting our own fiscal analysis so I couldn’t speculate on the (new numbers) at this point,” said Michael Ott, an analyst for LAFCO. “We hope to have a recommendation on incorporation by next week.”

There is one problem that could spell doom for Rancho Santa Fe’s new report. According to Ott, LAFCO does not typically consider cost-saving measures like salary reductions and other technicalities of municipal governments in assessing the ability of a town to be economically self-sufficient. Instead, such a decision is normally based strictly on “known sources” like property tax revenues, sales tax income and expenditures on services provided by the county. If Zion’s proposed cost-cutting measures--which reduced anticipated first-year expenditures by $82,134--are excluded from LAFCO’s analysis, Rancho Santa Fe could be deemed unable to afford incorporation.

“We like to base our decision on factors we have control over, not on speculative things like salaries that would occur after incorporation,” Ott said. “But we will take into consideration the cost-savings measures provided and let the commission analyze them. Then it’s their decision.”

In addition to eliminating City Council salaries, Zion’s report recommends the abolition of an assistant city manager’s post and significant reductions in funding for the city attorney position and the planning and engineering departments.

The rationale for the changes, Foss said, hinges on the existence of the Rancho Santa Fe Assn., a homeowners group with a budget of more than $1 million that oversees road maintenance, a security patrol, an art jury and numerous other government-like functions in the Ranch.

With the association already operating much like a city government, incorporation proponents reasoned that they could cut back on anticipated municipal needs, Foss said.

“The idea is to have the two working together side by side,” Foss said. “This will allow us to avoid duplication of services and save on some city costs in areas like planning and administration.”