Sunset Hills Proponents Unfazed by Predictions City Would Face Deficit

A state report predicts that the proposed city of Sunset Hills would face budget deficits immediately after incorporation, but a key cityhood supporter said the study is still encouraging news to residents hoping to create another new city in the Santa Clarita Valley.

The report, released Tuesday, said Sunset Hills, located west of the city of Santa Clarita, would accrue yearly budget deficits ranging from $275,000 to nearly $500,000 during the first four years of cityhood. But those deficits would be relatively minor compared to projected deficits for other new cities such as Santa Clarita, Ernest Dynda, a cityhood proponent, said Wednesday.

The report was prepared by the Local Agency Formation Commission, or LAFCO, which oversees annexations and incorporations.

Dynda had not read the complete report but said the small size of projected deficits could bode well for Sunset Hills. “It sounds good,” he said. But he added that the report raises more questions than it answers.

The only certainty Wednesday was that the city of Santa Clarita will oppose incorporation because it hopes to annex the area. Mayor Jo Anne Darcy pledged to fight the Sunset Hills cityhood effort.

Sunset Hills would cover 27.8 square miles west of the Golden State Freeway and south of California 126, including Six Flags Magic Mountain and the Stevenson Ranch development under construction by the Dale Poe Development Co.

The area has an estimated 1,701 residents and could have 2,264 by 1993, the report said.

Jeff Stevenson, a Dale Poe vice president, and Dynda, a former Poe consultant and Agoura Hills city councilman, are leading the cityhood drive. Some critics have derisively dubbed the area “Poe-dunk.”

Darcy said projected deficits for Sunset Hills seemed unusually low. “I thought it would be in the millions,” Darcy said.

When Santa Clarita incorporated two years ago, for example, LAFCO projected that the first-year deficit would be $3.5 million, Darcy said. LAFCO approved letting residents vote on Santa Clarita incorporation despite the projected deficit. As it turned out, the city had a $2.5-million surplus in its first year.

The fiscal report released Tuesday does not endorse or oppose cityhood for Sunset Hills. Instead, it outlines the potential revenues and expenses of the proposed city. The commission is scheduled to hold a hearing on the cityhood proposal June 27.

LAFCO officials were out of town at a conference Wednesday and could not be reached for comment.

Santa Clarita asked LAFCO last year to include the Sunset Hills area in its “sphere of influence,” thus making the area eligible for annexation to the city. LAFCO turned down the request, citing the incorporation effort launched by Dynda and Stevenson.

The proposed city would include Six Flags Magic Mountain and property owned by Newhall Land and Farming Co. but both companies have said they do not want to be included in Sunset Hills.