Calabasas Cityhood Called Viable : Incorporation: A government analysis says the situation has changed since the community’s first attempt in 1988. It says a new city would see a financial surplus in the first 4 years.

Cityhood may not come cheap, as backers of the proposed city of Calabasas know well. But the governmental agency that oversees the birth of new cities has concluded that the hilly, affluent community can finally afford independence.

In a financial analysis released Thursday, the Local Agency Formation Commission reported that Calabasas can expect a balanced budget and even a surplus in its first four years. The information is crucial to cityhood proponents, whose last attempt at incorporation in 1988 ended after LAFCO determined that their new government would be $450,000 in debt after its first year.

“We’re very optimistic about the budget since it shows a surplus in all the years, and a substantial one,” said Robert S. Hill, president of the cityhood committee.

A hearing on the proposed incorporation has been scheduled before LAFCO July 11.

If all goes smoothly and the cityhood drive wins approval by LAFCO and the Los Angeles County Board of Supervisors, the committee may place the issue before voters as early as November, Hill has said.

Ruth Benell, the agency’s executive officer, said she will make a recommendation to the commission sometime before the hearing, probably by the end of the month. Benell and an assistant met cityhood backers for lunch Thursday to give them a copy of the financial report and discuss their new application for incorporation, which was filed early this year.

Hill said Calabasas has about 27,000 residents living within a 14-square-mile area.

Under LAFCO’s projections, an incorporated Calabasas would enjoy a budget surplus of $1.2 million during the 1989-90 fiscal year; a $600,000 surplus in 1990-91; a $1.6-million surplus in 1991-92; and a $2-million surplus in 1992-93.

Benell attributed Calabasas’ new-found financial stability to tax-producing auto dealerships and a new motel that have opened since its prior attempt to incorporate. The cityhood committee has also scaled back its proposed municipal boundaries, eliminating an undeveloped stretch of the Santa Monica Mountains that would have produced no revenue but required costly police and fire protection, she said.

Although Benell declined to discuss what her recommendation on Calabasas cityhood will be, she said, “It appears it would have a viable budget this time.”

LAFCO’s 1988 economic projections were challenged by cityhood backers in a lawsuit which, in one example of alleged miscalculations, accused Benell of overestimating expenses by $387,641 by twice overbilling overhead costs for sheriff’s services.

Hill said Thursday that the suit was dropped in January or February, when the cityhood committee submitted a new application to LAFCO.

About the same time, the Calabasas Park Homeowners Assn. reached an accord with developer Jim Baldwin in which the group agreed not to oppose construction of 550 new houses in exchange for Baldwin’s support of a renewed cityhood drive.

During the last campaign, Baldwin took legal steps to prevent his property from being included in the proposed city and becoming subject to a possible building moratorium by a new City Council.

Despite the apparent elimination of legal and financial hurdles, Benell said Calabasas cityhood still depends on several factors, including “the need for another city along the Ventura Freeway corridor.”