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.L)~ A MEMBER OF ARTHUR YOUNG INTERNATIONAL
h 15 ~outt1 I luwl:' r ~; \rut:. l
Arthur Young Lu::; Anqclt':r,. C r1l1forn i:i f;0071
fo l()phonc: (213) 977- 3200
September 18, 1987
Santa Clarita Incorporation Committee
c/o Mr. Louis Garasi, President
Gruber Systems
25636 Avenue Stanford
Valencia, CA 91355
Members of the Santa Clarita Incorporation Committee:
Arthur Young was retained in January 1987, by the Santa Clari ta
Incorporation Committee to assess the proposed City s budgets as
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prepared by the Los Angeles County Local Agency Formation Commission
(LAFCO). Our primary objective was to evaluate the revenue and
expenditure data compiled by LAFCO and to comment on the potential
degree of reliability inherent in these data. Tbe Incorporation
Committee retained Arthur Young due to our audit and management
consulting experience with the newly formed cities of Agoura Hills,
Westlake Village, West Hollywood and Moorpark as well as our
experience with larger and well established municipalities such as
Beverly Hills, Lancaster and Palmdale. Based on Arthur Young's
knowledge of municipal finance, the Committee believed our firm would
be well-suited to assess the potential strength of the proposGd City
of Santa Clarita's finances.
Currently, LAFCO's estimated budget for the pJ·oposed City of Santa
Clarita (contained in a LAFCO report dated April 22, 1987) presents
revenues of approximately $3.5 million over expenditures. This
budget reflects a very positive financial outlook for the proposed
City. In addition, several factors which have not been quantified in
LAFCO' s analysis may serve to enhance the City's al ready positive
financial outlook. These factors include:
• The rapid economic development exp~rienced in the Santa Clarita
area should cause significant sales tax growth which would
further increase municipal revenues. For example, LAFCO's report
recognizes that six new automobile dealerships and two junior
department stores have recently opened. The sales tax revenue
resulting from these known enterprises is not reflected in
LAFCO's budget data as actual sales tax data for these businesses
were not available when the report was prepared.