Laguna Niguel Groups Draw Battle Lines on Cityhood Step

Laguna Niguel, a sprawling planned community of about 26,000, soon could become the second large chunk of south Orange County to take a major step toward cityhood since the county Board of Supervisors’ vote a year ago to cut funds for services to unincorporated communities.

Last November, Mission Viejo residents voted to form a community services district and take over the administration of street-sweeping, landscaping, recreation and street-lighting services that until then were all being provided by the county. A five-member board of directors was inaugurated last week and will take over the services in July.

Now, Laguna Niguel is in the midst of a communitywide debate on the issue that is beginning to heat up. While the services-district concept was adopted without much opposition in Mission Viejo--a homogeneous community master-planned by a single development company--residents of Laguna Niguel, a hodgepodge of smaller developments stretching from the coast through rolling hills to the San Diego Freeway, are having a harder time reaching a consensus.

‘Feelings Are Very Strong’

How property taxes are spent, property values and a good deal of community pride are at stake, said Supervisor Thomas F. Riley, whose district includes Laguna Niguel.

“Something is being heatedly debated, and the feelings are very strong,” Riley said. “People don’t like change, and I have no doubts from my experience that this is a very, very important decision. Boundaries are being set, and (they) could determine whether you live in a coastal community or not.”

The Laguna Niguel Community Council--a semi-official body that speaks for Laguna Niguel in county matters--asked the Board of Supervisors last October to begin proceedings for the formation of a Laguna Niguel Community Services District, and the proposal, if it is approved by the county’s Local Agency Formation Commission next month and then by the supervisors, could be presented to area voters on the June ballot.

Separate Coastal District

Some residents of coastal neighborhoods want to split off from the rest of Laguna Niguel and possibly form their own district. Others are worried that a new district might not be able to afford skyrocketing liability insurance premiums--if insurance can be obtained at all.

At stake is about $1.2 million a year in locally generated property taxes. That is the amount that Laguna Niguel property owners pay into a countywide fund set up after the passage in 1978 of Proposition 13 to help special service districts balance their budgets. Until this fiscal year, Laguna Niguel could, with the approval of the supervisors, draw on that money to keep its slopes green and baseball diamonds manicured. But last February the Board of Supervisors said the $45-million special fund would be used for services, such as fire protection, that benefit the entire county and could no longer be used to subsidize strictly local services.

However, the $1.2 million would stay in Laguna Niguel if the community services district were created. While services could probably be maintained at current levels for another two years even without the windfall, “we do have a number of uses in Laguna Niguel for that money right now,” Community Council member Bob Hurst said. “Our Little League is turning kids away, soccer is crowded and it’s time our parks grew a little bit,” he said.

If the election is delayed beyond June, Hurst said, the community will lose the $1.2 million for fiscal year 1986-87, which begins July 1.

Maintenance Services

The new district, as proposed by the Board of Supervisors, would provide street-sweeping, slope, median and parkway landscaping, parks and recreation and street-lighting services, said Robert Hamilton, special districts administrator for the county’s Environmental Management Agency. Other services--such as fire and police protection, libraries and road maintenance--would continue to be provided by the county. The new district could provide such services only if first approved by voters in a future election, Hamilton said.

The new district could not raise property taxes, but it could levy benefit assessments or user fees for services without voter approval.

Community services districts are often referred to as “junior cities,” as they offer so many of the same services as a city and are considered by the Local Agency Formation Commission to lay out the boundaries for future incorporation, commission executive director Richard Turner said.

But Laguna Niguel residents are divided over what the boundaries of the possible future city should be.

Some Favor County Tie

Some residents support the local council’s proposal to form one large services district encompassing all of Laguna Niguel, plus parts of the Bear Brand Ranch and Nellie Gail developments. Others, mostly from the coastal neighborhoods, want to divide Laguna Niguel into two districts--one inland and one on the coast, with Clubhouse Drive as the most likely boundary.

Still others want to remain under the county’s apron, holding out the possibility of joining a services district in a year or two, or perhaps creating a coastal city that would include South Laguna, Dana Point and Capistrano Beach--the last two of which are taking a hard look at their own prospects for incorporation.

Most of the retail tax base for a future city lies near the coast, and the completion of Stein-Brief’s Monarch Beach development, which is to include a large resort hotel and a major shopping center and theater complex, will make inland Laguna Niguel appear to be even more of a bedroom community by comparison.

Insurance May Be Problem

The dark cloud looming over all of these proposals, however, is the distinct possibility that any new service district in Laguna Niguel will not be able to obtain liability insurance. If approved, the district, when it takes over responsibility for administering services from the county, will also be liable for claims arising from those services.

But Hamilton said residents are mistaken in believing that they are currently insured by the county. “The costs of settlements are charged to areas,” Hamilton said. “Like the county, service areas are self-insured.” In other words, a settlement or award against County Service Area 3 would come from that area’s budget or, if not enough funds were available, from an assessment levied on residents the following year, he said.

“Our actual experience with liability for county service areas has been nominal,” Hamilton added. “There haven’t been any claims against Laguna Niguel in at least five years.”

But self-insurance is not being considered an option for any new district, Hurst said. “We just can’t afford that luxury,” he said. “One or two big settlements could wipe us out.”

Property Values at Issue

So far, no insurance company will even offer an estimate, said Community Council President Dr. James Krembas, who is nonetheless optimistic that legislative action might change the situation by June. “If it doesn’t happen by then, then everyone can join hands and say it isn’t the right time.”

Some constituents are worried about property values, Supervisor Riley said. Many who moved to Laguna Niguel partly because it meant having a coastal address now are concerned that the value of their property will go down if the community is divided into inland and coastal portions, he said.

“What is there that is different?” asked Solveig Darner, a resident of one of the inland neighborhoods and a member of the Community Council’s ad hoc governance committee. Darner said that if liability insurance could be obtained at a reasonable cost, a single services district “could be a very positive, feasible solution for Laguna Niguel.”

“We all came to Laguna Niguel because it’s pretty, because we have the coast and there’s a good community feeling,” Darner said. “To say that you live in Niguel Shores (a locked-gate coastal neighborhood that favors the two-district idea) and don’t care about the rest of Laguna Niguel is unfortunate.”

‘Keep Options Open’

Niguel Shores resident John Bulleit disagrees, however. “If this (proposed services district) is a step towards a municipality, let’s all run,” he said. “Do we belong more with the coastal area, or with Nellie Gail? The coastal-city idea is the future. There is no need to worry about what it looks like now, but we do need to keep our options open.”

Bulleit also expressed concern that an all-inclusive services district dominated by the more populous inland communities would favor the inland parks over those on the coast when budgeting recreation funds. If two districts were formed, Bulleit said, each could spend its revenues on its own parks.

Another cluster of homeowners associations in the coastal area wants to remain under the county’s aegis, at least for the time being, and have asked the Local Agency Formation Commission to leave them out of any new services district.

“People feel things are working well as a county service area, and they question whether we should take an unnecessary risk that might make them work a little bit better,” said Paul Christiansen, who represents the Pacific Island Village and Monarch Summit homeowners associations on the Community Council. Christiansen says his community “does not want to create a whole new layer of bureaucracy,” and wants to see a vote on the issue postponed until November.

“We should wait until we know we can get insurance and have a chance to see how Mission Viejo is shaping up,” Christiansen said. “If that turns out to be a golden egg, then people might be persuaded to change their views. But (the issue) is creating a divisiveness that we do not need in Laguna Niguel. You can see the red line being drawn on the map right now.”