Liability Insurance Pinch Delays Rossmoor Bid for Services District

The residents of Rossmoor, a community of 12,000 nestled between Los Alamitos and Seal Beach, are in a bind.

The county Board of Supervisors voted early last year to stop using money from countywide property taxes for services aimed at only one community. In Rossmoor’s case, that means a loss of more than $30,000 worth of services such as street sweeping, tree trimming and street lighting.

The community’s alternative is to form its own services district, which would return a portion of Rossmoor’s property taxes to the area to pay for that work. But community services districts, like cities, must be insured. And lately, no one wants to insure them.

Insurance Predicaments

Other cities and districts are finding themselves in similar predicaments. Neither Mission Viejo, where residents voted in November to become a services district, nor Laguna Niguel, which reopened public hearings on the issue this month, have been able to find companies willing to insure them against liability lawsuits.

Gus Brickman, vice president of the Rossmoor Homeowners Assn., said the group is convinced that insurance companies are refusing to offer liability coverage to garner support for the June 3 “deep pockets” ballot initiative.

“What they’re saying is: ‘Help get the bill passed and we’ll get you a quote,’ ” Brickman said.

The initiative, Proposition 51 on the June ballot, would limit the liability of cities under the “deep pockets” legal doctrine, which allows courts to hold one party in a lawsuit, one with presumably “deep pockets” of wealth, liable for most damages no matter what its level of responsibility in an accident.

Insurance Unprofitable

Insurance brokers contend that companies are dropping city coverage because the number of liability lawsuits, and the damages awarded, make it unprofitable.

Last November, Mission Viejo became the first unincorporated community in the county to form its own services district since the Board of Supervisors voted early last year to stop using “special district augmentation funds,” which consist of county property taxes, for services that did not benefit the entire county. Other communities, such as Laguna Niguel and Rossmoor, must either follow suit or lose locally generated property taxes to countywide services. Laguna Niguel will lose $1.3 million from the county.

Rossmoor cut back services such as street sweeping and tree trimming when it was notified of the county cuts but still faces a deficit of between $30,000 and $40,000 for the 1986-87 fiscal year, Brickman said. He added that Rossmoor residents agree that they would rather form a community services district than face another possibility: fees ranging from $10 to $29 levied by the county on each home.

Hearing Postponed

The creation of a community services district would require approval by the county Board of Supervisors and Rossmoor residents. But the insurance problem forced the Rossmoor Homeowners Assn. to ask the supervisors to postpone a February hearing on the issue until June 25, Brickman said.

Rossmoor residents now will have to wait at least until the November election to decide the issue.

Brickman said a 1982 association survey showed that Rossmoor residents would like to remain unincorporated. Although community services districts are sometimes referred to as junior cities, he said that becoming a city is not Rossmoor’s intent. However, the creation of an autonomous district does pave the way for increased self-government in the future.

“If the community services district were voted in, I can foresee the residents asking the Board of Supervisors to add other services to it,” he said.