El Toro, Laguna Hills to Vote on Cityhood : Incorporation: LAFCO overrides recommendations of denial that cited county revenue loss. Voters will decide on March 30.

The fast-growing areas of south Orange County took another step toward urbanization and self-rule Wednesday when the Local Agency Formation Commission cleared the way for El Toro and Laguna Hills to become the county’s newest cities.

Meeting in Santa Ana, the LAFCO board voted 4 to 0 with one abstention to let the voters decide if El Toro and Laguna Hills should become the latest South County areas to create their own city councils to deal with local affairs.

If approved in the March 30 vote, the neighboring areas straddling Interstate 5 would become the 30th and 31st cities in the county, joining Laguna Niguel, Dana Point and Mission Viejo as areas that have opted for cityhood in the past three years. The first day of business for the new cities would be Dec. 20, 1991.

The LAFCO board gave its approval despite strong recommendations from the agency’s staff, the county’s chief administrative officer and the Environmental Management Agency that the applications be denied on the grounds that loss of tax revenue to the county would hurt its already shrinking coffers.

Cityhood backers in Laguna Hills and El Toro welcomed LAFCO’s approval and exchanged hugs after the final vote.

“This is it, this is wonderful,” said Grady Davis, secretary of El Toro’s Community Coalition for Incorporation. “Standing out in the street to solicit petitions was worth it after all.”

The chamber also erupted in applause when the board voted to approve an amended version of the Laguna hills application.

The proposed new city of El Toro would have a population of 58,000. It would be bounded on the north by the planned Foothill Transportation Corridor, on the east by Mission Viejo, on the west by Irvine and on the south by Interstate 5. It would not include El Toro Marine Corps Air Station or the proposed Foothill Ranch development lying north of the Foothill corridor.

Laguna Hills, with a population estimated at 23,000, would be bounded by El Toro Road on the north, Interstate 5 to the east, Crown Valley Parkway to the south and Moulton Parkway to the west.

The twin cityhood efforts have taken a long and tortured path as municipal fever has swept much of the South County, dictated by what homeowners see as their natural allegiances to specific areas and neighborhoods.

Compared to Mission Viejo, a self-contained planned community, El Toro and Laguna Hills are not so well defined, and the fight to incorporate those areas has been fraught with controversy. Residents of the Portola Hills development near Trabuco Canyon, for example, were split about being tied in with the proposed city of El Toro, while in Laguna Hills, the large Leisure World retirement community successfully fought to keep itself from being included in the boundaries of that proposed municipality.

Cityhood proponents in both areas eventually compromised, deleting neighborhoods that wanted nothing to do with the new cities, and predicted Wednesday that voters would approve the new cities next March.

Concern over the potential loss of revenue for the county led Don R. Roth, chairman of the Board of Supervisors and a LAFCO board member, to abstain from Wednesday’s vote. Before leaving the hearing, Roth urged other LAFCO commissioners to delay allowing a vote on the proposed incorporations.

Noting recent budget cuts that would affect social services provided by the county, Roth said: “Now is not the time for new incorporations. . . . My countywide responsibilities to the poor and those in need make me see that now is not the time. We must set our priorities.”

If the two cities are incorporated, the county would lose $9.3 million annually in tax revenue, according to estimates by LAFCO’s staff.

But that figure could be lower since LAFCO trimmed significant revenue-generating areas from the boundaries of the proposed cities. Last week Gaddi H. Vasquez, a supervisor who serves as LAFCO chairman, struck a compromise by getting cityhood proponents to remove Portola Hills and the proposed Foothill Ranch development from their application.

On Wednesday, the LAFCO board voted to keep the Laguna Hills Mall within the boundaries of the proposed city, but deleted the lucrative northern Laguna Hills area of homes and businesses from the proposed city limits.

In both cases, however, the deleted areas were placed in the proposed city’s “sphere of influence,” meaning they could be annexed after incorporation.

“Everyone did not get everything,” Vasquez said. “But by approving the petitions, we have moved the issues forward for the people to determine their future.”

Still, cityhood proponents were pleased with the outcome and were anxious to begin their campaigns to get the referendums approved.

“Our first step is to incorporate the south and then it’s on to annex the north,” said Helen Wilson, co-chair of the Citizens to Save Laguna Hills.

Although El Toro residents were virtually certain about securing approval from the LAFCO board, cityhood backers in Laguna Hills were a little skeptical about their chances. However, their application received a major boost when Supervisor Thomas F. Riley, whose district includes Laguna Hills, made a surprise appearance to testify in favor of the application.

“Because of the strong outpouring of community interest, I felt it was my responsibility to be here today to make your job easier,” Riley said.

Laguna Hills cityhood backers made two earlier, unsuccessful attempts to incorporate. First a proposal to create a city out of a large part of Saddleback Valley was defeated in November, 1988--it would have included both Laguna Hills and El Toro. Then, a cityhood proposal that included Leisure World was rejected by voters in June, 1989.

LAFCO’s approval of both applications was seen by many cityhood backers as a reversal of what they called an unwritten agency policy to stem independence fever in South County communities.