ORANGE : Tax Question May Delay Annexations

Upset that the county may back away from an agreement that guarantees the city’s share of tax revenues from annexed properties, Orange officials are expected to act today to postpone any further annexations until the matter can be resolved.

City officials are most worried about revenues from the proposed East Orange annexation, a mammoth, 7,100-acre development planned by the Irvine Co. Orange stands to lose $5.7 million annually in property taxes from the East Orange annexation if the county changes the 1980 Master Property Tax Agreement, according to a report to be presented to the City Council today.

The property tax agreement determines how property taxes collected from unincorporated areas will be divided between county and city government. In most cases, the city and county split the tax revenue.

But in January, during a hearing on the city of Anaheim’s proposed annexation of Gypsum Canyon, the Board of Supervisors deadlocked on a recommendation to seek a greater portion of property taxes for the county.

Because of large-scale annexations such as the one in East Orange, county administrative officers want to re-evaluate the tax agreements with other cities.

If the tax agreement with Orange is changed, the city may not find it fiscally feasible to annex East Orange, a development of 12,350 homes which could increase the city’s population by one-third, according to Vern Jones, administrator of community planning.

Orange City Manager Ron Thompson said a modification of the tax agreement could throw off the city’s “fiscal balance.”

Calling the agreement “inviolate and sacrosanct,” Mayor Gene Beyer warned the Board of Supervisors in a letter that the city would not process any county requests to annex islands of unincorporated property in Orange until the future of the agreement is guaranteed.

Orange has been steadily annexing these islands, a program considered helpful to the county because it will no longer have to provide services such as police and fire protection to these isolated areas.

Orange currently has eight annexations of county islands with pending property tax agreements. An additional five annexations, including the Cumberland Road annexation approved in the March 5 election, already have tax agreements approved and will move ahead as scheduled.