NORTH TUSTIN : LAFCO Seeks Data on Tax Proposal

A planning agency said Wednesday that it will seek more information on rates for a utility-users tax that would ensure the financial feasibility of a new city in North Tustin.

Estimates for the utility-users tax have ranged from $73 to $500 per household annually. Members of the Local Agency Formation Commission asked staff members to compile more specific figures and report back to the commission at its Jan. 15 meeting.

In addition, LAFCO staff will put together language for possible ballot measures that would link the utility-users tax to the incorporation of North Tustin.

“I believe that we as a public body have an obligation to clear up some of the questions,” said County Supervisor Gaddi H. Vasquez, who represents the North Tustin area and also serves as a LAFCO commissioner.

Although issues including boundaries and conditions must be tackled before the incorporation process can proceed, commissioners said they wanted to address the utility tax before moving ahead.

The commission has never before considered a proposed city that would require a utility tax to be financially viable. Both proponents and opponents of a new city agree that without the tax, the city would not be financially feasible because the largely residential area has only one source of sales-tax revenue, a restaurant.

The method of implementing the tax also remains in doubt. Commissioners indicated they would like to hinge incorporation on approval of a utility tax, but that has raised some concerns. Attorneys told the commission that even if voters approved the new tax before incorporation, it would be up to the new City Council to impose it.

Incorporation opponent Phyllis Spivey said that given the area’s conservative, anti-tax stance, she is concerned that residents might approve the incorporation and utility-users tax but elect an anti-tax City Council, which would lead to a bankrupt city.

Although incorporation proponents said they were encouraged by LAFCO’s action on Wednesday, it is uncertain whether the issue will ever make it to the ballot.

In addition to continuing discussion of incorporation, LAFCO once again postponed decisions on three competing annexation applications filed by the city of Tustin shortly after the incorporation proposal was filed.

The city of Orange also filed three annexation applications early in 1991 but those were approved in September by the commission. Orange subsequently conducted the required protest hearings and is evaluating the amount of written protests received.