LAGUNA HILLS : City to Take Annex Fight to Legislature

Weary of a dead-end battle with the county over annexation of North Laguna Hills, city officials said they will travel to Sacramento today to seek relief through state lawmakers.

For nine months, city and county negotiators have butted heads over the annexation, which has been made a top priority by the City Council and many community groups in the 736-acre unincorporated area. Both sides say the talks have been terse and unproductive. The key stumbling block has been money.

The city’s delegation plans to go before the Senate Local Governments Committee today to lobby for a bill it hopes will break the impasse over division of North Laguna Hills’ tax revenues.

That same committee heard testimony from the city and county last month and instructed both sides to return to the bargaining table. With those renewed talks also failing, city officials said the bill, sponsored by Sen. William A. Craven (R-Oceanside), appears to be the only available option.

“We’ve bent over backwards, but the county just does not want to give up that area,” said Don White, the city administrative services director. “They want all the money, and that’s all there is to it.”

The county’s lead negotiator, Anthony J. Carstens, said the talks have been difficult, but he said it is unfair to classify the county’s concerns as strictly financial.

“There are other issues. But as far as the money goes, the bottom line from our perspective is no matter what deal we cut, we are going to have less money for county services,” he said.

The annexation of North Laguna Hills and its 4,950 residents has been a top priority of this city since its incorporation in December, 1991. But that effort has been stymied by county negotiators who want to hold on to a portion of the area’s sales tax, city officials said.

One penny of the county’s 7 3/4-cent sales tax levied on each dollar traditionally stays at the city level. Laguna Hills officials have been reluctant to change that and set a “bad precedent,” City Manager Bruce Channing said.

The city has offered to give 100% of its share of the area’s property taxes to the county, which would amount to $1.38 million annually. By comparison, the county’s proposal to keep 95% of the property tax revenues and 7% of the sales tax revenues would generate $1.41 million for county coffers.

The state revenue and tax code says property tax is the sole bargaining chip in any annexation process, city officials argue, adding that the offer to relinquish 100% of that revenue should end any need for negotiation.

However, county negotiators said the city’s offer would not be enough to earn endorsement of the annexation bid when it goes before the Local Agency Formation Commission. LAFCO has approval power over annexations. Two of its five members are Orange County supervisors.