LAGUNA NIGUEL : City Wins Revenue Battle With County

After a two-year struggle, Laguna Niguel officials Tuesday finally got the county to pay nearly $2.4 million in back property tax revenue and refigure the city’s share of future revenue--a change that could mean $800,000 more annually.

The Board of Supervisors voted unanimously to adjust the county’s property tax sharing agreement with the city, updating the cost and revenue figures that determine how much money is earmarked for Laguna Niguel. Previously, the county based revenue on 1985 statistics.

“Basically, they were using stale numbers,” Laguna Niguel City Manager Tim Casey said. “When I arrived here three years ago and began to familiarize myself with the city’s revenues, I realized the county’s numbers failed to take into account the rapid growth and development in our city. Our true share was tremendously understated.”

Although Casey first met with county officials in 1991 to argue that newer numbers should be used, the county opted to continue its practice until a recent court decision favored a San Bernardino County city in a similar situation.

The board’s action, made without comment, will send $800,000 to the city’s general fund within weeks. It will also void a $400,000 debt the city owed for county services when Laguna Niguel was incorporated. A second debt, $570,000 for police services in May and June, also will be forgiven.

Another $630,000 will be given to the city in the form of 36 monthly credits of $19,500 from July, 1993, through June, 1996. Those credits will be applied to the city’s police service costs, which are contracted from the county for $286,000 a month.

Casey said the city will earn 7% interest on the monthly credits, which will garner another $70,000 over three years.

The $2.4-million combination of payments and credit compensates the city for lost revenue from 1990 through 1993, but the change will also potentially increase the city’s yearly property tax revenue by $800,000, Casey said. That infusion will nearly triple the city’s recent annual average of about $450,000 in property taxes.

The city’s general fund budget is $9.5 million for fiscal 1992-93.

As part of the agreement, the city agreed to drop its lawsuit against the county over the disputed revenue.

Although Laguna Niguel became a city in 1989, county officials have figured the city’s share of the local property tax by using cost and revenue data collected in 1985--the last fiscal year before the city filed its petition to incorporate.

Seeking relief, Laguna Niguel officials filed suit last year and looked to other cities in similar situations. They found such conflicts between Malibu and Los Angeles County and the city of Highland and San Bernardino County.

In 1992, Malibu city officials swayed state lawmakers to pass legislation mandating a fairer division, while the Highland case resulted in a 4th District Court of Appeal decision also instructing the county agency to use more recent numbers.

County Deputy Counsel Ben de Mayo said the court decision helped clarify a situation that was exacerbated by the lag time between Laguna Niguel’s application for cityhood in 1986 and the incorporation in 1989.

“It was what I guess you would call a friendly dispute,” De Mayo said. “Once the (Highland) case made it clear what the formula was meant to be, it was just a case of implementing it.”