ORANGE COUNTY IN BANKRUPTCY : Aliso Viejo Group Asks State for Funds Help

Declaring a loss of confidence in Orange County’s ability to safeguard the special taxes it collects in Aliso Viejo, a group of residents Friday asked the state auditor to step in and manage the funds that are now going into the county treasury.

“No one, to our knowledge, represents the interests of the residents of Aliso Viejo who pay Mello-Roos taxes,” said a letter to state Auditor Kurt Sjoberg. Other taxpayers with money tied up because of the county’s bankruptcy have their interests represented by their cities, but Aliso Viejo residents have “a lack of trust in the Board of Supervisors,” which technically represents the unincorporated community’s interests, the letter said.

Aliso Viejo, which has about 20,000 residents, is indebted for $348 million in Mello-Roos taxes. The taxes, which are paid in addition to property taxes, are levied by special districts, usually in newer communities, and are supposed to pay for infrastructure costs as a community grows.

The citizens’ group asked Sjoberg to “provide us with some measure of protection for our special tax funds and advise us how to proceed with future tax payments.”

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With county officials talking about raising taxes, layoffs and slashing employee retirement funds to deal with the bankruptcy crisis, Aliso Viejo residents also asked Sjoberg to represent them so that “in the rush of demands for money, our interests will not be forgotten.”

However, after a quick review of the letter, Sjoberg said his office may not be able to act on all of the residents’ requests.

“They have a compelling concern, and it’s one that they’ve struggled with for some time,” Sjoberg said in a telephone interview from Sacramento. “But it’s not within the powers of my office to fulfill their request. Perhaps if they word it differently.”

The two-page letter represents the frustrations of local residents who have tried for years to get the county and other assessment districts to give them an adequate accounting of how their Mello-Roos taxes are spent, said Debbie Anderson, one of four Aliso Viejo residents who signed the letter. The residents are members of a group called Concerned Citizens from Aliso Viejo.

After several years of trying to get information, Aliso Viejo homeowners finally learned from Orange County officials in November, 1993, how much they were being assessed for the San Joaquin Hills tollway, which was sanctioned by the state in 1983 and given final approval in 1991. The homeowners’ share of the $793-million road is $67.9 million, or about 8.5% of the total cost.

“All they do is collect our Mello-Roos taxes twice a year and give it away,” Anderson said. “Several of us have tried to get the county to give us an accounting of where this money goes, but every attempt has been futile.”

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The Assembly passed a law in 1982 that allows local government agencies to establish community facilities districts, which have the authority to levy Mello-Roos taxes, named after the two legislators who authored the measure. The funds are used to fund public improvements.

“Orange County’s financial debacle is terribly troubling to us because we are sending our hard-earned money to an agency that has already breached its fiduciary responsibilities,” said the residents’ letter. “Consequently, we believe that our Mello-Roos tax dollars are particularly vulnerable to all types of misuse and mismanagement.”

The letter also said that Aliso Viejo residents are entitled to know how Orange County has spent their Mello-Roos taxes and how much of those funds remains in the county treasury.

“We would like to be treated fairly. Please agree to assume this role for us. We have no one else to turn to,” said the letter.

Sjoberg said he understands the residents’ concerns but added that he does not have the authority to manage their Mello-Roos taxes or offer advice on whether they can withhold the upcoming payments in April.

“I have no power to undertake anything but an audit,” said Sjoberg. “But if there is a request that I audit the Mello-Roos district they live in, then I could do something.”