Laguna Hills Seeks Help on Annexation : Legislation: A Senate bill would permit action to proceed. Orange County is reluctant to cede the area--and its tax revenue--because of bankruptcy constraints.

Frustrated in their three-year effort to take control of a nearby unincorporated community, city officials are seeking passage in the state Legislature of a bill that could pave the way for the annexation without county approval.

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The bill, sponsored by Sen. William A. Craven (R-Oceanside), would require that the annexation proposal be considered by the Local Agency Formation Commission even if the county refuses to grant its blessing. The agency processes intergovernmental land transactions.

County officials oppose the bill, saying the annexation would deprive the bankrupt county of about $1.3 million in annual sales tax revenue generated in the unincorporated area known as North Laguna Hills.

Dave Kiff, an aide to County Supervisor Marian Bergeson, said there is little question that the area should join with Laguna Hills.

But in light of the bankruptcy, he said the county cannot afford to immediately give up all sales tax revenue involved.

“It would take away a good chunk,” Kiff said.

Bergeson recently suggested a compromise in which the county would gradually give up the area’s sales taxes to Laguna Hills over several years.

City leaders, however, have reacted coolly to Bergeson’s idea, saying it is unfair for Laguna Hills to receive only a portion of sales taxes from annexed territory when other cities have received all such revenue.

Laguna Hills has tried to annex the 1.5-square-mile county pocket since the city was incorporated in 1991. North Laguna Hills is home to about 5,000 people and a sizable commercial district off the Santa Ana Freeway.

Before a city can annex unincorporated territory, it must reach an agreement with the county on how to divide the property’s tax revenue.

Last year, Laguna Hills offered to let the county keep all the property taxes generated by North Laguna Hills. But the county still refused to proceed with the annexation in what city officials believe was a bid to gain a portion of sales tax revenue as well, said Laguna Hills Councilwoman Melody Carruth.

Craven’s bill would require the Local Agency Formation Commission to consider the Laguna Hills annexation even if the county does not agreed to a tax-division plan.

Carruth said the annexation makes sense, especially as the Board of Supervisors moves to downsize county government.

“The county has been promising downsizing and streamlining,” Carruth said. “Here’s a perfect example of where they can do that.”

As part of a radical plan to restructure county government, Bergeson has proposed that all county unincorporated areas either join other cities or form new ones by the end of the century.

“This area should be part of Laguna Hills,” Kiff said. “It’s a question of timing.”