Cityhood Votes a Year Away for 2 Communities

Although cityhood will not be on the ballot anywhere in Orange County this year, civic leaders in Leisure World in Laguna Hills and Rancho Santa Margarita say their incorporation drives are on track for a March 1999 special election.

Both communities hoped to get cityhood on the November ballot, but the morass of financial statistics needed for their incorporation applications slowed the process.

“It certainly appears like the [incorporation election] is going to be March 1999,” said Leisure World cityhood petitioner Bob Ring. “We just couldn’t get the necessary [tax revenue] data from the state in time.”

Ring said the retirement community might have barely qualified in time to put cityhood on the November ballot, but prospective City Council members would have had only a matter of days to turn in candidate papers.

About three months behind Leisure World in processing their paperwork, residents supporting Rancho Santa Margarita cityhood say their application also should qualify for a March 1999 special election.

“We’re working with our consultant on a financial analysis” of cityhood, organizer Gary Thompson said. “We should make it. It makes sense for both [Rancho Santa Margarita and Leisure World] to use a March special election.”

Neither Foothill Ranch nor Aliso Viejo, two other communities considering cityhood, have submitted an application to the Local Agency Formation Commission, which is responsible for approving annexations and incorporations.

Leisure World recently jumped an important hurdle when it negotiated an agreement on how to compensate the county for lost tax revenue.

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When a community incorporates, it receives property, cigarette and gas tax revenue that formerly went to the county.

State law requires that such lost tax revenue be returned to the county. Since being passed in 1992, the law has had a chilling effect on incorporations--only one community in California has become a city in the last five years.

But Ring said county officials worked openly and fairly on dividing current and future tax revenue.

“They really went out of the way to make this a fair arrangement for both us and them,” he said. “I think the county is doing everything they can to make it easy for unincorporated areas to incorporate so they can get out of the business of providing municipal services.”

Formerly, county officials pressed for every dollar they could get from an annexation or incorporation. Tax revenue splits sometimes took years to negotiate.

Following the 1994 bankruptcy, the county began softening its position.

“I believe the guiding principle that was applied in [Leisure World] would apply to other incorporations,” said Mike Ruane, county assistant chief executive officer. “We’re looking to recover the county’s costs without undermining the viability of a prospective city.”

Thompson hopes the same policy is followed when Rancho Santa Margarita works on its tax split with the county, possibly as early as next month.

“What we’ve seen so far is that the county isn’t going to come out and say, ‘We want all your money,’ ” Thompson said. “But we have a different type of tax base than Leisure World, so we’ll see how it goes.”