State Crushes Cityhood Bid of Foothill Ranch, Portola

In a decision that all but snuffed out the cityhood dreams of two new Orange County communities, a state commission on Wednesday allowed the city of Lake Forest to annex the revenue-rich Foothill Ranch Towne Centre shopping and commercial area.

By awarding jurisdiction over the shopping center to Lake Forest, the Local Agency Formation Commission undercut hopes by residents of Foothill Ranch and Portola Hills to form their own city, using the Towne Centre area as a crucial revenue source. Without the 1,502-acre commercial and retail area, and the taxes it would generate, the city would lack the revenue needed for viability.

Wednesday’s decision, at a meeting in Santa Ana, will have ramifications for the future civic map of Orange County. The commission, which governs civic boundary issues, signaled it will honor past agreements that designate “spheres of influence” of existing cities but also will require cities to negotiate with inhabitants of areas to be annexed.

But the requirement to negotiate future annexations failed to temper the anger of residents of Foothill Ranch and Portola Hills, who sensed their ambitions to become a city slipping away. Lake Forest intends to begin the process of annexing the two communities next year; many residents say they want none of it.

“They went and made their decision against the wishes of the people,” said Sharon Hankins, vice president of the Foothill Ranch Civic Council.

Helen Ward, director of Cityhood Now!, which has been gathering signatures and raising funds for incorporation of the two planned communities, said members plan to file for a reconsideration.

“This is another example of how people are dictating what our actions should be,” Ward said, appearing at the meeting with other annexation foes. “We’re all disappointed.”

About 12,000 people live in the adjoining communities of Foothill Ranch and Portola Hills. Towne Centre generates an estimated $2 million a year in sales tax revenue.

Lake Forest at first will receive sales tax revenue from businesses in the Towne Centre area but none of the property taxes, which still will be paid to the county, which continues to provide services to the nearby residential areas. The city and county will begin sharing the property tax revenue if Lake Forest succeeds in annexing surrounding communities.

When Lake Forest became a city in 1991, the areas comprising Towne Centre, Foothill Ranch and Portola Hills were considered to be within its sphere of influence, meaning it had a standing right to annex them.

The LAFCO decision Wednesday shows the agency wants “to fulfill the obligation to Lake Forest,” said Dana Smith, LAFCO executive director.

In the Foothill Ranch Towne Center area, 1,502 acres of bustling shopping and commercial activity, businesses either supported the annexation by Lake Forest or remained silent on the issue.

“When we bought the property we understood the sphere of influence and assumed that it would become part of the city,” said Larry Harmson, who leases industrial property and was one of two property owners who spoke in favor of the annexation. Harmson also owns property in Lake Forest.

But near the end of the business day, customers who had heard of the ruling and live in the affected area were expressing anger and opposition, said Jeff Edwards, an employee of a Mail Boxes Etc. store in Towne Centre.

“People seem mad about it,” Edwards said.

The unincorporated communities have been gathering signatures and last week filed a cityhood feasibility study, but the study was rejected by the commissioners, who voted unanimously to grant the annexation by Lake Forest.

“Lake Forest is not an ogre coming up the hill to take away the riches,” said LAFCO Chairman Randal J. Bressette, also a Laguna Hills city councilman. “Geographically, a couple of planned communities do not make a city.”

Bressette also said the shopping center alone would not be a “good financial base for a proposed city.”

Lake Forest also plans to provide some services previously provided by the county. Bressette and other LAFCO commissioners said the two planned communities need those services, but residents said they would be of little use, consisting of street sweeping, crossing guards and park maintenance in an area that has no public parks.

Many said they would refuse to support future residential annexations by Lake Forest.

Still, William G. Steiner, a LAFCO commissioner as well as an Orange County supervisor, said he hopes the two communities become part of a larger community someday.

“It’s a specter that I worry a lot about, unincorporated islands,” Steiner said. “They are a structure of government that doesn’t make any sense. I hope that over time Foothill Ranch and Portola Hills will not remain unincorporated cities; they would be shortchanging themselves.”

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Land Claim

A state commission Wednesday allowed Lake Forest to annex the revenue-rich Foothill Ranch Towne Centre shopping and commercial area, killing plans for Foothill Ranch cityhood.