MISSION VIEJO : City Offers County Tax Revenue Deal

In an effort to break a stalemate with county officials, the City Council last week voted to cede property tax revenue from a proposed annexation to the county.

The City Council authorized staff to give 100% of property tax revenue from the 7,000-resident Aegean Hills community to the county, a considerable change from the 52% to 48% split weighed toward the county that was previously put on the table by city negotiators.

At stake is about $709,000 in revenue from property taxes and special lighting and park maintenance fees charged residents. The county is seeking about 85% of the total revenue to help pay for running the court system, jails and other social services.

Under the city’s new offer, the county would receive about $439,000 annually from property taxes. Mission Viejo would draw about $270,000 each year from special property taxes, including a street lighting fee and an assessment that pays for parks and street maintenance.

But county officials said the new proposal would still leave the county at least $169,000 short each year, while the city would make about $300,000 a year from sources such as sales and cigarette taxes.

“That still puts us in a hole,” said County Administrative Officer Ernie Schneider. “It would put us in a deficit situation for services we have to provide (to the Aegean Hills community) and leave them on the plus side. We’re just looking for equity.”

Both sides must agree on how to divide the revenue before the proposed annexation of the unincorporated zone that borders the city can be completed. Normally, negotiations are required to be complete within 30 days after an annexation application is submitted by the city.

However, with the county suffering from a $67.7-million budget shortfall last year, county officials have been reluctant to see revenue from Aegean Hills disappear.

Two 30-day extensions of the negotiation period have gone by, with the latest due to expire June 8.

City officials say they are growing frustrated by what they say is a game of hardball being played by the county.

“What they’re trying to do is raid our city coffers,” said Councilman Robert D. Breton. “It’s highway robbery. They’re asking for a bigger and bigger piece of the pie to subsidize their bloated bureaucracy.”

But county officials say hard financial times have forced them to look closely at all income sources. The county has lost property tax revenue worth several millions of dollars in recent years by the incorporation of several cities, including Mission Viejo.

“We can no longer afford to be so generous as to give money away,” Schneider said. “We can’t have the rest of the county subsidize Aegean Hills.”

City legal staff is preparing to file legal action against the county to force an agreement if talks are still stalemated by the council’s next meeting, on June 8.

“We’re offering the whole pie this time,” Breton said. “I don’t think a court in the land would find in their favor.”

But Schneider said that “for us to be shortchanged, and them to come out with more than they need, that’s just unfair.”