CITY OF LAGUNA NIGUEL
CITY COUNCIL AGENDA ITEM
To: Honorable Mayor and Council Members
FROM: Tamara S. Letourneau, City Manager
DATE: October 7, 2025
SUBJECT: Approval of Resolution for Property Tax Correction Between City of Laguna Niguel and Laguna Hills
RECOMMENDATION
Staff recommends that the City Council hold a public hearing and adopt Resolution No. 2025-1511, approving a correction in property tax allocation pursuant to Revenue and Taxation Code sections 99(b)(6) and 99.02.
BACKGROUND
Prior to incorporation, residents of the City of Laguna Niguel formed the Laguna Niguel Community Services District (CSD), which provided parks and recreational services to the community. The Laguna Niguel CSD included certain properties ultimately located within the boundaries of the City of Laguna Hills, currently identified as Assessor Parcel Numbers 636-211-03, 636-211-04, 636-211-05, 636-211-06, 636-211-07, and 636-211- 08 (Subject Parcels).
The Subject Parcels had been in the Laguna Niguel CSD, but the Orange County Local Agency Formation Commission (LAFCO) directed that, following the CSD dissolution and the assumption of all municipal services by Laguna Hills, the property taxes from the Subject Parcels should go to the City of Laguna Hills along with the service respons ib i I ities.
On April 13, 2004, the LAFCO adopted Resolution OS 05-02, dissolving the Laguna Niguel CSD. On May 16, 2005, LAFCO recorded a Certificate of Completion, which implements the LAFCO Resolution, providing that, as a condition of approval of the dissolution, the property tax revenue from the Subject Parcels would be redirected to the City of Laguna Hills.
ANALYSIS
The cities of Laguna Niguel and Laguna Hills have recently discovered that the necessary paperwork to redirect the property tax revenue from the subject properties to Laguna Hills was never filed with the County of Orange, and the property tax revenue continued to be to be allocated to the City of Laguna Niguel. To correct this, Revenue and Taxation Code sections 99(b )(6) and 99.02 require that both cities adopt tax-sharing resolutions to appropriately reallocate those property taxes going forward. On August 26, 2025, the Laguna Hills City Council adopted a tax-sharing resolution.
Staff has prepared Resolution No. 2025-1511, which would correct the property tax misallocation and transfer the property tax revenues from the Subject Parcels to the City of Laguna Hills (Attachment A). Following the adoption of Resolution No. 2025-1511, both cities will.forward all necessary information to the County of Orange for further processing and County approval.
ALTERNATIVES CONSIDERED
The City Council may decide not to approve Resolution No. 2025-1511, approving a correction in property tax allocation pursuant to Revenue and Taxation Code sections 99(b)(6) and 99.02. This alternative is not recommended as doing so would continue the misappropriation of property tax revenue.
FISCAL REVIEW
The revenue to be reallocated by the County of Orange from the City of Laguna Niguel to the City of Laguna Hills is approximately $17,000 annually.
LEGAL REVIEW
This report and Resolution 2025-1511 were drafted in collaboration with the City Attorney's Office. The City Attorney's Office has reviewed this report and Resolution 2025-1511 as to form and substance.
CONCLUSION
Staff recommends that the City Council hold a public hearing and adopt Resolution No. 2025-1511, approving a correction in property tax allocation pursuant to Revenue and Taxation Code sections 99(b)(6) and 99.02.
~ u~1!#~
City Manager
Kevin O'Connor
Assistant to the City Manager
Attachment:
A. Resolution No. 2025-1511
\
\ l r-
'
Scott C. Smith
City Attorney
ATTACHMENT A
Resolution No. 2025-1511
RESOLUTION NO. 2025-1511
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAGUNA
NIGUEL, CALIFORNIA, APPROVING A CORRECTION IN PROPERTY TAX
ALLOCATION FOR CERTAIN PARCELS BETWEEN THE CITIES OF
LAGUNA NIGUEL AND LAGUNA HILLS AND FINDING THE ACTION NOT
SUBJECT TO CEQA
WHEREAS, the City of Laguna Niguel, California ("City") is a municipal corporation, duly organized under the constitution and laws of the State of California; and WHEREAS, prior to Laguna Niguel's incorporation, some municipal services were provided through the Laguna Niguel Community Services District ("CSD"), which was dissolved in 2004; and
WHEREAS, after the incorporation of the Cities, the CSD's boundaries were largely coterminous with Laguna Niguel's, but a small portion of its territory was in Laguna Hills; and
WHEREAS, the Orange County Local Agency Formation Commission ("LAFCO") dissolved the CSD in 2004 upon application of the <;;ity of Laguna Niguel; and WHEREAS, the LAFCO Resolution dissolving the CSD mandated that following the CSD's dissolution, the portion of the CSD's property tax revenues from the CSD's former area located in Laguna Hills, currently identified as Assessor Parcel Numbers 636- 211-03, 636-211-04, 636-211-05, 636-211-06, 636-211-07, and 636-211-08 (the "Subject Parcels") be allocated to the City of Laguna Hills, which would provide all municipal services to those parcels; and
WHEREAS, the Cities recently discovered that the paperwork necessary to effectuate this re-allocation of property taxes for the Subject Parcels from the CSD to Laguna Hills was mistakenly not filed with the County Auditor; and WHEREAS, the City of Laguna Niguel and the City of Laguna Hills have agreed to correct and reallocate the ad valorem property tax for the Subject Parcels to Laguna Hills as the City providing municipal services to the Subject Parcels (i.e., Laguna Hills); and WHEREAS, the procedures of Sections 99(b)(6) and 99.02 require that this corrected reallocation be approved in public hearings with a resolution from each of the governing bodies of the affected agencies; and
WHEREAS, on October 7, 2025, the City conducted a duly noticed public hearing in accordance with Revenue and Taxation Code Section 99.02 to consider this correction and reallocation; and
WHEREAS, based upon the record of proceedings, all written and oral testimony presented, and any public comment received, the City Council finds that the proposed correction meets the requirements of Revenue and Taxation Code Sections 99(b)(6) and 99 .02(f) and desires to effectuate the correction of property tax allocation to the City of Laguna Hills. •
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LAGUNA NIGUEL AS FOLLOWS:
SECTION 1. The foregoing recitals are true and correct and incorporated herein by this reference.
SECTION 2. Based on the review of the entire record, the City Council hereby makes the following findings with respect to the California Environmental Quality Act ("CEQA"). The City Council's proposed action is not a "project" within the meaning of CEQA Guidelines Section 15060(c) because such action will not result in a direct or ~ reasonably foreseeable indirect physical change in the environment and Section 15378(b )(5) because it constitutes organizational or administrative activities that will not result in direct or indirect physical changes in the environment. Rather, the proposed action merely involves the correction of property tax revenues between local agencies.
Therefore, the proposed action is not subject to CEQA.
SECTION 3. The City Council of the City of Laguna Niguel DOES HEREBY AGREE that ad valorem property taxes from the Subject Parcels previously distributed to the Laguna Niguel CSD or the City of Laguna Niguel shall correctly and prospectively be allocated to the City of Laguna Hills.
SECTION 4. The City Manager is hereby authorized to execute all necessary agreements and documents and take all necessary actions to effectuate this transfer.
SECTION 6. This Resolution shall take effect immediately upon its adoption by the City Council. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions. Upon adoption of this Resolution and reciprocal approval by the City of Laguna Hills, the City Clerk shall transmit a copy of this Resolution to the Auditor of the County of Orange for implementation of the corrected allocation pursuant to Section 99.02.
PASSED, APPROVED, AND ADOPTED this 7th day of October 2025.
Ray Gennawey, Mayor
ATTEST:
Marissa Asistin, City Clerk