To:
FROM:
DATE:
SUBJECT:
CITY OF LAGUNA NIGUEL
CITY COUNCIL AGENDA ITEM
Honorable Mayor and Council Members
Tamara S. Letourneau, City Manager
August 18, 2026
Adoption of Resolution for Property Tax Correction Between City of Laguna Niguel and Mission Viejo
RECOMMENDATION
Staff recommends that the City Council hold a public hearing and adopt Resolution No. 2026-1537 , approving a correction in property tax allocation pursuant to Revenue and Taxation Code sections 99(b)(6) and 99.02.
BACKGROUND
Prior to the City of Mission Viejo's incorporation in 1988, various municipal services were provided by the Mission Viejo Community Services District (MVCSD). Included in the service area of the MVCSD were Assessor Parcel Numbers (APN's) 637-221-06/637- 221-16 and APN 637-231-01 located within Tax Rate Area 29018 and APN 637-232-01 located within TRA 29076 (Subject Parcels).
Following the City of Mission Viejo's incorporation in 1988, TRA 29018 and 29076, located west of the 1-5 freeway , were expressly excluded from the boundaries of Mission Viejo pursuant to the Orange County Local Agency Formation Commission (QC LAFCO) Resolution No. 87-35, and were to be located within the City of Laguna Niguel upon its incorporation in 1989. The Subject Parcels are located at the northeast and southwest corners of Avery Parkway and Camino Capistrano.
ANALYSIS
The cities of Laguna Niguel and Mission Viejo have recently discovered that the necessary paperwork to redirect the property tax revenue from the subject parcels to Laguna Niguel was never filed with the County of Orange, and the property tax revenue continued to be allocated to the City of Mission Viejo. To correct this, Revenue and Taxation Code sections 99(b)(6) and 99.02 require that both cities adopt tax-transferring resolutions to appropriately reallocate those property taxes going forward. On July 14, 2026, the Mission Viejo City Council adopted a tax-transferring resolution.
Staff has prepared Resolution No. 2026-1537 , which would correct the property tax misallocation and transfer the property tax revenues from the Subject Parcels to the City of Laguna Niguel and authorize the City Manager to execute all necessary agreements and documents , including the Ad Valorem Property Tax Revenue Allocation Agreement and Release attached, and take all actions necessary to effectuate the transfer (Attachment A). Following the adoption of Resolution No. 2026-1537 , 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 adopt Resolution No. 2026-1537 , 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 Mission Viejo Niguel to the City of Laguna Niguel is approximately $2,000 annually.
LEGAL REVIEW
This report and Resolution 2026-1537 were drafted in collaboration with the City Attorney's Office. The City Attorney's Office has reviewed this report and Resolution 2026-1537 as to form and substance.
CONCLUSION
Staff recommends that the City Council hold a public hearing and adopt Resolution No. 2026-1537, approving a correction in property tax allocation pursuant to Revenue and Taxation Code sections 99(b)(6) and 99.02.
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City Manager City Attorney
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Kevin X. O'Connor
Assistant to the City Manager/Acting Public Works Director Attachment:
A. Resolution No. 2026-1537
ATTACHMENT A
Resolution No. 2026-1537
RESOLUTION NO. 2026-1537
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAGUNA
NIGUEL, CALIFORNIA, APPROVING A PROSPECTIVE CORRECTION IN
PROPERTY TAX ALLOCATION FOR CERTAIN PARCELS BETWEEN THE
CITIES OF LAGUNA NIGUEL AND MISSION VIEJO AND FINDING THE
ACTION NOT SUBJECT TO CEQA
WHEREAS, the City of Laguna Niguel, California ("Laguna Niguel") and the City of Mission Viejo ("Mission Viejo") are each municipal corporations, duly organized under the constitution and laws of the State of California; and WHEREAS, prior to Laguna Niguel's and Mission Viejo's incorporation, some municipal services were provided to residents through the Mission Viejo Community Services District ("MVCSD"); and
WHEREAS, Assessor Parcel Numbers ("APN"s) 637-221-06/637-221-16 and 637- 231-01 were and currently are located within Tax Rate Area ("TRA") 29018, and APN 637-232-01 was and currently is located within TRA 29076, and both TRA 29018 and TRA 29076 were located within the MVCSD (the "Subject Parcels"); and WHEREAS, following Mission Viejo's incorporation in 1988, the above referenced TRAs, located west of the 1-5 freeway, were expressly excluded from the boundaries of Mission Viejo, pursuant to Orange County Local Agency Formation Commission ("QC LAFCO") Resolution No. 87-35, pg. 1, Section 2 (referencing the exclusion of parcels along Avery Parkway, west of the 1-5, from the incorporation) and were instead located within Laguna Niguel upon its incorporation in 1989; and WHEREAS, for reasons unknown to Laguna Niguel and Mission Viejo, the ad valorem property tax revenue from the Subject Parcels were not allocated to Laguna Niguel upon its incorporation by the County of Orange ("County"), but were instead allocated to Mission Viejo following dissolution of the MVCSD; and WHEREAS, Laguna Niguel receives sales tax payments from the businesses located on APN 637-221-06/637-221-16 and had previously received sales taxes from APN 637-231-01, prior to the Orange County Transportation Authority acquiring the property; and
WHEREAS, the two Cities recently became aware of the misdirection of the ad valorem property taxes for the Subject Parcels;. and
WHEREAS, Laguna Niguel and Mission Viejo have agreed to correct and reallocate prospectively the ad valorem property tax for the Subject Parcels to Laguna Niguel; and
WHEREAS, the procedures of Revenue and Taxation Code Section 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 August 18, 2026, 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 Section 99.02(f) and desires to effectuate the correction of property tax allocation from Mission Viejo to the City of Laguna Niguel.
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 Mission Viejo shall henceforth prospectively be allocated to the City of Laguna Niguel.
SECTION 4. The City Manager is hereby authorized to execute all necessary agreements and documents and make revisions thereto, including executing the Ad Valorem Property Tax Revenue Allocation Agreement and Release ("Agreement") attached hereto as Exhibit A, and take all necessary actions to effectuate this transfer.
SECTION 5. 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 Mission Viejo, the City Clerk shall transmit a copy of this Resolution and the Agreement to the Auditor of the County of Orange for implementation of the corrected allocation pursuant to Section 99.02.
PASSED, APPROVED, AND ADOPTED this 18th day of August 2026.
Gene Johns, Mayor
ATTEST:
Marissa Asistin, City Clerk
EXHIBIT A
Ad Valorem Property Tax Revenue Allocation Agreement and Release
AD VALOREM PROPERTY TAX REVENUE ALLOCATION
AGREEMENT AND RELEASE
This Ad Valorem Property Tax Revenue Allocation Agreement and Release ("Agreement") is entered into by and between the City of Mission Viejo ("Mission Viejo") and the City of Laguna Niguel ("Laguna Niguel"). Mission Viejo and Laguna Niguel are sometimes hereinafter referred to individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the City of Mission Viejo ("Mission Viejo") and the City of Laguna Niguel ("Laguna Niguel") are each municipal corporations, duly organized under the constitution and laws of the State of California; and
WHEREAS, prior to Mission Viejo's incorporation in 1988, various municipal services were provided through the Mission Viejo Community Services District ("MVCSD"); and WHEREAS, Assessor Parcel Numbers ("APN"s) 637-221-06/637-221-16 and 637-231- 01 were and currently are located within Tax Rate Area ("TRA") 29018, and APN 637-232-01 was and currently is located within TRA 29076, and both TRA 29018 and TRA 29076 were located within the MVCSD (the "Subject Parcels"); and
WHEREAS, following incorporation in 1988, the above referenced TRAs, located west of the 1-5 freeway, were expressly excluded from the boundaries of Mission Viejo, pursuant to Orange County Local Agency Formation Commission ("OC LAFCO") Resolution No. 87-35, pg. 1, Section 2 (referencing the exclusion of parcels along Avery Parkway, west of the 1-5, from the incorporation) and were instead located within Laguna Niguel upon its incorporation in 1989; and WHEREAS, for unknown reasons, the ad valorem property tax revenue from the Subject Parcels were not allocated to Laguna Niguel upon its incorporation by the County of Orange ("County"), but were instead allocated to Mission Viejo following the dissolution of the MVCSD; and
WHEREAS, Laguna Niguel receives sales tax payments from the business located on APN 63 7-221-06/63 7-221-16 and had previously received sales taxes from APN 637-231-01, prior to the Orange County Transportation Authority acquiring the property; and WHEREAS, the two Cities recently became aware of the misdirection of the ad valorein property taxes for the Subject Parcels; and
WHEREAS, the Parties acknowledge that in order for Laguna Niguel to receive the correct property tax allocation on the Subject Parcels prospectively, the Parties must follow the procedure in California Revenue and Taxation Code section 99.02, and the County auditor must implement the correction; and
1 WHEREAS, the Parties desire to enter into this Agreement to correct prospectively and redirect the future property tax allocation on the Subject Parcels; and WHEREAS, the Parties desire to settle and resolve, on the terms set forth in this Agreement, their rjghts, liabilities, and obligations relative to all potential claims by Laguna Niguel for property tax revenue for the Subject Parcels allocated to and received by Mission Viejo prior to the Effective Date.
REPRESENTATIONS
The Parties represent and warrant as follows:
(a) That the individuals executing this Agreement expressly have the authority to execute this Agreement, and that this Agreement as so executed will be binding upon the Parties; (b) That the Parties for whom these individuals execute this· Agreement are the sole owners of all rights, title, and interests in and to all matters settled and released under this Agreement and that they have not heretofore assigned, transferred, or purported to assign and/ or transfer to any person or entity any matters, or portions thereof, settled and released under this Agreement;
( c) That the representations set forth above shall endure forever and shall survive the execution and performance of this Agreement.
NOW, THEREFORE, in consideration of the promises set forth herein, the Parties agree as follows:
TERMS
1. Recitals and Representations: The above Recitals and Representations are incorporated herein in full as terms and/or conditions and/or provisions of this Agreement.
2. Effective Date: This Agreement shall become effective on the "Effective Date," which means the latest of the following occur: (i) both Parties sign this Agreement, and (ii) each Party's city council adopts a resolution correcting prospectively the property tax revenue allocation for the Subject Parcels in accordance with any applicable laws.
3. Agreement to Cooperate: The Parties understand that to prospectively correct the property tax revenue allocation for the Subject Parcels requires implementation by the County auditor. The Parties agree to work together in good faith to notify the County and/or its official(s) or department( s ), to execute any documents required by the County, and to take all steps necessary to facilitate the County's implementation.
4. Release: In consideration of the agreement described in Section 3, above, and the promises contained herein, the Parties hereby fully, finally, and forever release, discharge, and exonerate each other and their employees, agents, representatives, City Council members, 2 affiliates, assigns, officers, directors, attorneys, insurance companies, and all other individuals and legal entities whatsoever, whether described herein or otherwise related to the Parties, ("Released Parties") from any and all claims, obligations, promises, demands, rights, actions, causes of action, litigation, and liability of any kind whatsoever, whether known or unknown, matured or contingent, regarding, arising from, or relating to the allocation of property tax revenue for the Subject Parcels received by Mission Viejo prior to the Effective Date of this Agreement (hereinafter referred to as the "Released Matters"). In connection with the Released Matters, the Parties waive any and all rights that they may have under the provisions of section 1542 of the California Civil Code, which states as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR
RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR
AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER,
WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
In the event that any waiver of the provisions of Section 1542 of the California Civil Code provided for in this Agreement is judicially determined to be invalid, voidable, or unenforceable for any reason, such waiver, to that extent, shall be severable from the remaining provisions of this Agreement, and the invalidity, voidability, or unenforceability of the waiver shall not affect the validity, effect, enforceability or interpretation of the remaining provisions of this Agreement.
5. Integration: The Parties are resolving the Released Matters on the terms, promises, and representations that are contained in this Agreement. No other terms, promises, or representations have been made to or relied on by any of the Parties. This Agreement sets forth the entire agreement between the Parties regarding the Released Matters.
6. Attorney's Fees and Costs: The Parties each agree to bear their own costs, expenses, and fees, including without limitation, attorney's fees, up through the date of execution of this Agreement.
7. No Admission of Liability: The Parties understand that neither the execution of this Agreement, nor any payment pursuant thereto, is to be construed as any admission of any liability on the part of any Party hereto. In addition, this Agreement may not be introduced into or be admissible in any judicial proceeding other than a judicial proceeding to enforce the terms of this Agreement.
8. Knowingly and Voluntarily: The Parties acknowledge that they fully understand this Agreement, and that they have knowingly and voluntarily entered into it with the advice of their own legal counsel.
9. Further Assurances and Cooperation: The Parties, without further consideration, agree to execute and deliver such other documents and to· take such other action necessary, convenient, or desirable to effect the provisions and fulfill the purposes of this Agreement.
10. Counterparts: This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the 3 same document. Electronic and/or scanned signatures are to be deemed equivalent to original signatures.
11. Severability: If any part or provision of this Agreement, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
12. Modifications: This Agreement may be amended or modified only by a writing signed by all Parties.
13. Final Agreement: The Parties acknowledge that this Agreement has resulted from negotiations between the Parties. Therefore, the language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the Parties. The Parties hereto have participated in the drafting and preparation of this Agreement and, therefore, in any construction to be made of this Agreement the same shall not be construed against any of the Parties.
14. Paragraph Headings: The paragraph beadings used in this Agreement are intended solely for convenience and reference and shall not in any manner amplify, limit, modify or otherwise be used in the interpretation of the provisions hereof.
15. Governing Law: This Agreement shall in all respects be enforced and governed by and under the laws of the State of California.
[SIGNATURES ON THE FOLLOWING PAGE]
4 Dated: August_, 2026
Dated: August_, 2026
APPROVED AS TO FORM:
Dated: August xx , 2026
Dated: August xx , 2026
CITY OF MISSION VIEJO
Elaine Lister
City Manager
CITY OF LAGUNA NIGUEL
Tamara Letourneau
City Manager
JONES-MAYER
Tarquin Preziosi
City Attorney for the City of Mission Viejo
BEST BEST & KREIGER LLP
Scott C. Smith
City Attorney for the City of Laguna Niguel
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