2 New Cities Gird for Next Battle Over Golden Coast : Lawsuit: Laguna Niguel says incorporation bolsters its effort to win beach communities awarded to Dana Point.

DANA POINT —  Cooled by gentle marine breezes, the west side of this harbor city is a collection of upscale neighborhoods where estate-size homes perch on sculpted bluffs offering million-dollar ocean views.

But the otherwise peaceful beach community has also become a beachhead for Orange County’s two newest cities, who continue to fight over the tax-rich coastal area now part of Dana Point.

Even before their city governments were formed, residents of Dana Point and Laguna Niguel battled for political and legal jurisdiction over the coastal region between South Laguna and Dana Point Harbor.

With the Dec. 1 incorporation of Laguna Niguel, the 3-year-old conflict between the two cities now is likely to escalate.

“If this were Europe, this would be war,” Laguna Niguel resident Marisa Jones said during her city’s inauguration ceremony. “That land has always been part of Laguna Niguel. And now that we are a city, we will get it back again.”

Claiming that they now have added clout, Laguna Niguel community leaders and city officials say they are stepping up their effort to reclaim the 1,400 acres of coastal property comprising five subdivisions: Monarch Bay, Monarch Terrace, Monarch Beach, Emerald Ridge and Niguel Shores.

“With the will of the people behind us,” Laguna Niguel Mayor Patricia C. Bates said this week, “the City Council will take the case forward.”

The coastal community, traditionally a part of unincorporated Laguna Niguel, was handed to Dana Point by the Orange County Local Agency Formation Commission when the city of Dana Point was incorporated in January.

That action enraged Laguna Niguel residents, many of whom say they bought into the planned community because of sales pitches that described it as “Sea Country.”

Getting the coast back was the rallying cry that became a top issue in the Laguna Niguel cityhood campaign. In fact, cityhood proponents say, it was the major reason why an impressive 89% of voters opted for cityhood.

And only minutes after Laguna Niguel was inaugurated as the county’s 29th city, residents talked openly--and sometimes fiercely--about wresting the disputed 1.5-mile-long coast from Dana Point.

During the first Laguna Niguel City Council meeting, Dennis Harris, head of the cityhood campaign, said control of the coast “is very dear to the hearts and minds of everyone.”

He urged the City Council to “spend the time meeting with counsel to . . . regain our coast and put Laguna Niguel as sea country.”

But Laguna Niguel officials admit that there is little they can do but wait for the courts to rule on their legal challenges.

At issue is a decision by LAFCO to hold an advisory election in November, 1987. In that election, residents living in the disputed area were asked if they preferred to be part of Laguna Niguel or Dana Point.

Residents of Dana Point and Laguna Niguel had filed applications with LAFCO in December, 1986. At the time, financial feasibility studies showed that the disputed coastal area, which includes the lucrative Ritz-Carlton hotel, would generate $2.5 million a year in tax revenue.

The special election was called, said LAFCO executive director James Colangelo, after some residents of the 13 homeowner associations in the area complained that they did not want to be a part of Laguna Niguel.

About 61% of voters who lived in the disputed area chose Dana Point, and LAFCO officials then removed the southernmost portion of the proposed city of Laguna Niguel and attached it to Dana Point’s incorporation map.

Laguna Niguel cityhood leaders have claimed that the election was flawed because only voters living in the disputed area were allowed to go to the polls.

Laguna Niguel community leaders, in a lawsuit filed last year, claimed that all Laguna Niguel voters should have been able to cast ballots on the issue because the outcome would affect them as well.

The lawsuit, which is awaiting a hearing by the 4th District Court of Appeal in Santa Ana, asks that the LAFCO decision be rejected, Laguna Niguel City Atty. Terry E. Dixon said.

The earliest that case can be heard would be January, Dixon said.

Either way, the appellate court decision is almost certainly going to end up in the state Supreme Court, officials of both cities said.

LAFCO’s Colangelo defended the decision to only allow voters in the disputed area to participate in the advisory election, saying the case was similar to an annexation measure, in which voters of the affected area are asked if they favor joining an established city.

Colangelo said that a ruling against LAFCO could set up an unusual circumstance that would take LAFCO officials years to unravel.

If the courts ultimately side with Laguna Niguel, Colangelo said, it could either hand the land directly to the inland city, rule both incorporations as invalid or declare the disputed land as unincorporated.

If the latter happens, he said, either city could apply for annexation. But if the court chooses either of the first two options, LAFCO officials would be faced with a set of untested legal complications.

“We’re kind of in uncharted waters,” Colangelo said. “We’re just trying in our own minds to run through all the possibilities.”

Dana Point officials have urged that the lawsuit be dropped and that officials of the neighboring city accept the LAFCO decision.

“I really and truly hope that we can get this thing behind us,” Dana Point Mayor Eileen Krause said. “We have so many things that we need to work on together.”

Although also calling for the lawsuits to be dropped, Dana Point Councilman T. Michael Eggers said he doubts that will happen.

“Politically, they can’t drop this,” Eggers said. “It was the linchpin of (Laguna Niguel City Council members’) campaign.”

Eggers said he is confident the courts will continue to side with Dana Point. The lawsuit has failed twice so far in lower courts.

“Laguna Niguel has lost the war several times,” Eggers said. “The escalation of emotions does not have to go any further. It is easy to throw verbal bombs back and forth. But what’s it going to solve?

“We need to be statesmen now, instead of fighters,” Eggers continued. “The campaign’s over and now its time to do what we all told our constituents we would do. That is to solve problems.”