Laguna Beach begins process of renewing tourism marketing district

Laguna Beach is preparing to renew its tourism marketing district, which has assigned assessments of 2% to local lodging businesses to drive funding toward causes that help bring overnight guests into town.

In addition to covering the costs of promotional material geared toward tourists, the funds raised through the district have also supported Laguna’s cultural arts and economic development.

The City Council on Tuesday declared its intent to make a 10-year commitment to the tourism marketing district. The district was established in 2001 and most recently renewed for five years in 2020.

City staff said the plan was for the 2% rate to remain in place, but it could be increased to 2.5% at the determination of the council and Visit Laguna Beach, the tourism marketing arm of the city.

Under the current structure, half of the assessed funds go to Visit Laguna Beach. The other half goes to local arts organizations, including Arts Commission programming, grants for cultural arts, Laguna Art Museum, Laguna College of Art & Design and Laguna Playhouse.

Distribution of the revenue brought in from the lodging establishments would change under the proposed plan, with a new category for destination development that would receive 25% of the funds.

Assistant City Manager Gavin Curran told the council the new category would address a wide range of interests, from artist housing to beautification projects, and from enhanced tourism to environmental sustainability. The city would also receive $500,000 annually for development initiatives.

“When [the marketing district] started 23 years ago, the idea was to support the organizations that it currently supports, and since that time, we’ve noticed and understand that we have a need to support artists and try to keep them in the community,” Mayor Pro Tem Mark Orgill said. “That’s what this is about. It’s been said and could be argued that we’re expecting this to do too much, but my counter argument to that is, ‘Well, it’s grown 9% a year.’ That’s a lot, so I think it can do more, and I think it can now, at this time, support the artists.”

The creation of a destination development pool would result in a reduction in the funding share for the local arts organizations, which have been receiving 10% of the generated revenue from the assessments. Plans showed that each would get 8% under the new proposal, an idea some members of the arts community objected to.

“You cannot build destination development on a weakened foundation,” said former mayor Wayne Baglin, who served three terms on the City Council. “It can’t happen. Laguna Art Museum, Laguna Playhouse, Laguna College of Art & Design, the Arts Commission, and dozens of nonprofits in the arts will not be stronger and more able to increase the number of tourists in Laguna lodging establishments after having 20% of their funding reduced.”

Donna Ballard, chair of the Arts Commission, took a different tack, expressing appreciation for the funding and noting that the arts and the hotels have a “symbiotic relationship.”

“In 2024, the Arts Commission special program budget was $319,800,” Ballard said. “Of that amount available, a total of $275,000 was paid directly to artists for the employment in city programming. That’s 86% of the funds provided going directly to artists. The other 14% went to public art maintenance, so we can maintain the condition of our public art projects.”

“The city distributed $380,000 in the cultural arts funding grants,” Ballard said. “We administer that. We support nonprofit arts organizations who present innovative programming in our community, so I hope you’ll agree with us that the investment in the Arts Commission programming and all the arts through the Laguna Beach tourism marketing district is an investment in artists and art in our special community.”

Community concerns also included visitor impacts and the longevity of the proposal. Resident Aaron Peluso said the city would only be able to manage the impact of the tourism marketing district if it had the ability to opt out and if annual reviews occurred.

“I’m in favor of watching what Visit Laguna is doing and seeing how it’s going next year and not in 2036,” Peluso added.

Ruben Flores, a local horticulturist and the owner of Laguna Nursery, pointed to the city’s desire to attract visitors that would bolster the local economy.

“I see more and more about the ads for the hotels, but not necessarily how we’re changing that profile of the ads so that who’s coming here is already geared towards coming to our retail and coming to our restaurants, versus just coming to the hotels and the beaches,” Flores said. “I applaud the use of funds for the arts, and I think we can all use more and more of that.”

Curran added the renewal plan was getting support from hotels, noting that the list of proponents included properties that would account for “75-to-80%” of the assessment revenue that would be collected. A staff report projected the tourism marketing district to produce a revenue stream of $3 million in the first year and approximately $36.75 million over the next decade.

Council members shared concerns related to oversight of decision-making for the tourism marketing district, asking for diversified representation on an advisory board.

“I think that this destination development idea is a really important one, and I very much appreciate the shift from Visit Laguna to one of stewardship and connecting people with these incredible resources that we have as a community,” Councilwoman Hallie Jones said. “I want to ask that we have a little bit of time to talk about, at the public hearing, how we codify that. How do we know if we’re doing a good job? How do we know if we’re being successful in shifting Visit Laguna’s focus from one of bringing tourists into this community to one of promoting responsible visitorship and responsible stewardship of our town?”

Laguna Beach will host a town hall meeting on visitor stewardship from 5:30 p.m. to 7 p.m. on Thursday, April 17 at City Hall. The city is also circulating a resident survey on tourism impacts.

A public meeting regarding the renewal of the tourism marketing district will take place on May 6. The public hearing for the adoption of a resolution to renew the tourism marketing district is scheduled for June 10. If adopted, the 10-year renewal would begin with the new fiscal year on July 1.