Laguna Beach officials approved a $5 million downtown overhaul slated to be funded by Visit Laguna – the city’s tourism bureau – in an effort to bring in more foot traffic and bolster city coffers.
City council members approved the agreement unanimously at the November 12 city council meeting with Visit Laguna to improve the downtown area over the next 11 years – with the tourism bureau spending hundreds of thousands of dollars annually towards upgrades.
It comes after elected officials in cities like Anaheim and Newport Beach have debated over the past year on how to best use their respective municipality’s tourism dollars – especially after a scathing state audit last year found Anaheim’s tourism bureau improperly spent money, which is generated by an additional tax on hotel rooms.
[Read: CA Auditors Lambast Anaheim’s Tourism Bureau, Find Improper Tax Dollar Spending]
Sue Kempf, Laguna Beach mayor at the time, said hotel guests aren’t spending enough money in the downtown area, and that the hotels themselves are strongly in favor of enhancing the downtown area.
“They (Laguna Beach Hotels) are looking for a better experience for their visitors,” she said at the Nov. 12 meeting. “What they frequently say is,’when are you guys gonna do something about your downtown?’”
“They (Hotels) are sending people out of town, rather than into our town”.
Currently, the city’s bed tax, also known as the transient occupancy tax or TOT, generates $15.4 million in tax revenue for the city every year to be used in their general fund – a discretionary pot of money, according to Visit Laguna.
Similar to Anaheim, Laguna Beach also levies a separate 2% special tax on people staying in local hotels called the Laguna Beach Tourism Marketing District. Half of that money generated goes to Visit Laguna Beach to market the city.
The other half is split between the Laguna Art Museum, the Laguna College of Art & Design, Laguna Playhouse, the city’s art commission for special projects and cultural arts funding.
Visit Laguna is committing to contributing roughly $500,000 towards this plan annually until 2035, with the amount of the final contribution adjusted annually based on the amount of revenue made from the Laguna Beach Tourism Marketing District tax.
Visit Laguna Beach Board Member Karyn Philippsen shared with the council her high hopes for the fund, and said the lofty cost will pay off.
“This investment is going to hurt, it’s not going to be easy for our organization. But it’s the right investment. It’s the right investment to bring us up to the next level of the quality of tourism this community is looking for,” she said.
This year, $200,000 of the $500,000 will be dedicated towards artist work spaces and living spaces, and then for the next 10 years, the money will be geared exclusively towards improving the downtown area.
Meanwhile, one group is raising concerns about the money being used exclusively for the downtown areas and not other areas in Laguna Beach.
Greg O’Loughlin, president of the South Laguna Civic Association, said the fund is unfair to the tourist-heavy districts in South Laguna and should be dispersed throughout the city, rather than going only to downtown.
“Nearly 50% of Laguna Beach Tourism Marketing District (LBTMD) bed tax income comes from the South Laguna hotels – Montage and the Ranch, yet none of this disbursement is planned to be spent on projects in South Laguna,” he told council members at the Nov. 12 meeting . “Once again the city’s funding is allocated only to the downtown – arguably our most successful commercial district – while other districts languish.”
Councilmember Bob Whalen said officials will work with the tourism bureau to look at spreading improvements to other parts of the city.
“It is true the agreement is limited to downtown, but this does include the ability to enhance services and public safety measures,” he said at the Nov. 12 meeting.
“We could still explore with (Visit Laguna) whether or not to expand this to other areas.”
Former council member George Weiss also said that it was important to emphasize the improvement of the downtown area without leaving other parts of town behind.
“I think the residents have spoken out about sharing the wealth and I think that should be done, not all of (the fund) should be going downtown,” he said at the Nov. 12 meeting. “If people are traveling overnight, they do want to enjoy the whole town, not just the downtown. I think any enhancements in other parts of the town would be beneficial”