Laguna Beach council studies 10-year renewal of tourism marketing district, adds 'destination development' fund

Laguna Beach officials on Thursday discussed a proposal to renew the Laguna Beach Tourism Marketing District (LBTMD) for 10 years, keep the base assessment at 2% of lodging receipts with a City- and Visit Laguna Beach–approved ability to adjust the rate up to 2.5%, and add a new “destination development” spending category that would shift how assessment revenues are allocated.

Assistant City Manager Gavin Curran told the City Council in a study session that the LBTMD (formerly the BID), established in February 2001, is currently on a five‑year cycle that expires this June and that the proposed renewal would begin July 1, 2025. "The big 3 changes are those 3. It's currently ending its 5 year term renewal. The change is going to a 10 year. It continues the 2, but is looking to get that ability to increase it or decrease it from 2 to 2 and a half, and it's adding that...destination development," Curran said.

Why it matters: the proposal would reallocate existing assessment revenue into a new destination development category intended to fund infrastructure and programs that management says will support overnight stays and manage visitor impacts. Staff said the change could move roughly $500,000 that the city and Visit Laguna Beach previously agreed to toward destination development and would add additional dollars based on the percentage allocation in the draft plan.

Under the presentation, current category allocations are split among Visit Laguna Beach (sales, marketing and communications), administration and operations, and five arts/cultural recipients including the Arts Commission programs, Laguna College of Art and Design, Laguna Art Museum, cultural arts funding grants and Laguna Playhouse. The draft plan adds destination development as a category and shows sales and marketing and administration percentages falling while destination development receives a sizable share.

Curran said the draft plan shows sales and marketing communications at 25% (down from a larger share under the current plan), administration at 10% (down from 15%), destination development at 25% (new), and the arts organizations moving from 10% to 8% in each of their allocations. He also said the city and Visit Laguna Beach would have authority to move allocations during the 10‑year term within specified limits.

Council members and members of the public raised a number of concerns and requests for additional detail. Councilmember Sue Jones asked whether both Visit Laguna Beach and the council would have to agree to raise the assessment to 2.5%; staff said increases would be proposed as part of Visit Laguna Beach’s annual report and would require council approval before taking effect for the coming fiscal year. Councilmembers asked staff to return with revenue projections for short‑term rental inclusion and with updated FY 24–25 figures rather than the adopted budget column shown in the study materials.

Several public commenters and local arts advocates objected to shifting money away from arts organizations. A public commenter identified as John argued that "there is no justification to pre approve an increase to the 2 and a half percent and to cut the 50 50 split to the arts groups." Wayne (public commenter) told the council, "You take away that money, you are taking away arts... As you take this money away, there will be organizations that will fail." Another speaker pointed out that the previously approved agreement with Visit Laguna Beach for approximately $500,000 is a variable amount tied to collections and cautioned against describing it as a fixed sum; as one speaker put it, "it wasn't a flat 500,000. That was a fluctuating dollar amount depending on collections."

Council members discussed the stated policy objectives—managing visitor impacts, supporting artist housing and creative spaces, beautification, wayfinding and transportation improvements—and voiced differing priorities. Some members said they supported a broader destination development category to allow a range of investments, while others urged that funds targeted at artists or housing be protected and tracked. Councilmember Mark (first name only in the transcript) said housing for artists should be a top priority if the city seeks to sustain an artist community.

Process and next steps: staff said they will return March 25 with a resolution of intent to form the district and the management district plan attached, and that public hearings are scheduled for April 22 and May 20 with a planned effective date of July 1, 2025, if the council adopts the resolution. No formal action or vote occurred during the study session.

Requests from council for the March 25 return included: clearer dollar figures and FY 24–25 updated numbers rather than the adopted budget column; an estimate of revenue if short‑term rentals with fewer than four rooms are included; and a clearer accounting of how the previously negotiated $500,000 allocation and the destination development percentage interact. Staff indicated the management district plan will list allowable services and that the city and Visit Laguna Beach can adjust allocations within limits spelled out in the plan.

Brief ending note: the presentation and public comment made clear there is support across some councilmembers for addressing overtourism while also significant concern about cutting arts funding; councilmembers directed staff to return with the detailed plan, updated numbers and revenue projections prior to any decision at a regular meeting.