Laguna Beach council studies 10-year renewal of tourism marketing district that would shift funding to ‘destination development’

City staff and Visit Laguna Beach presented a study-session overview of a proposed 10-year renewal of the Laguna Beach Tourism Marketing District (LBTMD), which would continue a 2% assessment on lodging receipts, allow the assessment to be adjusted up to 2.5% with city approval, and add a new “destination development” spending category that would shift portions of existing funding away from arts organizations.

Assistant City Manager Gavin Curran told the council the proposal is intended to extend the district’s term from five years to 10, retain the base 2% assessment while allowing the city and Visit Laguna Beach to increase the rate as needed (up to 2.5%), and create a destination development category that would receive 25% of district revenues under the draft allocation.

The change would reduce Visit Laguna Beach’s sales and marketing allocation from 35% to 25% and lower several arts recipients from 10% to about 8% each, while carving out the new 25% destination development allocation. Curran said the district plan presented to the council will list permissible uses for destination development, including enhanced tourism infrastructure, beautification, wayfinding, transportation improvements, support for artists and creative spaces, mitigation of tourism environmental impacts, and tourism-impact studies. He said the draft plan also reflects an existing agreement to allocate roughly $500,000 to the city under current collections; that figure fluctuates with receipts.

Council members and public commenters focused discussion on two themes: (1) how the money is being reallocated among Visit Laguna Beach and local arts organizations, and (2) safeguards and oversight on how destination development funds would be spent. Councilmembers asked whether both Visit Laguna Beach and the council must approve any change in the assessment rate; staff said an increase 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.

Bob (councilmember) and other commenters noted the $500,000 payment to the city under a recent agreement is not a fixed sum but an amount that varies with collections. Councilmember Bob said he understood the proposed allocation shifts would pull some dollars out of Visit Laguna’s and arts organizations’ shares to seed the new destination development pot. Gavin Curran summarized the change as “the agreement plus more,” saying destination development will draw from multiple existing pots and that Visit Laguna would manage the destination development program under the draft plan.

Public commenters urged caution. A resident who identified himself as John criticized pre-authorizing the option to raise the assessment to 2.5% and warned the proposal effectively reduces the arts groups’ share from a roughly 50–50 split to a 60–40 split: “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,” he said. A speaker who said he represents local arts groups said the arts organizations are dependent on the current funding and “not 1 of them can really survive losing 2%.” Another commenter warned that reducing arts allocations now could prompt arts groups to press for raising the assessment.

Councilmembers sought additional detail before any formal action. They asked staff to bring back the management district plan and a resolution of intent at the council meeting on March 25, with public hearings set for April 22 and May 20 and an anticipated effective date of July 1, 2025, if adopted. Staff said the management district plan accompanying the resolution will list specific services and programs eligible for destination development funding and noted the council and Visit Laguna Beach have authority to adjust category allocations in future years within limits described in the draft plan.

Council and staff also discussed whether the district should be assessed on short-term lodging units under 4 rooms; staff said the draft plan contemplates including short-term lodging at a 1-or-more unit threshold, which would increase overall revenue and be reflected in the plan.

No formal vote or adoption took place during the study session; the council scheduled further action and public hearings on the item.

The council took public comment and then recessed to closed session. The item will return to the council on March 25 with a resolution of intent and the full management district plan for review.