DISPUTE OVER RENT : LAGUNA BEACH, FESTIVAL OF ARTS TO RESUME TALKS

After a hearing marked by warnings of a possible shutdown of the Festival of Arts, the Laguna Beach City Council and festival organizers decided Tuesday night to resume long-deadlocked negotiations over rent.

Council members and festival organizers, however, did not make headway in resolving the dispute, which is chiefly over a festival proposal to cut the city’s share of gross gate receipts from 17.5% to 10%.

However, Tuesday’s meeting was the first public council session concerning the rift, and negotiators announced that they would meet next week and follow with another public meeting some time next month.

“No one wants the festival to close. We all want to get the talks going again and settle this,” Mayor Martha Collison told a standing-room-only audience of 150 at the meeting.

The council indicated it would consider lowering the rent, but some members expressed skepticism over the dismal fiscal picture presented by Paul Griem, the festival’s chief negotiator.

Repeating statistics he gave at the festival’s May 1 meeting with cultural organizations, Griem said the festival, struck by spiraling operating costs, cannot survive without more monies to renovate facilities on the city-owned site.

“We need money to keep up the quality of our Pageant of the Masters and keep ahead of the competition. We need to get it from the city,” Griem said.

Although the tableaux show at the Irvine Bowl still sells out annually, the pace of ticket sales--even for this year’s event--have slowed markedly, he said.

“We’re serious about shutting down if you drive us to the wall and subject us to economic strangulation,” Griem warned.

However, City Manager Kenneth C. Frank questioned whether the festival was having a fiscal crisis.

He said the festival, which has $1.5 million in reserves for the projected $3-million renovation of the Irvine Bowl seating, stage and service areas, could raise the remaining $1.5 million by city-backed, tax-exempt revenue bonds. Work could start within the next year or two, he said.

Under the current lease, which expires in 1990, the city last year received $388,000, most of it from the 17.5% share of gross gate receipts. The festival has proposed cutting that share to 10% with a $292,800 guaranteed minimum.

Unless the city share is reduced, Griem said, the festival may have to cut or eliminate its direct grants to cultural programs. Last year, $44,000 went to cultural organizations and $108,000 for arts scholarships.

Griem also argued that the city--which sets aside a portion of rent proceeds for community groups--has not met lease requirements for cultural allocations. Only $17,000 of the $49,500 the city gave last year to community groups went to bona fide cultural organizations, he said.

Disputing Griem’s claim, Frank maintained that most of the $49,500 went to such organizations as the Laguna Art Museum, Laguna Moulton Playhouse and to other groups that offer cultural activities.

Under the festival proposal, Griem said, the festival would allocate all grants directly. The initial allocations under the 10% gate-share plan would total at least $240,000 a year.

This year’s pageant and art exhibition, scheduled for July 9-Aug. 28, is again expected to be Laguna Beach’s top tourist attraction, drawing more than 250,000 visitors and grossing more than $2.5 million.

City officials said a shutdown was unlikely for the 54-year-old festival, which is too solidly entrenched. If such a shutdown did occur, officials said, another operator would be found to continue the same summer shows.