COSTA MESA : Festival Tax Revenue Disappoints City

City Council members were hoping for big returns when they invested $400,000 last October to help sponsor the Festival of Britain, two weeks of activities at South Coast Plaza featuring a visit by Princess Alexandra, a first cousin of Queen Elizabeth II.

Last week, they were relieved to learn that the city didn’t lose money in the $3-million event. But the $15,800 in net sales tax revenues fell noticeably short of the $300,000 that the city staff had projected.

“And if that wasn’t enough,” said Councilwoman Sandra L. Genis, San Diego-based CIC Research Inc. charged the city $12,500 to analyze revenues generated by the festival.

According to Genis, festival organizers had told the council the promotion would bring in about $600,000 in additional sales tax revenue. The city’s staff was skeptical and instead projected that the event would “more realistically” bring in $250,000 to $300,000.

Based upon those numbers, the council members--some reluctantly--voted to give $400,000 to the festival, hoping it would promote tourism, arts and history appreciation, Genis said.

The Festival of Britain, which ran from Oct. 12 to 28, was a cornucopia of British arts and crafts exhibitions along with theater and music events. Critics of the festival, however, charged that the event was more of a commercial and retail promotion on the part of organizers.

Council members were criticized last summer for spending the money--nearly half of the city’s annual arts budget--while cutting support to the city’s now-defunct Tourism, Arts and Promotion Corp.

The city was also criticized for taking part in what many saw as a retail promotion for South Coast Plaza in that most of the events took place in and around the shopping mall. In addition, many of the events promoted under the program would have been presented whether or not the festival took place.

In retrospect, Genis said, the festival was “a folly, a very expensive experiment.”

Mayor Mary Hornbuckle said she was disappointed with the $15,800 returns, adding: “We had hoped for greater sales tax revenues (from the festival), but given the economy of the city, that’s better than a loss.”

According to the CIC study, which was released Friday, visitors to Costa Mesa spent $1.5 million at the festival, generating about $9,200 in sales tax revenue and about $6,600 in hotel tax revenue.

The CIC study only looked at the sales generated during the two-week interval and not at promotional events before and after the festival, said CIC Research Director Skip Hull.

Because the study was conducted to show the amount of sales generated by people who would not otherwise visit South Coast Plaza, sales generated by Costa Mesa residents were not included in the study, said Susan Temple, city finance director.

Councilman Peter F. Buffa, who strongly supported city sponsorship of the event, suggested that the study is distorted because it does not include Costa Mesa residents.

He also noted that sales from the festival extend beyond the 17 days that were studied.

Using different criteria than the CIC study, South Coast Plaza General Manager Jim Henwood said the festival brought “at minimum” more than $100,000 of sales tax benefits to the city, including retail, restaurant and hotel tax revenues. South Coast Plaza, he said, saw a 19% increase in traffic during the festival, a higher attendance than the traditional Thanksgiving shopping peak.

Costa Mesa was the only city to contribute money to the festival, though other cities allowed the use of their facilities for festival events.