LAGUNA BEACH

Stalled lease negotiations between the city and the Festival of the Arts hit another snag when the city proposed redirecting festival rent proceeds rather than substantially reducing what the festival must pay.

Mayor Kathleen Blackburn announced this week a proposal to create a city Festival Improvement Fund of about $300,000. The money would be used to fund repairs and improvements to the festival property.

However, the 67-year-old Festival of the Arts would prefer a reduction in the rent so the festival can do the improvements itself. The current lease for the festival, which runs the internationally known Pageant of the Masters, requires payment to the city of 13.75% of the gross receipts, including ticket sales and merchandise and restaurant revenue.

The lease expires in September 2001. Agreement on a new lease for the property on Laguna Canyon Road has not been reached, despite more than three years of negotiations and the threat that the festival may find a new home.