Arts Festival Reneges on Rent in Showdown With City Council

Violating terms of their 20-year lease with Laguna Beach, directors of the city’s prestigious Festival of the Arts this week paid only $65,000 of their annual rent of $585,184, an amount they contend in a federal lawsuit is discriminatory.

In a letter to Laguna Beach Mayor Kathleen Blackburn, Festival President Sherri Butterfield said the $65,000 represents what the arts organization should be paying. The balance, she wrote, will be deposited in a bank account pending settlement of the lawsuit.

“We feel that the amount we are being charged is excessive and exorbitant, in view of the fact that other similar tenants pay their landlords so much less for the property,” Butterfield said.

In a closed session Tuesday, the City Council voted unanimously to file its own lawsuit seeking to hold the festival to terms of its lease unless the full amount is paid by next week.

“The real goal is to get this thing resolved,” City Manager Kenneth C. Frank said.

The current lease, which expires in September 2001, requires the festival to pay 13.75% of its gross income, including ticket, merchandise and restaurant sales.

Last year, the festival rented the 5.6-acre site for about $102,074 an acre, compared to $10,000 an acre paid by neighboring Laguna Playhouse. Festival officials said they cannot accept the city’s offer to reduce the annual rent by about $11,000.

Councilman Paul Freeman said Tuesday: “I think this is nonsense, because they are under contract to pay us a certain amount of money.”

The festival’s lawsuit, filed Dec. 13, contends that the city charges more than fair market rent and that the festival pays the city far more than any other renter for use of similar property. It seeks a rent reduction and unspecified damages.