Laguna Gets Crafty in Deal to Keep Art Festival

Threatened with the loss of its most distinctive annual event, Laguna Beach has offered the sweetest lease deal ever to the directors of the Festival of Arts--who still might decide to leave town.

The City Council’s offer late Tuesday comes after years of squabbling over the future of the summertime art showcase and just a day before San Clemente was set to propose a new round of negotiations to lure the festival away.

“We want to keep it in Laguna,” Mayor Kathleen Blackburn said Wednesday.

Under the proposal unanimously approved by the City Council, Laguna Beach would surrender its sole control over the nearly $600,000 in rent the festival now pays for the city-owned venue under its existing lease.

The city also would forgo an annual lease payment the festival now pays into the city’s general fund, which amounted to $74,000 last year. In exchange, the festival must allow the city to rent the facility--the Tivoli Terrace restaurant, the park area and the Irvine Bowl--during the eight months the pageant is on hiatus.

The festival board will meet next on May 16, but a special session could be called sooner to consider the offers, festival President Sherri M. Butterfield said.

Festival exhibitor Diane Reardon, who has been lobbying the Laguna Beach City Council for months to present a better offer, praised the lease proposal.

“This offer is so excellent,” Reardon said. “I don’t see how our board can refuse it.”

Reardon and many other exhibitors have lobbied the board of directors for months to keep the festival in Laguna Beach. Some launched an effort to recall board members who support the move to San Clemente. A hearing on that recall is scheduled May 24 in Orange County Superior Court.

Under the existing lease, about $300,000 of the rent goes into a city-controlled fund to improve the festival grounds, $210,000 goes to community organizations chosen by the city and $74,000 goes into the city’s general fund.

The offer made by the city this week would give the festival board substantially more control over how the rent money is spent.

Festival officials still would be required to contribute $300,000 a year, or 7 1/2% of its ticket sales, whichever is greater, to repair the aging 5.6-acre complex that straddles Laguna Canyon Road. However, decisions on those improvements would be made jointly by the festival and city. Likewise, the festival and city would jointly decide how to divide the $210,000 among local nonprofit groups.

The offer also is a dramatic departure from the city’s hardball tactics in the negotiations, a tumultuous 3 1/2-year feud over what the festival calls an exorbitant rent and how the money will be controlled.

The offer comes as festival officials have considered moving the event to a 20-acre site in San Clemente. The festival entered into exclusive lease negotiations with San Clemente in February. Those negotiations ended earlier this week, but the San Clemente City Council late Wednesday voted unanimously to extend negotiations for 90 days.

“The board will have to evaluate which site, in the long run, will suit their long-term needs,” San Clemente Mayor Susan Ritschel said.

Times correspondent Kenneth Ma contributed to this report.