Visitors Bureau Urges Increase in Laguna Beach Bed Tax to Support Arts

The Laguna Beach Visitors Bureau wants local hotels to increase their bed tax and use the proceeds to benefit the painters, poets, playwrights, performers and other creative people who shape the city’s personality and help draw tourists.

Mayor Paul Freeman, who plans to present the idea Tuesday to the City Council, said it would increase off-season tourism by lengthening a cultural calendar that now revolves mainly around the eight-week, summertime Festival of the Arts.

For a city that proclaims itself artist-friendly but nearly lost the popular Festival of the Arts to nearby San Clemente last year, Freeman said the marriage between the hotel industry and the art community would send an important message.

“I think we brag about being a city of the arts,” he said. “At the same time, there is no dedicated revenue stream for performing arts, for culture, for public art. And now there can be. And it’s not even at our own expense. So I think this is huge in that context.”

Under the proposal, a special business district would be created, encompassing the city’s 26 hotels, motels, inns and bed and breakfasts. Each of the establishments would agree to raise its bed tax to 12% from 10%.

The new rate would be the highest for any coastal city in Orange County. But it would remain lower than the rate in Anaheim, which is now 15%.

Technically, the tax is self-imposed, allowed under state statutes enacted in 1989 that authorize cities to levy assessments on businesses to promote economic revitalization and tourism, among other things.

The Laguna Beach City Council, as well as the community’s hotel owners, would have to approve the tax increase in separate majority votes.

The idea is new in Orange County but not unprecedented. Bonnie Hall, executive director of Arts Orange County, a nonprofit arts council, cited San Diego and San Francisco as two cities that apportion bed taxes to artistic causes.

Freeman, who has been bandying the notion about for more than six months in informal meetings with hotel officials and arts activists, says the tax increase would initially generate $640,000 a year. That amount would double, once the proposed Treasure Island resort is complete.

Half the new funds would go to the Visitors Bureau to market Laguna Beach as a destination for cultural tourism. The Arts Commission, Art Institute of Southern California, Laguna Art Museum and Laguna Moulton Playhouse each would get $80,000. The balance, nearly $160,000, would go to city coffers, to be used for the arts or other critical needs.

“This is one of those rare, serendipitous opportunities to do something of truly broad public benefit,” Freeman said. “It creates a dynamic between the hotel industry and arts groups to collaborate.”

The bill has a clear opponent in Councilman Wayne Baglin, who says the city should not use taxes to subsidize hotel advertising or provide operational funds for nonprofit organizations.

“We may need to use an increase in the bed tax funds just to pay for essential services in Laguna Beach,” he said.

But art supporters are embracing the idea.

“It sounds exciting,” said Alan Barkley, director of the Art Institute, a four-year college with 260 full-time students from around the globe.