In pricey Laguna Beach, city makes a space for affordable artist live-work housing
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The city of Laguna Beach has entered the closing stages of a concerted effort to preserve two canyon-based properties considered crucial to the town’s stock of affordable housing where artists can both live and work.
After several steps, including the formation of a community land trust, the City Council during a Dec. 9 meeting approved an amended purchase and sale agreement for the parcels, located at 2307 and 2535 Laguna Canyon Road.
The city’s role in the ownership of the properties will be temporary. While Laguna’s community land trust was not created in connection with a specific property acquisition in mind, the artist live-work units fit under the umbrella of community assets the trust is designed to protect.
City staff is expected present the council with a loan agreement and a purchase and sale agreement proposal during a Jan. 13 council meeting.
“I think [the purchase of the properties] really does make sense,” said Councilmember Bob Whalen, who along with Mayor Mark Orgill appointed the founding board of the community land trust on Nov. 7. “I think our staff has done a lot of work on this, a lot of due diligence. We know what the real estate issues are, we understand them.
“The thing that gives me the most confidence, though, … is the members of the community land trust board. … It’s critical that when you’re making a loan, you’re making a loan to a group of people, an organization that you think is capable of accomplishing the mission.”
The purchase price is $8 million for the two Laguna Canyon Road properties, which comprise a total of 25 units.
“This is not just a real estate decision,” said Kristine Thalman, president of the community land trust board. “This is a decision of who we are as a city. Those canyon units are home to artists who give Laguna its soul, people whose hands, hearts and creativity have shaped this community for decades. Their work builds our festivals, our galleries, our storefronts, our public spaces and the memories of everyone who visits.”
Thalman was part of a long march to the podium during the Dec. 9 meeting by artists, community land trust board members and proponents asking the city to support a bridge loan for the newly-formed nonprofit land-holding entity.
“If the city does not act now, these units will fall into the hands of corporate developers. Rents will skyrocket. The artists who make this city what it is will be forced out, not because they want to leave, but because they can no longer afford to stay. … Once that happens, you can’t get it back.”
When officials learned the properties could hit the market in October 2024, the city got involved, with an eye toward preserving a home for the creative community that would stand against the threat of private acquisition and redevelopment.
The sellers supported the goal of retaining the units for use by artists, city staff said. That led to an initial purchase and sale agreement with George R. Burkhardt Trusts for $8.65 million, which the City Council unanimously approved last January.
Tom Lamb, a longtime resident and photographer, said he has been among those who have used the light industrial space to work on certain projects.
“I’ve lived in Laguna Beach over 40 years, of which many of those years, I’ve been afforded studio space by George Burkhardt at 2307 Laguna Canyon Road,” Lamb said. “I’m not a dirty artist, in the sense that I don’t use torches and things, but I borrow those tools from all the people around me when I need to use them.
“I do have big printers, I have huge prints, huge things, and that space has afforded me the ability to make art in this town. I can’t make my art on the kitchen sink and [on] the dining room table. It doesn’t work that way. We make big stuff, and we need big spaces to make it.”
The $8 million purchase price for both properties was arrived at after the city commissioned independent appraisals of the properties and conducted its due diligence. The appraised value of 2535 Laguna Canyon Road remained firm at $5 million. As for 2307 Laguna Canyon Road, the findings noted the property had less leasable square footage than listed and required site improvements. Negotiations over the parcel brought down the cost, from the original $4.5 million asking price to $3,050,000, according to city staff reports.
The city and the community land trust executed a nonbinding letter of intent, providing a look at the terms the council is expected to consider regarding a loan and transfer of property next month.
The agreement provides for a five-year loan of $8 million from the city with a fixed interest rate of 4% annually. The closing date for the purchase of the properties is expected to be Jan. 30.
“We do have several covenants that we intend to include,” Assistant City Manager Jeremy Frimond said during the Dec. 9 meeting. “That’s some code remediation, restriction on development outside of the remediation until the city’s investment is recovered. We have a rent covenant to make sure that net operating income will cover debt services and avoid default, and an affordability component, as well, obviously, for the purchase under the stated goal [for] affordable housing.”
Frimond added the city would be requiring property, fire and flood insurance.
City staff has suggested that the funding for the loan could come out of the vehicle replacement fund, which maintains a balance of approximately $17 million, according to a staff report.
“I do think that Laguna, at its best, is when we empower all the talented people in our community to unite around a common cause,” Councilman Alex Rounaghi said. “I can’t think of a more important, unifying cause than the idea of having artists living in our town. I’m very excited about that. …
“I’m going to support the recommended actions before us tonight, not because I’m willing to spend $8 million on this alone, but based on the idea that we can still ensure that we have the best public safety, invest in infrastructure, invest in high-quality services for our residents — the core competencies of local government — and that this loan will be paid back, and that it will have a multiplying effect, hopefully, and lead to future opportunities for affordable housing.”
Community land trust board members attending the meeting expressed confidence in their fundraising abilities.
In addition to the artist live-work property matter, the land trust may also get involved with affordable housing for seniors and the local workforce.
“The community land trust’s task is to secure donations sufficient to allow a long-term mortgage that can be supported by the property with affordable rentals,” said board member Cody Engle. “To all of you in the community who care about supporting the history of our town and our artists, be forewarned. The community land trust will be asking you all to contribute your motion and your money.”
