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Council extends BID on inns

Laguna Beach hotels and motels will continue for at least another fiscal year to underwrite arts organizations that help fill their rooms.

The City Council voted unanimously Tuesday to extend until June 30, 2010, the Laguna Beach Business Improvement District agreement, a 2% assessment levied on all Laguna Beach lodging establishments, commonly referred to as the BID. The assessment is levied in addition to the bed taxes paid to the city by the hotels and motels, with their concurrence.

“This is voluntary,” Councilwoman Toni Iseman said. “The hotels could unplug it at any time.”

Half of the assessment funds, an estimated $800,000 this fiscal year, are allocated to the Laguna Beach Visitors and Conference Bureau, which promotes destination tourism.


The other half of the BID assessment is divided up among local art institutions, Arts Commission programs and community art organizations that burnish the city’s reputation as an art colony and are deemed attractive to tourists.

This fiscal year, the Laguna College of Art & Design, the Laguna Playhouse, Laguna Art Museum and Arts Commission programs all received $160,000. Another $160,000 was split among local arts organizations.

Among the commission projects funded by the BID in 2008-09: artist-designed benches, banner and palette competitions, art exhibits at City Hall, publications, Concerts in the Park, a public art tour, public art restorations and temporary exhibits of rotating sculptures.

The Chamber of Commerce wants a piece of the action and Chamber President Jeff Redeker made a pitch at the council meeting for a 5% slice of the pie.


“We should get BID support,” Chamber Executive Director Rose Hancock said. “We do an enormous amount for visitors, as well as residents.”

However, the allocations are specified in a city ordinance.

“It’s not up to the city to decide,” Mayor Pro Tem Elizabeth Pearson said. “We are just the caretakers.”

She advised chamber officials to take their case to the hoteliers.

Surf & Sand General Manager Nick Bozych wasn’t receptive to the proposal.

“We are the No. 2 contributor to the BID,” Bozych said. “I would question a request for a percentage. I would want to know where it’s going before approving it and I’d want to know how it would help hotels.”

Lodging establishments were at one time members of the chamber. A split came when hotels wanted to fund efforts to attract visitors who came to town, stayed and spent money, but could not make any headway with chamber officials.

The hoteliers founded the Laguna Beach Hospitality Assn. in 1986. A Visitors Center was opened on Broadway in 1993. Two years later, the group changed its name to the Laguna Beach Visitors and Conference Bureau.


Behind-the-scenes maneuvering by businessman Sam Goldstein, City Councilman Paul Freeman and bureau officials resulted in the BID proposal, which went into effect July 1, 2001.

“It was an almost two-year process,” said Karyn Philippsen, president of the bureau.

Part of the process included the formation of an advisory board consisting of the mayor, mayor pro tem, city manager and four representatives appointed by the bureau, which recommended the extension and no changes in the boundaries of the district.

In order to continue the district, the council must schedule a public hearing, noticing all the lodging establishments and providing them the opportunity to protest the extension.

“No protests were filed,” Assistant City Manager John Pietig said.

For which the council gives thanks: Transient occupancy tax, better known as bed tax, represents the second highest revenue source for the city category.

City Manager Ken Frank has said that he prays every night for the Montage Resort and Spa, the No. 1 contributor to the BID and No. 1 contributor to the bed tax, both of which are being adversely affected by the economy.

The estimate of the BID revenue for this fiscal year has been revised 11% downward from $1.78 million to $1.6 million. Revenue for 2009-10 is expected to drop another $100,000.


Cities are authorized by state law to levy assessments on businesses in order to promote economic revitalization and tourism, create jobs, attract new businesses and prevent erosion of business districts and levy the businesses that benefit — in Laguna, that is hotels and motels.

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BARBARA DIAMOND can be reached at (949) 380-4321 or