By Megan Miller, Special to the Independent
Laguna Beach and Laguna Presbyterian Church inked a tentative deal Tuesday that could add 92 spaces of public parking through a ground lease agreement.
The City Council voted 3-2 Tuesday to approve a Memorandum of Understanding (MOU) with the church, which would allow the City use of the lot at 355, 395, 361, and 363 Third St. to build a $10 million parking structure.
Councilmembers Toni Iseman and George Weiss dissented, citing concerns over the terms of the lease.
“I thought it was very well done to the benefit of the church,” Iseman said.
The MOU is not a binding agreement, and therefore would allow either party to back out if the City doesn’t get the necessary design review or coastal development approvals, or if the project proves too costly, City Manager Shohreh Dupuis said.
The City Council held back on authorizing a lease agreement to continue negotiations, and voted to add language to the memorandum that makes it clear either party can back out at any point before breaking ground on the structure.
Dupuis has been involved in the negotiations since 2019, when City Council had the opportunity to buy the property at 355 Third St. but opted instead to pursue a shared-use lease agreement with the church. After pandemic-related delays, staff resumed discussions with the church in October and made reports to the City Council in closed session.
The lease terms are still subject to negotiation, but the current proposal would see the City paying the church $2 million upfront to lease the land for a 53-year term.
Supporters of the agreement say the lease would encourage tourists and residents to visit the businesses downtown. Opponents fear traffic congestion and financial fallback from what they say is a lopsided agreement that favors the church.
“This is a non-binding action tonight, but it keeps us in the game,” Mayor Pro Tem Bob Whalen said.
After construction is completed on the parking structure, the City would pay an annual rent equal to 2% of the gross revenue from motorists for the first 10 years, 10% for the next 20 years, and 28% for the remainder of the lease.
The City would be responsible for the structure’s maintenance and operation. Parking would remain free to residents with Shopper’s Permits.
Staffers estimated the annual revenue per space to be $4,200 based on a five-year average of other metered lots downtown.
Laguna Presbyterian would have exclusive use of 41 subterranean spaces. The church could also reserve public spaces for up to 25 special events per year, as long as the dates don’t fall between Memorial Day and Labor Day.
The Church could also reserve the upper deck at no cost on Sundays until 12:30 p.m.
“If it does work, we have some of the most convenient parking possible, and the downtown could thrive,” said Ed Sauls, a volunteer at Laguna Presbyterian who has been negotiating on behalf of the church.
The structure could generate a net $14.2 million for the City over the lease term, staffers said.
“We had to make certain assumptions in the financial model,” Dupuis said, adding, “This is not a profit venture. This is a way to provide public service and public amenities to the downtown.”
Whalen pointed out that the parking structure will be funded by parking fund revenues, not the general fund.
“It’s not trading off police and fire and other jobs – it’s parking revenues. That’s what’s [going to] pay for this thing. Is it the lowest cost?” Whalen said. “No, but we’re in the business of providing services, and this is a service to the community.”
The City also faced pushback from residents who felt they’d been left in the dark about the agreement.
Laguna Beach taxpayers would pay a premium of at least $115,502 per space to install more spaces on the church’s lot rather than a city-owned parcel, according to a financial analysis conducted by John Thomas, a member of the Laguna Beach Audit Review & Measure LL Oversight Committee.
“While building parking structures may or may not be in the best interest of the residents of Laguna Beach, if a parking structure is to be built, building on city-owned land makes far more financial sense than building on property owned by someone else and unnecessarily paying rent that would not be necessary on city-owned land,” Thomas wrote in a letter to the City Council.
Thomas also pointed out that the staff report projects the parking structure will take about 30 years for the project to finally break even.
“We’re just getting started, unfortunately,” Councilmember Peter Blake said. “We [will] have who knows how many more meetings where the public will be involved.”
Mayor Sue Kempf added it’s common for cities to negotiate terms in closed session and said that the public will have a chance to be involved in public discussions about the lease agreement in the future.
“It’s something to explore further. There may be some improvements along the way as people vet ideas,” Whalen said.
Once negotiations are finalized, the lease agreement will return to the City Council for approval.
