Letter: Rent Free for 85 Years at Taxpayers’ Expense

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Why do the citizens of Laguna Beach provide free office space to the Laguna Beach Chamber of Commerce (CoC)? To hear CoC representatives tell it, long ago their organization gave the citizens of Laguna Beach its cherished property and in return the City agreed to free office space in perpetuity. That telling presents an inaccurate account of what really happened back in 1937. Back then, the CoC was in danger of defaulting on their mortgage and it was in arrears for property taxes too. Foreclosure loomed. The 1937 agreement in which the City takes on the obligations of the Chamber in exchange for title reads in part:

“Whereas, the party of the second part (aka CoC) is unable to meet its obligations arising under said deed of trust and to pay taxes and street assessments; and
Whereas, the party of the first part (aka City) desires to assist the party of the second part to have at all future times a place for an office…” and viola!, the Chamber is entitled to free rent in perpetuity (“perpetual agreements” have been found to be legally unenforceable unless all parties agree).

Beyond taxpayers’ providing them free space, the CoC also benefits from the City’s providing them service contracts and outright grants. Throughout the 20th century, the City regularly executed agreements with the CoC for “community promotional activities and services”; annual fees in the 1970s were around $20,000 (about $140,000 in today’s dollars). Agreements have been replaced by outright grants in recent years (e.g., $25,000 per year for the “Think Laguna First” campaign in 2020).

But all of this taxpayer largess raises the question of whether City monies should be spent on an organization focused on private businesses or whether our over-touristed city needs promotional campaigns at all. I encourage voters to question prospective Council candidates’ positions on continuing to provide such generous financial support to the Chamber of Commerce and indeed, whether 85 years of free rent is enough.

Michael Morris, Laguna Beach

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6 COMMENTS

  1. The City Council’s husbandry of taxpayer’s money seems largely divorced from residents’ needs lately. The $2.7M spent on the useless Ti Amo non-fire station site without an appraisal – all despite huge public outcry. The suspicious proposed Third St. parking structure deal that could ultimately cost us around $39M for 92 spaces with meter revenues split with the landowner who will ultimately get the structure and the land back. The $400,000 to $500,000 lost annually in meter revenues for the promenade (yet another $4M expenditure) so four restaurants can have outside dining while paying only $100 per month for their public space. The $23,000 gifted by the Arts Commission and pro-development City Council to the local radio station which promulgates pro-development propaganda and acts as a megaphone for pro-development City Council members. Plus raises for the City Attorney and his law firm. And yes – the “free” rent for the Chamber Of Commerce. Our taxpaying dollars at work. And these are all being advanced by “conservative” Council members? I suggest we need some major changes come the November elections.

  2. Thank you. I questioned this during the Library acquisition as well.

    I could not believe that our Council members did not inquire in more depth about the “assist language” vs “ free rent obligation” they approved to provide to the Chamber of Commerce at taxpayers expense.

    This is a private business who represent businesses in our town not residents. Why are we subsidizing them?

  3. Thank you, Michael Morris, for uncovering this 1937 document that provides evidence that the Chamber of Commerce “gift” of the library land is a LEGEND versus actual fact. Based on this legend, the taxpayers (mostly residents) of Laguna Beach have been funding the Chamber of Commerce with free rent, grants, and more. Maybe we can redirect the Chamber to promote our local businesses more rather than our local beaches and beautiful trails for the money we’ve been spending? Stop pitching our beaches and trails. We’ve got enough people on them. The businesses need the Chamber’s help more.

  4. This is the same outfit that offered $20,000 in dark money to the city council towards a $35,000 parking structure study in 2020. They did so with the stipulation that it only be used for the site next to city hall. No other locations. This city council majority accepted the money from the 7 anonymous Chamber of Commerce members—no questions asked. Clearly, providing $25,000 back to a group focused on promoting business profits and tourism is unseemly at best. Laguna already welcomes 6.5 million visitors a year. Enough is enough. Community assistance grants should be based on need and there are many organizations that need the money. The Chamber of Commerce is not one of them.

  5. A lot has changed in 85 years.
    Imagine Laguna Beach in 1937. With the country climbing out of the Great Depression,1937-1938 is sometimes referred to as the “Roosevelt Recession” or “the Recession within the Depression.” GDP nationally fell 10% and industrial production was down 32%. Across the country unemployment hit 20%. Meanwhile, over the decade of the thirties, the population of Laguna Beach was growing – from under 2.000 residents in 1930 to over 4,0000 in 1940. But with annual per capita income of $540 – compared to $96,869 today – and no freeways, and minimal development of Orange County, it is reasonable to expect that most people who lived in Laguna in 1937, and had a job, worked in Laguna. So, the livelihood of 1937 Laguna residents was probably closely tied to the businesses in Laguna, and a Chamber of Commerce was important for many residents. So, helping out the Chamber of Commerce in 1937 probably made a lot of sense. Presumably, in 1937, helping the Chamber of Commerce, meant helping Laguna’s businesses, and that meant helping Laguna residents. At that time, the butcher, the baker, and the candlestick-maker may very well have been your neighbors.
    But compare that to Laguna today. Helping the Chamber of Commerce today seldom means helping Laguna residents. Of course, there are exceptions, but few people who live in Laguna today rely for their livelihood on Laguna businesses, and especially the types of businesses represented by the Chamber. With the tourism industry focus of many local businesses, the dominant types of jobs in Laguna seldom provide the income needed to live in Laguna. The employees in and owners of Laguna businesses are overwhelmingly people who do not live in Laguna – and people who live here seldom work here. So, the role the Chamber of Commerce plays has changed. It is less relevant to the livelihood of Laguna residents than it was in those earlier times.
    But that rent subsidy from the City government to the Chamber continues, and in fact, in addition to the free rent, the City just this week granted the Chamber a Community Assistance grant of $10,000 in spite of the fact that the non-profit organization reported a healthy “profit” for 2021. In that respect, the City government continues to act as if it is still 1937. It does seem fair to raise the question of the appropriateness of these subsidies.

  6. Mr. Morris,

    It appears to me that you are misleading the public once again. How can something be rent free at the taxpayers expense if the taxpayers benefitted from this transaction. It appears that the Chamber of Commerce, which you would point out that I am on the board of, made this property available for use to the City and then sold to the city in hopes that they would use it as a City Hall and other civic purposes. In turn, the Chamber would have an office. Can you imagine if they had kept this property and what it would have been worth today?

    Meanwhile, other charities get $1 leases with nothing in exchange and receive hundreds of thousands of dollars a year in donations from the city and in tax revenue collected from hotel operations.

    Fact for readers is this: without partnerships between the city and nonprofit organizations, Laguna Beach would be Stanton by the Sea!

    A big thanks to the forefathers and foremothers of Laguna Beach for their vision.

    Not everything Michael is nefarious amd evil. Sometimes there are well-thought legal agreements.

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