STAFF REPORT
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Meeting Date:
August 12, 2025
SUBJECT: DONATION OF UNUSED IN-LIEU FEE PAID BY THE RANCH AT LAGUNA BEACH PURSUANT TO COASTAL DEVELOPMENT PERMIT NO. A-5- LGB-14- 0034 TO LAGUNA CANYON FOUNDATION
RECOMMENDATION: It is recommended that the City Council:
1. Authorize the City Manager to execute a Memorandum of Understanding with the Laguna Canyon Foundation to donate the unused portion of the in-lieu fee paid by the Ranch at Laguna Beach consistent with the Coastal Development Permit No. A-5- LGB-14-0034;
2. Authorize the City Manager work with the Laguna Canyon Foundation to ensure the donation of the unused portion of the in-lieu fee is not subject to challenge and once confirmed, make the donation; and
3. Determine that the action consists of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment and therefore does not constitute a “project” within the meaning of the California Environmental Quality Act.
Appropriation: $0 Fund: N/A
Submitted By: . Approved:
Megan Garibaldi, City Attorney Dave Kiff, City Manager
SUMMARY OF THE MATTER
On January 8, 2015, the California Coastal Commission (“CCC”) approved a Coastal Development Permit (“CDP”) authorizing the expansion and remodel of the former 64-room Aliso Creek Inn hotel, restaurant, banquet, and golf course facility at 31106 South Coast Highway (the Ranch at Laguna Beach). On April 15, 2015, the CCC adopted revised findings in support of the January 8, 2015, approval. One of the conditions the CCC imposed on the project was a fee of $250,000 for the purpose of planning and permitting a public trail that would connect Aliso and Woods Canyon Wilderness Park to Aliso Beach (“In-Lieu Fee”), including identification of a trail alignment. On September 22, 2015, the City accepted the fees and established the Trail Deposit Account. Pursuant to CDP No. A-5- LGB-14-0034, if any portion of the InLieu Fee or accrued interest remains ten years after the City's acceptance of the deposit of the In-Lieu Fee (September 22, 2025), the City shall donate the remainder to one or more of the State Park units or nonprofit entities providing lower cost visitor amenities in a Southern California coastal zone jurisdiction or other organization acceptable to the Executive Director. The City desires to donate these funds to LCF consistent with CDP No. A-5- LGB-14-0034.
DONATION OF UNUSED IN-LIEU FEE PAID BY THE RANCH AT LAGUNA BEACH PURSUANT TO COASTAL DEVELOPMENT PERMIT NO. A-5- LGB-14-0034 TO LAGUNA
CANYON FOUNDATION
September 9, 2025
DISCUSSION
On September 22, 2015, the City received deposit of the In-Lieu Fee as required by CDP No. A-5- LGB14-0034. Section 2 of this CDP states:
2. In-lieu Fee as Mitigation for Impacts on Affordable/Lower Cost Overnight Accommodations & Visitor and Recreational Facilities. PRIOR TO THE ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall pay a fee for not providing lower-cost overnight hotel units on the project site.
A. The required total in-lieu fee of $250,000 shall be deposited into an interest-bearing account, to be established and managed by one of the following entities approved by the Executive Director of the Coastal Commission: City of Laguna Beach, Orange County Parks, California Coastal Conservancy, California Department of Parks and Recreation, or a similar entity. The purpose of the account shall be for planning and permitting of a pedestrian and cycling trail, including identification of a trail alignment, with any funds remaining after planning is completed to be used for trail construction and maintenance. The entire fee and accrued interest shall be used for the above stated purpose, in consultation with the Executive Director, within ten years of the fee being deposited into the account. All development funded by this account will require review and approval by the Executive Director of the Coastal Commission and a coastal development permit. If any portion of the fee remains ten years after it is deposited, it shall be donated to one or more of the State Park units or nonprofit entities providing lower cost visitor amenities in a Southern California coastal zone jurisdiction or other organization acceptable to the Executive Director. Alternative mitigation may include completion of a specific project that is comparable in cost to the amount of the in-lieu fee and makes a substantial contribution to the availability of lower cost visitor recreational facilities in Laguna Beach and/or other parts of the coastal zone of Orange County, subject to the review and written approval of the Executive Director.
B. Prior to expenditure of any funds contained in this account, the Executive Director shall review and approve, in writing, the proposed use of the funds as being consistent with the intent and purpose of this condition. In addition, the entity accepting the in-lieu fee funds required by this condition shall enter into a memorandum of understanding (MOU) with the Commission, which shall include, but not be limited to, the following: 1) a description of how the funds will be used to identify a trail alignment including planning, permitting and construction of the trail; 2) the terms provided in subsection A of this condition; and 3) an agreement that the entity accepting the funds will obtain all necessary regulatory permits and approvals, including but not limited to, a coastal development permit for development of the trail required by this condition (emphasis added)
DONATION OF UNUSED IN-LIEU FEE PAID BY THE RANCH AT LAGUNA BEACH PURSUANT TO COASTAL DEVELOPMENT PERMIT NO. A-5- LGB-14-0034 TO LAGUNA
CANYON FOUNDATION
September 9, 2025
On March 7, 2023, the City Council considered an agenda item that sought approval of an agreement with the Laguna Canyon Foundation (“LCF”) in an amount not to exceed $30,000 to study the feasibility of the public trail as well as an approval a Memorandum of Understanding with the CCC regarding the use in the In-Lieu Fee. However, the CCC never accepted this Memorandum of Understanding and no executed contract with LCF exists for this feasibility study. This March 7, 2023, City Council item appears to have been an attempt to comply with the specific provisions of section 2 prior to expending any of the In-Lieu Fee. However, since the CCC never approved/executed the Memorandum of Understanding and the LCF never signed the agreement, provided the feasibility study or received payment, there is some uncertainty as to the most effective and sound way to effectuate the donation to LCF.
While there is an argument that the plain language of the permit condition appears to call for a selfeffectuating donation to one of three distinct categories of entities if funds remain from the In-Lieu Fee ten years after deposit, the failure to execute a final version of the memorandum of understanding with the CCC or expend any of the In-Lieu Fee potentially complicates matters. To avoid any doubt, and to ensure any donation to the LCF is not subject to challenge or enforcement action, the most conservative approach is for LCF, or LCF and the City, to confer with the Executive Director or CCC staff to ensure the validity of the donation. However, because of the impending deadline, City staff is asking City Council to authorize the City Manager to take reasonable steps to ensure the City has approved the donation to LCF is prior to any deadline. The proposed Memorandum of Understanding with LCF was drafted with the above mentioned complications in mind and provides flexibility for the City and LCF to take reasonable steps to finalize any donation in the most secure way.
FINANCIAL ANALYSIS
On September 22, 2015, the City accepted a $250,000 deposit, which was placed into a Trail Deposit Account, for the consideration of the trail at the Ranch at Laguna Beach. As of the date of this report, the Trail Deposit Account contains approximately $280,000 ($250,000 of the original deposit and $30,000 in interest). Approval of this item will authorize the City Manager to donate all remaining funds in the Trail Deposit Account to the Laguna Canyon Foundation, consistent with Coastal Development Permit No. A-5- LGB-14-0034.
ENVIRONMENTAL ANALYSIS
The recommended action consists of the creation of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (Public Resources Code Section 21065; CEQA Guidelines Section 15378(b)(5).) Before the City Council tonight is a request to donate funds from the InLieu Fee to LCF. Any future project by the LCF funded by the donation will require independent environmental review.
ATTACHMENTS
1. Draft Memorandum of Understanding (Pgs. 4-6)
DONATION OF UNUSED IN-LIEU FEE PAID BY THE RANCH AT LAGUNA BEACH PURSUANT TO COASTAL DEVELOPMENT PERMIT NO. A-5- LGB-14-0034 TO LAGUNA
CANYON FOUNDATION
September 9, 2025
Report Prepared By: Coordinated With:
Patrick Donegan, Assistant City Attorney