RESOLUTION NO. 25.008
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LAGUNA BEACH, CALIFORNIA, ESTABLISHING THE
ECONOMIC DEVELOPMENT POLICY AND RELATED
ECONOMIC INCENTIVES TO ENCOURAGE BUSINESS
DEVELOPMENT IN THE CITY
WHEREAS, the City of Laguna Beach recognizes the importance of fostering a strong, resilient local economy and seeks to encourage business development, increase employment opportunities, and enhance the City's tax base; and
WHEREAS, the City Council finds that a well-structured economic development policy is necessary to stimulate business growth, revitalize vacant properties, and support new and existing businesses in a manner that aligns with the City's General Plan and economic goals; and WHEREAS, the Economic Development Incentive Policy ("Policy") establishes a framework for providing economic assistance to businesses through various incentives, including fee waivers, expedited permitting, revenue-sharing agreements, and economic development grants; and
WHEREAS, all economic assistance provided under this Policy must comply with Article XI, Section 7 and Article XVI, Section 6 of the California Constitution to ensure that any economic incentives granted serve an identifiable public purpose and provide adequate consideration to the City; and
WHEREAS, the City Manager, or the City Manager's designee, shall be responsible for overseeing the administration of this Policy, ensuring compliance with applicable laws, and providing annual reports to the City Council on the Policy's outcomes; and WHEREAS, the City Council retains full discretion to approve or deny any economic incentive request, and no incentive shall create any vested rights or entitlements for any applicant; WHEREAS, the City is committed to maintaining high ethical standards in the administration of this Policy and ensuring that no conflicts of interest compromise the integrity of • public funds.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAGUNA BEACH DOES RESOLVE:
SECTION 1. Adoption of the Economic Development Incentive Policy. The Economic Development Incentive Policy, as set forth in Exhibit A attached hereto and incorporated by reference, is hereby adopted.
SECTION 2. Authority and Implementation. The City Manager, or the City Manager's designee, is authorized to develop and implement administrative guidelines necessary to carry out the provisions of this Policy and to make any future modifications necessary for compliance with State law.
SECTION 3. Fiscal Responsibility. Staff shall conduct a fiscal analysis of all incentive requests to ensure financial feasibility and alignment with the City's economic priorities. No individual incentive package shall exceed $100,000, except as permitted under Government Code Sections 53083 to 53085.
SECTION 4. Semiannual Review and Reporting. The City Manager shall provide an semiannual reports to the City Council detailing the impact and effectiveness of the Economic Development Incentive Policy, including the number of businesses assisted, public benefits achieved, and fiscal impacts to the City.
SECTION 5. Severability. If any section, subsection, clause, or phrase of this Resolution is for any reason found to be invalid or unconstitutional, such decision shall not affect the remaining provisions of this Resolution.
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SECTION 6. Effective Date. This Resolution shall take effect immediately upon its adoption.
ADOPTED this 25th day of February, 2025.
All Romari
Alex Rounaghi, Mayoı
ATTEST:
I, Ann Marie McKay, City Clerk of the City of Laguna Beach, certify that the foregoing Resolution No. 25.008 was duly adopted at a regular meeting of the City Council of said City held on February 25, 2025, by the following vote:
AYES: COUNCILMEMBERS: Jones, Kempf, Whalen, Orgill
NOES: COUNCILMEMBERS: Rounaghi
ABSENT: COUNCILMEMBERS: None
Clerk, City of Laguna Beach, Calffornia
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Exhibit A
CITY OF LAGUNA BEACH
ECONOMIC DEVELOPMENT POLICY
I. PURPOSE
The purpose of this Economic Development Incentive Policy ("Policy") is to stimulate business development, increase employment opportunities, and enhance the tax base of the City of Laguna Beach ("City"). The Policy further supports economic growth that enhances residents' quality of life and aligns with the City's commitment to a strong, resilient local economy by offering economic incentives to qualifying businesses and developers establishing or revitalizing enterprises within the City.
Il. GUIDELINES AND REQUIRED FINDINGS FOR PROVISION OF ECONOMIC
ASSISTANCE
Any economic assistance granted by the City pursuant to this Policy must align with Article XI, Section 7 of the California Constitution and not contradict any general laws of the State. In addition, any economic assistance provided under this Policy must comply with Article XVI, Section 6 of the California Constitution to ensure it does not qualify as a gift of public funds. To satisfy this requirement, the City Council must find, based on substantial evidence, that (1) any economic assistance provided by the City must serve an identifiable public purpose (2) the City receives adequate consideration from the transaction, even if the other party to the transaction may incidentally benefit.
Prior to distributing any economic assistance, the City should conduct a financial feasibility and community necessity analysis to ensure the project is viable and beneficial. The City Manager, or City Manager's designee, in consultation with the City Attorney, are responsible for implementing and maintaining guidelines that ensure any economic assistance complies with both the California Constitution and the Government Code.
III. ECONOMIC DEVELOPMENT AND BUSINESS INCENTIVE PROGRAM In order to encourage the attraction, retention and expansion of new and existing businesses in the City meeting specified criteria, the City establishes the "Economic Development and Business Incentive Program" ("Program") pursuant to this Policy. This Program is designed to strengthen the City's economic development efforts by fostering the expansion of Laguna Beach businesses that offer quality employment opportunities to residents, attracting new business enterprises to the City, broadening the City's economic base, and ultimately enhancing the quality of life for City residents.
A. Generally
The City Manager, or City Manager's designee, is responsible for developing the application for the Program, defining the associated requirements for the Program, and overseeing the implementation of this Program. Disbursement of funds will take place through the City's Finance Department in accordance with this Policy.
Applications for this Program can be accessed in person at 505 Forest Ave, Laguna Beach, CA 92651 or online at https://www.lagunabeachcity.net/government/departments/community- development/economic-development-copy. All applicants must submit fully completed, signed applications accompanied by the required supporting documents to be considered for economic incentive under this Program. Incomplete applications will be rejected and not processed.
Applications will be reviewed on a first-come, first-served basis.
The City reserves the unqualified right, in its sole and absolute discretion at any time to choose or reject any or all applications received under this Policy, including if it is determined that the public benefit is not served by the proposal, request additional information of the applicants as deemed necessary and appropriate by the City, conduct additional due diligence with applicants or any third party before making a decision on any application, adjust the City's objectives or the scope of the Program, modify program requirements, general terms and conditions, or eligible activities, and disqualify any proposing applicant on the basis of any real or perceived conflict of interest that is disclosed or revealed by materials submitted or by any data available to the City. Nothing herein shall be construed to limit the ability or authority of the City to impose conditions on development or to enter any otherwise lawful agreement.
Certain businesses or individuals are ineligible to participate in the programs or receive economic incentives outlined under this Program. Ineligible entities include City employees, elected or appointed City officials, properties owned or managed by tax-exempt organizations, cannabis businesses, and unpermitted businesses.
B. Minimum Eligibility Criteria
In order to be eligible for the Program, new or existing Laguna Beach-based business must meet one of the following eligibility requirements:
(1) For existing businesses, either add a new location within the City, or expand their current location to occupy a vacant lot or storefront in the City. (2) New businesses must occupy a vacant lot, a vacant storefront, or an impending vacant storefront.
Eligibility requirements do not include an exclusively online or home operated businesses.
C. Available Economic Incentives
The City offers a range of economic incentives through the Program to support eligible businesses.
These incentives are subject to the "Requirements and Limitations" outlined in Section III(F) of this Policy. Applicants are highly encouraged to seek legal representation to pursue any incentive under this Program.
1. Fee Waivers and Reductions
The City may waive, reduce, or defer existing City-administered fees associated with the business, including, but not limited to, application fees, such as those associated with submitting a business license tax application. Fee reductions and deferrals may be available in an amount not to exceed $50,000.
The Community Development Director will forward the request to the appropriate departments, including the Finance Department, to evaluate eligibility and estimate the fee waiver, reduction, or deferral available to the applicant. To receive any of these incentives, applicants will be required to enter into an agreement with the City that is approved by the City Attorney. These agreements will outline the terms and conditions of the incentives, including repayment schedules for deferrals, monitoring provisions, and any necessary security or indemnification clauses as deemed necessary by the City.
1. Expedited Plan Review
The City may expedite the review of any and all building plans and the processing of any required permits for projects. Further, City staff will endeavor to schedule any required public hearings related to a project subject to this policy in way where the goal is a single hearing at the pertinent City body (i.e., Planning Commission, City Council, etc.).
2. Revenue Sharing Agreements
Applicants may apply for revenue-sharing of one or more of the following new taxes generated by the business: sales and use tax, utility user tax, transient occupancy tax, and business license tax.
The specific terms of the agreement will depend upon the unique character and nature of the business and the type of revenue-sharing in question.
3. Economic Development Grant
Applicants may apply for an economic development grant to support the growth and development of their business within the City. The award amount will depend on the availability of funding, the number of successful applicants in a given fiscal year, and the proposed activities outlined in the application.
The maximum individual grant amount shall not exceed $10,000. Grant funds may only be used for preapproved purposes related to the operation or development of the business, including but not limited to the following:
(1) Fixed business expenses such as rent, utilities, and equipment purchases; (2) Facility improvements, including interior and exterior renovations, ADA compliance upgrades, and accessibility modifications;
(3) Other expenditures that support economic growth, as approved by the City.
Each grant recipient must enter into a grant agreement with the City detailing the grant terms, reporting requirements, and other conditions, as approved by the City Attorney. Grant funds must be expended within twelve (12) months from the award date. Grant funds may not be used to pay off existing obligations, debts, or liabilities, nor for any political activities or attempts to influence legislation or governmental bodies. The City may impose additional restrictions or requirements within the grant agreement as it deems necessary.
Grant recipients must submit regular progress reports and a final report to the City Manager, or City Manager's designee, as specified in the grant agreement. These reports must detail how grant funds were used, progress toward achieving program goals, and any challenges encountered. The City may require repayment of the grant or take other corrective actions if recipients fail to comply with the terms of the grant agreement. The City is not obligated to provide any additional support beyond the awarded grant.
D. Application Procedures and Review Process
Businesses meeting the eligibility criteria and seeking to take advantage of the Program's incentives must submit a written proposal to the City Manager's Office. The proposal should include details such as the type of business, location, jobs to be created, projected tax revenue, any additional information required in the application or requested by the City, and any other information necessary for the City to evaluate the public benefit, as further detailed below. (1) Provide a general description of the proposed project, type of business, location, number and type of jobs existing and/or to be created/added, projected tax revenue generation, and any other criteria the City may use to evaluate the public benefit of the proposed project. This may include both financial benefits as well as enhancements to the community's overall quality of life and diversification of the City's economic base. (2) Address which of the required criteria of Section B (Minimum Eligibility Criteria) are being proposed and include appropriate documentation demonstrating qualification for the Program (i.e., copy of signed lease or purchase agreement). (3) The proposed project must be clearly defined and provide an articulation of the public purpose of the proposed project as well as any new public benefits provided by the proposed project.
(4) Identify the incentives requested and the estimated value of each.
Upon receipt of the proposal, the Assistant City Manager will review the request and forward a copy of the application to the Finance Director, City Manager, and City Attorney, or their designees, for review.
E. Values of Incentives and Approval Process
The total value of the incentives offered to the applicant will depend on the particular attributes of each proposal and shall be determined on a case-by- case basis with importance placed on the public benefits that will accrue to the City.
The Finance Department will complete a fiscal analysis of the proposal and the requested incentives. Applicants are encouraged to provide economic impact studies or analysis for the City's consideration. The City may undertake those studies or analysis at the City's or, with consent of the applicant, applicant's cost (to be deducted from the amount received by the applicant and/or reimbursed to the applicant from the City). After review by the Community Development Director and the Finance Director, recommendations from both departments will be provided to the City Manager for further determination consistent with this Program and any applicable laws.
Based upon the fiscal analysis of the Finance Department, negotiation with the applicant, and consideration of the overall benefit of the proposal and proposed incentives, the Community Development Director may prepare a proposed incentive package and draft agreement for the City Council's consideration and approval, if appropriate. Said packages and draft agreements shall be reviewed and approved by the City Attorney for consideration of the benefits and impacts of the project on the community and to ensure that an appropriate public purpose exists and findings are made for the City's financial commitment. All incentive packages, including any agreements in furtherance of said package, must be approved by a majority of the City Council.
F. Requirements and Limitations
1. Funding Limits
Incentive packages will be offered based on both the benefits of the proposal as well as the availability of City funds. No incentive package may exceed a value of $100,000, except for revenue sharing agreements which are subject to Government Code Sections 53083 to 53085. To the extent applicable, the City will allocate incentive package funds on a fiscal year-by-year basis contingent on the receipt of sufficient economic benefits within each fiscal year.
2. Prevailing Wages
Incentive packages may trigger a requirement to pay prevailing wages. Applicants are required to abide by prevailing wage laws, which apply to construction projects funded in whole or in part with public funds. Applicants will be required to agree to indemnify, defend and hold the City harmless for any claim that prevailing wage was applicable and not adhered to. Applicants should seek professional advice regarding prevailing wages requirements.
3. Compliance with Government Code Sections 53083 to 53085 Any incentive package valued at $100,000 or more must be approved and managed consistent with the requirements of Government Code Sections 53083 to 53085, including the public hearing and disclosure requirements under those sections. The City shall consult with the City Attorney when considering the approval of any incentive package.
G. Required Agreement Provisions
To receive an incentive under this Program, applicants will be required to enter into an agreements) with the City in a form approved by the City Attorney based on the agreement negotiated by the parties. Any specific agreements required by the City for an incentive package must be approved by the City Council. Agreements prepared in furtherance of this Program may include the following provisions and others at the discretion of the City:
(1) Terms and Conditions: Terms and conditions of the incentive package, including timelines for payment due, reimbursements to be made, etc., as may be applicable to the incentive package, will be memorialized.
(2) Biannual Monitoring: Sufficient monitoring of the applicant's continued eligibility of the incentives offered under the Program. For example, for applicants receiving incentives for the creation of additional jobs, paycheck stubs, or other proof that individuals continue to be employed will be required, for a length of time deemed appropriate for the parties.
(3) Records Open to Inspection: The City will have a right to inspect financial records maintained by the applicant pertaining to incentives under this Program. (4) Indemnification: Applicant shall indemnify the City for claims related to implementation of the agreement.
(5) Security: Security for any incentive.
(6) Continue Operations: Contractually agree to continue operation for the duration of the incentive(s) or be required to return the value of the incentive(s) provided. (7) State and Local Law: Applicant shall comply with all State and local regulatory requirements (e.g. California Environmental Quality Act, local zoning requirements, etc.).
IV. AUTHORITY
The City Manager, or City Manager's designee, will oversee the administration of this Policy. This Policy authorizes the City Manager, or City Manager's designee, to design and approve guidelines necessary to implement the programs discussed in this Policy or to make any modifications of this Policy. Regular reports will be submitted by the City Manager, or City Manager's designee, to the City Council detailing the outcomes of projects receiving assistance on a biannual basis or other timeframe as dictated by the City Council.
V. NO VESTED RIGHTS
The granting or providing of any economic incentive is within the sole discretion of the City. This Policy is not intended to and shall not create any vested right, entitlement or privilege in any person or entity. The City Manager or designee may amend, terminate, suspend, or abrogate all or any provision of this Policy at any time and for any reason within the limits of the discretion afforded the City Manager by law with respect to legislative matters.
VI. ETHICAL STANDARDS
The highest ethical standards will be maintained in carrying out the responsibilities of this Policy.
All City personnel and officers responsible for administering this Policy will remain consistently aware and comply at all times with their legal and ethical responsibilities regarding the provision of public funds. No employee, officer, or agent of the City may participate in the selection, award, or administration of a contract or incentive under this Policy in which they have a real or apparent conflict of interest. The officers, employees, and agents of the City may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts, subject to any applicable standards for determining whether a financial interest is not substantial or a gift is an unsolicited item of nominal value.