STAFF REPORT
Meeting Date:
January 13, 2026
BUSINESS
10 SUBJECT: LAGUNA PLAYHOUSE LEASE AMENDMENT / FUNDING ASSISTANCE RECOMMENDATION: It is recommended that the City Council:
1. Authorize the City Manager to execute a First Amendment to the 2003 Laguna Playhouse lease with the City of Laguna Beach, that would memorialize more community use time at the Playhouse, along with a rate structure;
2. Appropriate $500,000 in Fiscal Year 2025–26, to be disbursed in two installments, for one-time operational support to the Laguna Playhouse to support expanded community access and performance opportunities, by appropriating $250,000 from the Cultural and Environmental Stewardship Special Revenue Fund and $250,000 from funds set aside for the cultural arts facilities reserve; and
3. Find that these actions do not constitute a “project” within the meaning of the California Environmental Quality Act. (Public Resources Code Section 21065; 14 CCR Section 15378(b)(5).)
SUMMARY OF THE MATTER
At 104 years young, the Laguna Playhouse located at 606 Laguna Canyon Road is attempting to remain sustainable, even as other regional theaters have struggled or closed in recent years. Playhouse leadership has proposed a retooling of their business model in what they assert will be sustainable, including more opportunities for community use of this City-owned facility, but have asked for $500,000 in support within the City’s Fiscal Year (FY) 25-26 budget year to allow time to transition to the new model.
At the City Council’s December 9, 2025 meeting, the Council discussed this issue, and authorized the City Manager to develop and negotiate a Lease Amendment reflecting the additional community use provisions and a rate structure. This is shown as Attachment 2 to this staff report.
DISCUSSION
Please see the Staff Report from the December 9, 2025, meeting for more detail. What follows here is an update on the discussions / thinking since the December 9, 2025, meeting.
City Considerations. As noted in December 2025, the Laguna Playhouse is clearly an important Laguna institution – for the community as well as for the arts and cultural scene across the region. Its survival likely means addressing new trends in community theater by adopting a different model of serving the community and region. City team members who considered this proposal liked the following:
• A willingness on the Playhouse’s part to change, including to rather dramatically adjust ongoing operational expenses;
• A willingness on the Board’s part to put personal resources and effort into the change;
LAGUNA PLAYHOUSE LEASE AMENDMENT / FUNDING ASSISTANCE
January 13, 2026
• The Playhouse leadership’s apparent commitment to opening up its venue to more extensive community use; and
• A willingness on Playhouse leadership’s part to be transparent with us and with the community as to what it might take to remain on a fiscally sustainable path.
Should the City Council wish to proceed further down this pathway, the internal team (Whalen, Rounaghi) asked for the following:
• That the Playhouse agree to amend the 2003 lease to include the community venue commitments, including pricing and quantity of time, and that the Lease amendment be brought back at the January 13th Council meeting even as the Council takes a straw vote commitment to pledge the $500,000 (in two installments) at the December 9th, 2025 Council meeting; • That the Playhouse regularly report to City staff progress as to achieving its transition goals – including meeting (or not) projected cash flows.
• That the Playhouse Board at least verbally commit to a sustainable model akin to what they are describing now – with an approach that prioritizes the Playhouse’s business survival. • That the Council consider two sources of funds for this grant – $250,000 from FY 24-25’s $500,000 for Cultural and Environmental Stewardship TMD funds, and $250,000 from about $927,000 that is held in reserve for a future expenditure related to the arts – such as a permanent art piece or improvements to (for example) the Forum Theater.
Proposed Lease Amendment. As such, should the Council wish to proceed with this grant, we propose the below language as a lease amendment to the 2003 City-Playhouse lease. Section 3 of the Lease would be amended (with new text in underline and deleted text in strikethrough) to read as follows:
3. USE AND PURPOSES.
(a) During the term of this Lease, Playhouse shall have the use of the Premises, together with the improvements thereon. Such use shall be for the preparation, production, and exhibition of theatrical performances and other performing arts (including film) to the public. It is understood that in addition to the third party use of the premises as set forth in Section 3(b) below, the premises may be used for such purposes by other local organizations, including for example but not by way of limitation, those dedicated to concert, ballet, and opera; in such cases, Playhouse shall have the right to contract with such organizations for those uses subject to written approval of City. (b) In 2026 and annually through the duration of this Lease, and in exchange for a one-time payment of $500,000.00 paid by the City to the Playhouse over two installments (1st $250,000.00 installment paid on or about January 14, 2026, and the 2nd $250,000.00 installment paid on or about May 14, 2026), the Playhouse shall immediately begin to work with Laguna Beach community-based nonprofit cultural arts organizations (“Organizations”) to identify ten (10) weeks of Playhouse venue programming time for these Organizations annually. Rental rates and other charges to the
LAGUNA PLAYHOUSE LEASE AMENDMENT / FUNDING ASSISTANCE
January 13, 2026
Organizations shall be at the lowest cost possible to cover the Playhouse’s direct expenses to support or otherwise staff the Organizations’ events. An initial rate schedule, subject to consumer price index adjustments annually (on January 1 of each year), is shown in Attachment C. The Playhouse shall provide the City with a copy of the rates paid by each Organization for its event.
Playhouse management shall use its best efforts to coordinate the Playhouse venue’s calendar twelve (12) or more months in advance of its and the Organizations’ events so as to ensure the smooth execution of events and in the case of the Laguna Beach Music Festival will use its best efforts to coordinate scheduling up to thirty-six months in advance of the Music Festival’s planned events By December 15 of each year, the Playhouse shall provide the City with a written schedule of the dates reserved by the Organizations for the following calendar year and shall update the schedule during the calendar year. If by the end of a calendar year the Organizations have reserved fewer than ten (10) weeks of programming for the next calendar year, then the Playhouse may book other events in the weeks not booked by the Organizations and shall provide the City written notice of the number of weeks not booked by the Organizations for the upcoming calendar year.
FINANCIAL ANALYSIS
The fiscal impact is $500,000, made in two installments across the remainder of FY 2025-26 via budget amendments. Staff proposes utilizing $250,000 from the Cultural and Environmental Stewardship Special Revenue fund (from FY 24-25 commitments) and $250,000 from the current reserve of $927,000 set aside for cultural arts facilities.
To address and respect the Arts Commission’s concerns about the reduction of that reserve, staff proposes a goal to refund the $250,000 over up to three years, should the City’s financial position allow it in FY 2026-27, FY 2027-28, and FY 2028-29. This would be addressed in each year’s proposed budget as distinct action (yay or nay) as the Council considers the budget each May or June.
If the City’s financial position does not allow refunding during this period, the reserve would be permanently reduced by the $250,000 amount.
ENVIRONMENTAL ANALYSIS
The recommended action consists of organizational or administrative activities of the City that will not result in a direct or indirect physical change in the environment and therefore does not constitute a “project” within the meaning of the California Environmental Quality Act. (Public Resources Code Section 21065; 14 CCR Section 15378(b)(5).)
ATTACHMENTS
1. 2003 Playhouse – City Lease Agreement (Pgs. 5-17)
2. Proposed Lease Amendment (Pgs. 18-22)
LAGUNA PLAYHOUSE LEASE AMENDMENT / FUNDING ASSISTANCE
January 13, 2026
Submitted By: Dave Kiff Approved: .David A Kiff
Dave Kiff, City Manager Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Dave Kiff, City Manager Gavin Curran, Assistant City Manager Michelle Bannigan, Finance Director
Councilmember Alex Rounaghi
Councilmember Bob Whalen
Jane Abzug, Assistant City Attorney
Patrick Donegan, Assistant City Attorney