STAFF REPORT
Meeting Date:
January 27, 2026
NON APPEAL
16 SUBJECT: 1796 SOUTH COAST HIGHWAY: CONDITIONAL USE PERMIT 26-0066 FOR A HISTORIC PRESERVATION INCENTIVE FOR A 75% REDUCTION IN THE
REQUIRED OFF-STREET PARKING SPACES FOR THE SEAHORSE LOUNGE,
PEARL STREET COFFEE SHOP, AND PEARL STREET GENERAL STORE IN THE C-1 (LOCAL BUSINESS DISTRICT) ZONE, AND CATEGORICAL EXEMPTION UNDER STATE CEQA GUIDELINES SECTIONS 15301 (CLASS 1) AND 15331 (CLASS 31)
RECOMMENDATION: It is recommended that the City Council:
1. Conduct a Public Hearing, including receiving a staff report and taking public testimony and all evidence relating to the consideration of Conditional Use Permit 26-0066 and the categorical exemption under the California Environmental Quality Act Guidelines Sections 15301 and 15331; and
2. Adopt the Resolution titled, “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAGUNA BEACH, CALIFORNIA, APPROVING CONDITIONAL USE PERMIT 26-0066 INVOLVING A HISTORIC PRESERVATION INCENTIVE FOR A 75% REDUCTION IN THE
REQUIRED OFF-STREET PARKING SPACES FOR THE SEAHORSE LOUNGE, PEARL STREET COFFEE SHOP, AND PEARL STREET GENERAL STORE AT 1796 SOUTH COAST HIGHWAY IN THE C-1 (LOCAL BUSINESS DISTRICT) ZONE, AND FINDING THE
PROJECT CATEGORICALLY EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT PURSUANT TO STATE CEQA GUIDELINES SECTION 15301 (CLASS 1) AND 15331 (CLASS 31)”.
SUMMARY OF THE MATTER
The applicant, Garry Ledesma, representing the Seahorse Lounge, Pearl Street Coffee Shop, and Pearl Street General Store, requests City Council approval of Conditional Use Permit (“CUP”) 26-0066 for a 75% (18-space) reduction in the required off-street parking spaces, as an incentive for maintaining a property on the City’s Historic Register, pursuant to Laguna Beach Municipal Code Section 25.45.008(A).
The City’s Historic Preservation ordinance requires the Planning Commission to make a recommendation to the City Council on a CUP to grant parking incentives with the City Council as the final decision-maker. (LBMC Section 25.45.008(A).) Projects involving modifications to properties in commercial zones may be granted a CUP to allow a reduction in parking requirements up to a maximum of 75% of the otherwise required parking spaces if the project complies with Secretary of the Interior's Standards (SOIS) or Local Design Guidelines or Style Guide. (LBMC Section 25.45.008(A)(3).) If the requested incentive involves a reduction of 15 or more spaces, a parking demand study may be required by the City to evaluate the existing or proposed use, potential neighborhood impacts and the available off-site and on-street parking when considering proposed parking reductions. (Id.)
HISTORIC PRESERVATION INCENTIVE FOR A 75% REDUCTION IN THE REQUIRED OFFSTREET PARKING SPACES FOR SEAHORSE LOUNGE, PEARL STREET COFFEE SHOP, AND PEARL STREET GENERAL STORE AT 1796 S. COAST HIGHWAY January 27, 2026
On December 5, 2025, the Planning Commission voted unanimously to approve CUP 25-2265, Coastal Development Permit (“CDP”) 25-2267, and Sign Permit (“SP”) 25-2266 to establish a tavern (Seahorse Lounge) that allows on-site sale and consumption of alcohol, live entertainment, outdoor seating for an existing coffee shop, a joint-use parking plan, three window signs, and one painted wall sign. The Planning Commission also recommended City Council approval of the requested 75-percent parking requirement reduction through the historic preservation program incentives, based on a finding the project complies with Secretary of the Interior's Standards (SOIS) or Local Design Guidelines or Style Guide, and without requiring a parking demand study. The project complies with the SOIS for the following reasons: (1) it does not involve alterations to the building’s exterior, other than the installation of the two approved window decal signs, one painted window sign, and one painted wall sign, and interior tenant improvements are limited to repair and maintenance of finishes, such as paint, wallpaper, and installation of accessory equipment to support bar operations. As previously documented in a historic assessment and peer review prepared by qualified architectural historians, the structure in its existing condition maintains its historic integrity. (The March 5, 2019 historic assessment prepared by ESA and the June 3, 2021 HRG peer review are attached as Attachments 8 and 9, respectively.)
Staff recommends the City Council adopt the attached resolution (Attachment 1) approving CUP 26-0066 for the historic preservation incentive.
Public notice was duly provided for this public hearing in accordance with LBMC Section 25.05.065, including notices that were mailed to owners and occupants within a 300-foot and 100-foot radius, respectively, and posted on the project site, thereby providing an opportunity for property owners and tenants to inform the City Council of any comments or concerns at, or prior to the public hearing. (See Attachment 2).
BACKGROUND
The Property
The subject property is located at the corner of Pearl Street and South Coast Highway within the Historic and Interesting Places (“HIP”) District of the C-1 (Local Business District) zone. The site is developed with an approximately 3,000-square-foot Mission Revival–style commercial building and a rear surface parking lot providing seven standard spaces, including one (1) van-accessible space in accordance with the Americans with Disabilities Act (“ADA”), two (2) compact spaces, and two motorcycle spaces, for a total of eight onsite spaces. Constructed in 1926, the building is representative of Laguna Beach’s early commercial development. The property is listed on the City’s local historic register and is eligible for historic preservation incentives. Surrounding uses include a multitenant commercial building with a restaurant (Saigon Beach) to the north, a retail liquor store and sandwich shop to the south, residential uses to the east, and an automotive service shop to the west.
The property currently operates under a single business entity operating two uses: Pearl Street Coffee and Pearl Street General Store. Both uses occupy the front portion of the building, while the rear half is barricaded and not accessible to customers. Pearl Street Coffee offers specialty coffees prepared onsite, along with premade pastries and grab-and-go snacks. Pearl Street General Store provides a curated selection HISTORIC PRESERVATION INCENTIVE FOR A 75% REDUCTION IN THE REQUIRED OFFSTREET PARKING SPACES FOR SEAHORSE LOUNGE, PEARL STREET COFFEE SHOP, AND PEARL STREET GENERAL STORE AT 1796 S. COAST HIGHWAY January 27, 2026
of high-quality goods, including beach gear, home décor, knick-knacks, kitchenware, art, and clothing.
Current hours of operation are 7:00 a.m. to 2:00 p.m. for the coffee shop and 7:00 a.m. to 5:00 p.m. for the general store.
A. Prior and Recent Entitlements
On January 18, 2017, the Planning Commission approved CUP 15-2458 and CDP 16-2736 to allow onsite consumption of beer and wine under a Type 42 alcohol license, along with consumption of prepackaged specialty foods within a roped-off, 280-square-foot area of the Pearl Street General Store. Following numerous violations of CUP conditions of approval, Building Code requirements, and Department of Alcoholic Beverage Control regulations, the Planning Commission revoked CUP 15-2458 on September 20, 2023. Since that revocation, the business has transitioned to new ownership, which has expressed full commitment to complying with City requirements and conditions of approval. On December 5, 2025, the Planning Commission held a public hearing to consider the application for CUP 25-2265, CDP 25-2267, and SP 25-2266. The CUP involved the establishment of a tavern (Seahorse Lounge) that allows on-site sale and consumption of alcohol, live entertainment, outdoor seating for an existing coffee shop, and a jointuse parking plan for the Seahorse Lounge, Pearl Street Coffee Shop, and the Pearl Street General Store.1 The CDP was required for the intensification of use of the existing commercial space. The SP was requested for three window signs and one painted wall sign. The proposed business operations are included in the applicant’s letter of intent provided as Attachment 5. The plans are provided as Attachment 6. A joint-use parking plan to accommodate the three business operations is attached as Attachment 7.
After considering the oral and documentary evidence presented at the hearing, including a staff recommendation for approval, the Planning Commission voted 3-0 (Commissioners Kellenberg and Goldman absent) to conditionally2 approve CUP 25-2265, CDP 25-2267 and SP 25-2266, and found the project categorically exempt from the California Environmental Quality Act (“CEQA”) under State CEQA Guidelines Sections 15301 (Existing Facilities) and 15331 (Historical Resource Restoration/Rehabilitation), and recommended that the City Council approve CUP 26-0066 for the historic preservation incentive of the 75% reduction of the required parking. The Planning Commission staff report and the adopted resolution are included as Attachments 3 and 4, respectively.
Only the historic preservation incentive request for the 75% reduction of required on-site parking is being considered at this City Council public hearing. As further described herein, the project’s feasibility is contingent upon approval of the parking reduction.
1 Under the CUP, the retail store will operate from 7:00 a.m. to 5:00 p.m. and the coffee shop will operate from 7:00 a.m. to 2:00 p.m. The Seahorse Lounge will operate from 5:00 p.m. to 10:00 p.m., Sunday through Thursday, and 5:00 p.m. to 11:00 p.m., Friday and Saturday, following the closure of the retail store and coffee shop. Tavern operations will be confined to the rear portion of the building and the front portion currently occupied by the retail store and the front portion of the building that operates as the Pearl Street General Store. 2 Conditions of approval were added by the Planning Commission to address neighborhood concerns regarding noise, including but not limited to, requirements for no loitering signage, limiting trash disposal hours, and directing employees of the business to monitor noise and activity near the rear parking lot area.
HISTORIC PRESERVATION INCENTIVE FOR A 75% REDUCTION IN THE REQUIRED OFFSTREET PARKING SPACES FOR SEAHORSE LOUNGE, PEARL STREET COFFEE SHOP, AND PEARL STREET GENERAL STORE AT 1796 S. COAST HIGHWAY January 27, 2026
B. Parking Requirements
The applicant is requesting the full 75% reduction to accommodate the three business operations in conjunction with the joint‑use parking plan approved by the Planning Commission. With approval of the Conditional Use Permit for the joint‑use parking plan and the requested 75% reduction, the Project’s parking requirements will be satisfied, as demonstrated by Tables 1 and 2 below.
Table 1. Pearl Street Coffee Shop and General Store Parking Calculation with 75% reduction.
HISTORIC PRESERVATION INCENTIVE FOR A 75% REDUCTION IN THE REQUIRED OFFSTREET PARKING SPACES FOR SEAHORSE LOUNGE, PEARL STREET COFFEE SHOP, AND PEARL STREET GENERAL STORE AT 1796 S. COAST HIGHWAY January 27, 2026
Table 2. Seahorse Tavern Parking Calculation with 75% reduction.
CONDITIONAL USE PERMIT
The requested parking incentive requires a CUP. Below is City staff’s analysis as to the findings and facts for the CUP:
(1) The site for the proposed use is adequate in size and topography to accommodate said use, and all yards, spaces, walls and fences, parking, loading and landscaping are adequate to properly adjust such use with the land and uses in the vicinity.
Yes. The project site is developed with an existing commercial building and an eight-space surface parking lot at the rear where there is no change to the existing building footprint or modification to the existing available parking spaces. The site is adequate in size and topography, as well as all yards, spaces, walls and fences, loading, and landscaping to serve the proposed uses of a tavern, coffee shop, and retail store. Although the combined business model of a retail store, coffee shop, and tavern will require additional parking, totaling 24 spaces, the historic preservation incentive of a 75% reduction (18 spaces) reduces the required parking to six spaces. The parking requirement is met by the eight existing on-site spaces when the uses are operating within their respective hours.
The parking calculation uses a conservative approach and considers the square footage of all areas of the building, including areas not accessible to the public, and the entire building is calculated at the more restrictive ratio of one space per 100 square feet of floor area. Moreover, Condition No. 25 of Planning Commission-adopted Resolution No. 25-2265 requires that the Applicant promote alternative modes of transportation to reduce the reliance on single-occupancy passenger vehicles.
HISTORIC PRESERVATION INCENTIVE FOR A 75% REDUCTION IN THE REQUIRED OFFSTREET PARKING SPACES FOR SEAHORSE LOUNGE, PEARL STREET COFFEE SHOP, AND PEARL STREET GENERAL STORE AT 1796 S. COAST HIGHWAY January 27, 2026
(2) The site for the proposed use has access to streets and highways adequate in width and pavement type to carry the quantity and kind of traffic generated by the proposed use.
Yes. The site has existing access to Pearl Street and Coast Highway, both of which will remain unchanged and will continue to be adequate in width and pavement type to carry the quantity and kind of traffic generated by the proposed uses. The historic preservation incentive parking reduction will allow the property to use the existing building’s gross floor area and surface parking lot to their full capacity without adversely affecting access to adjacent streets or existing pavement conditions.
The subject property is located in the C-1, Local Business District and abuts South Coast Highway, a four-lane highway. Food services, which are subject to the same parking requirements as a tavern, are similarly allowed in the C-1 zone and already exist in the project vicinity. (3) The proposed use will have no substantial adverse effect upon abutting property.
Yes. The proposed use in conjunction with the historic preservation incentive of reduced parking will not have a substantial adverse effect upon abutting property because the existing parking lot will continue to be available for the patrons of the businesses. The reduction will allow the property to meet its parking requirements with no remaining spaces required. Additionally, there is metered parking available along Pearl Street, Coast Highway, and Agate Street, and an Orange County Transit Authority bus stop, and a Laguna Local pick-up stop at the intersection of Glenneyre Street and Pearl Street, all of which will mitigate traffic impacts from the proposed business. (4) The proposed use is consistent with the objectives and policies of the City's General Plan.
The proposed use is consistent with the goals and policies of the City’s General Plan as described below. The granting of the historic preservation incentive for reduced parking will support an individually conceived, non-formulaic tavern use that is desirable for the surrounding neighborhood, reinforcing a sense of place and belonging within the community and adding to the village character of the area. The parking reduction allows the space of the existing, historic commercial building to be adaptively reused without negatively impacting the historic resource. Lastly, by activating and maintaining a historically significant storefront, the project prevents potential vacancy and contributes to the retention of small businesses.
Goal 3: Preserve, enhance, and respect the unique, small-scale village character and individual identity of Laguna Beach’s commercial areas.
Policy 3.3: Encourage the preservation of historically significant buildings and protect the character defining components of Laguna Beach’s commercial neighborhoods.
Policy 3.7: Encourage retention and attraction of small businesses throughout the community.
HISTORIC PRESERVATION INCENTIVE FOR A 75% REDUCTION IN THE REQUIRED OFFSTREET PARKING SPACES FOR SEAHORSE LOUNGE, PEARL STREET COFFEE SHOP, AND PEARL STREET GENERAL STORE AT 1796 S. COAST HIGHWAY January 27, 2026
(5) The conditions stated in the decision are deemed necessary to protect the public health, safety and general welfare.
The conditions stated in the decision are deemed necessary to protect the public health, safety, and general welfare because the conditions of approval have been included to ensure continued land use compatibility, including restricting hours of operation, and a requirement that the operator maintain and clean up all adjacent public areas, including the sidewalks.
CITY COUNCIL REVIEW
Pursuant to Municipal Code Section 25.45.008(A)(3), projects involving modifications to properties listed on the City’s Historic Register that are located in commercial zones may be granted a CUP to allow a reduction in parking requirements up to a maximum of 75% of the otherwise required parking spaces if the project complies with the SOIS. When a CUP is required, the City Council shall be the final approval authority, with a recommendation from the Planning Commission. Staff’s analysis concludes that the project complies with the SOIS for the following reasons: (1) it does not involve alterations to the building’s exterior, other than the installation of the two approved window decal signs, one painted window sign, and one painted wall sign, and interior tenant improvements are limited to repair and maintenance of finishes, such as paint, wallpaper, and installation of accessory equipment to support bar operations. Therefore, staff recommends that the incentive be approved by the City Council by adopting the attached resolution, approving CUP 26-0066.
FINANCIAL ANALYSIS
The recommended action has no financial impact to the budget.
ENVIRONMENTAL ANALYSIS
The City Council finds that the implementation of a historic preservation incentive for a 75% reduction in the required off-street parking spaces are part of the project which involves the establishment of a tavern, a joint-use parking plan, and the installation of three window signs and one painted wall sign for the Seahorse Lounge, Pearl Street Coffee Shop, and Pearl Street General Store (hereinafter referred to as “Project”). On December 5, 2025, the Planning Commission approved the Project, and as part of the approvals found the Project to be categorically exempt from the California Environmental Quality Act pursuant to State CEQA Guidelines, Section 15301 – Existing Facilities, and Section 15331 Historical Resource Restoration/Rehabilitation. There have been no changes to the Project, no changed circumstances, and no new information that could not previously have been known, that would trigger the need for subsequent CEQA review.
The Project is categorically exempt from environmental review under the California Environmental Quality Act pursuant to State CEQA Guidelines, Section 15301 - Existing Facilities. The Class 1 Exemption allows for repair, maintenance, or minor alteration of existing structures or topographical features, involving negligible or no expansion of former use. Here, the Project involves the establishment of a tavern within an existing commercial building, the implementation of a joint use parking plan, a historic preservation incentive for reduced parking, and the installation of three window signs and one painted wall sign.
HISTORIC PRESERVATION INCENTIVE FOR A 75% REDUCTION IN THE REQUIRED OFFSTREET PARKING SPACES FOR SEAHORSE LOUNGE, PEARL STREET COFFEE SHOP, AND PEARL STREET GENERAL STORE AT 1796 S. COAST HIGHWAY January 27, 2026
Further, none of the exceptions outlined in CEQA Guidelines section 15300.2 apply. The project site does not contain any environmentally sensitive areas because the site is fully developed with a commercial building and a surface parking lot. There will be no cumulative impacts resulting from successive projects of the same type in the same place, over time, because the property will be used to its maximum capacity and could not expand further. There are no unusual circumstances resulting in a significant impact on the environment because no alterations to land are proposed with the project. There will be no damage to scenic resources, including trees, historic buildings, rock outcroppings or similar resources, within a highway officially designated as a state scenic highway because the project is limited to establishing a tavern within an existing commercial building and no alterations are proposed to the building aside from the installation of window signs and a painted wall sign. Scenic resources including highways, trees, and rock outcroppings do not exist on site. The project is not located on a hazardous waste site or any other site included on a list compiled pursuant to Government Code section 65962.5. The project will not result in significant adverse impacts to historical resources as defined by CEQA because the project does not involve alteration to the building, other than the installation of three signs that may be easily removed from the building without impacting the building. Consequently, additional environmental analysis is not necessary to meet the requirements of the CEQA. In accordance with the California Environmental Quality Act (CEQA) guidelines, the project is also categorically exempt pursuant to Section 15331 Historical Resource Restoration/Rehabilitation, in that the project is limited to maintenance, repair, stabilization, rehabilitation, restoration, preservation, conservation or reconstruction of historical resources in a manner consistent with the Secretary of the Interior’s Standards for the Treatment of Historic Properties with Guidelines for reserving, Rehabilitating, Restoring, and Reconstructing Historic Buildings (1995).
ATTACHMENTS
1. Draft City Council Resolution (Pgs. 10-20)
2. City Council Public Hearing Notice (Pg. 21)
3. 12/5/25 Planning Commission Staff Report (Pgs. 22-42)
4. Planning Commission-Adopted Resolution No. 25-2265 (Pgs. 43-57)
5. Applicant Letter of Intent (Pgs. 58-62)
6. Project Plans (Pgs. 63-66)
7. Joint Use Parking Plan (Pg. 67)
8. 3/5/19 ESA Historic Assessment (Pgs. 68-90)
9. 6/3/21 HRG Historic Assessment Peer Review (Pgs. 91-98) Submitted By: Matthew Schneider Approved: .David A Kiff Matthew Schneider, Director of
Community Development
Dave Kiff, City Manager
HISTORIC PRESERVATION INCENTIVE FOR A 75% REDUCTION IN THE REQUIRED OFFSTREET PARKING SPACES FOR SEAHORSE LOUNGE, PEARL STREET COFFEE SHOP, AND PEARL STREET GENERAL STORE AT 1796 S. COAST HIGHWAY January 27, 2026
Report Prepared By: Coordinated With:
Sarah Olsen, Assistant Planner Jane Abzug, Assistant City Attorney Anthony Viera, Deputy Director of Community
Development