Laguna Beach City Council
July 7, 2026

RFP #010424

REQUEST FOR PROPOSALS
for
Firefighting Personal Protective Equipment with Related Equipment Cleaning Proposal Due Date: January 4, 2024, 4:30 p.m., Central Time Sourcewell, a State of Minnesota local government unit and service cooperative, is requesting proposals for Firefighting Personal Protective Equipment with Related Equipment Cleaning to result in a contracting solution for use by its Participating Entities. Sourcewell Participating Entities include thousands of governmental, higher education, K-12 education, nonprofit, tribal government, and other public agencies located in the United States and Canada. A full copy of the Request for Proposals can be found on the Sourcewell Procurement Portal [https://proportal.sourcewell-mn.gov]. Only proposals submitted through the Sourcewell Procurement Portal will be considered. Proposals are due no later than January 4, 2024, at 4:30 p.m. Central Time, and late proposals will not be considered.

SOLICITATION SCHEDULE
Public Notice of RFP Published: November 9, 2023
Pre-proposal Conference: November 30, 2023, 2:00 p.m., Central Time Question Submission Deadline: December 20, 2023, 4:30 p.m., Central Time Proposal Due Date: January 4, 2024, 4:30 p.m., Central Time Late responses will not be considered.

Opening: January 4, 2024, 4:30 p.m., Central Time
See RFP Section V.G. “Opening”
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I. ABOUT SOURCEWELL
A. SOURCEWELL
Sourcewell is a State of Minnesota local government unit and service cooperative created under the laws of the State of Minnesota (Minnesota Statutes Section 123A.21) that facilitates a competitive public solicitation and contract award process for the benefit of its 50,000+ participating entities across the United States and Canada. Sourcewell’s solicitation process complies with State of Minnesota law and policies, conforms to Canadian trade agreements (including Canadian Free Trade Agreement, Ontario-Quebec Trade and Cooperation Agreement, and Canada-European Union Comprehensive Economic and Trade Agreement, as applicable), and results in cooperative purchasing solutions from which Sourcewell’s Participating Entities procure equipment, products, and services.

Cooperative purchasing provides participating entities and suppliers increased administrative efficiencies and the power of combined purchasing volume that result in overall cost savings. At times, Sourcewell also partners with other purchasing cooperatives to combine the purchasing volume of their membership into a single solicitation and contract expanding the reach of contracted suppliers’ potential pool of end users.

Sourcewell uses a website-based platform, the Sourcewell Procurement Portal, through which all proposals to this RFP must be submitted.

B. USE OF RESULTING CONTRACTS
In the United States, Sourcewell’s contracts are available for use by:
• Federal and state government entities1;
• Cities, towns, and counties/parishes;
• Education service cooperatives;
• K-12 and higher education entities;
• Tribal government entities;
• Some nonprofit entities; and
• Other public entities.

In Canada, Sourcewell’s contracts are available for use by:
1 Pursuant to HAR §3-128-2, the State of Hawaii, Department of Accounting and General Services, State Procurement Office, on behalf of the State of Hawaii and participating jurisdictions, has provided notice of its Intent to Participate in the solicitation as a participating entity. 46 46 of 313
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• Provincial and territorial government departments, ministries, agencies, boards, councils, committees, commissions, and similar agencies; • Indigenous self-governing bodies;
• Regional, local, district, and other forms of municipal government, municipal organizations, school boards, and publicly funded academic, health, and social service entities referred to as MASH sector (this should be construed to include but not be limited to the Cities of Calgary, Edmonton, Toronto, Ottawa, and Winnipeg), as well as any corporation or entity owned or controlled by one or more of the preceding entities; • Crown corporations, government enterprises, and other entities that are owned or controlled by these entities through ownership interest; and • Members of the Canoe procurement group of Canada, and their partner associations:

Canoe members are regional, local, district or other forms of municipal government, school boards, publicly-funded academic, health and social service entities in Alberta and across Canada, as well as any corporation or entity owned or controlled by one or more of the preceding entities – as well as partner associations, including Saskatchewan Association of Rural Municipalities, Association of Manitoba Municipalities, Local Authorities Services/Association of Municipalities Ontario, Nova Scotia Federation of Municipalities, Federation of Prince Edward Island Municipalities, Municipalities Newfoundland Labrador, Union of New Brunswick Municipalities, North West Territories Association of Communities, CivicInfo BC, and their members.

For a listing of current United States and Canadian Participating Entities visit Sourcewell’s website (note: there is a tab for each country): https://www.sourcewell-mn.gov/sourcewell-forvendors/agency-locator.

Participating Entities typically access contracted equipment, products, or services through a purchase order issued directly to the contracted supplier. A Participating Entity may request additional terms or conditions related to a purchase. Use of Sourcewell contracts is voluntary and Participating Entities retain the right to obtain similar equipment, products, or services from other sources.

To meet Participating Entities’ needs, Sourcewell broadly publishes public notice of all solicitation opportunities, including this RFP. In addition, where applicable, other purchasing cooperatives and procurement officials receive notice and are encouraged to re-post the solicitation opportunity.

Proof of publication will be available at the conclusion of the solicitation process.

II. SOLICITATION DETAILS
A. SOLUTIONS-BASED SOLICITATION
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This RFP and contract award process is a solutions-based solicitation; meaning that Sourcewell is seeking equipment, products, or services that meet the general requirements of the scope of this RFP and that are commonly desired or are required by law or industry standards.

B. REQUESTED EQUIPMENT, PRODUCTS, OR SERVICES
It is expected that proposers will offer a wide array of equipment, products, or services at lower prices and with better value than what they would ordinarily offer to a single government entity, a school district, or a regional cooperative.

1. Sourcewell is seeking proposals for Firefighting Personal Protective Equipment with Related Equipment Cleaning, such as:
a. Firefighting Personal Protective Equipment (PPE) for all types of fire and rescue service; including, but not limited to:
i. Protective Clothing;
ii. Helmets and related accessories;
iii. Other related equipment and accessories (e.g. belts, suspenders, straps, radio holders, eye protection, etc.); and,
iv. Firefighting apparel and station-wear, Proposers may include firefighting apparel and station-wear to the extent that these solutions are complementary to the purchase of the equipment and products being proposed.
b. Firefighting PPE cleaning and decontamination equipment and service; including but not limited to:
i. Extractors, laundry machines, mechanical dryers, drying and storing racks; ii. Cleaning and decontamination service and maintenance; iii. Firefighting PPE cleaning supplies; and,
iv. Cleaning equipment for other firefighting equipment and tools. c. Services Related to the equipment described in subsections 1. a. and 1. b. above, including training, testing, service, maintenance, installation, warranty programs, and certification of gear. Proposers may include related services to the extent that these solutions are complementary to the purchase of the equipment and products being proposed.

Proposers may include related equipment, accessories, and services to the extent that these solutions are ancillary or complementary to the equipment, products, or services being proposed.

2. This solicitation does not include those equipment, products, or services covered under categories included in pending or planned Sourcewell solicitations, or in contracts currently maintained by Sourcewell, identified below:
a. Body Armor with Related Accessories, Equipment, and Services (RFP #011221); 48 48 of 313
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b. Firefighting Apparatus, with Related Equipment, Accessories, and Supplies (RFP #113021);
c. Public Safety Training and Simulation Equipment and Technology (RFP #011822); d. Medical Supply Solutions (RFP #022422);
e. Critical Care and EMS Equipment (RFP #041823);
f. Ambulance and Emergency Medical Transport Vehicles, with Related Equipment Accessories, and Supplies (RFP #122123);
g. Firefighting Equipment and Rescue Tools (RFP #TBD);
h. Self-Contained Breathing Apparatus (SCBA) and Breathing Air Systems (RFP TBD); and, i. Uniforms with Related Products and Services (RFP #TBD); Generally, the solutions for Participating Entities are turn-key solutions, providing a combination of equipment, products and services, delivery, and installation to a properly operating status. However, equipment-only or products-only solutions may be appropriate for situations where Participating Entities possess the ability, either in-house or through local thirdparty contractors, to properly install and bring to operation the equipment or products being proposed.

Sourcewell prefers suppliers that provide a sole source of responsibility for the equipment, products, and services provided under a resulting contract. If proposer is including the equipment, products, and services of its subsidiary entities, the proposer must also identify all included subsidiaries in its proposal. If proposer requires the use of distributors, dealers, resellers, or subcontractors to provide the equipment, products, or services, the proposal must address how the equipment, products or services will be provided to Participating Entities, and describe the network of distributors, dealers, resellers, and/or subcontractors that will be available to serve Participating Entities under a resulting contract.

Sourcewell encourages suppliers to offer the broadest possible selection of equipment, products, and services being proposed over the largest possible geographic area and to the largest possible cross-section of Sourcewell current and future Participating Entities.

C. REQUIREMENTS
It is expected that proposers have knowledge of all applicable industry standards, laws, and regulations and possess an ability to market and distribute the equipment, products, or services to Participating Entities.

1. Safety Requirements. All items proposed must comply with current applicable safety or regulatory standards or codes.

2. Deviation from Industry Standard. Deviations from industry standards must be identified with an explanation of how the equipment, products, and services will provide equivalent function, coverage, performance, and/or related services. 49 49 of 313
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3. New Equipment and Products. Proposed equipment and products must be for new, current model; however, proposer may offer certain close-out equipment or products if it is specifically noted in the Pricing proposal.

4. Delivered and operational. Unless clearly noted in the proposal, equipment and products must be delivered to the Participating Entity as operational.

5. Warranty. All equipment, products, supplies, and services must be covered by a warranty that is the industry standard or better.

D. PROSPECTIVE CONTRACT TERM
The term of any resulting contract(s) awarded by Sourcewell under this solicitation will be four years. Sourcewell and supplier may agree to up to three additional one-year extensions based on the best interests of Sourcewell and its Participating Entities. Sourcewell retains the right to consider additional extensions beyond seven years as required under exceptional circumstances.

E. ESTIMATED CONTRACT VALUE AND USAGE
Based on past volume of similar contracts, the estimated annual value of all transactions from contracts resulting from this RFP are anticipated to be USD $50 Million; therefore, proposers are expected to propose volume pricing. Sourcewell anticipates considerable activity under the contract(s) awarded from this RFP; however, sales and sales volume from any resulting contract are not guaranteed.

F. MARKETING PLAN
Proposer’s sales force will be the primary source of communication with Participating Entities.

The proposer’s Marketing Plan should demonstrate proposer’s ability to deploy a sales force or dealer network to Participating Entities, as well as proposer’s sales and service capabilities. It is expected that proposer will promote and market any contract award.

G. ADDITIONAL CONSIDERATIONS

1. Contracts will be awarded to proposers able to best meet the need of Participating Entities. Proposers should submit their complete line of equipment, products, or services that are applicable to the scope of this RFP.

2. A proposer may submit only one proposal. If related, affiliated, or subsidiary entities elect to submit separate proposals, rather than a single parent-entity proposal, each such proposal must be prepared independently and without cooperation, collaboration, or collusion.

3. If a proposer works with a consultant on its proposal, the consultant (an individual or company) may not assist any other entity with a proposal for this solicitation.

4. Proposers should include all relevant information in its proposal, since Sourcewell cannot consider information that is not included in the proposal. Sourcewell reserves 50 50 of 313
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the right to verify proposer’s information and may request clarification from a proposer, including samples of the proposed equipment or products.

5. Depending upon the responses received in a given category, Sourcewell may need to organize responses into subcategories in order to provide the broadest coverage of the requested equipment, products, or services to Participating Entities. Awards may be based on a subcategory.

6. A proposer’s documented negative past performance with Sourcewell or its Participating Entities occurring under a previously awarded Sourcewell contract may be considered in the evaluation of a proposal.

III. PRICING
A. REQUIREMENTS
All proposed pricing must be:

1. Either Line-Item Pricing or Percentage Discount from Catalog Pricing, or a combination of these:
a. Line-item Pricing is pricing based on each individual product or services. Each line must indicate the proposer’s published “List Price,” as well as the “Contract Price.” b. Percentage Discount from Catalog or Category is based on a percentage discount from a catalog or list price, defined as a published Manufacturer’s Suggested Retail Price (MSRP) for the products or services. Individualized percentage discounts can be applied to any number of defined product groupings. Proposers will be responsible for providing and maintaining current published MSRP with Sourcewell, and this pricing must be included in its proposal and provided throughout the term of any contract resulting from this RFP.

2. The proposer’s not to exceed price. A not to exceed price is the highest price for which equipment, products, or services may be billed to a Participating Entity. However, it is permissible for suppliers to sell at a price that is lower than the contracted price.

3. Stated in U.S. and Canadian dollars (as applicable).

4. Clearly understandable, complete, and fully describe the total cost of acquisition (e.g., the cost of the proposed equipment, products, and services delivered and operational for its intended purpose in the Participating Entity’s location).

Proposers should clearly identify any costs that are NOT included in the proposed product or service pricing. This may include items such as installation, set up, mandatory training, or initial inspection. Include identification of any parties that impose such costs and their relationship to the proposer. Additionally, proposers should clearly describe any unique distribution and/or delivery methods or options offered in the proposal.

B. ADMINISTRATIVE FEES
Proposers awarded a contract are expected to pay to Sourcewell an administrative fee in exchange for Sourcewell facilitating the resulting contracts. The administrative fee is normally 51 51 of 313
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calculated as a percentage of the total sales to Participating Entitiesfor all contracted equipment, products, or services made during a calendar quarter, and is typically one percent (1%) to two percent (2%). In some categories, a flat fee may be an acceptable alternative.

IV. CONTRACT
Proposers awarded a contract will be required to execute a contract with Sourcewell (see attached template). Only those modifications the proposer indicates in its proposal will be available for discussion. Much of the language in the Contract reflects Minnesota legal requirements and cannot be altered. Numerous and/or onerous exceptions that contradict Minnesota law may result in the proposal being disqualified from further review and evaluation.

To request a modification to the template Contract, a proposer must submit the Exceptions to Terms, Conditions, or Specifications table with its proposal. Only those exceptions noted at the time of the proposal submission will be considered.

Exceptions must:

1. Clearly identify the affected article and section.

2. Clearly note the requested modification; and as applicable, provide requested alternative language.

Unclear requests will be automatically denied.

Only those exceptions that have been accepted by Sourcewell will be included in the contract document provided to the awarded supplier for signature.

If a proposer receives a contract award resulting from this solicitation it will have up to 30 days to sign and return the contract. After that time, at Sourcewell’s sole discretion, the contract award may be revoked.

V. RFP PROCESS
A. PRE-PROPOSAL CONFERENCE
Sourcewell will hold an optional, non-mandatory pre-proposal conference via webcast on the date and time noted in the Solicitation Schedule for this RFP and on the Sourcewell Procurement Portal. The purpose of this conference is to allow potential proposers to ask questions regarding this RFP and Sourcewell’s competitive contracting process. Information about the webcast will be sent to all entities that have registered for this solicitation opportunity through their Sourcewell Procurement Portal Vendor Account. Pre-proposal conference attendance is optional.

B. QUESTIONS REGARDING THIS RFP AND ORAL COMMUNICATION
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All questions regarding this RFP must be submitted through the Sourcewell Procurement Portal.

The deadline for submission of questions is found in the Solicitation Schedule and on the Sourcewell Procurement Portal. Answers to questions will be issued through an addendum to this RFP. Repetitive questions will be summarized into a single answer and identifying information will be removed from the submitted questions.

All questions, whether specific to a proposer or generally related to the RFP, must be submitted using this process. Do not contact individual Sourcewell staff to ask questions or request information as this may disqualify the proposer from responding to this RFP. Sourcewell will not respond to questions submitted after the deadline.

C. ADDENDA
Sourcewell may modify this RFP at any time prior to the proposal due date by issuing an addendum. Addenda issued by Sourcewell become a part of the RFP and will be delivered to potential proposers through the Sourcewell Procurement Portal. Sourcewell accepts no liability in connection with the delivery of any addenda.

Before a proposal will be accepted through the Sourcewell Procurement Portal, all addenda, if any, must be acknowledged by the proposer by checking the box for each addendum. It is the responsibility of the proposer to check for any addenda that may have been issued up to the solicitation due date and time.

If an addendum is issued after a proposer submitted its proposal, the Sourcewell Procurement Portal will WITHDRAW the submission and change the proposer’s proposal status to INCOMPLETE. The proposer can view this status change in the “MY BIDS” section of the Sourcewell Procurement Portal Vendor Account. The proposer is solely responsible to check the “MY BIDS” section of the Sourcewell Procurement Portal Vendor Account periodically after submitting its proposal (and up to the Proposal Due Date). If the proposer’s proposal status has changed to INCOMPLETE, the proposer is solely responsible to:
i) make any required adjustments to its proposal;
ii) acknowledge the addenda; and
iii) ensure the re-submitted proposal is received through the Sourcewell Procurement Portal no later than the Proposal Due Date and time shown in the Solicitation Schedule above.

D. PROPOSAL SUBMISSION
Proposer’s complete proposal must be submitted through the Sourcewell Procurement Portal no later than the date and time specified in the Solicitation Schedule. Any other form of proposal submission, whether electronic, paper, or otherwise, will not be considered by Sourcewell. Late proposals will not be considered. It is the proposer’s sole responsibility to ensure that the proposal is received on time.
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It is recommended that proposers allow sufficient time to upload the proposal and to resolve any issues that may arise. The time and date that a proposal is received by Sourcewell is solely determined by the Sourcewell Procurement Portal web clock.

In the event of problems with the Sourcewell Procurement Portal, follow the instructions for technical support posted in the portal. It may take up to 24 hours to respond to certain issues.

Upon successful submission of a proposal, the Sourcewell Procurement Portal will automatically generate a confirmation email to the proposer. If the proposer does not receive a confirmation email, contact Sourcewell’s support provider at [email protected].

To ensure receipt of the latest information and updates via email regarding this solicitation, or if the proposer has obtained this solicitation document from a third party, the onus is on the proposer to create a Sourcewell Procurement Portal Vendor Account and register for this solicitation opportunity.

Within the Sourcewell Procurement Portal, all proposals must be digitally acknowledged by an authorized representative of the proposer attesting that the information contained in in the proposal is true and accurate. By submitting a proposal, proposer warrants that the information provided is true, correct, and reliable for purposes of evaluation for potential contract award.

The submission of inaccurate, misleading, or false information is grounds for disqualification from a contract award and may subject the proposer to remedies available by law.

E. GENERAL PROPOSAL REQUIREMENTS
Proposals must be:
• In substantial compliance with the requirements of this RFP or it will be considered nonresponsive and be rejected.
• Complete. A proposal will be rejected if it is conditional or incomplete. • Submitted in English.
• Valid and irrevocable for 90 days following the Proposal Due Date.

Any and all costs incurred in responding to this RFP will be borne by the proposer.

F. PROPOSAL WITHDRAWAL
Prior to the proposal deadline, a proposer may withdraw its proposal.

G. OPENING
The Opening of proposals will be conducted in the Sourcewell Procurement Portal immediately following the proposal due date and time. To view the list of proposers resulting from the opening, verify that the Sourcewell Procurement Portal opportunities list search is set to “All” or “Closed.”
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Members of the public may attend the Opening at Sourcewell’s office located at 202 12th Street NE, Staples, MN to hear the results.

VI. EVALUATION AND AWARD
A. EVALUATION
It is the intent of Sourcewell to award one or more contracts to responsive and responsible proposers offering the best overall quality, selection of equipment, products, and services, and price that meet the commonly requested specifications of Sourcewell and its Participating Entities. The award(s) will be limited to the number of proposers that Sourcewell determines is necessary to meet the needs of its Participating Entities.

Factors to be considered in determining the number of contracts to be awarded in any category may include the following:
• Total evaluation scores (giving consideration to natural breaks in the scoring of responsive proposals);
• The number and geographic location of highest-scoring proposers that offer:
o A comprehensive selection of the requested equipment, products, or services; o A sales and service network ensuring availability and coverage for Participating Entities’ use; and
o Other attributes of the proposer or contents of its proposal that assist Participating Entities in achieving environmental and social requirements, and goals.

Information submitted as part of a proposal should be as specific as possible when responding to the RFP. Do not assume Sourcewell has any knowledge about a specific supplier or product.

B. AWARD(S)
Award(s) will be made to the highest-scoring proposer(s) whose proposal conforms to all conditions and requirements of the RFP, and consistent with the award criteria defined in this RFP.

Sourcewell may request written clarification of a proposal at any time during the evaluation process.

Proposal evaluation will be based on the following scoring criteria and the Sourcewell Evaluator Scoring Guide (a copy is available in the Sourcewell Procurement Portal):

Conformance to RFP Requirements 50
Financial Viability and Marketplace Success 75
Ability to Sell and Deliver Service 100
Marketing Plan 50
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Value Added Attributes 75
Warranty 50
Depth and Breadth of Offered Equipment, Products, or Services 200 Pricing 400
TOTAL POINTS 1000
C. PROTESTS OF AWARDS
Any protest made under this RFP by a proposer must be in writing, addressed to Sourcewell’s Executive Director, and delivered to the Sourcewell office located at 202 12th Street NE, P.O.

Box 219, Staples, MN 56479. All documents that comprise the complete protest package must be received, and time stamped at the Sourcewell office by 4:30 p.m., Central Time, no later than 10 calendar days following Sourcewell’s notice of contract award(s) or non-award. A protest must allege a procedural, technical, or legal defect, with supporting documentation. A protest that merely requests a re-evaluation of a proposal’s content will not be entertained A protest must include the following items:
• The name, address, and telephone number of the protester; • Identification of the solicitation by RFP number;
• A precise statement of the relevant facts;
• Identification of the alleged procedural, technical, or legal defect; • Analysis of the basis for the protest;
• Any additional supporting documentation;
• The original signature of the protester or its representative; and • Protest bond in the amount of $20,000 (except where prohibited by law or treaty).

Protests that do not address these elements will not be reviewed.

D. RIGHTS RESERVED
This RFP does not commit Sourcewell to award any contract, and a proposal may be rejected if it is nonresponsive, conditional, incomplete, conflicting, or misleading. Proposals that contain false statements or do not support an attribute or condition stated by the proposer may be rejected.

Sourcewell reserves the right to:
• Modify or cancel this RFP at any time;
• Reject any and all proposals received;
• Reject proposals that do not comply with the provisions of this RFP; • Select, for contracts or for discussion, a proposal other than that with the lowest cost; • Independently verify any information provided in a proposal; • Disqualify any proposer that does not meet the requirements of this RFP, is debarred or suspended by the United States or Canada, State of Minnesota, Participating Entity’s 56 56 of 313
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state or province; has an officer, or other key personnel, who have been charged with a serious crime; or is bankrupt, insolvent, or where bankruptcy or insolvency are a reasonable prospect;
• Waive or modify any informalities, irregularities, or inconsistencies in the proposals received;
• Clarify any part of a proposal and discuss any aspect of the proposal with any proposer; and negotiate with more than one proposer;
• Award a contract if only one responsive proposal is received if it is in the best interest of Participating Entities; and
• Award a contract to one or more proposers if it is in the best interest of Participating Entities.

E. DISPOSITION OF PROPOSALS
All materials submitted in response to this RFP will become property of Sourcewell and will become public record in accordance with Minnesota Statutes Section 13.591, after negotiations are complete. Sourcewell considers that negotiations are complete upon execution of a resulting contract. It is the proposer’s responsibility to clearly identify any data submitted that it considers to be protected. Proposer must also include a justification for the classification citing the applicable Minnesota law. Sourcewell may reject proposals that are marked confidential or nonpublic, either substantially or in their entirety.

Sourcewell will not consider the prices submitted by the proposer to be confidential, proprietary, or trade secret materials. Financial information, including financial statements, provided by a proposer is not considered trade secret under the statutory definition. 57 57 of 313
11/9/2023
Addendum No. 1
Solicitation Number: RFP 010424
Solicitation Name: Firefighting PPE and Related Equipment Cleaning Consider the following Questions and Answers to be part of the above-titled solicitation documents. The remainder of the documents remain unchanged.

Question 1:

Are you looking for a supplier to provide these services in Canada and the United States?
Answer 1:

A proposer is not required to cover every geographic region to be considered for award.

Each proposal is evaluated based on the criteria stated in the RFP. This RFP's resulting contracts may be used by Sourcewell's participating entities in the United States and in Canada as outlined in section 1.B. of the RFP document.

Question 2:

What are the administrative fees?
Answer 2:

Refer to section III. B., of the RFP for details on the Administrative Fee, "Proposers awarded a contract are expected to pay to Sourcewell an administrative fee in exchange for Sourcewell facilitating the resulting contracts. The administrative fee is normally calculated as a percentage of the total sales to Participating Entities for all contracted equipment, products, or services made during a calendar quarter, and is typically one percent (1%) to two percent (2%). In some categories, a flat fee may be an acceptable alternative." It is left to the discretion of each proposer to determine and propose an administrative fee that is consistent with its business and its industry. 58 58 of 313
End of Addendum
Acknowledgement of this Addendum to RFP 010424 posted to the Sourcewell Procurement Portal on 11/9/2023, is required at the time of proposal submittal. 59 59 of 313
11/30/2023
Addendum No. 2
Solicitation Number: RFP 010424
Solicitation Name: Firefighting PPE and Related Equipment Cleaning Consider the following Questions and Answers to be part of the above-titled solicitation documents. The remainder of the documents remain unchanged.

Question 1:

Outside of our submitted dealers of record, can an end user request a dealer not stated on this list if they have a preferred supplier or there are none in close proximity? Answer 1:

Refer to RFP Section II. B. – Requested Equipment, Products, or Services – “… If Proposer requires the use of dealers, resellers, or subcontractors to provide the products or services, the Proposal should address how the products or services will be provided to Participating Entities and describe the network of dealers, resellers, and/or subcontractors that will be available to serve Participating Entities under a resulting contract.” It is left to the discretion of each proposer to determine the information or documentation necessary to best demonstrate their ability to serve Sourcewell Participating Entities and satisfy all the requirements of the RFP and the questionnaire tables. Proposals are evaluated based on the criteria stated in the RFP.

For additional detail on the requirement for awarded suppliers with respect to distributor/dealer networks, refer to Sourcewell Contract Template Section 2. C. – Dealers, Distributors, and/or Resellers.

Question 2:

With selling into both U.S. and Canada, what is the best way to list our prices in local currency? Within the same document, separate submissions, etc.? Answer 2:

Each proposer, in its discretion, will determine and propose the pricing approach that aligns with its business methods and satisfies all the requirements of the RFP Article on 60 60 of 313
Pricing. Proposers should clearly identify any costs that are not included in the proposed pricing of the equipment, products, or services.

End of Addendum
Acknowledgement of this Addendum to RFP 010424 posted to the Sourcewell Procurement Portal on 11/30/2023, is required at the time of proposal submittal. 61 61 of 313
12/04/2023
Addendum No. 3
Solicitation Number: RFP 010424
Solicitation Name: Firefighting PPE and Related Equipment Cleaning Consider the following Question and Answer to be part of the above-titled solicitation documents. The remainder of the documents remain unchanged.

Question 1:

Will there be preference given to either a vendor or a manufacturer if both bidding the same items and what if the pricing is lower for one of them? How will the award process work this time around for this type of event?
Answer 1:

The Sourcewell RFP is an open and competitive solicitation process. Sourcewell does not restrict the ability of interested proposers to submit a proposal in response to this RFP.

A proposer is allowed to propose its entire line of equipment, products, and services falling within the requested equipment, products, or services of the subject solicitation.

Proposals are evaluated based on the criteria stated in the RFP.

End of Addendum
Acknowledgement of this Addendum to RFP 010424 posted to the Sourcewell Procurement Portal on 12/04/2023, is required at the time of proposal submittal. 62 62 of 313
12/14/2023
Addendum No. 4
Solicitation Number: RFP 010424
Solicitation Name: Firefighting PPE and Related Equipment Cleaning Consider the following Question and Answer to be part of the above-titled solicitation documents. The remainder of the documents remain unchanged.

Question 1:

Can you kindly confirm the requirements for the Proposer's Authorized Representative? Are they required to submit a signed letter from the Proposer authorizing them to submit on their behalf? Does the user ID who submits the bid via the Sourcewell portal need to match exactly with the name listed for the Proposer's Authorized Representative in section 7 of the first page on the bid questionnaire, in order to be considered a valid submission?
Answer 1:

Refer to Step 1 - Table 1, Question 7, and the contents of the Proposer’s Affidavit in Step

3. A Proposer’s authorized representative must be identified in Question 7. and must also execute or direct the execution of the Affidavit and the submittal of the Proposal.

End of Addendum
Acknowledgement of this Addendum to RFP 010424 posted to the Sourcewell Procurement Portal on 12/14/2023, is required at the time of proposal submittal. 63 63 of 313
12/15/2023
Addendum No. 5
Solicitation Number: RFP 010424
Solicitation Name: Firefighting PPE and Related Equipment Cleaning Consider the following Question and Answer to be part of the above-titled solicitation documents. The remainder of the documents remain unchanged.

Question 1:

In regards to Table 2, Line Item 16, could you kindly confirm if the written authorization to act as distributor/dealer/reseller (or similar entity) must be provided for each manufacturer individually, or is it a blanket statement covering all manufacturers proposed? Is any documentation required directly from the manufacturer, or is it sufficient to simply respond within Line Item 16 affirming that we are an authorized dealer?
Answer 1:

It is left to the discretion of each proposer to determine the documentation necessary to best demonstrate their ability to serve Sourcewell members and satisfy all the requirements included in the questionnaire tables.

End of Addendum
Acknowledgement of this Addendum to RFP 010424 posted to the Sourcewell Procurement Portal on 12/15/2023, is required at the time of proposal submittal. 64 64 of 313

STAFF REPORT
Meeting Date:

July 7, 2026

CONSENT
13 SUBJECT: ACCEPT A DONATION TO FUND THE RESURFACING OF THE BLUEBIRD

CANYON TENNIS COURT
RECOMMENDATION: It is recommended that the City Council:

1. Accept a donation of $13,000 from the Ashvin and Poonam Dhingra Foundation to fund the resurfacing of the Bluebird Canyon tennis court;

2. Authorize the City Manager to sign a letter of appreciation to the donor foundation;

3. Appropriate $13,000 in the FY 2026/27 budget for the resurfacing of the Bluebird Canyon tennis court and increase donation revenue in the General Fund by the same amount; and

4. Find the recommended action categorically exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301 (Class 1 – Existing Facilities)

SUMMARY OF THE MATTER
This report recommends that the City Council accept a $13,000 donation from the Ashvin and Poonam Dhingra Foundation to fund the resurfacing of the Bluebird Canyon Tennis Court, authorize the City Manager to sign a letter of appreciation, and appropriate the donated funds for the project. The donation will allow the resurfacing to proceed without additional General Fund resources after the City's annual tennis court resurfacing budget was fully expended on the Alta Laguna Park courts. Acceptance of donations exceeding $5,000 requires City Council approval under the City’s donation policy.

DISCUSSION
The Bluebird Canyon tennis court will benefit from resurfacing. When the donation was presented to the City, the City’s tennis court resurfacing budget for fiscal year 2025-26 was fully expended on the resurfacing of the four courts at Alta Laguna Park.

Ashvin and Poonam Dhingra, Laguna Beach residents, approached the City with an offer to fund the resurfacing of the Bluebird Canyon court so that the work can be completed as soon as possible. Staff obtained three quotes from qualified resurfacing vendors, consistent with the City’s procurement requirements, and the lowest quote was $12,880. The Foundation has designated a donation of $13,000 for this specific purpose, as documented in the Donation Designation Form included in Attachment 1. Pursuant to the City’s Donation Policy, donations of this kind (in excess of $5,000) must be accepted by the City Council.

Upon City Council acceptance and appropriation of the donated funds, staff will proceed with the resurfacing work through the lowest-quoting vendor and authorize a letter of appreciation to the donors.

Consistent with the City’s Donation Policy, the City will also provide appropriate public recognition of the donor’s contribution.
1 of 316

ACCEPT A DONATION TO FUND THE RESURFACING OF THE BLUEBIRD CANYON

TENNIS COURT
July 7, 2026

FINANCIAL ANALYSIS
The recommended actions have no net impact on the General Fund. If approved, the $13,000 donation will be deposited as donation revenue in account 1100000-48010-D2603, and $13,000 will be appropriated in the FY 2026/27 budget for the resurfacing expenditure in account 1103602-55030-D2603 (Repairs & Maintenance – Other). The resurfacing work is estimated at $12,880 based on the lowest of three vendor quotes; the donation fully offsets this cost, and no General Fund contribution is required.

ENVIRONMENTAL ANALYSIS
The proposed action is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines Section 15301 (Existing Facilities), Class 1, which exempts the repairs, maintenance, or minor alteration of existing public facilities involving negligible or no expansion of existing use. The resurfacing of an existing tennis court constitutes maintenance of an existing facility with no expansion of use and therefore is exempt from CEQA.

ATTACHMENTS

1. Donation Designation Form - Ashvin and Poonam Dhingra Foundation (Pg. 3) Submitted By: Alexis Braun Approved: .David A Kiff
Alexis Braun, Acting Director of
Transit and Community Services
Dave Kiff, City Manager
Report Prepared By:

Coordinated With:

Garrett Rauch, Recreation Coordinator
Armand Pigeon, Administrative Analyst
2 of 316
Attachment 1
3 3 of 316

STAFF REPORT
Meeting Date:

July 7, 2026

CONSENT
14 SUBJECT: AMENDMENT SEVEN TO COOPERATIVE AGREEMENT BETWEEN THE

COUNTY OF ORANGE AND CITY OF LAGUNA BEACH FOR COMMUNITY

DEVELOPMENT BLOCK GRANT FUNDING
RECOMMENDATION: It is recommended that the City Council:

1. It is recommended that the City Council authorize the City Manager to execute Amendment Seven to the Cooperative Agreement with the County of Orange for participation in the CDBG program for the upcoming grant cycle (July 1, 2028 – June 30, 2030).

SUMMARY OF THE MATTER
Approval of Amendment Seven to the Cooperative Agreement with the County of Orange will maintain the City's eligibility to receive Community Development Block Grant (CDBG) funding administered by the County on behalf of the United States Department of Housing and Urban Development (HUD).

The City has participated in the County's Urban County CDBG Program since 2005 by renewing the Cooperative Agreement every three years. Participation in the program allows the City to automatically receive annual CDBG funding.

In Fiscal Year 2025-26, the City was awarded $140,326 in CDBG funding to offset a portion of the costs associated with operating the Alternative Sleeping Location. The City has used these funds for that purpose dating back to the ASL’s opening in 2009.

Approval of Amendment Seven will extend the Cooperative Agreement for the next three-year qualification period and preserve the City's eligibility to receive future CDBG funding. Approval of the amendment does not obligate the City to accept any specific grant award or commit the City to any future expenditures.

Individual grant agreements and appropriations will continue to be presented to the City Council for approval on an annual basis as funding becomes available.

It is recommended that the City Council authorize the City Manager to execute Amendment Seven to the Cooperative Agreement with the County of Orange, thereby maintaining the City's eligibility to participate in the Community Development Block Grant Program for the upcoming three-year grant cycle.

FINANCIAL ANALYSIS
The recommended action would result in generating grant revenue of approximately $140,000 per year.

ENVIRONMENTAL ANALYSIS
The recommended action is not subject to the California environmental quality act (CEQA) pursuant to CEQA guidelines section 15378 because it consists of an administrative action to maintain the city's eligibility to participate in the CDBG program and does not commit the city to any specific project, expenditure, or activity that may result in a direct or reasonably foreseeable indirect physical change in the 1 of 360

AMENDMENT SEVEN TO COOPERATION AGREEMENT BETWEEN THE COUNTY OF

ORANGE AND CITY OF LAGUNA BEACH FOR COMMUNITY DEVELOPMENT BLOCK

GRANT FUNDING
July 7, 2026

environment. Any future projects or activities funded through the CDBG program will be evaluated for compliance with CEQA, as appropriate, prior to approval.

ATTACHMENTS

1. Amendment Seven inclusive of Original Cooperative Agreement and Amendments 1-6 (Pgs. 3-44) Submitted By:
. Approved: Dave Kiff.

Jeremy Frimond, Assistant City
Manager
Dave Kiff, City Manager
Report Prepared By: Coordinated With:

Jeremy Frimond, Assistant City Manager
2 of 360

AMENDMENT SEVEN TO

COOPERATION AGREEMENT BETWEEN

THE COUNTY OF ORANGE
AND

CITY OF LAGUNA BEACH
This Amendment Number SEVEN (hereinafter “Amendment SEVEN”) is made and entered into by the County of Orange, a political subdivision of the State of California, (“COUNTY”) and CITY OF LAGUNA BEACH, a municipal corporation, (“CITY”), UEI number PPPXANKDF7N7 which are sometimes individually referred to as “Party” or collectively referred to as “Parties”, and is effective as of July 1, 2027, hereinafter referred to as “EFFECTIVE DATE”.

WHEREAS, COUNTY and CITY executed that certain COOPERATION AGREEMENT “Small-City” (hereinafter, as amended, “Original Agreement” or “Agreement”) for commencement July 1, 2005; and
WHEREAS, the Original Agreement was amended by Amendment ONE, effective as of July 16, 2008; and
WHEREAS, the Original Agreement was amended by Amendment TWO, effective as of July 1, 2012; and
WHEREAS, the Original Agreement was amended by Amendment THREE, effective as of July 1, 2015; and
WHEREAS, the Original Agreement was amended by Amendment FOUR, effective as of July 1, 2018; and
WHEREAS, the Original Agreement was amended by Amendment FIVE, effective as of July 1, 2021; and
WHEREAS, the Original Agreement was amended by Amendment SIX, effective as of July 1, 2024; and
WHEREAS, U.S. Department of Housing and Urban Development (“HUD”) Notice CPD-26-08 allows “automatic” renewals for one successive three year Urban County qualification period provided that COUNTY sends a letter to CITY notifying it that the Original Agreement will be renewed unless CITY notifies COUNTY that it wishes to terminate the agreement and a copy of such a letter is provided to HUD; and WHEREAS, COUNTY sent CITY a letter notifying CITY of such renewal on March 11, 2026; and
WHEREAS, CITY did not advise COUNTY that it wished to terminate the Original Agreement with County; and
Attachment 1
3 3 of 360

WHEREAS, the CITY’s City Manager and the COUNTY’s Director of Orange County Community Resources have been duly authorized by their City Council and Board of Supervisors, respectively, to execute this Amendment SEVEN; and

WHEREAS, the Parties agree to further amend the Original Agreement at this time in the manner set forth herein.

NOW, THEREFORE, the Parties hereby agree as follows:

I. Modifications to the Original Agreement

1. Section 2 of the Original Agreement is amended in its entirety as follows:
“COUNTY shall have the authority to carry out activities, which will be funded from annual Community Development Block Grant (“CDBG”), Home Investment Partnership (“HOME”) and Emergency Solutions Grant (“ESG”) Program funds appropriated for Fiscal Years 2027-2028, 2028-2029 and 2029-2030 and from any program income generated from the expenditure of such funds.”

2. Section 9 of the Original Agreement is amended and shall read as amended in its entirety as follows:
“This Agreement shall cover the three-year program period for Fiscal Years 2027-2028, 2028-2029 and 2029-2030, respectively of CDBG, HOME and ESG programs, including any subsequent Supplemental sources (Paragraph 23 of the Agreement). In no event shall this agreement be terminated by either Party before June 30, 2030, except as allowed in legislation enacted by the U.S. Congress for termination or withdrawal from the Urban County Program and as permitted by HUD.

This Agreement remains in effect until the CDBG (and, where applicable, HOME and ESG) funds and program income received (with respect to activities carried out during the three-year qualification period, and any successive qualification periods under agreements that provide for automatic renewal) are expended and the funded activities completed, and the COUNTY and CITY cannot terminate or withdraw from this Agreement while it remains in effect.”

3. Section 10 shall be added to Agreement to read:

“In accordance with HUD Notice CPD 26-08, this Agreement will renew automatically for participation in one successive three-year Urban County qualification period (July 1, 2030 to June 30, 2033) unless COUNTY or CITY provides written notice that it elects not to participate in a new qualification period. A copy of the termination notice must be sent to HUD Field Office by the date specified on the HUD Exchange Urban Counties website.

COUNTY shall notify CITY in writing of its right not to participate any longer 4 4 of 360

than the date specified in HUD’s Urban County Qualification Notice for the next qualification period. A copy of the County’s notification must be sent to the HUD field office by the date specified on the HUD Exchange Urban Counties website.”

4. Section 11 of the Original Agreement is amended to read:
“CITY and COUNTY agree to adopt amendment(s) to this Agreement as may be required by HUD to meet any new Urban County Qualification requirement(s) when applicable and to submit such amendments to HUD.

The COUNTY will notify CITY of its right to terminate its participation in the program based on the adoption of any such amendment. If either CITY or COUNTY refuses to adopt any such amendment, and to submit such amendment to HUD, this Agreement will be voided for such qualification period.”

5. Section 14 of the Original Agreement is amended to add subsection (d) as follows:
“d. This Agreement covers the following formula funding programs administered by HUD: CDBG, HOME, and ESG, and CITY may receive a formula allocation under the HOME and ESG Programs only through the COUNTY. This does not preclude the COUNTY or the CITY from applying for HOME or ESG funds from the State, if the State allows.”

6. Section 24 of the Original Agreement is amended to read:
“CITY may void this Agreement only if it submits to COUNTY on or before June 2027 the notification from HUD that CITY has qualified as a “Metropolitan City” or an “Entitlement City” prior to the completion of the re-qualification process for Fiscal Years 2027-2028, 2028-2029, and 2029- 2030. Upon such notification by HUD, CITY also must submit to COUNTY and HUD written notification of its decision to either remain in the Urban County Program as a “Metropolitan City” or become an “Entitlement City” as a separate entity. If this Agreement is not voided, then CITY must participate in COUNTY’s Urban County for the entire three-year qualification period (FYs 2027/2028 through 2029/2030).”
II. Additional Agreements
The terms of the Additional Agreements in the Original Agreement are hereby amended as follows:

1. The COUNTY and the CITY agree to cooperate to undertake, or assist in undertaking, essential community development and housing assistance activities in and for the benefit of the CITY, as approved and authorized between the Parties in the CDBG agreements, including the Consolidated Plan.
5 5 of 360

2. The CITY understands and agrees that it may not apply for grants under the State CDBG Program for the fiscal years during the period in which the CITY participates in the COUNTY’s CDBG Program. The COUNTY agrees that the CDBG funds that the CITY is entitled to will be utilized to benefit the CITY.

3. The COUNTY and the CITY shall take all actions necessary to assure compliance with the COUNTY’S certification under section 104(b) of Title I of the Housing and Community Development Act of 1974, as amended, and that the grant will be conducted and administered in conformity with:
a. Title VI of the Civil Rights Act of 1964 and the implementing regulations at 24 CFR Part 1;
b. The Fair Housing Act, and the implementing regulations at 24 CFR Part 100, and will comply with the obligation to affirmatively further fair housing including the obligations set forth in 24 CFR 91.225(a) and 5.105(a); and
c. Section 109 of Title I of the Housing and Community Development Act of 1974, and the implementing regulations at 24 CFR Part 6, which incorporates Section 504 of the Rehabilitation Act of 1973 and the implementing regulations at 24 CFR Part 8, Title II of the Americans with Disabilities Act of 1974 and the implementing regulations at 28 CFR Part 35, the Age Discrimination Act of 1975 and the implementing regulations at 24 CFR Part 146, Section 3 of the Housing and Urban Development Act of 1968, Uniform Relocation and Real Property Policies Act of 1970 and the implementing regulations at 49 CFR Part 24, Section 104(d) of the Housing and Community Development Act of 1974 and the implementing
regulations at 24 CFR Part 425, and all other applicable laws and regulations. The Parties agree that no urban county funding will be used for activities in, or in support of, any cooperating unit of general local government that does not affirmatively further fair housing within its own jurisdiction or that impedes the COUNTY’S actions to comply with the COUNTY’S fair housing certification. The Parties acknowledge and agree that noncompliance by a unit of general local government included in an urban county may constitute
noncompliance by the grantee (i.e., the urban 14 county) that can, in turn, provide cause for funding sanctions or other remedial actions by the Department.

4. The CITY, COUNTY, and all other applicable units of general local government, may not sell, trade, or otherwise transfer all or any portion of such funds to another such metropolitan city, urban county, unit of general local government, or Indian tribe, or insular area that directly or indirectly receives CDBG funds in exchange for any other funds, credits or nonFederal considerations, but must use such funds for activities eligible under 6 6 of 360

Title I of the Housing and Community Development Act of 1974, as amended.

5. All other provisions of the Original Agreement, as amended, a copy of which is attached hereto as Exhibit A and incorporated by this reference, to the extent they are not inconsistent with this Amendment SEVEN, remain unchanged and in full force and effect.

IN WITNESS WHEREOF, CITY has caused this Amendment SEVEN to be executed by its City Manager and attested by its City Clerk; COUNTY has caused this Amendment SEVEN to be executed by the Director of the Orange County Community Resources; each having been duly authorized by the CITY Council and the COUNTY Board of Supervisors, respectively.

ATTEST:

City of Laguna Beach, a municipal
Corporation in the State of California
By: By:

Name: Name:

Title: City Manager Title: City Clerk
Date: Date:

COUNTY OF ORANGE, a political
subdivision of the State of California
By:

Dylan Wright, Director
Orange County Community Resources
Date:
////////////////////////////////////////////////////////////////////////////////////////////

ORIGINAL AGREEMENT, AS AMENDED, APPROVED AS TO FORM AND REQUIRED COUNTY COUNSEL OPINION STATEMENT:

The terms and provisions of the Original Agreement, including this Amendment SEVEN, are fully authorized under State and local law and the Agreement provides 7 7 of 360

full legal authority for the County to undertake, or assist in undertaking, essential community development and housing assistance activities within the CITY’s jurisdiction.

Office of the County Counsel
Deputy County Counsel Dated
8 8 of 360

Exhibit A
Original Cooperation Agreement and Amendment Numbers ONE through SIX 9 9 of 360
Attachment E
DocuSign Envelope ID: 3B5FB8CC-98AA-4D25-83A9-1576FD0090D1 10 10 of 360
Attachment E
DocuSign Envelope ID: 3B5FB8CC-98AA-4D25-83A9-1576FD0090D1 11 11 of 360
Attachment E
DocuSign Envelope ID: 3B5FB8CC-98AA-4D25-83A9-1576FD0090D1 12 12 of 360
Attachment E
DocuSign Envelope ID: 3B5FB8CC-98AA-4D25-83A9-1576FD0090D1 13 13 of 360
Attachment E
DocuSign Envelope ID: 3B5FB8CC-98AA-4D25-83A9-1576FD0090D1 6/27/2023
7/19/2023
14 14 of 360
Attachment E
PAGE 1 of 6
DocuSign Envelope ID: 96BB54E0-372E-47E4-9241-4DD9CF7C5CB2 15 Attachment E
PAGE 2 of 6
DocuSign Envelope ID: 96BB54E0-372E-47E4-9241-4DD9CF7C5CB2 16 Attachment E
PAGE 3 of 6
DocuSign Envelope ID: 96BB54E0-372E-47E4-9241-4DD9CF7C5CB2 17 Attachment E
PAGE 4 of 6
DocuSign Envelope ID: 96BB54E0-372E-47E4-9241-4DD9CF7C5CB2 18 Attachment E
PAGE 5 of 6
DocuSign Envelope ID: 96BB54E0-372E-47E4-9241-4DD9CF7C5CB2 8/6/2020
19 Attachment E
PAGE 6 of 6
DocuSign Envelope ID: 96BB54E0-372E-47E4-9241-4DD9CF7C5CB2 6/25/2020
20 AMENDMENT FOUR TO

COOPERATION AGREEMENT BETWEEN
THE COUNTY OF ORAI{GE
AND

CITY OF LAGUNA BEACH
This Amendment Number FOUR (hereinafter "Amendment FOUR") is made and entered ínto by the County of Orange, a political subdivision of the State of California, ("COUNTY") and CITY OF LAGUNA BEACH, a municipal corporation, ("CITY"), DUNS Number 089135552 which are sometimes individually referred to as "Party" or collectively referred to as "Parties", and is effective as of July 1, 2018, hereinafter referred to as *EFFECTIVE DATE'.

WHEREAS, COUNTY and CITY executed that certain COOPERATION AGREEMENT "Small-City" (hereinafter "Original Agreement" or "Agreement") for commencement July 1, 2005; and
WHEREAS, the Original Agreement was amended by Amendment ONE, effective as of July 16, 2008; and
WHEREAS, the Original Agreement was amended by Amendment TWO, effectíve as of July L 2OL2; and
WHEREAS, the Original Agreement was amended by Amendment THREE, effective as of July 1, 2015; and
WHEREAS, U.S. Department of Housing and Urban Development ("HUD") Notice CpD-14-07 allows "automatic" renewals for up to three yeãrs provided that COUNTY sends a letter to CITY notify¡ng it that the Original Agreement will be renewed unless CITY notifies COUNW that it wishes to terminate the agreement and a copy of such a letter is provided to HUD; and
WHEREAS, COUNTY sent CITY a letter notifying CITY of such renewal on February 2,2OL7i and
WHEREAS, CITY did not advise COUNTY that it wished to terminate the Original Agreement with County; and
WHEREAS, the Parties desire to further amend the Original Agreement at this time in the manner set forth herein.

NOW, THEREFORE, the Parties hereby agree to the following modifications to the Original Agreement:

1. Section 2 of the Original Agreement is amended in its entirety as follows:

Page I of4
21 21 of 360
"COUN1y shall have the authority to carry out activities, which will be funded from annual Cornmunity Development Block Grant (CDBG), Home Investment Partnership (HOME) and Emergency Solutions Grant (ESG) Program funds appropriated for Federal Fiscal Years 2018-2019 ,20L9'2020 anO ZOZO-AOZL and from any program income generated from the expenditure of such funds."

2. Section 6 of the Original Agreement shall be amended to add subsection (c,) as follows:
"c. A policy to undertake or assist in undertaking, community renewal and lower-income housing assistance activities."

3. Section 9 of the Original Agreement shall read as amended in its entirety as follows:

This Agreement shall cover Fiscal Years 2OL8-2OL9,20t9'2O20 and 2O2O2021, iespectively of CDBG, HOME and ESG program applications, including any subsequent Supplemental sources (Paragraph 23 of the Agreement).

In no event shall this agreement be terminated by either Party before June 3A,202L, except as allowed in legistation enacted by the U.S. Congress for termination or withdrawal from the Urban County Program and as permitted by HUD.

4. Section 10 shall be added to Agreement to read:
"In accordance with HUD Notice CPD L4-07, and subsequent CPD Notíces, this Agreement will be automatically extended for an additional 3 (three) year period (luly t, àOZL to June 30, 2024) unless COUNTY or CITY provides written notice that it elects not to participate in a new qualification period. COUNTY shall notify CIW in writing of its right not to participate any longer than the date specified in HUD's Urban County Qualification Notice for the next qualification period."

5. Section 11. Of the Original Agreement is amended to read:
"CITY and COUNW agree to adopt amendments (s) to this Agreement as may be required by HUD to meet any new Urban County Qualification requirement(s) subsequent to June 30, 2020. The COUNTY will notiñ/ CITY of its right to terminate its participation in the program based-on the adoption of any such amendment. If either CITY or COUNTY refuses to adopt any such amendment, this automatic renewal provision herein will be void."

6. Sectiön 24.ls amended to read:
"CITY may void this Agreement only if it submits to COUNTY on or before June ZOLT the notification from HUD that CITY has qualified as a "MetropOlitan City" or an "Entitlement City" prior to the completion of the Puge 2 of 4
22 22 of 360
re-qual¡fication process for Fiscal Years 2018-19, 2OL9-2020, and 2A2O202t. Upon such notification by HUD, CITY also must submit to COUNTY and HUD written notification of its decision to either remain in the Urban County Program as a "Metropolitan City" or become an "Entitlement City" as a separate entity."

7. All other provis¡ons of the Original Agreement, as amended, a copy of which is attached hereto as Exhibit A and incorporated by this reference, to the extent they are not inconsístent with this Agreement, remain unchanged and in full force and effect.

IN WITNESS WHEREOF, CITY has caused this Amendment FOUR to be executed by its City Manager and attested by its City Clerk; COUNTY has caused this Amendment FOUR to be executed by the Director of the Orange County Community Resources; each having been duly authorized by the CITY Council and the COUNTY Board of Su pervisors, respectively.

ATÏEST:

City of Laquna Beach, a municipal
Corpo in the lifornia
By:

Name: John Pietig Na me: L¡ hel-Walker
Title: City Manager City Clerk
Date: {-zf- t+ zÇ
COUNTY OF ORANGE, a Political
SU oft California
By
Dylan ht, Director
Title:

Date
Orange County Community Resources
oate: 1'J6-t?

23 23 of 360
t/il il/ilil t/t/ ///ililililil/ ililt/il/il1/il/ // /t/t//// / /t//illlt/l// illl/illl/ llil ll l/ll/il

ORIGINAL FORM CONTRACT
APPROVED AS To FORM and REQUIRED COUNW COUNSEL STATEMENT:
"The terms and provisions of the agreement are fully authorized under State and local law and the agreement provides full legal authority for the County." Date: orylab ltz
By County Counsel

24 24 of 360
C¡ty of Laguna tseach
25 25 of 360

AMENDMENT THREE TO

COOPERATION AGREEM ENT BETWEEN

THE COUNTY OF ORANGE
AND

CITY OF LAGUNA BEACH
This Amendment Number THREE (hereinafter "Amendment THREE") is made and entered into by the County of Orange, a political subdivision of the State of California, ("County") and CITY OF LAGUNA BEACH, a municipal corporation, ("City"), which are sometímes individually referred to as "Party" or collectively referred to as "Palties", and is effective as of July 1, 20L5, hereinafter referred to aS "EFFECTIVE DATE'.

WHEREAS, County and City executed that certain COOPERATION AGREEMENT "Small-City" (hereinafter "Original Agreement" or "Agreement") for commencement July 1, 2005; and
WHEREAS, the Original Agreement was amended by Amendment One, effective as of July 16, 2008; and
WHEREAS, the Original Agreement was amended by Amendment TWO, effective as of July L 20L2¡ and
WHEREAS, U.S. Depaftment of Housíng and Urban Development ("HUD") Notice CPÐ-L4-07 allows "automatic" renewals for up to three years provided that County sends a letter to City notifying it that the Original Agreement will be renewed unless City notifies County that it wishes to terminate the agreement and a copy of such a letter is provided to HUD; .. ._:

WHEREAS, County sent City a letter notifying City of such renewal on February 25,2074;
WHEREAS, City did not advise County that it wished to terminate the Original Agreement with County;
WHEREAS, the Pafties desire to further amend the Original Agreement at this time in the manner set forth herein.

NOW, THEREFORE, the Parties hereby agree to the following modifications to the Original Agreement:

1. Section 2 of the Original Agreement is amended in its entirety as follows:

COUNTY shall have the authority to carry out activities, which will be funded from annual Community Development Block Grant (CDBG), Home Page I of4
26 26 of 360
Investment Paftnership (HOME) and Emergency Solutions Grant (ESG) Program funds appropriated for Federal Fiscal Years 20t5-20L6, 2016- 20L7 and 2OL7-20I8 and from any program income generated trom the expenditure of such funds.

2. Section 6 of the Original Agreement shall be amended to add subsection (c,) as follows:
c. A policy to undeftake or assist in undeftaking, community renewal and lower-income housing assÍstance activities.

3. Section 9 of the Original Agreement shall read as amended in its entirety as follows:

This Agreement shall cover Fiscal Years 2015-2016,2016-2017 and 2OL7' 2018, respectively of CDBG, HOME and ESG program applications, including any subsequent Supplemental sources (Paragraph 23 of the Agreement). In no event shall this agreement be terminated by either party before June 30, 2018, except as allowed in legislation enacted by the U.S. Congress for termination or withdrawal from the Urban County Program and as permitted by HUD,

4. Section 10 shall be added to Agreement to read:

In accordance with HUD Notice CPD L4-07, and subsequent CPD Notices, this Agreement will be automatically extended for an additional three (3) year period (July 1, 2018 to June 30, zOZt) unless COUNTY or CITY provides wrítten notice that it elects not to pafticipate in a new qualification period. COUNTY shall notify CITY in writing of its right not to participate any longer than the date specified in HUD's Urban County Qualification Notice for the next qualification period. 5, Sectíon 11. Of the original Agreement is amended to read "CITY and COUNTY agree to adopt amendments (s) to this agreement as may be required by HUD to meet any new Urban County Qualification requirement(s) subsequent to June 30, 2OL7. The COUNTY will notify CITY of its right to terminate its pafticipation in the program based on the adoption of any such amendment. If either CITY or COUNTY refuses to adopt any such amendment, this automatic renewal provision herein will be void"

6. Section 24. Is amended to read "City may void this agreement only if it submits to County on or before June 2014 the notification from HUD that Cíty has qualified as a "Metropolitan City" or an "Entitlement City" prior to the completion of the re-qualification process for Fiscal Years 2015-16, 2OL6-2QL7, and 21l7-20t8. Upon such notification by HUD, CITY also must submit to COUNTY and HUD written notification of its decision to either remain in the Urban County Program as a "Metropolitan City" or become an "Entitlement City" as a separate entity.

27 27 of 360

7. All other provisions of the Original Agreement, as amended, a copy of which is attached hereto as Exhibit A and incorporated by this reference, to the extent they are not inconsistent with this Agreement, remain unchanged and in full force and effect.

IN WITNESS WHEREOF, CITY has caused this Amendment THREE to be executed by its City Manager and attested by its City Clerk; COUNTY has caused this Amendment THREE to be executed by the Director of the Orange County Community Resources; each having been duly authorized by the CITY Council and the COUNTY Board of Supervisors, respectively,
ATTEST:

City of Laguna Beach, a municÍpal
Corporatio in ia
By: By (-
Name: Joln ø*y
Title: City Manager
¡lame;zldllrØY +nY
hwt-v{AtYt(
Date:

Title:

Date:

COUNTY OF ORANGE, a political
subdivis n he State of California
Franks, Director
Orang e Co n ity Resources
Date:

28 28 of 360

AMENDMENT TWO TO

COOPERATION AGREEM ENT BETWEEN

THE COUNTY OF ORANGE
AND
CIw oF LAGUNA BEACH (small City)
This Amendment Number TWO (hereinafter "Amendment TWO") is made and entered into by the County of Orange, a political subdivision of the State of California, ("County") and CITY OF L-AGUNA BEACH, a municipal corporation, ("City"), which are somet¡mes índividually referred to as "Party" or collectively referred to as "Parties", and is effective as of July !, 2012, hereinafter referred to as "EFFECIVE DATE'.

WHEREAS, County and City executed that certain COOPERATION AGREEMENT "SmallCity" (hereinafter "Original Agreement" or "Agreement") for commencement July 1, 2005; and
WHEREAS, the Original Agreement was amended by Amendment One, effective as of July 16, 2008; and
WHEREAS, U.S. Department of Housing and Urban Development ("HUD") Notice CPD-11- 02 allows "automatic" renewals for up to three years provided that County sends a letter to City notifying it that the Original Agreement will be renewed unless City notifies County that it wishes to terminate the agreement and a copy of such a letter is provide to HUD; WHEREAS, County sent CiÇ a letter notifying City of such renewal on March 25,2Ot7; WHEREAS, City did not advise County that it wished to terminate the Original Agreement with County;
WHEREAS, the Parties desire to further amend the Original Agreement at this time in the manner set forth herein.

NOW, THEREFORE, the Parties hereby agree to the following modifications to the Origínal Agreement:

1. Sectlon 2 of the Original Agreement is amended in its entirety as follows:

COUNTY shall have the authority to carry out activities, which will be funded from annual Community Development Block Grant (CDBG), Home Investment Partnership (HOME) and Emergency Shelter Grant (ESG) program funds appropriated for Federal Fiscal Years 2OL2-2OL3, 20I3-2OL4 and 2OL4-20I5 and from any program income generated from the expenditure of such funds.

2. Section 9 of the Original Agreement shall read as amended in its entirety as follows:

This Agreement shall cover Fiscal Years 2OL2-2073, 2Ot3-2074 and 2O].4-70L5, respectively of CDBG, HOME and ESG program applications, including any subsequent Supplemental sources (Paragraph 23 of the Agreement). in no event shall this agreement be terminated by either party before June 30,2075, except as allowed in legislation enacted by the U.S. Congress for termination or withdrawal from the Urban County Program and as permitted by HUD.

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3. Section 10 shall be added to Agreement to read:

In accordance with HUD Notice cPD L7-02, and subsequent cPD Notices, this Agreement will be automatically extended for an additional three (3) year period (July 1, 2015 to June 30, 2018) unless COUNTY or CITY provides written notice that it elects not to participate in a new qualification period. COUNTY shall notify CITY in writing of its right not to participate any longer than the date specified in HUD's urban county Qualification Notice for the next qualification period. 4, Section 11 of the original Agreement is amended to read "CITY and COUNTY agree to adopt amendments (s) to this agreement as may be required by HUD to meet any new Urban County Qualification requirement(s) subsequent to June 30, 20L4. The COUNTY will notify CITY of its right to terminate its participation in the program based on the adoption of any such amendment. If either CITY or COUNTY refuses to adopt any such amendment, this automatic renewal provision herein will be void".

5. Section 24 is amended to read "City may void this agreement only if it submits to County on or before May 28,2011 the notification from HUD that City has qualified as a "Metropofitan City" or an "Entitlement City" prior to the completion of the re-qualification process for Fiscal Years 2OL2-L3,20L3-2014, and 20L4- 2015. Upon such notification by HUD, CITY also must submit to COUNTY and HUD written notification of its decision to either remain in the Urban County Program as a "Metropolitan City" or become an "Entitlement City" as a separate entity.
6, All other provisions of the Originat Agreement, as amended, a copy of which is attached hereto as Exhibit A and incorporated by this reference, to the extent they are not inconsistent with this Agreement, remain unchanged and in full force and effect.

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IN WITNESS WHEREOF, CITY has caused this Amendment TWO to be executed by its City Manager and attested by its City Clerk; COUNTY has caused this Amendment TWO to be executed by the Director of the Orange County Community Resources; each having been duly authorized by the CITY Council and the COUNTY Board of Supervisors, respectively.

ATTEST:

C¡ty ofl¿gu¡e-Beeeh-, a municiPal
the of California
By
Name: John Pietig Name: Martha Anderson
Title: City Clerk {-/é-tt
By
Title: City Manager
Date: ,f- /6 -// Date
COUNTY OF ORANGE, a polltical
subdivision of the State of California
By:

Steve Franks, Dírector
Orange County Community Resources
Date
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ORIGINAL FORM CONTRACT
APPROVED AS TO FORM and REQUIRED COUNTY COUNSEL STATEMENT:
"The terms and provisions of the agreement are fully authorized under State and local law and the agreement full legal authority for the Cou
Date:
nty." ,l,l ixtt rt

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EXHIBIT A
Cooperation Agreement "Small-C¡ty"
(This page ¡ntentionally left blank)

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2 COOPERATION AGREEMENT
AGREEMENT is entered into this F fgfaa7 ot eoos

BY AND BETWEEN
CITY OF LAGIINA BEACII a municipal
Corporation, hereinafter referred to as CITy,
COIJNTY OF ORAIIGE, a political
subdivision ofthe State of California and
recognized Urban County under the Federal
Housing and Community Development Act
of 1974 @ublic Law 93-383), as amended,
hereinafter referred to as "COUNTY'.

RECITAI,S
WHERËAS, Title I of the Housing and Community Development Act of l97a @ublic 93-383), as amended, hereinafter referred to as ACT, makes available to the COUNIy as an County, and to cities under 50,000 in populatioq grants through the Community Block Grant Program (hereinafter referred to as *CDBG'), and the HOME Partnership Program (hereinafter referred to as "HOME'), and any subsequent United States Department of Housing and Urban Development (hereinafter referred to as ',HUD',) which may become available to the COIJNTY to be used for eligible housing and community development activities; and
WHEREAS, the ACT requires such cities and the COUNTY to enter into cooperation in order for the cities to be included as part of the Urban County CDBG and HOI\48 and
include,
WHEREAS, the COTINTY and CITY desire to cooperate to undertake or assist in community development and lower income housing assistance activities, which but are not limited to, (1) acquisition of property for disposition for private reuse, low- and moderate-income housing, (2) direct rehabilitation of or financial for 3 4
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to housing (3) low rent housing activities, (4) disposition of lar,rd to private developers for appropriate redevelopment, and (5) condemnation ofproperty for low income housing NOW, TIIEREFORE, the parties agree as follows:
l- This Agreement shall constitute a cooperation agreement between the parties the meaning of Seøion 102 (aXb) of the ACT. The parties agree to cooperate to or assist in undertaking, activities which might include, but are not limited tq (l) acquisition of property for disposition for private reuse, especially for low- and moderate-income (2) direct rehabilitation of or financial assistance to housing, (3) low rent housing activities, (4) disposition of land to private developers for appropriate redevelopment, and (5) condemnation of property for low income housing-community. 2- COIJNTY shall have the authority to carry out activities, which will be funded annual CDBG or HOME Program funds appropriated for Federal Fiscal Years 2006-2007, 2007'2008, and 2008-2009 and from any program income generated from the expenditure of such 3- COUNTY shall have final responsibility for selecting aøivities and annually frling grant application (i.e. Annual lrodon Plan) with IIUD. In the preparatisl of s¿id applicatiorl COUNTY shall give due consideration to CITY's analysis of community development needs'and activities.

4. COUNTY certifies tllø,titis following an adopted Consolidated plan as required by CFRPat 9l and 24 CFRParr 570.306.

5. Since HUD \ryill not accept an Agreement including a provision for veto or other which would allow any party to obstruct implementation of the Consotidated plar¡ COIJNTY and CITY shall attempt to fi¡lfïll housing goals established by the HUD approved Consolidated Plan for the period of this Agreement

6. CITY acknowledges that it has adopted and is enforcing:
a- A policy prohibiting the use of excessive force by law enforcement agencies its jurisdiøion against any individuals engaged in non-violent civil rights demonstrations; and
b- A policy of enforcing applicable Stæe and local laws 4gainst physically barring entrance to or exit from a facility or location which is the zubject of such non-violent civil rights within jurisdictions.
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7. COtINTY and CITY agree to take all actions necessary to ensure compliance with Urban County's certificåtion required by Section 104 (b) of Title I of the Housing Community Act of 1974, as amended, including Title vI of the civil Rights Act of 1964, the Housing Act, Section 109 of Title I of the Housing and Community Development Act of 1914, and other applicable laws; Failure by CITY to comply with these provisions or to afürmatively further fair housing within its own jurisdiction or impediment of the COTINTY's to comply with the COUNTY's fair housing certificatio4 which may constitute with the urban county CDBG and HOME Programs, which may cause funding sanctions or other remedial actions by HIJD and/or COIINTY.

8. In the event COUNTY's Urban County application is approved by HttD, COIJNTY shall contract with the CITY to utilize any such grant funds received from HUD which attributable to activities administered by CITY, unless another form of allocation is required This Agreement shall cover Program Years 32, 33 and 34 (Frscal Years 2006- 2007, 2007'2008 and 2008-2009, respectively) of CDBG and HOME program applications, including any subsequent Supplenrental 8ourc6Ê (Paragraph 23 below). In no cvcnt shall this agreement be terminated by either party before June 30, 2009, except as allowed in legislation by the U.S. Congress for termination or withdraw form the Urban County Program and as by HUD

10. In accordance with HUD Notice CPD 05-01, this agreement will be automatically extended for an additional three (3) year period (i.e, from July 1, 2009 to June 30, ZOl2) unless COUNTY or CITY provides written notice that it elects not to participate in a new qualification COIJNTY shall notifr CITY in uniting of its right not to participate no later than the date specified in IIUD's Urban County Qualification Notice for the next qualification period. ll. CITY and COUNTY agree to adopt amendment$) to this Agreement as may be by HIJD to meet any new Urban County Qualification requirement(s) subsequent to June 0,2009. The COUNTY will noti$ CITY of its right to terminate its participation in the program on the adoption of any such amendment. If either CITY or COIJNTY refuses to adopt any such amendment, this automatic renewal provision herein will be void.

12. The eligible activities to be undert¿ken during the terrr of this Agreement will be by CITY from those outhorizcd by HIJD Rules and Regulations gowrning the CDBG antl ?
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30 Programs and any regulations which may be applicable to future Supplemental Federal

13. The parties agree to comply with the requirement(s) of the CDBG and HOME including laws and policies applicable to said Programs.

CITY acknowledges by its execution of CDBG and HOME cooperation agreement(s) that as included unit of general local government it:
a. May not apply for grants from appropriations under the Small Cities or State CDBG Programs for fiscal years during the period in'which it participates in the COLJNTYS program and;
b. May not participate in a HOME consortium except through the Urban County, regardless of whether the Urban County currently received a HOME formula allocation. c. May not terminate or withdraw from the Cooperation Agreement while it in effect until the CDBG and HOME funds and income received with respect to the year qualification period (and any suocessive qualification periods under agreements that for automatic renewals) are expended and the funded activities completed.

15. a. CITY must inform COLJNTY, through pcriodic rcports requested by COIINTY, of any income generated by the e4penditure of Program funds received by the CITY. Pursuant to applicable federal requirements, such program income must be paid to the COUNTY. CITY may such program income only if agreed upon by COLJNTY and used exclusively for eligible activitiès as determined by the COUNTY and in accordance with all CDBG and HOME Program as may then apply.
b. CITY shall keep and maintain appropriate records on the use of program income required by COIJNTY as the COTINTY has the responsibility of monitoring and reporting incometo HUD.
c. In the event of close-out or change in status of CITY, any progam income attbat time or received subsequent to the close-out or change in status shall be paitl by CITY to the COIJNTYwithin ninety (90) days afterthe expiration ofthe term ofthis Agreement.

16. a. Any proposed modification or change of use of any real property acquired or improved in whole or in part by the CITY using CDBG funds (from the use planned at the time of acquisition or improvement), including disposition, must be reported by CITY to the COLJNTY.

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COUNTY may approve the proposed modification or change of use. CITY shall not implement modification or change in use without COUNTY approval.
b. Should the disposition, sale or transfer of such real property acquired or improved in whole or in part using CDBG or HOME Program fr¡nds result in a use which does not qualify under CDBG or HOME Program regulations, the CITY shall reimburse COUNTY in the amount equal to the then current fair market value of the property (less any portion thereof attributable to expenditure of non-CDBGiHOME funds).
c. Any program income generated from the disposition, transfer or sale of such property prior to or subsequent to the close-out, change of status or termination of the cooperation agreement between the COUNTY and CITY may be either used by CITY for other specific eligible activities in the CITY or paid to the COUNTY for other eligible Urban County activities, as determined in advance of the expenditure at the discretion of the COUNTY.

17. a. CITY shall indemnify, hold harmless, and defend with counsel approved in by COUNTY, its offrcers, agents and employees against all liability, claims, losses, demands and actions for injury to or death of persons or damage to property arising out of or alleged to arise out of or in consequence of this Agreement including attomeys' fees, provided such liability, claims, demands, losses or actions are due to the acts or omissions of CITY, its officers, agents or employees in the performance of this Agreement, including any activities by CITY under its application.
b. In addition, CITY shall indemnif¡ defend with counsel approved in writing by UNTY, and hold harmless COUNTY against any liability, claims, losses, demands, and actions attomeys' fees incurred by COUNTY as a result of a determination by HUD that undertaken by CITY under CITY's application failed to comply with any laws, regulations, or policies applicable thereto or that any funds forwarded to CITY under this Agreement were improperly expended.
c. The provisions of Section 2778 of the California Civil Code, as said section exists on the effective date of this Agreement, shall be applicable to the above indemnification provisions. Transmittal to CITY of any pleadings served upon COUNTY shall be deemed to be a request to defend.

18. a. COUNTY shall indemnify, hold harmless and defend with counsel approved in writing by CITY, its officers, agents and employees against all liability, claims, losses, demands 5 200G20O8 Uó¡n CouDty Sm¡ll Clty AgruE€na reylæd M¡y 9, 2005 40 40 of 360
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and actions for injury to or death of persons or damage to property arising out of or alleged to arise of or in consequence of this Agreement, provided such liabilit¡ claims, demands, losses or actions are due to the acts or omissions of COUNTY, its offrcers, agents or employees in the performance of this Agreement, including any activities conducted by COUNTY under its application.
b. In addition, COUNTY shall indemnify, defend with counsel approved in writing by CITY, and hold harmless CITY against any liability, claims, losses, demands, and actions including attorneys' fees incurred by CITY as a result of a determination by HUD that activities undertaken by COUNTY under COUNTY's application failed to comply with any laws, or policies applicable thereto or that any funds forwarded to COUNTY under this were improperly expended.
c. The provisions of Section 2778 of the Califomia Civil code, as said section exists on the effective date of this Agreement, shall be applicable to the above indemnification provisions. Transmittal to COUNTY of any pleadings served upon CITY shall be deemed to be a request to defend.

19. COUNTY shall have the right to periodically audit CITY's records to determine compliance with this Agreement.

20. CITY shall forward to COUNTY a copy of each annual audit of the CITY conducted by an independent public auditor during the period of this Agreement as soon as the audit report becomes available. COUNTY shall have the right to ensure that necessary corrective actions are made by CITY for any audit findings pertinent to CITY handling of CDBG Program funding pursuant to federal requirements.

21. No CDBG or HOME Program funds shall be expended on any activity, which does affirmatively further fair housing goals within CITY.

22. Pursuant to 24 CFR Part 570.501(b) of CDBG and 24 CFR Part 92.504 of HOME regulations, CITY is subject to all requirements applicable to subrecipients, including the of a written agreement set forth in 24 CFR Part 570.503 of CDBG and 24 CFR Parts

92.505-509 of HOME program regulations.

23. This Cooperation Agreement shall apply to any supplemental program which HUD available through the CDBG or the HOME Programs.
6 200G2008 UÉ¡n Couty SD¡ll Clty Agreement revked Mry 9,2005 41 41 of 360
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24. CITY may void this Agreement only if it zubmits to ÇOIJNTY on or before July 2005 the notification from HUD that CITY has qualified as a 'Metropolitan City'' or an City" prior to the completion of the re-qualification process for Fiscal Yeæs 2006, 2007-2008, 2008-2009. Upon such notification by HUD, CITY also must submit to COUNTY and HUD written notification of its decision to either remain in the Urban County as a "Metropolitan City" or become an "Entitlement city'' as a separate entity il
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Title:

IN \ryTINESS \ryHEREOF, CITY has caused this Agreement to be executed by its Manager and attested by its City Clerk; COI/NTY has caused this Agreement to be by the Director of the Housing and Community Services Department; each having been duly authorizedby the CITY Council and the COUNTY Boa¡d of Supervisors, respectively ATÏEST:

City oflagunaBeaclq a municipal By:
in the Name: Martha Anderson
Date:

Title:
6 Clerk
6 0
COUNTY OF ORAÌrIGE, o politicol
subdivision ofthe Stæe of California
By:

Paula Burrier-Lund, Director
Housing and Community
Services Department
Date: 6
Kenneth Frank
CityManager
a to oç

FORM CONTRACT
AS TO FORM and REQUIRED COIJNTY COTINSEL STATEMENT:
*
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4 terms and provisions of the agreement are fully authorized under State and local law and the provides full legal authority for the County."
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STAFF REPORT
Meeting Date:

July 7, 2026

BUSINESS
15 SUBJECT: EFFICIENCY & FISCAL SUSTAINABILITY AD HOC COMMITTEE BUDGET

RECOMMENDATIONS
RECOMMENDATION: It is recommended that the City Council:

1. Discuss and provide direction based on the analysis and recommendations outlined in this memorandum.

MEMORANDUM
TO: Members of the City Council and the Laguna Beach community FROM: Councilmembers Sue Kempf and Alex Rounaghi
DATE: July 1, 2026
RE: Efficiency & Fiscal Sustainability Ad Hoc Committee Budget Recommendations

SUMMARY
As councilmembers, we are elected by Laguna Beach residents to represent their priorities and set the City's policy direction. Under our council-manager form of government, we do not run the organization ourselves — we appoint a City Manager and a City Attorney to carry out that direction and manage day-to-day operations, and we hold them accountable for results.

Representing residents well means more than meeting this year's needs — it means stewardship: keeping the City strong enough to serve them not just this year, but for decades to come. No tool expresses that direction more clearly than the budget — the clearest statement of what the City actually prioritizes.

Two questions guided our work over the past several months, and both are squarely ours to ask: Is Laguna Beach on a financially sustainable path for the decade ahead? And are we budgeting and delivering in a way that will keep us there? We ask them not out of anxiety about the future, but out of ambition for it.

Fiscal Year 2026-27 opens our centennial. We can celebrate a hundred years of Laguna Beach while being honest that the next hundred years will demand serious capital investment — in wildfire protection, aging public-safety facilities, and core infrastructure — and that the budget as built today is not yet set up to meet those demands. The Council adopted this budget on June 23, 2026; during those deliberations we previewed these recommendations at a high level and committed to returning with this formal memo for the Council's consideration.

In total, the FY 2026-27 budget appropriates about $170.4 million across all funds against roughly $166.2 million in revenues. The General Fund — the City's main operating fund, about $101.8 million — balances in large part because we transfer roughly $2.3 million from the Capital Improvement Fund to cover 1 of 33

EFFICIENCY & FISCAL SUSTAINABILITY AD HOC COMMITTEE BUDGET

RECOMMENDATIONS
July 7, 2026

operations; on an operating basis the General Fund (as set up today) runs a deficit, and our own forecast shows that gap widening.

The adopted budget already reflects real restraint. It includes about a million dollars in service reductions and a net reduction of roughly seven full-time positions, so authorized headcount falls for the first time in recent history. Credit is due for that: the City Manager and staff made genuinely difficult choices to unfund positions and trim spending across departments in a year when the easier path was to hold steady, and that discipline deserves the Council's recognition. It is real progress — but restraint alone will not close a structural gap, and the pressures that make that gap matter are no longer far off.

This memo documents where we stand, explains why our incremental way of budgeting cannot close that gap on its own, and sets out what we ask of the Council in four parts:
(1) govern by outcomes;
(2) identify about $2.3 million in recurring savings or new revenues (not from new taxes) before the midyear update to independently level-set the General Fund so that it no longer requires the Capital Improvement Fund transfer;
(3) build the capacity to leverage technology and innovation to deliver more cost-effective, residentcentered services; and (4) overhaul our capital delivery to advance a comprehensive infrastructure plan.

The adopted FY 2026-27 budget reflects real restraint — it includes about a million dollars in service reductions and the first drop in authorized headcount in years — but it does not yet include the recurring cuts needed to balance operations. The lesson we draw is simple — before the City asks residents for more revenues, every program and contract should make its case, procurement should seek alternatives, and the expenditures already on our books should be scrutinized. To us, the lasting fix is not another round of across-the-board cuts but budgeting from outcomes.

WHERE WE STAND
Laguna Beach has a strong fundamental fiscal condition:
● A stable, predictable, and steadily growing property-tax base — about $59 million next year, 58 percent of General Fund revenue, drawn from roughly 12,000 parcels assessed at $22.3 billion — thanks to California's property-tax structure.
● A strong visitor economy that produces well over $38 million a year in General Fund and other revenues through sales taxes, hotel taxes, and parking revenues. ● Very low debt.
● Full reserves — a 20 percent General Fund operating reserve (about $19 million) plus a Disaster Contingency Fund of roughly $7.4 million (7.3 percent of General Fund spending, against a 10 percent target) — comfortably above the GFOA's recommended minimum of about two months (roughly 17 percent) of operating revenue, a level GFOA says disaster-prone, tourism-dependent governments like ours should exceed.
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EFFICIENCY & FISCAL SUSTAINABILITY AD HOC COMMITTEE BUDGET

RECOMMENDATIONS
July 7, 2026

Increased expenditures have also advanced critical policy goals:

Fire Department:
● Wildfire safety: the question is not if but when the next wildfire happens. The City has committed more than $30 million since the 2019 Wildfire Mitigation and Fire Safety Plan — now a sustained annual program rather than a one-time push — including new fuel-modification zones that surround the city and an expanded outdoor siren-warning system. The City's response to the Rancho Fire showed the value of that fuel modification and preparedness, and the 2025 Plan update will require further, ongoing investment.
● Utility undergrounding: burying overhead lines along wildfire evacuation routes through costshared neighborhood assessment districts, to which the City contributes 10–20 percent (about $2.7 million for Woods Cove, $1.4 million for West Street, and $950,000 for Fairview/LaBrea), plus Coast Highway evacuation segments — reducing fire risk and public safety power shutoffs (PSPSs).1
● First new fire station in 55 years: the City will soon start constructing Fire Station 4, built to modern seismic standards — with a commitment to bring our three other aging stations up to that standard. ● In-house ambulance program: the City created a municipal ambulance-transport program (now 12 full-time and 20 part-time operators) with licensed paramedics on roughly two-thirds of the force.

It strengthens medical response — about two-thirds of Fire calls are medical — and almost entirely pays for itself through transport fees.
● Additional firefighters: for the first time in decades, the City added three firefighters (FY2025-26), allowing four-person engine staffing — the national NFPA 1710 standard, which NIST research finds completes fireground tasks about 25 percent faster than three-person crews and lets a crew begin an interior attack without waiting for a second unit. This investment, among others, helped the Department earn an ISO Class 2 rating (top 4 percent nationally), which enhances safety and can lower residents' and businesses’ fire-insurance costs.

Police Department:
● Fully funded law enforcement: with the department down to about 42 of 55 sworn officers, the Council approved a 19 percent raise over three years (10 percent upfront) in January 2023 to compete regionally and cut turnover. It worked — reducing vacancies and helping the City attract and retain high-caliber officers.
● The City invested in Flock Safety automated license-plate-reader cameras — a low-cost, forcemultiplier tool for investigating and deterring crime that complements the sworn-staffing investment.
● As a result of these investments, Laguna Beach ranked 1st among Orange County beach cities with the lowest violent crime per capita and 2nd for property crime (2024 California Department of Justice data), even as we host more than six million visitors a year. 1 City of Laguna Beach, City Services & Budget Presentation (Town Hall, Feb. 19, 2026). 3 of 33

EFFICIENCY & FISCAL SUSTAINABILITY AD HOC COMMITTEE BUDGET

RECOMMENDATIONS
July 7, 2026

Water Resources:
● The City approved its first-ever Wastewater Master Plan and Stormwater Master Plan, and reached a favorable agreement at the SOCWA Coastal Treatment Plant to advance recycled water and manage long-term wastewater costs.
● And through the Laguna Beach County Water District, the City helped secure a historic regional groundwater-well agreement (with Newport Beach and Fountain Valley) that will supply up to twothirds of the District's water and cut reliance on imported supply by 2028. ● We have an opportunity to embrace an integrated and resilient approach to water resources that will benefit future generations.

Marine Safety:
● Marine Safety is the clearest case of a policy choice becoming a permanent cost. Its 17 full-time positions guard 7.5 miles of coastline, and its budget — about $4.9 million — more than doubled mainly because the City took over South Laguna's beaches from the County in 2023, adding Aliso Beach and South Laguna lifeguarding, restrooms, day-porter and maintenance service, and security, with two more full-time officers funded by Measure LL.

Visitor Impacts:
• Regional growth is steadily feeding that visitor load. Over the past decade the population within easy day-trip range has surged — Irvine alone grew about 45% (to ~315,000), and the Inland Empire added several hundred thousand residents (now ~2.66 million) — almost all of it inland housing with no coastline of its own. As the City Manager notes, those residents see Laguna as their go-to beach, which helps explain why about 95% of our 6.3 million annual visitors are day-trippers who drive up service costs without significant offsetting revenues. • We should be equally candid about the challenges. Laguna is a community of about 23,000 residents running a full-service city — we have our own Police, Fire, and Marine Safety — for a population that swells many times over. That model is why we staff roughly 16 positions per thousand residents — well above the 10 to 12 of comparable cities — and why personnel is about 70 percent of the General Fund.
• Public safety alone is roughly half of all City spending — police 25, fire 20, and marine safety 5 percent — and those costs have climbed fast: since 2020-21, fire is up about 69 percent, police about 40 percent, and marine safety about 130 percent (measured in part from a pandemic-suppressed 2020-21 base, and, for Marine Safety, the City's takeover of South Laguna's beaches). As the department investments above show, that growth reflects deliberate policy choices versus bureaucratic drift.
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EFFICIENCY & FISCAL SUSTAINABILITY AD HOC COMMITTEE BUDGET

RECOMMENDATIONS
July 7, 2026

The pressures ahead are visible now and do not all peak together:

Cost pressure Impact Timing
CalPERS pension (UAL) Peaks at $10.6M in FY2029,
then declines to ~$6.0M by
FY2037
Peak FY27-29, recedes
South Laguna fund exhaustion ~$2.8M/yr shifts onto the
General Fund
~FY29-30 (≈4 yrs)
Replacing the capital-tooperations transfer~$2.3M/yr recurring gap Now, ongoing Wildfire mitigation program >$25M committed since 2019
(+$2.2M this year); tens of $M
more ahead
Multi-year, including
utility undergrounding
contributions and
ongoing maintenance of
FMZs
Public-safety & civic facilities
(Facilities Master Plan)
~$300M in 20-year needs
citywide; Fire Station 1 first
No funding source
Insurance Fund shortfall $3.6M one-time transfer (fund
would otherwise go negative)
FY26-27, though more
investment here is
needed.

Reduction in Revenue with a
Major Hotel out for Renovation
About $500K per year Starting in this FY,
lasting for two FYs.

Pensions:

On pensions — with our unfunded actuarial liability (UAL) being our largest long-term obligation — the news is better than the headline. The total unfunded liability is roughly $80 million as of mid-2025 ($28 million Miscellaneous, $51 million Safety) — down from about $95 million a year earlier, as strong returns lifted funded ratios into the high 70s — and next year's required payment rises to $9.1 million, up 27.5 percent — part of a roughly $2.3 million increase in pension costs in FY 2026-27.

But, barring a big market downturn, this peak truly is a peak: the City's own schedule (see chart below) shows the CalPERS payment cresting near $10.6 million in FY 2029, holding through about 2030-31, then declining every year to about $6 million by FY 2037.

The pressure is shared statewide: CalPERS is about 78 percent funded, held its 6.8 percent discount rate for 2025, and a strong 11.6 percent return in FY 2024-25 should ease our costs when it reaches local rates in FY 2027-28. We estimate a 7.5% to 8% return for CalPERS following the June 30, 2026 year-end of their FY 2025-26 investment year, which should further help our local rates. 5 of 33

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Remember too that a significant majority of our current employees are within the Public Agency Pension Reform Act (PEPRA) tier, which has almost no unfunded liability. It’s the legacy retirees – representing close to two workforces – where the lion’s share of the UAL costs reside.

Cost Reductions Approved in the Budget:

We are also already cutting. The final budget removes or un-funds six regular full-time positions and three limited-term Associate Planners, converts two part-time Jailer posts into one full-time, and adds a Records Management Coordinator — a net reduction of about seven full-time positions, plus a roughly 5 percent trim to part-time hours, so authorized headcount falls for the first time in years. That restraint is notable against the growth behind it: the City added roughly 86 full-time positions since FY 2017-18, mostly after COVID — ambulances and emergency preparedness, park rangers, South Laguna and Measure LL services, Community Development to clear a permit backlog, and support staff. We will need roughly $2 million more in structural reductions — but cuts alone cannot close a gap of this kind.

We are not alone in this. Across Orange County, cities face the same squeeze — public-safety and personnel costs outrunning a tax base that has not kept pace. Anaheim is closing a roughly $64 million general-fund gap with one-time funds; Huntington Beach used a portion of their reserves for capital projects – their operational budget is balanced this year but warns of a large deficit next; Santa Ana projects a $30 million shortfall when a sales-tax measure sunsets in 2029; and Buena Park, La Habra, and Seal Beach have all turned to sales-tax increases. Even Irvine faces fiscal challenges. That the problem is regional and structural is precisely why the answer cannot be one-time fixes — and why how we budget matters.3 3 “Orange County Cities Scramble to Patch Budget Gaps,” Voice of OC (July 2025). https://voiceofoc.org/2025/07/orangecounty-cities-scramble-to-patch-budget-gaps/ 6 of 33

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THE STRUCTURAL CHALLENGE
The deeper challenge is not any single number; it is our method. Like nearly every city, Laguna budgets incrementally — in the Government Finance Officers Association (GFOA's) words, “last year's budget becomes next year's budget with changes around the margin.” That approach endures for reasons the GFOA credits: it is simple, offers line-item control, and is predictable. But the GFOA's Rethinking Budgeting initiative names its weakness plainly: the traditional process “is unsuited to address emerging and complex community challenges” and is prone to a “collective action problem that results in overuse of public resources” and “ongoing financial stress.” For a city facing the shifts above, a method anchored in precedent is backwards. By treating last year's budget as the starting point for this year's, we anchor our priorities to the past instead of the future.

The remedy the GFOA describes is to start from outcomes — identify the community's highest priorities, define the problem, and fund the most promising strategies — so the question shifts from “what do we cut” to “what do we keep.” The GFOA notes that under traditional budgeting “elected officials feel like passive participants,” while an outcome-based process “gives elected officials agency to set the strategic direction of the budget.” A deficit cannot be closed by a council going line by line through thousands of committed entries across dozens of funds; our job is to set the outcomes we want and hold the organization accountable for them.

This is not a call to rebuild the budget from zero each year. The GFOA is explicit that incremental budgeting “could be useful and a wise strategy in some cases” — a valuable service performing well can continue — and its design principles (use leverage points, take smart shortcuts, avoid burnout) keep the effort focused rather than exhausting. It is a call to budget around results and tell residents a clearer story about what their money buys. None of this is foreign to Laguna: our Measure LL Oversight Committee urged the City, from its FY 2016-17 through FY 2019-20 reports, to have departments “develop performance measurements to help recognize success and identify problem areas.” We should finally act on what residents' own oversight committee asked for nearly a decade ago.

In short, we’ve used the same or similar format of our budget for the past many years – we could add more specificity and clarity to it, for the benefit of all. Similarly, guidance about budgeting is across multiple documents (including Council resolutions) - these could be better delineated in one place, with comprehensive financial policies relating to the Budget.

WHAT WE ASK OF THE COUNCIL
A single objective runs through these recommendations: targeted investments in technology, data, and organizational effectiveness to improve service outcomes, increase efficiency, and make the most of limited public resources. They track the Council’s own strategic priorities, with wildfire safety and fiscal sustainability foremost among them. We group them in these three parts:
• Modernize how we budget, embrace outcomes, and adopt comprehensive financial policies, • Secure Fiscal Sustainability through efficiency and technology, without new taxes. This may include:
o Integrating operational efficiencies better into the organization o Embracing AI as a tool to innovate how we approach services; and o Navigating through time-specific hurdles such as our PERS costs’ peaking, hotels off-line, and the ending limits of the South Laguna Fund.
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• Fix our capital project delivery pacing, prioritization, and final delivery.

We are candid that budgeting from outcomes is a method, not a money machine — it reallocates and clarifies, but closing the gap will take this discipline together with the near-term savings, capital reforms, and grants below, and, if those fall short, an eventual revenue conversation with residents. To keep the list manageable, we also flag what we seek now: a first set to adopt with this budget (the performancemanagement framework, the roughly $2 million in mid-year savings, and a capital delivery-improvement plan); a second set on which we ask the Council to direct staff to return (the ACM/COO mandate, the AI pilots, the comprehensive infrastructure plan, and the grants partnership); and a third set to study before acting (including the consolidated capital plan, a wastewater governance review, and a new strategy on pensions that may redeploy other funding for additional discretionary payments).

A. Modernize How We Budget / Embrace Outcomes / Adopt Comprehensive Financial Policies The lesson of the pages above is that a structural gap cannot be closed by a Council going line by line through thousands of largely committed entries across dozens of funds. Our job is to set the outcomes we want and hold the organization accountable for them — in the budget, and in every program, contract, and policy we touch. The reforms below are the instruments that make that possible: measures that tell us whether programs work, and audits that ask not whether the books are accurate but whether the money buys results.
● Build a permanent performance-management framework — built on outcomes, not workload. ○ The City already tracks performance measures, but most are workload counts — how much we do (permits processed, calls answered, tons collected), not whether the outcome improved.
○ Workload data cannot show the Council where a dollar buys the most, so it does not support the budget tradeoffs we need to align spending with today's challenges. ○ Start instead with a few outcome metrics for four departments where the data already exists — the City Attorney's Office, City Manager's Office, Community Development, and Police — on a public dashboard (Attachment A).
○ Define what each program is meant to achieve before measuring it — for Laguna Local, for instance, is the goal reducing parking demand, improving mobility, supporting local business, or resident access? — then review and refine the measures over time, adding departments as the City gains experience.
● Build our data capacity, starting with Laguna Local. The City today has limited operational data to support some of the decisions it is being asked to make; the aim is a culture of datadriven decision-making. ○ Use the new TripShot system to right-size the on-demand service (about $1.37 million a year, at a high cost per ride) against its intended purpose. ○ Require providers themselves to recommend improvements — drawing on their experience with peer agencies — keep City ownership of the data (Attachment B), and tie every measure to outcomes.
● Adopt an annual performance-audit workplan.
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○ We require an annual financial audit but not performance audits, which ask whether existing programs deliver efficiently.5
○ Adopt a yearly workplan of three to four performance audits, linked to the Key Performance Indicators (KPI) program; begin with a core financial or operational function; tie a portion of leadership evaluations to agreed-upon outcomes; and review our metrics annually. ○ The recommendation is grounded in our own experience: the City recently commissioned an assessment of the Finance department, and staff found real value in it.

B. Secure Fiscal Sustainability through Efficiency and Technology, without New Taxes.

Governing to outcomes by overhauling our budget process is the long-term solution; the near-term test is bringing fiscal sustainability to our General Fund operations. In addition to bringing back recommendations to update the FY 26-27 budget to eliminate the $2.3 million required transfer from the Capital Improvement Fund to the general fund, we believe that the City can further embrace technology and efficiencies to advance fiscal sustainability while maintaining high-quality services for residents. ● Set a goal to identify roughly $2.3 million in annual recurring reductions or additional offsetting revenues (that are not new taxes) for an initial Q1 update. ○ Direct the City Manager (and the ACM/COO once seated) to bring a package of recurring reductions to the mid-year review, drawn from the audit's candidates. ○ Detail them in the companion model and a separate request to the City Manager, replacing one-time capital-transfer dollars with ongoing savings. ○ Separately, review city-owned and income properties — lease terms, rents, and sale-or-lease potential — for savings or revenue without cutting service. ○ Provide a regular, quarterly update of our existing long-term fiscal forecast, starting with the FY 2026-27 Q1 Update.
● Revenue Opportunities as Cost Offsets
○ Evaluate the potential long term revenue opportunities with a sale or lease arrangement of the Community and Recreational Center (CRC) property.
○ A portion of the investment portfolio is significantly underperforming due to legacy (preMeeder) investments that were placed in an very low rate interest environment with long maturities at returns way under market. Roughly 22% of the portfolio is affected, however, most of these underperforming (potentially $4 million in total interest foregone) investments mature (about $28M) this year and will be invested by Meeder likely at a more strategic and balanced rate of return.
5 Performance audits are distinct from the City's annual financial audit: under the U.S. Government Accountability Office's Government Auditing Standards (the “Yellow Book,” or GAGAS), they provide objective analysis of a program's economy, efficiency, and effectiveness in order to improve operations. They are an established local-government practice; leading offices such as Long Beach's independent City Auditor and San José's Council-assigned auditor publish each recommendation's projected savings and track it until implemented. See GAO, Government Auditing Standards (2024 rev.); GFOA performancemanagement best practices. 9 of 33

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○ To advance fiscal sustainability and organizational efficiency, Meeder should be investing all funds with the exception of those funds necessary for overnight liquidity. This aligns with the Council’s previous direction to outsource investments. ○ We would like the Finance Department to propose the most efficient method of auditing TOT (especially short-term lodging) remittances to ensure that all operators are paying taxes owed to the City.
○ Concerts at the Irvine Bowl, if properly managed, could generate a few million dollars a year in general economic benefit (including revenue to the City from ticket tax, sales tax, TOT and parking revenue).
○ We successfully worked with the City Manager to negotiate with Townsend Public Affairs to add grant services to their scope of work at no extra cost; hopefully this yields additional grant opportunities.
• Leverage AI and innovative technology to deliver more cost-effective, resident-oriented city services.
o Ad Hoc Committee will form an informal AI Advisory Group with residents who have expertise; this group will collaborate with staff to identify opportunities to leverage AI to improve service delivery. The Ad Hoc will bring back an AI policy based on the San Jose’s coalition.
o Implement a short-term pilot AI project for Community Development (zoning plan check, application completeness check), followed by a longer-term Request for Proposals. This pilot will allow for streamlined processing of plans while ensuring that city staff ensure accuracy of returned comments.
o Direct the City Manager to come back to Council with a contract for Claude’s Anthropic for appropriate city departments. This may leverage a 50% discount that local governments are eligible for under Governor Newsom’s newly announced partnership with Anthropic. ● Restructure around an Assistant City Manager serving as Chief Operating Officer, as recommended by the City Manager.
○ The adopted budget already unfreezes an ACM position (about $315,500); the opportunity is to define its mandate.
○ Like a corporate COO, it should own internal execution, operations, and performance — freeing the City Manager, as CEO, for policy, the Council, and the community. ○ Make the position accountable for organizational effectiveness, process improvement, performance management, data-driven decision-making, and the citywide KPI program, and for leading the mid-year reduction package; search beyond traditional municipal backgrounds — including operational leaders from complex public or private organizations; and study peer cities that adopted the model.

C. Fix our capital project delivery pacing, prioritization, and final delivery.

As a 100-year old City, we have significant deferred investments in our facilities. These infrastructure investments are critical and require comprehensive planning and prioritization to effectively deliver. While 10 of 33

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we have several different Master Plans, it is critical that we have one comprehensive infrastructure plan that looks at the next 20 years and clearly outlines for the Council and community what will be rebuilt when, with what funds. Instead of adding new projects that are not feasible based on staff capacity and funding resources, the Council must prioritize adding projects in the context of the comprehensive plan.

This allows for effective Council prioritization of projects and enhances staff accountability for delivering.

This also allows us to ensure that City Staff do not focus on planning exercises for projects that cannot be funded.

We appear to have about 70 active and inactive CIP projects, some dating back to 2017 start dates. While the funds sitting there are invested in our investment portfolio, we believe that our largest opportunity and our largest risk may both sit in the capital program, and the problem has to be understood before the fixes make sense.

Year after year the City thoughtfully appropriates $7-8 million in funds into the Capital Improvement Fund, but this can be more funds than can be expended annually. In FY 2025-26 it projects spending only about 25 percent of the $75.2 million available, carrying roughly $56 million forward (some carryover is normal for multi-year capital, but a one-quarter spend rate and a compounding backlog go well beyond that).

What we see as the ideal way of addressing this concern – to have or complete:

1. A concerted effort to winnow down the existing list of legacy projects on the books.

2. As noted, a comprehensive infrastructure plan (developed in house) that very simply integrates all existing Master Plans and other planning documents into a Council- and community-aware approach. a. This should consider capacity as well as priorities. b. The comprehensive infrastructure plan and the master plans should be all made available for public and Council review.
c. The City Manager should come back with three tiers of recommendation as to project prioritization – one that assumes more funding, one a moderate level of funding, and one with minimal funding – based on each Master Plan.

3. A recommendation as to how to best deploy idle funds currently programmed for projects (and that may be years away from execution) for more cost-effective effort such as to make additional pension payments.

4. A plan or method to optimize Public Works’ scope of responsibilities (which includes things we can see and things that work while we don’t see them), including whether Wastewater is appropriately placed within the Public Works Department or the City itself (versus a special district).

CONCLUSION
The City of Laguna Beach, like most cities as referenced in this document, is facing upward cost pressures.

While some of these pressures reflect policy choices over the years, the cost of public safety agencies, fire 11 of 33

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mitigation/fire safety investments, pension liability, community development bottlenecks, poor investment results and inefficient capital utilization are causing general fund shortfalls.

While the City still maintains solid reserves, more scrutiny of departmental budgets will likely yield both one-time and ongoing savings. We recognize that this will involve tough choices – in some cases, programs may not meet the vital needs test at all. In others, program changes may impact service levels that are “nice to have” but simply not sustainable.

We sincerely look forward to this discussion with our colleagues, the City staff, and the community.

ATTACHMENTS
A. Initial Set of Performance Metrics (Pg. 13)
B. Governing by Outcomes in Practice: A Worked Example (Pg. 14) C. Example of Potential Department Level Goals Based on 2026 Council Priorities (Pg. 15) Submitted By: . Approved: .David A Kiff
Report Prepared By: Coordinated With:

Sue Kempf, Council Member
Alex Rounaghi, Council Member
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ATTACHMENT A — AN INITIAL SET OF PERFORMANCE METRICS
We should build on what the City already does. The budget already includes a “Performance Measures” block for each department — a genuine foundation, not something to replace. But most of those measures are workload counts: community outreach events held, false alarms, parking citations issued, animal-shelter impounds and adoptions, and the like. A few, such as emergency response times, begin to capture service quality. As activity tallies, they tell us how busy a department is, not whether it is achieving the result residents care about — and they cannot support the analysis good decisions require: is the program working, for whom, and at what cost. The step now is to evolve these into outcome and service measures.

Good metrics measure outcomes — results residents can feel — not activity. Each measure should fall into one of four types — outcome (what results are achieved), service (how well services are delivered), efficiency (how well resources are used), and workload (how much work is done) — with the emphasis on the first three. We should avoid the measures that look busy but prove nothing: counts of permits processed, calls answered, or hours billed, and any “100 percent always” target, which mostly invites gaming. The goal is a few metrics per department that a resident would recognize as mattering, tracked honestly over time.

City Attorney
Claims – volume and costs.

Litigation – costs and success rate.

Municipal prosecutor – volume and costs.

In-house service delivery – percentage of legal matters handled in-house versus by outside counsel City Manager
Presentation / implementation of a balanced budget
Operational growth rate kept at 4% (?) or below (not including CIPs).

Citywide customer satisfaction survey results at ___% or above Citywide employee Tenure, on Average (currently at ____ years).

Community Development
Average time when a completed application is with the City (as low as possible) Average time from Application “Deemed Complete” to Issuance of Building Permit (as low as possible)
Level of customer satisfaction at ___ or above
Departmental Employee Tenure, on Average (currently at 3.73 years).

Police
Type 1 and Type 2 Crime Rates
Crime clearance rates
Type 1 and Type 2 response times
Parking Citations Issued, Parking Citations voided or not paid Nuisance Violations issued – drunk in public, smoking on beach, trash, loud exhaust, (now) canopy violations
Departmental Employee Tenure, on Average (currently at ____ years). 13 13 of 33
ATTACHMENT B — GOVERNING BY OUTCOMES IN PRACTICE: A WORKED

EXAMPLE
When the City moved to renew its on-demand transit contract with LAZ, our volunteer advisor Jeff Roedersheimer proposed exactly the kind of evaluation this message urges citywide — the clearest illustration of the difference between counting activity and managing for outcomes. Today the contract largely measures rides provided, which tells us how busy the service is, not whether it works, for whom, or at what cost per result.

A defensible minimum
Even a bare-minimum modern service contract should require: customer-satisfaction measurement (post-trip ratings and feedback); core rider analytics (unique riders, repeat riders, volume, time-ofday use); operational performance (wait times, completion rates, vehicle utilization and idle time); quarterly vendor optimization recommendations (route, fleet-sizing, service-hour, and costreduction); application performance and usability (app ratings, failed bookings, abandonment); and City ownership of all operational and rider data — “competent operational governance,” not anything radical.

Measuring outcomes, not activity
Who it serves. Unique versus repeat riders, residents versus visitors, and optional ride-purpose data (beach access, errands, commuting, ADA/senior, nightlife).

How well it serves. Rider-satisfaction scoring, app usability and accessibility, average and peak wait times, cancellations, and complaint-response times.

How efficiently. Vehicle utilization, cost per ride and by time and zone, demand patterns, and — over time — cost per avoided vehicle trip and parking demand reduced.

How it improves. Quarterly improvement and fleet-optimization recommendations, benchmarking against comparable cities, and pilot authority.

The two ideas that make it work
First, the vendor should help improve the service, not merely operate it — gain-sharing can align its incentive to our outcomes. Second, targets should be set after a baseline, so the measures are grounded in reality.

This is one contract, but it is the template. Most of what the City delivers, it delivers through contracts and programs; requiring this discipline across our major contracts is governing by outcomes in the most concrete form. The on-demand evaluation is where we start. 14 14 of 33
ATTACHMENT C — EXAMPLE OF POTENTIAL DEPARTMENT LEVEL GOALS BASED ON 2026 COUNCIL PRIORITIES
These department-level goals translate the Council's 2026 Strategic Priorities into a clear goal for each department. These goals would advance through KPIs that the departments recommend to the City Council.

These goals are just examples for context.

Department Primary priority Goal
Fire Wildfire; Public Safety Reduce the risk of structure loss from wildfire and deliver fast, effective emergency and medical response.

Police Public Safety Keep Laguna among the safest cities in Orange County with fast, trusted, cost-effective policing.

Marine Safety Stewardship; Safety Protect beachgoers and manage South Laguna's beaches sustainably.

Community Development Advanced Planning Deliver faster, more predictable permitting and modern, compliant land-use policy.

Public Works & Utilities Infrastructure Maintain reliable infrastructure and deliver the capital program on time and on budget.

Administrative Services Fiscal Sustainability Achieve structural balance, strong controls, and a highperforming workforce.

City Manager's Office Fiscal; All priorities Lead an outcome-driven, efficient organization that delivers on Council priorities.

City Attorney's Office Fiscal Sustainability Reduce the City's legal risk and cost while delivering responsive counsel.

Transit & Community Services Stewardship Provide right-sized, outcome-driven transit and recreation that serve residents and manage visitor
impacts.
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How Rocky Are Orange County’s Municipal Budgets? 7/7/26, 10:44 AM https://voiceofoc.org/2026/07/how-rocky-are-orange-countys-municipal…gets/?vcrmeid=JrKzrYZo0kSaMTkJoY1m3g&vcrmiid=NM4GxkfeZ0SKpzV3bCJA8A Page 1 of 10 A view of the city of Orange looking west across Orange County on Thursday, July 2, 2026. The city of Orange, along with others, faces budget deficits. Credit: JULIE LEOPO, Voice of OC NEWS: ECONOMY
How Rocky Are Orange County’s Municipal Budgets?

BY NOAH BIESIADA, HOSAM ELATTAR AND ANGELINA HICKS
4 hours ago
Why you can trust Voice of OC
Over a million Orange County residents live in cities spending beyond their means this year, and questions are growing over how their leaders are planning to fix growing budget deficits long term. 22 of 33
How Rocky Are Orange County’s Municipal Budgets? 7/7/26, 10:44 AM https://voiceofoc.org/2026/07/how-rocky-are-orange-countys-municipa…gets/?vcrmeid=JrKzrYZo0kSaMTkJoY1m3g&vcrmiid=NM4GxkfeZ0SKpzV3bCJA8A Page 2 of 10 It’s a problem affecting the three largest cities in the county as well as smaller cities and the county government itself, all of which face structural deficits this year where their annual revenue is outpacing their spending, forcing them to use up their savings instead to stay afloat.

Former County CEO Michelle Aguirre, who just retired last week, told supervisors on her way out they missed the mark on a structurally balanced budget by roughly $75 million this year and there’s no sign it’s going to get better next year.
“Simply put, we have exhausted all resources available to us, but we are resilient,” Aguirre said. “You will see that we have no general fund requests for additional resources, because there are none to be given.” [Read: Orange County Leaders Warn of Dangerous Budget Future] While the county still has significant reserves to draw on, many cities don’t, with many having already drawn down their reserves to balance their budgets in previous years.

What’s Driving the Deficit?
Irvine City Council listens to a public comment during the meeting on May 13, 2025. Credit: BRIAN GUEVARA, Voice of OC. 23 of 33
How Rocky Are Orange County’s Municipal Budgets? 7/7/26, 10:44 AM https://voiceofoc.org/2026/07/how-rocky-are-orange-countys-municipa…gets/?vcrmeid=JrKzrYZo0kSaMTkJoY1m3g&vcrmiid=NM4GxkfeZ0SKpzV3bCJA8A Page 3 of 10 While most cities are still managing to achieve a technically balanced budget, which is required by California law, they’re doing it using one-time funding – like reserves and property sales – that will eventually run out.

The biggest problem city leaders highlight is that their annual expenses are outpacing the increases to their annual revenue, leading to a gap that keeps growing every year due to a number of factors such as inflation and labor costs.
“Financial conditions continue to decline due to external factors, particularly in unexpected expenditures,” said Irvine’s Deputy Director of Administrative Services Jonathan Nih to city council members at their June 9 meeting. “Economic pressures continue to create fiscal challenges as expenditures outpace revenues.” “The key drivers for the higher costs are due to labor, healthcare escalations, inflation and unexpected events.” As revenue lags, many city leaders have continued signing off on wage increases for the public sector unions like police and fire, despite questions on how they’ll pay for them.

Several cities also staved off earlier problems by using one-time federal COVID bailout funding leftover from the pandemic to stabilize their budgets or secure one-time projects, but as that money dwindles, they’re having to face the problems they put off years ago now.
[Read: Orange On Track for Bankruptcy in Three Years Without ‘Radical’ Change] Several cities such as Fullerton and Westminster have faced warnings for years about financial peril ahead from their city staff, while officials in cities like Irvine are just now finding out they have a problem.

Which Cities Are in the Worst Shape?
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How Rocky Are Orange County’s Municipal Budgets? 7/7/26, 10:44 AM https://voiceofoc.org/2026/07/how-rocky-are-orange-countys-municipa…gets/?vcrmeid=JrKzrYZo0kSaMTkJoY1m3g&vcrmiid=NM4GxkfeZ0SKpzV3bCJA8A Page 4 of 10 Two women walk past the City of Orange’s Civic Center in Orange, Calif., on April 16, 2026. Credit: Nora Grube, VOICE OF OC
Anaheim is in the best shape of Orange County’s three largest cities, facing an over $60 million structural deficit this year they say will be patched by over $120 million coming into the general fund next year when a set of bonds they used to upgrade the resort area are paid off. [Read: Anaheim’s Budget Deficit Eats Half of $120 Million in Expected New Tax Revenue] No other Orange County cities have that kind of bailout on the horizon.

This year, Santa Ana faced a $13 million deficit they had to reduce through a series of spending cuts in order to balance out their budget.

According to the city’s future financial outlook, Santa Ana is also projected to face a roughly $30 million deficit in the 2028-29 fiscal year just as their 2018 sales tax increase, Measure X, is expected to start to sunset, with budget deficits expected to widen more after that year. 25 of 33
How Rocky Are Orange County’s Municipal Budgets? 7/7/26, 10:44 AM https://voiceofoc.org/2026/07/how-rocky-are-orange-countys-municipa…gets/?vcrmeid=JrKzrYZo0kSaMTkJoY1m3g&vcrmiid=NM4GxkfeZ0SKpzV3bCJA8A Page 5 of 10 “Looking ahead, expenditures are projected to continue to grow faster than revenues, and this is largely driven by inflationary cost increases, negotiated labor increases, contractual costs and growing pension obligations,” Alex Trinidad, the city’s finance director told council members. “The outlook also reflects the schedule of Measure X rate decrease beginning in April of 2029 which contributes to the increasing long term fiscal pressure.” In Irvine, leaders are grappling with how to address a budget shortfall that could reach $47 million by 2030.

During a city council meeting on June 9, officials also heard a budget update that recapped how the council is already facing a $6 million deficit for the current fiscal year and a projected $9 million deficit for the next fiscal year.
[Read: Irvine Officials Deadlock on How to Close Multimillion Dollar Budget Deficits] Irvine City Council members voted to balance the 2025-26 budget with a one-time budget transfer of $6 million from the Asset Management Plan Fund.

Officials also voted to address next year’s $9 million budget deficit by keeping some vacant positions, pausing the city’s non-emergency vehicle replacement program and adding a slew of small fees.

Staff said they will return at a special meeting on Aug. 3 to discuss long-term financial planning for the 2027- 28 fiscal year and beyond.
“We can’t keep operating on a deficit and not expect to go into a hole,” Irvine Councilmember Melinda Liu said at the June 9 meeting.

In Orange, officials faced a projected $20 million dollar deficit as they struggled to quell a long-time structural deficit – one that city-hired consultants warned them last year could lead to municipal bankruptcy if they don’t get a grip on it.

In Fullerton – a city similar in size to Orange – officials are expected to adopt a budget in the third end of July, weeks after the state deadline.

City council members there voted to keep spending at the same levels as their current budget until they adopt a new one next month.
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How Rocky Are Orange County’s Municipal Budgets? 7/7/26, 10:44 AM https://voiceofoc.org/2026/07/how-rocky-are-orange-countys-municipa…gets/?vcrmeid=JrKzrYZo0kSaMTkJoY1m3g&vcrmiid=NM4GxkfeZ0SKpzV3bCJA8A Page 6 of 10 The college town is projected to face a nearly $14 million deficit after a multi-million dollar accounting error saw the city run through $10.1 million in unassigned reserves quicker than elected officials expected. [Read: Auditors Question if Fullerton is Properly Overseeing Budget] In Huntington Beach, officials adopted a budget that acknowledges a $15.6 million shortfall between recurring revenues and ongoing expenses, with Mayor Casey McKeon repeatedly warning residents they need to find new ways to increase revenue.
“We have structural budget issues we need to resolve,” McKeon said at the council’s April 22 meeting during a debate over a proposed rebranding contract. “If you guys don’t like this proposal, what proposal do you have to fix our structural budget deficit?”
In a written statement, city spokesperson Julie Toledo said the city does not “simply draw down $15.6 million from existing prior-year savings,” and that they were looking to other strategies to help shrink the gap.

Other cities like Laguna Beach are barely hanging onto a structural balance, with the city this year passing a general fund budget that’s over $360,000 in the black after having one last year that was over $1 million in the red.

Tax Hike Pitches Coming to a City Near You
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How Rocky Are Orange County’s Municipal Budgets? 7/7/26, 10:44 AM https://voiceofoc.org/2026/07/how-rocky-are-orange-countys-municipal…gets/?vcrmeid=JrKzrYZo0kSaMTkJoY1m3g&vcrmiid=NM4GxkfeZ0SKpzV3bCJA8A Page 7 of 10 Downtown Santa Ana on Sunday, April 19, 2026. Credit: SYDNEY SAWYERS, Voice of OC For most cities facing a deficit, the first tool that city leaders reach for is a tax increase.

In Orange, city council members are once again turning to residents to help bail them out of their structural deficit after voters shot down a 0.5% sales tax increase in 2024.

Last month, elected officials there narrowly voted to place a 1% sales tax increase measure on the November ballot that, if approved by voters, would last 13 years.

If approved, the measure is expected to bring in $37 million in additional revenue to city coffers with city council members promising to make more significant cuts if the measure fails at the ballot box. [Read: Is Municipal Bankruptcy on the Horizon if Orange’s Sales Tax Measure Fails?] Officials in Orange also placed a separate ballot measure that would raise the hotel tax from 10% to 14% for hotels with 11 rooms or more.

Fullerton leaders have also discussed pitching their residents a sales tax hike if they can’t find another way to fix the budget.
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How Rocky Are Orange County’s Municipal Budgets? 7/7/26, 10:44 AM https://voiceofoc.org/2026/07/how-rocky-are-orange-countys-municipa…gets/?vcrmeid=JrKzrYZo0kSaMTkJoY1m3g&vcrmiid=NM4GxkfeZ0SKpzV3bCJA8A Page 8 of 10 Amid a poor financial outlook in Santa Ana, city council members are mulling placing a measure on the November ballot that, if approved by voters, would retain the Measure X sales tax increase indefinitely.

San Clemente will also have a sales tax on the ballot this year — but it’s specifically meant to raise money to get more sand on the beach, to address coastal erosion, and to fund projects to prevent wildfires in town.

Spending Cuts and Ideas for New Revenue
Placentia’s Historic Water Tower, constructed in 1935, on March 9, 2022. Credit: CAROLINE LINTON, Voice of OC In lieu of a tax hike, several cities are looking for ways to increase tax revenue or cut spending, but are struggling to find any options that can make up the full gap.

Santa Ana City Council members adopted a balanced budget this year in part by cutting $11 million in spending, including slashing $5 million by eliminating vacant positions and reducing spending on part-time employees.

Other sizable cuts included cutting spending on park maintenance and dialing back the Police Activity and Athletic League after school program. Officials also slashed five city commissions to save a little over $38,000.
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How Rocky Are Orange County’s Municipal Budgets? 7/7/26, 10:44 AM https://voiceofoc.org/2026/07/how-rocky-are-orange-countys-municipa…gets/?vcrmeid=JrKzrYZo0kSaMTkJoY1m3g&vcrmiid=NM4GxkfeZ0SKpzV3bCJA8A Page 9 of 10 [Read: Santa Ana Officials to Purge City Commissions to Curb $13 Million Budget Gap] Elected leaders are closing the remaining gap by increasing revenue by about $2 million, including a technology cost recovery fee expected to bring in $750,000.

Irvine leaders have instituted hiring freezes, holding some vacant positions and increasing some fees for athletic facilities and payments to the city made using credit cards. Leaders are also considering cutting some library services since they aren’t able to currently afford any major library upgrades.

City leaders also moved forward with a plan to charge for parking at the Great Park, giving residents about four hours free while charging visitors for every hour they stay in a move they hope can bring $3-5 million into the budget annually.
[Read: Irvine Looks to Charge For Parking at Great Park in Face of Budget Deficit] In Orange, city leaders balanced the budget by eliminating and freezing $6 million in vacant positions and pulling $15 million from three different spending buckets like the city’s infrastructure fund into the general fund to balance their books.

Huntington Beach leaders have started greenlighting a number of controversial new programs, including trademarking the city logo, pitching city merch, putting ads on lifeguard towers, and even pitched expanding the city’s PR and film programs, but that was ultimately shot down. [Read: Huntington Beach Shelves Plans for Film Commission and Expanded PR] Several cities including Orange are studying switching to a charter city model in the hopes it could let them generate more revenue, highlighting options for more parking fees and similar increases. [Read: Another Orange County City Eyes a Governing Charter] Placentia leaders shot down a proposal from their staff that would’ve used reserves to fill a $1.4 million structural deficit, instead directing staff to layoff two staffers and make a series of other small cuts to eat up the gap.

Mayor Chad Wanke also highlighted that even with the balanced budget, they were pushing off millions of dollars worth of upgrades to buildings and that they needed to figure out a long term solution and that other 30 of 33
How Rocky Are Orange County’s Municipal Budgets? 7/7/26, 10:44 AM https://voiceofoc.org/2026/07/how-rocky-are-orange-countys-municipa…ets/?vcrmeid=JrKzrYZo0kSaMTkJoY1m3g&vcrmiid=NM4GxkfeZ0SKpzV3bCJA8A Page 10 of 10 © 2026 Voice of OC
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cities do too.
“It’s difficult for any city to make cuts. A lot of cities are ignoring it,” Wanke said at the June 30 council meeting. “The County of Orange is looking at a looming deficit, we have cities that are looking at $30 million deficits.”
“We have a little bit of a crisis here getting this budget put together,” he continued. “But I think over the next six months, we’re going to need to look at further changes.” 31 of 33
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STAFF REPORT
Meeting Date:

July 7, 2026

BUSINESS
16 SUBJECT: REVENUE MEASURE UPDATE – RECOMMENDATION FROM AD HOC

COMMITTEE
RECOMMENDATION: It is recommended that the City Council:

1. At the request of the Revenue Ad Hoc Committee, do not place a general tax revenue measure on the November 3, 2026 ballot; and instead

2. Direct staff to pursue the “deferral with a plan” strategy as described in this report. This strategy would work to reduce ongoing expenditures thoughtfully, while focusing outreach, education, and polling efforts on a single measure, a one-cent (1%) transactions and use (sales) tax, for placement on the November 3, 2028 General Municipal Election ballot; and

3. Find that the recommended action is not subject to the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378, and alternatively, is exempt pursuant to CEQA Guidelines Section 15061(b)(3).

SUMMARY OF THE MATTER
At the City Council’s June 9, 2026 study session, Council directed staff and the Revenue Ad Hoc Committee to further evaluate a possible transient occupancy tax (TOT) measure and a measure to increase the business license tax (BLT) on bars and restaurants.

Based on further polling on the BLT and other considerations explained herein, the Revenue Ad Hoc Committee respectfully recommends that Council not move forward on any revenue measure at this time, and instead to direct staff to work towards additional organizational efficiencies, and concentrate development, outreach, and polling efforts on a single measure: a one-cent (1%) transactions and use (sales) tax, for placement on the November 3, 2028 General Municipal Election ballot.

DISCUSSION
The attachments to this report describe the three revenue concepts considered since the Council’s January 30, 2026 Strategic Priorities discussion:
• A transient occupancy tax (TOT – also known as a hotel bed tax) increase from 12% to 14%, estimated to generate approximately $3.0 million annually;
• An increase in the Gross Receipts Tax associated with the Group 4 business license tax category (for bars and restaurants), estimated to generate approximately $8.6 million annually; and / or • A one-cent increase in the transactions and use (sales) tax, taking the local rate to 8.75% from 7.75%, estimated to generate approximately $7.8 million annually.

Of the three, the Committee believes that:
• The sales tax offers the strongest combination of generating the amount of revenue needed to achieve the City’s capital and operational goals along with a likelihood of voter approval – but possibly not in Fall 2026;
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REVENUE MEASURE UPDATE – RECOMMENDATION FROM THE AD HOC COMMITTEE July 7, 2026

• The transient occupancy tax, though well-supported by voters, would generate revenue short of what is needed to fund the City’s significant infrastructure, public safety, mitigating visitor impacts, and wildfire-mitigation needs further described in this report; and • The business license tax – while interesting as a potential way to more fully offset visitor costs by raising revenue from visitor-frequenting businesses - tested poorly in two rounds of voter polling; Any general tax ultimately placed before voters would require a two-thirds (2/3) vote of the City Council (four affirmative votes) to place it on the ballot, followed by the approval by a simple majority of voters.

AD HOC RECOMMENDATION
As an alternative to placing a measure before the voters in November 2026, the Ad Hoc Committee recommends that the City Council direct staff to focus on developing a single measure (a 1% sales tax measure of general purpose) for the November 2028 General Municipal Election. In the meantime, the Committee believes that the City should continue to demonstrate:
(1) The diligence it has pursued and hopes to pursue in becoming a more efficient organization (in alignment with some of the suggestions offered by Council Members Kempf and Rounaghi as a part of their Budget Ad Hoc Committee work);
(2) The need for additional capital investment, affirmed by a specific spending proposal / plan that clearly identifies infrastructure needs and expected costs; and (3) The costs associated with ensuring the city and its resources are not adversely impacted by overtourism.

The Committee also believes that the sales tax is best positioned to both succeed (because of modestly favorable polling) and provide the revenue needed (about $8 million a year in ongoing General Fund dollars) to accomplish necessary capital and operational goals (again, please see Attachment 2). Of further assistance may be an early process to appoint an Oversight Committee (see discussion in Attachment 1).

FINANCIAL ANALYSIS
As discussed, this item is all about fiscal issues – but the discussion of it has no direct fiscal impact right now.

ALIGNMENT WITH CITY COUNCIL GOALS AND PRIORITIES
The recommended action directly supports the City Council’s adopted 2026 Strategic Priorities. It advances City Fiscal Sustainability, which identifies long-term challenges between expenditure growth and revenues, the cost impact of managing six million visitors annually, the cost of wildfire mitigation, and a phased approach to the Facilities Master Plan.

ENVIRONMENTAL ANALYSIS
The recommended action is not a project subject to the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15378 because it involves calling an election and placing proposed general tax measures before the voters, which does not commit the City to a specific project and will not result in a direct or reasonably foreseeable indirect physical change to the environment. Alternatively, the action is exempt under CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no possibility that the action may have a significant effect on the environment. Any future projects 2 of 162
REVENUE MEASURE UPDATE – RECOMMENDATION FROM THE AD HOC COMMITTEE July 7, 2026

funded by revenue from the measures, if approved by the voters, would be subject to separate environmental review as required. No further environmental review is required for this action.

ATTACHMENTS

1. Discussion / summary of City Council actions and revenue concepts (Pgs. 4-10)

2. Draft Spending Plan (Pgs. 11-14)

3. Probolsky Research 2026 Voter Poll Results – BLT Question (Pgs. 15-30)

4. June 9, City Council Study Session (Pgs. 31-94)
https://lagunabeachcity.primegov.com/Portal/Meeting?meetingTemplateId=894

5. Draft presentation for July 7, 2026 (Pgs. 95-108)
Submitted By: Dave Kiff Approved: .David A Kiff
Dave Kiff, City Manager Dave Kiff, City Manager
Report Prepared By: Coordinated With:

Gavin Curran, Assistant City Manager Megan Garibaldi, City Attorney Ad Hoc Committee
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DISCUSSION / SUMMARY OF CITY COUNCIL ACTIONS / REVENUE CONCEPTS Since the City Council’s February 2026 Strategic Priorities discussion, the City and the Revenue Ad Hoc Committee have completed substantial outreach, polling, and analysis. This section summarizes that work and the resulting recommendation.

Background and Process Timeline
Date Action
February 24,
2026
City Council confirmed the 2026 Strategic Priorities, including City Fiscal Sustainability and evaluation of a potential November 2026 revenue measure.

February–May
2026
City conducted community outreach, including four Town Hall meetings and an online community survey.

May 19–27, 2026 Probolsky Research conducted a statistically valid voter poll of 400 likely November 2026 voters (margin of error +/-5%).

June 9, 2026 City Council study session; Council directed staff to poll more on the viability of a Business License Tax increase on restaurants and bars, as well as to return with resolutions that could place either a TOT measure (12% to 14%) or a business license tax measure for bars and restaurants on the November 2026 General Election ballot.

June 19, 2026 June 19–24, 2026: Probolsky Research conducted a second voter poll (400 likely voters, +/-5%) focused on the viability of a business license tax measure.

July 7, 2026 City Council considers deferring placement of a revenue measure on the November 2026 ballot and directs staff to develop a sales tax measure for the November 2028 ballot (this report).

Why is the City looking for a new revenue source?
Over the past several years, the City has faced sustained cost pressures, including public safety staffing costs, pension liabilities associated with workforces long retired from Laguna Beach, rising insurance costs, wildfire mitigation and fuel modification scope expansion, and the maintenance and replacement of aging infrastructure and facilities, such as our four fire stations.

To help balance the Fiscal Year 2026-27 budget, the City has already taken significant steps to reduce costs, including eliminating a net of seven full-time positions, reductions in part-time hours, and reducing contracts and capital outlay.

Looking ahead, the City faces several major long-term obligations that the current revenue base may not fully support. These include the Facilities Master Plan and the condition of aging City facilities (such as fire stations, the library, and community centers); the costs of providing services like beach cleaning, restroom maintenance, trash removal, and nuisance citation enforcement associated with our significant visitor base, and the continued investment in wildfire risk reduction and utility undergrounding along evacuation routes.

Attachment 1
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Community outreach was conducted between February and May 2026, including four Town Hall meetings and an online community survey, and voter polling by Probolsky Research confirmed both the level of community concern and a recognition of fiscal impact. Likely voters said that the City has a need for additional funds to maintain the level of services and facilities residents use; reducing wildfire risk ranked as the highest-rated priority; and traffic congestion on Coast Highway and Laguna Canyon Road, and the impact of visitors on the community were among the most frequently cited concerns.

A recurring theme throughout outreach was that daytime visitors should pay a greater share of the costs of the services they generate before the City turns to resident-paid revenue sources.

Two of the revenue measures reviewed significantly relate to visitors – another (the sales tax) does, too, but to a lesser extent. A summary of each follows:

TRANSIENT OCCUPANCY TAX
The Transient Occupancy Tax (TOT) is a tax paid by guests of hotels and short-term lodging; it is not a tax on residents’ homes or property. The proposed measure would increase the City’s TOT rate from 12% to 14%, effective July 1, 2027. The existing 2% Tourism Marketing District (TMD) assessment would be maintained, resulting in a combined lodging tax rate of 16%. The measure is estimated to generate approximately $3.0 million in new revenue annually.

In addition to the rate change, the proposed ordinance would modernize and update the definition of “rent” and require that TOT be collected on the full amount paid by the guest, including booking fees, commissions, and other lodging-related charges. It would also strengthen collection and enforcement requirements for online travel companies (OTCs) and booking platforms such as Expedia, Booking.com, Airbnb, and Vrbo. As a general tax, the measure requires approval by a simple majority of voters.

How does Laguna Beach’s TOT rate compare?
Laguna Beach’s current 12% base rate (not including the 2% TMD) is already in the upper range among Orange County cities, most of which levy between 8% and 10%. At the proposed 14% rate, Laguna Beach would remain below Anaheim and Garden Grove (15%) and above Tustin (13%) on the base rate, while the combined 16% lodging rate reflects the City as a coastal destination.

Voter support
Polling shows strong support for the TOT measure. In the May 2026 voter poll, 74% of likely voters initially said they would vote yes, rising to 75% after hearing additional information about the measure. Sixty-eight percent (68%) said they were more likely to support the measure knowing that it is paid only by hotel and short-term rental guests rather than by residents. When asked which measure(s) should go before voters, the TOT measure received the highest level of support of the three concepts tested.

Additional consideration: higher rate on short-term lodging At the June 9, 2026, study session, the City Council discussed whether short-term lodging should be taxed at a higher rate than hotels but did not identify a specific rate. Staff estimates that each additional 1% applied to short-term lodging would generate approximately $100,000 in new 5 5 of 162
revenue annually. The proposed TOT measure applies a single, uniform rate, which the measure establishes as the maximum rate approved by the voters. The Council may set the actual rate at or below that voter-approved maximum, but cannot exceed it without returning to the voters.

As a result, the Council could create a differential without a new ballot measure. For example, by lowering the rate applied to hotels while continuing the existing rate on short-term lodging. If, instead, the Council wishes to set a higher maximum rate for short-term lodging than the rate approved for hotels, staff would need to return with revised ordinance language and a corresponding ballot question for the Council's consideration.

BUSINESS LICENSE TAX
The City’s business license tax for bars and restaurants is currently subject to an annual cap of $1,650, which has arguably not kept pace with the costs that visitor-serving businesses and their patrons place on City services. The proposed measure would create a new Group 4 business license tax category specific to bars and restaurants, remove the existing $1,650 annual cap, and impose a 3% tax on gross receipts for businesses in that category, effective January 1, 2027. No changes are proposed to the business license tax for any other category. The measure is estimated to generate approximately $8.6 million in new revenue annually. As a general tax, the measure requires approval by a simple majority of voters.

Voter support – May Survey
Of the three revenue concepts tested in the May 2026 voter poll, the business license tax measure drew the least support. Initially, 41% of likely voters said they would vote yes and 48% said they would vote no. When presented with competing statements, 46% agreed that the increase would be a burden on businesses, compared with 40% who agreed that the new revenue would be paid largely by visitors and would offset visitor impacts. When asked which measure(s) should go before voters, the business license tax measure was selected by the smallest share of respondents.

Voter Support - June Survey (see attachments)
Following the Council's direction to conduct additional message testing on the business license tax, Probolsky Research conducted a second survey of 400 likely voters from June 19–24, 2026 (margin of error +/-5%), focused specifically on this measure. The survey tested the ballot question itself, informed voter questions, and a series of supporting and opposing messages.

On an initial reading of the ballot question, 47% of likely voters said they would vote no and 33% said they would vote yes, with the remainder undecided. After hearing both supporting and opposing information, support did not improve: 50% said they would vote no on the informed question, and of those, 61% were firmly opposed. When asked to choose between two resident statements, 52% agreed that the tax would increase costs for residents and harm local restaurants.

Message testing showed supportive messages had a meaningful but limited effect, the strongest being that every dollar raised would stay in Laguna Beach (55% more likely to vote yes) and that funds could reduce wildfire risk (49%). Opposing messages were at least as strong: the message that the tax could cause bars and restaurants to close and increase storefront vacancies moved 71% of voters toward no, and the "less competitive" message moved 51%. 6 6 of 162
Taken together, the May and June polling indicate that the business license tax faces the most significant voter resistance. Initial opposition exceeded support in both surveys, support did not improve after voters received additional information in the June poll, and opposition messaging focused on potential impacts to local bars and restaurants tested as highly persuasive. The results of the BLT questions are included for Council’s and the public’s review.

Informing the public about a complex measure
Unlike the TOT and Sales Tax, which voters readily understand, the business license tax is a more complicated measure to explain. It changes the structure of an existing tax, removing a fixed annual cap and replacing it with a percentage of gross receipts, and applies only to a single category of business. Gross receipts taxation is unfamiliar to most voters, and the distinction between a tax on the business and a tax on the customer can easily be blurred. Because of the measure’s complexity, staff would recommend a robust public information effort to educate voters along with continued survey testing (should the Council wish to proceed with a BLT measure in 2028).

SALES TAX (TRANSACTIONS AND USE TAX):

At the June 9, 2026, study session, the City Council directed staff to return with the transient occupancy tax and business license tax measures and did not advance a general sales (transactions and use) tax measure. The Revenue Ad Hoc Committee has since requested that the City Council reconsider its direction and focus on a one-cent (1%) transactions and use tax as the single measure to develop for the November 2028 General Municipal Election ballot.

Voter support – May Survey
Of the three revenue concepts tested in the May 2026 voter poll, the sales tax measure drew 48.8% support with an informed vote. This is a meaningful improvement from the initial vote and from previous polling.

A resolution and ordinance giving effect to that measure are provided as a draft attachment to this report so that, should the Council wish to proceed in 2028, it and the public has a baseline document to memorialize and discuss between now and November 2028. 7 7 of 162
If reconsidered and approved by the Council, the measure would ask voters to establish a one percent (1%) transactions and use tax, deposited into the City’s general fund. The tax is estimated to generate approximately $7.8 million in new revenue annually and would remain in effect until ended by voters, with annual independent audits and public disclosure of expenditures. As a general tax, the measure would require approval by a simple majority of voters, and a two-thirds (2/3) vote of the City Council (four affirmative votes) would be required to place it on the ballot.

COMMUNITY SENTIMENT AND VOTER CONCERN
Residents' overall assessment of the City of Laguna Beach government has remained relatively stable over the long term, with the 2026 results returning to the City's historical norm after a favorable 2025. In the June 2026 survey, 39% of likely voters rated the overall job the City is doing as good and 36% as fair, while 22% rated it poor. Positive ratings have hovered in the low 40s for roughly a decade, comparable to the share giving favorable marks in the City's 2016 survey, rose to a high of 50% in 2025, and have since settled back to 39%. Viewed in that longer context, the 2026 figures are better understood as a return to baseline consistent with a broader softening in public assessments of government in recent years.

Also, residents' concerns have been strikingly consistent over time. Traffic congestion on Coast Highway and Laguna Canyon Road has ranked as residents' leading concern for the better part of a decade, appearing at the top of the list in the City's 2016, 2025, and 2026 surveys alike, alongside persistent concern about traffic on local streets and the impact of visitors. In the June 2026 survey, roughly two-thirds of respondents cited tourism impact (66%) and Coast Highway/Laguna Canyon traffic (69%), and 78% agreed that the City spends tens of millions of dollars each year addressing the impacts of day visitors, with much of that cost borne by residents rather than visitors. These findings indicate that residents broadly recognize the visitor-related cost pressures that motivate the proposed revenue measures, even as their overall view of City government has grown modestly more critical.

Wildfire risk also remains a concern for residents. In June 2026, 94% of respondents reported being concerned about wildfire risk in Laguna Beach, and reducing wildfire risk has ranked as voters' single highest priority, registering as the top priority in surveys as far back as 2016, while also showing the largest gap between importance (61%) and satisfaction (28%) in 2026 polling.

This also carries into how voters respond to revenue measures: on the proposed business license tax, the wildfire-mitigation message was the second-strongest argument tested, moving 49% of voters toward yes.

REVENUE AD HOC COMMITTEE’S RECOMMENDATION: PROCESS AND

RATIONALE
The Revenue Ad Hoc Committee held discussions with representatives of the hotel industry, residents, and other community members over the course of this process, in addition to reviewing the results of the City’s May and June 2026 polling.

Through those discussions and the polling results described in this report, it became clear to the Committee that there is meaningful concern in the community about the imposition of any new tax. The Committee concluded that more work (including a detailed spending plan), further outreach, further local government efficiencies, education, and refinement of the ballot question 8 8 of 162
are needed before any measure is brought before voters, which is why the Committee recommends deferring placement of the revenue measure in favor of the more deliberate timeline for November 2028. In reaching this recommendation, the Committee was also mindful of the risk of getting ahead of voters on a decision: presenting a measure before it is well understood and broadly supported risks the very revenue outcome the City is trying to secure. The additional time will allow the City to build on the outreach already completed.

At the same time, it also became clear to the Committee that the cost of delivering City services and maintaining and replacing City infrastructure continues to rise. As shown in the Draft Spending Plan below, the TOT measure, generating an estimated $3.0 million annually, is a good and meaningful amount of new revenue, but does not cover the City’s significant infrastructure needs and rising public safety costs.

The Committee found that the sales tax measure would do substantially more. Over a five-year period, the difference between the two measures is approximately $26 million: roughly $15.8 million for the TOT measure compared with roughly $42.1 million for the sales tax measure. The Committee determined that this difference is significant enough to fund, on a pay-as-you-go basis, both critical infrastructure, such as the replacement of the City’s aging fire stations and wildfire mitigation, and quality-of-life improvements, such as improvements to parks and trails, that the TOT measure alone would not support.

These are the services and facilities residents rely on directly, safe streets and fire stations, wellmaintained parks and trails, and reliable emergency response, and the Committee believes the additional time between now and 2028 should be used to more clearly show voters how the revenue would be spent and the benefit it would provide to the community, so that any measure ultimately placed before voters reflects a shared understanding of its purpose.

OVERSIGHT COMMITTEE
A recurring theme in the City’s community outreach and survey is that residents want assurance that new revenue will be spent as promised. To strengthen public confidence and accountability, the City Council could establish a citizens committee to serve in two phases: one to help confirm the City’s needs and review a proposed spending plan well before the election, and a second to oversee spending after voters approve a measure.

Before the Election: Given the additional time before the November 2028 election, the City Council could convene a citizens review committee to help confirm the City’s infrastructure and operational service needs, review a proposed spending plan, and provide independent input on the case for whichever measure the Council ultimately places before voters. This kind of pre-election confirmation is intended to give voters confidence that the need is real and the plan is sound before they are asked to decide, building on the outreach and polling already completed.

After the Election: If a measure is approved by voters, the City Council could establish a citizens’ oversight committee to review the use of that revenue. Because each of the measures described in this report is a general tax deposited in the General Fund, the committee would serve in an advisory and transparency role; it would not direct appropriations or supersede the City Council’s authority 9 9 of 162
over the budget, but it would provide independent, public review of how the funds are received and spent relative to the priorities identified in the spending plan.

Similar to previous committees of this kind, staff anticipates that either committee would be composed of Laguna Beach residents appointed by the City Council, and could include members with backgrounds in finance, accounting, business, or public budgeting. Each committee’s size, member qualifications, terms, and meeting frequency would be defined by the City Council.

The oversight committee’s core responsibilities, once revenue is collected, would be to review, on at least an annual basis, the revenues received and expenditures made from the revenue measure; to confirm that those expenditures are consistent with the spending plan presented to voters; and to report its findings to the City Council and the community through an annual public report. This review would complement the annual independent financial audit.

Should the City Council wish to establish a citizens committee in either or both phases, the Council can provide direction at this meeting. Staff would then return with the recommended structure, membership, and duties of the committee(s) well in advance of the first full year of revenue collection.
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SAMPLE FIVE-YEAR SPENDING PLAN
City of Laguna Beach·2026 Revenue Measures
This attachment provides a detailed view of the three measures summarized in the staff report. The Local Funding Measure (the business license tax or the one-cent sales tax) is modeled at approximately $8.0 million per year; the Hotel Tax Measure (transient occupancy tax) at approximately $3.0 million per year. The $8.0 million figure is a deliberately conservative planning estimate: the business license tax is projected to generate about $8.6 million per year, and the onecent sales tax about $7.8 million per year, and $8.0 million is used throughout, so the plan holds regardless of which measure the Council places before voters. Revenue figures assume a 2.5% annual increase from each measure’s first full year of collection. Because both are general taxes, the allocations below are statements of priority and remain subject to City Council approval of each annual budget.

LOCAL FUNDING MEASURE:

BUSINESS LICENSE TAX OR SALES TAX (~$8.0 MILLION / YEAR) Annual Allocation by Priority
Priority Share FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 5-Yr Total Fire
Stations &
Wildfire
Safety
40% $3,200,000 $3,280,000 $3,362,000 $3,446,000 $3,532,000 $16,820,000 Police &
Emergency
Services
20% $1,600,000 $1,640,000 $1,681,000 $1,723,000 $1,766,000 $8,410,000 Beaches,
Parks &
Visitor
Programs
15% $1,200,000 $1,230,000 $1,261,000 $1,292,000 $1,325,000 $6,308,000 Library &
Community
Facilities
10% $800,000 $820,000 $841,000 $862,000 $883,000 $4,206,000 Housing
for Seniors
&
Workforce
8% $640,000 $656,000 $672,000 $689,000 $706,000 $3,363,000 Reserves &
Savings 7% $560,000 $574,000 $588,000 $603,000 $618,000 $2,943,000 Total
Annual
Measure
100% $8,000,000 $8,200,000 $8,405,000 $8,615,000 $8,830,000 $42,050,000 What Each Priority Funds
• Fire Stations & Wildfire Safety (40%): replacement of three aging fire stations (Forest Avenue, Agate, and Top of the World), phased over multiple years; new and maintained fuelmodification (brush-clearing) zones citywide; and related wildfire-safety improvements.

Attachment 2
11 11 of 162
• Police & Emergency Services (20%): a modernized police facility, relocation of the police weapons range to a new indoor facility, a dedicated Emergency Operations Center at City Hall, and an advanced dispatch / real-time crime center. • Beaches, Parks & Visitor Programs (15%): beach and park maintenance, cleaning and trash removal, nuisance and noise enforcement, and a safety drone program to manage the impacts of roughly six million annual visitors, plus open-space acquisition and park development. • Library & Community Facilities (10%): expansion of the branch library and improvements to community facilities.
• Housing for Seniors & Workforce (8%): support for affordable and senior housing through partnerships, gap funding, and accessory-dwelling-unit incentives. This is an ongoing funding priority rather than a single capital project, and is not itemized in the capital schedule below. • Reserves & Savings (7%): disaster-reserve set-asides and savings to keep the plan sustainable and the City prepared for emergencies; held as a recurring set-aside rather than an itemized project.

Illustrative Capital Schedule (Major One-Time Projects) The priority shares above describe how much funding is directed to each priority each year. The major facilities within those priorities would be designed and built over a multi-year period, not all at once.

The schedule below shows the major one-time projects, their target construction year, and their estimated cost in year-of-construction dollars.

Project Priority Target
Year
Est. Cost
Fire Station #1 — Forest Avenue Fire Stations &
Wildfire Safety 2028 $16,640,000
Fire Station #2 — Agate Fire Stations &
Wildfire Safety 2029 $10,816,000
Fire Station #3 — Top of the
World
Fire Stations &
Wildfire Safety 2030 $11,248,640
Fuel-Modification Zones (new) Fire Stations &
Wildfire Safety 2028 $1,040,000
Advanced Dispatch / Real-Time
Crime Center
Police & Emergency
Services 2029 $7,571,200
Emergency Operations Center
(City Hall)
Police & Emergency
Services 2028 $4,160,000
Updated Police Facility Police & Emergency
Services 2030 $16,872,960
Relocate Police Weapons Range
(indoor)
Police & Emergency
Services 2032 $4,866,612
Catalina Lots Purchase / Park
Development
Beaches, Parks &
Visitor Programs 2027 $4,500,000
Open-Space Acquisition (future) Beaches, Parks &
Visitor Programs 2027 $7,000,000
Branch Library Expansion (added
story)
Library & Community
Facilities 2030 $11,248,640
Total — Local Funding
Measure capital program $95,964,052
12 12 of 162
Costs are shown in year-of-construction dollars, assuming approximately 4% annual construction inflation from a 2027 base; the equivalent total in today’s dollars is about $88.95 million. Small visitor-impact start-up costs (e.g., drone program and noise-enforcement equipment) are funded under the Hotel Tax Measure and are not shown here. Target years and scope are illustrative and would be confirmed each year through the City’s capital budgeting process.

Fiscal Discipline — $1 Million in Annual Cost Reductions Alongside the new revenue, the City commits to reducing its own operating costs by approximately $1 million each year (about 1% of the operating budget) and redirecting those savings to core services.

This continues the cost discipline already underway, including the elimination of eight full-time positions and reductions in contracts and capital outlay to balance the FY 2026-27 budget.

HOTEL TAX MEASURE — TRANSIENT OCCUPANCY TAX (~$3.0 MILLION / YEAR) An increase in the transient occupancy tax from 12% to 14% — paid by hotel and short-term lodging guests rather than residents — would generate about $3.0 million per year. With the existing 2% Tourism Marketing District assessment, the combined lodging rate would move from 14% to 16%, in line with other coastal destinations and still paid by guests, not residents.

Annual Allocation by Priority
Priority Share FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 5-Yr Total Wildfire
Prevention
& Brush
Clearing
35% $1,050,000 $1,076,000 $1,103,000 $1,131,000 $1,159,000 $5,519,000 VisitorImpact
Programs
30% $900,000 $923,000 $946,000 $969,000 $993,000 $4,731,000 Police,
Fire &
Marine
Safety
20% $600,000 $615,000 $630,000 $646,000 $662,000 $3,153,000 Reserves
& Savings 15% $450,000 $461,000 $473,000 $485,000 $497,000 $2,366,000 Total
Annual
Measure
100% $3,000,000 $3,075,000 $3,152,000 $3,231,000 $3,311,000 $15,769,000 What It Funds
The plan focuses on ongoing priorities: year-round wildfire prevention and brush clearing; beach cleaning, trash removal, and nuisance enforcement to address day-visitor impacts; police, fire, and marine-safety services; dispatched medical transport to help bridge care as Mission Hospital changes its services; and reserves and savings.

THE TWO MEASURES SIDE BY SIDE
The two measures differ in scale, and a spending plan has been prepared for each. The table below shows both measures together across the City’s priorities. The Local Funding Measure allocates approximately $8.0 million per year; the Hotel Tax Measure approximately $3.0 million per year. 13 13 of 162
Priority Local Funding
Measure — $8.0M/yr
Hotel Tax Measure —
$3.0M/yr
Fire Stations & Wildfire Safety $3,200,000 $1,050,000
Police & Emergency Services $1,600,000 $600,000
Beaches, Parks & Visitor Programs $1,200,000 $900,000
Library & Community Facilities $800,000 –
Housing for Seniors & Workforce $640,000 –
Reserves & Savings $560,000 $450,000
Total Each Year $8,000,000 $3,000,000
Hotel Tax Measure amounts reflect its allocation, mapped to the corresponding priorities. A dash indicates a priority not included in that measure.

NOTES:
● Revenue. Both measures assume 2.5% annual growth from the first full year of collection.

Actual timing follows each measure’s effective date. Dollar figures are rounded to the nearest thousand.
● Capital is funded over time, not all at once. The priority shares are annual statements of priority. The major facilities in the Illustrative Capital Schedule are phased across several years and together exceed any single year’s revenue; they would be delivered over time from the ongoing revenue stream and, where appropriate, through financing tools authorized separately by the City Council.
● Not a bond measure. These are general tax measures, not bond measures. A yes vote authorizes the tax described in the ballot question; it does not, by itself, authorize the City to issue bonds or incur debt.
● Cost vs. revenue timing. Project costs in the capital schedule assume roughly 4% annual construction inflation, while revenue is projected to grow about 2.5% per year. Because costs are expected to rise faster than revenue, project timing and scope will be confirmed each year through the City’s capital budgeting process.
● Accountability. Every dollar stays in Laguna Beach, supported by independent annual audits and a public yearly spending report.
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City of Laguna Beach
2026 BLT Poll
Results (abridged to focus on BLT)
June 2026
Opinion Research on
Elections and Public Policy

PROBOLSKY RESEARCH
23 Corporate Plaza Suite 150 Newport Beach CA 92660
Newport Beach
(949) 855-6400
San Francisco
(415) 870-8150
Washington DC
(202) 559-0270
Attachment 3
15 15 of 162
City of Laguna Beach – 2026 BLT Poll
Survey Methodology*
Sample
The sample was compiled from data obtained from the
Orange County Registrar of Voters. We called, emailed,
and texted voters. We matched the demographics of City of Laguna Beach likely 2026 General Election voters.

Data Collection Explained
Interviews were conducted by phone (34%) and online
methods (67%). Phone participants were interviewed
through landline (25%) and mobile (75%) calls. Online
participants were invited by email (50%) and text
message(50%) to access the survey by computer, tablet,
or smartphone.

Respondents in all modes chose their preferred language, English (98%) and Spanish (2%).

Security measures precluded individuals from completing the survey more than once.
*Due to rounding, totals shown on charts may not add up to 100% Probolsky Research is a Latina- and woman-owned market and opinion research firm with corporate, election, government, and nonprofit clients. 1 Survey Details
Mode Phone (landline and mobile)
Online (email and text to web)
Language English and Spanish
Length 20 minutes
Target Respondents Likely November 2026 General Election voters Survey Fielding Jun 19 - 24, 2026
Margin of Error +/-5%
Survey Participants 400
16 16 of 162
51% think there is a need for additional funds to
provide the level of City services and facilities
Question 3: Do you think the City has a great need, some need, a little need, or no real need for additional funds to maintain the level of City services and facilities that Laguna Beach residents use?
8 5.8%

25.8%

19.8%

33.5%

15.3%
Great need Some need Little need No real need Unsure
51%

63.0%

61.0% 64.1%

51.0%

8.0% 15.8% 11.8% 15.3%

28.8% 23.5% 24.3%

33.5%
2024 2025 2026 2026 - 2
Need
Unsure
No real need
17 17 of 162
Initial vote: 47% would vote no on the business
license tax
Here is a potential ballot measure that may come before Laguna Beach in November. If the election were held today, please indicate how you would vote.

Question 4: “To help fund services for six million annual visitors, most of whom come for the day and create costs for public safety, traffic and parking enforcement, park and beach maintenance, waste removal, shall the City of Laguna Beach adopt a measure updating its business license tax by removing the $1,650 annual cap and imposing a 3% tax on amounts charged by bars and restaurants, generating approximately $8,600,000 until ended by voters, with all funds spent locally?”

33.3%

47.3%

19.5%
Vote yes Vote no Unsure
9 18
18 of 162
Among those who vote no, 61% definitely vote no
Here is a potential ballot measure that may come before Laguna Beach in November. If the election were held today, please indicate how you would vote.

Question 4: “To help fund services for six million annual visitors, most of whom come for the day and create costs for public safety, traffic and parking enforcement, park and beach maintenance, waste removal, shall the City of Laguna Beach adopt a measure updating its business license tax by removing the $1,650 annual cap and imposing a 3% tax on amounts charged by bars and restaurants, generating approximately $8,600,000 until ended by voters, with all funds spent locally?” Definitely

37.6%
Probably

62.4%
Among those who said
vote yes
Definitely

60.8%
Probably

39.2%
Among those who said
vote no

33.3%

47.3%

19.5%
Total
10 19
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27% would vote yes on the BLT because it makes tourists pay and offsets tourism costs
Question 5: What is the main reason you would vote yes on this measure? :
[IF ANSWERED 'VOTE YES' TO Q4]
[OPEN-ENDED RESPONSE]

27.1%

12.8%

12.8%

11.3%

7.5%

6.0%

6.0%

3.8%

2.3%

5.3%

0.8%

4.5%
Make tourist pay/ Offset tourism cost
Maintain service/ Improve infrastructure
Overtourism/ Negative tourism impact
Increase revenue/ Need funds
Reduce tax for local resident
Improve public safety
Tax business
General support
Improve quality of life/ Better livability
Other
Unsure
N/A/Refused

33.3%

47.3%

19.5%
Question asked of
respondents who would
vote yes on the business
license tax, representing
33% of the total sample or
133 individuals.
14 20
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23% would vote no on the BLT because it could hurt the
local economy
Question 6: What is the main reason you would vote no on this measure? :
[IF ANSWERED 'VOTE NO' TO Q4]
[OPEN-ENDED RESPONSE]

22.8%

19.0%

15.3%

13.2%

6.9%

6.9%

3.7%

3.7%

5.3%

0.5%

2.6%
Hurts local businesses/Economic harm
City wastes money/needs better fiscal management
Oppose new taxes/Taxes already too high
Impacts local residents
Tourists should be taxed
Too expensive/Would increase cost of living
Need more accountability
City is bloated/overstaffed
Other
Unsure
N/A/Refused

33.3%

47.3%

19.5%
Question asked of
respondents who
answered vote no to Q4,
representing 47% of the
total sample or 189
individuals.
15 21
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78% agree that residents pay the costs created by
visitors
Question 7: Agree or disagree: The City spends tens of millions of dollars each year addressing the impacts day visitors have on our community – including public safety, infrastructure, beach maintenance, trash removal, and other services, much of those costs paid for by residents, not the visitors.

78.8%

10.3% 11.0%
Agree Disagree Unsure
16 22
22 of 162
Among those who agree, 62% strongly agree
Question 7: Agree or disagree: The City spends tens of millions of dollars each year addressing the impacts day visitors have on our community – including public safety, infrastructure, beach maintenance, trash removal, and other services, much of those costs paid for by residents, not the visitors.

Strongly

61.9%
Somewhat

38.1%
Among those who said
agree
Strongly

51.2%
Somewhat

48.8%
Among those who said
disagree

78.8%

10.3%

11.0%
Total
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10 Positive messages Percent More Likely to
Vote Yes
Every dollar generated for this business license tax measure on bars and restaurants would stay and be used in Laguna Beach and cannot be taken by the county or state. 55.3%
Funding from this measure could allow the City to spend more to reduce wildfire risk through vegetation management, evacuation planning, undergrounding power lines on Laguna Canyon Road, and other fire safety improvements. 49.3% Approximately 74% of sales at local bars and restaurants come from visitors. 48.0% Most visitors come to Laguna Beach for only a day but still use city streets, public safety services, parks, and other local infrastructure, creating costs that are currently paid for by residents. The proposed business license tax on bars and restaurants would make sure visitors contribute more toward the services they use.

45.8%
Visitors each year create impacts to our police, fire, and marine safety services in Laguna Beach. Funding from this measure could provide funding for additional police officers, firefighters, and paramedics. 45.5% Funding from this measure could help expand parking enforcement, add parking spaces, and make it easier to find available parking outside residential neighborhoods. 38.5%
Funding from this measure could help maintain and improve City parks, trails, and recreational facilities, and open spaces, including Heisler Park, Bluebird Park, Alta Laguna Park, and other community amenities. 38.3% Negative messages Percent More Likely to
Vote No
Bars and restaurants operate on thin profit margins and face rising labor, rent, and operating costs. This tax could cause some bars and restaurants to go out of business and lead to additional storefront vacancies. 70.5% Taxes on bars and restaurants are not common in Orange County, this tax could make Laguna Beach bars and restaurants less competitive and encourage people to spend their money elsewhere. 51.0% 24 24 of 162
Informed vote: 50% would vote no on the business
license tax
Knowing what you know now, if the election were held today, how would you vote on this ballot measure? Question 17: “To help fund services for six million annual visitors, most of whom come for the day and create costs for public safety, traffic and parking enforcement, park and beach maintenance, waste removal, shall the City of Laguna Beach adopt a measure updating its business license tax by removing the $1,650 annual cap and imposing a 3% tax on amounts charged by bars and restaurants, generating approximately $8,600,000 until ended by voters, with all funds spent locally?” 66 33.3%

47.3%

19.5%

38.0%

50.0%

12.0%
Vote yes Vote no Unsure
initial Informed initial Informed initial Informed
25 25 of 162
Among those who vote no, 61% definitely vote no
Definitely

43.4%
Probably

56.6%
Among those who said
vote yes
Definitely

61.0%
Probably

39.0%
Among those who said
vote no

38.0%

50.0%

12.0%
Total
67 Knowing what you know now, if the election were held today, how would you vote on this ballot measure? Question 17: “To help fund services for six million annual visitors, most of whom come for the day and create costs for public safety, traffic and parking enforcement, park and beach maintenance, waste removal, shall the City of Laguna Beach adopt a measure updating its business license tax by removing the $1,650 annual cap and imposing a 3% tax on amounts charged by bars and restaurants, generating approximately $8,600,000 until ended by voters, with all funds spent locally?” 26 26 of 162
52% agree with Smith that the tax would increase
costs for residents and hurt local restaurants
Question 18: Now we have the statements from two Laguna Beach residents. Please choose which statement you agree with the most.

Smith: “I oppose the Business License Tax increase because it is going to be a burden on our bars and restaurants. And they are just going to pass along the higher taxes to me when I go out to eat with my family. Worse, higher prices discourage customers from going to our bars and restaurants, making it harder for them to survive.

Jones: “I support the Business License Tax increase on bars and restaurants because the vast majority of new revenue will be paid by visitors, not residents. And we have to do something to recover all the millions we spend on visitors that impact our roads, beaches, parking, and public safety. We cannot stop people from coming, but this is the one of the best ways to make sure visitors pay their fair share”.

51.5%

34.0%

14.5%
Agree with Smith Agree with Jones Unsure
71 27
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Demographics
80 28
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Respondent demographics by gender, age, ethnicity, party, education, years of residency, vote propensity, and birthplace

48.8%

51.3%
Male
Female
Gender

10.3%

6.0%

8.3%

27.8%

47.8%
18-29
30-39
40-49
50-64
65+
Age

6.0%

83.0%

4.3%

6.8%
Latino/Hispanic
White/Caucasian
Asian/Pacific
Islander
Other
Ethnicity

46.8%

29.3%

17.0%

7.0%
Democrat
Republican
No Party
Preference
Other
Party

59.7%

40.3%
Non-college
College
Education

48.5%

14.0%

13.8%

8.8%

8.8%

2.5%

3.8%
5 out of 5
4 out of 5
3 out of 5
2 out of 5
1 out of 5
New Perfect Voter
New Registrant
Vote propensity

82.5%

17.5%
US born
Foreign born
Birth Origin
81 0.8%

8.1%

10.9%

7.6%

7.1%

65.6%
Less than 1 year
1 to 5 years
6 to 10 years
11 to 15 years
16 to 20 years
21 years and over
Years of residency
29 29 of 162
Questions?
Adam Probolsky, President
O: 949-855-6400 | M: 949-697-6726
E: [email protected]
Sergio Martinez, Senior Research Analyst
E: [email protected]
Opinion Research on
Elections and Public Policy

PROBOLSKY RESEARCH
23 Corporate Plaza Suite 150 Newport Beach CA 92660
Newport Beach
(949) 855-6400
San Francisco
(415) 870-8150
Washington DC
(202) 559-0270
30 30 of 162

STAFF REPORT
Meeting Date:

June 9, 2026

STUDY SESSION
5 SUBJECT: 2026 SURVEY RESULTS, COMMUNITY OUTREACH UPDATE, AND DIRECT

STAFF WHETHER TO RETURN FOR FURTHER CITY COUNCIL
CONSIDERATION OF ANY POTENTIAL NOVEMBER 2026 REVENUE BALLOT

MEASURE
RECOMMENDATION: It is recommended that the City Council:

1. Receive a presentation on the results of the 2026 community survey from Probolsky Research;

2. Receive an update on the community outreach efforts conducted from February through May 2026, including four Community Town Hall meetings;

3. Discuss the three potential revenue measures evaluated in the survey: (1) a Transient Occupancy Tax increase, (2) a Sales Tax increase, and (3) a Business License Tax measure for bars and restaurants;

4. Provide direction to staff regarding whether to return to the City Council on July 7, 2026, with an agenda item to consider placing one or more revenue measures on the November 3, 2026, General Municipal Election ballot; and

5. If direction is given to bring any measure(s) forward, continue the Council Survey Ad Hoc Committee to work with staff and consultants on public education and outreach, assist in drafting final ballot measure language, and assist in preparing any resolutions and ordinances necessary to place the measure(s) on the November 3, 2026, ballot.

SUMMARY OF THE MATTER
This report provides the City Council with the results of the 2026 community survey conducted by Probolsky Research (Attachment 1), a summary of the community outreach activities conducted between February and May 2026, and information on three potential revenue measures that could be considered for placement on the November 3, 2026, General Municipal Election ballot. The three measures evaluated are an increase to the Transient Occupancy Tax (TOT), a local Sales Tax measure, and a Business License Tax measure applied to bars and restaurants.

The City Council is being asked to receive the information presented and provide direction to staff on whether to return at a future meeting (anticipated July 7, 2026) with resolutions to place one or more measures on the November 2026 ballot. Pursuant to California Government Code Section 53724 and California Elections Code Section 9222, a two-thirds (2/3) vote of the City Council (four affirmative votes for a five-member Council) is required to place a general tax measure on the ballot, and a general tax measure requires a simple majority (50% + 1) for voter approval.

Revenue Measure Survey Results at a Glance:
• Transient Occupancy Tax (12% → 14%, ~$3.0M annual): Strongest and most stable support – 74% initial yes, 75% informed yes, with 58% of informed-yes voters indicating a "definite" yes.

Attachment 4
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2026 SURVEY RESULTS, COMMUNITY OUTREACH UPDATE, AND CONSIDERATION OF POTENTIAL NOVEMBER 2026 REVENUE BALLOT MEASURE
June 9, 2026

• Sales Tax (1% local add-on, ~$7.8M annual): 47% initial yes / 49% no; 49% informed yes / 47% no. Significant improvement from October 2025 (informed yes up from 42.3%), but still short of the simple majority.
• Business License Tax (Bars & Restaurants, ~$8.6M annual): Weakest of the three – 44% initial yes / 48% no; no informed re-vote was conducted.
• Year-over-year trend: All three measures showed improved voter support from the October 2025 survey to the May 2026 survey, with the Sales Tax measure showing the most consequential movement (informed vote shifted from losing by approximately 2 points to leading by approximately 2 points).

There is no direct fiscal impact associated with receiving the report and providing direction. Costs associated with placing measures on the November 2026 ballot, including ballot printing and election services, would be brought forward as part of any future resolution placing the measure(s) on the ballot.

Alternatives: The Council may also direct staff to defer further consideration to a future election cycle.

DISCUSSION
Background
On February 27, 2024, the City Council directed staff to retain a community survey consultant and appointed a Council Ad Hoc Committee to work with staff in developing the survey objectives. Probolsky Research conducted a community survey in 2024 to evaluate potential revenue measures, and the City Council subsequently considered placing measures on the November 2024 ballot.

Since that time, the City's fiscal pressures have continued to grow. While balanced, the proposed Fiscal Year 2026-27 budget reflects rising costs for public safety staffing, wildfire mitigation, fuel modification, infrastructure maintenance, and construction, CalPERS pension obligations and insurance. To maintain a balanced budget, the proposed budget eliminates up to eight (8) positions, reduce contracts and capital outlay, and takes a conservative approach to revenue projections. Notable factors causing the fiscal pressures include reduced sales tax and transient occupancy tax receipts, the added public safety and other costs associated with mitigating visitor impacts, and costs related to the updating of aging infrastructure the implementation of the Facilities Master Plan (estimated at approximately $400 million over time and $25 million in the next five fiscal years).

In recognition of the City's long-term structural revenue needs, the City Council authorized renewed community outreach and a refreshed survey to evaluate community priorities and willingness to support locally controlled revenue measures.

Community Outreach Activities (February – May 2026)
Beginning in February 2026, City staff conducted an extensive community outreach campaign designed to inform residents about City services, infrastructure needs, the fiscal outlook, and potential revenue options, and to gather community feedback. The campaign included four Community Town Hall meetings (three in32 32 of 162
2026 SURVEY RESULTS, COMMUNITY OUTREACH UPDATE, AND CONSIDERATION OF POTENTIAL NOVEMBER 2026 REVENUE BALLOT MEASURE
June 9, 2026

person and one virtual), eight smaller “ask anything” neighborhood meetings, meetings with Visit Laguna Beach, presentations at the Chamber of Commerce Government Affairs Committee, an ongoing online community survey through the City website, and presentations posted on the City's Community Outreach webpage. Two Town Hall meetings were recorded and made publicly available on the City’s YouTube Channel, along with the slide-deck presentation for each town hall. The webpage highlighting each meeting can be found here https://www.lagunabeachcity.net/our-initiatives/community-outreach.

A summary of outreach activities is provided below with additional details provided in Attachment 2:

Date Outreach Activity
February 19,
2026
In-person Town Hall – Overview of City services, infrastructure, fiscal outlook, and introduction to potential revenue measures.

March 9, 2026 In-person Town Hall – Continued discussion of fiscal conditions; introduced Charter City concept; community feedback on parking, downtown traffic, and TOT comparisons.

April 16, 2026 In-person Town Hall – Focused on infrastructure, undergrounding, wildfire mitigation, and revenue options. Robust Q&A on enforcement, beach maintenance, and economic vitality.

April 28, 2026 City Council action – Council decided not to pursue a City Charter measure for the November 2026 ballot.

May 5, 2026 Meeting with Hotel – City Staff met with Visit Laguna Beach and representatives from local hotels to present the information provided at the Town Halls, present the potential ballot measures, and gather input.

May 19–27,
2026
Probolsky Research conducted a statistically valid community survey of 400 likely November 2026 voters whichwas a follow-up survey to the one conducted by Probolsky in the fall of 2025.

May 20, 2026 Virtual Zoom Town Hall – City Manager and Assistant City Manager presented the fiscal outlook, infrastructure needs, and three potential revenue measures (TOT, Sales Tax, Business License Tax) to approximately 60 attendees.

Ongoing An online community survey hosted on the City webpage for residents unable to attend Town Halls.

Recurring Community Themes. Across all four Town Halls, several themes were raised consistently by residents:
• Concern that visitors and day-trippers are not paying their fair share of the cost of services they generate.
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• Strong interest in underground utilities, including along primary evacuation routes, to reduce wildfire risk.
• Questions about whether the City has sufficiently reduced spending before considering new taxes. • Questions about capital choices, such as the investment in the Promenade, and the disposition of the Community and Recreation Center (CRC).
• Interest in parking management (including increased rates), more aggressive parking enforcement, and the potential use of the ACT V lot for employee parking. • Concern about the long-term funding of public safety services (Police, Fire, and Marine Safety). • Concern about aging City facilities, including fire stations, the library, and community centers. • Interest in maintaining the City's character, including local businesses, while addressing increasing visitor impacts.

Hotel and Visit Laguna Beach Meeting
In addition to the general community outreach, City staff met with Visit Laguna Beach and representative from the hotels on May 5, 2026, to present the potential revenue measure and gather input. Because hotels are the primary collectors of the Transient Occupancy Tax and have direct visibility into competitive market dynamics that affect TOT revenue projections, their input is included here as a separate stakeholder consideration for the City Council. Key points raised by hotel representatives included the following:
• Hotel representatives emphasized that Laguna Beach’s lodging industry operates in an increasingly competitive regional market and expressed concern that further increases to the Transient Occupancy Tax could affect the City’s ability to compete for overnight visitors, conferences, group bookings, and special events. Representatives noted that lodging taxes are highly visible to consumers and event planners and, unlike most other local taxes, are paid directly by visitors at the point of purchase. They indicated that maintaining Laguna Beach’s competitiveness as a visitor destination is important to sustaining hotel occupancy, visitor spending, tourism-related employment, and the local economic benefits generated by overnight guests throughout the community. Representatives noted that Laguna Beach’s existing TOT rate is already among the highest in Orange County and they also have the California Tourism Association tax and expressed concern that additional increases may place the City at a competitive disadvantage relative to neighboring coastal destinations. 2026 Community Survey – Methodology and Results
Methodology. Probolsky Research conducted a statistically valid community survey of 400 likely November 2026 General Election voters from May 19 to May 27, 2026. The survey was roughly 20 minutes in length and administered in English and Spanish by phone (34%) and online via email and text-to-web (67%). The sample was drawn from data obtained from the Orange County Registrar of Voters and matched to the demographics of likely 2026 General Election voters in Laguna Beach. The overall margin of error is approximately ±5% at the 95% confidence interval.
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Key Findings.
• 75% of voters rate the overall job the City government is doing as good or fair. • Reducing wildfire risk and maintaining parks, trails, and open space are the most important priorities to voters. Reducing wildfire risk also shows the largest gap between importance and current satisfaction.
• 64% of voters believe the City has a great or some need for additional funds to maintain current service levels.
• Voters expressed concern about the impacts of tourists and traffic congestion on Coast Highway and Laguna Canyon Road.
• 54% support the City taking ownership of Laguna Canyon Road along with the associated financial responsibilities, with most expressing ‘somewhat’ rather than ‘strongly’ support. • 61% support changes to the City’s land use code to allow more housing sites Downtown or along Laguna Canyon Road in response to State housing law requirements. • 88% say it is important to maintain a local 24/7 emergency room in Laguna Beach, primarily ‘somewhat’ important.

Revenue Measures Evaluated in the Survey
The survey tested three potential revenue measures. Each measure was presented to respondents twice – first as an initial vote, then again as an informed vote after voters heard positive and negative messages about the measure.

To be clear, the reason that the survey included persuasive messaging was to test the impacts of arguments both in favor and against possible measures, not to skew the results. It would not make any sense to purposefully seek responses that are not consistent with how residents and voters are feeling.

A summary of the survey results is provided in the table below, with detailed information following:

Measure Annual
Revenue
Initial Yes Initial No Informed
Yes
Informed
No
Transient
Occupancy Tax
(12% → 14%)
~$3.0M 74% 22% 75% 21%
Sales Tax (1% local
add-on)
~$7.8M 47% 49% 49% 47%
Business License
Tax (Bars &
Restaurants)
~$8.6M 44% 48% Not retested—
Note: Percentages may not total 100% due to rounding and inclusion of “unsure” responses. 35 35 of 162
2026 SURVEY RESULTS, COMMUNITY OUTREACH UPDATE, AND CONSIDERATION OF POTENTIAL NOVEMBER 2026 REVENUE BALLOT MEASURE
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Measure 1: Transient Occupancy Tax (TOT) Increase
The TOT measure tested would increase the City’s hotel and short-term rental tax (paid by hotel guests and short-term rental occupants) from 12% to 14%, generating an estimated $3.0 million annually. The City currently has a combined effective TOT rate of 14% – 12% for the City of Laguna Beach and 2% for the Laguna Beach Tourism Marketing District (LBTMD). The proposed measure would increase only the City’s portion.

Survey Results: 74% of voters initially indicated they would vote yes on the TOT measure, with 75% indicating yes on the informed vote after hearing positive and negative messages. Among those who said they would vote yes on the informed vote, 58% said they would 'definitely' vote yes, indicating relatively firm support. The strongest message tested was that the TOT is paid only by hotel and short-term rental guests, not by residents, 68% of voters said this information made them more likely to vote yes. The negative message that the TOT would hurt local hotels moved relatively few voters. In a head-to-head test, 67% of voters agreed with the pro-TOT statement that the increase 'is paid by visitors and will help us stay in front of visitor impacts.'
Measure 2: Sales Tax Increase
The Sales Tax measure tested would establish a one percent (1%) local sales tax, increasing the total sales tax rate in Laguna Beach from 7.75% to 8.75%, generating an estimated $7.8 million annually. According to City data, approximately 55% of sales tax collected in Laguna Beach is paid by tourists and visitors from outside the City.

Survey Results: On the initial vote, 47% of voters indicated they would vote yes, and 49% indicated they would vote no. Of those opposing, 68% indicated they would 'definitely' vote no, suggesting hardened opposition. After hearing positive and negative messages, the informed vote showed 49% yes and 47% no, essentially unchanged. The most effective positive message related to wildfire risk reduction (60% more likely to vote yes), followed by tourist contribution to sales tax revenue (48% more likely to vote yes). The negative message that the tax would 'hurt working families and fixed-income seniors' moved 36.5% of voters to less likely to vote yes. In the head-to-head Archer/Todd statement test, 46% agreed with the antitax 'Archer' statement.

Measure 3: Business License Tax (BLT) for Bars and Restaurants The BLT measure tested would update the City's business license tax for bars and restaurants by removing the current $1,650 annual cap and imposing a graduated tax on gross receipts, generating an estimated $8.6 million annually. The current business license tax structure for businesses paying based on gross receipts (Groups 1, 2, and 3) has not been adjusted since 1996.

Survey Results: On the initial vote, 44% of voters indicated they would vote yes, and 48% indicated they would vote no. Of those opposing, 61% indicated they would 'definitely' vote no. No informed re-vote was conducted on this measure. In the head-to-head 'Smith/Jones' statement test, 46% agreed with the anti-BLT 'Smith' statement that the increase would be 'a burden on businesses.' 36 36 of 162
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Background Information on Current Tax Structures
Transient Occupancy Tax. The City of Laguna Beach imposes a combined 14% charge on overnight visitor accomodations, consisting of: a 12% transient occupancy tax (TOT) imposed by the City (allocated to the City's General Fund, the Capital Improvement Fund, and the Measure LL Fund) and a 2% assessment imposed through the Laguna Beach Tourism Marketing District (LBTMD). These charges are paid by hotel and motel guests, as well as short-term rental occupants, for stays of thirty days or less. The proposed measure would increase the City's TOT rate from 12% to 14%, resulting in a combined effective rate of 16%.

Sales Tax. The sales tax rate in Laguna Beach is 7.75%, which is similar to the rate in a majority of Orange County cities. The City's share of the sales tax is 1% of the 7.75% rate. The remaining 6.75% is distributed among the County of Orange, the State of California, and the Orange County Transportation Authority. A number of Orange County cities ( 11 by the most recent count) have implemented local sales tax measures to fund services exclusively within their cities. If a sales tax measure were to pass, unlike the 7.75% general sales tax, 100% of the revenues generated (initially estimated to be $7.8 million per year) would remain with the City.

Business License Tax. Laguna Beach Municipal Code Chapter 5.08 outlines the taxation of businesses based on gross receipts, with provisions for both annual and flat-rate taxes. Businesses are categorized into three groups: Group 1 (retail, wholesale, manufacturing, artists) taxed at $0.44 per $1,000 with a cap of $1,650; Group 2 (personal services, recreation, entertainment) at $0.88 per $1,000 with a cap of $1,650; and Group 3 (professional practices) at $1.10 per $1,000 with a cap of $1,650. The flat-rate tax is adjusted annually based on CPI, but the Group 1, 2, and 3 rates and caps have not changed since 1996. The City receives approximately $1 million annually in business license tax revenue.

Other Context for Council Consideration
Wildfire Mitigation. Almost the entire city falls within high or very high fire hazard severity zones. The City has constructed 27 fuel modification zones (now in maintenance mode) and has two additional zones (Diamond Crest View and Hobo Canyon) under development. Following the 2025 Palisades and Eaton fires, the City invested an additional $4 million in fuel modification, utility undergrounding, AI-assisted fire detection technology, and expanded outdoor warning sirens. The upcoming budget includes an additional $2 million toward wildfire safety. Reducing wildfire risk consistently ranks as the top priority among survey respondents.

Facilities Master Plan. The City's Facilities Master Plan identifies an estimated $400 million in long-term needs for the maintenance, modernization, and replacement of aging public facilities, including fire stations (the oldest dating to the 1950s–60s), the Police Department, the Branch Library, community centers, and Lang Park. Tranche 1 priorities (Years 0–5) are estimated at approximately $25 million. .
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Utility Undergrounding. The City routinely contributes up to 20% of the total cost of a resident-driven undergrounding assessment district. With at least three major parts of the community left to underground, these costs (at 20% of total costs) may run into the tens of millions of dollars. Later in 2026, the City’s consultant will return with better cost parameters as to the specific costs per parcel or residence for the areas remaining to be undergrounded in Laguna Beach.

Addressing Visitor Impacts. The community is relatively small compared to the amount of visitors who arrive here annually. As noted, visitors pay some of the costs of their beach visits, but not all. Parking, sales tax, and hotel taxes are all contributed by visitors in part – but the size of our Police, Marine Safety, and other services are high in large part because of services to visitors.

Ballot Measure Considerations
Voting Threshold for Ballot Placement. Pursuant to California Government Code Section 53724 and California Elections Code Section 9222, a two-thirds (2/3) vote of the City Council membership (four affirmative votes for a five-member Council) is required to place a general tax measure on the ballot. Per California Constitution Article XIIIC, a general tax requires a simple majority (50% + 1) of voters for approval.

General Tax vs. Special Tax. All three measures evaluated are general tax measures, meaning the revenue would be deposited into the General Fund and could be used for any general governmental purpose. General taxes legally cannot be restricted by the ballot question itself to specific uses; however, the City Council may adopt an accompanying resolution stating the intended uses of the funds. A special tax restricting funds to specified purposes would require a two-thirds (2/3) supermajority of voters for approval, rather than a simple majority.

Multiple Measures on the Same Ballot. The City Council may place one, two, or three measures on the November 2026 ballot. Each measure would be evaluated independently by voters. Staff notes that polling and election research generally indicate that voters may experience 'tax fatigue' when multiple revenue measures are presented on the same ballot, which can reduce support for each measure compared to standalone placement.

Year-Over-Year Comparison: 2025 vs. 2026 Survey Results Probolsky Research conducted a similar voter survey in October 2025, which tested the same three potential revenue measures for transient occupancy tax and sales tax and a modified verion of a business license tax measure. Comparing the two surveys provides important context regarding how voter sentiment has shifted over the past seven months and how each measure is trending heading into the November 2026 election:
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2026 SURVEY RESULTS, COMMUNITY OUTREACH UPDATE, AND CONSIDERATION OF POTENTIAL NOVEMBER 2026 REVENUE BALLOT MEASURE
June 9, 2026

Measure Vote Stage 2025 Yes 2026 Yes Change Crosses 50%? Transient Occupancy Tax
(12% → 14%)
Initial Yes 66.5% 74% +7.5 pts Yes (both years)
Informed Yes 68.3% 75% +6.7 pts Yes (both years)
Sales Tax (1% local add-on) Initial Yes 39.8% 47% +7.2 pts No (both years) Informed Yes 42.3% 49% +6.7 pts Closer in 2026
Business License Tax (Bars
& Restaurants)*
Initial Yes 42.3% 44% +1.7 pts No (both years)
Informed Yes 47.0% Not retested— —
* Note on the Business License Tax: The 2025 survey tested a BLT measure projected to generate approximately $1.2 million annually, while the 2026 survey tested a larger measure projected to generate approximately $8.6 million annually. The two measures are not directly comparable due to the difference in scope.

Key Observations from Year-Over-Year Comparison:
• Sales Tax measure shows the most significant positive movement. Initial yes support grew from

39.8% to 47% (+7.2 points), and informed yes support grew from 42.3% to 49% (+6.7 points).

Notably, the informed vote in 2025 showed yes losing to no by approximately 2 points (42.3% to

44.3%), while in 2026 the informed vote shows yes leading no by approximately 2 points (49% to 47%) – representing a meaningful shift in voter sentiment toward the measure, though still short of the simple majority required for passage.
• Transient Occupancy Tax measure also strengthened across both stages, with initial yes support up 7.5 points (66.5% to 74%) and informed yes support up 6.7 points (68.3% to 75%). The TOT remained the strongest-supported measure in both years and now exceeds 75% on the informed vote – a level generally considered to provide a substantial cushion for general election dynamics. • Business License Tax measure showed only modest improvement on the initial vote (+1.7 points).

However, the 2026 measure tested a substantially larger revenue measure ($8.6 million versus $1.2 million in 2025), and remained the weakest of the three measures in both surveys.

Possible Contributing Factors. Staff and the consultant have identified several factors that may have contributed to the year-over-year improvement, including the impact of the January 2025 Palisades and Eaton fires on regional perceptions of wildfire risk; growing public awareness of the public safety and other costs associated with mitigating visitor impacts; sustained community outreach including four Town Halls between February and May 2026; and refinements to the ballot question language and accompanying messaging tested in the 2026 survey.
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Survey Conclusion
Based on the 2026 survey results and the year-over-year comparison with the 2025 survey, the TOT measure received the strongest and most stable voter support (74% initial yes, 75% informed yes), with the firmest 'definite' yes responses, and showed continued growth over 2025. The Sales Tax measure showed the most significant year-over-year improvement and now achieves a slight majority lead on the informed vote (49% yes to 47% no), although it has not yet crossed the 50% threshold. Opposition to the sales tax remains hardened, with 68% of 'no' voters indicating 'definitely no.' The BLT measure showed the weakest support of the three (44% yes, 48% no) and was not retested with an informed vote. The full 2026 survey results presentation is provided as Attachment 1, and the 2025 survey results are provided as Attachment 2 for reference.

Next Steps
Staff is requesting that the City Council provide direction on whether to return at a future Council meeting in later June or early July 2026 with one or more resolutions to place revenue measure(s) on the November 3, 2026, ballot. If direction is given to move forward, it is further recommended that the Council Revenue Ad Hoc Committee continue its work with staff and consultants to develop public education materials, refine ballot question language, and prepare the resolutions and ordinances necessary to place the measure(s) on the ballot.

Should the Council direct staff to bring forward one or more measures, the following timeline outlines the key milestones and statutory deadlines, with the complete County Election Calendar included in Attachment 5:

Event Scheduled Date
City Council Workshop – Review of survey results,
community outreach, and revenue measure options
June 9, 2026
Draft ballot question language and ordinances (if
Council directs)
July 7, 2026
Council action on ballot measure resolution(s); 2/3 vote of Council required to place general tax on ballot (four affirmative votes for a five-member Council)
June 23 or July 7, 2026 (latest is no
later than 88 days before election but
the OC Registrar sets an earlier
deadline)
Last day to submit City Attorney's impartial analysis
and City Manager's fiscal analysis
August 7, 2026
Filing period for arguments in favor, against, and
rebuttals
August 12 2026
General Municipal Election – Election Day Tuesday, November 3, 2026 40 40 of 162
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Revenue Ad Hoc Committee
Staff would like to express its sincere appreciation to the Council Revenue Ad Hoc Committee, consisting of Mayor Orgill and Councilmember Whalen, for their substantial time, thoughtful guidance, and leadership throughout this process. Should the City Council direct staff to move forward with placing one or more measures on the November 3, 2026 ballot, staff respectfully requests that the Revenue Ad Hoc Committee continue to assist staff and the City's consultants with refining ballot question language, developing public education materials, and preparing the resolutions and ordinances necessary to place the measure(s) before the voters.

FINANCIAL ANALYSIS
There is no direct fiscal impact as a result of the recommended action of receiving the report and providing direction to staff. Costs associated with placing measure(s) on the November 2026 ballot, including continued consultant services, City Attorney services for ballot question drafting and impartial analyses, ballot printing, and County election services, would be brought forward as part of any future resolution(s) adopting the measure(s).

Estimated Annual Revenue if Approved by Voters:
• Transient Occupancy Tax (12% → 14%): approximately $3.0 million annually. • Sales Tax (1% local add-on): approximately $7.8 million annually. • Business License Tax (bars and restaurants): approximately $8.6 million annually.

All revenues from any of the measures, if approved, would be deposited into the City's General Fund.

ALIGNMENT WITH CITY COUNCIL GOALS AND PRIORITIES
This action supports the City Council's 2026 Strategic Priorities, including Fiscal Sustainability, Public Safety and Emergency Preparedness, and Infrastructure Reinvestment. The community outreach and survey work directly support transparent, informed decision-making regarding the City's long-term financial sustainability and its ability to maintain the services and infrastructure that Laguna Beach residents value most.

ENVIRONMENTAL ANALYSIS
The recommended action is exempt from review under the California Environmental Quality Act (CEQA) pursuant to Sections 15378(b)(3) and 15061(b)(3) of the State CEQA Guidelines, as receiving information and providing direction to staff is not a 'project' under CEQA and has no potential to result in a direct or indirect physical change in the environment.

ATTACHMENTS

1. Probolsky Research – 2026 Voter Poll Results Presentation (Pgs. 12-45)

2. Community Outreach Summary (February – May 2026 Town Halls) (Pgs. 46-48)

3. Comparison of Transient Occupancy Tax Rates in Orange County Cities (Pg. 49)

4. Comparison of Sales Tax Rates in Orange County Cities (Pgs. 50-51)

5. Calendar for Orange County General Election, November 3, 2026 (Pgs. 52-54) 41 41 of 162
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Submitted By:
. Approved: .David A Kiff
Gavin Curran, Assistant City
Manager
Dave Kiff, City Manager
Report Prepared By: Coordinated With:

Gavin Curran, Assistant City Manager
42 42 of 162
City of Laguna Beach
Voter Poll
Results Presentation
May 2026
Opinion Research on
Elections and Public Policy

PROBOLSKY RESEARCH
23 Corporate Plaza Suite 150 Newport Beach CA 92660
Newport Beach
(949) 855-6400
San Francisco
(415) 870-8150
Washington DC
(202) 559-0270
43 43 of 162
City of Laguna Beach - Voter Poll
Survey Methodology*
1 Survey Details
Phone (landline and mobile)
Online (email and text to web) Mode
Language English and Spanish
Length 20 minutes
Target Respondents Likely November 2026 General Election voters Survey Fielding May 19 - 27, 2026
Margin of Error +/-5%
Survey Participants 400
Sample
The sample was compiled from data obtained from the
Orange County Registrar of Voters. We called, emailed,
and texted voters. We matched the demographics of City of Laguna Beach likely 2026 General Election voters.

Data Collection Explained
Interviews were conducted by phone (34%) and online
methods (67%). Phone participants were interviewed
through landline (25%) and mobile (75%) calls. Online
participants were invited by email (50%) and text message (50%) to access the survey by computer, tablet, or smart phone.

Respondents in all modes chose their preferred language, English (98%) and Spanish (2%).

Security measures precluded individuals from completing the survey more than once.
*Due to rounding, totals shown on charts may not add up to 100% Probolsky Research is a Latina- and woman-owned market and opinion research firm with corporate, election, government, and nonprofit clients. 44 44 of 162
2 39.0% 36.3%

22.0%

2.8%
Good Fair Poor Unsure
75% rate the overall job the Laguna Beach City
government is doing as good or fair
Question 1: How would you rate the job the Laguna Beach City government is doing overall?

41.3%

50.5%

39.0%

39.5%

27.8%

36.3 17.0% 18.8% 22.0%
2024 2025 2026
Good
Fair
Poor
75%
45 45 of 162
Reducing wildfire risk and maintaining parks, trails,
and open space are the most important priorities
Question 2: Now we have a list of priorities you might have for Laguna Beach, please indicate which are very important to you personally. Select all that apply. 3 61.0%

53.8%

48.3%

41.5%

39.5%

37.8%

35.8%

32.3%

22.8%

22.0%

19.8%

19.3%

0.5%
Reducing wildfire risk
Maintaining parks, trails, and open space
Maintaining streets and roads, sidewalks, crosswalks
Balancing the City budget
Maintaining and improving police, fire, marine safety services and facilities
Keeping local taxes low
Undergrounding powerlines on Laguna Canyon Road for wildfire safety
Addressing homelessness
Supporting affordable housing for seniors and artists
Providing additional public parking
Encouraging improved wireless services in the City
Other
None of these
46 46 of 162
4 Voters are most satisfied with maintaining and improving police, fire, marine safety services and facilities
Question 3: Please indicate which of the following priorities you are personally satisfied with how the City of Laguna Beach is. Select all that apply.

45.3%

39.3%

31.5%

27.8%

19.5%

12.5%

12.0%

10.8%

10.5%

10.0%

9.8%

3.5%

10.0%

3.5%
Maintaining and improving police, fire, marine safety services and facilities Maintaining parks, trails, and open space
Maintaining streets and roads, sidewalks, crosswalks
Reducing wildfire risk
Addressing homelessness
Supporting affordable housing for seniors and artists
Balancing the City budget
Undergrounding powerlines on Laguna Canyon Road for wildfire safety Encouraging improved wireless services in the City
Keeping local taxes low
Providing additional public parking
Other
None of these
Unsure
47 47 of 162
5 61.0%

41.5%

37.8%

35.8%

48.3%

53.8%

32.3%

22.0%

22.8%

19.8%

39.5%

27.8%

12.0%

10.0%

10.8%

31.5%

39.3%

19.5%

9.8%

12.5%

10.5%

45.3%
Reducing wildfire risk
Balancing the City budget
Keeping local taxes low
Undergrounding powerlines on Laguna Canyon Road for wildfire safety Maintaining streets and roads, sidewalks, crosswalks
Maintaining parks, trails, and open space
Addressing homelessness
Providing additional public parking
Supporting affordable housing for seniors and artists
Encouraging improved wireless services in the City
Maintaining and improving police, fire, marine safety services and facilities Importance Satisfaction

33.2%

29.5%

27.8%

25.0%

16.8%

14.5%

12.8%

12.2%

10.3%

9.3%
-5.8%
Question 2: Now we have a list of priorities you might have for Laguna Beach, please indicate which are very important to you personally. Select all that apply.

Question 3: Please indicate which of the following priorities you are personally satisfied with how the City of Laguna Beach is. Select all that apply.

The largest gap between importance and satisfaction is
in reducing wildfire risk
48 48 of 162
The impact of tourists and traffic congestion on Coast Highway and Laguna Canyon Road are the most concerning issues
Question 4: Now we have a list of possible concerns for Laguna Beach residents, please indicate which are concerning to you. Select all that apply. 6 61.3%

52.8%

47.0%

44.0%

35.8%

32.3%

25.8%

25.3%

23.0%

22.8%

22.3%

21.3%

18.5%

15.3%

11.0%

6.0%

5.5%
The impact of tourists on the community
Traffic congestion on Coast Highway and Laguna Canyon Road Traffic congestion on local streets and roads
Maintaining the character of Laguna Beach
Wildfire and evacuation safety
Waste and inefficiency in local government
Hazards of utility poles and above ground wires throughout the City Pedestrian safety
A lack of affordable housing
The amount we pay in local taxes
Not enough parking
The impact of homelessness
Crime and public safety
Lack of wireless service availability
Use and availability of recreation facilities
9-1-1 emergency response times
Other
49 49 of 162
7 9.0%

39.3%

15.8%

24.3%

11.8%
Great need Some need Little need No real need Unsure
64% think there is a need for additional funds to
provide the level of City services and facilities
Question 5: Do you think the City has a great need, some need, a little need, or no real need for additional funds to maintain the level of City services and facilities that Laguna Beach residents use?
64%

63.0%

61.0%

64.1%

8.0% 15.8%

11.8 28.8% 23.5%

24.3%
2024 2025 2026
Need
Unsure
No real need
50 50 of 162
54% support the City taking ownership of Laguna
Canyon Road along with the financial responsibilities
The City is in discussions with Caltrans about taking ownership of Laguna Canyon Road from El Toro Road to Coast Highway. Local control could allow the city to underground power lines to reduce fire risk and prevent utility pole collisions, with potential payment from Southern California Edison of millions in undergrounding dollars. Caltrans could also give the City approximately $15 million in the process. However, the city would then assume responsibility for ongoing operating costs and the liability of owning the road.

Question 6: Do you support or oppose the city taking ownership of Laguna Canyon Road along with the financial responsibilities? 8 53.8%

37.0%

9.3%
Support Oppose Unsure
51 51 of 162
61% support changes to the City’s land use code to allow more housing sites Downtown or along Laguna Canyon Road
New state laws require Laguna Beach to identify more sites which could accommodate housing. Potential locations include allowing generally some second-story units above the central part of downtown, adding some third-story units along the edges of downtown, and allowing multi-family housing of two or three stories in Laguna Canyon between Art-A-Fair and Laguna College of Art + Design Main Campus. If the City does not site housing in these locations, it must identify the same amount of housing sites in other locations across Laguna Beach.

Question 7: Do you support or oppose changes to the City’s land use code to allow for more housing sites Downtown and along Laguna Canyon Road? 9 48.3%

34.8%

34.5%

4.5%
Support more housing along Laguna Canyon Road
Support more housing Downtown
Oppose more housing
Unsure
61%
Selected at least one
“Support” option
52 52 of 162
70% say it is important for the city to upgrade and
retrofit aging facilities
Question 8: How important is it for the city to upgrade and retrofit aging facilities (such as fire stations, the library, and community centers) to ensure they comply with current and future earthquake and other safety standards?
10 70.3%

25.0%

4.8%
Important Unimportant Unsure

76.8%

70.3%

2.8%% 4.8%

20.5% 25.0%
2025 2026
Important
Unsure
Unimportant
53 53 of 162
88% say it is important that there is a local 24/7
emergency room in Laguna Beach
Question 9: Providence St Josephs, which operates Mission Hospital Laguna Beach, said that, by 2030, it will be closing the acute care hospital and changing the services that it provides to the community. Providence proposes a community health center, with diagnostic testing, outpatient surgery, and urgent care. But they have said that it will not operate a traditional 24/7 emergency room in Laguna Beach. For context, the Laguna Beach emergency room sees about 17,000 patients per year, but no one is routed there for heart attacks or strokes – ambulances take those patients directly to larger hospitals. How important is it to you that there is a local 24/7 emergency room in Laguna Beach? 11 87.8%

10.8%

1.5%
Important Unimportant Unsure
54 54 of 162
Initial vote: 49% would vote no on a one percent
sales tax
Here is a potential ballot measure that may be on the ballot in Laguna Beach this year. If the election were held today, please indicate how you would vote.

Question 10: “To help cover the costs of visitors to Laguna Beach, to maintain and improve police and fire response, to reduce wildfire risk by more utility undergrounding along evacuation routes, shall the City of Laguna Beach adopt a measure establishing a one percent sales tax, until ended by voters, providing approximately $7,800,000 annually, with annual independent audits, public disclosure of expenditures, and all funds only for Laguna Beach?” 12 46.5% 48.8%

4.8%
Vote yes Vote no Unsure
55 55 of 162

26.3%

10.5% 26.3%

36.8% More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know
52% are more likely to vote yes on the sales tax knowing that the measure incorporates fiscal accountability
Now we have some statements about the measure. Please indicate whether this information makes you more likely or less likely to vote for the ballot measure.

Question 14: The measure incorporates fiscal accountability including annual independent financial audits, public review of expenditures and all funds remaining in the City of Laguna Beach and cannot be taken by Sacramento, the County of Orange, or any other government agency. 13 51.5%

31.8%

11.3%

5.5%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know

26.7%

49.7%

19.5%

4.1%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know
Initially said unsure
Initially vote no
56 56 of 162

34.4%

42.1%

19.5%

4.1%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know

31.6%

31.6%

10.5%

26.3% More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know
60% are more likely to vote yes on the sales tax knowing that the measure could allow the City to reduce wildfire risks Now we have some statements about the measure. Please indicate whether this information makes you more likely or less likely to vote for the ballot measure.

Question 15: Laguna Beach faces significant risk of wildfire. The measure could allow the city to reduce wildfire risks by funding vegetation management, evacuation planning, and other fire safety improvements.
14 59.5%

25.8%

10.5%

4.3%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know Initially said unsure
Initially vote no
57 57 of 162
51% are more likely to vote yes knowing the measure could fund additional police officers, firefighters, and paramedics Now we have some statements about the measure. Please indicate whether this information makes you more likely or less likely to vote for the ballot measure.

Question 16: Tourists coming to Laguna Beach have caused a 20% increase in calls for service from the police department. Fire department calls have gone up, too. Marine safety also must respond to large crowds. At the same time, the cost of providing public safety services is increasing every year. Funding from this measure could provide additional resources to increase the number of police officers, firefighters, paramedics. 15 50.8%

28.8%

15.3%

5.3%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know Initially said unsure
Initially vote no

24.6%

47.2%

24.1%

4.1%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know

36.8%

21.1%

10.5%

31.6% More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know
58 58 of 162
56% are more likely to vote yes knowing the measure would provide resources to address impacts from day tourists
Now we have some statements about the measure. Please indicate whether this information makes you more likely or less likely to vote for the ballot measure.

Question 17: Without the measure, Laguna Beach’s city government will have a harder and harder time keeping up with the impacts of day tourists – such as littering, loud music in public, smoking on the beach, or parking violations. 16 Initially said unsure
Initially vote no

56.0%

27.3%

13.0%

3.8%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know

29.2%

46.2%

21.5%

3.1%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know

47.4%

15.8%

5.3%

31.6% More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know
59 59 of 162
41% are more likely to vote yes knowing the measure could expand parking options and help direct visitors to available parking outside residential neighborhoods
Now we have some statements about the measure. Please indicate whether this information makes you more likely or less likely to vote for the ballot measure.

Question 18: With new revenue from the measure, the City could build more parking lots, add more meters, pay stations, and technology for people to know where to find available parking away from residential neighborhoods.
17 Initially said unsure
Initially vote no

40.5%

36.0%

19.3%

4.3%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know

19.0%

47.2%

30.3%

3.6%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know

26.3%

21.1%

21.1%

31.6% More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know
60 60 of 162

11.8%

47.7% 35.4%

5.1%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know

5.3%

21.1%

26.3%

47.4%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know
Opinions are mixed about the measure because it would
raise taxes on everyday purchases in Laguna Beach
Now we have some statements about the measure. Please indicate whether this information makes you more likely or less likely to vote for the ballot measure.

Question 19: The measure means everyone who buys things in Laguna Beach will pay higher taxes. As the cost of living rises, this hurts working families and fixed-income seniors the most.
18 Initially said unsure
Initially vote no

24.3%

31.8%

36.5%

7.5%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know
61 61 of 162
19 Message Effectiveness
Positive messages [Percent More Likely to Vote Yes] 2026 2025

59.5% 59.3% *Laguna Beach faces significant risk of wildfire. The measure could allow the city to reduce wildfire risks by funding vegetation management, evacuation planning, and other fire safety improvements.

56.0% - Without the measure, Laguna Beach’s city government will have a harder and harder time keeping up with the impacts of day tourists – such as littering, loud music in public, smoking on the beach, or parking violations.

51.5% 51.8% The measure incorporates fiscal accountability including annual independent financial audits, public review of expenditures and all funds remaining in the City of Laguna Beach and cannot be taken by Sacramento, the County of Orange, or any other government agency.

50.8% 50.8%
*Tourists coming to Laguna Beach have caused a 20% increase in calls for service from the police department. Fire department calls have gone up, too. Marine safety also must respond to large crowds. At the same time, the cost of providing public safety services is increasing every year. Funding from this measure could provide additional resources to increase the number of police officers, firefighters, paramedics.

48.3% 41.3% According to city data approximately 55% of the nearly $7 million sales tax dollars collected in Laguna Beach comes from tourists and visitors from outside the city.

40.5% - With new revenue from the measure, the City could build more parking lots, add more meters, pay stations, and technology for people to know where to find available parking away from residential neighborhoods.

24.3% - The measure means everyone who buys things in Laguna Beach will pay higher taxes. As the cost of living rises, this hurts working families and fixed-income seniors the most.

Negative messages [Percent Less Likely to Vote Yes] 2026 2025

36.5% 50.0% The measure means everyone who buys things in Laguna Beach will pay higher taxes. As the cost of living rises, this hurts working families and fixed-income seniors the most.
*Note: Minor revisions have been made to message wording. 62 62 of 162
Informed vote: 49% would vote yes on a one percent
sales tax
Now, please consider the sales tax measure again.

Question 20: Knowing what you know now, how would you vote on this measure, “To help cover the costs of visitors to Laguna Beach, to maintain and improve police and fire response, to reduce wildfire risk by more utility undergrounding along evacuation routes, shall the City of Laguna Beach adopt a measure establishing a one percent sales tax, until ended by voters, providing approximately $7,800,000 annually, with annual independent audits, public disclosure of expenditures, and all funds only for Laguna Beach?” 20 46.5% 48.8%

4.8%

48.8%

44.5%

6.8%
Vote yes Vote no Unsure
initial Informed initial Informed initial Informed
63 63 of 162
46% agree with Archer in that they already pay enough
in taxes and oppose a sales tax increase
Question 21: Now we have two statements from Laguna Beach residents. Please choose which statement you agree with the most.

Archer: “I already pay enough in taxes. I oppose the sales tax increase. The City should spend the money it already gets more responsibly instead of asking for more.”.

Todd: “I’m worried about being overwhelmed by visitors, and want the City of Laguna Beach to have the resources it needs to protect our community’s future and safety, so I am OK with a sales tax increase to mitigate visitor impacts and to protect us from wildfire.” 21 46.0% 44.0%

10.0%
Agree with Archer Agree with Todd Unsure
64 64 of 162
Initial vote: 74% would vote yes on the measure to
increase Transient Occupancy Tax
Here is a potential ballot measure that may be on the ballot in Laguna Beach next year. If the election were held today, please indicate how you would vote.

Question 22: “To help cover the costs of visitors to Laguna Beach, to maintain and improve police and fire response, to reduce wildfire risk via more utility undergrounding to improve evacuation routes, shall the City of Laguna Beach adopt a measure increasing the transient occupancy (hotel) tax from twelve percent to fourteen percent, until ended by voters, providing approximately $3,000,000 annually, with annual audits, public disclosure of expenditures, and funds only for Laguna Beach?” 22 73.5%

20.3%

6.3%
Vote yes Vote no Unsure
65 65 of 162
68% are more likely to vote yes on the TOT knowing that it is paid only by guests at hotels and short-term rentals Now we have some statements about the measure to increase the city’s Transient Occupancy Tax, otherwise known as a hotel and short-term rental tax. Please indicate whether this information makes you more likely or less likely to vote for the measure.

Question 25: The transient occupancy (hotel) tax is paid only by guests at hotels and short-term rentals like Airbnb - it is not a tax on your home or property. 23 Initially said unsure
Initially vote no

68.0%

20.5%

7.0%4.5%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know

24.7%

48.1%

25.9%

1.2%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know

36.0%

12.0% 12.0%

40.0%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know
66 66 of 162
After hearing that TOT will hurt local hotels, half are undecided on how they will vote
Now we have some statements about the measure to increase the city’s Transient Occupancy Tax, otherwise known as a hotel and short-term rental tax. Please indicate whether this information makes you more likely or less likely to vote for the measure.

Question 26: A transient occupancy (hotel) tax will hurt local hotels because guests could choose to stay in another nearby city. 24 Initially said unsure
Initially vote yes

25.5%

50.3%

19.5%

4.8%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know

27.9%

55.1%

15.3%1.7%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know

12.0%

28.0%

20.0%

40.0%
More likely to vote for
Makes no difference to me
Less likely to vote for
Don’t know
67 67 of 162
25 Message Effectiveness
Positive messages [Percent More Likely to Vote Yes] 2026 2025

68.0% 63.3% The transient occupancy (hotel) tax is paid only by guests at hotels and short-term rentals like Airbnb - it is not a tax on your home or property.

Negative messages [Percent Less Likely to Vote Yes] 2026 2025

19.5% 26.3% A transient occupancy (hotel) tax will hurt local hotels because guests could choose to stay in another nearby city.
*Note: Minor revisions have been made to message wording. 68 68 of 162
Informed vote: 75% would vote yes on the measure to
increase Transient Occupancy Tax
Now here is the measure again. If the election were held today, please indicate how you would vote.

Question 27: “To help cover the costs of visitors to Laguna Beach, to maintain and improve police and fire response, to reduce wildfire risk via more utility undergrounding to improve evacuation routes, shall the City of Laguna Beach adopt a measure increasing the transient occupancy (hotel) tax from twelve percent to fourteen percent, until ended by voters, providing approximately $3,000,000 annually, with annual audits, public disclosure of expenditures, and funds only for Laguna Beach?” 26 73.5%

20.3%

6.3%

75.0%

20.5%

4.5%
Vote yes Vote no Unsure
initial Informed initial Informed initial Informed
69 69 of 162
67% agree with Jones that the TOT increase is paid by
visitors and will help improve services
Question 28: Now we have two statements from Laguna Beach residents. Please choose which statement you agree with the most.

Smith: “The transient occupancy (hotel) tax increase is going to be a burden on business travelers and friends and family who come to visit Laguna Beach. Some might even choose to stay in other cities with lower transient occupancy taxes.”.

Jones: “The new revenue from the transient occupancy (hotel) tax increase is paid by visitors and will help us stay in front of visitor impacts, as well as improving services for Laguna Beach residents without costing residents anything.”
27 23.0%

67.0%

10.0%
Agree with Smith Agree with Jones Unsure
70 70 of 162
48% would vote no on the Business License Tax
measure for bars and restaurants
There is one more potential measure that is an option for the ballot in Laguna Beach this year. If the election were held today, please indicate how you would vote.

Question 29: “To help cover costs of visitors to Laguna Beach, maintain and improve police and fire response, to reduce wildfire risk via more utility undergrounding to improve evacuation routes, shall the City of Laguna Beach adopt a measure updating its business license tax for bars and restaurants by removing the $1,650 annual cap and imposing a graduated tax on gross receipts as set forth in the measure, generating approximately $8,600,000 annually until ended by voters, with all funds used locally?” 28 41.3%

47.5%

11.3%
Vote yes Vote no Unsure
71 71 of 162
46% agree with Smith that the Business License Tax
increase is going to be a burden on businesses
Question 30: Now we have two statements from Laguna Beach residents. Please choose which statement you agree with the most.

Smith: “The Business License Tax increase is going to be a burden on businesses – it may make people decide not to patronize our restaurants and bars, further harming the local economy.“
Jones: “The new revenue from this increase in the Business License Tax will be paid by visitors to directly offset the costs of visitor impacts to the community, and I’m OK with that even though I’ll pay a bit more, too.”
29 46.3%

40.3%

13.5%
Agree with Smith Agree with Jones Unsure
72 72 of 162
56% would vote yes on the Transient Occupancy Tax
measure
Question 31: The Laguna Beach City Council will soon decide whether to place a sales tax measure, transient occupancy (hotel) tax measure, or business license measure on the November 2026 ballot. Please indicate which measure(s) you think should go before the voters? Select all that apply. 30 56.3%

43.0%

23.5%

19.8%

4.5%
Transient Occupancy Tax measure
Sales Tax measure
Business License Tax measure
None of them
Unsure
73 73 of 162
Demographics
31 74
74 of 162
32 Respondent demographics by gender, age group, ethnicity, years of residency, education, place of birth, and party

49.0%

51.0%
Male
Female

9.1%

5.0%

11.3%

29.8%

44.3%
18-29
30-39
40-49
50-64
65+

6.0%

82.5%

5.0%

5.8%

0.8%
Latino/Hispanic
White/Caucasian
Black/African American
Asian/Pacific Islander
Other
Gender Age Group Ethnicity Years of residency
Education Place of Birth Party

47.3%

29.3%

17.5%
Democratic
Republican
No Party Preference

29.8%

70.3%
No college
College

82.5%

8.8%

8.8%
U.S. born
Foreign born
Birthplace unknown

0.8%

5.8%

10.0%

14.8%

6.5%

60.0%

2.3%
Less than 1 year
1 to 5 years
6 to 10 years
11 to 15 years
16 to 20 years
21 years and over
Prefer not to answer
75 75 of 162
Questions?
Adam Probolsky, President
O: 949-855-6400 | M: 949-697-6726
E: [email protected]
Sergio Martinez, Senior Research Analyst
E: [email protected]
Opinion Research on
Elections and Public Policy

PROBOLSKY RESEARCH
23 Corporate Plaza Suite 150 Newport Beach CA 92660
Newport Beach
(949) 855-6400
San Francisco
(415) 870-8150
Washington DC
(202) 559-0270
76 76 of 162
Community Outreach Summary
City of Laguna Beach | February – May 2026 | Attachment to June 9, 2026 Agenda Report Between February and May 2026, the City conducted broad community outreach to inform residents about the fiscal outlook, service and infrastructure needs, and potential revenue measures, and to gather community input. Outreach included four Community Town Hall meetings and an ongoing online community survey hosted on the City's Community Outreach webpage.

Community Town Hall Meetings
Between February and May 2026, the City hosted four Community Town Hall meetings to inform residents about City services, the fiscal outlook, infrastructure needs, and potential revenue measures, and to gather direct community feedback. Three of the four meetings were held in person, and the fourth was conducted virtually via Zoom to broaden participation. Each meeting was led by the City Manager and Assistant City Manager/CFO, with subject-matter staff available for technical questions. Each Town Hall was recorded and posted to the City's YouTube channel along with the slide presentation, allowing residents who could not attend in person to review the materials at their convenience.

Town Hall #1 — February 19, 2026 (In-Person)
The first Town Hall introduced residents to the City’s overall fiscal context and the rationale for evaluating potential new revenue. Staff presented an overview of City services, the proposed Fiscal Year 2026-27 budget, rising cost pressures including public safety staffing, CalPERS pension obligations, insurance, wildfire mitigation and fuel modification, infrastructure maintenance, and construction, and the steps the City had already taken to balance the budget (including the elimination of eight full-time positions and reductions in contracts and capital outlay). The session also introduced the long-term infrastructure picture, including the Facilities Master Plan and the anticipated closure of Mission Hospital Laguna Beach. The three potential revenue measure concepts (TOT, Sales Tax, and Business License Tax) were introduced for community awareness and initial feedback. Resident questions focused on cost-reduction steps already taken, the scope and prioritization of the Facilities Master Plan, and the rationale for considering each potential revenue measure.

Town Hall #2 — March 9, 2026 (In-Person)
The second Town Hall continued the fiscal conversation and expanded into policy options beyond direct revenue measures. Staff introduced the City Charter concept – a separate but related policy question regarding whether Laguna Beach should pursue charter city status to gain expanded local control over taxation, contracting, and other matters. Discussion also covered parking management (including residential parking impacts and potential use of the ACT V lot), downtown traffic concerns, comparisons of Laguna Beach’s transient occupancy tax rate with surrounding Orange County cities, and the City’s relationship with Visit Laguna Beach. Resident feedback on the City Charter concept was mixed, with some interest in the additional flexibility and others expressing concerns about complexity, process, and unintended consequences. This feedback informed the City Council’s subsequent decision on April 28, 2026, to not pursue a City Charter measure for the November 2026 ballot.

Attachment 2
77 77 of 162
Town Hall #3 — April 16, 2026 (In-Person)
The third Town Hall focused on infrastructure investment and risk reduction. Presentations addressed wildfire mitigation activities (including fuel modification zones, AI-assisted fire detection, expanded outdoor warning sirens, and the additional $4 million invested following the 2025 Palisades and Eaton fires), utility undergrounding priorities, evacuation route reliability, and the potential transfer of Laguna Canyon Road from Caltrans, including the associated $15 million transfer payment and potential undergrounding contributions from Southern California Edison. Staff also revisited the three revenue measure concepts with refined revenue estimates. The Q&A was extensive and covered code enforcement, beach maintenance, downtown economic vitality, the long-term operating cost implications of assuming responsibility for Laguna Canyon Road, and concerns about repeating past experiences with state and regional agencies.

Town Hall #4 — May 20, 2026 (Virtual via Zoom)
The final Town Hall in the series was held virtually via Zoom and drew approximately 60 attendees. The City Manager and Assistant City Manager/CFO presented an integrated summary of the City's fiscal outlook, infrastructure needs, and the three potential revenue measures with revenue estimates aligned to the ballot language being evaluated in the concurrent Probolsky Research voter survey. The virtual format allowed residents who could not attend the in-person sessions to participate, ask questions, and provide feedback in real time. Discussion topics included the structural nature of the budget gap, the November 2026 ballot timeline, the comparative merits of each of the three measures, the implications of placing multiple measures on the same ballot, and the next steps the City Council would consider at its June 9, 2026 meeting.

Recurring Resident Themes Across the Town Hall Series
Several themes were raised consistently by residents across all four meetings:
• Visitor impact and fair share: Concern that visitors and day-trippers are not paying their fair share of the cost of the services they generate, and that revenue measures should focus on visitorpaid sources before resident-paid sources. • Wildfire risk and undergrounding: Strong interest in undergrounding utilities, particularly along Laguna Canyon Road and primary evacuation routes, to reduce wildfire risk and improve evacuation safety.
• Spending discipline before new revenue: Questions about whether the City has sufficiently reduced spending and pursued efficiencies before asking voters to consider new taxes. • Parking and traffic: Interest in parking management, enforcement, ACT V lot utilization for employee parking, and addressing traffic congestion on Coast Highway and Laguna Canyon Road.
• Public safety funding: Concern about the long-term funding of Police, Fire, and Marine Safety services, especially in light of anticipated public safety cost growth. • Aging City facilities: Concern about the condition of aging City facilities, including fire stations, the library, and community centers, and the cost of maintaining or replacing them. • City character and visitor balance: Interest in maintaining the City's character and supporting local businesses while addressing the impacts of increasing visitation. 78 78 of 162
Online Community Survey
Twenty-six (26) responses were received via the online community survey between March 23 and May 20, 2026. The online survey is self-selected and not a scientifically valid sample of community opinion; it is intended to capture the views of engaged residents who chose to participate. Responses across the six survey questions are summarized below.
• Most important City issues: Wildfire mitigation and public safety were most frequently cited, followed by traffic congestion (particularly on Coast Highway and Laguna Canyon Road, including the LCAD crosswalk), parking, fiscal management and perceived overspending, beach management and visitor behavior enforcement, sewer infrastructure and utility undergrounding, and the balance between resident quality of life and tourism. • Highest funding priorities: Wildfire mitigation and Fire Department readiness, Police and public safety, sewer and storm drain infrastructure, beaches and marine safety, and ambulance services in light of concerns about the planned hospital closure. Several respondents indicated no new services should be funded until existing costs are reduced first. • Suggestions to improve efficiency or reduce costs: Across-the-board departmental cuts of 5– 10%; reductions to Marine Safety full-time staffing in favor of seasonal lifeguards; reducing City Hall hours or staffing levels; streamlining permitting in Community Development; cancelling or defunding Visit Laguna Beach; using AI and technology for routine services; and expanding volunteer programs.
• Long-term infrastructure ideas: Prioritize fire station replacement and seismic upgrades; accelerate utility undergrounding in residential neighborhoods; sell St. Catherine's property and redirect proceeds; build an overhead pedestrian bridge at LCAD to eliminate the on-demand crosswalk; do not assume ownership of Laguna Canyon Road (viewed by many respondents as a long-term financial liability); and adopt disciplined long-term savings planning for infrastructure replacement.
• Revenue options: A majority of respondents opposed new taxes until cost reductions are demonstrated. Several supported a modest 1-cent sales tax increase if funds are demonstrably used for fire safety and infrastructure. There was strong support for shifting costs to visitors through higher parking fees, trolley fares, and littering fines, and interest in taxing vacant second homes and long-vacant commercial properties.
• Programs to reduce, expand, or re-evaluate: Respondents identified Marine Safety management positions, the Laguna Local trolley, and Visit Laguna Beach tourism marketing as candidates for reduction. They supported expanding beach enforcement (trash, alcohol, smoking), ambulance services, and parking meter modernization (pay-by-plate / pay-by-phone).

Overall tone: A significant share of respondents expressed skepticism toward City decision-making and called for greater fiscal discipline and transparency before considering new revenue. A smaller number were positive about the City's current direction. Common closing themes were "put residents first," "make visitors and external agencies pay for their impacts," and "demonstrate fiscal discipline before asking for more revenue."
Note: The online survey reflects 26 self-selected responses and is not a statistically valid sample. For statistically valid voter sentiment, see the Probolsky Research 2026 Voter Poll Results (Attachment 1). 79 79 of 162
33 How Does Laguna Beach’s TOT Rate Compare to
Other Orange County Cities?
Tax Rate Cities
0% La Habra, Rancho Santa Margarita, Villa Park
8% Costa Mesa, Irvine, La Palma, Laguna Hills, Los Alamitos, Mission Viejo, Westminster 9% Fountain Valley
Aliso Viejo, Brea, Cypress, Dana Point, Fullerton, Huntington Beach, Laguna Niguel, Laguna Woods, Lake Forest, Newport Beach, Orange, Placentia, San Clemente, San Juan Capistrano, Yorba Linda
10%
11% Santa Ana
12% Buena Park, Seal Beach, Stanton, Laguna Beach (not including 2% TMD) 13% Tustin
15% Anaheim (not including 2% TMD), Garden Grove
For Information Purposes Only
Attachment 3
80 80 of 162
City Sales Tax Rate
Seal Beach 9.25%
Fountain Valley 8.75%
Aliso Viejo 7.75%
Costa Mesa 7.75%
Dana Point 7.75%
Huntington Beach 7.75%
Irvine 7.75%
Laguna Beach 7.75%
Newport Beach 7.75%
How Does Laguna Beach Compare to Neighboring Cities
For Information Purposes Only
Attachment 4
81 81 of 162
City Sales Tax Rate
Santa Barbara 9.25%
Carmel by the Sea 9.25%
Monterey 9.25%
Palm Springs 9.25%
Palm Desert 8.75%
Solvang 8.75%
Pismo Beach 8.25%
Dana Point 7.75%
Laguna Beach 7.75%
Newport Beach 7.75%
How Does Laguna Beach Compare to Coastal/Destination Cities? For Information Purposes Only
82 82 of 162

CALENDAR OF EVENTS FOR ORANGE COUNTY CITY MEASURES
NOVEMBER 3, 2026 GENERAL ELECTION
For City Clerk Use Only
Shown below is a sequence of events, including statutory deadlines and Registrar of Voters’ administrative deadlines, leading to the General Election on November 3, 2026. This sequence shows the actions a City Council would need to take to place a city measure on the ballot.

The Registrar of Voters’ recommended administrative deadlines will enable City Clerks to establish deadlines for the submittal of filings related to a measure, which provide a reasonable time to prepare the election material, the full 10-day public examination periods for the submitted filings, and sufficient time to resolve a petition for writ of mandate challenging any of the election materials without substantially interfering with the conduct of the election.

It is statutorily permissible for a City Council to order a city measure election up until 88 days before Election Day. If an election is ordered less than 109 days before Election Day, the Registrar of Voters would endeavor to conduct the election as ordered and would recommend the City Clerk set expedited filing deadlines for election materials. Even with such shortened deadlines, there would not be much time left for a court to resolve a legal challenge without impacting the conduct of the election.

All statutory references are to the Elections Code, unless stated otherwise.

July 1, 2026
(E-125)
Jurisdictional boundary changes must occur no later than 125 days before an election and be provided to the Registrar of Voters to be effective for purposes of that election. §12262
July 17, 2026
(E-109)
The Registrar of Voters requests that a City Council by this date adopt a Resolution(s) to order a city measure election to be consolidated with the General Election and to request the election services of the Registrar of Voters. The City must submit the Resolution(s) to the Board of Supervisors with a copy to the Registrar of Voters.

If the City wishes to have the full text of the measure printed in the County Voter Information Guide, the Registrar of Voters requests the City submit the full text by this date.
§§ 9286, 1415, 9222,9295, 9255, 10002, 10201, 10403, 10418, Govt.

Code § 34458
July 31, 2026
(E-95)
Recommended date for filing measure ordinance text, direct arguments, a city attorney impartial analysis and a fiscal impact statement (if applicable). If your Council adopts a Resolution prior to July 31, 2026, adjust the material submission deadline dates accordingly. §§ 9280, 9281, 9282, 9286
Attachment 5
83 83 of 162
When filing direct arguments, the parties must provide a list of supporters or opponents to the city measure that will be printed on the ballot. The list must not exceed 125 characters in length including spaces, commas, semicolons, and other characters. § 9170 August 1, 2026
through
August 10, 2026
(E-94 – 85)
Public Review period for the measure ordinance text, impartial analysis, direct arguments, and fiscal impact statement, if applicable.

Measure documents will also be posted on the Registrar of Voters website. During the Public Review period, any voter may seek a writ of mandate or an injunction requiring any of these materials to be amended or deleted. § 9295
August 7, 2026
(E-88)
Statutory deadline for a City Council to request consolidation of a city election with the General Election by submitting a Resolution to the Board of Supervisors with a copy to the Registrar of Voters. §§ 9222, 10403
August 10, 2026
(E-85)
Registrar of Voters will email measure letter designations to cities that have measures on the ballot. § 13116
August 10, 2026
(E-85)
Recommended deadline for filing of rebuttal arguments. Rebuttals must be filed 10 days after the direct arguments. § 9285 August 11, 2026
through
August 20, 2026
(E-84 – 75)
Public Review period for rebuttal arguments. Only Rebuttal Arguments are subject to legal action during this public review period. § 9295 August 12, 2026
(E-83)
Statutory deadline for City Council to submit a resolution to the City Clerk to withdraw a prior city measure order of election. § 9605 August 28, 2026
(E-67)
The Registrar of Voters requests that the Court issue a potential order to change measure ordinance text, impartial analysis, financial impact, and direct and rebuttal arguments by this date to ensure Registrar of Voters can meet election material mailing deadlines. § 9295 September 19, 2026
(E-45)
Statutory deadline for Registrar of Voters to issue ballots and Voter Information Guides to military and overseas voters. § 3105 September 24, 2026
(E-40)
Voter Information Guide mailing begins approximately this date.

Mailing completed by October 13, 2026 (E-21). § 13303(a) October 5, 2026
(E-29)
Ballot mailing to active registered voters begins. All Vote-By-Mail ballots will be issued through the Registrar of Voters. Requests for replacement mail ballots should be forwarded to the Registrar of Voters. §§ 3000.5, 3001, 3014, 4005(a)(8)(A)
October 5, 2026
(E-29)
Ballot drop boxes are open this day through Election Day. § 4005(a)(1)(B)
October 19, 2026
(E-15)
Last day to register to vote for the November 3, 2026 General Election. § 2102
October 20, 2026
through
November 3, 2026
(E-14 – E-0)
Conditional Voter Registration period. During the 14 days prior to Election Day and including Election Day, an individual can go to the office of their county elections official, a satellite office, or to a Vote Center to conditionally register to vote and vote a provisional ballot. § 2170
84 84 of 162
October 24, 2026
(E-10)
Beginning 10 days before the day of the election and continuing daily up to Election Day, select Vote Centers are open to the public. § 4005(a)(4)
October 31, 2026
(E-3)
Beginning 3 days before the day of the election and continuing daily up to Election Day, additional Vote Centers are open to the public. § 4005(a)(3)
November 3, 2026
(E-0)
Election Day. All Vote Centers will be open from 7 a.m. to 8 p.m.

Ballots will be centrally tallied at the Registrar of Voters’ office. §§ 1000, 14212
December 3, 2026
(E+30)
Registrar of Voters will certify on or before this date. §§ 15372, 15375 85 85 of 162
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City of Laguna Beach
Resident/Non-Resident Analysis
Development Driven by Data
HdL ECONSolutions
120 S. State College Blvd., Ste 200
Brea, CA 92821
www.hdlcompanies.com
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Overview
Incorporated in 1927, Laguna Beach is a charming beach community located along the Pacific Ocean in Orange County, California. It is bordered by the City of Newport Beach to the west, City of Aliso Viejo and City of Laguna Woods to the east, and the City of Irvine to the north. The city one of many beach front cities along Pacific Coast Highway. It is also easily accessible from California State Route 133. Known for its stunning coastal scenery, vibrant arts scene, and commitment to environmental preservation, Laguna Beach offers a unique blend of natural beauty and cultural richness.

The City of Laguna Beach is a renowned destination for food lovers, offering a variety of famous casual dining restaurants that provide unique dining experiences, including The Cliff, Starfish Asian Coastal Cuisine, and Nick's. For those seeking fine dining, Laguna Beach boasts exceptional options like Las Brisas, Selanne Steak Tavern, and Sapphire Cellar Craft Cook, which not only serve exquisite cuisines but also stand as local landmarks. Additionally, the city features a variety of independently owned quick-service restaurants, as well as well-known chain establishments like Jack in the Box, Domino’s Pizza, and Starbucks.

The walkable downtown area located across from the main beach is the heart of Laguna Beach. This vibrant area is filled with creative boutiques, bars, restaurants, recreational parks, and facilities for a variety of interests. Laguna Beach is also known for its air-oriented events and festivals, which draw visitors on a national level. Some of the annual events, include the Pageant of the Masters, Festival of Arts, Sawdust Art Festival, and Art-A-Fair. Below is a summary of the market analytics, for the City of Laguna Beach and trade area within a 15-minute drive.

City of Laguna Beach 15-Minute Drive Time
Population 22,921 100,986
Households 10,716 44,100
Average HH Income 238,684 207,903
Daytime Population 26,529 95,669
There are 1,865 established businesses in the City of Laguna Beach that employ approximately 10,209 employees in specialized industries such as Retail Trade, Health Care & Social Assistance and Accommodation & Food Services (Source: SiteSeer Demographics). The largest industry category in the City of Laguna Beach is Retail Trade, providing employment to approximately 15.0% of the total workforce within the city.

Legend
City of Laguna Beach
Laguna Beach- Broadway
15-minute drive time
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Non-Resident Spending Summary
The City has requested an estimate of the approximate amount of sales and use tax revenue generated by residents versus non-residents. Hereafter, individuals and businesses residing and located within the city will collectively be referred to as residents. While individuals and businesses residing and located outside of the city will collectively be referred to as non-residents.

The table below summarizes the results of the analysis based on actual sales tax revenue in 2024 (Calendar Year) and TUT revenue estimate for 2024-2025 (Fiscal Year), it also reflects the percentages of sales tax estimated from non-residents for the seven major industry groups. The 1% Bradley Burns tax is based on where the sale is negotiated or the place where the order is taken, while Transactions and Use Taxes (TUT) are applied in accordance with where purchased goods are delivered or placed into use.

In summary, HdL companies estimates that 55.2% of the 1% Bradley Burns Sales Tax in 2024 is generated from non-residents, while the potential percentage of a 1% TUT paid by non-residents is estimated at 37.1%.

Economic Segment
Bradley Burns 1%
Sales & Use Tax
Transactions & Use
Tax (TUT)
Autos & Transportation 62.7% 2.5%
Building & Construction 29.3% 9.7%
Business & Industry 47.3% 6.4%
Food & Drugs 25.3% 25.3%
Fuel & Service Stations 19.0% 17.6%
General Consumer Goods 35.9% 24.8%
Restaurants & Hotels 74.3% 66.3%
Estimated Average Non-Resident
Generated Revenue 55.2% 37.1%
Estimated % of Sales Tax Revenue Generated from Non-Residents The figures shown above were obtained utilizing a variety of methodologies customized to each economic segment. These methodologies consider the mix of businesses located in the City, per capita sales within the City of Laguna Beach versus the per capita sales across Orange County, as well as factoring average income population and trade area daytime- population for the designated trade areas previously described as a percentage of those categories within the City. The findings for each economic segment that led to the conclusions are listed below.
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Autos & Transportation
The Autos & Transportation sector accounted for 4.8% of the Bradley Burns Sales Tax revenue for the City of Laguna Beach. When comparing per capita sales in 2024, the City of Laguna Beach produced lower per capita sales level than Orange County. Without many autos related retailers in the city, non-residents are not purchasing vehicles as well as auto-related items in large quantities within the City of Laguna Beach. This is also supported by a review of the Consumer Demand & Market Supply Assessment as the Autos & Transportation segment reflects that the businesses located within the City of Laguna Beach supplied less than consumer demand. The combined information further suggests that the car dealerships, automotive services, and automotive retailers located within the city’s limits are not providing for non-residents and are not meeting the consumer demand, in a meaningful way. An estimated 62.7% of the sector’s 1% Bradley Bruns Sales Tax revenue is generated from non-residents.

It is also important to keep in mind that most of the TUT revenue is generated by residents and local businesses when they purchase and register a vehicle at an address within the City of Laguna Beach. With that, nonresident purchases of vehicles in Laguna Beach are not subject to the TUT. However, TUT would apply to sales of auto supplies, repairs, tires, and auto related items which would include transactions to non-residents. The estimated percentage of a TUT revenue in this sector generated by non-residents is estimated much lower at

2.5%.

Building & Construction (B&C)/ Business& Industry (B&I) The Building & Construction and Business & Industry sectorstogether generated 6.7% of city’stotal 1% Bradley Burns Sales Tax in 2024. Most sales within these sectors rely on Business-to-Business transactions. The methodology used to estimate revenue from non-residents relies on adjustments to both segments’ top sales tax producers, which were used as a relative sampling of sales tax generation within these industry groups. The top 10 businesses in the Building & Construction(B&C) group accounted for 99% of the revenue generated by the B&C sector in 2024, while 59% of the revenue generated in the Business & Industry (B&I) group was attributed to its top 20 sales tax producers.

The City of Laguna Beach produced lower per capita sales than Orange County’s per capital sales level in both the Building & Construction(B&C) and Business & Industry(B&I) sectors, similar to autos this is due to the small number of retailers in this segment. A review of the Consumer Demand & Market Supply Assessment reflects that the establishments in both B&C and B&I segments supplied less than consumer demand. The combined information suggests that the businesses in this sector within the City of Laguna Beach are not providing for non-residents and are not meeting the consumer demand.

The estimated 1% Bradley Burns Tax for the Building & Construction and Business & Industry sectors generated from non-residents is 29.3% and 47.3% respectively. Applying the same methodology used for the 1% Bradley Burns Sales Tax estimate to a potential TUT for B&C & B&I sectors, it is estimated that 9.7% and 6.4% of the revenue would be generated from non-residents, respectively. 91 91 of 162
Food & Drugs
The Food & Drugs sectors accounted for 6.2% of the Bradley Burns Sales Tax revenue for the City of Laguna Beach. Analysis of the Food & Drugs segment indicates that the City of Laguna Beach produced higher per capita sales than Orange County’s per capita sales level at grocery and drug stores. However, a review of the Consumer Demand & Market Supply Assessment and the Grocery & Drugs segment reflects that the establishments in this business group within the City of Laguna Beach supplied less than consumer demand.

The combined information suggests that businesses are providing for non residents but not enough to meet the consumer demand entirely.

It should be noted that generally only about 20% to 30% of grocery store sales are taxable and the receipts in this group are generally very close to 1:1 ratio between the Bradley Burns and a TUT tax. Therefore, an estimated 25.3% of the sector’s revenue is generated from non-residents for the Bradley Burns Sales Tax and the estimated percentage for a potential TUT generated from non-residents is 25.3%.

Fuel & Service Stations
The Fuel & Service Station (F&SS) sector generated 4.0% of the Bradley Burns Sales Tax revenue for the City of Laguna Beach and the city produced lower per capita sales than Orange County’s per capita sales level. In addition, reviewing the Consumer Demand & Market Supply Assessment, the Fuel & Service Stations segment reflects that gasoline stations supplied less than consumer demand for the city. The combined information suggests that non-residents are not purchasing auto fuel in large quantities from the service stations located within the city’s limits in Laguna Beach and gas stations located within the city’s boundaries are not providing enough to meet the consumer demand. The estimated percentage of non-resident sales for the 1% Bradley Burns Sales Tax is 19.0% and the estimated percentage for any potential TUT from non-residents is 17.6%.

General Consumer Goods
The General Consumer Goods sector accounted for a substantial 28.0% of the Bradley Burns Sales Tax revenue for the City of Laguna Beach. Within this sector, Women's Apparel contributes 10%, Art/Gift Novelty Stores lead with 27%, Jewelry Stores follow at 20%, and Home Furnishings provide 17%. Collectively, these categories generated 74% of the General Consumer Goods economic sector.

The city produced significantly higher per capita sales than Orange County’s per capita sales level, suggesting that non-residents are purchasing general consumer goods from retail businesses located within the city boundaries of Laguna Beach. This is supported when reviewing the General Consumer Goods segment of the Consumer Demand & Market Supply Assessment as it reflects that the businesses located within the city’s boundaries supplied more than consumer demand. The combined information suggests that the retailers located within the City of Laguna Beach are providing for non-residents and are meeting the consumer demand. An estimated 35.9% of the sectors 1% Bradley Burns Sales Tax revenue is generated from nonresidents. Applying the same methodology used forthe 1% Bradley Burns Sales Tax estimate to a potential TUT, it is estimated that 24.8% of the revenue would be generated from non-residents from a potential TUT. 92 92 of 162
Restaurants & Hotels
The Restaurants & Hotels sector accounted for a significant 49.9%, close to half of the Bradley Burns Sales Tax revenue for the City of Laguna Beach. Within this sector, Causal Dining category contributed 43%, Hotel/Motel category generated 29% and Fine Dining category contributed 16%. Collectively, these categories generated 88% of the sales tax revenues for the Restaurants & Hotels sector. This is not surprising considering that Laguna Beach is a highly sought after tourist and destination location.

An analysis of the Restaurants & Hotels sector reveals that the city achieved significantly higher per capita sales levels compared to Orange County, approximately three times the county's per capita sales level. This suggests that non-residents stay and dine at the businesses located within the city’s boundaries.

An analysis of the Restaurants & Hotels segment in the Consumer Demand & Market Supply Assessment indicates that businesses located within the city’s boundaries supplied more than consumer demand. The combined information suggests that business establishments located in the City of Laguna Beach are focused on providing for non-residents and are meeting the consumer demand. An estimated 74.3% of the sectors 1% Bradley Burns Sales Tax revenue is generated from non-residents. Applying the same methodology used for the 1% Bradley Burns Sales Tax estimate to a potential TUT, it is estimated that 66.3% of the revenue would be generated from non-residents from a potential TUT.

Conclusion
Local tax is the general term for sales and use taxes imposed under the Bradley Burns Uniform Sales and Use Tax Law. Please keep in mind that while per capita sales comparison is one of the methods that is being used to measure the ‘the City vs County’ trends, HdL also uses a methodology that is based on characteristics unique to each economic segment as well as examining the demographic data and the Consumer Demand and Market Supply Assessment for a drive-time trade area.

Laguna Beach's blend of stunning landscapes, vibrant art scene, and diverse outdoor activities make it a prime destination, enticing visitors to explore, relax, and enjoy its activities and culinary delights. Nonresidents living around the city or visiting Laguna Beach are producing and increasing sales tax revenue in all categories, particularly in Food & Drugs, General Consumer Goods and Restaurants & Hotels where the city’s per capita sales levels are higher than Orange County’s per capita sales levels. In conclusion, the estimated percentage for sales tax revenue generated by non-residents in the City of Laguna Beach is 55.2% for the 1% Bradley Burns that is based on actual sales tax revenue in 2024 and a potential TUT generated by nonresidents based upon a revenue estimate for 2024-2025 is estimated at 37.1%. 93 93 of 162
City of Laguna Beach
Estimate for Transactions Tax/District Add-on Sales Tax – April 2025 The following district tax estimate was devloped using comparisons of active voter approved transactions tax overrides of comparable juridictions within the region. Per-capita figures at the countywide, statewide and regional levels were all considered when projecting and adjusting certain categories.

FY 2026-27 Projection
Major Industry Group Local Tax 1.00%
Autos/Transportation $199,000 $829,000
Building & Construction $225,000 $260,000
Business & Industry $215,000 $630,000
Food & Drugs $347,000 $347,000
Fuel/Service Stations $238,000 $243,000
General Consumer Goods $1,330,000 $2,280,000
Restaurants/Hotels $3,130,000 $3,146,000
Transfers & Unidentified $22,000 $87,000
State & County Pools $1,083,000
Total $6,789,000 $7,822,000
District Tax / Local Tax Ratio 115%
NOTE – Transactions tax estimate is based on the Bradley-Burns Local (1%) projection for FY 2026-27 prepared Jan. 2025. The above figure is before administration fees.

Functional Differences: Bradley Burns (1%) local tax vs Voter Approved District Tax Traditionally, local tax is allocated based on an origin methodology where tax is allocated based on the place-of-sale. In other words, where the business is located. Voter approved district taxes are allocated on a destination methodology where tax generally follows the buyer. Traditional brick & mortar retailers, restaurants, and service stations will continue to generate a proportional amount of district tax compared to their normal local tax reporting. Below highlights the most common and notable differences in respect to the two tax sources.

Local Tax District Tax
Vehicles Dealership (place-of-sale) District of vehicle registration Delivered Materials/Equipment Sales office, warehouse, county pool Destination of use (ship to location)
Online Sales Ship from location (fulfillment center
and/or county pool)
Destination of use (ship to
location)
Construction Contracts County Pool District of Jobsite location These functional differences create variations dependent on a jurisdiction’s tax base. An agency without auto dealerships typically experiences an influx of district tax revenue from that segment. Similarly, an agency heavy in industrial or warehousing sectors is likely shipping more products outside of the city, resulting in less district tax compared to their local tax revenues. These factors are all considered in the above estimate. 94 94 of 162
CITY OF LAGUNA BEACH · STAFF REPORT
General Revenue Measure:

Ballot Strategy & Deferral to November 2028
City Council Meeting · July 7, 2026
Prepared by Dave Kiff, City Manager
Coordinated with Megan Garibaldi, City Attorney & Revenue Ad Hoc Committee Attachment 5
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STAFF RECOMMENDATION
What the City Council Is Being Asked to Do

1. Defer & Focus on a Single Measure
At the Revenue Ad Hoc Committee's request, defer a general tax measure from the November 2026 ballot.

Concentrate on internal efficiencies, outreach, education, and polling on one measure — a one-cent (1%) transactions and use (sales) tax — for the November 3, 2028 General Municipal Election.

2. CEQA Determination
Find that the recommended action is not a project subject to CEQA under Guidelines Section 15378, and alternatively, is exempt under Guidelines Section 15061(b)(3).

Recommendation City of Laguna Beach — Staff Report
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BACKGROUND
Why Is the City Looking for a New Revenue Source?
Rising Cost Pressures
• Public safety staffing costs – staying competitive
• The costs of responding to huge numbers of visitors
• Our remaining unfunded pension liability
• Insurance and claims
• Adding to our Fuel Modification Zones and fire safety efforts
• Maintenance & replacement of aging infrastructure
Already Cutting Costs
To balance the FY 2026-27 budget, the City eliminated 7 fulltime positions and reduced contracts and capital outlay.

Major Long-Term Obligations
Facilities Master Plan
Aging fire stations, library, beach accessways
Hospital Closure by 2030
Might need a new medical transport model…
Acquiring Open Space and Parkland
Seeing opportunities to preserve areas around us,
including in South Laguna
Utility Undergrounding – the 10-20% assist
Undergrounding utilities in town and along evac routes
Background City of Laguna Beach — Staff Report
Assist w/compliance with State law, aging-in-place
Senior and Workforce Housing
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BACKGROUND
Process Timeline: February–June 2026
Feb 24, 2026
Council confirms 2026
Strategic Priorities,
including Fiscal
Sustainability
Feb–May 2026
Community outreach: 4
Town Hall meetings +
online survey
May 19–27, 2026
Probolsky Research voter
poll: 400 likely voters (±5%)
June 9, 2026
Study session — Council
directs TOT & business
license tax measures
June 19–24, 2026
Second Probolsky voter poll
focused on business license
tax
Process Timeline City of Laguna Beach — Staff Report
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DISCUSSION
Three Revenue Concepts Considered
Transient Occupancy Tax
$3.0M
estimated annual revenue
12% → 14%
Strong voter support (75% yes) but insufficient
scale for infrastructure needs.

Business License Tax
$8.6M
estimated annual revenue
3% on gross receipts
Tested poorly in two rounds of voter polling;
significant resistance.

Sales Tax (1%)
$7.8M
estimated annual revenue
1% transactions & use tax
Strongest combination of revenue capacity and
likely voter approval.

COMMITTEE RECOMMENDATION
Revenue Concepts City of Laguna Beach — Staff Report
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DISCUSSION
Transient Occupancy Tax (TOT)
A tax paid by hotel and short-term lodging guests — not a tax on residents' homes or property. The proposed measure raises the rate and modernizes how the tax is collected.

Rate Increase 12% → 14%
Effective July 1, 2027
Modernized “rent” Definition
TOT collected on full guest charge, incl. booking fees & commissions Stronger OTC Enforcement
Expedia, Booking.com, Airbnb, Vrbo and other platforms
75% said yes after hearing
more information (up
from 74%)
68% more likely to support
knowing it's paid only by
guests, not residents

ESTIMATED NEW REVENUE
$3.0M
per year
Combined lodging rate: 16%
(14% TOT + existing 2% TMD assessment)
Requires approval by a simple majority of
voters.

Transient Occupancy Tax City of Laguna Beach — Staff Report 100
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DISCUSSION
Business License Tax — Bars & Restaurants
The current business license tax for bars and restaurants is capped at $1,650 a year — a cap that has not kept pace with the cost these visitor-serving businesses place on City services.

TODAY
$1,650 cap
Flat annual cap, regardless of size
→

PROPOSED
3%
of gross receipts — cap removed (new
Group 4 category)
No changes are proposed to the business license tax for any other category. Effective January 1, 2027.

ESTIMATED NEW REVENUE
$8.6M
per year
The largest revenue potential of the three
measures — but, as the next slide shows, it also
faces the most voter resistance.

Business License Tax City of Laguna Beach — Staff Report 101
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DISCUSSION
Business License Tax: Voter Resistance
Yes vs. No — May & June 2026 Polls
41 33 33
48 47 50
0 10
20 30
40 50
60 May (initial) June (initial) June (informed)
Yes No
Support did not improve after voters heard additional information.

Message Testing — % Moved Toward Each Side
71%
→ NO
Could close restaurants / raise vacancies
55%
→ YES
“Every dollar stays in Laguna Beach”
51%
→ NO
“Makes the city less competitive”
49%
→ YES
Funds could reduce wildfire risk
Opposition messaging tested at least as strong as support. Staff recommends a robust public information effort and continued testing if the measure proceeds.

Business License Tax City of Laguna Beach — Staff Report 102
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DISCUSSION
Sales Tax (Transactions & Use Tax)
Presented at the request of the Revenue Ad Hoc Committee — reconsidering the Council's June 9 direction to instead advance the sales tax as a single measure for 2028.
1%
transactions & use tax rate
$7.8M
estimated new revenue annually
50%+
simple majority voter approval
required
The tax would be deposited into the General Fund, remain in effect until ended by voters, and be subject to annual independent audits and public disclosure of expenditures.

Sales Tax Measure City of Laguna Beach — Staff Report
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THE PLAN
Deferral With a Plan for November 2028
Concentrating on a single measure lets staff:
1 Walk the Talk
Continue to work to make
the City more effective and
efficient – squeezing what
we can out of expenses
2 Develop and
Communicate the Need
via a Spending Plan
Explain clearly what the
community needs, what a
measure does and its
impact.
3 Continue Testing
4 Refine Language
Ongoing message testing
and polling ahead of the
2028 study session and
filing deadline.

Staff would complete this work by the end of 2027 and present results — with a recommendation — at the Council's 2028 study session, well ahead of the 2028 filing deadlines.

Deferral With a Plan City of Laguna Beach — Staff Report Adjust question wording
and, if warranted, measure
structure to address points
of confusion.
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DRAFT SPENDING PLAN
$8.0 Million Per Year — Where the Money Should Go
A conservative planning estimate: the business license tax is projected at ~$8.6M/yr and the sales tax at ~$7.8M/yr; $8.0M is used so the plan holds regardless of which measure advances.
40%
20%
15%
10%
8%
7%
Fire & Wildfire Safety Police & Emergency Svcs
Beaches, Parks & Visitors Library & Community
Housing Reserves & Savings
Where the Money Goes Share Each Year 5-Year Total
Fire Stations & Wildfire Safety 40% $3,200,000 $16,820,000 Police & Emergency Services 20% $1,600,000 $8,410,000
Beaches, Parks & Visitor Programs 15% $1,200,000 $6,308,000 Library & Community Facilities 10% $800,000 $4,206,000
Housing for Seniors & Workforce 8% $640,000 $3,363,000
Reserves & Savings 7% $560,000 $2,943,000
Draft Spending Plan City of Laguna Beach — Staff Report 105
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DRAFT SPENDING PLAN
Funding Side by Side: Plan A vs. Plan B
Priority Plan A — Sales Tax $8.0M/yr Plan B — Hotel Tax $3.0M/yr Fire Stations & Wildfire Safety $3,200,000 $1,050,000
Police & Emergency Services $1,600,000 $600,000
Beaches, Parks & Visitor Programs $1,200,000 $900,000
Library & Community Facilities $800,000 —
Housing for Seniors & Workforce $640,000 —
Reserves & Savings $560,000 $450,000
Total Each Year $8,000,000 $3,000,000
A dash indicates a priority not included in that plan. Both plans are general taxes deposited into the General Fund; figures assume a 2.5% annual increase.

Funding Side by Side City of Laguna Beach — Staff Report 106
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ACCOUNTABILITY
Proposed Citizens Oversight Committee
A recurring theme in outreach: residents want assurance new revenue is spent as promised.

Before the Election
Convene a citizens review committee to help confirm infrastructure and operational needs, review a proposed spending plan, and give independent input on the case for whichever measure the Council places before voters.

After the Election
An advisory oversight committee reviews revenue and expenditures at least annually, confirms consistency with the spending plan presented to voters, and reports findings publicly — complementing the annual independent audit.

Oversight Committee City of Laguna Beach — Staff Report 107
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NEXT STEPS
Recommended Council Action
• Defer a general tax measure from November 2026
• Continue to get our own house in order – walk the talk • Make the case - direct staff to focus outreach, education & polling on the 1% sales tax for November 2028
• Adopt the CEQA finding as recommended
Next Steps City of Laguna Beach — Staff Report
108
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CITY OF LAGUNA BEACH · STAFF REPORT
General Revenue Measure:

Ballot Strategy & Deferral to November 2028
City Council Meeting · July 7, 2026 (UPDATED)
Prepared by Dave Kiff, City Manager
Coordinated with Megan Garibaldi, City Attorney & Revenue Ad Hoc Committee 109 of 162

STAFF RECOMMENDATION
What the City Council Is Being Asked to Do

1. Defer & Focus on a Single Measure
At the Revenue Ad Hoc Committee's request, defer a general tax measure from the November 2026 ballot.

Concentrate on internal efficiencies, outreach, education, and polling on one measure — a one-cent (1%) transactions and use (sales) tax — for the November 3, 2028 General Municipal Election.

2. CEQA Determination
Find that the recommended action is not a project subject to CEQA under Guidelines Section 15378, and alternatively, is exempt under Guidelines Section 15061(b)(3).

Recommendation City of Laguna Beach — Staff Report
110 of 162

BACKGROUND
Why Is the City Looking for a New Revenue Source?
Rising Cost Pressures
• Public safety staffing costs – staying competitive
• The costs of responding to huge numbers of visitors
• Our remaining unfunded pension liability
• Insurance and claims
• Adding to our Fuel Modification Zones and fire safety efforts
• Maintenance & replacement of aging infrastructure
Already Cutting Costs
To balance the FY 2026-27 budget, the City eliminated 7 fulltime positions and reduced contracts and capital outlay.

Major Long-Term Obligations
Facilities Master Plan
Aging fire stations, library, beach accessways
Hospital Closure by 2030
Might need a new medical transport model…
Acquiring Open Space and Parkland
Seeing opportunities to preserve areas around us,
including in South Laguna
Utility Undergrounding – the 10-20% assist
Undergrounding utilities in town and along evac routes
Background City of Laguna Beach — Staff Report
Assist w/compliance with State law, aging-in-place
Senior and Workforce Housing
111 of 162

BACKGROUND
Process Timeline: February–June 2026
Feb 24, 2026
Council confirms 2026
Strategic Priorities,
including Fiscal
Sustainability
Feb–May 2026
Community outreach: 4
Town Hall meetings +
online survey
May 19–27, 2026
Probolsky Research voter
poll: 400 likely voters (±5%)
June 9, 2026
Study session — Council
directs TOT & business
license tax measures
June 19–24, 2026
Second Probolsky voter poll
focused on business license
tax
Process Timeline City of Laguna Beach — Staff Report
112 of 162

DISCUSSION
Three Revenue Concepts Considered
Transient Occupancy Tax
$3.0M
estimated annual revenue
12% → 14%
Strong voter support (75% yes) but insufficient
scale for infrastructure needs.

Business License Tax
$8.6M
estimated annual revenue
3% on gross receipts
Tested under 40% support in two different polls,
informed opposition at 50% (June 2026). Note:
documents transposed education level –was
similar education level in each poll (40% college,
60% non-college).

Sales Tax (1%)
$7.8M
estimated annual revenue
1% transactions & use tax
Strongest combination of revenue capacity and
likely voter approval.

COMMITTEE RECOMMENDATION
Revenue Concepts City of Laguna Beach — Staff Report
113 of 162
$3,000,000 $7,800,000 $8,600,000
114 of 162

DISCUSSION
Transient Occupancy Tax (TOT)
A tax paid by hotel and short-term lodging guests — not a tax on residents' homes or property. The proposed measure raises the rate and modernizes how the tax is collected.

Rate Increase 12% → 14%
Effective July 1, 2027
Modernized “rent” Definition
TOT collected on full guest charge, incl. booking fees & commissions Stronger OTC Enforcement
Expedia, Booking.com, Airbnb, Vrbo and other platforms
75% said yes after hearing
more information (up
from 74%)
68% more likely to support
knowing it's paid only by
guests, not residents

ESTIMATED NEW REVENUE
$3.0M
per year
Combined lodging rate: 16%
(14% TOT + existing 2% TMD assessment)
Requires approval by a simple majority of
voters.

Transient Occupancy Tax City of Laguna Beach — Staff Report 115 of 162

DISCUSSION
Business License Tax — Bars & Restaurants
The current business license tax for bars and restaurants is capped at $1,650 a year — a cap that has not kept pace with the cost these visitor-serving businesses place on City services.

TODAY
$1,650 cap
Flat annual cap, regardless of size
→

PROPOSED
3%
of gross receipts — cap removed (new
Group 4 category)
No changes are proposed to the business license tax for any other category. Effective January 1, 2027.

ESTIMATED NEW REVENUE
$8.6M
per year
The largest revenue potential of the three
measures — but, as the next slide shows, it also
faces the most voter resistance.

Business License Tax City of Laguna Beach — Staff Report 116 of 162

DISCUSSION
Business License Tax: Voter Resistance
Yes vs. No — May & June 2026 Polls
41 33
38 48 47 50
0 10
20 30
40 50
60 May (initial) June (initial) June (informed)
Yes No
Support improved by five points, while opposition improved by three, after voters heard additional information. Note: This was incorrectly characterized as no movement on the support side in the staff report – support moved 5% upwards as shown.

Message Testing — % Moved Toward Each Side
71%
→ NO
Could close restaurants / raise vacancies
55%
→ YES
“Every dollar stays in Laguna Beach”
51%
→ NO
“Makes the city less competitive”
49%
→ YES
Funds could reduce wildfire risk
Opposition messaging tested at least as strong as support. Staff recommends a robust public information effort and continued testing if the measure proceeds.

Business License Tax City of Laguna Beach — Staff Report 117 of 162
$3,000,000 $7,800,000 $8,600,000
118 of 162

DISCUSSION
Sales Tax (Transactions & Use Tax)
Presented at the request of the Revenue Ad Hoc Committee — reconsidering the Council's June 9 direction to instead advance the sales tax as a single measure for 2028.
1%
transactions & use tax rate
$7.8M
estimated new revenue annually
50%+
simple majority voter approval
required
The tax would be deposited into the General Fund, remain in effect until ended by voters, and be subject to annual independent audits and public disclosure of expenditures.

Sales Tax Measure City of Laguna Beach — Staff Report
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THE PLAN
Deferral With a Plan for November 2028
Concentrating on a single measure lets staff:
1 Walk the Talk
Continue to work to make
the City more effective and
efficient – squeezing what
we can out of expenses
2 Develop and
Communicate the Need
via a Spending Plan
Explain clearly what the
community needs, what a
measure does and its
impact.
3 Continue Testing
4 Refine Language
Ongoing message testing
and polling ahead of the
2028 study session and
filing deadline.

Staff would complete this work by the end of 2027 and present results — with a recommendation — at the Council's 2028 study session, well ahead of the 2028 filing deadlines.

Deferral With a Plan City of Laguna Beach — Staff Report Adjust question wording
and, if warranted, measure
structure to address points
of confusion.
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DRAFT SPENDING PLAN
$8.0 Million Per Year — Where the Money Should Go
A conservative planning estimate: the business license tax is projected at ~$8.6M/yr and the sales tax at ~$7.8M/yr; $8.0M is used so the plan holds regardless of which measure advances.
40%
20%
15%
10%
8%
7%
Fire & Wildfire Safety Police & Emergency Svcs
Beaches, Parks & Visitors Library & Community
Housing Reserves & Savings
Where the Money Goes Share Each Year 5-Year Total
Fire Stations & Wildfire Safety 40% $3,200,000 $16,820,000 Police & Emergency Services 20% $1,600,000 $8,410,000
Beaches, Parks & Visitor Programs 15% $1,200,000 $6,308,000 Library & Community Facilities 10% $800,000 $4,206,000
Housing for Seniors & Workforce 8% $640,000 $3,363,000
Reserves & Savings 7% $560,000 $2,943,000
Draft Spending Plan City of Laguna Beach — Staff Report 121 of 162

DRAFT SPENDING PLAN
Funding Side by Side: Plan A vs. Plan B
Priority Plan A — Sales Tax $8.0M/yr Plan B — Hotel Tax $3.0M/yr Fire Stations & Wildfire Safety $3,200,000 $1,050,000
Police & Emergency Services $1,600,000 $600,000
Beaches, Parks & Visitor Programs $1,200,000 $900,000
Library & Community Facilities $800,000 —
Housing for Seniors & Workforce $640,000 —
Reserves & Savings $560,000 $450,000
Total Each Year $8,000,000 $3,000,000
A dash indicates a priority not included in that plan. Both plans are general taxes deposited into the General Fund; figures assume a 2.5% annual increase.

Funding Side by Side City of Laguna Beach — Staff Report 122 of 162

ACCOUNTABILITY
Proposed Citizens Oversight Committee
A recurring theme in outreach: residents want assurance new revenue is spent as promised.

Before the Election
Convene a citizens review committee to help confirm infrastructure and operational needs, review a proposed spending plan, and give independent input on the case for whichever measure the Council places before voters.

After the Election
An advisory oversight committee reviews revenue and expenditures at least annually, confirms consistency with the spending plan presented to voters, and reports findings publicly — complementing the annual independent audit.

Oversight Committee City of Laguna Beach — Staff Report 123 of 162

NEXT STEPS
Recommended Council Action
• Defer a general tax measure from November 2026
• Continue to get our own house in order – walk the talk • Make the case - direct staff to focus outreach, education & polling on the 1% sales tax for November 2028
• Adopt the CEQA finding as recommended
Next Steps City of Laguna Beach — Staff Report
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STAFF REPORT
Meeting Date:

July 7, 2026

NON APPEAL
17 SUBJECT: 340 ST. ANN’S DRIVE: TENTATIVE PARCEL MAP 2026-0865 AND COASTAL DEVELOPMENT PERMIT 2026-0954 TO MERGE FOUR LOTS INTO A TWO

LOTS IN THE LOCAL BUSINESS PROFESSIONAL (LBP) AND RESIDENTIAL MEDIUM DENSITY (R-2) ZONES; AND FINDING THAT NO FURTHER

ENVIRONMENTAL REVIEW IS REQUIRED UNDER STATE CEQA
GUIDELINES SECTION 15162 OR, ALTERNATIVELY, THAT THE HOUSING DEVELOPMENT IS NOT A “PROJECT” OR IS EXEMPT UNDER
GOVERNMENT CODE SECTIONS 65913.16(C), (B)(12)(B), AND 65913.16(L)(7),

RESPECTIVELY
RECOMMENDATION: It is recommended that the City Council:

1. Conduct a Public Hearing, including receiving a staff report and taking public testimony and evidence related to the consideration of Tentative Parcel Map 2026-0865, Coastal Development Permit 2026-0954, and CEQA finding that no further environmental review is required under Government Code Section 15162 or, alternatively, that the housing development is not a “project” or is exempt under Government Code Sections 65913.16(c), (b)(12)(B), and 65913.16(l)(7); and

2. Adopt the Resolution titled, “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAGUNA BEACH, CALIFORNIA, APPROVING TENTATIVE PARCEL MAP 2026-0865 AND COASTAL DEVELOPMENT PERMIT 2026-0954 TO MERGE FOUR PARCELS LOCATED AT 340 ST. ANN’S DRIVE (APNS: 644-034-05, 644-034-09) INTO TWO PARCELS IN THE LOCAL BUSINESS PROFESSIONAL (LBP) AND RESIDENTIAL MEDIUM DENSITY (R-2) ZONES; AND FINDING THAT NO FURTHER ENVIRONMENTAL REVIEW IS REQUIRED UNDER STATE CEQA GUIDELINES SECTION 15162 OR, ALTERNATIVELY, THAT THE HOUSING DEVELOPMENT IS NOT A “PROJECT” OR IS EXEMPT UNDER GOVERNMENT CODE SECTIONS 65913.16(C), (B)(12)(B), AND 65913.16(L)(7), RESPECTIVELY”.

SUMMARY OF THE MATTER
Liane Takano (“Applicant”), representative for the property owner, Neighborhood Congregational Church (“NCC”) of 340 St. Ann’s Drive (the “Property”), applied for Tentative Parcel Map (“TPM”) 2026-0865 and Coastal Development Permit (“CDP”) 2026-0954 to merge the existing four existing lots (APNs: 644- 034-05, 644-034-09) into two lots in the Residential Medium Density (R-2) and Local Business Professional (LBP) zones. The merger is necessary to comply with California Building Code requirements for the approved affordable housing development, as the development would extend across the existing shared property lines among the four parcels (the “Project”). Refer to Figure 1, below, for the existing parcel configurations, and Figure 2 for a location map depicting the existing church structures and surface parking lot improvements.
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TENTATIVE PARCEL MAP 2026-0865 AND COASTAL DEVELOPMENT PERMIT 2026-0954 AT 340 ST. ANN’S DRIVE
July 7, 2026