Council OKs final steps to purchase Canyon properties for artist work/live, $8M loan to LB Community Land Trust
By SARA HALL
City Council this week unanimously approved the final steps for purchasing two properties in Laguna Canyon for artist work/live space.
Councilmembers voted 5-0 on Tuesday (Jan. 27) in support of assigning the city’s purchase and sale agreements for 2307 and 2535 Laguna Canyon Road to the Laguna Beach Community Land Trust. The item also included executing a loan agreement in the principal amount of $8 million with the LBCLT, secured by deeds of trust on both properties, on substantially the terms presented.
The action also authorized the city manager to execute all necessary related escrow, security and implementing documents.
The item also approved a one-time grant to the LB Community Land Trust of $75,000 to cover closing costs and initial operating capital.
“We need to know that we have the right purpose here. What we’re doing is…for this community, for the artists, as a start and then looking to go beyond that to affordable housing for seniors and workforce housing is the objective,” Ed Sauls said during the LB Community Land Trust presentation. “That’s an incredible purpose and this is the start on that purpose.”
Sauls also emphasized that this is the right property for what they’re trying to achieve and the due diligence has been done. They have worked with city staff to understand some of the shortfalls, that have since been brought up to speed for the permitting, for example, he said.
They also have the right group of people working on the project, he added, both with the LBCLT board and city staff.
Tuesday’s action will move forward the final steps for closing on the properties, said Assistant City Manager Jeremy Frimond.
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Photos courtesy of First Team Commercial/courtesy of city of Laguna Beach
2535 (top) and 2307 (bottom) Laguna Canyon Road
In November 2024, the council held a workshop on the city’s efforts to retain and create artist work/live space on properties along Laguna Canyon Road. Although it wasn’t a formal action, councilmembers ultimately directed staff to continue to proceed with negotiations and pursue acquiring two properties in the Canyon: 2307 and 2535 Laguna Canyon Road.
In January 2025, council unanimously agreed to move forward with the purchase of the properties, which contain about 25 artist work/live space and light industrial units.
At the time, councilmembers agreed that it is important to preserve the artist community in Laguna Beach.
The $8 million purchase price (which is the combined listing price for both properties) is reduced from the $9.45 million initially noted in the staff report for the December 10, 2024 meeting. The item was ultimately removed from the agenda due to ongoing negotiations. Conversations continued in closed session in late 2024 and early 2025, staff explained at the time.
In late 2025, council authorized staff to proceed with the purchase of the properties and directed staff to return with final assignment and loan documents.
The final purchase price for the property at 2307 is $3.05 million and the 2535 property is $4.95 million, both below the appraised values, Frimond explained.
To facilitate acquisition, the city is providing a secured loan to the LB Community Land Trust. The loan carries simple interest at a fixed rate of 4% and has a five-year term. The loan is secured by deeds of trust on the subject properties. At the end of the term, the full principal balance is due.
There are some covenants incorporated into the loan agreement, including: Code remediation; no redevelopment without city approval; artist work/live and affordability restrictive covenant and compliance (one-year or earlier repayment to finalize covenant) and the option to secure easement rights for future LCR undergrounding (one year or earlier repayment to finalize option).
The city will use the vehicle replacement fund as the source for the loan. It has a balance of approximately $17 million, Frimond said. He also confirmed that the city can grant the loan and still continue with the fleet replacement cycle.
There was also some discussion about including a covenant in the agreement specifying that the rent and net operating income must be sufficient to satisfy the interest on the loan.
Councilmember Bob Whalen noted that there are different ways the LBCLT can cover the cost of the loan interest.
“(There are) a lot of different factors, a lot of different levers they can pull in order to adjust expenses or increase revenues,” Whalen said.
He noted a previous discussion that mentioned an expectation, which has been communicated to the residents, that there is going to be some rent increases.
Orgill, who was also involved in the early conversations, didn’t remember the exact percentage that was mentioned, but it was not much, he said. The unit rents are significantly under market, Orgill added, and the idea was that any adjustment would still keep them under market.
In their findings, they do expect some raising of the rent, but they are also intending to bring in some revenue from fundraising, Sauls said. However, to make the rents equal to the cash flow, they would have to raise them 25%, which is not something they want to do, he explained.
Kristine Thalman, president of the LB Community Land Trust, announced that the group’s nonprofit status as a 501(c)(3) was recently approved by the Internal Revenue Service.
The recent IRS designation opens up opportunities for the LB Community Land Trust to go for public and private grants, Thalman explained. In a January 27 press release, she added that, with the tax-exempt status, the group can also accept tax-deductible donations and enter into long-term partnerships to steward land outside the speculative real estate market.
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Sara Hall covers City Hall and is a regular contributor to Stu News Laguna.
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