CA: Laguna Beach picks up $19.1-million tab to to continue offering free citywide transit

Laguna Beach will maintain its public transportation programs, but city officials, citing budgetary concerns, indicated there could be changes on the way.

The City Council Tuesday approved a five-year contract in an amount not to exceed $19.1 million with Costa Mesa-based LAZ Parking to operate Laguna Beach's trolley and on-demand transit services through fiscal year 2030-31.

Current service levels could be sustained by the new agreement, but a reduction in service, and possibly charging riders a fare, are under consideration as the city looks to build up its parking fund.

In its purest form, the Laguna Local and the trolley are all paid by parking revenue, as well as some grants," City Manager Dave Kiff said. "We don't use other general funds, like property taxes, to pay for Laguna Local. … What I've been trying to do is make sure there's enough room in the parking fund to continue to maintain our parking operations, to make sure that we always have a robust parking management plan.

In recent years, however, a gap between the city's parking revenues and the costs of providing free public transit has grown, causing a concern among officials as insurance and fuel costs continue to increase, Kiff continued.

We're getting to a point where it's much closer than it was, say, just three years ago, where there was enough money coming out of the parking fund to do good capital investments, like replacing and improving the Glenneyre parking structure, looking at other parking opportunities, leases of spaces," he said. "That's been the city's focus in the past."

Prior to the COVID pandemic, city employees operated the local transit service. In April 2021, the city outsourced that work to LAZ Parking under an initial five-year agreement in the amount of $10.6 million. The Laguna Local on-demand ride service was introduced that fall.

After service expansions, city contracts to run the transit programs swelled to approximately $16 million by December 2024, according to city staff.

Over the life of the new contract, the city anticipates allocating $12.3 million toward operation of the trolleys and $6.8 million for the on-demand service.

Through its local transportation services, the city has hoped to encourage motorists to use peripheral parking lots, reducing parking demand and traffic congestion in the downtown area.

In addition to parking fund transfers, the programs are also paid for through grants. Staff said the city has secured approximately $7.2 million from OCTA through cooperative agreements requiring the continuance of qualifying services, including the Summer Breeze, Weekend Coastal and Winter Express trolleys and the Canyon on-demand service.

Council members directed staff to solicit more community input regarding which service might be reduced. Recommendations made by staff Tuesday included potential elimination of the canyon corridor on-demand service on the weekends.

The council was asked to consider charging on-demand riders a $2 to $5 per-passenger fare, but the panel backed away from that option.

"I think we should just take the fee off the table, because at the end of the day, we don't want to turn into Uber, right?" Councilman Alex Rounaghi said. "I think we're running a public service here, and if we want to do that, we should do that, but I think there's value in looking at how we could cut this back in the most efficient way possible.

"I just don't see people spending money on this. At that point, they're just going to take an Uber. I feel like we're just kind of getting out of our role as a city government when we get into this idea of charging for something like this."

Mayor Mark Orgill also weighed in on charging users to ride the trolley, suggesting it may defeat the purpose of directing traffic to park in lots away from the downtown area.

"A fee for the trolley is very complicated," Orgill said. "I think it's going to be a lot more difficult to implement technology for the trolley, just to go one block. It also gets complicated, I think, with the peripheral parking.

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