The Laguna Beach City Council gave the OK on a preliminary financing plan for the Village Entrance project at a special meeting Tuesday night inside a crowded Council Chambers.

The council voted 3 to 2 for the plan, estimated to cost $42.3 million, despite some residents' pleas to put the matter to a community vote. Mayor Kelly Boyd and Councilwoman Toni Iseman cast the dissenting votes.

The project, which includes a pedestrian park and a parking structure at the entrance to the city off Forest Avenue and Laguna Canyon Road, has taken too long, according to Councilman Steve Dicterow.

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"We've been discussing this for how many years?" Dicterow told the audience. "We are waiting to have a perfect solution with unanimous consent, and that will never happen. [The parking structure] is not going to solve [the parking problem], but it will chip away at it. We need to have parking in a lot of other places."

The Village Entrance has been in the planning stages since a group of residents formed a task force on the issue in 1995.

Still, some residents at Tuesday's meeting were concerned the four-level parking structure slated to have 500 parking spaces would draw more tourists to Laguna and add congestion.

"If people can't find parking in the structure, they will drive back out to Act V [parking lot in Laguna Canyon], and that will create more traffic," Diane Valentino, a Laguna Canyon resident, said.

Traffic has worsened to the point that there are six hours each day when it's difficult getting to the grocery store without sitting in gridlock, Valentino said.

"The residents of Laguna Beach do not benefit," Valentino said about the current Village Entrance plan.

"They're going to come regardless of whether we build a parking structure," Mayor Pro Tem Elizabeth Pearson said, alluding to potential traffic impacts from residents in bordering housing communities traveling into Laguna on Laguna Canyon Road.

Councilman Bob Whalen allayed some residents' fears that they would be saddled with paying off the Village Entrance for 25 years.

"This will be new parking revenue, 90% derived from visitors to the community and not property taxes," said Whalen, a public finance lawyer. "I've spent 30 years in this field, and it would be extremely rare to vote on this type of financing plan. This is something we can afford, and it will benefit the community and downtown."

The project would be paid for with $13.3 million from the city. That number includes revenue from parking meters, city-owned parking lots, and from resident, business and shopper parking permits, according to a city staff report.

Drivers will see an increase in $0.25 per hour for on-street parking meters, with phased increases up to $1 more per hour by 2017, according to the city, which will also replace coin-operated meters with credit card machines.

The increase in parking meter rates is expected to generate $2 million by 2017 with $300,000 in revenue each year from new Village Entrance spaces.

The remaining $29 million is expected to come from lease revenue bonds with a 25-year repayment term, the staff report said.

The project would add 200 spaces, including an additional 100 surface spots to the 500 in the structure.

Dicterow asked if the city could boost the parking meter rate hike to $1 instead of $0.25 per hour, but the city would need Coastal Commission approval, City Manager John Pietig said.

Boyd said he voted against the proposal because he didn't want to saddle the city with the debt for the next 25 years.

"We can't guarantee the general fund couldn't be tapped in an extraordinary season, like if the economy took another dive," Boyd said. "We have to be very careful that we don't take away from things the city needs to get done in the future."

The pricing plan maintains the annual transfer from the parking to the general fund — $700,000 — and there will be no changes to city services, including transit, Pietig said.

Iseman was also concerned about the 25-year payback period and suggested ways to find additional parking spaces.

She offered adding mechanical lifts to boost parking spaces behind the Laguna Playhouse and converting the south part of Ocean Avenue to a one-way street to secure 14 additional spaces.

"With $12.5 million I'll find all those spaces and we won't have bonded indebtedness for 25 years," Iseman said.