If the event is for charity, or even a portion of the proceeds go to charity (the more local the charity the better), then this fact should be out front and center by publicizing it well. I believe most people are honest, caring, and good-natured (at least in SoWal, especially when they are on vacation). If people know about the charity you're probably going to get a very high rate of paid attendees. If 10% or so of the people are never going to pay and are going to hang around the edges, then so be it. Maybe they will spend a little with the merchants, or buy a Tee shirt.
And even if there is no charity involved I think the large majority will do the right thing and pay if you have it set up properly. Booths at every major ingress between buildings and on 30A. Paid attendees get a bracelet. Have roaming greeters to approach folks without bracelets and direct them to the ticket booths. If this is done in a thorough and friendly way on the first day word will get around and those who haven't paid will be more inclined to line up.
The only tents that are needed are medical, souveniers, tickets, vendors, etc. Just those will create a separation. In between you can have signs that say, "no entry without ticket" with an arrow to "ticket sales".
The bottom line is make it an open, friendly and welcoming event and people will come in droves and almost all will pay. The festival will make a profit, the majority of homeowners and merchants will be happy, and so will locals and visitors.
Getting locals on board is very important. I know there was limited time to get the whole thing planned and exectuted, and it seemed to go pretty smooth. 30A Radio should be playing the artists leading up to the shows, with maybe an interview or two. Central Square Records should be involved with getting the word out.
Include SoWal.com in your advance marketing, and other marketing thoughout the year, and you will be way ahead of the game. ;-)
