Errors And Omissions In Mayor’s Column

Opposition to economic subsidies or assistance from the government in any form is a valid and honorable principle. It is not the only position that can be adopted from a conservative standpoint but generally speaking, it is the standard stance.

Unfortunately, Mayor Tait’s column strays from simply opposing the latest applicant to the city’s Hotel Incentive Policy and garnishes his position with flawed arguments, overheated rhetoric and demagoguery. Some examples:

“…we were told we needed to help shield the developer from the effects of the economic recession, and that if we didn’t subsidize this hotel “it would not be built.” In the 3 years since then, we have approved and celebrated the opening of 17 hotels in Anaheim, all without any subsidies.”

And none of those 17 hotels are four- or five-diamond hotels – which undermines the mayor’s argument. The point of the Hotel Incentive Policy is to incentivize the construction of luxury hotels in the Resort, because they make they make enhance Anaheim’s value as a convention destination in a very competitive market and generate significantly more TOT revenue than limited service hotels.

“We certainly can’t argue that nothing will be built without a subsidy, as the last three years have shown.”

Then it’s a good thing nobody is arguing that “nothing” will be built a subsidy. Hotel Incentive Proponts are simply stating no four- or five-diamond hotels are being built absent this program – a an argument Mayor Tait inadvertently bolsters. He references the strongest hotel market in 25 years – but not one of the 17 recently opened hotels he mentioned is a 4-diamond hotel. None are even close.  In other words, Anaheim continues to miss out on the massively higher tax revenue generation from these hotels. The mayor inadvertently argues for the program.

Mayor Tait claims that hotel projects approved under this policy diverts tax revenue from “being used to improve and increase city services to residents, like better parks programs, graffiti-removal services and more police officers.”

This claim has been made ad nauseum by the mayor and other critics since 2012. It is patently false. it was false in 2012, and it is false today. As Mayor Pro Tem Kring points out in her column, this claim “fails a simple test: You can’t give away what you don’t have.”

There is no existing revenue from the GardenWalk hotels or the Good Hope International project. Not a dime. Furthermore, even with the 70% TOT-equivalent rebate, one of these luxury hotels will still generate more TOT revenue than the limited service hotels the mayor prefers.

The Anaheim Plaza Hotel & Suites generates about $900,000 annually in TOT revenue. It’s estimated the luxury hotel being proposed for this site will generate $7 million per year. Even after backing out the rebate payments, the city still collects $2.1 million per year – twice what it’s receiving now. Is that bad? Furthermore, at the expiration of the agreement, the city will collect 100% of the TOT in perpetuity.

Furthermore, after building a four diamond hotel on the site of an existing two- or three-diamond hotel, the typical guests at the former still want a two- or three-star hotel. Going forward, they will stay in a different two- or three-star establishment in Anaheim. Guests at the new four-diamond hotel will generally be people who are visiting Anaheim but had been staying elsewhere prior to the construction of the new luxury hotels. So the city keeps the old revenue and gains the new revenue – meaning the TOT increase to the city is more like $3 million. .

“…the Anaheim city council majority voted to give $158 million to a politically-connected hotel developer…”

The “politically-connected developer” is one of the bloody shirts waved at every opportunity by the mayor and other opponents of these agreements.  The developer in question is Bill O’Connell, Sr. – a good and decent man, and a long-time, generous pillar of the Anaheim business community. He and his partners worked with the city to craft an agreement that is different in degree but not principle, from TOT rebate programs that been in existences for years – and which Tait had supported. The way Mayor Tait and others have dehumanized him into an effigy to be rhetorically burned at every opportunity is shameful and the opposite of kindness.

Reasonable people ought to be able to disagree on this issue without larding their arguments with hyperbole, half-truths and outright falsities, and with demonizing those with whom they disagree. Perhaps the unexpected will happen and those unkind attributes will not manifest themselves when the matter comes before the council. But don’t bet on it.

5 comments

  1. The math is solid proof that Anaheim and its residents will benefit greatly by partnering with the luxury hotel industry.

  2. Can the city guarantee quality in the long term? Just how long does the rebate last? How long is the hotel expected to remain operational? How does the hotel plan on financing renovations? No offense to Mr. O’Connell, but is his the only offer on the table? Can we make the process competitive? If not, do they really need so much? What is the rational behind the amount? I think it is reasonable to ask these questions given appearances.

    • You can ask questions until Kingdom Come. Empty lot = no revenue for the general fund. Luxury Hotel = Mucho Dinero!

      • I hate making up names

        It just seems odd. You have one side that says no deal at all ever, and another side that seems giddy to make the deal presented to them. That same can be said about the Angels debacle. I hate to sound Trumpian, but who is looking to make the best deal for Anaheim. Maybe the criticism came out of the blue and the establishment wasn’t prepared to keep up appearances. And really, it’s not just appearance, I would like to see my representative ask tough questions with the intent of ultimetly reaching a deal. Is that so radical!

        Bernie Samders sucks!

  3. I hate making up names

    *Sanders! 🙂

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