Yesterday, the Los Angeles Times headlined a front-page article with the rhetorical question “Is Disney Paying Its Fair Share in Anaheim?” The author, Daniel Miller, unmistakably tilts the article toward the conclusion that Disney does not – despite the overwhelming weight of the evidence to the contrary.
By any reasonable, objective standard, the relationship between Disney and Anaheim – including the 1996 agreement that created the Resort District – has been a mutually beneficial one. However, by cherry-picking facts, presenting some out of context and omitting key information altogether, the article’s author weaves a false narrative that Disney is taking advantage of Anaheim taxpayers.
Does the Resort cost Anaheim more than it generates in revenue? Are Disney and the Resort District in general a net benefit to the city? That is the key standard by which the relationship should be judged. The LAT story quotes an expert saying as much:
“Anaheim residents should ask themselves if the return on investment was worthwhile,” said Michael Thom, an assistant professor at USC and an expert on tax incentives.
In 1996, the year of the Resort District agreement, the net surplus to the city generated from the Resort area – the revenue left after subtracting to cost of city services to the Resort area – was $10 million. When the 1996 agreement was approved, it was estimated Resort revitalization investment would increase that net surplus to $16 million by 2005.
The reality has far exceeded the estimates. The net surplus to the City of Anaheim for Fiscal Year 2017-18 is $81.6 million – a more than 800% rate of return for Anaheim taxpayers. In other words, the answer to Professor Thom’s question is “yes” – but one wonders if Miller provided this information for Thom to comment on.
It would take some truly creatively slicing and dicing of the data to concoct the conclusion Anaheim taxpayers are getting the short end of the stick. Any of us should be so lucky to be short-changed like that on our retirement investments.
This is public information, readily available. It is critical to honestly answering the question posed in the article’s headline. Amazingly, it was omitted from the article, despite the fact the reporter has been working on this story for months.
Some additional, pertinent, publicly-available information regarding the positive impact of the 1996 agreement, which was not presented to readers:
- Average daily rate of hotels has doubled from $90/night in 1997 to $180/night in 2016.
- Anaheim revenue from the Transient Occupancy Tax (TOT) has more than tripled from $45 million per year in 1997 to $148 million in 2016.
This explosion of tax revenue would not have been possible without the 1996 agreement between Disney and Anaheim the article subjects to unbalanced, unfair criticism.
Miller focuses inordinately on a single aspect of the 1996 agreement – the Mickey and Friends parking structure – using it to guide the readers to the conclusion Anaheim taxpayers are being taken advantage. The 1996 Resort District agreement were solely about the parking structure, Miller would have a point. However, it is only one part of a much bigger Resort revitalization package that has been mutually beneficial to both parties – which is the hallmark of good deal. The point is for both parties to win – and it is inarguable that is the case with the 1996 agreement.
That agreement led to the development of the Anaheim Resort District we know today. It brought numerous improvements to the Resort area, including expansion of the Anaheim Convention Center, public infrastructure improvements to landscaping, streets, sewers, and storm drains – and the Mickey & Friends parking structure, which included a shared-use parking arrangement for the Convention Center.
These investments were paid for by outside bondholders, and at no risk to the city’s general fund because Disney agreed to guarantee the bond.
It was because of the 1996 agreement that Disney invested in the building of the Disney California Adventure theme park, the Grand Californian Hotel & Spa, and Downtown Disney. This agreement paved the way for the dramatic transformation of the Anaheim Resort area into the tourism and convention powerhouse it is today, yielding a bonanza of tax revenue that other Orange County cities can only dream about.
The article acknowledges Disney is Anaheim’s largest taxpayer. In 2016 alone, Disneyland paid more than $125 million in taxes, bonds, levies, fees and contracts, directly benefitting Anaheim, its residents and local schools. As Councilwoman Kris Murray points out in the article, this allows the city to avoid imposing significant taxes and fees on residents. That is not an inconsequential point, as several OC cities have resorted to sales tax hikes to make ends meet, and it more are likely to follow suit.
Miller echoes Disney critics when it comes to the agreement between the city and Disney that was approved by the previous council majority in 1996. Under its terms, Disney committed to investing more than $2 billion in Anaheim to build a new land in the park called Star Wars: Galaxy’s Edge, as well as a new seven-story, 6,800 space parking structure. The LAT article curiously omits any mention of the new parking structure, which will be built with no taxpayer assistance.
For its part, Anaheim agreed to extend the existing moratorium on a gate tax – something the city has never levied.
Disney will also build a new four-diamond hotel under the now-defunct Hotel Incentive Policy, which incentivizes the development of luxury hotels by rebating 70% of TOT revenue generated by participating hotels back to the owner for a 20 year period. Nonetheless, the new Disney hotel will generate more than $750 million in new revenue during the next 40 years.
Furthermore, these projects will create an additional 3,200 permanent roles and 4,100 construction jobs.
LAT Amplifies Disingenuous Carping From Critics
Critics like Mayor Tom Tait and Councilman Jose F. Moreno carp that Disney is the unfair recipient of special treatment. Disney cover the city’s cost for all police and fire services related to its properties. Anaheim’s public safety services are funded by sales and property taxes paid by Anaheim residents, business and visitors (nearly all the latter drawn by Disneyland). Disney is the city’s largest taxpayer. Disney is essentially paying twice for public safety services – something no other business enterprise in the city does. Is this the sort of special treatment the critics have in mind?
In the article, Moreno says:
“Some of the big projects that they may be thinking about — some of the money they want to siphon off from the city — will probably get postponed,” said City Councilman Jose F. Moreno, who defeated incumbent Jordan Brandman, a beneficiary of more than $250,000 spent by Disney-backed PACs.
Moreno is flat-out wrong. Tax revenues that do not exist – no matter how deeply he wishes to the contrary — cannot be “siphoned off.” LAT reporter Miller allows Moreno’s false claim to go unchallenged.
The councilman from District 3 goes on to attribute his anti-Disney activism as “being pro-neighborhood, pro-city.” Left unanswered is how an antagonistic stance toward Anaheim’s biggest employer and taxpayer is “pro-neighborhood, pro-city” when it is the existence of Disneyland and businesses associated with it that fund city services. Anaheim city government would literally collapse without the Resort District, which is the fruit of the public-private partnerships Moreno and Tait find so noxious.
Not that Moreno is above exploiting Disney’s philanthropy for his own purposes. The day before the LAT article was published, he was promoting Disney’s funding and installing of playground equipment in Willow Park:
Miller suggests the new council majority is the result of a backlash against Disney influence – a tired canard endlessly repeated by Moreno, Tait and their progressive allies, and which has little basis in fact. Miller describes newly-elected Councilwoman Denise Barnes – a close Tait recruitment and ally – as a “reform” candidate.
What has she reformed? Indeed, what has the new council majority accomplished? How do they plan to grow the economic pie, reduce crime, lower taxes, incentivize economic development or spur the construction of affordable housing? Crime has increased and homelessness has exploded since the November election. Neither of these can be attributed to the to Resort District – unless one believes that greater economic activity, job creation and rising tax revenues are bad things.
The Los Angeles Times article has apparently been in the works for months. According to sources interviewed for the article, reporter Daniel Miller’s line of questioning left no doubt that the premise was baked in from the beginning: Disney is taking advantage of Anaheim taxpayers.
Coincidentally or not, this is the same song sheet from which Councilman Jose F. Moreno and Mayor Tom Tait – whose quotes and claims were given ;pride of placement – have been singing off of for years.
Disney is Anaheim’s largest provider of employment and top generator of tax revenue. It gives tens of millions of dollars to Anaheim-based charities and underwrites community improvement – particularly for low-income families and at-risk youth. That it has become a punching bag for progressive political activists who claim to represent the aspirations of those folks is testament to the old adage that no good deed goes unpunished.