OC Register Columnist: Disney Had No Choice But Halt 4-Diamond Hotel Project

Jonathan Lansner, the OC Register’s veteran real estate columnist, wrote today that Disney had no choice but to pull back plans for Anaheim luxury hotel.

Some key excerpts from the column, which Register subscribers can access here:

Disneyland’s luxury hotel in Anaheim wasn’t a financial no-brainer to start with.

So a last-minute pullback of a controversial city tax break would, at a minimum, obviously force Walt Disney Co. to recalibrate its plans.

Alan Reay, who follows the hotel industry at Atlas Hospitality in Irvine, says the latest twist in Anaheim’s quest to add four-star hotels is no surprise.

“I’d have been shocked if Disney did go forward for now,” Reay says. “They were thrown a huge curveball at the last minute.”

The Disney project, along with two 4-Diamond projects by the Wincome Group, were approved in 2016 to participate in the city’s Hotel Incentive Program – which used TOT rebates to incentivize the construction of 4-Diamond hotels in the Anaheim Resort, which currently has only one such property.

Lansner describes why the city’s sudden move to yank the TOT rebate incentive throws such a big monkey wrench into the project’s development:

And on Aug. 6, Anaheim officially told Disney that because of those new plans the controversial tax subsidy was gone. Please note that the current city council is nowhere as wild about Disneyland as the group that previously approved the hotel deal.

That tax break, estimated to be valued at $267 million, comes from reduced hotel-room taxes generated by the new luxury lodge during its first two decades in operation. That means if the hotel’s never built, city coffers lose $113 million as well over 20 years, plus the chance to collect all hotel taxes thereafter.

The city’s change of heart put Disney — a publicly owned company with huge transparency requirements — in a tough spot, Reay says. So Disney executives had to step back quickly. Imagine a consumer being told just before closing a major purchase that a significant rebate was no longer valid; that shopper would likely walk away, too.

Lansner writes that the hold could very well become a cancellation of the entire project:

Reay expects Disney’s executives to diligently review the hotel project’s finances and construction plans assuming the tax credits are now gone. They’ll have to weigh those added costs as well if any legal and negotiation options are viable, too.

“Disney may very well say ‘No’, ” Reay says.

That’s because the luxury hotel game is the most difficult niche in the often unpredictable hotel business.

For starters, building a four-star luxury hotel — rooms plus high-end amenities, top-shelf dining and full-service meeting and convention facilities — isn’t cheap. They can cost two times, even three times, the construction expenses of a three-star, limited-service hotel, which is essentially just rooms. Reay guesses Disney could spend up to $1 million per room to build the new hotel.

As for those who continue to claim these 4-Diamond priojects would have been built without the TOT rebate incentives:

“The hotel market is as strong as it ever been in my 20-plus years in the business,” Reay says. “But we did not see developers jumping into Anaheim to build a luxury product without incentives.”

Those who say these 4-Diamond hotels will be built without the incentives have yet to explain why no 4-Diamond hotels have been built in the Resort in 20 years.

 

16 comments

  1. The economic brain trust that is the CATER cabal, consists of: Cynthia Ward, Brian Chachua, Greg Diamond, Vern Nelson, Mark Daniels and Yesina Rojas and any number of unemployed/underemployed losers will (and have) argue(d) that these properties will be developed anyhow. FALSE.

  2. Au contraire!

    They have the choice to build the hotel without Anaheim taxpayer’s money
    just like the Radisson.

    • Say No to Aitken Moreno Vanderbilt

      The Radisson will not be a 4 star hotel. So where is Tait’s grand plan to recoup the millions of dollars that will not be received by the general fund? Does he think kindness will get us there? Does he have a plan?
      If the economics worked to build it, they would have already. Anaheim’s own finance director stated that the Disney hotel was a piece to the budget- But by all means hit the reset button.

    • What makes you think they’d do that? Disney’s had the entitlements for a new hotel for years and years. They didn’t pull the trigger until the council established a TOT rebate program open to all comers. Now that Tait is reneging on the agreement, Disney’s pulling the plug. Surprised? Who wants to do business with an Indian giver?

      You and Tait should go back to what you do best: electing socialists and nincompoops to the city council.

  3. We need a list of candidates that are in line with Jose Moreno’s politics. That was we can know exactly who NOT to vote for. No on Moreno, Al Jabbar and Ryan Ruelas. Who else? Because show me who your with and it will show me who you are.

    Take a look at Moreno’s Facebook page, see his ideals, thoughts and what he is up to as well as who he associates with. In one instance he shows Martin Luther King and yet he associates with those that took part in the Palais riot that was anything but peaceful.

    We need his whole group elected OUT of Anaheim.

    • Well, Mayor Tait, but he is leaving, but he is backing Cynthia Ward for Mayor, James Vanderbilt in District 2, Dr, Moreno in District 3 and Patty Gaby in District 6,

      Of course, Ashley Aitken for Mayor, as pointed out at the Anaheim Blog.

    • That’s a hard one. Folks from left and right think highly of the good Doctor; how are you defining “his politics”?

      If you wanna vote the opposite of Moreno, you should probably stick to the klepto slate – Sidhu, Caldwell, Brandman, O’Neill (sorry Trevor). And on the school boards, whoever wants to plunder the public treasury for the profits of charter schools.

      • Matthew Cunninghsm

        Vern prefers school board members who will plunder the public treasury on behalf of the teachers unions.

        Or who spend $1 million in taxpayers dollars suing a bunch of poor and working class immigrant parents to stop them from converting their school into a charter.

        Ryan Ruelas and the Moreno clone running for AESD board fit that bill.

        • MC don’t forget that those school board members that Vern prefers, the ones who plunder the public treasury on behalf of the teachers union…..did this while defending the failing test scores of the schools/students they are paid so well to represent.

          DO NOT VOTE FOR RYAN RUELAS, AL JABBAR AND JOSE MORENO.

    • Funny thing about the Tait interview on KNX today:

      ” I just got home from work, I was removing my shoes and heard screaming…………….”

      Did the mayor of Anaheim just tell us that he lives in Laguna Beach? How many days/nights in 2018 has Tait spent in Laguna Beach? What is his TRANSPARENT ANSWER to where he lives and his FUTURE plans for living in Anaheim?

      I already read Cynthia Ward and Vern Nelson defending him (surprise), but that leads to more questions: The Millionare Rich Kid, who INHERITED his Daddy’s business, who was recruited to be mayor, has now become a representative of the people. Which people that “UNITE HERE” or live on Anna drive have mansions in Anaheim Hills, Condo’s in Laguna and luxury cars??

      • Key phrase is ‘got home’.
        Sad that Ward and others defend him when attacking others claiming they were not truthful about where they lived.
        So Tait lives in the wealthiest part of anaheim where he doesn’t have to deal with any of the real issues anaheim faces, yet gets to decide on those issues for us. But on the “weekends” he gets to go to his other house… the one on the beach that cost him a few million….
        Maybe Vern will get invited to that house too..but he’ll have to take an uber….

        • Gustavo Elias Valencia sexually assaulted a sleeping woman in her Anaheim home while Mayor Tom Tait, a Democrat pretending to be a Republican, is at his new home in Laguna Beach.

  4. DO NOT VOTE FOR: Jose Moreno, Cynthia Ward, James Vanderbilt, Patty Gaby, Ryan Ruelas and Al Jabbar. This is the group that is ruining Anaheim. Anyone who associates themselves with Jose Moreno is dangerous to have as representation.

    We need to stand together on voting day resolute in the goal that each and everyone of our votes is speaking for us to the effect that we care about Anaheim and we will not allow it to go downhill any longer.

    Moreno pontificates about how much good he has accomplished and how with our help he will continue to move us forward.

    There you have it. Look at Moreno’s District,is is a mess and has actually gone backwards, falling deeper into disrepair/disarray with residents very unhappy with service. What is he saying? Is he evading the TRUTH? Or is he not of sound mind? Or does Jose have an agenda and will not stop, even avoiding the obvious? His District is a mess, and his residents don’t feel represented and are unhappy. They do not see the state of his District the way he does. That is a problem but it is easy to solve = DO NOT VOTE FOR JOSE MORENO.

    Ryan Ruelas and Al Jabbar both defend failing schools that have failing test scores. They are failing the parents, the kids and Anaheim. They all were party to spending so much time and money to prevent Palm Lane from turning into a Charter School. This is fact and cannot be dismissed as it is public record. They defended the failing school with its failing scores in an effort to keep it in the Anaheim School District. Jabaar, Ruelas and Moreno, fought to keep it in a system that was producing failing scores so bad that it was taken away from them. They fought to continue to fail our kids and the kids of the future.

    They align themselves with Jose Moreno and have his vision. Despite what IS they say IT is something different. Despite his District looking like a mess with unhappy residents he just keeps professing “His accomplishments” and how much progress District 3 has made with his as their council leader.

    Al Jabbar and Ryan Ruelas continue to defend failing schools.

    They all are asking for us to vote for them and continue to move Anaheim forward together with them in their current leadership roles.

    DO NOT BE FOOLED – Anaheim is NOT doing better with Jose Moreno, Al Jabbar, and Ryan Ruelas in their current leadership positions rather it is the contrary. Anaheim is in chaos.

    ANYONE WHO VOTES FOR: JOSE MORENO, AL JABBAR OR RYAN RUELAS OR VANDERBILT, PATTY GABY, AIKEN AND CYNTHIA WARD – They are all aligned.

    please make our votes count toward a better Anaheim.

  5. Believe: Al Jabbar, Jose Moreno, Ryan Ruelas and Mayoral candidate Ashleigh Aiken are all linked and each is distributing the others campaign materials or hosting coffee/coffee and cookies with the respective candidates as well as walks asking for votes. The are “homey” but slick while slipping in their “homespun” rhetoric Don’t be fooled by their performances. They have had the opportunity to improve Anaheim and its schools and have not done so.

    Please have your eyes wide open and ask yourselves how has Anaheim improved. Are our lives better since these “leaders” have been our representation? Have our schools flourished? Is our city cleaner and are our streets safer? Are our recreation/parks enjoyable safe places to visit? Are our city employees happy in their jobs. Have we become known as a city that is hostile to do business in? Are our residents proud of their city in its present state/environment?

    Most would answer No.

    Simply,we need to elect candidates that will have us answering yes. We need to represent ourselves in this upcoming election and we can only do that with researching who are candidate really are and what direction they will take us in. Do we like what we see and how we feel or do we need change.

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