Disney Announces It Will Proceed With Deluxe Hotel Project…In Orlando, Florida

Two weeks ago, the Disneyland Resort announced it was cancelling its planned 4-Diamond hotel – a 700-room, $700 million luxury hotel at the west end of Downtown Disney that would have opened in 2021. The decision came in the wake of the city’s claim a minor siting adjustment nullified the TOT rebate agreement upon which the project was premised.

Last week, Disney Parks and Resorts announced it would build a 900-bed hotel and vacation club villas project at Walt Disney World that will open its doors in 2022.

Critics of the TOT rebate agreement loudly and repeatedly claimed Disney would build the 4-Diamond hotel in Anaheim anyway, without the tax incentive agreement.

And they were wrong.

They forget Disney is a worldwide company that has choices where to invest its capital in order to get the best return for its shareholders. The governing city council majority led by Mayor Tom Tait and Mayor Pro Tem Jose F. Moreno have created an increasingly hostile political and business environment that is driving out investment. Just ask the Angels. But for now, let’s focus on Disney.

So Disney cancels a massive investment in the Anaheim Resort that would have created thousands of jobs and deposited hundreds of millions in tax revenue into city coffers. The City of Anaheim will now receive 100% of nothing.  On the other hand, Disney continues to invest in Walt Disney World.

Critics who claim this announcement is evidence the TOT rebate incentive wasn’t necessary to build the 4th hotel are comparing apples to oranges. Construction costs in Florida are significantly lower than in California – upwards of 20% more expensive. And that doesn’t include land acquisition.

In Anaheim, Disney was and is obviously space constrained, whereas they face no space constraints in Walt Disney World. Furthermore, there is a building spree going in California – including Anaheim – which also increases costs since the strong demand bids up the expense of supply.

All these factors underscores the necessity of a tax incentive agreement in order to make the 4th hotel pencil out.

The bottom line is Disney has options. The usual suspects seem to believe otherwise, pointing out that Disney can’t physically move the Disneyland Resort. What they miss is Disney has options as it relates to their long-term investments. Companies understandably prefer investing in places with a stable business environment – and that’s not how you’d describe Anaheim in the Tait-Moreno era.

In 2016, the City of Anaheim entered into a contractual agreement with Disney regarding its fourth Resort hotel.  Within months, the political winds shifted and a new governing majority worked to undermine and undo that agreement. What company would want to invest hundreds of millions of dollars in such an unpredictable environment?

Also last week, the Angels chose to opt out of their stadium lease with the city. The Angels, too, have been mau-maued by the mayor and his followers and prefer to take their chances on finding somewhere to play the 2020 season rather than pursue fruitless negotiations with a hostile council majority.  Given their own experience with the city, and after watching the new council majority do everything it could to renege on and undermine a contractual agreement, who can blame the Angels for this course of action when they can’t be confident the city leadership will act in good faith.

Perhaps Anaheim voters should ask themselves what a new Mayor and City Council can do to change the tone and promote continued investment, resulting in jobs and revenue for the city of Anaheim. It would appear the Tait-Moreno majority’s approach of constantly assailing and attacking the city’s largest employer and taxpayer is resulting in less investment and job creation for Anaheim. This hostile attitude has already cost the city $100 million risk-free tax revenue over the next 20 years – a windfall that would increase by orders of magnitude in succeeding decades. Anaheim voters might consider if they want their city council to continue cutting off its nose to spite Disney.

9 comments

  1. Stand for Anaheim

    What! How you treat your largest businesses have consequences??? Shame on you Tait and Moreno. Wake up, Anaheim. There is a hostile business climate!

  2. Sidhu would see the value in working together rather than one alienating the other, which is very poor business practice. It actually is embarrassingly apparent that neither Tait or Moreno has much business sense or do they think the citizens of Anaheim are not bright enough to see through what they are doing or do they think that we are not strong enough to stand up for our city as well as ourselves.

    We are strong enough to this ultra left wing movement whose only interest is to control us.

    VOTE ANAHEIM. CHANGE NEEDS TO HAPPEN, IT CAN’T GET MUCH WORSE.

    NO ON MORENO
    NO ON JABBAR
    NO ON RANDLE-TREJO
    NO ON ALVAREZ
    NO ON RUELAS
    NO ON THURMOND
    NO ON LOPEZ
    NO ON VANDERBILT
    NO ON QUIRK-SILVA

    YES ON PROP 6. A YES VOTE WILL REPEAL THE GAS TAX.

  3. We are strong enough to stand up to this ultra left wing movement whose only interest is to control us.

  4. The interesting points that are left out of this article is that the ground that the hotel was to be built, was moved and because of a former gas station that had been there many years ago never removed the tanks, the cost had skyrocketed. Antother factor is that you cite the ever increasing hostility of the business climate in Anaheim. The truth is that Disney asked to get out of the tax rebates so they would not have to be bound by the Living Wage initiative. The whole reason the measure exists is because of how Disney treats it’s employees. Most are living in poverty and since most start accruing debt, because they can’t earn enough to pay for rent, food, healthcare and living expenses, they find themselves in a downward spiral. Couple that with the revenue that the taxes didn’t bring in because of the rebates, the social services that which the poor rely is totally underfunded and overwhelmed, the people of Anaheim fought back. The right’s claim that the left has made the mood hostile is without merit. The real cause is the people on the council that allowed Disney to become a bad citizen and those who allowed it should be throw out of office.

    • And not a one of those employees is being held hostage. Nobody is holding a gun to ANYone’s heads to keep them working for Disney. There are other employers in Anaheim, right? Grass has got to be greener…evil corporation and all, right?
      Get a clue. Your wealth envy is showing.

  5. Edmund blame Disney NOT. Disney is a business. They treat their employees like every other business. Plus you get the Disney perks. I am not saying they are good or bad. However show me a hotel or low skill position job that pays more than Disney. Yes, they are a large business and probably could afford to pay more. However, these jobs were never intended to be permanent or high paying. They are considered stepping stone jobs. There is not a hotel chain that pays living wages. It is not the cities business to enforce wages. It is the state and federal government. Disney pays more than the federal minimum. They do not have to. Blame the Unite Here leaders for poor decisions. I think it is time to change these folks. They finally realized they backed the wrong horse when Disney backed out and everybody else had been given their raises. Do not blame Disney for their wages, no Disney, no low skilled but difficult jobs for Unite Here. Again these jobs were designed for teenagers or first jobs. They were never designed to be living wage paying jobs. Get your story straight and understand that a ballot initiative forced into the largest employer in the area was doomed to fail. And it did. Or find a job with a higher salary and take it. Sorry but Disney is not to blame in this case.

  6. Higher wage and sign ins, we demand it. Oh the Unions will fight for it saying how low the employees are paid all the while taking their cut.

  7. In San Francisco you do not have to be a citizen to vote for school board positions. What? What? This is where Gavin Newsom is mayor and he wants to be our governor. Unbelievable.

    Vote John Cox for Governor.

    Anaheim we must watch out as this movement is trying to take hold.

    Vote Harry Sidhu
    Vote Mitch Caldwell
    Vote Trevor O’Neil

    Vote YES on 6 to repeal the Gas Tax.

    Unbelievable.

  8. This is a initiative that says if a company takes a tax subsidy from the City of Anaheim, it needs to pay their employees a decent wage. Disney wants over 200 million dollars to build a hotel on property that they already own. Is that good business sense for the city of Anaheim to make? This initiative would not be paid by the city. It will be paid by the companies who decide to take the subsidies. Anaheim will still get their tax revenue. From all the current hotels and also the ones being built. There are 2 hotels being built right now not using any kind of subsidy. Here’s another idea. Disney CEO Bob Iger is projected to make $400 million dollars in the next 4 years! How about you take half of that and put it towards the hotel? Iger still gets $200 million and Disney has their $200 million to build their hotel. Also the recently passed Tax Reform Act is saving Disney 2 billion dollars a year now! How much more does Disney really need?!?!? Anaheim residents are tired of it!

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