Disney’s 4th Hotel: Politics Trumps Revenue & Jobs At Anaheim City Hall

Disney has had entitlements to build a 4th hotel in the Disneyland Resort for more than two decades. In 2016, the duly elected members of the Anaheim City Council voted – albeit after heated debate – to approve plans for a 700-room luxury hotel integrating Downtown Disney with the Disneyland Hotel and the Grand Californian. At the same time, the council approved the project’s participation in the Hotel Incentive Policy, – a program open to all qualified projects under which the developer is rebated 70% of Transient Occupancy Tax revenue generated for a period of 20 years.

In a dramatic case of cutting off one’s nose to spite one’s face, the City of Anaheim maintains Disney is out of compliance with the economic assistance agreement because Disney plans to shift the same 700-room hotel about 1,000 feet. Same hotel, same property, slightly different siting. The hotel’s address would be 1601 Disneyland Drive instead of 1401 Disneyland Drive. Disney’s intention was to improve the project by improving connectivity with Downtown Disney.

The 4-Diamond hotel project agreement is mutually beneficial for the city and Disney. A normal city council in a normal city with a normal interest in growing jobs and tax revenues would swiftly fix the matter so the project could continue moving forward. But this is Anaheim in the era of the pompously self-titled “People’s Council” – where politics trumps common sense.

Mayor Tom Tait is quoted in the Los Angeles Times claiming the slight siting change makes it “a fundamentally different project.” That’s just nonsense. It’s the same hotel project with a slightly different street address. City staff has been aware of the shift since the beginning of the year and actively participated in the planning for the site with no indication of a problem. What’s really going on is Mayor Tait sees an opportunity to use a technicality to stick it to Disney and kill the economic assistance agreement the council approved in 2016. He wants to unravel the entire garment by pulling on a loose thread.

Consequently, this massive investment in the Anaheim economy is on indefinite hold, and may be permanently cancelled.

That’s 5,050 construction jobs and 1,150 permanent jobs that won’t be available people who want and need them.

The City of Anaheim loses out on $25 million in net TOT revenues the city loses during the hotel’s first five years of operation, and more than $1 billion in TOT for the city’s general fund during the next 40 years.

UNITE-HERE Local 11 loses out on 1,000 dues paying members.

Anaheim’s tourism and convention sector loses out on a tremendous asset for attracting bigger, more affluent shows to the Anaheim Convention Center and cementing the Resort as top-tier destination.

How can the council majority harp about “investing in neighborhoods” when it intentionally kiss goodbye the tax revenue it needs to fund that investment?

LA/OC Building Trades Council President Ron Miller gave voice to the baffled frustration of many when he told the Voice of OC:

“It’s unbelievable that the leadership of the City of Anaheim has become so hostile and so unwelcoming to the prospect of new jobs and development in Anaheim that we’ve come to this: Disney deciding to stop moving forward with their planned, new fourth hotel in the Anaheim resort.”

The city council could easily fix any questionable legal misunderstanding by approving the minor siting adjustment. They would simply be honoring an existing agreement to which the city is a party. Unfortunately, it’s unlikely there are four votes to do so. Tait has already made plain he wants to kill the TOT rebate agreement even if that means killing the hotel project in the process. Councilwoman Denise Barnes will naturally vote with the mayor, as will Mayor Pro Tem Jose F. Moreno – who has been campaigning non-stop against “the Disney Corporation” for years. Councilman James Vanderbilt’s decided to kill his idea for an alternative minimum wage measure under pressure from his council allies and the Resort unions, so it’s unlikely he’ll re-discover his nascent independence to broker a compromise.

The city’s actions vis-a-vis the Disney project – driven by the anti-Disney mindset of the council majority – sends an unmistakable signal to anyone looking to invest in a business venture in Anaheim: agreements with the city aren’t worth the paper they’re written on if the political winds shift. Why invest in an enterprise in Anaheim when a one-vote shift on the city council means the city will look for any excuse to kill your project – no matter how much time, money and energy has been invested?

One comment

  1. Will Disney file suit against the City?

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