Anaheim to Award Biggest Tax Subsidy in City History to Disney—Union Leaders Remain Quiet

By David Schwartzman and Matt Smith

There’s evidence of a very California coup in the city of Anaheim, where an unusual alliance of city officials, government union leaders and developers is advancing its own financial interests at the expense of everyone else. Their current goal: a council vote Tuesday night by the Anaheim city council to offer major corporations, including Disney, the largest tax subsidies in Anaheim history.

That agenda item came as a surprise to Mayor Tom Tait, the man you might figure should know everything at City Hall. A long-time critic of taxpayer subsidies to business, Tait says city staff, including City Manager Paul Emery, worked to keep the deal under wraps. “I inquired multiple times about a new potential Disney property,” Tait told us. “When asked, he (Emery) denied any knowledge of this proposal.”

In an email, Emery told us he notified Tait and other council members about the Disney subsidies on June 8. But that was one day after the Orange County Register reported the Disney deal. By then, Tait says, he’d already heard the news elsewhere. “I had to hear it from the Disney president after it was announced,” Tait says. “At some point, (Emery) should have called me to let me know.”

Anaheim spokesperson Mike Lyster said there was nothing unusual in communications to Tait.

“To brief council members before an application has been filed is premature, as some inquiries may never result in a formal application, or a project may change significantly before an application is submitted,” he said in an email. Even when that pending application is from Disney? Requesting a historic $267 million subsidy? Maybe even especially then: “We don’t want to treat Disney any differently than we treat everybody else,” Lyster said.

Disney and two other luxury hoteliers are seeking a total of about half a billion dollars in new hotel subsidies. Leaders of the Orange County Employee Association (OCEA) once routinely opposed such subsidies, fearing they imperil rising government worker pay and benefits.

But now? Radio silence.

In January 2012, OCEA rallied to block subsidies to the proposed GardenWalk hotels – two four-star hotels in the resort district. OCEA attacked council members supporting the subsidies in mailers condemning the “Giveaway Three.” The group was the main muscle behind the signature gathering drive for Let The People Vote, a campaign to put hotel subsidies before a general vote.

A year after fighting public giveaways, union leaders were suddenly pro-subsidy, their fear of future shortfalls apparently eliminated. OCEA walked away from Let the People Vote; the campaign fizzled. When the Anaheim city council voted for the same GardenWalk subsidy in 2013, OCEA was silent. In 2015, fire and police union leaders actually endorsed a measure that would stop the city from taxing gate receipts at Disneyland for the next 45 years.

What changed? The obvious clue is that Disney’s hotels are union, organized by UNITE HERE Local 11. But multiple sources told us the unions’ conversion came in April 2012 after a meeting between Nick Berardino, head of the OCEA; Carrie Nocella, Disneyland’s government relations and minority business development director; and Todd Ament, Anaheim Chamber of Commerce president. After that meeting, Anaheim was a kind of Tomorrowland of happy relations between corporate, union and City Hall representatives.

OCEA officials did not respond to requests for comment. At the time, Berardino told the Voice of OC the meeting was called “to discuss better ways to handle divisive issues like taxpayer subsidies. Any talk that a labor deal was worked out in that meeting amounts to speculation run amok, he said.”

“We didn’t talk about delivering anything to [city] employees,” Berardino reportedly declared.

But in June 2012, just two months after the summit, the Anaheim city council approved a contract with workers covered by OCEA: no outsourcing of government jobs, no layoffs, no furloughs, and $2,200 to each employee who had taken furlough days. Tait was the lone dissenter.

A few months later, in November 2012, the City Council voted 4-1 to keep firefighter pension rates high – even as other California municipal officials were slashing government worker pay and benefits. Again, Tait was the lone dissenter. A few months after that, with Tait again in the minority, the council cut a similar deal with police. In January 2016, the city council was at it again, voting 4-1 to raise firefighter salaries by 10 percent by mid-2017. Of course, Tait was again the lone no vote.
On Tuesday, hotel developers including Disney will ask Anaheim taxpayers for subsidies amounting to a half-billion dollars. The city’s top elected official was boxed out of discussions—blindsided, he says, on what will be the largest subsidy in Anaheim history. If precedent means anything, union leaders will support the subsidies, despite the likelihood that doing so will undermine the city’s financial health and harm its own workers.

If you live in Anaheim, the story is clear: city officials, public employee unions and powerful businesses continue to give away hundreds of millions of dollars at the expense of the taxpayer.

There’s nothing remarkable about special-interest groups—like union leaders and big business—advocating for themselves. But you don’t have to be an idealist to expect that the city council will serve all residents, not just the rich and powerful.

Of course, Anaheim isn’t alone in taxing its residents on behalf of corporations and government unions. But there is something unique in the fact that all this is playing out in the shadow of the Matterhorn.

David Schwartzman is a rising junior at Hillsdale College, and Matt Smith is a graduate student at Princeton. Ethan Musser (Mississippi State) and Blake Dixon (Yale) also contributed to this report. They are participants in the investigative reporting summer internship at the California Policy Center in Tustin.