Construction plans on a new upscale hotel at the west end of Downtown Disney came to a screeching halt last week over disputed tax breaks. The Disneyland Resort sought to begin building its proposed eight-story, 700-room luxury lodge after appearing before the Anaheim planning commission today. The Mouse can still get things started, but opted to call everything off instead when the availability of $267 million in bed-tax subsidies granted to the project two years ago as part of a now-defunct Luxury Hotel Incentive Program came into question.
Mayor Tom Tait, a crusader against such tax breaks, can claim victory in checkmating the largest hotel subsidy in Anaheim’s history. But if the Mouse, by postponing the project, is playing wait-and-see with the November elections–one that will also feature a living wage ballot initiative for subsidized corporations in the Anaheim Resort–it could turn out to be the shortest-lived one on the eve of being termed-out of office as well.
“It certainly puts that issue in the forefront of this election,” Tait says. “If Disney wants to build a luxury hotel, they should do it with their money and not the people’s money.”
Will city council elections deliver a new majority who believe the same?
When a previous council granted Disney a massive 70 percent bed-tax break over 20 years for its new hotel in 2016, the corporation originally eyed a parking lot it owns. But a year later, plans moved slightly over to Downtown Disney and businesses at the west end like the Rainforest Cafe and the ESPN Zone shuttered in June to clear the way for construction. With a current council majority generally opposed to corporate subsidies, the change of location set the stage for political deadlock.
“Because this proposed site is inconsistent with the site intended in the Agreement, it is the City’s position that Disney would not be entitled to the tax rebate were it to move forward under its current hotel construction plan,” wrote city attorney Robert Fabela in an Aug. 6 letter to Disney. “The City’s unfortunate decision has put at risk more than 1,500 construction jobs and 1,000 new permanent jobs, as well as more than $25 million in incremental revenue to the City’s general fund in the hotel’s first five years of operation,” David Ontko, chief counsel for the Disneyland Resort, fired back on Aug. 15.
But the Mouse’s chief counsel left out an important fact; those thousands of jobs, both construction and permanent, are slated to be union. By contrast, Wincome’s pair of luxury resort hotels passed under the same incentive program only negotiated Project Labor Agreements to hire union construction workers. After ceremonial ribbons are cut, they’ll be non-union hotels. Not so for Disney’s project. If built, a thousand hotel workers at the luxury lodge will be represented by UNITE Here Local 11. It’s a rare occasion where the fates of the hotel union and building trades are seemingly intertwined; both have otherwise been at odds over the Wincome hotels and the living wage measure, which the building trades vocally oppose.
Councilman Jose F. Moreno, a supporter of UNITE Here Local 11 who’s up for re-election, didn’t respond to the Weekly‘s questions regarding the future of union jobs.
But in breaking the impasse, Disney could always revert back to the originally proposed site and receive its subsidization in full without any legal trouble. The hotel can also move forward at Downtown Disney without subsidies. Council members also have the ability to amend the development agreement to keep that current site and subsidies intact. Only, the political will to do so under the mayor’s council majority doesn’t appear to exist. “My job is to represent the people of Anaheim,” Tait says. “The $267 million is desperately needed to pay for our vital city services.”
Even with four seats up for grabs, the composition of the seven-member council isn’t the only question before Anaheim voters in November. They’ll also be deciding whether the Anaheim Resort adopts a living wage measure for subsidized companies like Disney. Under its provisions, the ordinance would immediately raises wages for applicable workers to $15 an hour next year. By the time Disney hoped to open its new luxury hotel in 2021, the wage floor would rise to $17 an hour. They’d see a final dollar-a-year annual increase to $18 an hour in 2022 before cost of living adjustments take over.
“It could be that if the hotel goes forward without a subsidy, it wouldn’t fall under that provision of the initiative,” says Mike Lyster, city spokesman, “but we do not have any final determination on that.”
Disney’s three hotels in the resort–the Disneyland Hotel, Paradise Pier and Grand Californian–all were built without bed-tax subsidies, but that’s not the only form of incentive in play under the ordinance. The Grand Californian came about as part of a ’96 Anaheim Resort Expansion deal that included a Disney gate tax moratorium. Only, the ordinance as written applies to present and future subsidies; the previous gate tax expired in 2016 before being extended.
There’s no ambiguity for UNITE Here Local 11 about the new hotel’s fate or that of the others under the ballot initiative since Disney is a resort-area company that’s received subsidies–including an extension of the entertainment tax moratorium in 2015 for up to 45 years. “Regardless if this hotel is built without bed-tax subsidies, the living wage is moving forward and it will be applicable to all Disney employees,” says Ada Briceño, UNITE Here Local 11 co-president.
That is, of course, if it’s approved by voters. See you in November!