Disneyland to Anaheim: These tax agreements are ‘divisive’ so let’s rip them up

Days after halting plans for a luxury hotel in the Anaheim Resort District, Disney officials are dissolving agreements that would have channeled millions in hotel room taxes to the company and barred the city from adding a gate tax to amusement park tickets for decades.

Disneyland Resort President Josh D’Amaro asked city leaders in a Tuesday, Aug. 21, letter to end the incentive agreements because they’ve become “a flash point for controversy and dissension in our community.”

Disney officials met with the city Tuesday to make the request, which the City Council could act on as soon as next week, Anaheim spokesman Mike Lyster said.

“I thought it was a good and bold move” by Disney, said Anaheim Mayor Tom Tait, who has opposed tax subsidy agreements with developers.

“It’s hitting the reset button and it’s a shift in how Disney looks at its host city.”

The announcement comes a little more than two months before the Nov. 6 election, when Anaheim voters will decide a ballot measure incrementally raising the minimum wage to $18 an hour by 2022 for workers at hotels and entertainment businesses that have received tax incentives from the city. Under one of the agreements Disney seeks to end, the company would get $267 million over 20 years from the taxes paid by hotel guests to help build a 700-room, high-end hotel.

The city hasn’t done a deep legal analysis of the request and its impact on the ballot measure, Lyster said, but if no incentive agreement is in place, “It could very well be that they (Disney) are not subject to those provisions of the initiative.”

The Wincome Group has also made agreements with the city to receive portions of their hotel taxes to build two luxury properties and would still be subject to the ballot measure’s wage requirements, if it passes. But, as the city’s biggest employer, Disney was a far bigger fish for the hospitality worker unions backing the initative.

Officials with Unite Here Local 11, a union that represents many of the resort’s hotel workers, were caught off guard by Disney’s withdrawal from the agreements.

“It definitely is a surprise,” Unite Here spokesman Andrew Cohen said.

He didn’t want to speculate on Disney’s motivations, but said, “This clearly means that they have no reason to oppose the living wage in Anaheim, and I think this also is hopefully an indication that they’re going to continue to take steps to lift their employees out of poverty.”

This summer, Disney agreed to a new union contract that gives about 8,600 of its 30,000 employees at least $15 an hour starting in January – that offer has also been made to the Unite Here workers. Another 7,000 non-represented workers also received a wage bump that will grow to $15.75.

It’s unclear how the end of the tax agreements may affect Disney’s future investment in its flagship park.

In exchange for the promise of no gate taxes for 30 years, Disney had agreed in 2015 to invest $1 billion in the resort, which included the addition of Star Wars: Galaxy’s Edge. The tradition of no taxes on tickets goes back to 1996. The company could have extended the no-tax pledge an additional 15 years by investing another $500 million to enhance the park and related developments.

Disney officials said Tuesday they’re proceeding with construction of  the “Star Wars” land, set to open next summer, and they’ll also follow through on plans for a Marvel Comics-themed area at Disney California Adventure.

But, the luxury hotel remains on hold indefinitely, Disney officials said. The hotel’s future was already in question after a recent dispute over whether a change of its location to part of Downtown Disney would invalidate the incentive agreement.

In the letter, D’Amaro said tax incentive policies are common for encouraging investment, but in Anaheim they “have become divisive” and hurt the company’s relationship with the city.

In a written statement, Anaheim Chamber of Commerce President Todd Ament said the cancellation of the agreements makes him fear for the city’s future financial condition.

“The only people happy about this news are other destination markets who will not stop offering such incentives to attract investment to their cities while Anaheim goes unarmed in the global marketplace,” he said.

Tait expressed no such worries.

“I believe Disney will continue to invest in their park,” he said, “because it makes good business sense.”