News of Disney cancelling their fourth onsite hotel is the latest in a series of on-again, off-again announcements that have left the Disneyland Resort in a state of flux. The cause of these frequent changes is the souring relationship between Disney and the city of Anaheim. The constant revisions have created a domino effect, leading to the cancellation or re-working of everything from parking, hotels, and even new theme park lands.
Disneyland does not have the luxury of a Reedy Creek Improvement District type agency that will allow Walt Disney World levels of autonomy from local government regulation. The city of Anaheim must approve anything of substance at the Disneyland Resort. Over the years there have been some rough patches, but for the most part Disney has been able to negotiate their way to favorable terms. This includes a deal where Anaheim funded the construction of the Mickey & Friends parking structure and then leased it to Disney for $1 per year. While Disney did not pay for the parking structure, they are able to keep all the revenue from parking fees.
That deal, among others, has current city officials calling foul. Several council members including mayor Tom Tait have vowed to play hardball with Disney. Combined with pressure from unions aimed at pushing wages higher, Disney is struggling to get projects approved with the financial terms they have come to expect.
The timing could not have worked out worse for Disney. They negotiated a plan in 2015 to spend over $1 billion dollars. In return, the city agreed to not impose a gate tax on park tickets that many in the city wanted. The measure barely passed, with mayor Tait against the measure. Disney is building Star War’s Galaxy’s Edge in Disneyland and had further plans for a large-scale Marvel land, a new hotel, and additional parking which would more than equal the mandated price tag. While Galaxy’s Edge is due to open in 2019, the other plans have been in upheaval.
Anaheim approved a tax incentive for the building of new AAA four diamond resorts in the resort district and Disney was one of many companies to jump on it. The incentive was estimated to save Disney roughly $267 million dollars long term on their new hotel. Plans were approved to put the resort in the Downtown Disney parking lot.
Disneyland has a massive parking problem and the addition of Galaxy’s Edge could potentially cripple the resort parking infrastructure. The long-overdue eastern gateway project would address this by building a large parking structure to the east of the resort, with a an elevated pedestrian walkway taking guests over Harbor Blvd. and into the resort. Local businesses objected, as it would route Disneyland guests away from their businesses. The city agreed and sent Disney back to the drawing board. This also affected Marvel’s plans for Disney California Adventure, as part of the plan would re-route Toy Story parking buses to the eastern gateway. This would free up land on the eastern edge of the resort earmarked for a Marvel expansion. Instead of altering their plans, Disney simply cancelled the eastern gateway project. Disney then had to find another place to put more guest parking and redesign their Marvel expansion.
Disney came back and surprised everyone by moving their new parking structure next to Mickey & Friends, which did not need city approval as the area had already been zoned for parking. This, however, pushed the hotel project south by 1,000 feet into the western portion of Downtown Disney. While Disney closed many businesses in Downtown Disney and was prepping for demolition, the city put a wrench in the plans again. The city concluded that the move of 1,000 feet constituted a change in address, and made the original deal for the resort moot. Further, Disney would be allowed to build the new hotel, but the tax incentive would not be approved for the new site. This essentially added $267 million to the project because of the incentive loss. Disney responded by cancelling the hotel.
New Disneyland Resort President Josh D’Amaro has been active in trying to repair the relationship with the city. He approached the city with a request to end the tax incentives. Some, however, say this is self serving. A union-backed city measure on the November ballot would force any company in the Anaheim Resort District that took city subsidies to pay workers $18 per hour. The measure was aimed largely at Disney and others taking advantage of the hotel tax incentive.
There is a potential silver lining for Disney in November. Several city council seats are up for election, with mayor Tom Tait and other anti-Disney members unable to run again due to term limits. Disney spent over $1 million on the last election, and with so much at stake it most certainly will spend as much or more this time around.
A favorable election may put several projects back on track, on Disney’s terms. New resorts and other projects may be resurrected if a more favorable council is elected in November. Nothing though is assured. There are many within the city of Anaheim steamed over Disney pushing to receive special financial treatment when they rake in billions of dollars of profit every quarter. Disney, on the other hand, has also reportedly approached nearby Garden Grove about building a hotel in their city with buses likely transporting guests to Disneyland. Whatever the future holds, the times of Disney being able to push through projects without a fight from city hall appear to be over.