The ongoing conflict between The Walt Disney Company and the Anaheim City Council has just produced a significant change to their relationship, as the two have agreed to put a halt to $267 million worth of subsidies Disney would have received for a new luxury hotel at the Disneyland Resort.
The vote by the Anaheim City Council on Tuesday comes as a result of Disneyland Resort President Josh D’Amaro’s August 21st request to end two agreements from 2015 and 2016 which have been criticized for providing Disney too many benefits from Anaheim taxpayers. D’Amaro’s letter described the agreements as “a flashpoint for controversy” which created an “adversarial climate.”
The agreements in question would have entitled Disneyland to 70 percent of collected occupancy taxes from a new luxury hotel it was planning to develop, and kept Anaheim from creating a theme park ticket tax for 45 years as long as The Walt Disney Company invested $1.5 billion in its Disneyland Resort parks.
Critics of the move suggest that Disneyland’s desire to end the subsidies stems from the possibility of new Anaheim minimum wage regulations. While Disney reached an agreement with 9,700 union-represented cast members to raise their minimum hourly wage to $13.25 immediately and $15 starting January 2019, a new measure is on the Anaheim ballot that would see minimum hourly wages raised to $15 and increase a dollar each year, topping out at $18 an hour by 2022, after which point it would be raised based on cost of living increases. The Anaheim measure would apply to major hospitality businesses who received government subsidies. Some suggest that ending their previous agreements with Anaheim is Disney’s way of making sure this new wage law wouldn’t affect their 30,000 cast members.
Disney has already put their luxury hotel plans on indefinite hold. After they changed the location of the AAA Four-Diamond property from their original plan and moved it to Downtown Disney, Anaheim has stated that the hotel would no longer be eligible for the $267 million in subsidies, as those only applied to projects approved before the city had ended the tax breaks.
Following last night’s vote a Disney spokesperson said, “These tax incentive policies, which are successfully and widely used across the country to stimulate economic growth and development, unfortunately became counterproductive in Anaheim, prompting our decision to step away from them.”
“I’ve been opposed to these subsidies for some time now. We need every penny of taxpayer money to pay for vital services,” said Anaheim Mayor Tom Tait. “So it really is great of Disney to have done this. They hit the reset button in our relationship.”
Tait noted that Disney still has the option of building the new hotel “with its own money,” but Anaheim won’t feel any negative effects if they decide not to, as there are still 20,000 non-taxpayer-subsidized rooms available near the Disneyland Resort for guests to stay in.
Source: The Hollywood Reporter