Anaheim Nixes Tax Incentive Deal For Disney's Proposed Luxury Hotel

As per The Walt Disney Co.'s request, the Anaheim City Council approved ending two tax incentive programs in which Disney would have built a four-diamond luxury resort next to Disneyland and prohibited the city from levying a gate tax on admission tickets.

The council unanimously approved Disney's request at the Aug. 28 city council meeting — a week after Disneyland President Josh D'Amaro wrote to the council to mutually agree to terminate Disney's approval for the hotel incentive policy that allowed developers of a four-diamond resort a 70% rebate from the transient occupancy tax the resort generated for 20 years, and the entertainment tax policy that prohibited the city from imposing a tax on admission tickets for 30 years in exchange for Disney placing $1B in investments into the resort.

The vote just terminates Disney's agreement for the hotel incentive, not other projects approved under the policy. Disney was one of three developers to receive a hotel incentive for proposing to build four-diamond hotels that would meet AAAs guidelines.

Wincome Group, which also was approved for the hotel incentive policy, already broke ground on the $245M Westin Anaheim. A second pre-approved project for Wincome Group remains on hold.

Another developer, a JV of Bill O'Connell and Ajesh Patel, who received a similar incentive policy, broke ground on a JW Marriott at the GardenWalk. It is unclear if a second hotel O'Connell and Patel are building tied to the incentive will be developed.  

"I was very surprised, in a good way, that Disney requested these agreements to be terminated," Anaheim Mayor Tom Tait said during the meeting. "I want to commend Disney for canceling these agreements. I believe it was a serious act of goodwill on their part towards the city of Anaheim."

The termination comes a few months before resident voters will decide if companies in the city that receive city subsidies, tax rebates or are subject to an entertainment tax policy will be required to pay their employees an $18/hour minimum wage by 2022.

Disney was just about to break ground on the four-diamond luxury hotel slated for the west end of Disneyland Resort's Downtown Disney retail strip when the city of Anaheim's attorney notified the company that it would not be eligible for the hotel incentive policy since Disney moved the proposed hotel's location.

The company has halted the project. 

Councilman Stephen Faessel believes Disney will abandon the project. He said the city could have used the additional bed tax the luxury hotel would have generated for city funds.

"As we grapple with pension liabilities which are increasing and other fiscal responsibilities, I think we're going to have to sharpen our pencil and take a look at this funding gap," Faessel said, believing the city will lose out on $7M a year.

Tait disputed the $7M number but asked the city staff to look into the exact loss of bed tax that the hotel could have generated through the hotel incentive policy program.

Councilman Jose Moreno said with the ending of these agreements, this is an opportunity for Disney to take care of its workers and provide them a higher wage.