Passage Of Anaheim Initiative Pushes Minimum Wage To $15/Hour At Hotels That Receive City Subsidies

Hospitality businesses in Anaheim that receive subsidies from the city will be required to increase the minimum wage of their employees to $15/hour starting next year.

Though not yet certified by the Orange County Registrar of Voters, Anaheim ballot Measure L, the Hospitality Industry Minimum Wage Initiative, is leading by nearly 8 percentage points. 

More than 44,000 voters marked yes on the initiative that will require at least two developers that are developing two four-diamond hotels — the Wincome Group and a JV of Prospera Group and Bill O’Connell — to pay hotel employees $15/hour next year and increase the salary by $1 a year to $18/hour in 2022.

Another O'Connell hotel, a DoubleTree that received city subsidies 20 years ago, is also believed to be covered by the initiative but that program ends in 2020, according to a city spokesman.

Starting in 2023, raises will be adjusted for cost of living. The city’s current minimum wage is $11/hour. 

"It was a campaign of the people," Unite Here Local 11 co-President Ada Briceño told Bisnow. Unite Here Local 11 is a local union that represents hotel and other low-wage workers and part of a larger union coalition that supported the measure. "We had conversations with more than 50,000 residents. I’m very proud that the residents of Anaheim took a look at the issue and voted in favor of our workers receiving a living wage from companies that are getting their tax dollars in the form of subsidies or rebates.

"We are expecting the employers that receive these subsidies as of Jan. 1 to pay their workers a living wage. If not, we are prepared to make sure it is enforced," she said, intimating possible litigation if the companies don't comply.

In a statement, Anaheim Chamber of Commerce President and CEO Todd Ament, who led the charge on the No On Measure L campaign, called the vote "a tragic outcome for Anaheim."

"The special interests pushing Measure L lied to voters and tricked them into thinking this flawed measure will help many Anaheim workers," Ament said. "Time will show the voters the truth. At best, it will only give a raise to about 150 Anaheim residents, but it will drive investment out of our city that will cost thousands their jobs and will cost residents hundreds of millions in tax revenue that could have addressed our most critical issues, including homeless services and public safety.”

Anaheim spokesman Mike Lyster said the city will wait until the Orange County Registrar of Voters certifies the initiative.

"The city is thinking about implementation and oversight possibly from our business licensing department," Lyster said.

The likely passage of the measure immediately impacts the developers building the two four-diamond hotels in the city’s resort district next to the Disneyland Resort and the Anaheim Convention Center. 

In 2013 and 2015, as a way to attract upscale tourists and visitors, the city awarded an estimated total of $700M in transient occupancy tax subsidy over 20 years to help three developers — Wincome, The Walt Disney Co. and a JV of Prospera Group and developer Bill O’Connell — build five four-diamond luxury hotels in the Anaheim Resort District. 

The city's hotel incentive program reimburses developers that build four-diamond luxury accommodations 70% of the transient occupancy tax the hotel generates for 20 years. The city has a 15% nightly bed tax rate.

Wincome received approvals to develop two luxury hotels. The developer is currently building a $250M, seven-story Westin Anaheim next to the Anaheim Convention Center. The second luxury development on a 9-acre lot on Harbor Boulevard, which sits across the street from Disneyland, is on hold. 

An email to a Wincome spokesman was not answered as of press time. Wincome CEO Paul Sanford previously told Bisnow the company would most likely cancel the development of the second luxury hotel if the measure were to pass.

Prospera Group and O’Connell also received approvals to build two four-diamond hotels. The JV is currently under construction on a JW Marriott at the GardenWalk. The development of a second luxury resort is also on hold. Emails to Prospera Group and O’Connell were not answered as of press time. 

Disney was another developer that received approvals to build a luxury hotel under the city's hotel incentive program.

But a couple of months before the November election, Disney asked for and the city granted the termination of the company's involvement in two tax incentive programs with the city, possibly exempting Disney from the initiative if it were to pass.

Shortly thereafter, Disney announced it would not build its proposed Disney-themed resort next to Disneyland.

Briceño said Unite Here Local 11 believes Disney, which employs more than 30,000 employees, is still covered under Measure L, citing a 1996 agreement Disney made with the city to build a Disneyland parking structure. However, Anaheim city attorney Robert Fabela told the city council that agreement would not fall under the initiative's definition of “tax rebate.”