Disneyland Moves to Cancel $267 Million Hotel Subsidy and Gate Tax Exemption

More ups and downs than the IncrediCoaster. Photo by Javier Castellanos

In an unprecedented move, the Disneyland Resort called on Anaheim to end two policies that granted the corporation $267 million in bed-tax subsidies for a planned luxury hotel as well as a 45-year moratorium on any future entertainment taxes levied against it. The decision comes just days after Disney put plans for an eight-story, 700-room hotel on indefinite hold after city officials argued moving site plans to the west end of Downtown Disney legally nullified the subsidies. 

“It’s a great day in Anaheim,” mayor Tom Tait tells the Weekly. “Disney subsidies will no longer be the flashpoint that they have been.” Alongside Tait, city manager Chris Zapata and city attorney Robert Fabela met today with Disneyland Resort president Josh D’Amaro and chief counsel David Ontko at their request.

“It has become apparent that certain policies that were adopted to enhance the Anaheim Resort District and benefit the City, including the Entertainment Tax policy that was originally adopted in 1996, have instead created an adversarial climate where there should be cooperation and goodwill,” D’Amaro stated in a letter to city officials. “We are asking the City to join us in terminating both agreements.” 

The mayor calls move “bold” and believes that it will usher in a new era of improved relations with Disney. The earliest that the city council could honor Disney’s request is during the scheduled council meeting a week from today. Plans for the luxury hotel, and the thousands of union construction and hotel worker jobs that come with it, remain on hold. Downtown Disney businesses like Earl of Sandwich and the ESPN Zone that employed more than 400 workers closed down in June to clear the way for construction. “If they want to build it and it makes sense financially for them without a subsidy, then they’ll build it which is what it should have been in the first place,” Tait says.

Disney’s hotel is still on hold. Courtesy of Anaheim

With a living wage measure on the November ballot for subsidized corporations in the Anaheim Resort, Disney’s move could potentially exempt them from increasing pay to $18 an hour by 2022 under its wage scale provisions. “It’s conceivable that if Disney does not a have hotel incentive or entertainment tax agreement, those provisions of the initiative could not apply to them,” Mike Lyster, city spokesman, writes in a statement. “But we do not have a definitive legal determination at this time.”

UNITE Here Local 11, the union set to represent 1,000 hotel workers should Disney move forward on the stalled project, remains committed to the living wage measure. Under the same incentive program that ushered in the Disney agreement, a previous council granted massive bed-tax breaks to two Wincome hotels slated to be built in the Anaheim Resort, ones that are clearly subject to the proposed ordinance.

The Weekly asked the “No on the Anaheim Job-Killer” coalition that opposes the living wage measure for comment but received no response. Curiously, the website for the group is now a dead link

“The Wincome hotels are a perfect example of why the living wage needs to go forward,” says Andrew Cohen, spokesman for UNITE Here Local 11. “Whether or not Disney’s a part of this conversation, there’s going to be plenty of businesses that are looking to take city tax dollars as an incentive to do business in Anaheim and we need to make sure that those companies pay their workers enough money so they’re not living on food stamps or are out on the streets.” 

Over the summer, Disney approved a contract that raises starting wages to $15 an hour next year for four unions belonging to the Master Services Council. In a classic union busting move, the corporation also lifted base pay afterward for non-union workers to $15.75 an hour. UNITE Here Local 11 is still in contract negotiations. Workers United Local 50, another principal member of the Coalition of Resort Labor Unions that’s pushing the living wage measure, is under contract until 2020. Thousands of employees still make less than $15 an hour. UNITE Here Local 11 has scheduled negotiations with Disney tomorrow. 

“It’s hard to predict what they’re going to do,” Cohen says of Disney. “We’re still hopeful that they’re going to commit to uplifting all of their employees out of poverty.” 

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