Deal protects Disneyland from city tax for decades

The Disneyland Resort will be protected against a possible city tax for at least the next 30 years, according to a deal approved Wednesday by the Anaheim City Council at its Tuesday meeting.

The resort must invest $1 billion in its Orange County property by the end of 2024 to ensure that the money would be refunded if an “entertainment tax,” or gate tax, is imposed in the next three decades.

The city does not currently charge such a tax to any institution.

A 20-year agreement that protected the theme park from the tax in the past was set to expire in 2016. No initiative to begin charging the tax is in place, according to the city.

After about six hours of comment and discussion, council members voted 3 to 2 to approve the policy. Mayor Tom Tait and Councilman James Vanderbilt dissented.

The council’s decision comes as Anaheim is preparing to switch next year to a district-based council election, which could dramatically change the face of a council that has typically had a cozy relationship with Disney.

“On the eve of the 60th anniversary of the Disneyland Resort, we’re in a similar position to that where we were 20 years ago, where we had both opportunity and constraints, “ said Michael Colglazier, president of the Disneyland Resort, who was called first from a pile of 72 cards submitted by people who wished to give a public comment.

“The proposal in front of you does not ask the city to fund any infrastructure that would enable this expansion, nor does it add any obligation to the city’s debt,” Colglazier added. “But we are asking the city to extend the assurance that Disneyland Resort guests will not be subjected to an incremental, targeted, local entertainment tax for 30 years on the condition that the Walt Disney Company first invest a billion dollars to expand the resort.”

Expansions must begin by Dec. 31, 2017, according to the deal. Possibilities for investment include a new parking garage, traffic improvements and other “park enhancements,” according to the city staff report.

If Disneyland invests an additional $500 million by the end of 2045, the pact could be extended by an additional 15 years.

“It is critically important to understand that the impact of this policy will go well beyond the next big attraction,” Colglazier said.

Supporters say the extension will benefit the local economy and city budget, while detractors argue the policy goes against residents’ future financial interests.

“Who’s to say what the financial condition of the city is going to be in 30 or 45 years, or any time in between?” Tait posed. “... You have to prepare for bad times.”

Added Tait: “At some point there might be a need for a tax. And the choice is going to be, you can either cut services, tax the residents or tax the tourists. This just took the ‘tax the tourists’ off the table for the next 45 years.”

While Tait predicted future generations would “rue this day” if the agreement passed, Councilwoman Kris Murray argued it would be remembered as a “hallmark opportunity for economic development.”

“Money is not the only priority,” Murray said. “In my opinion, jobs rank higher.... We absolutely have to make sure we have quality jobs for decades to come, and this does that.”

City staff recommended approval of the pact in its staff report, describing Disneyland as “a significant feature which sets our economy apart from those of our neighbors.”

The resort accounts for 4% of the city’s total acreage, but Disney businesses there are expected to provide $148 million to the city’s general fund revenue, according to the city’s budget for its 2016 fiscal year, which started July 1.