Buckle up for the wildest ride in the theme park business - negotiating with local governments!
Actually, most communities with a theme park have pretty smooth relationships with their parks. The parks employ a bunch of people. Their visitors pay a bunch of taxes. The parks provide the city with some free tickets (for politicians or for charitable causes). The local government approves new developments when the park wants them. And everyone is happy.
Well, until some citizens decide that they're not getting a fair deal from the parks and their elected representatives. That is what has happened in Disneyland's home of Anaheim, where newly elected officials have been questioning some of the deals that the city has made with Disneyland in the past. So when Disney moved the site of its recently announced fourth hotel, that change provided the city an excuse to back out of the tax deal it had made with Disney to allow the company to keep most the hotel taxes that the city would have collected from visitors.
And that, in turn, prompted Disney to freeze the hotel project.
In my Orange County Register column this week, I complained that no one looked good in this broken deal: the city for offering a tax subsidy on a luxury hotel then looking for an excuse backing out of its deal, and Disney for closing half of Downtown Disney then threatening not to build a hotel that it easily could afford even without the tax break. (Here is a link to my original [and non-paywalled] version of the column, since I updated it after the news I'm getting to in the next paragraph.)
A few hours after my column went up on the Register website and other newspaper websites in the region, Disneyland President Josh D'Amaro sent a letter to the City of Anaheim asking for what, essentially, seemed like a cease-fire. Disney provided a copy of the letter to me via email last night:
"Good friends will not always agree; however, the current level of animus is unprecedented and counterproductive. In light of this, we've come to believe that the Agreement Concerning Entertainment Tax Reimbursement and the Operating Covenant Agreement which Disneyland previously entered into with the City no longer serve the purpose for which they were intended and, in fact, have become a flashpoint for controversy and dissention [sic] in our community. Consequently, we are asking the City to join us in terminating both agreements."
The TL;DR? Disneyland wants Anaheim to rip up its tax breaks. Now, Disney didn't promise that it would proceed with the hotel plan if the city agreed. So why would Disney walk away from what could be hundreds of millions of dollars? I suggested a reason last week.
Hold up. If Disneyland doesn’t get the city hotel subsidy, does that mean Disneyland Resort employees would not be subject to the $18/hr minimum wage initiative that’s on the Anaheim ballot this fall?— Theme Park Insider (@ThemePark) August 16, 2018
Anaheim voters will decide this fall whether to raise the city's minimum wage to $18 an hour for employees of businesses that receive tax breaks from the city. But if Disney is no longer getting those deals, it's conceivable that the company would not be subject to the wage increase, should it pass. (We will need a ruling from lawyers, and possibly the courts, to be certain.)
Disneyland recently agreed to raise its starting wage to $15 an hour next year, after a brutal PR fight with its unions. (The State of California is raising its minimum wage to $15 an hour for large employers in 2022 anyway.) An extra $3 an hour for thousands of cast members could cost the resort as much, if not more, than it would have gotten back from the hotel tax deal. That put Disney in a damned-if-you-do, damned-if-you-don't conundrum.
Which is exactly what the unions who pushed the $18 an hour ballot initiative wanted.
The irony? By killing the tax rebate for the planned luxury hotel, the City of Anaheim might have taken the first step toward giving Disney an escape from the unions' trap. If Disney isn't getting the luxury hotel deal, why not kill its other city tax incentives... to free it from the potential of paying $18 an hour?
Any elected official who wanted Disney to be held to the $18 an hour plan then would be put into the position of supporting the tax breaks for Disney that they'd previously opposed. This is the political equivalent of watching the last 10 minutes of any Marvel flick. It's just one punch and counter-punch after another.
So who wins? Anaheim politicians? Disneyland cast members? Disney management? Theme park fans? (If only!) Stay tuned. This fight ain't over yet.Tweet
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