Disney Gets Go-Ahead for 40-Acre Burbank Project

The Walt Disney Co. was given the go-ahead Tuesday to plan an elaborate theme park, shopping mall and “Hollywood Fantasy Hotel” for a 40-acre redevelopment site in downtown Burbank.

Over the protests of a rival entertainment giant, the Burbank City Council voted unanimously to give Disney an option to buy the land for $1 million--which city officials admitted is a bargain price--to develop what would be called “The Disney-MGM Studio Backlot” at a cost of from $150 million to $300 million.

Michale Eisner, Disney’s chief executive officer, said preliminary plans for the complex call for “behind-the-scenes Hollywood themes, street performers, live theater, Disney animation tours and operating radio and TV media centers.”

If the project receives final approval from the council after detailed plans are completed, the studio’s animation department and offices for the Disney Channel would be moved to the site from its present Burbank headquarters, Eisner said. In addition, a man-made lake--the “Burbank Ocean”--would be built atop a six-story parking garage, with a waterfall to screen the structure from the nearby Golden State Freeway, he said.

Officials Impressed

The plan clearly captivated Burbank officials, with Councilwoman Mary Lou Howard saying, “It’s time the city had something that Johnny Carson wouldn’t make fun of.”

But a lawyer representing MCA Inc., headquartered in nearby Universal City, protested, telling the evening council meeting that his company should have been given the opportunity to bid against Disney.

“There is a question whether this is the proper thing to do with city property without asking for competitive bids,” attorney Dan Shapiro said. “You’re giving away 40 acres. . . .”

If adopted, Disney’s plan would accomplish at least two strategic goals for the company. Disney would not only relieve its crowded studio lot with a satellite office complex and “back lot” for filming, but could strike a blow to MCA’s effort to develop an entertainment and retail complex on its property in Universal City.

The two companies have been warring over the “back lot” concept for two years, since an aggressive new management team at Disney announced plans to build a studio tour attraction in central Florida, where MCA, which operates Universal Studios and its popular tour attraction, already planned such a Florida development.

Before the Tuesday night meeting, Jay S. Stein, president of MCA Recreation Services Group, said that MCA sought, but never received, information about the Burbank redevelopment site.

Burbank Mayor Michael R. Hastings confirmed that he made an overture to MCA’s Stein three or four weeks ago to determine whether the company might want to make a competing proposal.

Called Internal Problem

Following a phone conversation with Stein, Hastings said, he asked a city staff member to send information to MCA, but “somewhere it fell through the cracks.” Hastings declined to be more specific, characterizing it as an “internal problem.”

The council, acting as the city’s redevelopment agency, gave Disney an option to buy the 40-acre site for what amounts to 57 cents a square foot.

“At $1 million, Disney is clearly getting a special price, but we would be getting a special project,” City Manager Bud Ovrom said.

Other developers of a more traditional shopping center would have been willing to pay $35 million for the property, he said.

Under the agreement, the city cannot negotiate with any other developer, and Disney will come up with a design, parking layouts and construction schedules within six months. Further plans and revisions would be drawn up in the following six months. Either side could pull out after the 12-month period if it is dissatisfied with the final plans.

“I am convinced the Disney development has greater potential to generate more revenue and economic spinoff for the city over the long haul than any traditional center,” Ovrom said.

Other Revenue Sources

In addition to property taxes, the project would generate between $1 million and $3 million a year in revenue for the city through sales taxes and other sources, Ovrom said.

In 1985, Disney obtained the rights to the MGM lion as well as MGM motion picture and television titles, including the classics “Gone With the Wind” and “The Wizard of Oz,” and would incorporate these in “The Disney-MGM Studio Backlot” and hotel.

Another Disney official said approximately one-third of the acreage at the Golden State Freeway and Magnolia Boulevard would be devoted to a range of stores to be anchored by “two major international retailers,” which he did not name.

The Disney proposal overshadowed the disappointment Burbank officials felt after the Towncenter, a proposed $158-million redevelopment project, fell through last February when the developer lost commitments from four department stores.