ANAHEIM : City to Buy Parcel From Melodyland

The City Council voted Tuesday to buy 2.9 acres of prime property opposite Disneyland from the Melodyland Christian Center for $4.7 million.

The sale will provide badly needed money to the church, which must make a $4.9-million balloon payment within the next month on a 1983 loan that is in default.

The property, now used for overflow parking by the church, is at Freedman Way and Clementine Street and will be used by the city for parking, Mayor Fred Hunter said.

The deal, approved 4 to 1 with Councilman Irv Pickler dissenting, also gives the city the option to acquire Melodyland’s lease on an additional 4.1 vacant acres that front on Katella Avenue, the heart of the city’s tourist area. Further, the deal gives the city first refusal at purchasing Melodyland’s remaining 8 1/2-acre parcel, on which the church buildings stand.

Pickler said he opposed the purchase because the city is in a financial “crunch situation. We’re looking for the dollars and cents to do the things we need to do. . . . I feel somehow we’re setting our priorities in the wrong order.”

Mayor Hunter said the money for the land purchase will come initially from the general fund but eventually could come from the city’s hotel tax. He said in an interview after the vote that the city is contemplating raising the hotel tax a penny, from 11.5% to 12.5%.

The land purchase was an excellent move by the city, he said. Hunter would not divulge the exact plans for the property but said “everyone knows that in the next month there will be an announcement by Disney,” referring to the Disney company’s expected announcement of a new project in Anaheim. Hunter insisted that the city would not sell Melodyland property to Disneyland. “We are buying it for parking,” he said.

The sale comes at a crucial time for Melodyland. In January, the Bank of Yorba Linda filed a notice of default--the first step toward foreclosure--on the $4.9-million loan on the property.

To raise the money to make the balloon payment, Melodyland had tried to sell a 5-acre parcel nearly two years ago to an El Toro firm that planned to build a time-share hotel there. However, the sale never went through, partly because the City Council imposed a development moratorium in the Disneyland area.

The developer, Nostalgia Ventures Inc., has also filed a notice of default against Melodyland, contending that Melodyland must refund the $200,000 “earnest money” that Nostalgia gave the church when it agreed to the sale. Melodyland, in turn, has filed a lawsuit against Nostalgia in an effort to get back the deed of trust that it issued Nostalgia on the property.

The dispute puts a cloud on the title of the property, and city officials said it must be cleared up before the sale of the 2.9 acres is final.