Holdouts Could Alter Disney’s Anaheim Plans : Land: The company needs about 100 surrounding acres controlled by others, and some landowners are reluctant to sell for the proposed resort.
For all its grand designs and corporate wealth, The Walt Disney Co. does not control nearly 100 acres that it needs to build its proposed $3-billion Disneyland Resort--a “long-term” expansion beyond Disneyland’s current boundaries.
The entertainment giant faces the daunting prospect of a draining, lengthy fight to dislodge such holdouts as the landmark Melodyland Christian Center, a handful of stubborn motel owners and a 7-Eleven store that is a sales leader among the chain’s nearly 7,000 stores. The master plan calls for the redevelopment of 470 acres surrounding the current park.
If the land cannot be obtained, Disney would have to redraw its plans or press the city to initiate condemnation proceedings to force sales of the properties even though Mayor Fred Hunter has said he would not consider condemning land on Disney’s behalf.
Although Disney officials have declined to comment on what issues could influence its decision to locate the company’s second Southern California attraction either in Anaheim or Long Beach, protracted land disputes could add to the appeal of the competing project in Long Beach where Disney has already unveiled plans for a 414-acre ocean-theme park called Port Disney.
Potential problems with land acquisition could prove to be the Achilles’ heel for Disney’s planned Westcot project. The proposal unveiled two weeks ago, modeled after Florida’s Epcot Center, includes a golden sphere centerpiece, Spacestation Earth; three new hotels; a retail district, and 5,000-seat outdoor theater. Plans for the project, which could bring 13 million additional tourists to Anaheim each year, also call for the construction of two parking structures that would have nearly twice as many spaces as the enclosed structures at Los Angeles International and John Wayne airports combined.
But now that the Westcot Center plan has been made public, it has raised numerous questions and a boiling curiosity among area businesses and property owners about what life would be like around the Disneyland Resort.
“It’s called location, location, location,” said Hunter, describing the scramble for land in what could be the shadow of the new theme park that the company plans to build in what is now a 100-acre Disneyland parking lot.
Nobody has to tell S. Patel what he stands to gain from his sliver of real estate--the four-story Desert Palms Suites--located off Katella Avenue on the south boundary of Disneyland. More importantly, the lodge, with its 115 suites, sits within the footprint for the entertainment company’s Westcot plans, and Patel has no plans to leave.
“I am acting as if nothing has happened,” said the soft-spoken Patel, who owns three other hotels in the Anaheim area, including the Desert Inn across the street from Disneyland’s front gate on Harbor Boulevard. “I haven’t even been contacted about my property.”
A short walk from the Desert Palms, however, could be Disney’s toughest land acquisition target at the corner of Harbor and Katella.
For three years, a 7-Eleven store has turned the intersection’s southwest corner into a literal cash register for its parent company, the Southland Corp. With profits pushing the store into the top 10% of the chain’s nearly 7,000 outlets, manager Tom Matuzak said his store holds a lease through 1998, or roughly the year that Disney has set for completion of the Anaheim project.
“We’ve gotten a few business cards from people interested in buying the property, but the owner has thrown them in the garbage can,” said Matuzak, referring to store owner Herb Domeno, who was out of town last week. “This is a good 7-Eleven store. I don’t think the owner wants to sell.”
Besides the convenience store and a few motels, Disney’s shopping list still includes a 58-acre strawberry field southeast of Disneyland. Hiroshi Fujishige, who has owned the property since the early 1950s, has refused repeated overtures made by the Disney company.
Kerry Hunnewell, a Disney Development Co. vice president, said negotiations would continue for the remaining properties which make up about 100 acres.
“Our master plan does include several properties not under our control,” Hunnewell said. “If those properties are able to be acquired, they will be included in our plan. Some ownerships of these properties are complicated.”
If settlements are not able to be reached with the owners, Hunnewell declined to say whether the project’s boundaries would be redrawn. But Disney has already shown a willingness to work around some properties, such as the Pan Pacific Hotel next to its own Disneyland Hotel. Disney’s master plans show the 502-room hotel to remain where it is, surrounded by other elements of the massive project. The hotel’s owners refused Disney’s earlier offers to buy the property.
Disney could have similar trouble obtaining the land for its planned parking garages.
Although Disney has indicated that the city of Anaheim will be asked to buy the 51 acres needed for the park’s proposed southeast garage off Clementine Street--directly east of Disneyland--some business owners say they are reluctant to sell.
Less than two days after the project was made public, the chairman of an electronic-equipment manufacturer whose company headquarters sits on the planned site of a parking garage said in no uncertain terms that the land is not for sale.
Joel Slutzky, chairman of Odetics Inc., said in a written statement that the only notice his company received was a call to one of his employees the day before the project’s unveiling.
The parking garages also would encompass the Melodyland Christian Center property. While Disney’s plans show development on most, if not all, of the church’s 14 acres, church officials say they have not been approached about selling. The city, however, recently bought 3 acres of the church’s property for $4.7 million. City officials said they obtained the land for convention center parking, although it may eventually become part of the Disney project.
“As far as I know, we have not heard from Disney or the city,” said Melodyland lawyer Don Wall. He added that during previous negotiations with the city, he was also not aware of any Disney involvement in Anaheim’s plans to create additional parking for its convention center.
Anaheim landowners who have properties just outside the proposed theme park’s boundaries may also find that the neighborhood will take on a new look.
The coming of Westcot could spark a new building boom to replace the more than 500 budget motel and hotel rooms that Disney will have to bulldoze to make way for its second attraction. While Disney plans to build 4,100 rooms of its own as part of the project, few, if any, will fall into the budget category.
“The day of the motel is gone in Anaheim,” said Bill O’Connell, general manager of the Stovall Inns that serve the Disneyland tourist market. Three of the chain’s seven motels are being sold to Disney, and O’Connell said his company will use the proceeds to buy another motel and fix up its remaining Anaheim properties.
“It’s going to totally clean up this area and clean out the junk,” O’Connell predicted of the coming of Westcot. “The land is going to be valuable to (the point) where everything left is going to have to be nice.”
Gary Wiscombe, who analyzes the Orange County hotel market for the accounting firm of Kenneth Leventhal & Co. in Newport Beach, said that the Disneyland area would become home to more pricier hotels, with budget accommodations being forced farther away from the park.
Jim Luce, director of marketing for the Anaheim Marriott Hotel next to the convention center, said he expects that the pattern of development would roughly follow what has happened near Walt Disney World in Florida.
There, lower-priced hotels were built a little farther away from the park. “You can’t have all high-priced hotels. You have to have the mid-price and lower-priced if you want to get all the tourists you can.”
To some extent, the new wave of development is already under way. The Costa Mesa hotel development firm of Tarsadia Inc. has sold its interest in the old, single-story Dunes Motel on West Street to Disney, one of the properties that would eventually be bulldozed to make way for Westcot.
Now, Tarsadia is building a 140-unit deluxe hotel complex at Katella and Clementine, the first of three hotels on 10 acres that will serve both Disneyland and the convention center.
All of the 1,100 rooms in the three Tarsadia hotels will be built as suites, and restaurants and other amenities will be combined into the project, company spokesman Frank Elfend said.
While resorts are generally built in vacation areas where land value makes up 25% of the total cost of a project, Anaheim developers may find themselves having to pay half or more, said James T. Kelley, a hotel consultant based in Newport Beach.
Disney has paid an estimated $2 million for one 56-room motel, and it has paid top-dollar, or $35,000 per room, for other modestly sized motels. It is, of course, the land, rather than the motels, that the entertainment giant seeks.
In the meantime, before they are torn down to make way for giant hotel complexes, Disney will hire a private management firm to run the eight small motels it has acquired. Hunnewell said that Disney plans to renovate them to meet health and safety codes but does not plan major reconstruction to improve their appearance or profitability.
DISNEY’S LAND RUSH
Walt Disney Co.’s plan for the $3-billion Westcot Center includes nearly 100 acres that the company has yet to acquire. With land in the area already selling for more than $1 million an acre, the owners of some key parcels are determined to hold on. Developers, meanwhile, envision a tourist mecca of high-rise hotels.
Disney’s Shopping List 1. Cosmic Age Lodge + 2. Fabulous Space Age Lodge + 3. Candy Cane Motel 4. 7-Eleven Convenience Store 5. Sir Rudimar Motel 6. Desert Palm Suites 7. Alpine Motel 8. Musketeer Motel + 9. Heidi Motel + 10. Pan Pacific Hotel 11. Apollo Inn + 12. Lamplighter Motel + 13. Princess Motel + 14. Dunes Motel + 15. Melodyland Christian Center 16. Former trailer park 17. Fujishige strawberry field + acquired by Disney Source: Disney Co.
