Panel Approves Exemption for Disney Resorts : Legislation: A state Senate committee cleared a bill that would excuse the company from regulations governing time-share sales to the public.

Swayed by the wholesome reputation of the Walt Disney Co., a state Senate committee overcame its misgivings Tuesday and approved a special exemption in state time-share laws to allow the entertainment giant to charge what it wants in a novel membership plan for a proposed chain of international resorts.

The tailor-made exemption, contained in a bill sponsored by Sen. Frank Hill (R-Whittier), creates a form of time-share called a “qualified resort vacation club” and excuses such time-shares from the state regulations governing time-share sales to the public. The state Department of Real Estate can appraise and negotiate time-share prices for any developments built more than 200 miles outside of the state but marketed to Californians.

One of the statutes Disney wants modified is the “out-of-state land promotions law,” passed in 1963 in response to fraud involving Californians fooled into buying time at substandard resorts.

The time-share bill is the second Disney-inspired measure to be pending in the Legislature this year. The other bill, which has aroused objections from environmentalists, would allow the company to fill in portions of Long Beach Harbor for a new theme park.

Disney has asked Hill to carry the legislation as part of its corporate strategy to avoid price controls as it develops time-share resort villas near its amusement parks throughout the world; these could possibly include resorts to be built in Anaheim and Long Beach.

The Burbank-based firm is expected to open its first resort, a 501-room complex near Walt Disney World in Orlando, Fla., by the end of this year, and the company anticipates building similar developments serving Tokyo Disneyland and Euro Disney, which is now being built near Paris.

Disney believes California will be a lucrative market for the club memberships, which would entitle holders to buy slots of time at any of the resorts. Each resort would feature 24-hour front desk service and other amenities such as saunas, volleyball and tennis courts, exercise rooms and jogging paths.

Hill and Disney lobbyist Dougald Gillies said Tuesday that the resort club idea is a new vacation “product” because it would also include an 800-number telephone line to book airplane reservations and to buy tickets to Disney theme parks.

“We’re breaking new ground here,” Hill said.

Since the Disney proposal is international in scope and reservation service would be offered, Hill and Disney officials argued, the real estate department’s power to set time-share prices should not apply.

Instead of allowing the state to retain price-setting authority over the Disney vacation club sales, Hill offered amendments to his bill that would give the Real Estate Department other significant controls. The department would first have to issue a permit for the membership sales, and it would be able to inspect the resorts at Disney’s expense, Hill said.

Despite the amendments, which had been hastily written, Sen. Leroy Greene (D-Carmichael), chairman of the Senate Housing and Urban Affairs Committee, fretted openly that the Disney exemption would open the door to less scrupulous entrepreneurs eager to bilk the public.

“This is not limited to the Disney corporation,” Greene said about the bill. “If it was . . . I would feel a lot more comfortable knowing the reputation of that organization and how much they have at stake. It precludes something untoward from occurring.”

“I’m particularly interested in who the people are out there” besides Disney, Greene said.

At Greene’s urging, Hill agreed to put a “sunset clause” in his bill that would make the vacation club exemptions, if signed into law, expire in five years. The Real Estate Department also would issue a report to the Legislature about vacation resort club offerings by Disney and others in three years.

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