Panel OKs Exemption for Disney Time-Share Prices : Legislation: Senate committee approves measure that allows corporation to avoid state controls on what it charges for its memberships in proposed resort chain.
Swayed by the above-board reputation of the Walt Disney Co., a Senate committee Tuesday approved a special exemption allowing the entertainment giant to charge what it wants for time-share memberships in 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 it from some state regulations governing time-share sales to the public.
The state Department of Real Estate has the right to appraise and set prices for time-share developments located more than 200 miles outside of the state but sold to Californians. The Legislature gave the department this power in the wake of scams involving Californians fooled into buying time at substandard resorts.
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, possibly including Anaheim and Long Beach.
The Burbank-based firm is expected to open its first 501-room resort near Walt Disney World in Orlando, Fla., by late 1991, and anticipates similar developments serving EuroDisney near Paris and Tokyo Disneyland.
Disney believes California will be a lucrative market for its club memberships, which would entitle members to buy slots of time at resorts featuring a 24-hour front desk and amenities such as saunas, exercise clubs, tennis courts and jogging paths.
Hill and Disney lobbyist Dougald Gillies said Tuesday the resort club concept was a new vacation “product”--distinct from other time-share ownership plans--because it includes an 800-number telephone line to book airplane reservations.
“We’re breaking new ground here,” Hill said.
Since the Disney proposal would be international in scope and offer the reservation service, the real estate department’s authority to set time-share prices shouldn’t apply, Hill and Disney officials argued.
Instead of allowing the state to retain price-setting authority over the Disney vacation club sales, Hill offered amendments to his bill giving the real estate department other significant controls. The department would first have to issue a permit for the membership sales and would be able to inspect the resorts at Disney’s expense, Hill said.
Despite the hastily written amendments, Sen. Leroy Greene (D-Carmichael), chairman of the Senate’s Housing and Urban Affairs Committee, fretted that the Disney exemption would open the door to less scrupulous entrepreneurs eager to bilk the public.
One of the statutes the bill modifies is the so-called “out-of-state land promotions law,” passed in 1963 to avoid further time-sharing scams.
“This (bill) is not limited to the Disney corporation,” said Greene. “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.”
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.
The bill will be forwarded to the Senate Appropriations Committee for consideration before going to the full Senate for a vote.
After the hearing, Hill said his bill, while requested by Disney, may be used by a handful of other firms hoping to build similar vacation resort clubs.
