Disney Projects a Decision by January

A quiet countdown continues in the Burbank headquarters of the Walt Disney Co.

Leaders of two separate Disney development teams said this week that they are racing against a self-imposed deadline that is about to enter its final two months.

It will culminate at the start of the new year when Disney’s top two executives, Chairman Michael Eisner and President Frank Wells, are scheduled to decide whether the sands of Long Beach or an Anaheim parking lot will be the site of a new $3-billion hotel and theme park complex.

“We are trying to get a decision made by the end of the year,” said David Malmuth, a vice president for the Disney Development Co. who oversees the Long Beach project.

Forget any notion of a cataclysmic showdown between the two groups in a big boardroom. Both Malmuth and another vice president who heads the Anaheim project team, Kerry Hunnewell, say that in coming weeks they will be meeting with bosses and submitting reports detailing the status of their respective proposals.

“It’s not any magical process,” said Hunnewell. “The ultimate decision will be made by Michael and Frank.”

They will consider building Port Disney, a ocean-themed resort on the Long Beach waterfront with six posh hotels, a cruise ship terminal and an aquatic amusement park known as DisneySea that would invite tourists to swim with the fishes and gawk at the world’s largest aquarium.

The other option is the Disneyland Resort, featuring a world’s fair-type theme park with an international/environmental flair, a six-acre, man-made lake and three new hotels.

But for all the work accomplished in planning the projects, much will remain unsettled by the time decision day rolls around.

By the end of the year, Disney’s Long Beach team will still be unsure whether it can secure the necessary approvals from the state Coastal Commission and Legislature to fill in dozens of acres of Queensway Bay from which the theme park would rise.

Likewise, Disney’s Anaheim team must still figure out how to wrest land from holdouts who have refused to sell them the motels and other small businesses that would be razed to make way for the super-resort.

Hunnewell and Malmuth say deciding which project gets chosen rests on four factors: potential profitability of the new resort, the imaginativeness of the concept, community support for the project and whether Disney can receive the necessary government approvals and concessions.

Traffic is the major concern in both cities, Hunnewell and Malmuth concede. Each project expects to draw more than 10 million tourists--and their cars--each year. However, the preliminary environmental impact reports for both projects that will detail the problems and possible solutions are not due to be completed until next year. Malmuth said the Long Beach report is being slowed by consideration of alternatives that require less landfill of the bay.

“The environmentalists are expecting us to look at alternatives,” he said.

Both teams say they have strong community backing. Residents in each city have been showered with coffee-and-pastry presentations of the projects.

Little dissent has been heard lately in Anaheim, and public opposition in Long Beach has been largely unorganized. The smattering of anti-Disney bumper stickers seen around Long Beach has been overshadowed by massive pro-Disney pep rallies organized by business leaders and downtown developers.

But backing by residents in either city could vanish overnight if disagreements flare over environmental issues, such as smog caused by traffic jams, or costly demands being placed on city governments.

Disney, for example, wants Anaheim to foot the bill for construction of two parking garages that together would be the largest in the country, with a capacity of 30,000 vehicles and estimated cost of $500 million.

The city is balking. “If Disney thinks the city is going to do all this and have them collect all the (parking fees), they will be whistling in the wind,” said one City Hall pundit.

Such demands by Disney have been aired in quiet negotiations. Both cities, too, have their own consultants double-checking Disney’s figures that show residents would receive millions of dollars in direct and indirect tax benefits from having a giant new theme park as a next-door neighbor.

For example, Anaheim officials have hinted that they believe an independent study they are sponsoring will show that the new park would produce far less than the $38 million in annual tax benefits that Disney has forecast. Both city and Disney officials have declined comment on the study, which is expected to be released in November.

Disney has also projected that Long Beach would reap $47 million annually, but early in negotiations Disney presented the city with a wish list of $880 million in city-financed improvements. It was a staggering enough sum that Long Beach city negotiators gave “a little gasp,” one source said.

Despite the wrangling over money, Disney has had reason for some cheer in the last two weeks. A House committee is recommending the spending of federal funds on transportation improvements that would benefit both projects. The funding would include $17.5 million for ramps leading to car-pool lanes on the Santa Ana Freeway, which would help a Disneyland Resort, and $8.8 million for car-pool lanes on the Long Beach Freeway and $4 million more for a monorail or people mover to the waterfront linked to the Long Beach-Los Angeles light rail line.

Though only one city, Anaheim or Long Beach, will be chosen in the near term, Disney officials say they hope that the losing city will not feel abandoned by the company.

Even if Long Beach loses, Disney still is considered to have a valuable site for an attraction at its Queen Mary/Spruce Goose exhibit. And Hunnewell said that if Disney opts against Anaheim for the new project, there are still improvements needed to help Disneyland.

“We’re not just interested as a developer, but as an operator,” he said.