Disney Hints at $1-Billion City Tab for Resort

In its initial negotiations with the city, the Walt Disney Co. has suggested that the city raise as much as $1 billion toward the entertainment company’s financing of the Disneyland expansion, city sources said Thursday.

However, city officials recently answered with a public financing package totaling slightly more than half that amount that includes a variety of funding options, including possible federal grants and revenue bond sales, the sources said.

The $1-billion investment would have represented about one-third of the estimated total cost of the Disneyland Resort project.

The entertainment company reportedly has been reviewing the city’s response and is expected to answer Anaheim’s presentation within the next few weeks.

Specific elements of the city proposal were not immediately known.

“No one has agreed to anything,” one city source said, confirming the mammoth amounts of the initial cost estimates. “Everything is still very fluid. We are looking at a variety of (funding) options, but I’ve just got to emphasize that in no way would the project have any negative impact on the city’s general fund. Our thrust is to protect the city’s financial position.”

Anaheim Deputy City Manager Tom Wood, one of the city’s lead negotiators on the Disney project, declined to comment on the cost estimates.

“To publicly discuss a moving target would not be appropriate,” Wood said.

While initially challenging the $1-billion estimate as a “mischaracterization,” Disney Development Co. Vice President Kerry Hunnewell said late Thursday that in broadly defining the city’s need for improving its highway, parking and city traffic circulation systems, “you could come up with a billion dollars.”

“We (Disney) and the city have used figures like that to underscore the infrastructure needs in the commercial/recreation area,” Hunnewell said. “It’s not really an expectation that the city would fund that amount.”

Hunnewell said the company’s negotiations with the city have been geared toward determining the city’s basic needs and devising ways that they could be financed without touching the city’s general fund budget.

One of those options, Hunnewell said, is to use some of the future tax revenue derived from an expanded Disneyland to pay for the highway, street, sewer and parking improvements needed throughout the city.

“If we can work together without putting the city at risk, then it is a win-win situation for everyone,” Hunnewell said.

Noting the city’s recent budget problems, which earlier this year sparked the City Council to approve deep program cuts and a controversial new utility tax, Hunnewell said: “The city is quite right. They cannot put the general fund at significant risk.”

Attempts to find ways of financing the project moved the City Council on Tuesday to hire a second outside law firm to join its negotiating team.

In its recommendation of the San Francisco-based law firm of Jones Hall Hill & White, city staffers indicated that the firm would be searching for a variety of “low-cost financing alternatives,” including special tax assessment districts and the sale of revenue bonds to accommodate the $3-billion Anaheim resort.

“We have been looking to make a substantial investment in the commercial/recreation (Disneyland) area,” Wood said. “Those (improvements) have been on the books for some time.”

Included in Disney’s Anaheim expansion plans, unveiled last May, are three new hotels, a 6-acre lake, 5,000-seat amphitheater and a world’s fair-style theme park called Westcot Center.

The entertainment company has also proposed a $3-billion ocean-theme project called DisneySea in Long Beach.

Only one of the projects will be built. Company executives have said they would announce by year’s end which city would win the company’s next Southern California attraction.

The $1-billion figure for Anaheim is not far off the $880-million preliminary estimate of public investment costs associated with the DisneySea project in Long Beach, initially reported by the Long Beach Press-Telegram.

Last May, a Long Beach city official familiar with the Disney request told The Times that the Long Beach costs were based on preliminary estimates.

At the time, Disney’s wish list in Long Beach included $260 million for city land and site preparation; $60 million for new roads; $330 million for monorail, ferry and parking costs; $130 million for pedestrian and bike paths, a marina, new parkland and refurbishment of the Disney-owned Queen Mary, and $100 million for utilities.

Times staff writer Chris Woodyard contributed to this report.