Financial Pros, Cons of Disney Resort Weighed : Impact: Anaheim’s share of costs are still unknown, but park officials say project won’t be built unless it is mutually beneficial.
If the Disneyland Resort is built, the signs proclaiming the park as “the Happiest Place on Earth” could easily stand post to post with another reading “Your Tax Dollars at Work.”
The environmental planning report being released today reveals more about the approximately $750 million in infrastructure costs that will be split between the city of Anaheim and Disney. Those costs include salaries for 22 new police officers, four new Fire Department vehicles and modifications to existing fire stations, and the installation of higher-capacity sewer lines and storm drains.
That amount also covers such previously discussed items as construction and operation of the world’s largest parking structures, burying overhead utility lines and adding miles of lush landscaping for the streets surrounding the resorts. Disney has indicated that it would like the city to finance these improvements.
The federal government has already earmarked $14.8 million for construction of two off-ramps from the Santa Ana Freeway and will be asked for more. About 70% of Disneyland’s guests arrive from the freeway.
Anaheim’s ultimate financial responsibility remains unresolved. But Disney says the project won’t be built unless it is mutually beneficial.
“It has to be a win-win for everybody. That’s the bottom line,” said Ron Dominguez, executive vice president of Walt Disney Attractions, the company’s theme park division.
A study last year estimated that the project would enrich the city’s coffers by $28 million to $43 million a year. The Disneyland Resort would create thousands of jobs during construction, then 15,700 permanent jobs in Anaheim, part of 28,000 overall in Southern California once the expanded park is operating. It would generate total increased economic activity of $1.2 billion a year in the city and $2.8 billion in all of Southern California, according to a report commissioned by Disney last year.
Consequently, Disney is counting on taxpayers to finance a large portion of the costs associated with construction and operation of the $3-billion resort that would rise in the shadow of the Matterhorn.
The project would center around Westcot, an internationally themed amusement park in the present-day Disneyland parking lot. Guests would stay in three new hotels and be connected to the theme parks by monorail. Those arriving by car would be whisked into parking structures on either side of the parks with a combined capacity of more than 30,000 vehicles and take moving sidewalks or people-movers to the park entrance.
To cover its share of the project, the city would probably have to create special tax districts to issue bonds to construct the Disney parking garages and other transportation improvements. The city already has a program to expand sewer capacity and bury utility lines through its regular capital improvement budget. The additional police and fire service could be paid through additional tax revenue generated by the project.
“This (project) is an economic engine, and dollars will flow to fund infrastructure and the general fund,” said George Mihlsten, a lawyer working with Disney. “I see no risk to the taxpayer of this city.”
To be sure, Anaheim also has to measure the costs of not proceeding with the project. The city’s commercial zone blossomed in the 1960s and has not had a major renovation since. The main streets around the park--Harbor Boulevard, Katella Avenue and Ball Road among them--are cluttered with a Las Vegas-style hodgepodge of signs, old motels and coffee shops. Left alone, Disneyland would surely continue to prosper as the surrounding area becomes further blighted.
Disney proposes to transform the area into a “Garden District” with miles of lawns and thick bushes. The expanded thoroughfares would be lined with fully grown trees, giving the area the feeling of a Palm Springs resort. Because Disney hopes to persuade visitors to stay several days at a time, instead of the present average of a single-day visit to Disneyland, it needs a self-contained resort feeling to encourage people to stay put.
It is the same formula that has proven enormously successful in Florida. Disney has developed a nationally marketed resort outside Orlando where visitors sleep in Disney hotels, eat in Disney restaurants and play in Disney theme parks. Theme parks accounted for more than half of the company’s income in its most recent fiscal year--$617 million of $1.2 billion.
Despite the obvious profitability of their parks, Disney officials say the costs of the proposed new Disneyland Resort are so high that they may decide against building it.
“The economics are very marginal at this point,” said Kerry Hunnewell, vice president for the Disney Development Co.
Never before has Disney tried to build a major project in an urban setting. Its previous projects have been in vast tracts of open land, including Disneyland, which sprang from the orange groves of Anaheim in 1955. The high cost of doing business in Southern California has tacked on another $1 billion in higher land and labor costs over the $2 billion it would cost to build an identical project in Florida, Hunnewell said.
“There’s a commitment to try to make this happen, but each project has to stand on its own economics,” Hunnewell said.
Even with the tough talk about the project’s feasibility, Hunnewell said the current economic downturn will have little bearing on the decision whether to proceed.
