Disney Plan Won’t Put Bite on Taxpayers, Anaheim Says

City officials said Tuesday that taxpayers won’t have to pay a penny to build streets, sewers and other public works that the Walt Disney Co. says it needs to go ahead with the $3-billion Disneyland Resort project.

The city would finance the costs of the improvements--including the construction of two of the largest parking structures in the country--with a portion of the $27 million to $36 million in annual city revenue that would be generated by the expansion, according to a city report released Tuesday.

Disney officials have demanded as much as $750 million in public improvements as a condition for building a second theme park and three new hotels, which could double the number of yearly visitors to the area.

Although the state and federal governments would be asked to chip in for freeway off-ramps and other improvements, Anaheim would be on the hook for the largest share. The price tag for the two garages alone, with their total capacity of 30,000 cars, approaches $500 million.

Deputy City Manager Tom Wood said the city has agreed to participate in the project only if Anaheim receives a direct financial benefit and is protected from financial loss.

“We won’t risk the city to attract the Disneyland Resort,” Wood said.

In order to protect its financial interests, the city has proposed selling bonds to cover the cost of its portion of the public works. Wood said bonds would be sold on behalf of the city but guaranteed by a financial firm or other third party, so that taxpayers would not lose if the project goes broke or falls short of expectations.

The city would create a new agency, tentatively called the parking authority, to collect the new taxes generated from the Disneyland Resort and surrounding area and use that revenue to pay the bondholders.

At no time, Wood vows in a memo to the city manager, will the city have to pay out more in a single year on the bonds than it will receive in revenue from the project. That way, he said, taxpayers are protected.

According to the city’s economic review, the project will generate $27 million in additional taxes for Anaheim when it opens in 1998. That figure rises to $36 million by 2008, when the theme park and surrounding areas are fully developed. Those figures represent net revenue to the city after covering additional expenditures for fire, police and other services.

They do not include, however, the financing costs of the massive public works projects. The report did not state how much of the $27 million to $36 million would go to pay for these infrastructure improvements.

According to Wood and others, the city will haggle with Disney over how to split the $750 million in public works costs.

Wood, the city’s chief negotiator on the Disney project, Tuesday presented the report’s findings to a joint meeting of the City Council and the Planning Commission.

“The numbers are stunning,” Anaheim Mayor Tom Daly said of the revenue projections. “It appears to be a very positive review.”

The $36 million reflects a proposal to increase the hotel bed tax to 15%, up from 13%, according to the report, which was written by Economic & Planning Systems in Berkeley. About 5,000 new hotel rooms are anticipated as a result of the project, in addition to the 2,900 rooms that would have been built near Disneyland during the next 15 years anyway.

Disney officials Tuesday acknowledged that the $36 million in additional revenue is $7.6 million shy of the $43.7 million that a Disney report touted two years ago.

Kerry Hunnewell, a Disney Development Co. vice president who is heading the Anaheim project team, said the two figures are relatively close, reflecting different analyses by independent consultants two years apart.

Wood said the city’s analysis used more conservative assumptions. He said the latest analysis shows that the city receives $7.7 million in “profit” a year from the area surrounding Disneyland and the Anaheim Convention Center. Even if the project is not built, that figure will swell to $14.5 million by the year 2008.

One thing that both the city and Disney agreed on is that the project is sorely needed to upgrade the area surrounding Disneyland, which is run down, having seen just $8 million in public improvements in the last three decades.

“Without this project, without the additional tax revenues, we are going to be in a very difficult position to solve the infrastructure problems in that part of town,” he said.

Hunnewell lauded the city’s financial plan, saying it should be palatable to taxpayers.

“What makes this desirable to a taxpayer in Anaheim (is) it provides revenue to the general fund without risk to the general fund.” The general fund is the city’s main pot of money for paying for such basic services as police, fire and street maintenance.

Disney officials have said its go or no-go decision will not come until after completion of the environmental review process. Public hearings on the environmental elements of the project are scheduled to begin next Wednesday.

About a dozen members of Anaheim Home Group, an organization which has fought the project, protested the timing of that meeting, which is at 1:30 p.m., saying it was an inconvenient time for most people.

Wood said that while many details remain, the city is anxious to come up with a mutually acceptable deal with Disney.

“We’ve had a relationship for 35 years with these folks and we want to continue that relationship,” he said.

The Expansion Factor A city of Anaheim study estimates that the city’s general fund would receive a substantial boost from sales, hotel / motel room and other taxes if the expansion of Disneyland goes ahead.Below is revenue that would be generated in the Disneyland neighborhood with and without te expansion, in millions of dollars. With expansion: $50.6 Without expansion: $14.5 Source: City of Anaheim