Anaheim Needs to Drive Hard Bargain : * City Can’t Give Away Store to Get Disneyland Resort

The Walt Disney Co. and the city of Anaheim grew up as kids on the block. The old neighborhood of orange groves has changed, but today they are grown-ups still horse-trading over playthings. The entertainment giant has ambitious plans before the city for the $3-billion Disneyland Resort.

The stakes are high for both. Anaheim’s Disneyland environs today are tacky and run-down; Disney wants an updated foothold on tourism in Southern California. Negotiations center on how to split the estimated $750 million in public works costs.

As the public looks on, it too has an interest. Taxpayers need to know that the city will not get stuck holding the bag for costly infrastructure improvements. And the public has a larger stake in the success of this project because of the jobs and tourism it promises to bring to Orange County.

Both sides in the negotiations are only too aware of the economic imperatives. Yet while there are intersecting interests, the city must be careful not to give away the store. Disney has a reputation for driving a hard bargain, proven once again by the sweetheart deal it struck recently for Anaheim Arena.

Meanwhile, public hearings on environmental aspects of the project are to begin this week. Favorable environmental review could put additional fiscal pressure on the city to close a deal, even with Deputy City Manager Tom Wood’s pledge that “we won’t risk the city to attract Disneyland Resort.”

The problem for the city comes down to this: It really wants the project, but it needs to come away not looking as if it’s been had.

The federal government already was wary enough to turn down a bold Disney request to fund a futuristic parking structure. And yet Anaheim’s position is more complex. Its unique dependence on the fortunes of Disney give it much more of an interest than higher levels of government in being a true partner.

So it does make sense for the city to get involved financially.

But the economics must work, too. That’s what’s so hard to evaluate at this point, how the city is making out in the negotiations. Ultimately, this can work if the city can sell bonds to cover an as-yet-undetermined part of the expensive public works improvements, and then finance them with new city revenue from the expansion.

The city is optimistic that under this scenario, taxpayers won’t have to pay anything. But the numbers remain a mystery. All the more important, as the pressure mounts to say “yes,” that the city drives the best bargain it can.