Anaheim and Disney Make Tentative Deal

Capping a year of negotiations, city and Walt Disney Co. officials have reached a tentative agreement on financing, public works improvements and a timetable for development of the proposed $3-billion expansion of Disneyland, Anaheim officials said Monday.

While Disney remains noncommittal about whether it will actually build the resort, the tentative agreement was hailed as a substantial step forward. “It’s great news,” Anaheim Mayor Tom Daly said. “It’s been a long time coming.”

Because the agreement still must be reviewed by lawyers for both sides, Daly and others declined to reveal details. But they sketched the broad outline of the pact finally hammered out last week. It includes:

* A yet-to-be announced increase in the 13% tax on hotel room stays, but no tax increases on city residents to pay for project costs.

* A strict schedule detailing when Disney builds certain portions of the resort and the city completes public works projects, such as installing sewer lines, placing utilities underground and making street improvements.

* A commitment by Disney to build the project before the city makes any financial outlay.

* A plan to divert future tax revenue generated from the project to pay for bonds floated by the city.

* A guarantee not to touch the city’s general fund to pay for its share of the project costs.

“The basic deal points have been resolved and now it’s up to the attorneys to reduce our negotiations into writing,” said Deputy City Manager Tom Wood. “We’re pleased by the progress to date. We’ve overcome some major hurdles and this is clearly a major hurdle.”

“I’m comfortable so far with the conceptual points,” Daly added.

Kenneth P. Wong, senior vice president of Disney’s development division who is heading the project, said Monday that he would not confirm that a tentative agreement had been reached, but acknowledged: “We are making progress.”

As planned, Disney wants to develop about 500 acres around Disneyland with more than 5,000 hotel rooms, a 5,000-seat amphitheater, two of the nation’s largest parking structures and a new theme park, called Westcot.

The final issues apparently were resolved late last week when Disney agreed to several remaining deal points that the city was proposing. Attorneys from both sides still need to translate the deal points of the extensive development agreement into document form.

Once the document is drafted, city officials said it would go through an extensive review, consisting of at least two public hearings--in front of the Planning Commission and City Council--before it is officially approved. The entire review process could take several months.

City officials cautioned that further issues could arise during the legal review and drafting process, forcing additional talks.

“The project is very important to the city’s future,” Wood said. “Much is yet to be done as we work through the language issues. We look forward to bringing this to the City Council and Planning Commission this summer.”

Since Disney originally proposed building the project four years ago, it has maintained that about $800 million in financial support would be needed from city, county, state and federal agencies.

Recognizing the project’s potential economic and social benefits to the state, including the creation of nearly 28,000 new jobs, Gov. Pete Wilson has agreed to contribute $50 million worth of state transportation money for freeway off-ramps and one of the parking structures. The federal government has earmarked at least $15.5 million and indicated it would provide a total of $131 million for the construction of a garage.

Last month, the Orange County Transportation Authority approved spending $32 million toward construction of the parking garage to accommodate the project. The California Department of Transportation and the county also decided in February to proceed with construction of the $50 million in new freeway off-ramps it planned in support of the project.

Both the garage improvements and off-ramp plans are going ahead even without Disney’s commitment to build the project.

Approval of the agreement is expected to go smoothly through the Planning Commission and City Council, but one group of homeowners has already said it plans to try to thwart the project.

Members of Anaheim Home Owners Maintaining their Environment, or HOME, said they would circulate a petition seeking to give Anaheim voters the final say on any agreement between the city and Disney on the project’s financing.

Anaheim City Atty. Jack L. White has said the group is entitled to seek a referendum on the development agreement. He said HOME would have 30 days after the agreement is approved by the council to gather signatures from 10% of the registered voters in the city.

Another group that will be anxious to review the development agreement will be the new Anaheim Area Hotel/Motel Assn., which supports the Disneyland resort project, but is concerned about how a proposed increase in the hotel occupancy tax will be spent.