Disney Considering Scaling Back Resort, Eisner Says : Development: Orange County project’s $3-billion price may be too high, chairman says. Options include downsizing or building in phases.

Walt Disney Co. Chairman Michael D. Eisner confirmed Friday that the company is considering scaling back its $3-billion Disneyland Resort because the project appears to be too costly, especially in California’s economic climate.

Eisner declined to offer specifics, but said the resort might be built in phases or that Disney might have to reduce its “appetite slightly.”

“It’s a very complex issue,” he said. “It can mean reducing in size, it can mean reducing in scope, it can mean changing the mix of the product. We’re looking at all the different ways to make the project viable.”

Eisner’s comments were the first public concession by Disney that the company is seriously considering downsizing the ambitious project, which, as proposed, would include a 1,800-room hotel district, a lushly landscaped shopping area, a 5,000-seat amphitheater, a six-acre man-made lake and a new international-themed park called Westcot, adjacent to Disneyland.

“We’re looking at all sorts of different opportunities and prospects,” said Eisner, who was in Santa Ana on Friday for the opening of the Walt Disney Gallery at the MainPlace mall. “We’re looking at how to do a project like this in an urban environment and still have it be fiscally responsible.”

The chairman said he still feels the financial sting of more than $550 million in losses from Euro Disney in France and is trying to make sure that does not happen in Anaheim.

Eisner said the recent decision to abandon the Disney’s America project in Virginia will not affect what happens in Anaheim. He also said the company is committed to developing other tourism projects in Orange County, will continue to put money into Disneyland and plans to decide on the Disneyland Resort “very soon.”

Disney’s internal review, however, has further postponed the much-delayed project, which is at least two years behind its original groundbreaking schedule. Furthermore, Disney officials have refused to commit to building the project until they receive as much as $800 million in financial support from Anaheim, Orange County and state and federal agencies.

Earlier this week, Anaheim city officials said their negotiations on a development agreement with Disney have been temporarily halted because the company’s planners and financial analysts are trying to re-evaluate and possibly downsize the project.

“This is just a time for re-evaluation and reassessment of the magnitude of the project,” said City Manager James D. Ruth. “We’re still very optimistic about this going forward.”

Meanwhile, city officials say that regardless of Disney’s plans, they are committed to moving forward on a $172.5-million project to beautify the area around Disneyland by widening streets, installing underground utilities and planting tropical landscapes.

Nonetheless, the possibility of a scaled-back project has caused some concern among those in the tourism industry.

“Certainly, any downsizing could have some impact on our city as a destination,” said Ned Snavely, general manager of the Anaheim Marriott. “We’ll have to wait and see what they mean by downsizing. The chances are that it might not be as exciting for those who would be coming into the area.”

Bill O’Connell, general manager of four Stovall Best Westerns near Disneyland, said most hotel and motel owners are still optimistic and hope that the project “will be the boost in the arm” that the local tourism industry needs.

“We’d like to see the very best thing that Disney can do, but we understand they have to work within their budget,” O’Connell said.

Eisner said he appreciates the support Disney has received from city officials and the business community. But “the worst thing we could do,” he said, is to put the “the whole project at risk” by moving ahead before the economics of the resort make better sense.

One plan under consideration, he said, is building the project in phases over a longer period than projected.

Regardless of whether Disney builds the project, Eisner said the company will continue to make improvements in and around Disneyland, its 39-year-old flagship theme park.

The company is building two ice rinks in Anaheim for its Mighty Ducks hockey team and community skating programs, and is almost finished with a new thrill ride based on the Indiana Jones movies.

“Disneyland itself has never been better,” Eisner said. “No matter what we do, we’re never going to let Disneyland become an aging theme park.”