Pair of Ballot Measures Key to Anaheim Rejuvenation

The ink is still drying on the city’s agreement with Disneyland for a $1.4-billion expansion, but nervous officials have already begun worrying about the next obstacle that could stand in the way: Measure B.

The initiative, which will appear on the Nov. 5 ballot, asks voters to retroactively approve a raise of 2 percentage points in hotel bed taxes imposed 15 months ago to help pay for Anaheim’s share of the Disney and Anaheim Convention Center expansion projects. The increase brought the city’s bed tax rate to 15%.

That increase generates $9 million a year and is “the primary source of funding” for the project’s upgrades, said Mayor Tom Daly, who doubts the city could pay for them any other way.

“I just don’t know where it would come from,” Daly said Thursday. “This measure puts the entire [Disney] agreement at risk.”

Measure B is backed by the tourism industry and city officials. The opponents are mostly homeowners or advocates for the homeless, who say the bed tax is already high enough and would be unfairly borne by poor families who live in residential hotels and motels.

There are currently 17,928 hotel and motel rooms in Anaheim, and the number is expected to grow by 750 after the expansion project.

Measure B likely wouldn’t be on the ballot at all if it weren’t for another, statewide ballot measure sponsored by the Howard Jarvis Taxpayers Assn. That initiative, called the Right to Vote on Taxes Act, would require cities to get voter approval of any new taxes or tax increases--including retroactive approval of any taxes imposed after January 1995.

Anaheim’s latest bed tax increase went into effect in July 1995.

Betting on a nod from voters on the statewide Jarvis Initiative, city officials came up with Measure B to protect the bed tax and, more important, the newly approved Disney finance agreement.

If the Jarvis Initiative is not approved statewide, the Measure B vote becomes moot, regardless of the local results.

“The entire financial framework [of the expansion] will crumble” if the measure doesn’t pass, said Charles Ahlers, president of the Anaheim/Orange County Convention & Visitors Bureau. “We’re extremely worried. This is a high-stakes deal with the potential for disaster.”

This week, the council unanimously approved the expansion agreement with Disney, committing the city to pay up to $546 million for improvements related to the project and to a major expansion of the Convention Center. The new deal requires the city to upgrade streets, landscaping and utilities, as well as build a $90-million parking garage.

The city plans to issue $395 million in bonds to finance much of the work. Increased revenue from hotel taxes is expected to help pay off the bonds, along with sales taxes from tourists and property tax revenue generated within the Disneyland Resort area. Disney has agreed to step in and pay the bond debt in case of a shortfall in expected revenue.

Proponents of Measure B are counting on voters to accept the higher bed tax, saying it is being paid for by tourists and visitors while benefiting the city at large.

Opponents, however, say the increase puts Anaheim’s bed tax among the highest in the country. They want the city to find another way to finance the Disney and Convention Center projects, pushing instead for a park admissions tax that Disney has long resisted.

“They don’t want to pay it, of course, but with an admissions tax, you’d have a true user fee at the gate,” said Steve White, the leader of a 2,000-member anti-Measure B campaign.

William Fitzgerald, another opponent of the measure, said the city is forgetting about the hundreds of families who make their homes in hotel rooms and have to pay the bed tax every day. Fitzgerald, a longtime supporter of Anaheim’s homeless shelter, estimates that as many as 2,000 hotel and motel rooms are occupied by people who cannot afford rent, deposits and utilities anywhere else.

“These people don’t go to Disneyland,” Fitzgerald said. “These people are the poor of the poor.”

Daly said such families “have been paying this [bed] tax for 30 years” and have been absorbing the latest 2-point increase for 15 months.

“This is called a transient occupancy tax,” Daly said. “These people are transient.”

If the city must try to pound out a new finance plan with Disney, officials say, the time it would take would injure the relationship and imperil the deal altogether. Disney officials have said they would continue to object to any form of an admissions tax.

“We’ve already agreed on that with [the city] and we’re past that in negotiations,” said Doug Moreland, vice president of development for Walt Disney Imagineering. He said one of Disney’s conditions in moving forward with the new project was the guarantee that it would be protected from such a tax.

Daly said a user fee would be “impractical and unfair” to Disney.

“It doesn’t make sense to target a tax on a single business enterprise, especially since that business is the largest taxpayer in town,” Daly said. “They’re also the largest generator of other public revenues.”

Even so, White and his colleagues said they aren’t giving up. Their “Vote No on Measure B” campaign is being sorely outspent by tourism industry supporters, but White said he’s banking on fed-up taxpayers to upset the city’s last hurdle.

The pro-Measure B forces have already raised $189,700, with more than $100,000 of that coming from the Visitor’s Bureau, according to campaign finance reports. Proponents have spent the money on mass-mailings and cable television campaign ads. By contrast, opponents have raised less than $1,000 and are getting their message across with about 150 signs around town. They hope to raise enough money to finance one mailer.

“Hard-core voters in Anaheim are very anti-tax, anyway,” White said. “They don’t like [taxes] and they’re certainly not so trusting of public officials anymore.

“If we can plant a seed of doubt, we still have a chance. We’re not alone.”