The Anaheim City Council voted Tuesday to extend a $76.3-million tax break to a developer to build two Disney-operated luxury hotels, despite strong opposition from a council member, community activists and union members who called the deal a corporate handout.
The council voted 3 to 1 to make up to 15 years of assistance payments to GardenWalk Hotel I, LLC, the developer planning to build two, 12-story hotels with 866 rooms for $242.4 million. The payments would begin once the hotels began operation.
Councilwoman Lucille Kring abstained from the vote because she owns a wine bar in the GardenWalk area.
Critics said the agreement smacks of favoritism and charged that Anaheim politicians have long been too cozy with Disney.
Although Disney is in negotiations to operate the hotels, under the agreement, it would not directly benefit from any payments, a spokeswoman said.
Last year, Anaheim, which depends heavily on revenues from a 15% hotel bed tax, approved a policy of economic incentives to attract four-star hotels. The policy essentially lowered their bed taxes to the rate paid by three-star hotels. In March, the city approved a similar agreement to grant tax breaks to a four-star hotel.
Councilwoman Lorri Galloway cast the lone dissenting vote, saying the agreement gave special treatment to a private company at the expense of city revenue. She was also critical of the item’s placement on the agenda at the last minute as a “consent” item, which has limited opportunity for public comment.
“Why do we create an unfair policy where the rest of the hotels have to pay 15% but they don’t have to?” she asked. “The hotels are saying: I want a Mercedes but I only have money for a Chrysler. Will you give me the money for the Mercedes?”
Resident Larry Larsen, 62, a sales manager, told the council that the public should have been brought into the process.
The plan’s backers, which include Mayor Curt Pringle, called the move an economic incentive to bring in new business and new tax money they would otherwise not receive.
Keyser Marston Associates, a real estate consultant hired by the city, concluded in a report that “the proposed hotel cannot be constructed or operated without economic assistance, and that the assistance is warranted because the costs are estimated to exceed the owners’ ability to finance the project.”
Business representatives, builders and the city’s convention center, spoke in support, saying a subsidy would create jobs.
According to a city report, the two projects would provide 3,000 construction jobs and 1,300 permanent jobs.
“This will be a boon to the city,” said William Stone, a principal with Anaheim GardenWalk, the developer. “There’s no way in this environment to get that kind of project done without some kind of help,” he said.
Charles Ahlers, president of the Orange County Visitor and Convention Bureau, told the council that the incentive was needed to bring more first-class hotel rooms, and supported the subsidy.
“A subsidy is the normal course of doing business,” he said.