When Jose F. Moreno ran for Anaheim City Council last year, he wasn’t just challenging another politician. He was taking on the Walt Disney Co.
In front-porch pitches, the reform candidate told residents that politicians had prioritized Disney ahead of them, hurting a city already challenged by rising crime and poverty.
Disney responded with its pocketbook, making hefty contributions to PACs supporting Moreno’s opponent, incumbent Jordan Brandman, who had voted to approve lucrative incentives for Disneyland Resort.
Outgunned financially, Moreno’s chances appeared slim. But he hammered away at the idea that corporate subsidies had created “two Anaheims.”
“We’ve invested billions, really, in the children of tourists,” Moreno said. “We’d now like to really turn our investments toward making sure we take care of the children of Anaheim so that they can have that magical life that I think we all want for our kids and families.”
Moreno’s message resonated. His victory — in one of the tightest races in Anaheim history — helped flip the balance of power on the City Council.
Now, the new majority, led by Mayor Tom Tait, is already shaking things up. It forced the resignation of a city manager who had favored pro-Disney initiatives, voted to oppose a $300-million streetcar that would’ve ferried riders to the company’s resort, and says it wants to focus on making life better for locals.
Absent from the agenda: cutting big deals with Disney.
That puts the Burbank company in an unfamiliar position. For decades, it has been able to secure incentives, subsidies, rebates and tax protections from the city that, in total, would be worth more than $1 billion, according to public policy experts who have reviewed the agreements.
Part 1: Is Disney paying its share in Anaheim? »
Guarantees secured via the City Council, such as a decades-long exemption from any potential entertainment tax at Disneyland Resort, have helped insulate and expand the property, whose two theme parks welcomed a combined 27.2 million guests last year, according to data from Los Angeles consulting firm Aecom.
To help get its way, Disney has over the years spent heavily on Anaheim politicians, using a complex network of political action committees to back friendly candidates who will often vote in its favor.
Last year, Disney contributed $1.22 million to 10 PACs that were involved in the November election, more than any other company or single individual, according to an analysis of campaign finance disclosures by The Times. Those PACs received funds from multiple sources and most also spent money on elections outside of Anaheim.
This time, though, Disney’s spending didn’t pay off.
In interviews with The Times, more than a dozen community activists, political observers and current and former city officials pointed to the results in the November election as proof that voters are ready to take a harder stance on issues related to Disney. They say that the 45-year entertainment tax exemption secured in 2015 and a $267-million hotel tax rebate a year later pushed too far, souring some of the goodwill the company has built up in the city.
Disney declined requests to interview company executives. However, in a letter to The Times, the company said that some politically motivated critics in Anaheim “want to blame Disney for larger socio-economic ills that exist in cities throughout California and across the nation.”
“While there are some differences in opinion between Disney and several Anaheim officials regarding policy issues and how best to secure Anaheim’s economic future, our relationship with the city, its administration and the majority of its political and community leaders remains strong,” Disney said.
The company also disputed The Times’ estimates and analysis valuing Disney’s Anaheim incentives at more than $1 billion, and said that it has contributed much more to the city than it has received.
Lucy Dunn, chief executive of the Orange County Business Council, a nonprofit whose PAC received more than $100,000 from Disney in 2016, said she believes the council majority’s stance has left Disney “sort of baffled” — especially while it is in the midst of an expensive expansion that includes the Star Wars: Galaxy’s Edge area at Disneyland and a new luxury hotel.
“They are investing $1.5 billion in that town,” she said. “It’s odd to me that there isn’t a better working relationship between leadership at the city and Disney.”
The shift has been years in the making. Disney has grown, over decades, from a purveyor of children’s amusements into one of the world’s largest media and entertainment companies, a corporate juggernaut with a stock market value of about $154 billion.
Anaheim has undergone its own evolution. In 2016, the City Council expanded from five to seven seats. The six council members are now elected by district; the mayor is still elected citywide. Last year, four seats were up for grabs, more than any previous election. The change came after the American Civil Liberties Union filed a lawsuit alleging the prior at-large election structure discriminated against Latinos, who make up 53% of the population.
Poverty, declining income and rising crime are all contributing to a creeping restiveness. The city’s crime rate, after dipping earlier this decade, increased 14% from 2014 to 2016, according to data from the FBI. It has risen 1% since 2000.
Several Anaheim residents said they want more of the city’s tax revenue spent on making neighborhoods safer and tackling homelessness — a mushrooming problem that has drawn headlines as a large encampment of people has formed near Angel Stadium. The City Council voted unanimously in mid-September to declare a state of emergency on homelessness.
“I’m lucky I live [near] Disneyland Resort — it is nice and clean. But it’s not really representative of what Anaheim is,” said activist Luisa Lam. “The council before always kept giving and giving to Disney.… Honestly, I felt that we were spiraling out of control.”
Not far from Disneyland, a tall stone wall exemplifies the divide in Anaheim.
It runs along a section of East Gene Autry Way, a pristine thoroughfare lined by rows of manicured palm trees and gold-capped street lamps. The street is in the Anaheim Resort District, an 1,100-acre area created by the city after it issued $510 million in bonds to pay for infrastructure and projects, including an expansion of the city’s convention center and a parking garage for Disneyland Resort. Disney’s property, with its two theme parks, hotels and retail area, is the crown jewel of the district.
But just on the other side of the wall is the working-class Wakefield neighborhood, better known as the turf of the Boys From the Hood, a notorious local gang. It’s not part of the resort district.
On a recent visit, former City Council candidate Arturo Ferreras, who was defeated by a Disney-backed incumbent last year, pointed out the area of a trash- and graffiti-saturated alley where police shot and killed a man in 2012.
“You don’t go here during the night,” he warned.
Wielding influence
Few cities as large as Anaheim are so identified with a single company — some residents even call it “Disneyheim.”
Sleepy Bentonville, Ark., home to Wal-Mart Stores Inc., is a fraction of the size of Anaheim. The same is true of tiny Hershey, Pa., the headquarters of Hershey Co. But Anaheim, with a population of nearly 350,000, is also a company town — a place where one business exerts extraordinary influence.
Back in the 1960s and 1970s, when Disneyland was a growing but still somewhat quaint operation, chummy relationships with city of Anaheim officials helped the company achieve its goals. Former Disney executive Jim Cora, whose 43-year career included managerial roles at Disneyland in that era, said that company executives used to give City Council members “silver passes” that allowed free access to the park and take “top officials of the city of Anaheim” on annual trips to locales including Coronado and Santa Catalina islands.
“We laughed, we told jokes, we drank together, we played poker until well into the night,” said Cora, who attended the getaways with the men he called “the city fathers.” “The next morning, a group of guys would go out on a fishing boat, another group would go play tennis, another group would go out and play golf, and there was a group that just had bad hangovers and couldn’t go anywhere. So that’s what we did for a long time.”
One of Cora’s former Disneyland colleagues, Ron Dominguez, found the trips to be invaluable.
“It built relationships,” said Dominguez, who after 39 years with Disney retired from his post as executive vice president at Walt Disney Attractions in 1994. “If you had a power outage [at Disneyland] in the middle of the night, you could get some support because you knew the individual [at the city] that had that particular function.”
The state’s Political Reform Act of 1974, which regulates campaign finance, lobbying activity and conflicts of interest, put an end to the big gifts and junkets — around the same time the practice was fading.
“It became … unfashionable to accept gifts from Disney,” said Cora, who retired as chairman of Disneyland International in 2001. “And the city of Anaheim didn’t want to do it anymore, because it looked like they were being paid off.”
These days the interactions are much more subtle.
Take Carrie Nocella, Disneyland Resort’s director of government relations and minority business development. Little known outside of Anaheim, Nocella is a prominent player in the city.
Moreno, the newly elected City Council member, described her as Disney’s “political gatekeeper.”
“She was the one designing strategies, meeting with political consultants about what kind of PACs needed to be funded,” said Moreno, who previously served eight years on the Anaheim City School District Board of Education.
District 3
Disney-backed candidate
Jordan Brandman
Lost
Disney-opposed candidate
Jose F. Moreno
Won
Christopher Duarte, president of Workers United Local 50, recalled his surprise when Nocella showed up for a 2016 meeting with Councilman Jordan Brandman to discuss Disney’s prospective hotel tax rebate.
The encounter came about after Disney-backed Brandman asked if he could bring along an executive from the company, Duarte said. He was surprised by the request, but said he “agreed to it because I was interested to see who was going to come with him.” When Brandman appeared with Nocella, Duarte said, he realized how important this issue was to Disney. But the meeting “felt like a sales pitch,” Duarte said. “I don't believe that government and big business should be that close together — in tandem.”
Ultimately, Local 50 did not take a position on the rebate, which was approved by the City Council. Brandman declined multiple requests for comment. Disney declined to make Nocella available for an interview.
People who have encountered Nocella describe her as smart and savvy — but she has also been scrutinized for her friendship with City Councilwoman Kris Murray. The two women, along with a group of longtime friends, went on a European vacation shortly after Murray was reelected to a second term in November 2014. Her campaign was aided by financial support from Disney and Disney-backed PACs.
Murray told The Times that each person paid her own way, and city business wasn’t discussed. “Our friendship predated [my] service on this council,” she said. But the trip, first reported by Voice of OC, alarmed good-government experts.
“It looks terrible from the point of view of someone who doesn’t want the city decisions to be influenced and controlled by Disney,” said Tracy Westen, chief executive of the nonprofit Center for Governmental Studies, a nonpartisan think tank focused on governance reform.
Some Anaheim activists believe the councilwoman should recuse herself from votes related to the company. But Murray pointed out that other council members are friends with people who “interact with the city in a variety of capacities.”
“We all are capable and equipped to distinguish the difference between our personal relationships and our work to represent the residents of Anaheim, and I have certainly been able to do that during my tenure,” she said.
Murray has said she voted for the Disney-related deals, including the entertainment tax exemption in 2015, because they benefited the city financially.
Big campaign contributions
Disney also wields power in Anaheim by building relationships with an assortment of local organizations, whose members have become key emissaries for the company. They speak at council meetings in support of Disney and do some campaign legwork.
Support Our Anaheim Resort Area, known as SOAR, is perhaps the best-known group. It was founded in 2007 with financial backing from Disney in part to fight a housing development proposed near the company’s resort. By the end of the year, the developer’s plans, which included building low-cost apartments, had fallen through.
But amid the battle, SOAR backed a ballot initiative that would give voters the power to block future housing projects in the resort district, affording Disney the chance at a wider, longer-lasting victory. A few months ahead of the June 2008 election, the City Council adopted the initiative. The deciding vote was cast by City Councilman Harry Sidhu, who had received direct campaign contributions from Disney. All told, Disney gave $2.1 million to SOAR during the housing debate, The Times reported in 2008.
There are perks that come with joining a group like SOAR. The organization’s advisory committee members, for example, have in the past gotten free access to Disney’s theme parks.
That became problematic for longtime SOAR advisory committee member Gail Eastman, who visited Disneyland 16 times from December 2009 to December 2010, during her successful Disney-backed run for City Council and shortly before she was sworn in. Even though she said she never spent time in the park with her free “red pass” — and only briefly escorted Anaheim visitors and community members into the property — Eastman said she reimbursed Disney for gifts over the annual $420 limit. Her visits were valued at $3,896, according to an economic disclosure form.
“Wow, what a costly mistake on my part,” said Eastman, who added that she’d been initially unaware that the visits had to be reported.
In Anaheim politics, Disney’s money, more than anything, has given its favored candidates an edge.
During the pivotal 2016 election year, Disney’s $1.22-million outlay to 10 PACs beat its own record for spending on an Anaheim City Council election.
Shannon Nickerson, who for nine years has worked as a vendor at Disneyland, selling ice cream from a cart, said the company’s political spending isn’t surprising. “The big corporations pick politicians that they want to support and they fund them so they can get their way,” said Nickerson, who lives in Anaheim.
Disney’s money takes a serpentine path, often flowing from one PAC to another before being spent. (It also sometimes has unexpected beneficiaries: Even Mayor Tait, long a vocal critic of Disney deals, received contributions from the company when he was up for reelection in 2014.)
During last year’s election, Disney-backed PACs doled out money in support of four candidates — largely via independent expenditures, which by law cannot be done in consultation with politicians. (Disney also made direct contributions to those four politicians, giving the maximum $1,900.) Three PACs — one that received funds directly from Disney and two that got funds from a Disney-backed committee — spent money on advertisements attacking four other candidates.
Anaheim was flooded with mailers, lawn signs and advertisements in a massive display of corporate involvement in the City Council race. It was a crucial election — the first under the new district system designed to give Latino residents more of a say in city politics.
Even though Anaheim is 53% Hispanic, only three Latinos had served on the council in the city’s history as of 2012, according to the ACLU lawsuit that brought about the election change. Over the years, many council members have come from Anaheim Hills, a tony, largely white section of the city dotted with planned neighborhoods. Disney supported the move to districts, but council members it has backed, including Murray, did not.
Some Anaheim political players, including Moreno, noted that three of the four council candidates that Disney’s campaign spending in 2016 supported were white, while three of the four candidates who were targeted with negative campaigning by PACs with direct or indirect financial connections to Disney were Latino.
Though Moreno faced nearly $31,000 in opposition ads by a PAC that got money from Disney, he said that he believes the company makes its political decisions based on “its bottom line” and not race.
In its letter to The Times, Disney said its support of candidates is determined by their political and economic ideology.
“Our support of candidates is not based on ethnicity; it is based on candidates who support business growth and the continued development of the resort district, both of which help ensure a strong local economy and vibrant community,” Disney said.
Taking on Disney
Even as Disney has faced more opposition in Anaheim, the company’s deep pockets have still helped it defeat challengers.
Arturo Ferreras was one of those opponents during last year’s election. With just $33,000 in contributions and minimal PAC support, he was crushed by Lucille Kring, a Disney-backed incumbent who voted in favor of the entertainment tax exemption and hotel tax rebate. Ferreras, a pastor who works in his church’s Hispanic ministry, said he decided to challenge Kring to help refocus the council on neighborhood issues.
“Disney is the crown jewel of Anaheim,” he said. “But we would want them to be more responsive to the needs of our community.”
He wasn’t prepared for the amount of political money that would be deployed against him. PACs backed by Disney spent $272,000 in support of Kring’s campaign. Meanwhile, two PACs that received funds from a Disney-backed committee spent $63,000 in attack ads against Ferreras.
Residents in District 4 — which includes Disneyland Resort — were deluged with mailers. One showed a grainy photo of Ferreras next to a warning: “Arturo Ferreras would make reckless decisions on the City Council that would … threaten public safety.”
District 4
Disney-backed candidate
Lucille Kring
Won
Disney-opposed candidate
Arturo Ferreras
Lost
Kring also took legal action against Ferreras — alleging in a court petition that his true surname was not listed on the ballot and that his designation as a priest should not be included, contending, in part, that he’d been “defrocked.”
Both claims were inaccurate, according to the ruling from an Orange County Superior Court judge that denied the petition. The case forced Ferreras to spend $3,500 on a lawyer.
Kring said she followed the advice of her “campaign people” but now regrets filing the petition. “I wish I hadn’t wasted the money or the time, but in politics you have to do what you think is best at the moment,” Kring said.
One of the candidates who successfully took on the Disney money machine in 2016 was Moreno, who beat out Brandman, the incumbent whose campaign was turbocharged by the company.
Several PACs that got contributions from Disney and two that received money from Disney-backed committees spent a total of $330,000 in support of Brandman. And three PACs — one that received funds from Disney and two that got contributions from a Disney-backed committee — spent a total of about $85,000 on ads attacking Moreno.
A day before the election, a news release sent to area media outlets detailed a 2016 misdemeanor domestic violence case involving Moreno’s brother-in-law. The news release was sent by strategic planning firm Communications LAB, an Orange company under contract with the city of Anaheim to provide “policy aide” services to Councilwoman Murray. The firm also has ties to Disney — it names Disneyland Resort as a past client, and one of its senior executives, who also serves as Murray’s aide, is married to a Disney employee.
“As a political tactic — beyond the pale,” Moreno said of the news release. “It had nothing to do with the issues we were running on.”
Communications LAB executive David Cordero said that the work was done on a pro bono basis at the request of the ex-wife of Moreno’s brother-in-law.
“The firm was not paid for its assistance nor was the effort related to any candidate, campaign or PAC,” he said.
Moreno defeated Brandman by 72 votes. His win, and that of retired accounting supervisor Denise Barnes, gave Tait a like-minded majority with which to work until he is termed out in 2018. Councilman James Vanderbilt, who in 2014 was elected over Eastman, said the victories reflect the public’s desire “to have somebody who is in their corner.”
“Our first challenge,” said Vanderbilt, “has been to unwind a number of things that were questioned and were perhaps over-reaches.”
A new agenda
Almost immediately, the new majority — dubbed the “people’s council” — signaled its intention to upend the status quo. In December, the council voted unanimously to end the hotel tax rebate program that Disney and another developer took advantage of last year.
Although the program is expected to spur the construction of about 2,000 hotel rooms — and Disney still would get a rebate valued at $267 million over its 20-year term if it builds the project — the incentive will no longer be offered to future developments.
Next, the council voted 6 to 1 in January to oppose the streetcar project that would have benefited Disney by connecting its resort to the city’s transit hub. The company had in the past supported the project, which lost the backing of the Orange County Transportation Authority last year.
“It’s not an anti-Disney approach,” Moreno said. “It’s an anti-greed approach.”
Among the changes at City Hall, none roiled the establishment more than the forced resignation of City Manager Paul Emery.
Tait said he sought the official’s removal, in part, because Emery had recommended the council approve the entertainment tax exemption and the hotel tax rebate for Disney. In July, the council voted 4 to 3 to ask Emery to step down.
“I wanted to take the city in a new direction, a dramatic new direction — and Paul recognized it,” Tait said. “We have a fiduciary duty to the 350,000 people we represent. We have to look out for their best interests.”
Just before he resigned, Emery declined to comment via a city spokeswoman. After stepping down, he could not be reached for comment.
Some former Disney executives, including Jeff Kurtti, believe that the company is being scrutinized for pursuing deals that any blue-chip firm would seek. In some ways, he and others said, Disney is a victim of its own carefully crafted wholesome image.
“It’s almost as if Mickey Mouse went and wrote checks for campaign funding,” said Kurtti, who consults for the company. “I think it is a contradictory image that hits people in the wrong way.”
But not everyone is convinced the 2016 election represented a sea change. Former Anaheim Mayor Curt Pringle, who was supportive of the company while in office from 2002 to 2010, acknowledged that there is tension in the city. But he wonders if last year’s election simply reflected “some folks feeling that they want to shake it up and do things differently.”
An answer could come soon — another election is just around the corner. With Tait stepping aside next year and incumbents up for reelection, the 2018 race is sure to be hotly contested.
Among the mayoral candidates is Sidhu, the former councilman who cast the deciding vote on the anti-housing ordinance.
During his first successful run for the council in 2004, he received a contribution from a powerful company that was later able to count on his support.
The Walt Disney Co.
Second in a two-part series on Walt Disney Co.’s relationship with the city of Anaheim. Part 1: Is Disney paying its share in Anaheim? The money battle outside the Happiest Place on Earth.
Credits: Times staff writers Sandra Poindexter, Ben Poston and Priya Krishnakumar contributed to this report. Produced by Sean Greene. Lead photo: The Disneyland Monorail passes by as visitors walk toward Disneyland Resort. (Allen J. Schaben / Los Angeles Times)