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The Real Deal Los Angeles

Disney pumps breaks on hotel amid squabble with city officials

The firm secured a $267M tax break for the luxury hotel project
August 16, 2018 05:00PM

Disney Exec Bob Iger, Anaheim Hotel Rendering (Credit: Wikimedia Commons)

It’s not the happiest place on Earth. At least not today.

Walt Disney Co. has put its plans to build a luxury hotel on its Disneyland Resort in Anaheim on hold after failing to come to an agreement with the Anaheim City Council, the Los Angeles Times reported.

Disney secured a $267 million tax break to build the 700-room hotel on the north end of Disney’s massive property, at 1401 Disneyland Drive, in July 2016. The tax credit, which translates to a 70 percent break from the city’s transient occupancy tax, would last for 20 years.

The amusement park giant has since changed its mind on the location of the luxury hotel, instead opting to build it in a more central location within Downtown Disney.

City officials are now saying the new location does not qualify for the subsidy. In a letter to Disney’s attorneys, City Attorney Robert Fabela claims the agreement is “site-specific.”

The feud comes at a time when there is heightened scrutiny on big city-commissioned tax breaks. A new 29-page report released Friday by Ron Galperin, controller for L.A. City, showed the city has provided nearly $1 billion in tax breaks since 2005. Many of those deals were made “without having a broader, comprehensive Citywide economic development strategy,” the report said.

Anaheim officials could potentially fix the Disney situation by voting to amend the subsidy agreement, or by crafting a new tax break.

There are many businesses in the area where Disney wants to build the new hotel. Some, including the AMC Theatre, Rainforest Cafe and Earl of Sandwich, have already closed in preparation for the project.

Disney has yet to begin construction on the project, preferring for the moment to evaluate its economic viability without the tax break.

The hotel would be the fourth hotel at the Disneyland Resort and first luxury property built in two decades. [LAT] — Natalie Hoberman