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The Real Deal Los Angeles

Disney pulls plug on planned hotel over tax spat with Anaheim

The decision means millions in lost tax revenue and jobs, but the city says Disney wasn’t playing fair
October 11, 2018 09:00AM

Anaheim Mayor Tom Tait and Walt Disney Company CEO Bob Iger

Mickey Mouse is playing hardball.

The Walt Disney Company has canceled plans to build a 700-room high-end hotel near Disneyland, following Anaheim’s decision to nix a $267 million tax rebate. That happened after the company moved the planned hotel to a different site.

Disney’s move comes two months after Anaheim pulled out of the 2016 agreement, which would have seen the city return 70 percent of the hotel’s transient occupancy tax over the course of 20 years, according to the Los Angeles Times. The occupancy tax accounts for 15 percent of the nightly room rate.

But Anaheim said Disney was not playing by the rules. The company moved the planned hotel after the parties had agreed to the tax rebate deal and conducted economic impact reports. Disney argued the new location was just 1,000 feet away from its agreed upon spot. The city say the company is free to start the process over at the new location.

Even with the rebate, the new hotel would have generated considerable tax revenue for Anaheim and created hundreds of hospitality and construction jobs, industry pros said.

Anaheim and Disney have long had a close relationship. The company is the city’s largest employer and taxpayer and Anaheim has accommodated Disney with more than $1 billion in tax breaks, protections, and subsidies over the last two decades, according to the Times.

The city and Disney are also at odds over a “living wage” initiative that will appear on the Nov. 6 ballot. It would require companies receiving city subsidies raise wages based on the cost of living. [LAT] — Dennis Lynch