Disney Gate Tax Dialogues, Part 6: An Agreement to Disagree (With)


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Ariel's Bad Contract

[Editor’s note: There’s a lot for us to cover here before the Anaheim City Council votes next this Tuesday on Disney’s “Gate Tax” proposal — so to make it go down more smoothly we’re presenting it as a play involving Orange Juice characters.  Substantive dialogue from Cynthia Ward.]

[In Part 1 of our story, taking place in in the secret Orange Juice Blog Headquarters overlooking the GardenWalk complex, Cynthia Ward explains to Vern Nelson and Greg Diamond how Disney was originally not bent on sucking as much money as possible out of taxpayers. In Part 2, she explains how and when (and why) Disney started to get nasty.  In Part 3, she explains what happened almost 20 years ago, the LAST time a gate tax was proposed.  In Part 4, she explains how, based on its own figures and promises, the 1996 agreement has been a huge failure for the City.  In Part 5, she explains how Disney has apparently failed to meet the major obligation that made the 1996 deal even arguably reasonable for the City.]

CYNTHIA WARD: We’re finally getting to the part of the story where Disney starts begging for a new giveaway.

VERN NELSON: But Lucille Kring says that it’s NOT a “giveaway”! She says that NONE of the giveaways are “giveaways.”

(Everyone laughs heartily for several minutes, then they suddenly stop. But if this play is ever actually performed, maybe the laughing goes on for about eight seconds.)

GREG DIAMOND: Did I ever tell you, Vern, that in CATER’s Convention Center Bonds lawsuit the City’s Attorney wouldn’t let us introduce as evidence what Kring said about the bond sales during Council meetings into the record, because he said that even if it was false it was irrelevant to the case?

VN: Did that really happen?

GD: Yep. And then she still repeated the same lies when she wants to attack CATER. To be fair, though, she has absolutely no idea what’s really going on.

CW: Vern, do you want to play the part of the author of the Staff Report?

VN: Don’t mind if I do. Do I have to read documents?

CW: That’s sort of the point.

VN: Oh. OK, well it’s either me or Diamond, so here goes.  Staff Report, next section:

In continuation of the 60-year partnership between the City of Anaheim and Disney, Disney expressed an interest in possibly making significant additional investments in their Anaheim properties. The proposed investments would include an additional parking structure and necessary infrastructure to improve traffic circulation, with the majority of the proposed investment going towards park enhancements which would increase park attendance and length of stay in area hotels. As a result, Disney requests the City to consider extending the current entertainment tax rebate period included in the 1996 Finance Agreement, in order to provide the needed assurances regarding the economic landscape surrounding the significant investments currently contemplated, and to incentivize the construction and operation of those qualified capital improvements at their Anaheim location.

“Any improvements completed in connection with the Agreement have been fully analyzed in connection with the adoption of the Disneyland Resort Specific Plan No. 92-1 Zone and Anaheim Resort Specific Plan No. 92-2 Zone.”

GD: HA!

VN: Why “HA!”?

CW: The improvements were already analyzed because both sides know that Disney was already going to make these improvements to their own highly profitable private property before the gate tax idea even came up. That is why there is no CEQA impact!

VN (looking at Greg): Did you really already understand all of that?

(Greg is looking into his phone and doesn’t answer. Vern shrugs.)

CW: So any “benefit” the City derives from this improvement is already ours before this the July 7 meeting starts! We’d be giving them a sweet deal in exchange for nothing! It’s not as if Disney WON’T make these improvements if we refuse to bargain – they need them.

GD: That’s pretty much what I was going to say, Vern.

VN: Ha! You didn’t know about CEQA either! (Greg looks irritated and returns to looking at his phone.) We thus proceed:

As such, staff has negotiated an agreement with Disney that would provide the economic certainty requested by Disney and ensure the continued vitality of the tourism and convention market which is critical to the City’s financial future.

CW: We need to get off the “tourism as critical to City’s financial future” express train. We’ve already put far too high a proportion of our chips on that single bet.

GD: Not only that, but I get the sense that a lot of the non-construction jobs that they’re promising as “indirect” benefits of the Stadium, the Convention Center, and now Disneyland are the same jobs being counted two or three times.

VN: Someone should do a study on that.

GD: Yeah – just as soon as the City tells them what conclusions they want.

CW: We’ll get to “studies” later.  We also need to tell City Staff NOT to go negotiate a deal with Disney and bring it back for a last minute public approval! When was the meeting in which they revealed to the public and their leaders that Disney wants to negotiate? When did they get some public tentative affirmation that all sides are open to the idea, and then go negotiate the finer points? How does the public only get in on the act after it is fait accompli?

VN: But that “tentative affirmation” or whatever could have been done in private, right?

(Cynthia and Greg exchange a glance. Greg makes a hasty, emphatic note on his legal pad.)

CW: Not legally. In fact, for Staff to engage in real property negotiations over a contract involving public property – remember, the City OWNS the “Mickey and Friends” parking structure and the land it sits on – would seem to be a violation of public trust and potentially a violation of the law.

GD (muttering to himself): Work, work, work.

VN: I guess I should continue:

Under the proposed agreement, Disney would be required to make a minimum of $1,000,000,000 of capital improvements to receive the first extended tax rebate period of thirty years (that is, an extension of the current tax provisions for 30 more years). Afterwards, there is the option for an additional capital investment of at least $500,000,000 for a second extended rebate period of fifteen years. Other performance obligations include specific timetables for the capital improvements to be commenced and completed; local hiring and nondiscrimination provisions; and continuous operation of improvements requirements.

CW: So Disney commits to build stuff that they already committed to building so long ago that the Environmental work is done – but they want to pass this off as a new benefit to Anaheim? So they will invest in their own property again in the future if need be – as if they were going to do no repair and maintenance otherwise? AND they promise “continuous operation of improvements” as if, what, they were NOT going to staff their own projects? Just how stupid do they think Anaheim residents are?

(Vern and Greg both prepare to answer, but after looking at Cynthia they decide otherwise.)

VN: I’ll just keep reading:

The City would be obligated, in the event any entertainment taxes are enacted by the voters, to reimburse Disney an amount equal to 100% of the amounts remitted to the City from this tax.

CW: So even if we somehow succeed in getting a gate tax imposed, it goes back to Disney anyway. Tell me again – what part of this is a “partnership?”

GD: Well, legally that’s a pretty clever approach. Or else it’s idiotic. Maybe clever and idiotic. Hmmm … I’m starting to lean more towards “idiotic” now.

CW: You can have it all analyzed in time for July 7?

GD: Try to avoid rushing your attorneys, Cynthia. If you rush them, they become more likely to make some serious mistakes in things like drafting their contract provisions….

(Cynthia and Greg stare out towards where a person reading the computer monitor might be. Vern has stood up and is at his keyboard, playing the two-chord progression usually used to signal an ominous development in a 1950s horror movie.)

VN: I knew that if I waited long enough I’d finally get to use this thing!

GD (still looking out at the reader): Play it again, Vern. Play it again.


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Identity suspected but unsure, Anaheim Insider is SOME slavish devotee of Curt Pringle and the Disney/Chamber kleptocracy in the OC's biggest city, and can always be counted on to spout their official line. [OK, he's a satirical character based on the anonymous "Anaheim Insider" who posts on Matt Cunningham's "AnaheimBlog.net", and is known for his tagline "Anaheim Insider here" and referring to Mr. Pringle as "The Great Man."] Oh, and of late, the editors have been using "Anaheim Insider" for non-satirical Anaheim-related pieces which are either collaborative or simple announcements.