Disney Gate Tax Dialogues, Part 7: Cynthia Provides Context – or, California Screamin’

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[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.  In Part 6, she addresses details of the Staff Report for the July 7 meeting.]

CYNTHIA WARD: I promised you that we were going to talk about studies. It’s time.

VERN NELSON: Grrrrr – this has a lot of numbers.

The City consulted with Beacon Economics, LLC, an independent research and consulting firm, to prepare a summary report of the proposed agreement including determination of the economic benefit received by the City.

GREG DIAMOND: Let me guess: the Staff Report references the existence of an outside report, but it doesn’t provide the report itself and instead only offers the public a summary.

CW: Yes. How quickly you have learned the ways of Anaheim.

VN: Shhh, let me concentrate:

The report identifies an estimated $17,851,000 annually in increased tax revenues as a result of the initial capital investment by Disney of $1 billion dollars and an additional $8,926,000 annually from the second capital investment of $500 million dollars. Further, the firm estimated the economic output, as a result of the initial capital investment, to be $564,181,000 per year for businesses located in the City; and, an additional $282,092,000 from the second capital investment.

GD: It’s amazing how, even though the promises in these consultants’ reports don’t come true, the City keeps on presenting them like they’re brought down from heaven by winged angels – even though the City Staff has told the consultants what conclusions to reach!

CW: And so we keep on forfeiting benefits to which we are legally entitled so that we can make risky investments that benefit campaign big donors, although they don’t tell the public about the degree of risk, and all without a reasonable rate of return. Why do we have to even pretend to take these numbers seriously?

GD: Well, they did SUCH a good job with the initial gate tax….

CW: Yeah – let’s talk about that for a minute. Here’s how much we lost when we gave up that gate tax:

In the early 1990s, Disney had 12 million visitors a year, generally paying $33 per ticket. If we had put a $1 gate tax on those tickets – just 3% – we would have had $240 million extra in the General Fund over 20 years.

Now if we had kept that tax at 3% – the price of a hamburger within Disneyland – then now that we have 20 million guests per year paying about $100 per ticket (which will of course go up) then we’re losing $60 million per year right now. Over 30 years, if the ticket price stayed the same, that’s $1.8 billion. Over 45 years, it’s $2.7 billion. And a $9 surcharge on a very expensive family vacation isn’t going to keep people away. (And if it somehow does push away a small percentage, it would mean a better vacation experience for everyone else!)

VN: I’m going to start reading from the Staff Report again:

BEACON: The report identifies an estimated $17,851,000 annually in increased tax revenues as a result of the initial capital investment by Disney of $1 billion dollars.

CW: Why would we settle for $17 million per year when we should be pulling in $60 million a year for letting the agreement expire and going to a vote? We also need to demand answers for the nearly $4 million in missing parking benefits we have not seen in years. And any consultant whose estimates for future revenues are so far off (60% versus 10% Return on Investment is not within the margin of error!) need never be hired by the City again – period.

VN: You calm? OK.

As to job creation, it is estimated that during the construction phase of the initial capital investment 12,863 jobs will be supported and post construction the project will support 3,056 jobs on a permanent basis. An additional 6,432 construction jobs will be supported and post construction, the project will support 1,527 on a permanent basis for the second capital investment. The summary report detailing these estimates and other information pursuant to California Government Code Section 53083 is attached to this staff report and has been publicly available on the City’s website since June 25th. Additionally, submitted with this staff report is a detailed memorandum providing CEQA findings and determination that no further environmental documentation is required as a result of this agreement.

CW: The last time Disney claimed “job creation” they also scored up to $30,000 per job in State tax credits, using an Enterprise Zone deal run by their buddies at the Chamber of Commerce. That money was not available to help fund water infrastructure or school districts, and was instead kicked back to Disney for hiring Carsland cast members who they would have hired anyway even without the Enterprise Zone incentives! Where does it end? Disney’s continual demands are killing us!

GD: I’d just like to point out that I’ve only had three lines in this segment so far.

VN: Really, you count my reading from Staff Reports as lines?

CW: I guess we should talk about ARTIC, and its cost to taxpayers. Does anyone believe that that glass cockroach egg was constructed for anyone but Disney? It’s dirty little secret is that its “grand visionary” design forced construction of a suspended floor system that cannot be interrupted for the installation of tenant improvements. So while future ongoing revenues bank on restaurants and storefronts, the installation of plumbing, gas, sewer lines etc is not going to happen anytime soon – and it seems that none of the brilliant engineers picking up awards for the design of the boondoggle project bothered to identify this obstacle and plan for it by roughing in those utilities. So look for taxpayers to carry the cost of a shell devoid of tenants and life for some time into the future.

GD: Vern, do you notice something like heat waves coming off of Cynthia right now?  She’s sort of blurry.  Like, you know, a desert mirage?

VN: Yeah! Yeah, I do! It’s cool!

CW: Then there’s $319 million for a fixed track – can’t move it even if it’s needed –streetcar, funded by Federal transportation funds. That means it’s funded by regressive gas taxes that disproportionately harm the poor who drive less fuel efficient cars.  And it siphons off Measure M funds, which are badly needed elsewhere, and the 2% bed tax of ATID. To date, nobody has identified revenues for operations and maintenance, as fare boxes and ads don’t fund streetcars any more effectively than the ARTIC station has paid for itself.

GD: Vern, I am not entirely sure that we are safe standing this close to her at this moment.

VN: I’m sure she’s fine. This has probably just been building up for a while.

GD: Well, either way, I am going to go stand over there.

VN: I don’t think that she can even see you right now anyway.

GD: I still think that you’re too close, but you do what you want.

VN: I have to be this close. I’m trying to make s’mores….

CW: While it has gone quietly underground – like a subway? – the ARC streetcar project is alive and well. It’s still very much ready to swallow whole our civic treasury. While past plans called for the eminent domain taking of the hotel/restaurant of private citizens, and two office buildings at Manchester and Alro Way, Disney has now purchased a hotel just to the north of the Park Vue Inn, indicating the potential for the Scalzo family to perhaps cling to the legacy left by their father and grandfather.

As reported by Register, Disney has also purchased the office buildings that house an INS location and a dental business. And after a month long wait, the City finally turned over a public records request for the most recent documentation on the streetcar, which appears to reroute the line from Manchester and back into the Alro route, orienting just to the north of where the line had previously been planned.

GD (speaking into cell phone): Sweetie? I can’t reach your mom by phone. I don’t want you to worry, but I just want you to know, in case anything happens to me, that I love you and your mom and your sisters very much….

CW: So the $319 million cost to the public of the streetcar – Disney has not offered a nickel for it so far – is still on the table! With Disney insisting on taking a gate tax off the bargaining table for 45 years, how do we make them share the cost of their own project?

VN: S’mores are done! Greg, want a s’more?

CW: Oh yeah, and the FY 2015/16 budget indicates tens of millions being spent to upgrade Katella Avenue! While the Streetcar docs discuss replacing water mains “incompatible” with the streetcar, and other aspects of the project undo work we are still currently paying for. And my document requests show –

(Cynthia stops suddenly, An eerie silence comes over the office, broken only by the muffled sound of crunching graham crackers.)

GD (whispering): OK, we have to be really careful now. She’s stopped … she’s settling down onto the couch … no sudden moves.

VN: Too bad. She was saying some pretty good stuff there about the Streetc –

GD: SHHHHHHHHH! Yes, it was excellent. When we get to the end of this segment our readers will surely go back and read it more carefully, as many times as it takes to appreciate what’s going on here.  It’s just – this is a delicate situation here, Vern.

VN: Oh, so like I shouldn’t mention people like … oh, Natalie Meeks?


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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.