Disney Gate Tax Dialogues, Part 5: Balloons, Cars, and Forgotten Fees



Pixar Balloons and Car

[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.]

CYNTHIA WARD: Okay, Vern, you’re up.

VERN NELSON: Oh, you want me to read another document? You know, that’s not all I’m good for. I write plenty about public policies.

CW: Well, this is just something from the July 7 Staff Report.

GREG DIAMOND: It’s OK – I’ll read it!

(Vern looks at Cynthia apprehensively.)

VN: OK, I’ll read it.

The 1996 financing agreement, which enabled this extensive public/private investment in our Resort area, contains a provision that will soon be expiring. The provision at the time provided economic certainty for Disney while it was completing the substantial capital investment in their Anaheim assets and for an additional period of fifteen years. Specifically, the provision requires, that if any entertainment taxes (as defined in the 1996 agreement) are enacted, the sum equal to the amount required to be remitted to the City by Disney would be returned to Disney. To date, there has not been any tax enacted that has required a reimbursement from the City to Disney.

Hmmm … interesting …

CW: Why do you think that the agreement was only for 20 years?

VN: Hmmm …

GD: I know! Probably because they wanted to be able to review the success or failure of the agreement before the balloon payments kicked in on the bonds!

VN: Balloon payments?

CW: Yeah. But we have payments that have not come online yet. The next set doesn’t even begin until 2017, coincidentally just in time for the gate tax deferral to expire. So I gotta wonder if the City let them off the hook but wanted to revisit the whole thing before we started to pony up EVEN MORE PAYMENTS.

GD: So when the Council and Debbie Moreno talk about how they are making the bonds payments today thus we must be bale to make the bond payments in the future?

CW: Yeah, it’s scary that the people who are supposed to know this stuff clearly have no clue. Or else they know the payments jump in the future and are just lying about it.

GD: Those are not mutually exclusive, you know.

VN: They could be BOTH clueless and lying.

CW: True.

GD: Do we have any real evidence of what they intended?

CW: Not for sure.

GD and VN (in unison): Why don’t you check the minutes? (They then look at each other warily.)

VN (whispering): My line.

GD (whispering): Sorry.

CW: The Meeting Minutes for the October 8, 1996 City Council meeting show NOT ONE public comment for or against the exemption of a gate tax. The meeting of the Anaheim Public Finance Authority, which actually sold the bonds – without voter approval, of course – had NOT ONE public comment of any kind.

GD: But I thought that the Staff report claims something like wide discussion of this volatile issue, which reflected broad public support in media reports of the period.

CW: Yeah. Apparently, not so true. The Staff Report is right to say that the 1996 agreement offered Disney the economic certainty to invest in their own highly profitable properties. But it also left taxpayers shouldering the UNCERTAINTY of supporting Disney’s highly profitable property while deriving only a 10% return on our investment over 20 years.

VN: Half a percent a year? I could do better than that with a savings account!

GD: Yeah, but then you wouldn’t have the excitement of taking the risk of not getting any return on your investment at all. Savings accounts are boring.

VN: When’s the last time you had one?

GD: I have one!

VN: With money in it?

GD (muttering): I was just being sarcastic.

CW: In the past 20 years, we’ve come to recognize that it’s not the duty of taxpayers to protect favored private enterprises from the risks associated with their investments. Business a lot smaller, less stable, and less wealthy than Disney do it all the time – and no one gives them economic certainty.

GD: But Disney did take a risk opening the second gate in 1996.

CW: Maybe so – but was investing public funds in Disney’s own PARKING PLANS really the right way to protect them? It would be one thing if the City was clearly going to share in the profits – but the 1996 agreement forbids a direct stake for the public in increased attendance.

GD: So if it was an investment where Anaheim wouldn’t share in the profit, why did the Council pass it?

CW: Two reasons. First, we were competing with Long Beach at that time for the second gate, so it’s sort of understandable. And, second: we WERE supposed to share in the profits from our investment.

VN: I thought you said that that didn’t happen! (Vern looks at Greg, who is nodding his head dangerously quickly.)

CW: We weren’t supposed to be able to get money from a gate tax. But we were supposed to get money from the parking garage.

VN: Oh – so it all worked out?

(Greg puts his face in his hands and starts moaning softly.)

CW: Not exactly. The 1996 agreement created a “public parking facility” between Anaheim and Disney, for the use of the Convention Center. Taxpayers are still paying the bill for that Mickey and Friends parking garage – but somehow Disney seems not to be paying us those benefits.

GD (sitting up again, puzzled): Exactly what package of benefits is Anaheim due?

CW: The 1996 agreement included (1) a minimum of 1,000 spaces for Convention Center parking, (2) a Disney-funded shuttle between the parking structure and the Convention Center, (3) Anaheim picking up 75% of the parking fees for those going to the Center, and (4) Disney getting exclusive use of the facility for 20 days each year, to handle peak attendance.

GD: So convention visitors are supposed to be shuttled from the Mickey and Friends lot to the Convention Center? I didn’t know that.

CW: Well, at the time of the agreement we were – which makes it a lot easier to understand why it was passed. But I have never even heard of anyone being directed to the Mickey and Friends garage for Convention Center parking. I don’t know of any shuttle like this. I cannot even find a line item in the City budget to explain whether or not we derive any compensation from the loss of the parking benefits and revenues that we don’t seem to enjoy – which I calculate as being about $4,000,000 per year!

GD: More like $3,881,250.

VN (recoiling and shouting): Mr. Spock!

CW (shocked): How did you know that? Did you already know about this?

GD: I can read upside-down. That number was on your notepad. But I would like to hear your calculations.

CW: Convention Center parking is $15 for general – there are higher levels, but let’s ignore them for now.

VN: Yes, let’s.

CW: Mickey and Friends is $17 – like all Disney lots. If Anaheim got 1,000 cars parked for all 345 days out of the year (not counting Disney’s 20 days of exclusive use) and collected 75% of the Convention Center rate of $15 (even if Disney collected $17 and kept the other $2), meaning $11.25, we would net –

GD: 1000 times $11.25 is $11,250 per day, times 345 – yep, it’s $3,881,250 per year.

VN (looks at Greg, shocked): How did you DO that?

GD: You saw me punching numbers into my cell phone, right?

VN: I thought you were calling someone.

GD: It has a calculator.

VN: NO! What else can it do?

GD: Facebook, Candy Crush – not that I, uhmm, spend my time playing Candy –

CW (impatiently): Guys, the important thing is that we’re not getting the benefits that we were due from Disney under the 1996 Agreement. Parking fees, shuttles, etc. – the things that were supposed to justify the investment. I don’t know if we ever did get them. I don’t know who in the City “forgot about them” – or gave them away – and when.

GD: I’m sorry you didn’t bring this up before. That was obviously a big deal point in a very big agreement.

CW: Well, that would have been difficult for me.

GD: Why?

CW: Because the City hadn’t made – or at least hadn’t kept – the 1996 Agreement publicly available. They just put it on their website the last Friday in June – after I made a stink about it with my Public Records request.

(Greg buries his face in his hands again. They all fall silent. Vern finally speaks.)

VN: Wow. And that agreement was the basis for this new agreement, too. That’s bad.

(Greg lifts up his head again. The others see that this time he was laughing.)

VN: Hey – uh, can I use your cell phone to check Facebook?

GD: No.

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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.