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Disneyland Article
Disney Wants To Invest $1 Billion At Disneyland In Exchange For No New Gate Tax

ID:TMS-3064
Source:Orange County Register
Author:Art Marroquin
Dateline:June 25, 2015
Posted:July 06, 2015
 
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The Walt Disney Co. is seriously considering a $1 billion-plus expansion of the Disneyland Resort with new attractions, a new parking structure with at least 5,000 spots and other improvements to the massive theme park complex.

In exchange for the investment, Disney wants the city of Anaheim to forgo a tax on theme park admission tickets for another 30 years, according to a public notice published Thursday by the city.

Two members of the Anaheim City Council said they support Disney's desire to expand without threat of a ticket tax. Two others said they were undecided, while Mayor Tom Tait said he opposed the plan.

On July 7, the City Council will hold a public hearing to consider extending the current entertainment tax exemption for Disney that started in 1996 and expires June 30, 2016.

"Anaheim has been an economic success story thanks to its policies and initiatives that allow businesses to invest and thrive," said Michael Colglazier, president of Disneyland Resort.

"We are asking city leaders to continue with a policy set two decades ago that has driven unprecedented job creation, growth and prosperity and enabled the city to invest in vital services that benefit every Anaheim resident."

Disney officials said Thursday they don't know whether the expansion would be an addition to Disneyland, Disney California Adventure or, perhaps, both parks. They said there are no plans for a third theme park in Anaheim.

Any park expansion is contingent on approval of the ticket-tax exemption, Disney officials said. Under the proposal, the tentative ticket-tax ban could be extended another 15 years if Disney later embarks on a separate $500 million project.

Tait supported the current gate-tax ban for Disney during a previous stint on the City Council, but said Thursday he is "wiser" now. Unlike in 1996, Tait said, Anaheim currently faces an estimated $500 million unfunded pension obligation.

"As much as I'd like to see Disney expand, there are other ways to help them by streamlining the development process and speeding up approval times," Tait said. "Chaining the hands of future residents on their ability to impose taxes will jeopardize the city's financial health."

Councilwoman Kris Murray offered a different take. "History has shown us that a $1 billion investment by Disney will create thousands of new jobs in Anaheim and millions in new revenue for our neighborhoods and vital city services, all without increasing taxes for our residents or creating costs for the city," she said.

An expansion would not be outside the theme parks' current attractions and parking lot areas, except for the new structure located just east of Harbor Boulevard. Disney already owns that property.

Disney officials said they don't know potential rides, themed lands and other details yet, but said construction would begin by late 2017 and wrap up no later than December 2024. The company now owns the "Star Wars," Marvel and Pixar franchises and has other options such as banking off its "Frozen" blockbuster.

Earlier this year, Disney Chairman Bob Iger told shareholders the company plans to expand the Disneyland Resort and that Disney Imagineers are working on "Star Wars" attractions for theme parks.

The expansion of Disney California Adventure, completed in 2012, cost $1 billion-plus and created an average of 1,700 jobs annually over the project's half-decade. Upon completion, the company hired 5,000 new workers. Disney now has about 28,000 workers in Anaheim, making it the largest employer in Orange County.

The latest $1 billion-plus proposal would create another 1,400 jobs, according to a Disney-commissioned report by KPMG, an auditing firm.

Anaheim Interim Assistant City Manager Kristine Ridge said negotiations on how to frame a proposed theme park expansion began last month.

The city's first tax pact dates back to when California Adventure was on the drawing board. As a condition of getting that park built, the City Council in 1996 unanimously agreed to pay up to $546 million for a new parking garage on Disney property, repaved streets, redid landscaping and renovated utilities. City officials also agreed not to levy an admission tax on tickets sold at either Disney park for 20 years.

Charging admission taxes to Disneyland has been debated for decades. A proposed 5 percent tax on Anaheim's entertainment venues gained momentum in 1975, but the City Council changed course after heavy opposition from Disneyland and the Angels.

The idea came up again in 1991, when Anaheim officials suggested revenue generated by an admission tax could help pay for Disney's second theme park. Disney officials threatened to kill the project if a tax was imposed.

No Disney park in the world currently has an admission tax.

"Disney is a global company and can choose any of their five other locations to make this type of capital enhancement, so we're feeling lucky," Ridge said.

Under the proposal, if the city did charge an admission tax, that amount would be refunded to Disney, essentially negating the charge. The Angels have a similar pact as part of their lease for the city-owned stadium, due to expire in 2029.

Disney has elbow room inside the two Anaheim parks. California Adventure has approval for 3 million square feet of theme-park space but has used only 900,000, according to Anaheim's master-plan agreement with Disney. Disneyland already has used 2.6 million of its 3.5 million square feet available, city records show.

Steve Feicht, a former Disney Imagineer and current designer with Rethink Attractions, predicted Disney would create new lands bases on its new properties. ""Star Wars' Land is a slam dunk," he said.

Jim Hill, a blogger who covers the entertainment industry, said he believes the company's potential investment is in response to the revamping of Universal Studios Hollywood, which recently added a "Simpsons"-inspired land, Springfield U.S.A. Next year, that park unveils The Wizarding World of Harry Potter.

"This is the theme park equivalent of an arms race," Hill said. "Disney is saying, "What's going to make people come to Disneyland rather than Universal?'

"I think you'll see an immersive land that will be an ambitious take on "Star Wars' and Marvel, and in addition to refreshing their other retail, entertainment space and parking situation," Hill said.

Robin Diedrich, a senior consumer analyst at Edward Jones, sees this as a win for the city, Disney and Disney stock shareholders. "With all of the intellectual properties they have, and "Star Wars' and Marvel, it sets up a runway for potential growth."
 

 
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