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Get the shovels ready - Anaheim City Council extends Disneyland ticket tax exemption

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The City of Anaheim tonight voted 3-2 to extend the current ticket tax exemption on Disney theme park admission, following a nearly 7-hour-long council meeting. Citing the length of the meeting, the record number of speakers who addressed the Council, and that there had been only 9 days of public notice, Anaheim Mayor Tom Tait moved to continue the vote until the next meeting. His motion failed, as three other Council members pushed for a decision that night.

Debate continued into Wednesday morning, with Mayor Tait and Councilman James Vanderbilt ultimately voting against, and Council members Lucille Kring, Jordan Brandman and Kris Murray voting in favor of a 30-year extension.

Though Mayor Tait helped negotiate the current deal in 1996, he told The Orange County Register that he "couldn't sleep" if he voted for this extension. Tait said there are other ways that Anaheim can assist the Disneyland Resort without closing the door on this potential income source. Anaheim has never imposed a ticket tax on theme parks. Councilwoman Kris Murray said that she would even support offering the same exemption from possible future entertainment taxes to other companies willing to make significant investment in Anaheim, perhaps a nod to the ongoing negotiations with Angels baseball.

The current exemption was negotiated as part of the Disneyland Resort expansion that eventually saw the construction of Disney California Adventure, Downtown Disney, the Mickey and Friends parking lot, and Disney's Grand Californian Hotel. The 20-year deal ends in 2016. Mayor Tait noted that the original 1996 proposal called for an indefinite ban on ticket taxes, but that he was able to negotiate instead a 20-year agreement. Tait said that in retrospect, he feels Disney would have gone ahead with the Disneyland Resort expansion even had the city approved the tax. None of the domestic Disney theme parks are subject to a local ticket tax, though Florida state sales tax is added to tickets purchased at Walt Disney World.

In exchange for another extension, Disney proposed a $1 billion expansion of the Disneyland Resort, a project Disney says would mean 1,400 new jobs and an additional $15 million in annual tax revenue for the city of Anaheim. While Disney has not disclosed any firm plans, the deal is expected to include a new parking structure, new hotels, and expansions of the Disneyland and/or Disney California Adventure theme parks. A statement released by Disney references a "5,000 space parking garage" adjacent to a "potential new Harbor Gateway." The deal would require Disney to have "shovels in the ground" by the end of 2017, or the agreement is void.

Both Disney and the City of Anaheim commissioned independent studies to forecast the economic impact of the proposed expansion. Mayor Tait challenged a representative of the firm hired by the City of Anaheim, asking how they could reach any conclusion without knowing exactly what Disney planned to build.

Proponents of the tax deal argued that any loss of gate tax to the city would more than be offset by the increase in other tax revenue to the City of Anaheim, including sales, hotel and indirect property taxes. Opponents said Disney would build the expansion regardless of the vote, and argued the city should not rule out a future source of tax revenue that might be needed if the city faces tough economic times in the 30 years covered by the deal. Council woman Murray pointed out that the current deal had been tested by the recent economic downturn. and said Anaheim was in better financial health than some countries.

In an editorial published by The Orange County Register, Disneyland Resort President Michael Colglazier said that the outcome of the vote would greatly influence Disney's decisions about where to invest expansion and development dollars. "The Walt Disney Company is currently discussing where and how to develop these creative properties [Marvel and Star Wars] across its six resorts around the globe. Having the assurance of a continued Entertainment Tax Policy is a crucial part of the decision of how much to invest in Anaheim." Disney proposal also includes an automatic additional 15-year extension, for a total of 45 years, if Disney "invests an incremental $500 million in new attractions and/or entertainment offerings" beyond the $1 billion.

Council woman Kring warned that Disney had plenty of options, and might choose to invest instead in their theme parks in Japan or France if Anaheim imposed a new entertainment tax on Disney.

In an editorial, The Orange County Register urged the City Council to continue the tax break, saying "In doing so, the council would also renew a commitment to all Anaheim businesses to maintain a low-tax business climate, which improves private enterprise and the economic vitality of the community."

In June, a divided city council voted to give a bed tax break to developers building additional 4-star hotels in Anaheim. While customers of these new hotels will pay the full bed tax, the hotel would be allowed to keep up to 70% of that tax revenue. The vote for the 20-year deal fell along the same lines, with Mayor Tait and Councilman Vanderbilt voting against, and Council members Kring, Brandman and Murray voting in favor.

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Updated 07-08-2015 at 06:16 AM by AVP