Move requested by Walt Disney Company, citing growing adversarial business climate.
In a unanimous vote, the Anaheim City Council voted on Tuesday to end a set of deals that provided the Disneyland Resort tax breaks for investing in park expansion as well as a proposed luxury hotel, according to a report in the L.A. Times.
Last week, Disneyland Resort president Josh D’Amaro, in a letter to the city, requested an end to the agreements, claiming they have “created an adversarial climate where there should be cooperation and goodwill.”
In the August 21 letter, D’Amaro wrote:
“We believe the practice of utilizing tax incentives to encourage business investment was, and continues to be, an effective approach and sound public policy to create jobs, increase economic activity, and generate significant taxes and other fiscal benefits to the community. In fact, cities around the nation have implemented similar incentive policies with great success. However, unfortunately in Anaheim these policies have become divisive, leading to an unstable business climate and a difficult working relationship with the Citv.
Good friends will not always agree; however, the current level of animus is unprecedented and counterproductive. In light of this, we’ve come to believe that the Agreement Concerning Entertainment Tax Reimbursement and the Operating Covenant Agreement which Disneyland previously entered into with the City no longer serve the purpose for which they were intended and, in fact, have become a flashpoint for controversy and dissention in our community. Consequently, we are asking the City to join us in terminating both agreements.”
Disneyland Resort has been embroiled for some time in negotiations with its workers unions, which have been calling on the company to pay workers a living wage – Disney recently reached an agreement with the Master Services Council, representing four of its biggest unions on a set of wage increases that included an immediate minimum hourly rate increase from $11 to $13.25, with an additional increase to $15 per hour in January and $15.50 in June 2020.
During a June 2 visit to California, former presidential candidate and current Vermont Senator Bernie Sanders called out Disney CEO Bob Iger during a rally with Disneyland Resort employees at Anaheim’s River Church. As reported in the Orange County Register, after Sanders praised Iger for canceling ABC’s Roseanne TV reboot, he admonished him by saying, “If a corporation like Disney has enough to pay its CEO over $400 million in a four-year period, it damn well has enough to pay its workers at least 15 bucks an hour.”
Disney is positioning an end to the tax incentive agreements as a step towards improving relations with a city council that over the past two years has grown more oppositional to the various subsidy deals enacted over the past two decades – Disney critics claim the new move ensures that the company will not be affected by an upcoming November 6 ballot measure that if passed, would require any large business accepting city tax subsidies to pay workers a minimum of $15 per hour, with $1 hourly increases each year until 2022.
Disneyland Resorts has scuttled plans to build a luxury hotel, set to open in 2021, which they thought qualified for a $267 million tax rebate under one of the now terminated agreements – after learning the Anaheim city attorney determined the hotel didn’t quality because the planned building location moved after the deal was concluded, Disney representatives complained that the break should still apply as the location only changed by 1,000 feet before then putting the entire project on hold.
Source: Los Angeles Times
Dan Sarto is Publisher and Editor-in-Chief of Animation World Network.