The Anaheim City Council voted Tuesday to cancel deals with the Disneyland Resort that offered its parent company tax incentives for investing in its theme parks and a nearby shopping district, a vote requested by the Walt Disney Co.
The deals were put in place to encourage Disney to build a 700-room luxury hotel at the resort and spend millions to expand Disneyland and Disney California Adventure Park. Construction was scheduled to begin on those projects last month, but was put on hold after Disney and the city of Anaheim could not agree over the terms of the development, according to the Orange County Register.
Mayor Tom Tait told the Los Angeles Times he was "very surprised" by Disney's request, but said the move could provide "a rare opportunity to push the reset button" with Anaheim's largest employer.
Councilwoman Lucille Kring said ending the tax breaks will mean dozens of construction jobs tied to the luxury hotel project will be lost.
"For the city, it's sad," Kring told The Times.
The hotel was scheduled to open in 2021, making it the fourth Disney- owned hotel at the Disneyland Resort.
The request to end the agreements with the city came in a letter from Disneyland Resort President Josh D'Amaro to Anaheim officials last week, a letter that stated the deals have "created an adversarial climate where there should be cooperation and goodwill," The Times reported.
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Critics of the resort said they believe Disney hopes that by eliminating certain tax agreements, it may not have to pay all its workers a living wage -- an issue that will be on the Nov. 6 ballot, according to The Times.
The ballot measure, drafted to target the Disneyland Resort and its 30,000 workers, would require large hospitality businesses that accept a city tax subsidy to pay employees a minimum of $15 an hour, with annual $1 increases until 2022. Once the hourly rate reaches $18 an hour, annual raises would be tied to cost of living, The Times reported.
Members of four unions representing about 9,700 Disneyland Resort workers voted in July to approve a three-year contract bringing "cast members" up to a minimum wage of $15 per hour by January 2019 and includes three wage increases of 3 percent for workers already making above $15.
Disneyland Resort has two tax agreements with Anaheim. One prohibits the city from adopting an entertainment tax on the price of admission in exchange for the resort investing at least $1 billion by 2024. The other would give the resort a rebate of $267 million on the city's hotel tax if Disney builds a luxury hotel.
Disney was told it no longer qualifies for the second tax break because it moved the location of its luxury hotel project after the deal was reached, The Times said.