Disney Cancels Planned Hotel Construction in Anaheim

The hotel whose construction was to have begun at Anaheim's Downtown Disney last month has been put on hold indefinitely after Disney and the city of Anaheim could not agree over the terms of the development, according to officials on both sides of the issue, it was reported Wednesday.

The new upscale hotel had been slated to have 700 rooms spread over the west end of the outdoor mall, including the site of the former Rainforest Cafe, ESPN Zone sports bar and restaurant, the AMC Theatres and the Earl of Sandwich eatery, the Orange County Register reported. Those businesses and others were closed in June to make way for the new construction, which had been expected to start July 1.

The hotel was scheduled to open in 2021, making it the fourth Disney-owned hotel at the Disneyland Resort. However, Disney executives pulled the project Wednesday, saying they could not reach an agreement with the city over terms under which the hotel was to be constructed, according to the Register.

The move was in response to an Aug. 6 letter in which Anaheim City Attorney Robert Fabela wrote to Disney saying that a change in the site plan would make the hotel ineligible for expected tax incentive rebates.

"Given the city's position that our project does not comply with the requirements of the Agreement, you have given us no other choice other than to put construction of the hotel on indefinite hold,'' David Ontko, chief counsel for Disneyland Resort and International Parks & Resorts, wrote to the city attorney Wednesday.

City spokesman Mike Lyster said late Wednesday that officials "are disappointed the hotel isn't moving forward,'' the Register reported.

Todd Ament, president of the Anaheim Chamber of Commerce, said in a statement quoted by the Los Angeles Times that "Disneyland's decision to halt development of their fourth hotel is a devastating blow to Anaheim and a direct result of the city's increasingly hostile actions towards our local economy.''

But Anaheim Mayor Tom Tait, who has opposed the subsidy for the hotel project, said Disneyland Resort has the option to build the project without a subsidy from the city.

The hotel was originally proposed for the site of a parking lot on the north end of Disney's property, at 1401 Disneyland Way, The Times reported.

But since the hotel project was announced and the 20-year tax break was approved, Disneyland Resort has changed the hotel location to a larger site within Downtown Disney, a shopping district adjacent to the resort's Disneyland and California Adventure theme parks. The new address, about 1,000 feet south, would be 1601 Disneyland Way.

The ordinance approved by the Anaheim City Council in July 2016 gave the proposed hotel a 70 percent break on the city' transient occupancy tax but specified that the subsidy go to a luxury hotel built at 1401 Disneyland Way, near the north end of the resort -- not for a luxury hotel in the shopping district.

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