Updated 12:55 p.m.
Updated 6:10 p.m.
Nearly two months after Disney put construction of a planned fourth hotel at the Disneyland Resort on “indefinite hold,” and following Disney's request to cancel its participation in a controversial tax rebate intended to encourage investment in Anaheim, the company announced today it has canceled the project.
In a written statement, Disneyland spokeswoman Liz Jaeger says:
“We’ve taken the time to review the economics of our proposed Four Diamond hotel for Anaheim and have made the final decision to cancel the project. While this is disappointing for many, the conditions and agreements that stimulated this investment in Anaheim no longer exist and we must therefore adjust our long-term investment strategy.”
When Disney first announced the fourth hotel in 2016, it was to have been built on the corner of Disneyland Drive and Magic Way, on land currently used as the Downtown Disney parking lot. That project qualified for the Hotel Incentive Program approved by the Anaheim city council in 2015, under which Disney could retain 70 percent of the transit occupancy tax paid by visitors for the first 20 years of operation. The city would collect all of the tax, which currently adds 15 percent to the cost of a hotel room in Anaheim. The tax rebate was estimated to be worth $267 million to Disney over 20 years.
The then-newly elected Anaheim city council voted to end the incentive in December 2016, although Disney's already-approved project was grandfathered in, as were two projects by the Wincome Group.
But in October 2017, Disney announced that it would move the planned site of the 700-room hotel to the west side of Downtown Disney, about 1,000 feet from the original address. To make room for the new development, Disney closed five popular locations this summer, including the AMC Theater, the last operating ESPN Zone restaurant, the Rainforest Cafe, the relatively new Earl of Sandwich, and the district's second Starbucks location.
Demolition on the vacant buildings was to have begun in July, but days before the project was slated for final approval by the Anaheim planning commission, the City of Anaheim notified Disney:
“It is the city’s position that Disney would not be entitled to the tax rebate were it to move forward under its current hotel construction plans.”
Disney put the entire project on hold and canceled all scheduled planning meetings with the City of Anaheim while it considered its options. A few days later, Disney asked to cancel its participation in two tax rebate agreements with the City, a move the city council approved.
Now that Disney has canceled the hotel complex, the question becomes: what will the company do with the vacant buildings on the west side of Downtown Disney? The company says it has no plans to announce at this time, but noted that the Earl of Sandwich location reopened last week.
If we were to speculate, it would be a relatively easy matter to reopen the second Starbucks location, which could likely serve up espresso again by Halloween. It won't be so simple to find new operating partners for the shuttered ESPN Zone and Rainforest Cafe spaces, nor does it necessarily make sense for Disney to reopen one or both as restaurants.
In the midst of all of the Downtown Disney changes, two new eateries are slated to open this fall, including Black Tap Craft Burgers & Beer, and Ballast Point Brewery. Also under construction is an expansion of the Naples/Napolini restaurant duo, and a new Salt & Straw ice cream shop.
The AMC Theater could reopen, though there are signs some demolition work had already begun inside the building. An earlier version of this article stated AMC had canceled plans to open a 6-theater in the Garden Walk shopping center across from Disneyland. AMC has made no official announcement regarding the Garden Walk project, but sources have told MousePlanet that permits for the project are on hold.
As for future hotel development, it will likely be several years before Disney makes a move in that direction—and it might not happen in Anaheim.
In the upcoming November elections, Anaheim residents will elect a new mayor and fill three council seats. Residents will also vote whether to approve Measure L, a living wage initiative for businesses within the Anaheim Resort district that accept tax incentives. Though the Anaheim city attorney last night issued an opinion that Disney will not be subject to that law should it pass, proponents of the measure disagree and have threatened to take the matter to court. For its part, Disney has previously said it will look outside Anaheim for future development opportunities if that initiative passes.
In response to Disney's announcement, Todd Ament, CEO and President of the Anaheim Chamber of Commerce, issued the following statement on behalf of the No on Measure L campaign:
“Measure L contributed to the harsh political rhetoric and poor business climate in Anaheim, and that led to the cancellation of Disney’s 4th hotel. The jobs lost and future tax revenue eliminated from this news is devastating to Anaheim, and a direct result of special interests trying to pit too many in Anaheim against each other. Let’s vote No on Measure L and send a message that we all want to work together for an Anaheim in which we all win together, not at each other’s expense.”
Depending on what happens in that election and in terms of Disney's relationship with the City of Anaheim in coming months and years, the company may just take a second look at building in neighboring Garden Grove when it decides the time has come to expand again.
