The company pulls the cap of the luxury hotel Anaheim

Plans for a luxury hotel in downtown Disney's West End, Anaheim, are dead and the area will remain focused on shopping, dining and entertainment, Walt Disney officials said Co. this week.

This summer, Disney started emptying businesses, including Rainforest Cafe and ESPN Zone, to make way for the hotel, which is expected to attract business and leisure travelers looking for upscale accommodations.

City officials had previously agreed to redistribute most of the taxes collected on these luxury vacations to help Disney absorb the hotel's construction costs to AAA's four-diamond standards.

But the project has been in limbo since August, when the city announced to Disney a change of project location, she could no longer receive the promised tax incentive.

On Wednesday, the company officially unplugged.

"We took the time to consider the economics of our proposed four diamond hotel for Anaheim and made the final decision to cancel the project," said spokesperson Lisa Haines in a statement. .

"While this is disappointing for many," she said, "the conditions and agreements that spurred this investment in Anaheim no longer exist and so we must adjust our long-term investment strategy. term".

Disney officials said they were looking to bring food and entertainment back into the curtained windows of this part of downtown Disney, now that the hotel was not built, but that no immediate details were available. Earl of Sandwich, a popular restaurant, recently reopened.

Redeveloping downtown Disney will benefit the economy of Anaheim, but the hotel would have been much better, said City Councilor Kris Murray.

"Do not take goodwill and existing partnerships for granted, because companies can choose to invest elsewhere," she said.

How did we come here?

The construction of the 700-room hotel was to begin this year, in time for an opening in 2021.

When Anaheim executives agreed to help the hotel project in 2016, they offered tax incentives to encourage developers to make the necessary investments to earn the status of four diamonds. They said that it was necessary to develop more luxury housing to attract larger spenders from other markets.

Disneyland and two subsidiaries of the Wincome group have subscribed to the Anaheim offer: 70% of future hotel taxes for 20 years.

For Disney, that represented about $ 267 million to help fund the project.

However, the fiscal agreement has become a sore spot for some municipal leaders and a political discussion topic for unions representing Disneyland Resort workers, who have campaigned for months for higher wages.

Unions have linked tax incentives to a wage increase measure that voters will decide in November. Disney went to town and tore up deals that would have forced him to raise the salary – first at $ 15 an hour and finally at $ 18 – if the voting action is approved.

In the meantime, he signed contracts with many of his workers, earning at least $ 15 per hour.

Wincome, who also put a hotel on hold in the light of the vote, only made a final decision after the elections, said consultant Jeff Flint, the company's representative.

With deeper foundations, steel framing, and high-end finishes, high-end luxury hotels "are much more expensive to build," said Flint. "Without a public-private partnership, this is not a pencil."

Where will the visitors stay?

Disneyland will attract many more people when Star Wars: Galaxy's Edge opens next summer. And the city's convention center ushered in the 200,000-square-foot expansion last year, opening it up to bigger trade shows, conventions and events.

Nevertheless, in the coming years, vacationing families and delegates should be able to find a room in Anaheim more easily.

A 466-room JW Marriott and a 634-room Westin – both upscale – are under construction and are expected to open next year, according to city information. Three other hotels at a more moderate price will add about 700 rooms in the coming months.

A Radisson Blu and a Hilton Garden Inn are planned by 2021, and three other properties have been discussed, but may not be built, city officials said.

Visit Anaheim's CEO, Jay Burress, called the upcoming hotels "fantastic for us," but added that the Disney-branded luxury property would have helped "the only category we missed".

But for the future, said Burress, visitors are always looking for more dining options. Therefore, more of them would be welcome instead of the hotel located near Downtown Disney.

How is it going to affect Anaheim?

The canceled hotel is expected to create about 1,100 permanent jobs and generate $ 400 million in hotel room taxes over 20 years, as well as millions of dollars more on sales taxes and property taxes.

We do not know how many jobs will come from new or re-opened stores or restaurants in Downtown Disney. Several hundred jobs were lost during the company's closure this spring, although some employees found work elsewhere in the district.

The cancellation of the Disney Hotel was particularly disappointing: the Council of Building and Construction Trades in Los Angeles / Orange Counties.

Members of the Councilfought for the construction of the fourth Disney hotel in Anaheim to be well-paying jobs, with preferences for Anaheim residents and veterans. Hundreds of our members were planning to build this hotel, "said Executive Secretary Ron Miller.

Anaheim city councilor Kris Murray, who has supported tax incentives for development, said the loss of construction jobs and taxes on the rooms of a high-end hotel would hurt the city for the first time. years to come.

Anaheim receives only a small percentage of sales taxes and property taxes collected at Disneyland Resort, but all taxes on hotels go into the city coffers. Without the income, the Disney Hotel promisedMurray said, "Future boards will have to make the difficult decision of either reducing the city's services or increasing royalties and taxes to fund them."

Mayor Tom Tait, no supporter of city grants, disputed that the loss is a devastating blow.

"The city finds it financially better without the construction of a subsidized hotel," said Tait. "People will stay in other hotels where we keep all the money (hotel taxes)."

Now that this problem is behind them, Haines said the company hopes for a productive relationship with the leaders of the city of Anaheim.

As Anaheim voters are about to choose a new mayor and three council members in November, it's hard to say whether the topic of tax incentives to develop hotels will remain at the back.