After barely giving residents a week, over a holiday, to consider its future for the next two generations, Anaheim made its biggest financial decision of this century after midnight.
It wasn’t after months of public deliberation and debate. It wasn’t after an exhaustive community based input collection effort. It wasn’t after a marathon negotiation between elected officials to meet a critical deadline. It was after six hours of public comment.
Six. Hours.
Nine days of notice for six hours of comment on the biggest financial decision of the century.
That’s not democracy. That’s stupidity.
What happened in the early morning hours of Wednesday morning was nothing short of embarrassing. The decision on the table was quite simple: Will Disney fail to invest in its core asset if the residents of Anaheim fail to grant it tax concessions for the next forty five years.
Not one of the three council members approving this deal addressed this decision. Instead, we got some half-baked pontificating on the value of Disney to the community for the last sixty years, how great it is they want to spend more money in Anaheim, and how are parks aren’t really rocks and dirt.
No one talked about why Disney needed this deal. No one talked about what might happen if Anaheim failed to make concessions. No one talked about how every single Fortune 500 company seems to persist and thrive without 45 year tax exception deals and no one talked about what Disney’s normal capital expenditure, independent of expansion, might look like.
Why? Because the three people voting on this deal are part time government officials with absolutely no experience, training, or anything resembling basic competency necessary to negotiate or evaluate billion dollar capital expenditures.
So, Anaheim’s biggest financial decision was made by three incompetent financial neophytes, after midnight, with six whopping hours of public input, with nine whole days (including a holiday) of public notice.
That’s not stupidity. That’s $*^%ing stupidity.
In a nutshell, tonight’s deal is supposed to put Disneyland on equal footing with other major assets owned by Disney from a return on investment perspective. The basic concept is this: Disney can’t invest a dollar in Orlando if it’s spent in Anaheim. That dollar has to make it through construction, into its existing investment, and through a consumer before it’s available– several years later– into another opportunity. When a corporation is looking to maximize its return on investment, it considers fixed and variable costs . . . along with taxation . . . to determine the best project to invest in at the right time. It wants its dollar returned as quickly as possible and multiplied as much as possible.
Disney’s claim is Anaheim’s investment potential isn’t as attractive as its other parks if a gate tax looms on the horizon at any point over the next forty five years. To counter this, Anaheim agreed to refund any tax voters instruct to collect over the next three to five decades. This refund, which completely negates the vote, is supposed to tip the balance in Anaheim’s favor for Disney to secure a one billion dollar expansion.
That’s total and complete bullshit.
Disney’s potential investment of $1.0 to $1.5 billion will yield something between $0.15 and $0.35 billion per year in annual yield. That’s a normal return for a normal corporation on a normal day. A gate tax, at most and probably less, extracts $0.03 billion from the potential annual return. The probability of actually having a gate tax passed is probably somewhere between 20% and 45% given Disney’s influence in the region– so from an economic modeling perspective which considers risk as an element of taxation, we’re literally talking about a decimal point in terms of an annual return. $0.01b on an annual return of $0.35b, or roughly 2.5%
The claim here is that Disney is going to ignore expansion of its home (and arguably core) asset on the basis of a decimal point. Two percent.
So, Anaheim’s biggest financial decision was made by three incompetent financial neophytes, after midnight, with six whopping hours of public input, with nine whole days (including a holiday) of public notice based on the theory that Disney would ignore substantial investment in its home asset on the basis of a decimal point.
That’s not $*^%ing stupidity; it’s $&@ing moronic.
What happened this morning is that Anaheim residents, Anaheim voters, had their right to vote on a gate tax removed for forty five years. The residents had little to no input on the decision. They, their children, and their children’s children have no recourse to change that decision.
If you live in Anaheim, your grandchild’s right to determine her own financial future was obliterated by three incompetent financial neophytes after midnight, with six whopping hours of public input, with nine whole days (including a holiday) or public notice based on the theory that Disney would ignore substantial investment in its home asset on the basis of a decimal point.
That’s not $&@ing moronic; that’s just sad.
Finally, consider this: If you own a business in Anaheim, you are an absolute fool if you spend one dollar to expand your business without extracting a tax concession from the city. They’ve done it for car dealers, they’ve done it for hotels, they’ve done it for baseball, and they’ve done it for Disney– they can do it for you.
If I lived in Anaheim, I’d be getting out a pen and finding the closest petition possible. Your right to vote shouldn’t be for sale while you sleep. Not for a dollar, not for a billion– not now, not ever.
Darn it. Ryan — I wanted to write this one! But I can hardly argue with the great job you did. (But I can mess with the headline!)
The final vote was at about 1 a.m. — after which the Council announced that Paul Emery would be the next permanent City Manager. (That’s fine — get all the bad news out of the way at once. And, anyway, any good alternative was probably not hireable.) The good news for comedy fans was what will henceforth be known as “Jordan’s Soliloquy,” which certainly must be heard to be believed. (Bring a sack lunch.)
CATER (probably with one or more institutional partners) will challenge this in court. (The implications of their theory of what a Council can do to constrain future Councils are mind-boggling.) But that’s not the best part.
The best part is that while there was probably around a 5-10% chance of passing an entertainment tax — a much broader category than a simple sales tax on tickets — in the next five years, now that goes way up — and probably soon. It may happen in 2016 — or it may happen in 2018, after Disney has already started to spend their money. DIsney has overreached — and they’ve blown much of their good will.
I told Disney, at the meeting, that this was going to be a bad deal for them. Alas, some people can only learn from experience.
More soon — including the story of why almost all of the seats in the Council Chambers were gone before 4:00 — and how it happened.
There are lots of awful perspectives to write this from. I picked one. If I have time, I’ll pick a few more.
We won’t see a recall out of this, but we should. The careless indifference shown last night was unconscionable.
A remaining unasked question that I challenge the 3 Council Majority members, our soon-to-be-fully City Manger, and the Beacon Economics “Economist” to answer, is the COST to the City and its future residents, of the tax revenues they could not wait to begin spending, the jobs they could not wait to begin “creating” , and all the other real and imagined benefit that would apparently fall from the sky from Disney’s project. TOTALLY absent from what little discussion was had on the dias, was ANY mention of HOW the increased traffic of tourists who actually PAY this “revenue” to the City would be ACCOMMODATED. Vehicle and pedestrian traffic (and it’s air quality effects), water and utility usage, Public Safety, HOUSING, schools, and public facilities for the “NEW” employees filling the JOBS whose prospect evidently pushed out most if not all other thoughts from minds of the supporters, on and off the dias. While those topics perhaps may have LEGAL coverage in the original EIR that supposedly pre-empted a CEQA, etc., WHERE is the FINANCIAL coverage ??? We were shown ONLY the REVENUE side of the City’s ledger, NEVER the EXPENSE side, revealing the Beacon Economics effort more one of puppetry than analytics, sadly confirmed by the inability to fully respond to the Mayors questions about methodology beyond clinging reliance on the limits of the software package used, sadly reminiscent of the Convention Center “Study” where it appeared ability to unleash torrents of industry jargon on command was more prized by City Staff Clients than the ability to convey evidence of analytical facility of the subject. The 1996 EIR and analysis, for all the imperfections and errors uncovered by the public at the time, at least made a superficial effort to address the issues and concerns. None of that mattered to 3 on the dias last night who were an eager audience for their own scripted voices, but not for opposing viewpoints from the allegedly represented public. Last nights sorry spectacle, and the unexplained refusal for a continuance, confirms that Disney and its City minions no longer waste time on surviving scrutiny when evading it works (for them) just fine. So I repeat to the City, WHAT ARE THE OFFSETTING COSTS TO CITY REVENUES OF THESE “BENEFITS”, and WHY WAS LAST NIGHTS DECISION MADE WITH TOTAL SILENCE ABOUT THEM???
“They’ve done it for car dealers, they’ve done it for hotels, they’ve done it for baseball, and they’ve done it for Disney– they can do it for you.”
They can, but they won’t – unless you hire Pringle first.
I love the hotel and car argument that without sales increase there would be no tax anyhow, the most irresponsible and self-serving clap trap the Klepto’s and their running dogs dish out. As you note any sales increases anywhere in Anaheim could justify a kickback from the Giveaway Three. And how would that end up?
Disney is a trillion dollar company! They can’t invest a billion in expansion without screwing Anaheim residents for decades? That’s peanuts to them. They probably make a billion in gate admissions every 30 days! Anaheim could’ve solved all their financial problems if they voted the other way. Stupidity! I haven’t been to Disneyland in 10 years. And I’ll continue to not go there.
What do these things have in common?
RC: “Why? Because the three people voting on this deal are part time government officials with absolutely no experience, training, or anything resembling basic competency necessary to negotiate or evaluate billion dollar capital expenditures.”
GD: “The final vote was at about 1 a.m. — after which the Council announced that Paul Emery would be the next permanent City Manager. (That’s fine — get all the bad news out of the way at once. And, anyway, any good alternative was probably not hireable.)”
Anaheim has a City Manager run form of government, in which those elected to office are not expected to have a background in financial issues. These deals are supposed to be ushered through by a City Manager with the competency to get the best deal for the City while straddling the fine line of pleasing the Council. This is not easy, I get it, and why anyone would WANT the job is a mystery to me. (Seriously, can you IMAGINE the daily Hell of doing the bidding of Murray, Kring, and Brandman? You could not pay me enough!) This, of course, requires a City Manager with the ability to think for himself, or even think his/her way out of a paper bag. Most of all it takes a City Manager able to draw the firm line between those elected to set policy and the staff hired to turn policy into action. And all of those require a City Manager who gives a tinker’s damn about the job he is doing, and the legacy he is leaving behind. And let’s just come out and say it, Paul Emery seems like a nice man and probably makes a great neighbor, wherever (other than Anaheim) he seems to live. But I can’t recall the last time I encountered a “public servant” who exudes, “I-don’t-really-give-a-damn” quite as visibly as our new City Manager. One might note his job offer was approved 4 to 1, you can take a wild guess at the ONE “no” vote.
Since the City Manager’s office name plate is now on a dry erase board, one can only hope he doesn’t stay long enough to do more damage than has already been enabled, although his replacement could conceivably be worse. They claim a “national search” was conducted, and this is the best we came up with.
WORSE, this uber billion dollar deal was left to an ASSISTANT CITY MANAGER recently plucked from the HR Department. Emery did not make this deal, Kristine Ridge did. Which brings us to the magical question, WHO THE HELL AUTHORIZED HER TO NEGOTIATE, and bring back only the done-deal for public discussion?
While I did not care for the hardball arrogance of Tom Wood (or his BS back room deals) I have to say he would NEVER have taken the crap that Murray doles out in micro-managing the City and usurping the authority granted to the City Manager’s office by our City Charter. And therein lies the probable fix for Anaheim, in enforcement of the Charter which might get the audio-animatronic jackboot of the Murbot off the throat of Anaheim taxpayers.
In the absence of a City Manager with, pardon the crude reference but it MUST be said, the “stones” to stand up to the elected leaders who are overstepping the authority granted to them in the City Charter, it will take residents standing up and slugging back when the bully knocks us into the mud one too many times.
I am sure Mickey and Murbot and Mr. Old Guard Anaheim (who needs to recheck the local history book where he found “the Anaheim way” because he is using it incorrectly) think we are getting tired and discouraged. Yes, sometimes we do. But it passes, and every time they over reach it makes many of us even more energized, more determined to “take back Anaheim” and frankly our numbers grow with each new bad deal. Pretty much EVERY meeting now someone will track me down through the internet or approach me during the meeting and introduce themselves and ask how they can help. (money, send money.) And I somehow get the feeling the Council majority is NOT enjoying this rising tide of public support that the ragtag band of rebel alliance is gaining.
I am sure they don’t know this, and are too arrogant (and $&@ing stupid, moronic, and sad) to even consider that last night was anything but a win. But last night Disney and the Council majority may have lost even more than taxpayers. When that realization hits them it is likely to leave a mark.
I would have expected a 3-2 vote for the City Manager, but not a 4-1 vote.
Is democracy dead? This smells like what is happening across the globe. Corporations are not people–corporations are peoples’ GODs. And they are the new normal.