It’s Off to Workshop We Go! Pt 1: Just Now Getting Around to Reading the Contract

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Welcome!  Introductory images for this series obtained from the Orange County Archives.

(1) Awakening Sleeping Contract Obligations With a Kiss

Travel with us now back in time to the days of yore, when … oops, from the photo, it looks like we went too far.  We’re not talking about the “Wonderful World of Disney” in the ’60s in this series, when it was riding high, but the less-wonderful world of the 1990s, when Disney as a business was struggling, and fighting off take-overs from other companies, and came to the City of Anaheim needing and seeking help.  And it got it. With a cherry and nuts on top.

Something truly significant happened in this past Tuesday’s City Council meeting, a meeting that will unfortunately instead probably be remembered for the lack of civility that has packed our Council Chambers every time the name of Trump is summoned in a Council Agenda like some curse upon the land. That is a shame for reasons beyond the business of the people of Anaheim being interrupted by people outside of Anaheim. This should have been known as the beginning of the end. Too much genie got out of the bottle last Tuesday, and he/she/it ain’t going back into the vessel easily now. If enough of Anaheim’s voters/taxpayers get wise to the facts that were finally made public last Tuesday, never again will Disney be granted corporate welfare on the level we have seen the last few years. So we will do our part to share that news, as just one of the many services offered around here. You’re welcome.

The truly important portion of last Tuesday’s meeting happened before almost anyone from the general public had arrived, during a workshop that started at 3 pm. Thank God for videotape, so the public can see what was disclosed about how our tax dollars are spent, during the time most of Anaheim is still at work, earning those tax dollars.

A “workshop” is a tool used by City staff when the City Council needs to delve into some complicated and sometimes sensitive topic, and while some might prefer that Council be educated behind closed doors (see City Manager’s handling of the Annual Budget and its increasing lack of transparency as a sick, twisted example) the Brown Act requires that the briefing take place publicly. Thus these workshops begin at a time like 3:00 p.m. when only the die-hards like yours truly (and those directly affected by whatever is being discussed) are likely to show up.

The Tuesday April 25, 2017, 3 p.m. workshop — save that link in a place where you’ll always be able to find it! — was intended to aid the Council in what would seem to be an innocuous task: reviewing Disney’s compliance with its 1996 Development Agreement with the City of Anaheim.  Since Disneyland’s “second gate” — you know it as “Disney’s California Adventure” — opened in 2001, the Council has annually received submissions from Disney documenting how it has met its obligations under that agreement.  You can see the latest set of submitted documents regarding 2016 at this link.

But there’s been this one tiny little problem.  No one had much of any idea what Disney had actually committed to in 1996 and 1997 in exchange for a huge — seriously, huge! — influx of capital from the City.

Disney seemed to have some idea, which the City has apparently figured must be accurate (given its apparent lack of interest in verifying any of it) — but even back in 2001, 4-5 years after the agreement was signed, the City seems not to have understood what it was actually due in exchange for providing essential assistance in making the second gate come into being.

Yes,  “essential” is the right word: California Adventure took over what had once been Disney’s immense surface parking lot — and, without another place for visitors to park, California Adventure doesn’t get built.  Without DCA, there is little point in building Grand Californian Resort Hotel and Spa and thus little use for the Downtown Disney District connecting them all. In the big picture, had Anaheim not stepped up to help Walt make his untried dream (repeatedly rejected elsewhere) a reality; saw our community develop the blight of unplanned and hasty development centered around a low wage, service-sector economy; and then stepped up AGAIN for a once-mighty company now on the ropes — it is likely that Disney would be a subsidiary of some other entertainment giant rather than the corporate octopus that eats other companies for breakfast.  (A basic “thank you” would not be out of order here, Mickey.)

On Anaheim’s part, without the expansion of Disney’s wildly profitable property, there is little point to the expansion of the Convention Center (in the 90’s era, let alone this latest one) and of course no reason to pump public funds into “beautification” of the once shabby tourism district. Yet without the presence of Disney, Anaheim would also not be carrying the immense costs of infrastructure sufficient to support 23 million visitors per year today. We speak as if nothing would have happened on that property, and while then City Manager Murdock might not have worked to help assemble a parcel for large scale development without Walt, we don’t KNOW that we might not have hosted a major university or corporate campus in the absence of Disney. But please don’t say Anaheim was put on the map by Disney when our town predated him by 100 years.

Returning to the Development Agreements discussed/confirmed last Tuesday, let me be crystal clear:  as much as we can see the downsides of the 1996 Agreements today, in hindsight, if staff had set those agreements in front of me, together with the information base available to the Council at the time, and given the condition of the city, I would absolutely have signed those same documents, without question.  Anaheim has certainly benefitted from the DCA expansion and its related development. But it’s even more clear that Disney has benefitted, and I daresay Disney’s benefit has outstripped Anaheim’s.

When two parties cooperate in some agreement that benefits them both, they ideally set out ahead of time in writing how each will share in those joint benefits, and shared responsibilities.  Yet over time, the storyline has morphed from one of mutual investment resulting in mutual benefit, to one of Disney the grand and charitable corporation with a heart “investing in Anaheim” and receiving so very little in return for themselves. And then they all laughed, and laughed. Well all except Kris Murray who seems to believe the script she has been given, easy enough for her to do since she made her appearance in Anaheim just in time to become an “instant insider” essentially created by Disney and Pringle, and spoon fed their version of reality in order to ensure her loyalty.

It was past time to remind all involved that the taxpayers of Anaheim invested at least as much as Disney did, and while Disney gets to keep ALL profits generated by this joint investment, Anaheim’s return on investment is shaky, and the margin gets thinner with each new subsidy slicing off the ends of the meat like a dishonest baker in the age of communal ovens.

Not only does the post-Tom Daly leadership and staff no longer recall Anaheim’s investment, or Disney’s commitments to making the marriage work, but over time it appears we have forgotten Anaheim was even supposed to reap ANY rewards beyond what Disney might wish to share in their beneficence.  (And those rewards were substantial.  It was a pretty good agreement — if Disney had had to honor its obligations.)

It would be wrong if the City did this to Disney, dismissing the value of what BOTH parties brought to the table, and it’s just as wrong if Disney does it to the City.  What is worse is when the City’s own leaders and staff make the dismissive statements, devaluing the contributions of the entity/agency THEY ARE SUPPOSED TO REPRESENT! Is it any wonder we question who these people work for?

The difference between the two sides of the 1996 Agreements is that Anaheim is not likely to take over the Board of Directors of the Walt Disney Corporation.  Yet for years it has been clear Disney and its satellite minion corporations like SOAR and various hoteliers and trade groups have held absolute control of Anaheim’s “Board of Directors::  its elected leaders and senior staff.

Now imagine a world in which senior City staff and the Disney-supported City Council just decided not to seek from Disney what the City was owed? When the post-Daly era Council fails to even ask about the “big picture” of obligations reflected in the annual review of the Development Agreement, It looks bad. It looks especially bad when the Development Agreement (DA) directly addresses issues brought up with concern by taxpayers! (Fireworks, anyone?) Yet rather than embrace the chance to PROVE to the public “nothing to see here,” when members of the public, and a few of Anaheim’s elected leaders asked for a review of the DA to ensure the Council understood what they were certifying compliance for, we got stonewalling and hysterics.

But what if they did so — and the new Disney-supported City Council just decided not to seek from Disney what the City was owed?  That would be very bad.  And that’s why the City is supposed to verify, every year, that Disney is meeting its obligations to the City under the original agreement.

On March 21, Staff told Council they had to review the agreements at the next meeting (April 4) because the contract specified review within 45 days of Disney’s submission. 14 days is not 45 days. Why did Staff sit on the agreements for so long that delay would result in non-compliance with the 20-year old agreements? Strike One for Staff procrastinating in lack of professionalism, or deliberately waiting in order to force Council’s approval. This happens often—too often, as Staff brings what should be routine items for approval, waiting until the last minute so that even an attempt to ask questions spirals quickly into a crisis that will leave farmyards of orphaned unicorns homeless if we don’t approve the grant application/contract/budget amendment etc. RIGHT THIS SECOND! (Note to Staff, this is not how to engender confidence in your ability to guide our community.)

Despite Kris Murray’s drama abut the Mayor wanting to “dismantle” long standing agreements with “Anaheim’s largest employer,” the fact is that conducting such a review is not antagonistic towards Disney.  It’s a legal requirement.  We’d all like to presume that Disney wants only what’s fair from the agreements it signs — and does not what is unfair.  The prospect of this sort of review, then, is simply intended to keep everyone honest.  Does anyone NOT want honesty and integrity to be the watch-words of these projects?

To understand what they are approving, a new Council has to understand what is in the documents — that is, what obligations to the City Disney agreed to bear, and what the City agreed to in exchange.

Now understand: the Council has been certifying Disney’s compliance with these agreements on the “Consent Calendar” for years, in a rubber stamp process for issues Council could not have fully understood—since they were not briefed on the issues at any time I can find in their tenure. It turns out that STAFF also has not understood the agreements, despite 20 years of telling Council they reviewed Disney’s compliance and all is well.

In fact, up until March/April 2017, those staffers had NOT READ THE AGREEMENTS FOR THEMSELVES!

Kristine Ridge is now Asst City Manager, putting her directly in line for the CMO position when Emery leaves the department (hold your excitement, folks.) But coming up through the ranks she had been part of the Finance Department and the Audit Division.   And of all people currently in charge, she is most likely to have reviewed the agreements during past handling of the development review. Yet she complained to me about the size of the various agreements, which she was clearly reading for the first time! I sympathized with her, truly. The first time I read the thousands of pages representing these several agreements and studies that interconnect to govern the development of the Resort well into the NEXT 20 years, I was overwhelmed myself. But if I can slog through them, while educating myself regarding various phrases and terms I have not been trained to understand (unlike staff) nor have I been paid to immerse myself in them (unlike staff) I figure after 20 years staff can do their jobs at last. So when it comes to the “extra work” caused to staff in reading these docs, my sympathy light has been extinguished, and the bulb has been removed from its socket.

As it is, the workshop and review meeting was delayed beyond the April 4 that staff cited (and bravo to Disney for granting that extra time, not that they wanted the headlines if they refused such a reasonable request) the review had to be delayed, because as it turned out this was NOT such an easy thing to do.

Why?  Because in fact the City was apparently NOT aware of the full extent of Disney’s obligations under the agreement.  Disney may or may not have been aware of them itself.  But on that point, I daresay the continuity of Disney’s Legal Department’s attention to this sort of agreement is probably a bit better than that of the City.  If a Disney lawyer failed to extract maximum value on behalf of their employer because of gross unfamiliarity with the contract terms, their career would be over, and they would be forced to go work somewhere where the uniform was polyester rather than a snappy suit. When City Staff fails to extract maximum value for their employer, they get Planning Awards and a fat pension package.  (See the case of  ARTIC for a prime example.)

Now Orange Juice blog readers being the astute and attentive beings we know them to be might wonder about the validity of agreements drafted between Disney and the City in the interim years—like the Entertainment Tax Rebate of 2015, claimed to be rooted in these agreements apparently neither read nor understood by City Staff.

(We keep calling it an “exemption,” which would almost be fair, but no, this does not protect Disney’s patrons by exempting them from a gate tax, it rebates to Disney the taxes collected from their patrons, the OPPOSITE of their squeals about how gate taxes drive away patrons and change their spending patterns.)

Wasn’t that July 2015 deal advertised by Murray and company as simply a “continuation” of the 1996 agreements? Then someone explain HOW in the name of Beelzebub’s uncle Staff recommended that continuation of some elements of agreements that STAFF HAD NOT YET READ?! Oh, we will circle back to that, I promise.

So taxpayers finally got our workshop — but not without a typhoon of semi-hysterical objections from Council members Kris Murray and Lucille Kring, who did not want the Council even to LOOK AT Disney’s work (and its legal obligations.)  My former pastor used to say, “when you throw a rock into a pack of dogs, the one that yelps loudest is the one that got hit.” Well Lucille and Kris were a’yelpin’ plenty, despite the fact that NOBODY HAD THROWN ANY ROCKS (yet.)

No one even mentioned an intent to oppose certification of Disney’s compliance with the agreements over the past year.  In fact, there was no visible negative consequence if Council failed to approve Disney’s compliance.  Anaheim can’t foreclose on Disney’s California Adventure, the Grand Californian hotel, or Downtown Disney.  So what’s the problem, Kris and Lucille?

The problem is that some secrets were hidden — lying inert until they could someday be awakened with Due Diligence’s First Kiss.

(2)  Hi ho, Hi ho, It’s Off to Workshop We Go!

Last Tuesday’s workshop offered an overview or recap of the history of the Resort.  It focused on various 1996 agreements, some of the 1997 bond info, and how those various documents and funding sources governed the expansion of the Resort through Opening Day in 2001.

Assistant City Manager Kristine Ridge did most of the talking for City Staff.  She was joined in the hot seats by Planning Director David Belmer, Principal Planner Linda Johnson, and Senior Planner Elaine Thienprasiddhi. Of those present, only Linda Johnson was employed by Anaheim at the time of the agreements, and involved in their drafting. Yet Ridge did the talking, so we didn’t hear Johnson’s experience come into play. The history they covered was interesting, important, and actually reflected pretty well on both Disney and the City Council of 1996, in creating innovative solutions to problems both entities needed to solve together.

The free market doing its thing on Harbor Blvd.

They first covered the history of the Resort area running up to the 1990s and how the City’s lack of central planning allowed some skanky conditions to develop. That sounds like a harsh word, “skanky,” but those who recall the area at the time will nod in agreement. The pre-Resort tourist area was no longer family-centric in focus and had become a run down collection of motels renting by the week to essentially homeless folks and by the hour to those not wishing to engage in activities at home.  (A well-intentioned recap, with some questionable execution, of this challenging period in Resort history was done some time ago by David ONeal in Anaheim Vacationland — a book with proceeds intended to benefit motel families, if you’d care to buy it.)

Ridge explained the 1990’s era foundational documents that created the structure for what became today’s highly successful Anaheim Resort.  They included:

1995-96 Fiscal Impact Study Report

Environmental Impact Report No. 311 (EIR311) was certified in conjunction with the adoption of the DRSP.   It is 3,261 pages long. (The mitigation section alone is at least 80 pages long and covers 13 areas of the Resort.)

The Addendum to EIR 311 in conjunction with a 1996 amendment to the DRSP in conjunction with the approval of Development Agreement No. 96-01 by and between the City of Anaheim and Walt Disney World Company.  The Addendum is 1,113 pages long.

Specific plans:

Disneyland Resort Specific Plan

Anaheim Resort Specific Plan

Development Agreement DDA 96-01 October 26, 1996 (which was what was to be discussed, and Disney’s compliance with it approved, at meeting); it is 235 pages, and

Infrastructure and Parking Finance Agreement, October 8, 1997
644 pages (with staff report)

It is critical to understand how all of these documents create an interconnected jigsaw puzzle — and the absence of any of them skews the understanding of the others. While the prior Council majority was content to let Staff’s recommendation do the thinking for them, with a wholly new Council majority now focused on transparency, I believed it was time for a more complete review of the facts that work hand in hand with the agreements. Since the documents do not only govern past development of the Resort, but continue to guide future investments, it is also critical for Council to understand what was promised by all sides before additional development for remaining projects needs various flavors of approval.

And if you don’t believe that, I’ve got a small-business-destroying bridge over Harbor Boulevard to sell you make you pay for.

So there is the backstory on WHY some felt it was critical to pull a seemingly innocuous agenda item from the Consent Calendar after decades of rubber-stamping approval. And ultimately, following the workshop, the agenda item did pass, with Dr. Moreno abstaining for the reason that he still felt he was insufficiently informed to certify compliance. So no harm came to Disney, despite the fears of Kris Murray and Lucille Kring, as the Drama Sisters sat on their end of the dais and tore their hankies to bits wondering what that evil Mayor and his equally evil Council henchmen were up to. At least, no harm came to them, unless you believe letting the public finally hear the truth of the events of 1996 harmed someone.

With that introduction,this series will cover the contents of the presentation, structured to answer questions posed over the years by elected leaders or the public.

(3) A Preview of Coming Attractions

I am working one-handed from an injury last month that has required surgery to my right wrist, so covering the workshop is gonna take a while.  But with help from other editing [Ed. note: hi!  I also wrote some of section (1) above – GAD], we will cover it over the next week or so, in sections.

This post is, obviously, your introduction.  The rest of the series will cover — in some order, and reserving some opportunity for revisions —

• Parking
• Fireworks
• Housing (and its effect the poor)
• Traffic mitigation and water
• Loopholes to be closed, and why we can’t close them now — and who we can blame for that.

… and whatever else we manage to catch as we review the video and fact-check the various claims, as some were untrue from the get-go, leaving the entirety of staff’s assertions open to debate and confirmation. And since launching off my porch and onto my wrist left me with little else to do for a while, hitting the replay buttons on the workshop is better than bingeing old series TV online for days on end.