Tensions Remain High in Anaheim Over Hotel Subsidy

Tensions remain high over a $158-million tax subsidy for two planned four-star hotels approved by the Anaheim City Council last month, with interests on both sides voicing strong opinions at Tuesday's regular council meeting.

Opponents of the subsidy again bemoaned it as a giveaway of taxpayer money with no community benefits in return. They focused much of their anger on council members Kris Murray, Gail Eastman and Harry Sidhu, the council majority that approved the subsidy. Some opponents were wearing buttons reading "Recall Eastman, Murray, Sidhu."

Meanwhile, proponents of the subsidy plan, including building trade union members and business leaders, praised the council members who voted for the plan as visionaries who made a decision that would lead to the creation of thousands of new jobs.

The anger that the issue has generated among opponents was evident in Eric Altman, executive director of Orange County Communities Organized for Responsible Development. Altman shook with rage as he shouted from the speakers' podium.

"We could have had it all, but because three of you gave it away, we don't," Altman said, referring to members of council who approved the deal. Mayor Tom Tait and Councilwoman Lorri Galloway voted against it.

The subsidy plan allows a group headed by William O'Connell and Ajesh Patel to develop the hotels in the city's GardenWalk center and keep up to 80 percent of the hotels' room-tax revenue for the first 15 years after opening.

Because the remaining 20 percent would go toward paying off resort area bonds, the city during that time would realize no room-tax revenue, the largest revenue source to the general fund.

With its proposed contribution, the city would in effect pay more than 25 percent of the project's construction costs, and investors in the project would realize a nearly 16 percent rate of return, according to a staff report. The city staff recommended that council members reject the subsidy.

Despite the controversy, little can be done to stop the subsidy, because the contract with the developer has already been signed.

Joining the business community in supporting the subsidy were members of the building and trades unions, who said the project will help workers who are desperate for jobs.

Rachel Cornejo, a plumber and pipe worker, said that there was so little employment available in her field that she had to take a job in the desert near the California border. She said she was forced to leave her 18-year-old autistic son behind.

"There is still so much for the citizens of Anaheim [in this deal]," Cornejo said.

Todd Ament, president of the Anaheim Chamber of Commerce, said that opponents' description of the subsidy as a giveaway is inaccurate because the plan diverts only tax revenue generated by the development. "It wasn't a giveaway, it was an incentive," he said.

Ament argued that since the economy's recovery remains sluggish, it is vital to make decisions that increase the city's tax base. "The best thing we can do is to continue to grow that pie," he said.

Altman referred to the LA Live entertainment complex in Los Angeles, where developers of hotels also received subsidies. The difference, Altman said, was that Los Angeles city officials negotiated community benefits, such as permanent, liveable-wage jobs for stakeholders in the community.

Anaheim, however, awarded its subsidy without negotiating such concessions from the developer.

"We missed the boat here in Anaheim," Altman said.



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