The Anaheim City Council Tuesday night rejected an effort to have city residents vote on a controversial $158-million subsidy for the developer of two planned four-star hotels at the GardenWalk center.
Mayor Tom Tait, who along with Councilwoman Lorri Galloway voted against the subsidy Jan. 24, pushed for an initiative on the November ballot that would have invalidated the subsidy. But Tait couldn't get the support of council members Kris Murray, Harry Sidhu, and Gail Eastman — the same council members who voted to approve the subsidy — and the proposal was rejected by a 3-2 vote.
Under the deal, the GardenWalk hotel partnership, headed by William O'Connell and Ajesh Patel, would receive 80 percent of the room-tax revenue generated by the hotels during the first 15 years they are open.
Supporters say the subsidy was needed to attract investment to the project and kick-start construction. The hotels are vital to increasing business at the city's convention center, supporters assert. Proponents also say that the project will create 3,200 construction jobs and 1,300 permanent jobs, will increase sales and property tax revenue to the city and after 15 years will produce $20 million a year in new bed-tax revenue for the city.
But opponents of the project argue that the city negotiated nothing in return for the subsidy, leaving no guarantee that the jobs will provide living wages to Anaheim residents. They also say the public was left in the dark before the council voted.
City Attorney Cristina Talley said the city could be liable for damages to the developer, including the value of the subsidy, if council members voted to place an initiative on the ballot that would invalidate the subsidy agreement.
But Tait's proposal called for the city attorney to draft a “legally defensible” initiative that would have changed the policy on room-tax subsidies altogether, making the subsidy invalid under the revised policy. Talley indicated that such an initiative could be drafted.
The subtle difference wound up being a point of confusion.
“I'm sorry, but the ambiguity of the counsel doesn't give me the confidence to vote yes on this,” Murray said.
Residents still have the opportunity to circulate a petition to have the initiative placed on the ballot. Whether they will remains unclear.
The meeting was the first time since the subsidy was approved and the sharp divide in the community erupted that council members had a chance to discuss the plan and the aftermath of its approval.
Tait read into the record a letter from Ken Buksa, general manager at Sheraton Anaheim Hotel, calling the subsidy deal unfair to other hoteliers in the city, eliminating jobs at other hotels and giving an unfair advantage to the four-star hotels, which usually can't compete in Anaheim.
“This project is a slam-dunk mistake,” Buksa had written, according to Tait. Buksa was the first hotelier in the city to address the subsidy issue publicly.
Murray presented a slideshow with data on the economics of the project and the additional tax revenue it is expected to generate for the city, including $3.5 million during the first 15 years and an overall $4.4 billion economic impact. Much of that tax revenue would go toward resort area bonds and resort maintenance.
She also cited other examples of cities providing these kinds of subsidies, including Garden Grove, which is granting free land to a hotel developer in an effort to build hotels that attract visitors to Anaheim's convention center and Disneyland, according to the Orange County Register.
“They get it,” Murray said.
During the council's deliberations, tension over the actions of interim City Manager Bob Wingenroth also surfaced. Sidhu blasted Wingenroth for opening the council chambers for an impromptu town hall meeting in the days after the subsidy vote.
Tait had called a special council meeting, but the three council members who voted against the subsidy didn't attend. Without a majority of the council attending, no council meeting may be held, but Wingenroth opened the council chambers anyway, telling several residents — and particularly their children — that it was important for them to be engaged in their community.
It was during that meeting that residents began to express their outrage against council members for the subsidy vote. Sidhu said Tuesday that Wingenroth wasn't allowed to be there and called the meeting an abuse of public resources. “It is losing us money,” Sidhu said, referring to the cost of lighting and staff time.
Galloway defended Wingenroth, saying that the council chambers belonged to the taxpayers.
Murray had scheduled a review of the city manager last week in what was seen by City Hall insiders as a retaliation to Wingenroth's recommendation that council reject the subsidy, speculation that Galloway said was “not off base.” Galloway also said during the meeting that such a recommendation would usually come from a department head, but in this case Wingenroth decided to step in and take the heat.
Last year, Murray voted against appointing Wingenroth as interim city manager. She also voted against asking his predecessor, Thomas Wood, to resign.