The Walt Disney Co. put an indefinite hold on construction of a four-star Anaheim-subsidized 700-room hotel because of a dispute with the city over the hotel’s location, according to a Wednesday letter Disney sent to Anaheim officials.

City Attorney Robert Fabela warned Disney in an Aug. 6 letter that the site Disney was planning for the hotel wasn’t the same as the site the city and Disney agreed to when they also agreed on the subsidy.

“The agreement is site-specific,” Fabela wrote to Disney attorney David Ontko.  “Because this proposed site is inconsistent with the site intended in the Agreement, it is the City’s position that Disney would not be entitled to the tax rebate were it to move forward under its current hotel construction plan.”

Both sites are adjacent to each other on Disneyland Drive, west of Disneyland and east of the Disneyland Hotel. The original site is a parking lot at the corner of Disney and Magic Ways, while the new site is just to the south and includes part of the parking lot and some Downtown Disney businesses, like the Rainforest Cafe.

The city was going to give a 70 percent hotel tax subsidy to Disney. The subsidy for a four-diamond hotel proposed by Disneyland has the potential to be worth more than $200 million over two decades, which would make it the richest tax giveaway in the city’s history. It’s one of three proposed new hotels that would receive city subsidies.

Over a week after Fabela sent his letter, Ontko wrote back Aug. 15 and threatened to stop the hotel development and “re-evaluate” the future of hotel developments.

“… you have given us no other choice than to put construction of the hotel on indefinite hold as the Resort re-evaluates the economic viability of future hotel development in Anaheim,” reads Ontko’s letter.

Disney also claimed Anaheim’s “unfortunate decision” costs more than 1,500 construction jobs, 1,000 new jobs and “more than $25 million in incremental revenue to the City’s general fund in the hotel’s first five years of operation.”

News of Disney’s move to indefinitely halt construction on its fourth hotel project reached Building and Construction Trades union leader Ron Miller Wednesday afternoon.

“It’s unbelievable that the leadership of the City of Anaheim has become so hostile and so unwelcoming to the prospect of new jobs and development in Anaheim that we’ve come to this: Disney deciding to stop moving forward with their planned, new fourth hotel in the Anaheim resort,” said Miller in a statement emailed to Voice of OC.

Ontko, the Disney attorney, lambasted Anaheim for its “business environment.”

“The city’s inexplicable delay in raising the hotel’s location as an issue despite knowing about the location for more than eight months and participating in multiple project meetings, coupled with the City’s unwillingness to work together in a cooperative fashion to address it, further demonstrates the ongoing challenging business environment in Anaheim,” Ontko wrote.

The hotel fight comes after the Disneyland Resort and four labor unions approved a three-year deal that will raise the hourly minimum wage for 9,700 employees to $15 by January 2019. Anaheim voters will decide on a ballot measure in November which, if passed, would raise the minimum wage to $18 an hour by 2022 for resort employees of companies that receive city subsidies.

Correction: A previous version of this story said the city was going to give a 75 percent hotel tax subsidy to Disney. The correct percent is 70.

Spencer Custodio is a Voice of OC reporter who covers south Orange County and Fullerton. You can reach him at Follow him on Twitter @SpencerCustodio

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