The Anaheim Hotel, one of the city’s oldest hotels in the Disneyland area, will get a luxury makeover thanks to a 20-year hotel tax subsidy, approved this week by city council members on a 6-1 vote.
The development agreement renewed a longstanding City Council debate over whether luxury hotels can be built without such subsidies, which gives luxury hoteliers 70 percent of Anaheim’s imposed hotel tax for 20 years. The Council majority argued the subsidy is needed to build the luxury hotel.
Anaheim’s hotel room tax rate is 15 percent of the overnight rate.
Councilman Jose Moreno, who dissented from the majority vote, argued the market is strong enough for hoteliers to build luxury hotels without the city’s help during Tuesday’s meeting.
Moreno pointed to the incoming 12-story Radisson Blu luxury hotel, which will have 326 rooms and a rooftop pool, bar and restaurant.
“We had the Radisson Blu, which is, I believe they’re calling it a four-star hotel,” Moreno said. “They did not ask for the subsidy, they felt the market was strong enough for them to build a hotel.”
“So the market’s there, I just don’t know why we need to provide assistance if the market is there. Those of us that espouse market-based economics, I don’t know how you justify this continued giving away of taxpayer dollars,” Moreno said.
Councilwoman Lucille Kring defended the subsidy and said big conventions like National Association of Music Merchants (NAMM) bring wealthy business people to the area who want to stay in a luxury hotel.
“They want to stay in a truly four-star, four-diamond business hotel. They’re not going to stay — and nothing against Disney — in a Disney property with screaming kids having a great time. Not going to happen,” Kring said. “You’re going to get more money from a four-diamond hotel.”
She also countered Moreno’s characterization of a subsidy.
“It’s not a subsidy, it’s a rebate,” Kring said.
Councilman Trevor O’Neil agreed with Kring.
“Thank you Councilmember Kring for recharacterizing what is being painted as some kind of give away as rebate — which is really what it is. There’s nothing to give away if you haven’t brought anything in,” O’Neil said.
Moreno said it would be a rebate if the city gave the hotel tax money back to the tourists who paid it, not the hotel.
The Council voted 6-1 for the development agreement, with Moreno as the only dissenting vote.
The Wincome Group, who owns the Anaheim Hotel, originally had a five-year development agreement with Anaheim, but the company held off building when it faced uncertainty during the 2018 elections with referenda against the subsidies that could have hampered its construction.
The referenda against two luxury hotel developments failed to pass, which included the Anaheim Hotel luxury upgrade. Measure L, a minimum wage ordinance for hospitality businesses that was ultimately approved by voters in 2018, also slowed down the hotel’s construction.
The measure mandates a $16 an hour minimum wage from hospitality employers who receive a city subsidy, like the 70 percent hotel tax rebate over 20 years for luxury hotels. The minimum wage reaches $18 in 2022 and will be adjusted on cost of living increases after that.
The hotel tax subsidy policy was discontinued December 2016 after the city thought it secured the number of luxury hotel rooms it wanted and from a change in the City Council’s majority, who go increasingly wary of the subsidies.
Disney cancelled the proposed 700-room luxury hotel near Downtown Disney October 2018, after it asked the city to cancel the subsidies when questions about Measure L began to swirl and hotel tax subsidy debates resurfaced.
The Anaheim Hotel was originally named The Charter House Hotel, which opened in the early 1960s. Nearly all of the original buildings still stand.
The Wincome Group bought the property in 2014 and successfully secured the luxury hotel tax subsidy in 2015. Although no construction has started at the Anaheim Hotel, Wincome’s other property, The Westin luxury hotel, is slated to open this summer.