High Pay for Disney Area Promotion Group Called Out in Email from City Manager After Bailout

SPENCER CUSTODIO, Voice of OC

Disney's Californian Grand Hotel, which was closed down in order to combat the novel coronavirus. March 18, 2020.

Anaheim City Manager Chris Zapata raised concerns about the high pay of top executives at the Disneyland area resort promotion group, Visit Anaheim, after the city offered the group a $6.5 million bailout, according to an email memo Zapata sent the City Council yesterday morning. 

That same afternoon, an online city agenda item began circulating for a closed door discussion about Zapata’s firing or resignation.

In his Apr. 16 memo, Zapata questioned Visit Anaheim’s CEO Jay Burress’ $433,000 annual salary as well as the salary of Senior VP Christina Dawson, set at $318,000. 

Anaheim City Manager Chris Zapata

Zapata proposed reductions for both. 

Visit Anaheim is the hotel tax-funded advertising arm of the resort industry, which is shut down indefinitely due to the novel coronavirus pandemic. 

Last month, Mayor Harry Sidhu proposed a $6.5 million contract for the advertising group. 

Zapata offered to cut 10 percent of his $299,000 salary in his Apr. 16 memo and wanted similar cuts from Visit Anaheim’s top leadership. 

In his memo, Zapata noted that “there has been a significant impact to the City of Anaheim’s economy and business model.  The loss of TOT revenue affects our budget and that of these entities. Given these impacts and the authority granting the City Manager an appointment to the Visit Anaheim Board of Directors, I will be recommending that the Board begin negotiation to reduce executive compensation,” Zapata wrote. 

To bolster his point, Zapata pointed out in his memo that, “The required 2019 990 form lists salary, bonus and incentives for all employees of the Visit Anaheim non-profit.  Information provided in these reports listed compensation for the CEO/Secretary at $432,954 which includes a base salary, bonus and incentive compensation and $318,154 for the Senior Vice President.”

Anaheim City spokesman Mike Lyster late Friday responded to questions about Zapata’s memo by noting that there’s already been cuts to Visit Anaheim staff. 

“In March, Visit Anaheim cut its staff by 55 percent, or from 71 to 32 people. The remaining 32 staff members have all taken pay cuts in the form of mandatory, unpaid furloughs,” Lyster said in a Friday email. 

“For executives and senior staff, they are on two weeks unpaid furlough each month, a 50 percent reduction in salary,” Lyster said. “Lower level staff are on one furlough week per month, a 25 percent reduction in salary.”

Asked whether Zapata still supported a reduction in pay for Visit Anaheim executives in light of this information, Lyster said the city didn’t have “anything additional to share.”

In his Apr. 16 memo, Zapata also laid out concerns he has with Muzeo, a museum and cultural center near city hall, suggesting city hall hold off on contract payments. 

“The current agreement provides a $250,000 per year through 2023 and an additional $150,000 line of credit. Given the prohibition of gathering, it would be my recommendation to enter into a contract amendment which defers and extends this agreement as well as negotiate a lesser amount of funding in the next 12 month period,” reads Zapata’s letter. 

Zapata’s memo also said the city’s slowed employee hiring and will likely have to dip into various reserves to cover city operations.

“This new reality will also impact utility rates and require adjustments to the proposed rate schedule. Finally, we will need to look at short term sustainability and our ability to use other reserves legally for unintended purposes, in some cases redirecting and potentially internal borrowing from these funds,” Zapata wrote. 

Zapata told the Council he didn’t recommend giving the $6.5 million to Visit Anaheim at the March 27 meeting

He said the city should start at a lower amount. 

“Let me say this. I do agree on the plan’s three-pronged approach,” Zapata said. “However, I would not recommend the City Council commit the full amount of $6.5 million to Visit Anaheim. I believe we should commit a lesser amount at the onset.” 

Zapata said he wanted the Council to give him the ability to negotiate with Visit Anaheim and draw up a strict performance review so he can track what the money is doing. 

But his concerns were disregarded by the majority. 

The contract has faced criticism for giving money to the resort advertising group while industry is closed indefinitely during the virus pandemic. 

The OC Register editorial board called the contract a case of “misbegotten priorities.”

“The Anaheim City Council has long been chided for handing out subsidies to Resort Area businesses,” the editorial board wrote, “so its support for a bailout of a resort-related organization during the coronavirus crisis wasn’t surprising.” 

Spencer Custodio is a Voice of OC staff reporter. Reach him at  scustodio@voiceofoc.org. Follow him on Twitter @SpencerCustodio

Brandon Pho is a Voice of OC reporting fellow. Contact him at bpho@voiceofoc.org or on Twitter @photherecord.