When Anaheim’s resort bonds are paid off in a few years, around $100 million could be freed up every year to improve quality of life for some of the city’s poorest residents.
But Disneyland resort interests aren’t too keen on that idea, according to a public corruption report into City Hall released this week.
It describes a shadowy hotel retreat in December 2020, just after local resort interests solidified control of the city council, in which top City Hall officials and special interests were looking toward the horizon – and planned to keep most of that tax windfall far away from the city’s general fund.
It’s a fund that provides the most flexibility on spending for public services, which could directly impact residents by funding more community assets like libraries, senior centers and after school programs, among other things.
Those are services that tend to benefit the city’s working-class population, with nearly half of Anaheim residents on public health plans.
[Read: The Happiest Place on Earth is Surrounded by Some of Orange County’s Poorest]
The Secret Retreat Where the Plan Was Unveiled
In their report released July 31, independent investigators – based on interviews with City Manager Jim Vanderpool and two elected officials – describe how former Chamber of Commerce CEO Todd Ament came up with the idea to redirect all that cash.
The report says Ament pitched the idea to officials at an exclusive retreat at the JW Marriott in December 2020, hosted by the Chamber of Commerce.
“Todd was in the weeds on the LMPR [freed-up tax revenue], and what the City should do with the LMPR once those funds became available to the City. 100 million bucks a year! Why is the chamber guy in the Mayor’s ear about how to spend 100 million bucks a year, annually, in perpetuity, and why aren’t we doing that?” Vanderpool told investigators.
[Read: ‘Family Members Only’: Anaheim’s City Manager Admits He Was At Private Briefing Called Out By FBI]
Investigators said Ament proposed to break down the spending, according to an interview they conducted with Vanderpool
“You know, well I think his motivation was the chatter that—we always heard this ’30- 30-30-10’ was his percent split. He talked about doing a ballot initiative, to kind of lock those [LPMR] funds up. Not even sure it’s constitutional…. So, Todd’s in the weeds on how that money is going to be spent when we get our hands on it,” Vanderpool told investigators.
Ament, through his attorneys, declined to comment Friday.
The Bond Payments Eyed by Resort Interests
It all stems from the $510 million in bonds Anaheim issued in 1997 to help fund Disneyland’s expansion by paying for the construction of the Mickey and Friends parking garage that Disney currently leases for $1 a year, while keeping all the revenue generated there.
The bonds are expected to be paid off by 2027 and the parking garage is slated to be handed over to Disney after that.
Former City Councilwoman Denise Barnes said much of the money generated by the resort district goes right back to pay down bonds.
“Tourists keep saying your streets should be paved with gold – they should be – but all that money coming out of there goes to pay down the bonds,” Barnes said.
Anaheim’s current budget estimates the city will pay roughly $110 million to the bond debt this fiscal year.
Currently, 20% of the city’s hotel taxes go to pay down the debt, along with all of Disney’s incremental hotel, sales and property taxes.
A panel of appellate judges recently ruled that Disneyland does receive city subsidies stemming from the resort expansion deal and might soon have to pay their employees a nearly $20 an hour minimum wage.
[Read: Disneyland Workers Could Get Nearly $20 an Hour Following Appeals Court Ruling]
According to the current budget, the Disneyland resort district is expected to generate $289 million this fiscal year.
But, more than half of that – $149.2 million in total tax revenues – is expected to go right back into the resort: $124 million for bonds, $21.8 million for public safety, $300,000 for maintenance and infrastructure, along with $300,000 for “economic development and promotion.
And even when the bonds are paid, Vanderpool told investigators that resort area leaders wanted most of that freed up cash to go right back to them.
“So, the 30-30 was, like, 30 went to, like, this is off the top of my head so bear with me. Like, 30 would go to debt repayment, 30 would go to community projects, and 30 would go to I believe it was like, reserve restoration. And 10 would go to the Chamber,” Vanderpool told investigators.
In an Aug. 1 interview, former City Councilman Jose Moreno questioned what that debt would be since the city’s largest bonds would be paid off by then.
“You have to ask yourself, 30% for debt – what debt?”
Interest From Elected Officials
Former City Councilman Trevor O’Neil was also seemingly on board with the plan.
“Our position and my position is you don’t want to just flood the general fund with tens of millions of dollars in new money, because you’re going to have every interest group going after it, wanting a piece of it, particularly the unions,” O’Neil told investigators.
In a texted response to Voice of OC questions on Thursday, O’Neil sent the following statement:
“I was always supportive of taking proactive measures to direct that additional revenue where it would best be used rather than just let it go into the general fund where it would quickly get lost in the budget or eaten up by unions. Ideas I discussed with city staff, Ament, and others were dedicating portions of it to things like neighborhood investment, capital improvements, reserve funds, debt service and pension obligation, while still leaving some to go to the general fund to be directed at the discretion of the council. Never once however did I have any discussions about or knowledge of anyone’s intention to attempt to direct any portion of that money to the Chamber or Anaheim First – That is not something I would have ever supported.”
He also told investigators he was unaware that any of the $100 million windfall would go to the Chamber of Commerce.
“This is the first I’ve heard any of it would go to the Chamber,” O’Neil told investigators.
Yet O’Neil voted to give the Chamber of Commerce city contracts – along with a $6.5 million in federal aid to Visit Anaheim, a resort advertising bureau, in March 2020 when the pandemic shut down Disneyland for the next year.
[Read: Anaheim Council Funds $6.5 Million Bailout To Advertise Disneyland Resort Area]
Investigators said Anaheim First, a Chamber of Commerce-created nonprofit, was slated to get a large chunk of that money.
“It was clear that Todd Ament and Jeff Flint were interested in the LPMR revenue, and that a large portion of it—30% or $30 million (plus) a year would be devoted to Anaheim First, an entity that the facts tend to show Ament and Flint were vested in,” investigators wrote in the report.
Investigators allege Anaheim First was a “thinly veiled political data mining operation” that helped get resort-friendly candidates elected, like Councilwoman Natalie Rubalcava.
[Read: Was an Anaheim City Hall-Funded Nonprofit Used as a Political Data Mining Operation?]
Jeff Flint, an influential former Anaheim lobbyist mentioned extensively in the report, could not be reached for comment as his firm, FSB Core Strategies shut down last year and Voice of OC couldn’t find an attorney of record for Flint.
Moreno lambasted the proposed funding breakdown.
“During our times of crisis, during COVID they did this,” Moreno said “And the consequences again is less investment, greater poverty for residents and greater wealth for those who already have it.”
He said the plan was “insidious and it’s a direct violation of all the ethics of what public governance should be about.”
Barnes also blasted the idea of keeping as much of the expected $100 million a year out of the general fund.
“You could just see their minds working overtime, we hadn’t even secured that position yet, but they were already cooking up the next windfall for them – again special interests. I would like to know what the police union would like to say or the fire union would like to say, I would think they would like for it to be on that pot too,” Barnes said in an Aug. 2 interview.
Apparently Vanderpool thought Ament’s financial advice was more sound than the city’s own finance department, recounting a conversation he had with Deputy City Manager Greg Garcia after the 2020 chamber retreat.
“I came back [from the retreat]and told Greg—he got so pissed at me because I was the new guy telling him how to run his city, right? I told him ‘the Chamber’s filling a void. I’m getting better information than I’m getting from our Finance Department, and it’s a problem.’ And so, he was defending, and I said, ‘I’m telling you, they’re filling a void, and as long as [the Chamber] is existing, they’re doing what we should be doing. And that’s why they are who they are,” Vanderpool told investigators.
Barnes said too many tax dollars are used to bolster Disney.
“They say Disney is the economic engine for Anaheim, I’ve seen it touted on the booklets that go out to the city,” she said. “Are they really helping us when all this just goes to a parking lot in California Adventure? I just don’t see it.”
Spencer Custodio is the civic editor. You can reach him at scustodio@voiceofoc.org. Follow him on Twitter @SpencerCustodio.
Brandon Pho is a Voice of OC reporter. Contact him at bpho@voiceofoc.org or on Twitter @brandonphooo.
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