Disney Picks Anaheim for $3-Billion Resort : Development: Firm cites costly regulatory review process for its decision to bypass Long Beach.

By KEVIN JOHNSON and CHRIS WOODYARD

Dec. 13, 1991 12 AM PT

TIMES STAFF WRITERS

Walt Disney Co. executives, in an announcement that both Anaheim and Long Beach officials have celebrated and dreaded for weeks, said Thursday they will move forward with plans to develop a $3-billion resort next to Disneyland in Anaheim.

The decision, anticlimactic for many after Long Beach Mayor Ernie Kell last month publicly expressed doubts about winning the project, was told to officials in both cities in a series of meetings Thursday at Disneyland and in Long Beach.

Officials in Anaheim, a city whose economic fortunes have been tied to Disneyland for 36 years, were jubilant.

“It’s a monumental achievement in the history of the city,” said City Manager James Ruth. “Everybody is on a real high right now, but there is still a lot of work to be done.”

“Obviously, we’re very disappointed,” Kell said. “I had hoped we would be able to work this out.”

In the announcement at the Los Angeles Hilton Hotel, Disney officials said the decision not to pursue the proposed ocean-themed resort in Long Beach was based on prospects of a costly regulatory review process involving 27 federal, state and local agencies that could cost $70 million.

In remarks to reporters, Disney Development Co. President Peter Rummell said Disney could come back with an alternative for Long Beach but added that the company will now focus all its attention in Anaheim.

“In Long Beach, time was one of our enormous enemies,” Rummell said.

At the same time, Rummell stopped short of a full commitment to build the Disneyland Resort.

“We have not made a final decision to build in Anaheim,” Rummell said. “We have never built a major project like this in an urban environment. It is complicated and expensive, and the economic feasibility still has to be proven.”

According to the Anaheim plan, the new resort would be centered on the present Disneyland parking lot and include three hotels, a retail complex on the banks of a six-acre man-made lake and a new theme park called Westcot Center, a world’s fair-type park patterned after Epcot Center at Walt Disney World in Florida. The plan would transform the area to a so-called destination resort, intended to lure families for extended stays.

If an agreement for financing-related public improvements can be worked out with officials in Anaheim, construction could begin in 1993 and be completed by 1999, said Disney Development Co. Vice President Kerry Hunnewell.

According to Disney estimates, the new resort could pump $2.3 billion into the Southern California economy, create 28,000 permanent jobs in the region and return about $38 million in tax revenues to Anaheim.

“It’s just an exciting time to be in Anaheim,” said Mayor Fred Hunter. “It’s Anaheim going into the 21st Century. It helps so many things going on.”

Hunter said that new jobs and economic benefits from the project will boost the entire Southern California economy. He also said that he is not worried about Disney’s decision to put off the final go-ahead on the project for another year.

“Right now, there are no deal breakers,” he said. “We are very close on agreement. It’s going to take another year to fine-tune everything.”

Hunter said he wants to create a public-private partnership with Disney in which the city and company share the cost of streets, parking facilities and freeway access roads that will need to be built.

Last month, city sources said Disney wanted Anaheim to contribute $1 billion toward the cost, but municipal officials now say the amount has fallen just below the $1-billion mark.

“I think it’s a done deal,” Ruth said, “but we’re still hammering out the economics.”

The announcement of what would be a mammoth boost for the economy probably could not have come at a better time for Anaheim. City officials recently were informed that the city could face a budget deficit in the coming fiscal year of $6 million. That news came just after the city made deep budget cuts and eliminated several positions to balance this year’s $20-million budget deficit.

The mayor said he expects to minimize the impact of the costs associated with the project on Anaheim taxpayers by relying on such finance methods as an increase in the hotel bed tax, the creation of special tax districts and the issuance of revenue bonds.

Hunter said the city will not pursue a proposal for a city admissions tax on Disneyland tickets--a proposal that Disneyland President Jack Lindquist once said would kill the Anaheim project.

The Disney decision was welcome news to Anaheim’s once-healthy tourist industry, which has been flagging in the nationwide economic slump.

Bill O’Connell, general manager of a small motel chain near Disneyland, called the Anaheim decision “probably the best news that could have happened” and predicted that it “would have a lot more impact than the original Disneyland did.”

“Today, the city of Anaheim has some problems, namely blighted areas and the economy in general. It’s going to have an overall impact. . . . It’s just going to bring a lot more tourists, a lot more conventions.”

However, the leader of a group of Anaheim homeowners expressed some reservations--citing the potential buildup of automobile traffic in the area.

Curtis Stricker said his group is worried that the city is bending too far in its negotiations with Disney.

“They are going to have twice as many people there,” Stricker said. “Not all people are going to drive off the freeway and into the (parking) garages.”

When Disney first set up the bidding war between the two cities, many Long Beach officials were smugly confident that the ocean was a trump card Anaheim could not beat. In the end, the ocean was in large part Long Beach’s undoing.

Disney wanted to build half of its massive theme park resort on 250 acres of ocean landfill, even though landfill for recreational use is forbidden by the California Coastal Act. Disney went to the Legislature this year with a bill to amend the act, which has protected the state’s coastline for about 20 years and is considered sacred among environmentalists.

Environmentalists were furious and declared war on Disney in Sacramento, saying such an amendment would expose the entire coastline to rampant development. When it was over, Disney’s bill died in committee, powerful lawmakers were offended by the entertainment giant’s “arrogant” conduct in Sacramento, and the image-conscious company was left with a black eye.

At the same time, the powerful Port of Long Beach was emerging as another Disney foe. The Disney resort would have been next door to the highest-tonnage port on the Pacific coast and tenants worried that tourist traffic would paralyze port operations. So nervous were the port’s Far East clients that Disney was attempting a take-over, the name of the project was changed from Port Disney to DisneySea.

Top port officials said they wished that the Disney project would “dry up and blow away.” A compromise plan that would have satisfied environmentalists and port tenants by dramatically scaling back the project was proposed this fall. But by that time, the project seemed to have lost its luster for Disney, several officials said. Negotiations that had moved briskly for a year slowed, and last month Kell predicted the outcome that came Thursday.

Reactions to the demise of the Long Beach project ranged from mournful to relieved to elated.

The business community, which had hoped that Disney would pull the sleepy downtown out of its slump, was disappointed at the loss of an economic engine that might have driven it into the next century.

“It’s hard for a business community to look forward to something and have it taken away,” said Jane Netherton, chairman of the board of the Long Beach Area Chamber of Commerce. “But we didn’t hang our hats or our budgets on Disney.”

Environmentalists were gleeful.

“We stopped them!” said Bob Hattoy, Southern California regional director of the Sierra Club. “Disney knew it was a small world, they just didn’t know how small. They tried to pull a fast one in Sacramento to fill in the coast in Long Beach and we stopped them.”

He said the Sierra Club was never opposed to the Anaheim project and looked forward to working with Disney to solve the traffic, air and water problems it poses.

Times staff writer Faye Fiore contributed to this story.