Fred A. Bernstein

Housing Plan Turns Disney Grumpy

Affordable housing, near the happiest place on earth

Published in The New York Times, May 18, 2007

Anaheim, Calif.

FOR 52 years, the Walt Disney Company has called Disneyland, its Southern California theme park, "the happiest place on earth."

But now Disney is angry that the city of Anaheim, where the park is based, has approved plans for 1,500 apartments on a site zoned for tourist facilities.

In February, Disney sued the city, hoping to force it to abandon the decision permitting the project. The development would have 225 subsidized units, and advocates of affordable housing are accusing Disney of turning its back on low-income residents, including many of its own employees.

Disney argues that it is simply trying to make Anaheim an attractive place for tourists. In the 1950s, Walt Disney, the company's founder, bought 244 acres in Anaheim, for which he paid about $4,500 an acre. By the time the park opened, in 1955, Disney wished it had bought more.

In fact, Disneyland's success spawned thousands of acres of development around the park including some that the company found tacky. The disputes that arose have forced Anaheim to take sides, and it has almost always taken Disney's.

But the relationship between Anaheim and its largest employer has become strained over the planned housing, on a 26-acre site that now holds a trailer park.

Theresa Medina, an Anaheim resident, was visiting relatives at the trailer park this month. She said that one-bedroom apartments in Anaheim can cost $1,400 a month, and that many landlords won't rent to large families. The prices and the occupancy restrictions cause many workers to commute long distances to Anaheim, she said.

Lorri Galloway, one of three on the five-member Anaheim City Council who voted in favor of the housing project, said, "Research shows that we have a need in and around the resort area for 27,000 units of affordable housing." By trying to block some of that housing, she said, Disney is showing "complete disregard for the workers who make the resorts so successful."

But Rob Doughty, a spokesman for the Disneyland Resort, said the goal was simply to keep housing out of an area zoned for resort development in 1994.

Once the special zoning district was created, "the state and federal governments invested billions of dollars to clean it up," Mr. Doughty said. Disney and other companies then began building lavish facilities, including Disney's 745-room Grand Californian Hotel and Spa, which opened in 2001. "And now they want to throw all that away," he said, referring to the City Council.

Mr. Doughty added that "companies like Marriott and Disney and Hilton make their investment decisions on what they assume the zoning is going to be."

Anaheim's mayor, Curt Pringle, who voted against the housing plan, said he understood the frustration that led Disney to file a lawsuit.

"I certainly think they have a legal right to protect their interests," Mayor Pringle said, adding that "no one contemplated that three members of the City Council would turn their back on that engine of economic development within the city."

The controversy began when the SunCal Companies, a developer based in nearby Irvine, signed a contract to buy 26 acres and announced plans to build 1,300 condominiums and 225 rental units on the site.

Frank Elfend, a project manager for SunCal, said the idea for affordable housing came about in consultation with the city. "Whenever you do a big project, you talk to the community about what their needs are," he said. "In Anaheim, the priority was affordable housing."

SunCal's approach won the support of several members of the City Council. In February, the Council approved the project, leading Disney to file its first lawsuit ever against the city.

In late April, at the end of a contentious six-hour public hearing, the City Council voted to reaffirm its support for the housing project, ensuring that the litigation would continue. The vote was 3 to 2.

Mayor Pringle, who opposed the new housing, said that Anaheim was building at least as much affordable housing as any other city in Orange County, and that it would build more when it found appropriate sites. The city has recently completed 663 affordable rental units and has another 1,243 under way, according to statistics provided by the mayor.

Mr. Doughty of Disneyland said that hotels and restaurants, which operate around the clock, are incompatible with permanent housing. "It doesn't matter that it's low-income housing," he said, explaining that Disney objects to any new housing in the resort area.

Indeed, the company has recently voiced its objection to another proposed project, called Parc Anaheim, at the edge of the resort area.

The SunCal site is about a mile from the Magic Kingdom and half a mile from the company's second Anaheim theme park, Disney's California Adventure, which opened in 2001.

But it is directly opposite an 88-acre plot on which Disney is considering building a third Anaheim theme park, which is likely to include boutique attractions. (In Orlando, one such attraction, Disney's Discovery Cove, costs $249 a day to enter - a price that includes a chance to swim with dolphins.) Mr. Doughty confirmed that the third park was a possibility, but said it would probably not be announced this year.

Cynthia Ward, an architectural historian who lives in Anaheim, said that "there is essentially no place left to live in Orange County for people with extremely low-income jobs," but that, even so, the resort area should be protected. "Yes, we need affordable housing," she said, "but it doesn't have to be on that site." The median home price in the county last year was more than $600,000.

From the 1960s until the 1980s, the area outside Disneyland "really deteriorated," Ms. Ward said. Its rows of cheap hotels and restaurants, she said, "were tacky and disjointed."

In the 1990s, Disney actually considered expanding its Southern California theme park operations outside Anaheim. (After learning its lesson in Anaheim, where it failed to buy enough land for its future growth, the company bought more than 25,000 acres in Florida before opening Walt Disney World in 1971.)

Instead of building elsewhere, Disney persuaded Anaheim to create the resort area, whose main streets were then turned into idyllic palm-tree-lined corridors leading to the theme parks. "Sometimes, people who live in Anaheim complain that they're not getting the same street improvements," Ms. Ward said. "But we understand how much money tourism brings."

To pay for the improvements, the city levied a "bed tax" on hotels in the resort area. That tax now brings Anaheim some $80 million a year - which, when combined with sales and property taxes from the resort, represent more than a third of the city's general fund. The bed tax revenue is expected to increase as more hotels are built, and Mayor Pringle said the city had already borrowed against that anticipated revenue. That, he said, means that a failure to build more hotels in the resort district could cloud the city's economic future.

Disney's plan to protect its interests has gone beyond suing the city. It has called for a referendum that would allow voters to overturn the City Council's decision. That could come to a vote next February, Mr. Pringle said.

And the company is behind a separate voter initiative that would make the resort zoning part of Anaheim's city charter. "It would lock in permanently the boundaries of the resort area," Mr. Doughty said.

The voter initiative is being pushed by an organization called SOAR, for Save Our Anaheim Resort. Opponents of the initiative who favor the low-income housing have their own acronym: Yimby, for "Yes in Mickey's Backyard."

Mr. Elfend of SunCal called Disney's tactics "very heavy-handed."

"Historically," he said, "they've had so much power in Anaheim that they think they can control the development of land they don't even own"

But Mr. Doughty said, "It's not just about this one development - if one developer is allowed to build residential in the resort area, others will follow."

Mr. Doughty said that Disney supported the building of affordable housing in other locations. "Anaheim and Orange County have to address the affordable housing issue, but Anaheim also has to protect the resort area," he said. "It's not an either/or."

Mayor Pringle believes that someday, the two sides will reconcile. "We got along well before this, we will get along after this," he said of the company and the city. "This is a disappointing blip, but it's not one that will destroy the relationship forever."