Disney and Anaheim Agree on Entertainment Tax Policy
- Jul 10, 2015 | Gail Cole
For nearly twenty years, Disney and Anaheim, California have had a beautiful working agreement. It seems the harmonious relationship will continue for decades.
Under the agreement reached between the Walt Disney Company, Anaheim, and related organizations in 1996, Disney built a second theme park (now the California Adventure Park and Cars Land), at least 750 new hotel rooms, and a retail, dining and entertainment center. The Anaheim area benefitted from neighborhood improvements and increased tourism, jobs, and sales and property tax revenue.
In exchange for these improvements, Disney was exempt from “an admissions tax, parking tax or other tax… during the construction of the Opening Day Project and for a fifteen (15) year period after Opening Day.” And, as stipulated in the agreement:
“The term "Entertainment Tax" shall not include any assessments levied on the Disney Property by the Landscaping and Lighting District agreed to by Disney pursuant to Section 3.1.7 of the Development Agreement and shall not include any tax, fee, charge or assessment imposed by the City or any City Agency prior to the Effective Date, or any tax, fee, charge or assessment imposed by the City or any City Agency hereafter adopted which is of general City-wide applicability to Theme Parks and other business generally, provided that such tax, fee, charge or assessment does not violate (6) above.”
This agreement terminates on June 30, 2016.
The new agreement, reached July 8, extends the existing entertainment tax policy for 30 years. In exchange for the entertainment tax break, Disney will “invest a minimum of $1 billion in the Anaheim Resort by December 31, 2024. Should the company make an additional $500 million worth of investments by the end of 2045, it could be granted a 15-year extension of the entertainment tax agreement.
Anaheim does not currently impose an entertainment tax and there was some concern that Disney would be forced to comply with a future tax. To quell fears, the following guarantee was made:
“In the event an entertainment tax is adopted, the policy calls for the city of Anaheim to provide Disney with an incentive payment equal to any entertainment tax paid, in exchange for a minimum $1 billion investment by Disney.”
Additional information, including interesting statistics on how much Anaheim benefits from the existence of the Disney facilities, is available through the Anaheim city website.
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