THE ORANGE COUNTY REGISTER
Eleven months after the Anaheim City Council approved a $158 million tax subsidy to the developer of two luxury hotels near Disneyland, an Orange County Superior Court Judge this past week ruled that the council's deliberations on the sweetheart deal violated the Brown Act, the state's open meeting law.
While the council gave public notice that it would discuss the city's proposed development contract with hotelier Bill O'Connell, it failed to "substantially comply" with Brown, Judge Steven Perk held, because it neglected "to state that it would authorize execution of the agreement."
Indeed, there is little doubt that, had Anaheim residents been properly advised that the council planned to conclude its discussion of the contract with an actual up-or-down vote, the council meeting would have overflowed with opponents of the extremely generous tax break to Mr. O'Connell.
Instead, the only public comments on the contract were from supporters of the tax "incentive," which would allow the hotelier to keep 15 years worth of bed taxes that otherwise would flow into the city treasury. And having successfully maneuvered around public opposition, the council voted 3-2 in favor of the $158 million tax giveaway.
Now we have no problem with business "incentives" – including tax breaks – provided that the economic return exceeds the cost to taxpayers and, equally important, that the public is fully informed of the proposed incentives and has ample opportunity to make its feeling known for or against.
Indeed, we imagine most Anaheim residents concur with Eric Altman, executive director of Communities for Responsible Development, who issued a press release stating, "If the city is going to just give away $158 million and get nothing in return, then at a minimum it should have to tell the public about it in advance."
The three council members that voted in favor of subsidizing Mr. O'Connell's $283 million hotel development did so, they maintained, because it would yield the city both short- and long-term economic dividends.
They pointed to projections that building the two four-star hotels, which would boast 866 rooms between them, would create 3,200 construction jobs over the span of the project and 1,300 ongoing jobs once the two properties were completed.
That the council majority was less than confident in the jobs forecast, less than convinced the city would recoup in 15 years the $158 million in tax breaks it gifted Mr. O'Connell is suggested by the council's end run around the Brown Act.
It remains to be seen how the newly seated council responds to Judge Perk's ruling. Two newly elected members – Lucille Kring and Jordan Brandman – take the places of Lorri Galoway, who voted against the deal back in January, and Harry Sidhu, who voted in favor.
Mr. Brandman supports the development subsidy. Ms. Kring has not ruled out the subsidy, but says she would have negotiated for some tangible public benefit in return for the $158 million.
There seems to us a simple way for the Anaheim City Council to stem the public controversy over its development contract with Mr. O'Connell and to address the issues raised by Judge Perks: Put the entire matter before Anaheim voters next summer and let them decide whether the city will get a fair return on the incentives it has proffered the hotel developer.