Judge Rules Disneyland Exempt From “Living Wage Law”
Disneyland won a controversial ruling yesterday that deems the Resort exempt from “Measure L”, the “living wage law” in the Anaheim Municipal Code.
Guests take in the sights and sounds of Main Street U.S.A. as Disneyland Park in Anaheim, California, reopens on Friday, April 30, 2021. (Christian Thompson/Disneyland Resort)
Passed by Anaheim voters 2018, the clause applies to businesses in the tourism or hospitality sector who employ more than 25 people and receive tax subsidies from the city. Under the adopted wording, these businesses are required to pay employees a minimum wage of $15 per hour starting in 2019 with an annual tiered increase, topping out at $18 per hour in 2022.
Photo: Disney
Employee unions of the Disneyland Resort (along with other in the surrounding area) lobbied for Measure L in 2018, citing a commissioned study that found many Anaheim hospitality workers were not earning an adequate living wage. Many reported not being able to afford basic necessities like food and shelter. In 2019, a coalition of unions filed a class action suit, contending that Disney had not yet acted in accordance with the passed measure.
Disney argued that Measure L does not technically apply to Disneyland Resort because Disneyland does not receive direct tax subsidies from the City of Anaheim. (Important to note: Disneyland has already agreed to a $15 minimum wage for about 10,000 Disneyland workers starting next year. Compliance with Measure L would guarantee the same for all 30,000+ employees.)
Orange County Superior Court Judge William D. Claster ruled in favor of Disney yesterday. Here’s a synopsis of how this plays out…
History
Between 1997 and 2001, the Mickey & Friends parking structure was constructed adjacent to Disneyland park as part of the Anaheim Resort Expansion. A 1996 private/public $510 million bond agreement funded the structure along with other public improvements around Disney’s Anaheim parks. Landscaping, sidewalks, electrical work, etc. – all intended to boost the hospitality sector in the area. A successful endeavor, as Anaheim spokesman Mike Lyster stated,
The expansion was a public-private partnership reflecting shared interests in Anaheim’s visitor economy. It has been a great return on investment for our city, residents and neighborhoods. Since the 1990s expansion, Anaheim’s hotel revenue has more than tripled to a pre-pandemic high of $163 million in 2019. That money has gone to public safety, community centers, libraries, parks and meeting city obligations.”
Credit: Facebook
As part of this bond agreement, Disney’s hotel, sales and property taxes are now being used to pay down the bonds, rather than directly pay for city amenities. A loan-style loop that Richard McCracken, an attorney with labor union Unite Here says isn’t just.
So instead of Disney’s sales, property and transient occupancy taxes going to the city for police and fire and schools and roads, it’s going back to Disney in the form of all of the money that the city raised…”
Judge Claster ruled that the lease agreement for the Mickey and Friends parking structure didn’t make the living-wage law applicable to Disney. (Glenn Koenig / Los Angeles Times)
But are 20 year old bond agreements considered a tax rebate or a subsidy? Not according to Judge Claster, who recognized that Disney has benefited from the 1996 bond money, but nevertheless has not had their taxes lessened, simply redesignated.
“The finance agreement has the apparent effect of giving the Disney Defendants a 100% abatement on debt service payments, not taxes,” according to Claster’s tentative ruling. “This is a significant benefit to the Disney Defendants, but again, there is no evidence that the finance agreement somehow lessens their tax obligations.”
Image Credit: Disney
An attorney for the workers called Disney’s stance “shameful”.
“Certainly the judge’s hyper-technical decision is contrary to the Anaheim voters’ intent in passing the living wage (measure) in 2018,” Randy Renick said. “The plaintiffs are considering all their options, including appeal. It’s disappointing that Disney can take hundreds of millions of dollars from the city of Anaheim and yet refuse to pay over 25,000 workers a living wage.”
MickeyBlog will continue to follow the unions’ appeal.
Ken Potrock, president of the Disneyland Resort, outside the Main Gate in Anaheim, CA, on Monday, December 21, 2020. (Photo by Jeff Gritchen, Orange County Register/SCNG)
Finances
While Covid-19 ravaged the tourism industry in 2020, Disney Parks have rebounded in 2021. In the third quarter, Disney Parks, Experiences and Products reported revenue of $4.3 billion. Domestic parks returned a profit for the first quarter since the pandemic began in March 2020.
Josh D’Amaro (Chairman, Disney Parks, Experiences and Products) and Kevin Feige at Avengers Campus. Photo: D23
Feature Image: Bob Chapek, Walt Disney Company CEO, addresses Cast Members at a ceremony celebrating the reopening of Disneyland Resort in Anaheim, California, on Friday, April 30, 2021. Mr. Chapek stands in the same location in Town Square on Main Street, U.S.A. as Walt Disney himself when Disneyland was dedicated on July 17, 1955.
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