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Should Anaheim Tax Dollars Subsidize Luxury Hotel Development?

Posted by: Jubal | 04/22/2008 2:03 PM

There's an interesting consent calendar item on this afternoon's Anaheim City Council agenda:

"Approve a Hotel Development Economic Assistance Program that provides for the ability to apply for economic incentives for the development of high quality hotels in The Anaheim Resortâ„¢ and in the Platinum Triangle."
That's bureaucratese for city tax subsidies for luxury hotels.

City planners want the private sector to build four-star, luxury hotels in the resort district. Under this "Hotel Development Economic Assistance Program," if a hotel project doesn't pencil out financially -- if there's a "feasibility gap" in the phraseology of the city documents -- than Anaheim will give the hotel a portion of the bed tax revenue from that hotel.

Now, I was under the impression the Resort District was an economic powerhouse in which hotel developers were dying to build. If that is the case, why do they need tax subsidies to make a hotel pencil out?

And on a philosophical level, why should the City of Anaheim be in the business of subsidizing business ventures, let alone targeting those tax subsidies at favored types of businesses?

By they way, anyone planing to build a run-of-the-mill three star hotel would be out of luck -- no tax subsidies for you!

Whatever happened to opposing corporate welfare and keeping government out of the business of picking winners and losers in the marketplace?
CATEGORY: At The Trough

Comments

This is a good catch Matt. It will be interesting to see how the four Republicans on the Anaheim City Council vote on this.

There are lines that should not be crossed. One of them is creating "fake" market incentives for businesses to invest in a city. It's one thing to roll out the welcome mat, so that perspective businesses potentially come to the city.

But when you subsidize them with tax dollars, then the city is, in fact, playing Deity. Because it is them making subsidies available to SOME busineses, and not to others.

That is not the proper role of government, federal, state or local.

Slice said:

Amen, Jon.

Meddlesome Nobody said:

Agreed. As much as I disagreed with Matt's position on SunCal, I also oppose tax rebates. This agenda item makes me wonder whether Disney is trying to recoup some of its "investment" in SOAR.

The only two planned "luxury" hotels of which I am aware are rumored to be Disney-operated facilities at GardenWalk. Rumor has it those hotels will be owned by third parties but operated by Disney.

Anonymous said:

If Harry Sidhu votes AYE, watch for a big IE from Disney on his behalf.

Where's Greenhut? said:

Will Steve Greenhut pipe up? He's mighty brave when it comes to Brea. What'll he do when it's his favoite Anaheim politicians voting for a corporate welfare?????

redperegrine said:

"Now, I was under the impression the Resort District was an economic powerhouse in which hotel developers were dying to build. If that is the case, why do they need tax subsidies to make a hotel pencil out?"

That's a rhetorical question, since the answer is obviously that they don't. This is a fundamental local government issue and separates true conservatives from the types who confuse subsidies to businesses (like car dealerships) with being "pro business," and hence conservative. It will be interresting to see how Harry votes - my guess is he will not support it; even more interesting will be Pringle's position - since it seems to support subsidy in the Platinum Triangle where one-time condos are now being rented out.

BTW, my guess is that Greenhut will pick up on this from the OCBlog and will post his own feelings PDQ.

Anonymous said:

So Jubal, Greenhut and all of you so called consrvatives. If Curt Pringle votes for it, what will you say about him? You all worship the ground he walks on so we will all be curious to see your responses if he votes for this absolute giveaway of public funds for private gain.

Anonymous said:

The vote was 3-1 in favor of the taxpayer giveaway. Lori Galloway was the only dissenter. Harry Sidhu abstained. Pringle voted for it.

So Jubal, Greenhut and the rest of you so called "conservatives". What do you think of this vote by Mr. Pringle?

Karl Rove said:

That is one heck of a tax giveaway based on the Register's report in the newspaper. If I were Greenhut, I would be looking for blood on this one. I guess the only conservative in Anaheilm looking out for the taxpayers is Lori Galloway? Now how is that for a twist?

Paul B said:

So what is new in this proposal. When Fry's Electronics came to Anaheim the City gave away 1/2 of its 1% sales tax as an incentive for a period of time. In Reagan economics its called priming the pump. A little money given at the beginning to get a lot more in the end. Where have all you conservative economic guys gone.

Jubal said:

Huh? There's nothing Reaganesque about this.

It's more like giving tax rebates to rich people if they'll move into your neighborhood, because you want more rich people in your neighborhood.

redperegrine said:

Sorry Paul, you've got it wrong. Government handing out subsidies and deals to selected business is discriminatory against all the rest.

Sure, it happens all the time - schemes like tax kickbacks - put up by bureaucrats eager to generate sales tax revenue (to give themselves raises and step increases)and approved by pols trying to do someone a favor.

I had the sneaking suspicion that it wouldn't have made it to the agenda if Pringle wasn't supporting it.

Slice said:

As a regular Pringle fan, I am perplexed by this. Although Pringle has made it abundantly clear that the Resort District and the Platinum Triangle are very important to him and to Anaheim's economy, this action goes too far for my tastes. But, at least he actually cast a vote! I'm curious, did Sidhu state a reason for his abstention (ie, a legitimate conflict-of-interest) or did he just take a pass in the interest of his senate campaign?

Anonymous said:

Did I hear recenlty that Curt Pringle was leaving politics after his term is up? Then he has nothing to lose by tarnishing his political image. But let's see where he goes to work, or who he goes to work for after he leaves office. It is so unlike him to vote to give redevelopment money to hotels that can certainly afford to pay their own way.

Curt Pringle - why are you doing this?

Slice said:

And what about the other story in today's Register about a new tax in the Platinum Triangle. Did anybody catch that?

Anonymous said:

I went to the Anaheim website link in another post here and watched the discussion. Sidhu wanted a continuance to get more info on this thing. Then the other 3 Republicans, Pringle, Hernandez and Kring push it to a vote. What was their rush on this? So Sidhu abstains wanting more info and a continuance.

JC Fremont said:

Sidhu, as someone already mentioned, should have voted "no" if he didn't want it to go to a vote so soon. I still don't understand, though, if Jubal could understand the issue without more info and a continuance and he doesn't even live in Anaheim, how come Sidhu needed more info?! He's on the council!

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