1996/04/03CITY OF ANAHEIM, CALIFORNIA COUNCIL MINUTES
APRIL 3, 1996
The City Council of the City of Anaheim met in Special Session.
PRESENT:
ABSENT:
PRESENT:
COUNCIL MEMBERS: Tom Tait, Bob Zemel, Frank Feldhaus, Lou Lopez, Tom Daly
COUNCIL MEMBERS: None
CITY MANAGER: James Ruth
CITY ATTORNEY: Jack White
CITY CLERK: Leonora N. Sohl
PLANNING DIRECTOR: Joel Fick
A copy of the agenda for the Special Meeting of the Anaheim City Council was posted at 1:45 P.M. on April
2, 1996 at the CMc Center kiosk and Notice of Special Meeting transmitted as required.
Mayor Daly. He welcomed those in attendance to the Special Meeting of the City Council. The Council will
first recess into Closed Session to hear a final update from the City Manager on the proposed agreement
with Disney. After the Closed Session and when the Council is back in public session, the City Manager will
make a presentation on the proposed agreement and summarize all the various points of the agreement.
Subsequently, there will be an opportunity for members of the public to comment on the matter.
RECESS - CLOSED SESSION: Mayor Daly moved to recess into Closed Session. Council Member Lopez
seconded the motion. MOTION CARRIED. (2:09 P.M.)
AFTER RECESS: Mayor Daly called the meeting to order, all Council Members being present. (3:34 P.M.)
Mayor Daly asked City Manager Ruth to summarize the proposal listed on the agenda and to explain any
other changes that may have occurred in recent days.
City Manager, James Ruth. He referred to his report dated April 3, 1996 submitted to the Council (Subject:
Memorandum of Undemtanding-Anaheim Baseball Stadlum Lease Between City of Anaheim and Disney
Baseball Enterprises, Inc. for Stadium Renovations and Lease Terms and Conditions - made a part of the
record) recommending that the Council approve the proposed Anaheim Baseball Stadium Lease
Memorandum of Understanding (MOLl) between the City of Anaheim and Disney Baseball Enterprises, Inc.
for Stadium Renovations and Lease Term and Conditions. Mr. Ruth then briefed pages 1 through 5 of the
report which listed the key issues of the proposal, i.e., Pa~es Capital Contribution (City to contribute $30
million and Disney to contribute $70 million of total $100 million development costa), Operations, Operating
Standards & Capital Maintenance, Parking, Parking Lot Event Booking & Revenue, Future Football 'Other
Event" Income, City Annual Contribution, Development Design Control, Terms, Sport Taxes, Exterior
Advertising, Naming Rights, Team Name and Fast Food. listed beside each of the issues was a
corresponding recommendation.
CITY OF ANAHEIM CALIFORNIA COUNCIL MINUTES APRIL 1996
Following the foregoing portion of the City Manager's presentation, the City's Planning Director, Joel Fick,
gave a presentation on the buildable area around the Stadium.
Joel Fick, Planning Director. The Sportstown Anaheim concept is described in the Draft EIR incorporating a
mix of entertainment retail, office, hotel and other sports uses. He then briefed some of the highlights of the
concept. He noted during his presentation that a substantial portion, approximately 83% of the 'footprint'
building envetope described in the EIR for the stadium property, is preserved in the MOU. He then noted in
closing that Sportstown from its earliest days of inception has always been designed and projected to be a
flexible plan regardless of how Sportstown will precisely be developed. The marketplace will determine the
appropriate response to the level and intensity of the development of the area just as it would with any such
City Manager Ruth then briefed the remaining items in his report relative to the proposal's impact on the
budget. The City's $30 miition portion of Stadium improvements will be paid for as follows: $10 million will
be I~aid from existing extemal Stadium advertising revenues - $10 million will be paid through a bond issued
from excess TOT (Transient Occupancy Tax) funds originally earmarked for the Arena (the City's TOT
projections are over and above anticipated levels), and decreased cost related to possessory interest tax -
$10 million will be drawn from the City's reserves which will still leave the C~ within accepted fiscal reserve
levels. He also briefed revenues anticipated from the development of Sportstown which will be used to
replenish the reserves over time giving details on the two possible scenarios (Scenario I - 40-acre
Spodstown development to be built out by 2004 - e~mated gross positive of $72 million and an estimated
net present value of $23 million in 1996 dollars at the end of 33 years - Scenario 2 - 40-acre
hotel/office/football stadium development to be built out by 2004 - estimated gross positive of $26 million
and an estimated net present value of $1 million in 1996 dollars at the end of 33 years).
In closing, Mr. Ruth also briefed The peripheral benefits associated with the proposal relaying the
information provided by Dr. James Doti, Economist and President of Chapman University, the main points
being, '... the cumulative economic impact of the California Angels baseball team on Orange County is
$85 million annually (the economic impact on Anaheim is approximately $10.6 million annually; 1/8
County's population 1/8 of $85 million)... All figures are conservative, broad, and preliminary estimates
using best available data. Estimates are based on an average of 78 home games between the 1991 and
1995 seasons, an average of 26,000 fans per game each spending an average of $7.50/fan.'
Mayor Daly. Council questions and comments will be deferred until after input from the public. He invited
those who wished to speak to do so at this time.
The following people spoke relative to the proposal. Their comments are summarized:
Jeff Kirsch, 2661 W. Palais, Anaheim. He posed questions relative to the City's $30 million contribution to
the stadium development costs, specifically the $10 million from stadium adverl~sing revenues and the $10
million from reserves (later answered by City Manager Ruth). He also noted that about throe weeks ago,
the. Council indicated in answer to his question that The public would have full and adequate time to review
all terms of the propesel which he feels is necessary.
Nick Berardino, Orange County Employee's Association on behalf of AMEA (Anaheim Municipal Employees
Association). They are disappointed regarding the treatment of employees during the last couple of weeks.
During this time, the employee organization has not been consulted and the members have been
wondering if they are going to have a job in a couple of wseks or not. The City has been remi~s in keeping
CITY OF ANAHEIM CALIFORNIA COUNCIL MINUTES APRIL 1996
employees informed and a part of the process. They hope to be hearing from the City's representatNes
tomorrow morning.
Red Collins, 482 Paseo Real, Anaheim. He noted in the report that one of the major benefits is, 'The deal
will be consummated without imposing any new taxes on the citizens of Anaheim, i but also noted on the
previous page that it stated, 'in the event of a future 'sports tax" imposed by the City... * - he asked
where the sports tax is going to go when and if it is imposed. (Later answered by City Manager Ruth.)
Doug DeCinces, former California Angels player and member of the community. He applauded the efforts
of the Council in bdnging the negotiations to this point. Their efforts have recognized the fact that the
Angels have been ie Anaheim for many years along with a tremendous amount of history and tradition. The
fact that they will remain in Anaheim and at Anaheim Stadium for many years to come gives him great
warmth. The new ownership is a company that has also been a part of the City for many years and has
helped not only Anaheim but Orange County to be what it is today.
Steve White, 856 N. Clementine, Anaheim. Since the information has only been available about an hour,
he asked that the Council delay a vote on the matter until the next regularly scheduled meeting so that the
public can have an opportunity to digest the information and provide comments.
Jim Doff, President of Chapman University (resident of Vitla Park). He commented on the summary
remarks by the City Manager relating to his (Doti's) estimate of the cumulative impact of the proposal. It
was based on the fact that there would be no impact from Sportstown. Therefore, any future impact from
Sportstown would be over and above that. It did not include any restaurant spending by fans outside the
stadium, the $100 million construction spending in the stadium renovation, and is based on an attendance
of only 26,000 per game. He emphasized it is a very conservative estimate relating to Anaheim Stadium
spending, fan spending, excluding tickets, and Angels spending and television and media related
expenditures, it is important for an economist to note that more important than the numbers, a baseball
team is a symbol for the community which gives it identity and something to rally around. He has been
pleased and honored to be part of the negotiation and having served as facilitator. He has been extremely
impressed with the leadership on the part of the City and the Disney Company. It was a great example of a
public-private partnership and he was honored to be part of it.
Stanley Pawlowski, 1423 W. Janine, Anaheim, Banker and businessman - resident of Anaheim for 48
years. He reiterated many of his comments made at the Council Meeting of March 12, 1996 noting that
Anaheim is again at a crossroads where it has the opportunity to move forward, stand still, or go backwards.
The City has taken advantage of the goed things that have come its way over the years such as the Angels,
Rams, the Arena, Mighty Ducks, etc. The proposal before the Council makes a lot of sense and the time is
right. If the City lost the Angels, they would be very difficult to replace. He urged the Council to take
advantage of this excellent opportunity.
Jack Lindquist, 95 Linde Isle, Newport Beach (former President of Disneyland). He first shared a fable he
authored revolving around a Mouse, a Duck and a Singing Cowboy which he felt was analogous to the
situation/opportunity at hand. Subsequently, he stated one thing Anaheim has always been blessed with is
visionary leadership. The Council teday will set the course, the direction and the vision for Anaheim into the
millenium and beyond. Recounting the fable, he urged the Council to keep the Angels on their side.
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CITY OF ANAHEIM, CALIFORNIA COUNCIL MINUTES APRIL 3, 1996
City Manager Ruth then answered questions posed by several of the speakers. Relative to the $10 million
from advertising revenues, that money in the pest has gone into stadium operations to pay for operating
costs. Disney will be assuming those responsibilities and, therefore, are assuming the revenues. Relative to
reserves, a Council priority in terms of looking at the total funding and fiscal resoumes of the City, the City
Council weighs those priorities every year and makes determinations on an annual basis in terms of
allocating the resources. W'Ah respect to employees, the MOU before the Council today, if approved,
Disney would not assume operations of the stadium until next October so there is a considerable amount
of time to work with the employees. The City has extremely dedicated employees which they are very
proud of and who have contributed a great deal to the community for many years. They will do everything
as an organization to absorb the employees if they are not hired by the stadium itself. Based on past
performance and dedication to the City, it is in all likelihood many, if not most, will be absorbed and
continued by Disney. The City will do evetTthing in its power to accomplish that. Relative to public
comments, that will be addressed by the City Attorney relative to the future meeting in which they will bring
forth the documents which will be more detailed. Should the MOU be approved today, staffwould proceed
to work on those documents and to have them before the Council hopefully sometime in mid-May. Later in
the meeting, he also addressed the sports tax question. If the tax is imposed, it will be on those attending
events at the stadium. It is not the intent to impose any such tax but a protection that Disney asked to be
incorporated. In the event future Councils might consider such a tax, that tax could change the economics
of the deal and Disney would be reimbursed for any tax charges assessed against the ticket buyers.
City Attorney White. The MOU is basically an agreement between the partes to agree upon a final
agreement at a later date. It contemplates the parties will continue to negotiate and document the deal
points expressed in the Memorandum and discussed by the City Manager over the next five-week period.
Hopefully between now and May 15, staffwill be returning to the Council with a final agreement, it is also
possible the partes may not reach an agreement but they are hopeful this will culminate in a final
agreement. Over the course of the next five weeks, members of the public will have an opportunity to
review and comment on the document approved today at any City Council meeting that is held between
now and such time as the document in final form comes back to the Council and certainly at the meeting
where it is agendized for final approval. The Council also has in front of it today as part of the record a
report from LSA Associates (see report dated April 2, 1996 - Categorical Examption Analysis - Anaheim
Stadium Renovation Program prepared by LSA Associates, Inc.) concerning the analysis of the
environmental impacts of the downsizing of the Stadium to a baseball-only facility and determining that
such a project is categorically exempt from the California Environmental Quality Act (CEQA). Prior to taking
any action today on the MOU, it would be appropriate for the Council to make such a finding.
After a brief discussion between Council Members relative to the documentation submitted and the
timeliness of the submittals, Mayor Daly referred to letter dated April 3, 1996 from the Anaheim Chamber of
Commerce and paraphrased pertons of it for the record. The Chamber supports the proposed agreement,
raises concerns that the T.O.T. not be diverted from the Convention Center expansion, and also mentions
their desire that plans to scale back Sportstown should be minimized.
CALIFORNIA ENVIRONMENTAL QUALITY ACT - ENVIRONMENTAL FINDING: Mayor Daly moved that
the City Council find, based upon evidence in the record, that the Memorandum of Understanding (MOU)
between the City and Disney Baseball Enterprises, Inc. relating to the proposed Anaheim Baseball Stadium
Renovation, including the negotJation and execution of a formal lease agreement, the stadium renovation
program, and other actions implementing the terms of the Memorandum of Understanding, are exempt
from the California Environmental Quality Act (CEQA) pursuant to Sections 21080 and 21084 of the
California Public Resources Code and the Categorical Exemptions included in the state CEQA Guidelines
(California Code of Regulations, 'F~le 14, Chapter 3, Article 19) including without limitation Class 1, Class 2
and Class 23 exemptions. Council Member Feldhaus seconded the motion.
CITY OF ANAHEIM CALIFORNIA COUNCIL MI,NUTES APRIL 3r 1996
· Before a vote was taken, at the request of the Mayor, City Attorney White explained the meaning of
adopting the motion on the environmental finding concluding that the legal effect of adopting the CEQA
finding is that it will not require the City to initiate further environmental documentation, either an EIR or a
negative declaration for lhe lease agreement or the construction project. There is an EIR in process for the
overall Sportstown development.
Mayor Daly. The stadium project involves a downs[zing and an environmental process is under way for the
development as proposed for the remainder of the property.
Council Member Zemel stated that he will be opposing the motion and instead is going to recommend for
Council consideration that the matter be continued until next Tuesday to give him an opportunity to read the
LSA Categorical Exemption Analysis,
MOTION: Council Member Zemel moved to continue the motion on the CEQA finding for one week. The
motion died for lack of a second.
A vote was then taken on the motion offered by Mayor Daly seconded by Council Member Feldhaus on the
foregoing environmental finding. Council Member Zemel voted No. MOTION CARRIED.
MOTION ON MEMORANDUM OF UNDERSTANDING: Mayor Daly moved the approval of the
Memorandum of Understanding between the City of Anaheim and Disney Baseball Enterprises, Inc. dated
as of April 3, 1996 concerning the Anaheim Baseball Stadium Renovation. Council Member Feldhaus
seconded the motion.
Before a vote was taken, Council Members commented on the proposed approval of the MOU (comments
summarized).
MAYOR DALY: The agreement proposed is in the best tradition of the City. It is a step forward towards
reaching the full potential of the Stadium and surrounding property. It is an investment in the community
and it involves a partnership like previous partnerships in Anaheim, the latest and best example of an ideal
public-private partnership being the Anaheim Arena - the Pond. The baseball team will have the
responsibility of operating and maintaining the Stadium. No longer will the citizens have to be concerned
about the burden of liability, insurance and maintenance and all the other overhead requirements of
operating the Stadium. It is right and proper to shift this to the pdvate sector. The team will now be named
Anaheim as it should be. To be called Anaheim is ve~J helpful and important to the City's visitor and
convention indust~. W~th this proposal, major job creating and revenue producing development can occur
at the earliest opportunity on the Stadium properly. Anaheim will now have the rights to develop the
stadium property. The tug of war over that property has now virtually been ended by the proposal.
Anaheim will have clear rights to develop a major portion of the property at the earliest opportunity if the
agreement is approved. The agreement is in the best tradition of the community.
CITY OF ANAHEIM CALIFORNIA COUNCIL MINUTES APRIL 1996
COUNCIL MEMBER LOPEZ: The history of the leadership in Anaheim has always been visionary and the
reason why Anaheim is one of the most successful cities in the United States. Anaheim stepped forward
when others hesitated and got Disneyland, built the Stadium, and most recently, the Arena. They now have
the opportunity to keep the Angels in Anaheim where they belong, it is a good investment for the City.
COUNCIL MEMBER FELDHAUS: When he ten for Council, he stated the City needed to look further at
privatization and to operate more like a business especially in light of things that were happening at the
State level. The first time around, voting to approve the proposal was not a proper decision for him. At the
isast, a sports team should be revenue neutral but hopefully generate revenues for the Cit~ and not be a
burden to the taxpayers. There was no promise or assurance for him personally that would occur and he
thought the possibility of any agreement was over. Thanks to the vision of a number of people who were
able to get the parties back to the table to reconsider, he is now comfortable that this deal is a good one for
the citizens of Anaheim.
COUNCIL MEMBER TNT: This is a difficult decision for him. Although he is a big baseball fan and an
even bigger Angel fan, his main job is representing the citizens and in fulfilling that duty, he cannot vote for
the MOU. He wants it to go forward, but cannot vote for it. He sees the benefits of having Disney on the
team but he questions at what cost. The cost to the City is $30 million wherever it comes from. It is a
matter of priorities and he does not think the City can afford $30 million. The people expect or demand
fiscal responsibil~ and accountability and for that mason he cannot vote in favor.
COUNCIL MEMBER ZEMEL: This is a great deal for Orange County and for California, but it is on the
becks of the Anaheim taxpayer and, in his opinion, a threat to the Anaheim hoteliers and convention
industry. This decision is not difficult for him to make even though he believes it is a much better
transaction than 30 days ago. He is concerned over the 20-year "walk' clause so it cannot be called a 33-
year lease. He does not believe the City has done due diligence in looking into bonding. If a major tenant
can 'walk" in 20 years, it is questionable whether the bonding company will invest or not. He needs that
proven to him. He then elaborated in detail on the remainder of his concerns. If them was a direct
revenue stream to pay back the taxpayers, it would be possible to make the decision. He feels it would be
very easy to get that revenue stream. He does not feel they worked hard enough or went far enough even
though the deal is better.
In concluding his comments, Council Member Zemei stated the transaction is about promises made and
promises broken, and people, and faith. The people elected the Council to watch their tax dollars and that
there be no new taxes. He feels promises have to go a lot further. They promised taxpayers there would
be a revenue stream as a payback, promised public involvement, promised they would not invest reserves,
and promised the hotel indust~ the Cib/would help them get the Convention Center expansion started. A
public-private partnership is a catch-all phrase, tie wonders where the partnership is on this transaction and
if there is such a partnership, questioned why certain things did not happen. They are rushing the process.
He was given the information today without a chance to review it. He emphasized, there has to be a direct
revenue stream, it does not make sense to him. He feels the Council has to ask for more documentation.
He has asked recently and has not been able to get all of it. He is going to oppose the MOU and the
proposal. This 'marriage" has no basis if taxpayers do not get paid back.
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CITY OF ANAHEIM CALIFORNIA COUNCIL MINUTES APRIL '1996
Mayor Daly asked the Cb Manager to comment bdefly on the bed tax question which was broached by
Council Member Zemel. What will be the impacts of commiffing a certain portion of the bed tax revenue to
the stadium project.
City Manager Ruth. When the bed tax (TOT) was increased from 13% to 15%, the 2% was dedicated to the
Anaheim Resort Area as well as the Convention Center. Right now, $55 million is committed to the
Convention Center expansion. The 1% for the stadium was dedicated several years ago for the land
acquisition for the Arena and for paying the possessory interest tax. As a result of the renegotiated
agreement with the County, the possessory interest tax cost has dropped down by about $300,000 a year.
The ped'ormance of the 1% T.O.T. for the Arena area has improved substantially. Between the two funds,
the cost savings, and increased revenue they can bond for about $10 million. It will not impact the Anaheim
Resort Area or the Convention Center.
Mayor Daly. Before voting, he would like to thank staff for all the hard work expended in bringing this matter
to fruition, especially to City Manager Ruth, the City Attorney and all the staff people. It was a major
undertaking and they deserve a major thank you.
A vote was then taken on approval of the Memorandum of Understanding:
Ayes: Feldhaus, Lopez, Daly
No: Tait, Zemel
MOTION CARRIED.
ADJOURNMENT: By general Council consent, the Special Meeting of April 3, 1996 was adjourned
(4:56 P.M.).
LEONORA N. SOHL
CITY CLERK
7