RES-2015-221RESOLUTION NO. 2015- 221
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ANAHEIM APPROVING AN AGREEMENT CONCERNING
ENTERTAINMENT TAX REIMBURSEMENT BY AND BETWEEN
THE CITY OF ANAHEIM AND WALT DISNEY PARKS AND
RESORTS U.S., INC. ("DISNEY"), RELATING TO PROPERTIES
OWNED OR LEASED BY DISNEY AND AFFILIATES OF DISNEY
IN THE DISNEYLAND RESORT AND ANAHEIM RESORT
SPECIFIC PLAN AREAS OF THE CITY OF ANAHEIM,
AUTHORIZING THE CITY MANAGER TO EXECUTE AND
ADMINISTER THE AGREEMENT ON BEHALF OF THE CITY, AND
FINDING THAT SAID AGREEMENT IS NOT A "PROJECT" OR AN
AMENDMENT TO A PREVIOUSLY APPROVED PROJECT FOR
PURPOSES OF THE CALIFORNIA ENVIRONMENTAL QUALITY
ACT AND IS THEREFORE EXEMPT FROM CEQA REVIEW
PURSUANT TO CEQA GUIDELINES SECTIONS 15060(C)(3),
15061(B)(3), AND 15378(B)(4) OR, ALTERNATIVELY, THAT NONE
OF THE CIRCUMSTANCES REFERRED TO IN STATE CEQA
GUIDELINES SECTIONS 15162-15164 WARRANT OR
NECESSITATE THE PREPARATION OF A SUBSEQUENT
ENVIRONMENTAL IMPACT REPORT OR A SUPPLEMENT OR
ADDENDUM TO PREVIOUSLY CERTIFIED, APPROVED AND
ADOPTED ENVIRONMENTAL DOCUMENTATION
WHEREAS, Walt Disney Parks and Resorts U.S., Inc. ("Disney"), and/or "Affiliates of
Disney," as that term is defined in that certain Agreement Concerning Entertainment Tax
Reimbursement dated as of July 7, 2015, described hereinbelow (the "Agreement"), own or lease
those properties within The Disneyland Resort Specific Plan Area and the Anaheim Resort
Specific Plan Area in the City of Anaheim identified in Exhibit "A" attached to said Agreement
(collectively, the "Disney Properties"); and
WHEREAS, on or about June 22 and June 29, 1993, the City Council of the City of
Anaheim ("City Council") adopted and approved the original Disneyland Resort Specific Plan
(the "Original DRSP"), on or about September 20 and 27, 1994, the City Council adopted and
approved the original Anaheim Resort Specific Plan (the "Original ARSP"), and between those
dates and the date of this Resolution's approval the City Council has taken a number of actions to
amend and adjust the Original DRSP (which, as so amended, is referred to herein as the
"Existing DRSP") and the Original ARSP (which, as so amended, is referred to herein as the
"Existing ARSP") and to approve various land use entitlements authorizing development within
the Existing DRSP Area and the Existing ARSP Area, as more particularly summarized in
Recitals B and C of the Agreement; and
WHEREAS, in conjunction with its actions referred to in the preceding Recital relating to
the Original DRSP, as so amended, and pursuant to the California Environmental Quality Act
and implementing regulations (collectively, "CEQA"), the City Council certified Final
Environmental Impact Report No. 311 (the "DRSP FEIR"), made findings with respect to the
environmental impacts identified in the DRSP FEIR, adopted a Statement of Overriding
Considerations, and adopted Mitigation Monitoring Program No. 0067, which CEQA actions the
City has supplemented and modified by and through various findings, determinations,
Addendums, Mitigated Negative Declarations, and modifications to the Mitigation Monitoring
Program, all as more particularly summarized in Recital B of the Agreement; and
WHEREAS, in conjunction with its actions referred to in the second Recital above
relating to the Original ARSP, as so amended, and pursuant to CEQA, the City Council certified
Master Environmental Impact Report No. 313 (the "ARSP MEIR"), made findings with respect
to the environmental impacts identified in the ARSP MEIR, adopted a Statement of Overriding
Considerations, and adopted Mitigation Monitoring Program No. 0085, which CEQA actions the
City has supplemented and modified by and through various findings, determinations,
certification of a Final Supplemental Environmental Impact Report (the "ARSP FSEIR"),
approval of an Addendum, and adoption of a modified Mitigation Monitoring Program, all as
more particularly summarized in Recital C of the Agreement; and
WHEREAS, on or about October 8, 1996, City, Disney, and others entered into that
certain Infrastructure and Parking Financing Agreement dated as of October 8, 1996 (the
"Finance Agreement") for the purpose, among others, of establishing the terms pursuant to
which certain public improvements would be completed and financed (the "Public
Improvements"); and
WHEREAS, on or about October 22, 1996, City and Walt Disney World Co (predecessor
by merger to Disney) entered into that certain Development Agreement No. 96-01 (the
"Development Agreement") for the purpose of providing for the orderly development of certain
Disney properties in accordance with the DRSP and providing Disney with reasonable
assurances that such development could occur in accordance with City land use regulations then
in effect, all as more particularly set forth in and subject to the terms and conditions in the
Development Agreement; and
WHEREAS, pursuant to the Finance Agreement and Development Agreement, Disney
agreed to develop and operate a number of significant venues and attractions consistent with the
then -existing DRSP, including a second gated theme park designed to attract and accommodate a
planned annual attendance of 7 million guests, 750 new high-quality hotel rooms integrated
within or adjacent to the second theme park, at least 200,000 square feet of new retail, dining,
and entertainment uses, a pedestrian plaza between the two theme parks linking Harbor
Boulevard and Disneyland Drive, at least 5,800 net new parking spaces in addition to those then
serving Disneyland, the Disneyland Hotel, and the Disneyland Pacific Hotel, and completion of
all mitigation measures and conditions of approval relating to the foregoing (the "Second Gate
Project"); and
WHEREAS, the City of Anaheim has never levied, imposed, or charged a City
Entertainment Tax (as defined in the Agreement); and
WHEREAS, notwithstanding that the City did not levy, impose, or charge an
Entertainment Tax at the time the City Council approved the Finance Agreement in 1996, the
City Council at that time, recognizing the significant investment Disney was making in the
Second Gate Project and the significant increase in revenues potentially available to the City and
surrounding jurisdictions as a result of the Second Gate Project, determined that it was in the best
interests of the City to agree to return to Disney any City Entertainment Tax which might be
levied on the Disney Properties; and
WHEREAS, in order to implement this determination, the City agreed in Section 4.18 of
the Finance Agreement that if it were to adopt an Entertainment Tax during construction of the
Second Gate Project and until June 30, 2016 (the fifteenth anniversary of the "Opening Date" as
defined in the Finance Agreement), the City would pay to Disney a sum equal to any such
Entertainment Tax paid by Disney or Affiliates of Disney to City during such time period (as
more particularly articulated in Section 4.18 of the Finance Agreement, the "Current
Entertainment Tax Rebate Period"); and
WHEREAS, the Second Gate Project and Public Improvements have been completed as
envisioned by and in accordance with the terms of the Finance Agreement; and
WHEREAS, development and operation of the Second Gate Project and Public
Improvements have generated and continue to generate substantial direct and indirect tax
revenues to the benefit of the City's general fund, including increased sales tax, property tax, and
transient occupancy tax revenues; and
WHEREAS, subject to compliance with applicable governmental requirements, Disney
has the right to construct and operate substantial additional improvements on the Disney
Properties, in accordance with the Existing DRSP and Existing ARSP, as the same may be
amended from time to time after the date of this Resolution; and
WHEREAS, strong public demand for the venues and attractions within "The Anaheim
Resort®", including The Disneyland Resort and the Anaheim Convention Center, has generated
the need for additional parking to ensure the continued accessibility and smooth functioning of
the Anaheim Resort's venues and uses; and
WHEREAS, Disney currently owns and operates a 1,337 -space surface parking lot
(known as the Pumbaa parking lot) located north of Disney Way and west of South Clementine
Street/Manchester Avenue which, subject to City approval of a Final Site Plan, is allowed under
the Existing DRSP and Development Agreement for development as structured parking (the
"Pumbaa Structure"), and Disney has informed the City that it is contemplating constructing the
Pumbaa Structure and related infrastructure at its own cost and expense; and
WHEREAS, Disney has informed the City that it is also contemplating significant
additional investment in various improvements which are all entitled under the Existing DRSP,
the Existing ARSP, and the Development Agreement (as more particularly defined in the
Agreement, the "Qualified Capital Improvements"); and
WHEREAS, in order to provide Disney assurances regarding the economic landscape
surrounding the significant investments it is contemplating, and to incentivize construction and
operation of the Qualified Capital Improvements, and notwithstanding that the City does not
currently levy, impose, or charge an Entertainment Tax, Disney has requested that City extend
the Entertainment Tax rebate period beyond the Current Entertainment Tax Rebate Period
achieved under the Finance Agreement, all on the terms and subject to the conditions set forth in
the Agreement; and
WHEREAS, without acknowledging that the requirements of Government Code Section
53083 are applicable to the City Council's approval of the Agreement, the City has nevertheless
complied therewith; and
WHEREAS, without acknowledging that Government Code Section 53083 requires a
notice of public hearing to be published prior to the City Council's approval of the Agreement,
the City nevertheless caused notice of a public hearing concerning the City Council's
consideration and approval of the Agreement to be published in the Anaheim Bulletin, a
newspaper of general circulation in the City of Anaheim, on June 25, 2015, for the public
hearing set for July 7, 2015; and
WHEREAS, prior to the July 7, 2015, public hearing, the City prepared a Summary
Report Regarding Agreement Concerning Entertainment Tax Reimbursement Agreement (the
"Summary Report") and made such Summary Report available to the public in the City Clerk's
office and through the City's internet web site, which Summary Report contains the information
required to be included pursuant to Government Code Section 53083(a); and
WHEREAS, by its approval of this Resolution and the Agreement, the City Council of
City finds and determines that (1) the value to the City of Disney's satisfaction of the conditions
and performance of the covenants in each fiscal year during which City's extended
Entertainment Tax Rebate obligations remain in effect and cumulatively, over the term of the
Agreement --in terms of economic development, generation of additional local tax revenues that
will help to fund vital public services, provision of expanded entertainment, recreational,
lodging, dining, and retail opportunities for residents of the City and the general public,
provision of high quality and adequately compensated construction jobs, and long-term job
generation and retention --will be not less than the total amount of the Entertainment Tax Rebate
in each such year; (2) performance by Disney of its covenants pursuant to the Agreement in
exchange for the Entertainment Tax Rebate to be made by City constitutes a valid public
purpose; and (3) it is in City's best interests to enter into the Agreement in order to support
Disney's future investments and provide Disney with assurances concerning any Entertainment
Tax that may be established by City in the future and applied to Disney and Affiliates of Disney
during the "First Extended Entertainment Tax Rebate Period" (July 1, 2016 -June 30, 2046) and
"Second Extended Entertainment Tax Rebate Period" (July 1, 2046 -June 30, 2061) provided for
in the Agreement; and
WHEREAS, the Qualified Public Improvements are all authorized by applicable
"Governmental Requirements" (as that term is defined in the Agreement), including without
limitation the Existing DRSP and Existing ARSP, as applicable, and the environmental impacts
of said projects already have been fully evaluated and addressed in the DRSP FEIR, Addendums
to the DRSP FEIR, the Mitigated Negative Declarations, Modified Mitigation Monitoring
Program No. 0067 and 004 certified, adopted, and approved with respect thereto, the ARSP
MEIR, the ARSP FSEIR, the Addendums to the ARSP FSEIR, and Mitigation Monitoring
Program Nos. 0085 and 85C certified, adopted, and approved with respect thereto; and
WHEREAS, the Agreement does not constitute the approval by the City of any
development or any change in the physical environment, all development or improvements as
referred to in the Agreement have already been the subject of full environmental review pursuant
to the California Environmental Quality Act and implementing regulations ("CEQA"), and the
Agreement does not constitute a pre judgment or pre -commitment by the City with respect to
any future development that may be proposed by Disney or any Affiliate of Disney that requires
City approval after the date this Resolution is adopted, and in this regard the City expressly
reserves all of its discretion with respect to any such future development to the full extent the
City would retain such discretion in the absence of the Agreement; and
WHEREAS, the City Council hereby finds and determines that its approval of the
Agreement does not constitute approval of a "project" for CEQA purposes and the Agreement is
exempt from CEQA review pursuant to State CEQA Guidelines Sections 15060(c)(3),
15061(b)(3), and 15378(b)(4) or, alternatively, the City Council finds and determines that even if
its approval of the Agreement constitutes the approval of a CEQA "project" or an amendment to
a previously approved "project," the environmental documentation, findings, determinations, and
actions referred to above and in Recitals B and C of the Agreement adequately address all of the
environmental impacts of the proposed Agreement and that none of the circumstances referred to
in State CEQA Guidelines Sections 15162-15164 warrant or necessitate the preparation of a
Subsequent EIR, a Supplement to a Final EIR, or an Addendum to a Final EIR;
WHEREAS, the City Council conducted a noticed public hearing concerning the
Agreement at its July 7, 2015, regular meeting and considered the Agreement, the Summary
Report, any written correspondence submitted to the City Council prior to the close of the public
hearing, and all of the evidence and arguments submitted to the City Council by City staff and
members of the public; and
WHEREAS, the City Council has determined that approval of the Agreement is in the
best interests of the City and the general public;
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
1. The City Council finds and determines that all of the foregoing Recitals are true
and correct and the City Council expressly incorporates all of said Recitals into its approval.
2. The City Council does hereby approve the Agreement Concerning Entertainment
Tax Reimbursement by and between the City of Anaheim and Walt Disney Parks and Resorts
U.S., Inc., dated as of July 7, 2015, (the "Agreement") in the form presented to the City Council
at the meeting at which this Resolution is being adopted, and authorizes the City Manager to
execute, and the City Clerk to attest, the Agreement on behalf of the City.
3. The City Manager (or his/her duly authorized representative) is further hereby
authorized to implement the Agreement on behalf of the City and to administer the City's
obligations, responsibilities, and duties to be performed thereunder.
THE FOREGOING RESOLUTION is approved and adopted by the City Council of the
City of Anaheim this 7h day of July, 2015, by the following roll call vote:
AYES: Mayor Pro Tem Kring, Council Members Murray and Brandman
NOES: Mayor Tait and Council Member Vanderbilt
ABSENT: None
ABSTAIN: None
CITY OF ANAHEIM
MAYOR OF THE CITY OF 4gHEIM
PRO TEM
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CITY CLERK OF THE CITY OF ANAHEIM
CAO-110553v2/MRHW
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS.
CITY OF ANAHEIM )
I, LINDA N. ANDAL, City Clerk of the City of Anaheim, do hereby certify and attest, that the
foregoing Resolution No. 2015-221 was introduced and adopted at a regular meeting provided
by law, of the Anaheim City Council held on the 7th day of July, 2015, by the following vote of
the members thereof.
AYES: Mayor Pro Tem Kring, Council Members Murray and Brandman
NOES: Mayor Tait and Council Member Vanderbilt
Absent: None
Abstain: None
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of
Anaheim this 21St day of July, 2015.
CITY CLERK OF THE CITY OF ANAHEIM
(SEAL)
I, LINDA N. ANDAL, City Clerk of the City of Anaheim, do hereby certify and attest, that the
foregoing is the original of Resolution No. 2015-221 which was duly passed and adopted by the
City Council of the City of Anaheim on July 7, 2015.
CITY CLERK OF THE CITY OF AN HEIM
AGREEMENT CONCERNING
ENTERTAINMENT TAX REIMBURSEMENT
by and between
THE CITY OF ANAHEIM
and
WALT DISNEY PARKS AND RESORTS U.S., INC.
dated as of
July 7, 2015
AGREEMENT CONCERNING ENTERTAINMENT TAX REIMBURSEMENT
This Agreement Concerning Entertainment Tax Reimbursement (this
"Agreement") is dated for reference purposes as of July 7, 2015 (the "Agreement Date"),
and is being entered into by and between the City of Anaheim, a charter city and
municipal corporation, duly organized and existing under its Charter and the Constitution
and laws of the State of California ("City"), and Walt Disney Parks and Resorts U.S., Inc.,
a Florida corporation ("Disney") and successor by merger to Walt Disney World Co.
RECITALS:
A. Disney and/or "Affiliates of Disney" (as that term is defined below) own or
lease those properties within The Disneyland Resort Specific Plan Area and the Anaheim
Resort Specific Plan Area in the City of Anaheim identified in Exhibit "A" attached hereto
(collectively, the "DisnU Properties").
B. On June 22, 1993, the City Council of City adopted Resolution Nos. 93R-
107 and 93R-108, and on June 29, 1993, adopted Resolution Nos. 93R-146 and 93R-147
and Ordinance Nos. 5377 and 5378, approving amendments to the Land Use and
Circulation Elements of City's General Plan, approving The Disneyland Resort Specific
Plan (SP92-1) (the "Original DRSP"), approving zoning and development standards for
the Disneyland Resort Specific Plan, amending the Zoning Map referred to in Title 18 of
City's Municipal Code relating to zoning for The Disneyland Resort, and amending Title
18 of City's Municipal Code by adding a chapter thereto (Chapter 18.114) relating to
zoning and development standards for the Original DRSP, certifying Final Environmental
Impact Report No. 311 (the "DRSP FEIR"), making findings with respect to the
environmental impacts identified in the DRSP FEIR, adopting a Statement of Overriding
Considerations, and adopting Mitigation Monitoring Program No. 0067.
Subsequently, the City Council of City has approved several amendments and
adjustments to the Original DRSP, including the following:
.On March 22, 1994, the City Council of City adopted Resolution Nos. 94R-40 and
94R-41 and on April 12, 1994, the City Council of City adopted Ordinance No. 5420
approving Amendment No. 1 to establish "District A", re -designating a portion of the East
Parking Area (approximately 9 acres) to District A, and establishing Zoning and
Development Standards for District A (including approval of a finding that the previously
certified DRSP FEIR was adequate to serve as the required environmental documentation
for Amendment No. I and modifying Mitigation Monitoring Program No. 0067 to
reference "District A" in Mitigation Measure 3.10.1-8).
On June 13, 1995, the City Council of City adopted Resolution 95R-95 and on
June 20, 1995, the City Council of City adopted Ordinance No. 5503 approving
Amendment No. 2 to re -designate a portion (approximately 10 acres) of the East Parking
Area to District A (including approval of a finding that the previously certified DRSP
FEIR was adequate to serve as the required environmental documentation for Amendment
No. 2).
On October 8, 1996, the City Council of City adopted Resolution Nos. 96R-176,
96R-177, 96R-178 and 96R-179 and on October 22, 1996, the City Council of City
adopted Ordinance Nos. 5580 and 5581, approving Amendment No. 3 to encompass
modifications to The Disneyland Resort Project including a Revised Phasing Plan,
modifications to the Specific Plan (including the Zoning and Development Standards,
Design Plan and Guidelines and Public Facilities Plan) to implement the Revised Phasing
Plan; and incorporation of text and graphic modifications to the document, and finding
that the Addendum (dated July 31, 1996) to the DRSP FEIR and Modified Mitigation
Monitoring Program No. 0067 were adequate to serve as the required environmental
documentation for this request.
On September 16, 1997, the City Council of City adopted Ordinance No. 5613
approving Adjustment No. 1 to encompass standards addressing permitted encroachments,
screening requirements and height limitations, including a finding that this adjustment was
categorically exempt from CEQA under CEQA Guidelines Section 15061(b)(3), which
provides that where it can be seen with certainty that there is no possibility that the
activity in question may have a significant effect on the environment, the activity is not
subject to CEQA.
On June 22, 1999, the City Council of City adopted Resolution Nos. 99R-133,
99R-134, 99R-135, 99R-136, and 99R-137, and on July 13, 1999, the City Council of City
adopted Ordinance Nos. 5689 and 5690, approving Amendment No. 4 pertaining to the
Pointe Anaheim Lifestyle Retail and Entertainment Complex, amending the Land Use
Element of City's General Plan, Conditional Use Permit No. 4078, amending the Anaheim
Resort Public Realm Landscape Program on approximately 29.1 acres, establishing
Zoning and Development Standards for the Pointe Anaheim. Overlay, modifying the Land
Use Plan, the Public Facilities Plan, the Design Plan, and the Conditions of Approval and
incorporating text and graphic modifications to implement the Pointe Anaheim Project,
and re -designating a portion of District A (18.9 acres) and Parking District (East Parking
Area)/C-R Overlay (10.2 acres) to the Pointe Anaheim Overlay, and finding that a
Mitigated Negative Declaration and Mitigation Monitoring Plan No. 004 were adequate to
serve as the required environmental documentation for this request.
On September 19, 2000, the City Council of City adopted Ordinance No. 5736
approving Adjustment No. 3 encompassing modifications to permitted accessory uses
within. the Parking District and permitted encroachments in the Theme Park District,
including a finding that this amendment was categorically exempt from CEQA under
CEQA Guidelines Section 15061(b)(3), which provides that where it can be seen with
certainty that there is no possibility that the activity in question may have a significant
effect on the environment, the activity is not subject to CEQA.
On May 1, 2001, the City Council of City adopted Ordinance No. 5768 approving
Adjustment No. 4 encompassing modifications of criteria for Informational, Regulatory
and Directional (IRD) Signs visible from the Public Rights -of -Way, including a finding
that this adjustment was categorically exempt from CEQA under CEQA Guidelines
Section 15061(b)(3), which provides that where it can be seen with certainty that there is
kA
no possibility that the activity in question may have a significant effect on the
environinent, the activity is not subject to CEQA.
On February 26, 2002, and March 19, 2002, the City Council of City adopted
Resolution Nos. 2002R-53, 2002R-54, 2002R-55, 2002R-56, 2002R-57 and 2002R-58 and
Ordinance Nos. 5807 and 5808 approving Amendment No. 5 pertaining to the Pointe
Anaheim Lifestyle Retail and Entertainment Complex to incorporate text and exhibit
modifications throughout the Specific Plan document relating to the mix and allocation of
land uses, zoning standards, phasing, project layout and minor modifications to project
conditions of approval and mitigation measures to provide for the development of 569,750
square feet of specialty retail, restaurants, and entertainment, including a multiplex movie
theater; 1,628 hotel rooms/suites (including up to 500 vacation ownership units) and
278,817 square feet of hotel accessory uses; a transportation center; and 4,800 parking
spaces and 15 bus spaces and amending the Land Use Element of City's General Plan, the
Anaheim Resort Public Realm Landscape Program, and Conditional Use Permit No. 2002-
57, and finding that the Addendum (dated October 29, 2001) to the Mitigated Negative
Declaration including the Modified Mitigation Monitoring Plan No. 004 were adequate to
serve as the required environmental documentation for this request.
On May 20, 2003, the City Council of City adopted its Ordinance No. 5859
approving Adjustment No. 5 relating to various zoning and site development standards
including, but not limited to, modifications to minimum lot width, permitted architectural
projections into setback areas, minimum distance between driveways and permitted
signage in the Pointe Anaheim Overlay, including a finding that this adjustment was
categorically exempt from CEQA under CEQA Guidelines Section 15061(b)(3), which
provides that where it can be seen with certainty that there is no possibility that the
activity in question may have a significant effect on the environment, the activity is not
subject to CEQA.
On April 11, 2006, April 22, 2006 and April 25, 2006, the City Council of City
adopted Resolution Nos. 2006-061, 2006-062 and 2006-063 and Ordinance Nos. 6022 and
6023, approving Amendment No. 6, pertaining to, among other things, Conditional Use
Permit No. 4078, changing the project reference from "Pointe Anaheim Lifestyle Retail
and Entertainment Complex" to "Anaheim GardenWalk project" and the overlay reference
from "Pointe Anaheim Overlay" to "Anaheim GardenWalk Overlay," and, by motion,
determining the previously -approved Pointe Anaheim Initial Study and Mitigated
Negative Declaration together with the Second Addendum (dated March 1, 2006) and the
Modified Mitigation Monitoring Pian No. 004a, were adequate to serve as the required
environmental documentation for this request.
On August 8, 2006, the City Council of City adopted Ordinance No. 6031,
modifying sign standards for the Disneyland Resort Specific Plan and finding that the
previously certified Environmental Impact Report No. 330 for a citywide General Plan
Amendment and Zoning Code Update was adequate to serve as the required
environmental documentation for this request.
3
On April 17, 2007 and April 24, 2007 the City Council of City adopted Resolution
No. 2007-048 and Ordinance No. 6056, approving Amendment No. 7, pertaining to
permitted architectural encroachments in required building setback areas and modifying
exhibits pertaining to the maximum number and location of permitted wall signs within
the Original DRSP; by motion on April 17, 2007 the City Council of City determined that
the previously -approved Second Addendum (dated March 1, 2006) to the Pointe Anaheim
Initial Study and Mitigated Negative Declaration was sufficient to serve as the required
environmental documentation for this request.
On January 8, 2008, the City Council of City adopted Ordinance No. 6093,
approving Adjustment No. 7, relating to the number of hotel rooms permitted in the Hotel
and Theme Park Districts defined the Municipal Code and finding that the previously
certified Final EIR No. 311 was adequate to serve as the required environmental
documentation for this request.
On August 16, 2011 and August 23, 2011, the City Council of City adopted
Resolution Nos. 2011-119, 2011-120, 2011-121, 2011-122 and adopted Ordinance
Nos. 6221 and 62225 approving Amendment No. 8, pertaining to the total amount of retail,
dining and entertainment (RDE) uses within the Anaheim GardenWalk Overlay; by
motion, on August 23, 2011 the City Council of City determined that the Pointe Anaheim
Initial Study and Mitigated Negative Declaration together with the Third Addendum
(dated June 6, 2011) serve as the appropriate environmental documentation for this
request.
The Original DRSP, as so amended and adjusted through the Agreement Date, is
referred to in this Agreement as the "Existing DRSP".
C. On September 20, 1994, the City Council of City adopted Resolution Nos,
94R-234, 94R-235, 94R-236, 94R-237, 94R-238, 94R-239, and 94R-240 and on
September 27, 1994, adopted Ordinance Nos. 5453 and 5454, pertaining to certification of
Master Environmental Impact Report (MEIR) No. 313 (the "ARSP MEW), making
findings, adopting a Statement of Findings and Facts and Statement of Overriding
Considerations, and adopting Mitigation Monitoring Program No. 0085, approving
amendments to the Land Use, Circulation, and Environmental Resource and Management
Elements of City's General Plan, adopting the Anaheim Resort Specific Plan No. 92-2 (the
"Original ARSP"), approving zoning and development standards for the Original ARSP,
amending the Zoning Map referred to in Title 18 of City's Municipal Code relating to
zoning for the Original ARSP, amending Title 18 of City's Municipal Code by adding a
chapter thereto relating to zoning and development standards for the Original ARSP,
adopting the Anaheim Resort Identity and Public Realm Landscape Programs and
adopting the Anaheim Resort Nonconforming Signage Program. Subsequently, the City
Council has approved a number of amendments and adjustments to the Original ARSP,
including Ordinance No. 5599 adopted on June 3, 1997, Ordinance No. 5685 adopted on
May 18, 1999, Resolution Nos. 99R-166 and 99R-167 adopted on July 27, 1999,
Ordinance No. 5694 adopted on August 17, 1999, Ordinance No. 5703 adopted on
September 21, 1999, Ordinance No. 5769 adopted on May 1, 2001, Ordinance No. 5910
adopted on April 27, 2004, Resolution Nos. 2004R-954 and 2004R-97 adopted on May
rd
25, 2004, Ordinance Nos. 5920 and 5922 adopted on June 8, 2004, Ordinance Nos. 5954
and 5955 adopted on February 8, 2005, Ordinance No. 6031 adopted on August 22, 2006,
Resolution Nos. 2006-205 and 2006-206 adopted August 22, 2006, Ordinance No. 6036
adopted on September 12, 2006, Resolution Nos. 2007-52 and 2007-53 adopted on April
24, 2007, Ordinance No. 6058 adopted on May 8, 2007, Resolution Nos. 2007-224, 2007-
225, 2007-226 and 2007-227 adopted on November 27, 2007, Ordinance Nos. 6098 and
6099 adopted on March 4, 2008, Resolution Nos. 2008-168, 2008-169 and 2008-170
adopted on September 30, 2008, Ordinance No. 6177 adopted on October 14, 2008,
Resolution Nos. 2009-053, 2009-054, 2009-055, 2009-056, 2009-057, 2009-058 and
2009-059 adopted on March 31, 2009, Ordinance No. 6141 adopted on April 14, 2009,
Ordinance No. 6245 adopted on June 5, 2012. In December 2012 and January 2013, the
City Council adopted its Ordinance No. 6265 and Resolution Nos. 2012-158, 2012-159,
2012-160, 2012-161, and 2012-162 certifying Final Supplemental Environmental Impact
Report No. 2008-00340 (the "ARSP FSEIR"), adopting Findings and a Statement of
Overriding Considerations, adopting Mitigation Monitoring Program 85C, and a Water
Supply Assessment, approving amendments to the Land Use Element of City's General
Plan, approving and adopting Amendment No. 14 to the Anaheim Resort Specific Plan,
amending ,portions of Chapter 18.116 of Title 18 of the Anaheim Municipal Code,
approving and adopting Amendment No. 2 to the Anaheim Resort Identity Program, and
approving and adopting Amendment No. 5 to the Anaheim Resort Public Realm
Landscape Program. Subsequently, City Council adopted Ordinance No. 6266 on January
29, 2013 pertaining to Specific Plan conditions of approval. The Original ARSP, as so
amended through the Agreement Date, is referred to in this Agreement as the "Existing
ARSP."
On February 10, 2003, the Planning Commission adopted Resolution No. PC2003-
29, pertaining to Conditional Use Permit No. 2002-04657, permitting expansion of a legal
nonconforming retail building into a semi -enclosed fast food restaurant with fewer parking
spaces and a smaller setback adjacent to an interior property line than required by the
Zoning Code in conjunction with an existing 131 -roam hotel located at 1530 S. Harbor
Boulevard (Carousel Inn & Suites).
On June 14, 2004, the Planning Commission adopted Resolution No. PC2004-64
and on July 28, 2004 the Planning Commission adopted Resolution No. PC2004-059,
pertaining to Conditional Use Permit No. 2004-04848 and Variance No. 2014-04974,
permitting office uses with fewer parking spaces than required by the Zoning Code on a
property located at 1585 S. Manchester Avenue.
On June 26, 2006, under the Existing ARSP Plan and after finding that the
previously -certified MEIR No. 313 was the appropriate environmental documentation for
the request, the Planning Commission adopted Resolution PC2006-59 approving
Conditional Use Permit No. 2006-05103 for a 1,701 -space parking lot, the Toy Story Lot,
located at 1900 South Harbor Boulevard, with the permit to expire on June 26, 2011. On
August 17, 2009, under the Existing ARSP and after finding that the previously -certified
MEIR No. 313 was the appropriate environmental documentation for the request, the
Planning Commission adopted Resolution No. PC2009-073, approving an amendment to
the Toy Story Lot Conditional Use Permit (CUP No. 2006-05103A) to expand the parking
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lot for a total of up to 4,313 spaces, with the permit to expire on September 8, 2019. On
October 6, 2014, under the Existing ARSP and after approving an Addendum (dated
September 2014) to the previously certified ARSP FSEIR, the Planning Commission
adopted Resolution No. PC2014-090 approving an amendment to the Toy Story Lot
Conditional Use Permit (CUP No. 2006-05103B) to expand the existing temporary
parking lot for a total of up to 4,925 parking spaces and extending the time limit for the
conditional use permit to 2024 (the "Toy Story Lot"). On October 12, 2009, under the
Existing ARSP and after finding that a Class l Categorical Exemption was the appropriate
environmental determination for the request, the Planning Commission adopted
Conditional Use Permit No. 2009-05431 and Variance No. 2009-04797 to permit
corporate offices, a dental laboratory and training center in a 158,708 square foot legal
nonconforming building with fewer parking spaces than required by the Zoning Code on a
property located at 1515 South Manchester Avenue, by Resolution No. PC2009-100. On
December 16, 2013, under the Existing ARSP and after approving an Addendum (dated
December 2013) to the previously -certified ARSP FSEIR, the Planning Commission
adopted Resolution No. PC2013-093, approving Conditional Use Permit No. 2013-05693
and Final Site Plan No. 2013-00007 to permit a 1,363 space employee surface parking lot,
with optional theme park back -of -house uses, at 333 West Ball Road (the "Harbor Cast
Member Lot").
D. On or about October 8, 1996, City, Disney, and others entered into that
certain Infrastructure and Parking Financing Agreement dated as of October 8, 1996 (the
"Finance Agreement") for the purpose, among others, of establishing the terms pursuant to
which certain public improvements would be completed and financed (the "Public
Improvements").
E. On or about October 22, 1996, City and Walt Disney World Co
(predecessor by merger to Disney) entered into that certain Development Agreement No.
96-01 (the "DeveloRment Agreement") for the purpose of providing for the orderly
development of the DRSP Property in accordance with the DRSP and providing Disney
with reasonable assurances that such development could occur in accordance with City
land use regulations then in effect, all as more particularly set forth in and subject to the
terms and conditions in the Development Agreement.
F. Prior to the Agreement Date, the City has complied with the California
Environmental Quality Act ("CE A") with respect to its approval of the Existing DRSP,
the Existing ARSP, the Finance Agreement, the Development Agreement, and other land
use entitlements relating to The Disneyland Resort Specific Plan Area and the Anaheim
Resort Specific Plan Area, including without limitation through the actions referred to in
Recitals B and C above.
G. Pursuant to the Finance Agreement and Development Agreement, Disney
agreed to develop and operate a number of significant venues and attractions consistent
with the then -existing Disneyland Resort Specific Plan, including a second gated theme
park designed to attract and accommodate a planned annual attendance of 7 million
guests, 750 new high-quality hotel rooms integrated within or adjacent to the second
theme park, at least 200,000 square feet of new retail, dining, and entertainment uses, a
on
pedestrian plaza between the two theme parks linking harbor Boulevard and Disneyland
Drive, at least 5,800 net new parking spaces in addition to those then serving Disneyland,
the Disneyland Hotel, and the Disneyland Pacific Hotel, and completion of all mitigation
measures and conditions of approval relating to the foregoing (the "Second Gate
Project').
H. City, recognizing the significant investment Disney was making in the
Second Gate Project and the significant increase in revenues potentially available to City
and surrounding jurisdictions as a result of the Second Gate Project, determined that it was
in the best interests of City to agree to return to Disney any City "Entertainment Tax" (as
defined in the Finance Agreement) which might be levied on the Disney Properties,
I. In order to implement this determination, City agreed in Section 4.18 of the
Finance Agreement that if it were to adopt an Entertainment Tax during construction of
the Second Gate Project and until June 30, 2016 (the fifteenth anniversary of the "Opening
Date" as defined in the Finance Agreement), City would pay to Disney a sum equal to any
such Entertainment Tax paid by Disney or Affiliates of Disney to City during such time
period (as more particularly articulated in Section 4.18 of the Finance Agreement, the
"Current Entertainment Tax Rebate Period").
J. The Second Gate Project and Public Improvements have been completed as
envisioned by and in accordance with the terms of the Finance Agreement.
K. Development and operation of the Second Gate Project and Public
Improvements have generated and continue to generate substantial direct and indirect tax
revenues to the benefit of City's general fund, including increased sales tax, property tax,
and TOT revenues.
L. Subject to compliance with applicable Governmental Requirements,
Disney has the right to construct and operate substantial additional improvements on the
Disney Properties, in accordance with the Existing DRSP and Existing ARSP, as the same
may be amended from time to time after the Agreement Date.
M. Strong public demand for the venues and attractions within "The Anaheim
Resort®" (defined below), including The Disneyland Resort and the Anaheim Convention
Center has generated the need for additional parking to ensure the continued accessibility
and smooth functioning of the Anaheim Resort's venues and uses.
N. Disney currently owns and operates a 1,337 -space surface parking lot
(known as the Pumbaa parking lot) located north of Disney Way and west of South
Clementine Street/Manchester Avenue which, subject to City approval of a Final Site
Pian, is allowed under the Existing DRSP and Development Agreement for development
as structured parking (the "Pumbaa Structure"). Disney is contemplating constructing the
Pumbaa Structure and related infrastructure at its own cost and expense.
O. Disney is also contemplating significant additional investment in various
improvements which are all entitled under the Existing DRSP, the Existing ARSP, and the
7
Development Agreement (as more particularly defined herein, the "Qualified Capital
Improvements").
P. In order to provide Disney needed assurances regarding the economic
landscape surrounding the significant investments it is contemplating, and to incentivize
construction and operation of the Qualified Capital Improvements, Disney has requested,
on its own behalf and on behalf of the Affiliates of Disney, that City extend the
Entertainment Tax rebate period beyond the Current Entertainment Tax Rebate Period
achieved under the Finance Agreement, all on the terms and subject to the conditions set
forth in this Agreement.
Q. By its approval of this Agreement, the City Council of City has found and
determined that (1) the value to City of Disney's satisfaction of the conditions and
performance of the covenants in each fiscal year during which City's extended
Entertainment Tax Rebate obligations remain in effect and cumulatively, over the term of
this Agreement --in terms of economic development, generation of additional local tax
revenues that will help to fund vital public services, provision of expanded entertainment,
recreational, lodging, dining, and retail opportunities for residents of the City and the
general public, provision of high quality and adequately compensated construction jobs,
and long-term job generation and retention --will be not less than the total amount of the
Entertainment Tax Rebate in each such year; (2) performance by Disney of its covenants
pursuant to this Agreement in exchange for the Entertainment Tax Rebate to be made by
City constitutes a valid public purpose; and (3) it is in City's best interests to enter into
this Agreement in order to support Disney's future investments and provide Disney with
assurances concerning any Entertainment Tax that may be established by City in the future
and applied to Disney and Affiliates of Disney during the First Extended Entertainment
Tax Rebate Period and Second Extended Entertainment Tax Rebate Period provided for
herein.
R. The Qualified Public Improvements are all authorized by the Governmental
Requirements, including without limitation the Existing DRSP and Existing ARSP, as
applicable, and the enviromnental impacts of said projects already have been fully
evaluated and addressed in the DRSP FEIR, Addendums to the DRSP FEIR, the Mitigated
Negative Declarations, Modified Mitigation Monitoring Program No. 0067 and 004
certified, adopted, and approved with respect thereto, the ARSP MSIR, the ARSP FSEIR,
the Addendums to the ARSP FSEIR, and Mitigation Monitoring Program Nos. 085 and
85C certified, adopted, and approved with respect thereto. This Agreement does not
constitute the approval of any development or any change in the physical environment by
City, nor does this Agreement constitute a pre judgment or pre -commitment by City with
respect to any future development that may be proposed by Disney or any Affiliate of
Disney that requires approval by City after the Agreement Date. The Parties mutually
acknowledge and agree that City expressly reserves all of its discretion with respect to any
such future development to the full extent that City would retain such discretion in the
absence of this Agreement.
AGREEMENT
In consideration of the foregoing factual recitals, which are incorporated into this
Agreement as if fully set forth herein, and the mutual covenants and agreements contained
in this Agreement, the Parties hereby agree as follows:
I. DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the following terms
shall have the meanings ascribed:
"Accounting Opinion" means an opinion rendered by PricewaterhouseCoopers or
another independent certified public accountant selected by Disney which is similar in
reputation and scope of practice to what are currently referred to as the "Big Four"
accounting firms.
"Affiliate of Disney" means a person, sole proprietorship, limited liability
company, partnership, joint venture, trust, unincorporated organization, association,
corporation, institution or entity, which directly or indirectly controls, is controlled by or
is under common control with Disney. For purposes of this definition, "control" means
the possession, directly or indirectly, of the power to vote fifty percent (50%) or more of
the ownership interest of securities having ordinary voting power for the entity or
possessing the power or authority to generally direct the management and policies of the
entity.
"The Anaheim Resort®" means, collectively, the Disneyland Resort Specific Plan
Area, the Anaheim Resort Specific Plan Area (SP92-1), and the Hotel Circle Specific Plan
Area (SP 93-1).
"CEQA" means, collectively, the California Environmental Quality Act
(California Public Resources Code Section 21000 et seq.), the State CEQA Guidelines
(California Code of Regulations, Title 14, Section 15000 et seq.), and the City CEQA
Guidelines.
"City Agency" means each and every agency, department, board, commission,
authority, employee, and/or official acting under the authority of City, including without
limitation, City's Planning Commission.
"Claim" has the meaning ascribed to that term in Section V.L of this Agreement.
"Com letion" means that construction of a Qualified Capital Improvement has
been accomplished in compliance with all applicable Governmental Requirements
(including issuance of a certificate of occupancy if one is required), with all necessary
structures and systems sufficiently completed such that Disney (or the designated
operator) can conduct normal operations thereof in accordance with its intended use given
the nature of the particular improvement(s).
9
"Conditions to City's Payment Obligation With Respect to First Extended
Entertainment Tax Rebate Period" has the meaning ascribed to that term in Section II.A of
this Agreement.
"Conditions to City's Payment Obligation With Respect to Second Extended
Entertainment Tax Rebate Period" has the meaning ascribed to that term in Section II.B of
this Agreement.
"Costs" mean all of the following costs paid by Disney or an Affiliate of Disney
with respect to work performed after the Agreement Date to design, engineer, obtain
permits for, construct, and install a Qualified Capital Improvement as each such Cost is
verified by an Accounting Opinion or Opinions to be obtained by Disney and submitted to
City : (1) all architectural and/or engineering fees and expenses incurred by Disney (or
Affiliate of Disney) in preparing the plans for any Qualified Capital Improvement,
including the fees and expenses of all design, construction, relocation, and project
management consultants; (2) the cost of constructing and installing any Qualified Capital
Improvement, including, without limitation, the costs of a bid process, testing and
inspection costs, and contractors' fees and general conditions; (3) any construction and/or
project management fee of up to a cumulative total not to exceed ten percent (10%) of the
costs described in clause (2) above paid to a third party to oversee and manage
construction of the work; (4) the cost of fixtures and equipment installed with respect to a
Qualified Capital Improvement that have an estimated useful life of at least five (5) years;
(5) the direct cost of all technological systems deemed necessary or advisable by Disney
to properly equip any Qualified Capital Improvement for its intended use, which may
include voice and data wiring as well as alarm, security and life safety systems; (6) sales
and use taxes and Title 24 fees paid with respect to any Qualified Capital Improvement;
(7) the payment of plan check, permit, and license fees relating to use entitlement and/or
construction of any Qualified Capital Improvement, which may include the fees paid for
water, sewer, or other utility connections or other development fees; and (8) all other costs
directly expended by Disney or an Affiliate of Disney in connection with the construction
of any Qualified Capital Improvement such as the cost of payment, performance, and
warranty bonds, insurance costs, and internal labor costs (for the construction period
only). As used herein, the term "Costs" shall exclude: (1) any costs incurred with respect
to work performed prior to the Agreement Date; (2) any internal administrative or
overhead charge of Disney and any Affiliate of Disney, by whatever name called other
than those direct administrative or overhead charges of Waft Disney Imagineering, a
division of Disney, for work performed with respect to the Qualified Capital
Improvements; (3) costs incurred for the purchase or lease of personal property to be used
in or with respect to any Qualified Capital Improvement after Completion; and (4) costs
incurred for the maintenance, repair, and replacement of any Qualified Capital
Improvement after Completion.
"Current Entertainment Tax Rebate Period" has the meaning ascribed to that term
in Recital I above.
"Default" has the meaning ascribed to that term in Section IV.A of this Agreement.
to
"Disneyland Resort Specific Plan Area" is the area subject to the Existing DRSP,
as the same may be amended from time to time.
"Disney Properties" has the meaning ascribed to that term in Recital A and Exhibit
"A" to this Agreement.
"Entertainment Tax" means (1) any tax, fee, charge, or assessment imposed by
City or any City Agency based on the sale of admissions tickets and other admissions
media to a Theme Park; (2) any tax, fee, charge, or assessment imposed by City or any
City Agency which is based upon attendance at a Theme Park or the gross revenues of a
Theme Park; (3) any license fees imposed by City or any City Agency relating to Theme
Park operations; (4) any other tax, fee, charge, or assessment imposed by City or any City
Agency attributable to operating a Theme Park (as opposed to any other type of business);
(5) any tax, fee, charge, or assessment imposed by City or any City Agency on the parking
of cars or the right to park cars, whether of general Citywide applicability or with respect
to Theme Parks, to the extent that such tax, fee, charge, or assessment impacts parking for
Theme Parks; and (6) any other tax, fee, charge, or assessment which achieves the same
result. The term "Entertainment Tax" shall not include any of the following: (1)
development impact fees or building fees; (2) permitting and inspection fees; (3)
assessments levied on the Disney Properties by the Anaheim Resort Maintenance District
or the Anaheim Tourism Improvement District of 2010; (4) City's business license fee; (5)
any other tax, fee, charge, or assessment imposed by City or any City Agency prior to the
Agreement Date; (6) fees and charges for utility connections or service; or (7) any tax, fee,
charge, or assessment adopted or imposed by City or any City Agency after the
Agreement Date which is of City-wide applicability to Theme Parks and other businesses
generally, provided that such tax, fee, charge, or assessment does not violate clause (6) of
the preceding sentence.
"Entertainment Tax Rebate" means the amounts paid to Disney pursuant to Article
III of this Agreement.
"First Extended Entertainment Tax Rebate Period" means the thirty (30) year
period commencing July 1, 2016 (the first day after expiration of the Current
Entertainment Tax Rebate Period), and ending June 30, 2046.
"Fiscal Year" means City's fiscal year, which starts on July 1' of each year and
ends on June 30`x' of the following year.
"Governmental Requirements" means City's General Plan, the Existing DRSP, the
Existing ARSP, Chapters 18.114 and 18.116 of City's Municipal Code, those provisions
set forth in Title 18 of City's Municipal Code ("Zoning") that are applicable to the Disney
Properties, the Uniform Building, Plumbing, Mechanical, Electrical, and other similar
codes in effect from time to time (including any generally applicable City exceptions or
amendments thereto), the conditions of approval for all of the land use entitlements issued
with respect to the Disney Properties, and all CEQA approvals issued by City with respect
to the Disney Properties that are referred to in Recitals B and C of this Agreement, as the
same currently exist and as they may hereafter be amended from time to time, consistent
11
with and subject to any vested rights that Disney and any Affiliate of Disney may have
pursuant to the Development Agreement or otherwise applicable law.
"Incremental Investment Threshold" means the sum of Five Hundred Million
Dollars ($500,000,000) of Costs incurred by Disney or an Affiliate of Disney above the
amount of the Initial Investment Threshold to construct and install Qualified Capital
Improvements which are separate from and in addition to or are otherwise extensions or
additions to the Qualified Capital Improvements identified in the notice Disney is required
to provide to City under Section II.A.1 as a condition to qualifying for the First Extended
Entertainment Tax Rebate Period, and with said incremental $500,000,000 investment
threshold increased from and after the Initial Investment Threshold Date based upon the
percentage change in the Index from the Initial Investment Threshold Date through the
date the Incremental Investment Threshold is achieved or satisfied. Said Incremental
Investment Threshold may be satisfied with Costs incurred by Disney at any time between
the Agreement Date and December 31, 2045.
"Index" means the Consumer Price Index (All Items) for the Los Angeles -
Riverside -Orange County area published from time to time by the United States
Department of Labor, Bureau of Labor Statistics or, if such index is discontinued or not
available, such other similar index that may be mutually agreed upon by the Parties.
"Initial Investment Threshold" means the sum of One Billion Dollars
($1,000,000,000) of Costs incurred by Disney or an Affiliate of Disney not earlier than the
Agreement Date and not later than the Initial Investment Threshold Date to construct and
install one or more of the Qualified Capital Improvements identified in the notice Disney
is required to provide to City under Section II.A.1 as a condition to qualifying for the First
Extended Entertainment Tax Rebate Period.
"Initial Investment Threshold Date" means December 31, 2024.
"Qualified Capital Improvements" means capital improvement projects
constructed or installed by Disney or Affiliates of Disney from time to time on or in
conjunction with development of any of the Disney Properties in accordance with
applicable Governmental Requirements which improvement projects (1) create,
supplement, or enhance needed infrastructure in The Anaheim Resort® or (2) are designed
and intended to (a) result in increases in length of stay in hotels in The Anaheim Resort
and/or (b) increase attendance at The Disneyland Resort® or the Anaheim Convention
Center.
"Replacement Qualified Capital Improvements" means Qualified Capital
Improvements that are constructed or installed by Disney or Affiliates of Disney to replace
one or more of the initial Qualified Capital Improvements used to justify the
Entertainment Tax Rebates provided by City hereunder, as referred to in Sections II.A.S
and II.B.6 of this Agreement.
"Second Extended Entertainment Tax Rebate Period" shall mean the fifteen (15)
year period commencing July 1, 2046, and ending June 30, 2061.
12
"Theme Park" has the meaning set forth in Section 18.114.060.010.0101 of City's
Municipal Code, including without limitation Disneyland and Disney's California
Adventure.
II. DISNEY'S COVENANTS AND CONDITIONS TO CITY'S OBLIGATION
TO REBATE ENTERTAINMENT TAXES
A. First Extended Entertainment Tax Rebate Period. City's obligation to
provide the Entertainment Tax Rebate to Disney in each Fiscal Year during the First
Extended Entertainment Tax Rebate Period shall be conditional and contingent upon
Disney's performance of each of the following covenants and satisfaction of each of the
following conditions (collectively, the "Conditions to Cites Payment Obligation With
Respect to First Extended Entertainment Tax Rebate Period"):
1. Disney Notice re Election to Proceed With Initial Qualified Capital
Improvements and Incur Costs Equal to or Greater Than Initial Investment Threshold.
Nothing in this Agreement is intended or shall be interpreted to obligate Disney to proceed
with any of the Qualified Capital Improvements or to incur costs therefor in any amount.
If Disney does elect in its sole and absolute discretion to proceed with any Qualified
Capital Improvement, and if it anticipates it will incur Costs with respect to such
improvements equal to or in excess of the Initial Investment Threshold, then, on or before
December 31, 2017, Disney shall (a) deliver a written notice of such election to City,
which notice shall identify in general terms the Qualified Capital Improvements Disney
intends to develop, which notice shall include a statement that Disney anticipates the
Costs incurred with respect thereto will equal or exceed the Initial Investment Threshold,
(b) obtain any governmental permits (including, as applicable, demolition, grading, and
building permits) required to commence construction of a material portion or material
element of any Qualified Capital Improvement, and (c) actually commence such
construction (which commencement of construction may include the commencement of
demolition activities needed to accommodate the Qualified Capital Improvement or
material portion or material element thereof). If Disney fails to satisfy the conditions set
forth in this Section II.A.1 on or prior to December 31, 2017, this Agreement shall
automatically terminate unless it is extended by a written amendment approved and.
executed by both Parties, with each Party reserving the right to approve or disapprove any
such extension/amendment in its sole and absolute discretion. In the event of such
termination, (a) Disney shall refund any Entertainment Taxes rebated by City to Disney
for and with respect to the First Extended Tax Rebate Period, plus interest on said sums at
the rate of five percent (S%) per annum from the date that City previously rebated such
sums to Disney and the date Disney returns such Entertainment Taxes and accrued interest
thereon to City, (b) the Parties' obligations set forth in Section V.L, V.M, and V.N of this
Agreement shall survive, and (c) otherwise neither Party shall have any further rights or
obligations hereunder.
2. Diligent Construction and Timely Completion. If, on or before
December 31, 2017, Disney satisfies the conditions set forth in Section II.A.1, it shall
proceed with commercially reasonable diligence to pursue construction and installation of
the relevant Qualified Capital Improvements to Completion no later than December 31,
13
2024 (the "Initial Investment Threshold Date") and expend Costs related thereto in an
amount that equals or exceeds the Initial Investment Threshold.
3. Labor Provisions. To the extent any contract is offered to be
competitively bid in connection with the creation of any Qualified Capital Improvement,
Disney shall use reasonable efforts to invite local and regional Southern California
businesses to participate in the bid process. Additionally, if and to the extent Disney, in its
discretion, chooses to utilize union labor in connection with the creation of any Qualified
Capital Improvement, Disney shall require the union to ensure that all journeymen and
apprentices comply with all State labor laws and that the workforce on-site meets a
specific ratio of apprenticeship program graduates and of OSHA -certified workers, along
with the presence of at least one site safety manager with OSHA 30 -hour certification.
The Parties acknowledge that Disney historically has utilized a significant number of local
and regional firms as well as unionized firms when undertaking development projects at
The Disneyland Resort, however there can be no assurance that any particular firm,
number of firms, or type of firm will be utilized for any particular Qualified Capital
Improvement project.
4. Verification That Cost of Construction Equals or Exceeds Initial
Investment Threshold. No later than six (6) months after the Initial Investment Threshold
Date, Disney shall submit to the City Manager (with copies to the other City officials
entitled to receive copies of notices pursuant to Section V.A of this Agreement) an
Accounting Opinion verifying that Disney (including Affiliates of Disney) has in fact
incurred Costs with respect to Qualified Capital Improvements equal to or greater than the
Initial Investment Threshold. The City Manager or his/her designee shall have the
authority on behalf of City to review and approve the Accounting Opinion. The City
Manager (or designee) shall have the right to challenge whether certain amounts are
properly qualified as "Costs" pursuant to this Agreement and/or reasonably require
additional information related to the Accounting Opinion within thirty (30) days from the
date Disney provides the Accounting Opinion to City. Approval shall not be unreasonably
conditioned or denied. Any disapproval shall be in writing and shall state the reasons
therefor and any request for follow up information. In the event of a partial approval, the
City Manager's (or designee's) writing shall identify the item(s) and amount(s) approved
and the item(s) and amount(s) disapproved. After any disapproval, Disney shall have the
right to submit additional information in order to obtain an approval, in which case the
City Manager's (or designee's) review and approval/disapproval shall be subject to the
same procedures and deadlines as set forth above for the initial submittal. Disney shall be
deemed to have satisfied its obligations and the condition set forth in this Section II.A.4
when the City Manager (or designee) has approved Costs equal to or in excess of the
Initial Investment Threshold.
5. Continuous Operation. Disney shall continuously operate the
improvements comprising each element of any Qualified Capital Improvement that
reaches Completion or cause such improvements to be continuously operated during
normal business hours (subject to temporary interruptions for casualty losses, repairs, and
the like) during the entire First Extended Entertainment Tax Rebate Period; provided,
however, that (1) this Section II.A.5 is only a condition to Disney's right to receive an
14
Entertainment Tax Rebate, not an independent covenant to operate, and nothing in this
Agreement shall obligate Disney to continue to operate a Qualified Capital Improvement
if Disney determines in its sole and absolute discretion that such continuous operation
does not serve Disney's business interests; and (2) if Disney permanently takes out of
service a Qualified Capital Improvement used to satisfy the Initial Investment Threshold
prior to the end of the First Extended Entertainment Tax Rebate Period Disney still shall
be deemed to have satisfied the continuous operation condition set forth in this Section
II.A.5 if either (a) the other Qualified Capital Improvements that Disney continues to
operate satisfy the Initial Investment Threshold or (b) no later than the date Disney takes a
Qualified Capital Improvement out of service Disney delivers written notice to City of
Disney's intention to replace said Qualified Capital Improvement with one or more other
Qualified Capital Improvements (herein, individually, a "Replacement Qualified Capital
Improvement," and, collectively, the "Replacement Qualified Capital Improvements')
which will result in Disney (or an Affiliate of Disney) incurring Costs equal to or greater
than the Costs incurred with respect to the Qualified Capital Improvement that is taken out
of service (with the determination as to said minimum Costs incurred with respect to each
Replacement Qualified Capital Improvement adjusted from the Initial Investment
Threshold Date to the Completion Date of such improvement in accordance with the
Index), (c) Disney causes the Replacement Qualified Capital Improvements) to be
pursued to Completion within three (3) years from the date that the initial Qualified
Capital Improvement is taken out of service, and (d) within six (6) months after
Completion of the Replacement Qualified Capital Improvements) Disney delivers to the
City Manager an Accounting Opinion verifying that Disney's Costs incurred with respect
to the Replacement Qualified Capital Improvement(s) equals or exceeds the minimum
Costs referred to in clause (b) above, which Accounting Opinion is subject to the same
procedures and deadlines for City approval as set forth in Section II.A.4 for Disney's
initial submittal. If Disney fails to timely satisfy the conditions and requirements set forth
in this Section II.A.5, this Agreement shall automatically terminate unless it is extended
by a written amendment approved and executed by both Parties, with each Party reserving
the right to approve or disapprove any such extension/amendment in its sole and absolute
discretion. In the event of such termination, (a) Disney shall refund any Entertainment
Taxes rebated by City to Disney for the period commencing with the date that the initial
Qualified Capital Improvement is taken out of service, plus interest on said sums at the
rate of five percent (5%) per annum from the date that City previously rebated such sums
to Disney and the date Disney returns such Entertainment Taxes and accrued interest
thereon to City, (b) the Parties' obligations set forth in Section V.L and V.M of this
Agreement shall survive, and (c) otherwise neither Party shall have any further rights or
obligations hereunder.
6. Maintenance and Repair of Qualified Capital Improvements.
During the entire First Extended Entertainment Tax Rebate Period, Disney, at its sole cost
and expense, shall keep and maintain the improvements comprising any Qualified Capital
Improvements (including, if applicable, any Replacement Qualified Capital
Improvements) the Costs of which were applied to satisfy the Initial Investment Threshold
or shall cause such improvements to be kept and maintained in accordance with the
standards applied to other improvements of like kind and nature on the Disney Properties.
During such period, Disney shall not abandon or permit to be abandoned any portion of
15
the premises on which said Qualified Capital Improvements (and, if applicable, any
Replacement Qualified Capital Improvements) are situated, leave said premises or permit
said premises to be left unguarded or unprotected, or otherwise act or fail to act in such a
way as to unreasonably increase the risk of any damage to such premises.
7. Compliance with Laws. During the entire First Extended
Entertainment Tax Rebate Period, Disney shall construct and install the Qualified Capital
Improvements relied upon by Disney to qualify for the First Extended Entertainment Tax
Rebate Period and Disney shall operate and maintain the premises on which such
improvements (including, if applicable, any Replacement Qualified Capital
Improvements) are situated or cause said premises to be operated and maintained in
conformity with all Governmental Requirements and all other valid and applicable
material federal, state, and local laws, ordinances, and regulations, provided that Disney
does not waive its right to challenge the validity or applicability thereof to Disney or said
premises.
8. Non -Discrimination. In the development and operation of the
Qualified Capital Improvements (including, if applicable, any Replacement Qualified
Capital Improvements) the Costs of which were applied to satisfy the Initial Investment
Threshold and during the entire First Extended Entertainment Tax Rebate Period Disney
shall comply in all material respects and shall contractually require (and enforce said
requirements) all lessees and operators of said improvements to comply in all material
respects with all applicable laws that prohibit discrimination against any person or class of
persons by reason of gender, marital status, race, color, creed, mental or physical
disability, religion, age, ancestry, national origin, or other legally protected classes.
9. No Default. Disney shall not have committed a material Default of
any of its obligations set forth in this Agreement or, if any such Default shall have
occurred, Disney shall have timely cured or corrected the same.
B. Second Extended Entertainment Tax Rebate Period. Except as expressly
set forth below, City's obligation to rebate Entertainment Taxes to Disney in each fiscal
year during the Second Extended Entertainment Tax Rebate Period shall be conditional
and contingent upon Disney's performance of each of the following covenants and
satisfaction of each of the following conditions (collectively, the "Conditions to Cites
Payment Obligation With Respect to Second Extended Entertainment Tax Rebate
Period"):
1. Disney's Satisfaction of Conditions to City's Payment Obligation
With Respect to First Extended Entertainment Tax Rebate Period. Disney shall have
satisfied all of the Conditions to City's Payment Obligation With Respect to First
Extended Entertainment Tax Rebate Period set forth in Section ILA of this Agreement for
each fiscal year in the First Extended Entertainment Tax Rebate Period (i.e. for the period
of July 1, 2016, through June 30, 2046).
2. Disney Notice re Election to Proceed With Additional Qualified
Capital Improvements and Incur Costs Equal to or Greater Than Incremental Investment
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Threshold. Nothing in this Agreement is intended or shall be interpreted to obligate
Disney to proceed with any Qualified Capital Improvements in order to qualify for the
Second Extended Entertainment Tax Rebate Period or to incur costs therefor in any
amount. If however, (a) Disney does elect in its sole and absolute discretion to proceed
with such additional Qualified Capital Improvements, (b) it anticipates it will incur Costs
therefor in an amount that equals or exceeds the Incremental Investment Threshold, and
(c) it wishes to extend the Entertainment Tax Rebate for the Second Extended
Entertainment Tax Rebate Period, then on or before'December 31, 2040, Disney shall (x)
deliver a written notice of such election to City, which notice shall identify in general
terms the Qualified Capital Improvements Disney intends to develop, which identified
improvements shall be separate from and in addition to or additions to or extensions of the
Qualified Capital Improvements identified in the notice Disney is required to provide to
City under Section II.A.I as a condition to qualifying for the First Extended Entertainment
Tax Rebate Period, and which notice shall include a statement that Disney anticipates the
Costs incurred with respect thereto will equal or exceed the Incremental Investment
Threshold, (y) obtain any governmental permits (including, as applicable, demolition,
grading, and building permits) required to commence construction of such Qualified
Capital Improvements or a material portion or material element thereof and (z) actually
commence such construction (which commencement of construction may include the
commencement of demolition activities needed to accommodate such Qualified Capital
Improvements or a material portion or material element thereof . If Disney fails to satisfy
the conditions set forth in this Section II.B.2 prior to December 31, 2040, this Agreement
shall automatically terminate at the end of the First Extended Entertainment Tax Rebate
Period (if it has not previously terminated in accordance with its terms or by mutual
agreement of the Parties) unless it is extended by a written amendment approved and
executed by both Parties, with each Party reserving the right to approve or disapprove any
such extension/amendment in its sole and absolute discretion. In the event of such
termination, the Parties' obligations set forth in Section V.L of this Agreementshall
survive, and otherwise neither Party shall have any further rights or obligations hereunder
from and after the effective date of the termination.
3. Diligent Construction and Timely Completion. If Disney timely
satisfies the condition set forth in Section II.B.2, it shall proceed with commercially
reasonable diligence to pursue construction of the relevant Qualified Capital
Improvements to Completion no later than December 31, 2045, and expend Costs related
thereto in an amount that equals or exceeds the Incremental Investment Threshold,
4. Labor Provisions. To the extent any contract is offered to be
competitively bid in connection with the creation of any Qualified Capital Improvement,
Disney shall use reasonable efforts to invite local and regional Southern California
businesses to participate in the bid process. Additionally, if and to the extent Disney, in its
discretion, chooses to utilize union labor in connection with the creation of any Qualified
Capital Improvement, Disney shall require the union to ensure that all journeymen and
apprentices comply with all State labor laws and that the workforce on-site meets a
specific ratio of apprenticeship program graduates and of OSHA -certified workers, along
with the presence of at least one site safety manager with OSHA 30 -hour certification.
The Parties acknowledge that Disney historically has utilized a significant number of local
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and regional firms as well as unionized firms when undertaking development projects at
The Disneyland Resort, however there can be no assurance that any particular firm,
number of firms, or type of firm will be utilized for any particular Qualified Capital
Improvement project.
5. Verification That Cost of Construction Equals or Exceeds
Incremental Investment Threshold. Within six (6) months after the Completion of the
Qualified Capital Improvements relied upon by Disney to qualify for an Entertainment
Tax Rebate during the Second Extended Entertainment Tax Rebate Period, Disney shall
submit to the City Manager (with copies to the other City officials entitled to receive
copies of notices pursuant to Section V.A of this Agreement) an Accounting Opinion
verifying that Disney (including Affiliates of Disney) has in fact incurred Costs with
respect to said Qualified Capital Improvements equal to or greater than the Incremental
Investment Threshold. The City Manager or his/her designee shall have the authority on
behalf of City to review and approve the Accounting Opinion. The City Manager (or
designee) shall have the right to challenge whether certain amounts are properly qualified
as "Costs" pursuant to this Agreement and/or reasonably require additional information
related to the Accounting Opinion within thirty (30) days from the date Disney provides
the Accounting Opinion to City. Approval shall not be unreasonably conditioned or
denied. Any disapproval shall be in writing and shall state the reasons therefor and any
request for follow up information. In the event of a partial approval, the City Manager's
(or designee's) writing shall identify the item(s) and amount(s) approved and the itern(s)
and amount(s) disapproved. After any disapproval, Disney shall have the right to submit
additional information in order to obtain an approval, in which case the City Manager's
(or designee's) review and approval/disapproval shall be subject to the same procedures
and deadlines as set forth above for the initial submittal. Disney shall be deemed to have
satisfied its obligations and the condition set forth in this Section II.B.5 when the City
Manager (or designee) has approved Costs equal to or in excess of the Incremental
Investment Threshold.
6. Continuous Operation. Disney shall continuously operate the
improvements comprising each element of any Qualified Capital Improvement that
reaches Completion and that is relied upon by Disney to qualify for an Entertainment Tax
Rebate during the Second Extended Entertainment Tax Rebate Period or Disney shall
cause such improvements to be continuously operated during normal business hours
(subject to temporary interruptions for casualty losses, repairs, and the like) during the
entire Second Extended Entertainment Tax Rebate Period; provided, however, that (1) this
Section II.B.6 is only a condition to Disney's right to receive an Entertainment Tax Rebate
during the Second Entertainment Tax Rebate Period, not an independent covenant to
operate, and nothing in this Agreement shall obligate Disney to continue to operate a
Qualified Capital Improvement if Disney determines in its sole and absolute discretion
that such continuous operation does not serve Disney's business interests; and (2) if
Disney permanently takes out of service a Qualified Capital Improvement used to satisfy
the Incremental Investment Threshold prior to the end of the Second Extended
Entertainment Tax Rebate Period Disney still shall be deemed to have satisfied the
continuous operation condition set forth in this Section II.B.6 if either (a) the other
Qualified Capital Improvements that Disney continues to operate satisfy the Incremental
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Investment Threshold or (b) no later than the date Disney takes a Qualified Capital
Improvement out of service Disney delivers written notice to City of Disney's intention to
replace said Qualified Capital Improvement with one or more other Replacement
Qualified Capital Improvements which will result in Disney (or an Affiliate of Disney)
incurring Costs equal to or greater than the Costs incurred with respect to the Qualified
Capital Improvement that is taken out of service (with the determination as to said
minimum Costs incurred with respect to each Replacement Qualified Capital
Improvement adjusted from the Initial Investment Threshold Date to the Completion Date
of such improvement in accordance with the Index), (c) Disney causes the Replacement
Qualified Capital Improvement(s) to be pursued to Completion within three (3) years from
the date that the initial Qualified Capital improvement is taken out of service, and (d)
within six (6) months after Completion of the Replacement Qualified Capital
Improvement(s) Disney delivers to the City Manager an Accounting Opinion verifying
that Disney's Costs incurred with respect to the Replacement Qualified Capital
Improvement(s) equals or exceeds the minimum Costs referred to in clause (b) above,
which Accounting Opinion is subject to the same procedures and deadlines for City
approval as set forth in Section II.B.5 for Disney's initial submittal. If Disney fails to
timely satisfy the conditions and requirements set forth in this Section II.B.6, this
Agreement shall automatically terminate unless it is extended by a written amendment
approved and executed by both Parties, with each Party reserving the right to approve or
disapprove any such extension/amendment in its sole and absolute discretion. In the event
of such termination, (a) Disney shall refund any Entertainment Taxes rebated by City to
Disney for the period commencing with the date that the initial Qualified Capital
Improvement is taken out of service, plus interest on said sums at the rate of five percent
(5%) per annum from the date that City previously rebated such sums to Disney and the
date Disney returns such Entertainment Taxes and accrued interest thereon to City, (b) the
Parties' obligations set forth in Section V.L of this Agreement shall survive, and (c)
otherwise neither Party shall have any further rights or obligations hereunder.
7. Maintenance and Repair of Additional Qualified Capital
Improvements. During the entire Second Extended Entertainment Tax Rebate Period,
Disney shall construct and install the Qualified Capital Improvements relied upon by
Disney to qualify for the Second Extended Entertainment Tax Rebate Period and Disney
shall operate and maintain the premises on which such improvements (including, if
applicable, any Replacement Qualified Capital Improvements) are situated or cause said
premises to be operated and maintained in accordance with the standards applied to other
improvements of like kind and nature on the Disney Properties. During such period,
Disney shall not abandon or permit to be abandoned any portion of the premises on which
said Qualified Capital Improvements (and, if applicable, any Replacement Qualified
Capital Improvements) are situated, leave said premises or permit said premises to be left
unguarded or unprotected, or otherwise act or fail to act in such a way as to unreasonably
increase the risk of any damage to such premises.
7. Compliance with Laws. During the entire Second Extended
Entertainment Tax Rebate Period, Disney shall operate the premises on which any
Qualified Capital Improvement (including, if applicable, any Replacement Qualified
Capital Improvements) is situated and that is relied upon by Disney to qualify for an
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Entertainment Tax Rebate during the Second Extended Entertainment Tax Rebate Period
or Disney shall cause said premises to be operated in conformity with all Governmental
Requirements and all other valid and applicable material federal, state, and local laws,
ordinances, and regulations, provided that Disney does not waive its right to challenge the
validity or applicability thereof to Disney or said premises.
8. Non -Discrimination. In the development and operation of the
Qualified Capital Improvements (including, if applicable, any Replacement Qualified
Capital Improvements) relied upon by Disney to qualify for an Entertainment Tax Rebate
during the Second Extended Entertainment Tax Rebate Period Disney shall comply in all
material respects and shall contractually require (and enforce said requirements) all lessees
and operators of said improvements to comply in all material respects with all applicable
laws that prohibit discrimination against any person or class of persons by reason of
gender, marital status, race, color, creed, mental or physical disability, religion, age,
ancestry, national origin, or other legally protected classes.
9. No Default. Disney shall not have committed a material Default of
any of its obligations set forth in this Agreement or, if any such Default shall have
occurred, Disney shall have timely cured or corrected the same.
I1I. ENTERTAINMENT TAX REBATE
A. City Adoption of Entertainment Tax. This Agreement does not prohibit or
prevent City from adopting by way of ordinance, regulation, resolution, initiative, or other
means any tax, fee, charge, or assessment or otherwise exercising its taxing powers in
whatever fashion City deems appropriate in its sole and absolute discretion, subject to
applicable law. Nevertheless, City agrees that, assuming Disney satisfies the conditions
and complies with the covenants set forth in Article II of this Agreement, as applicable, it
would be , inequitable for City to adversely impact the financial viability of the proposed
Qualified Capital Improvements during the First Extended Entertainment Tax Rebate
Period and the Second Extended Entertainment Tax Rebate Period by imposing an
Entertainment Tax without reimbursing to Disney an amount equal to the Entertainment
Tax actually paid by Disney and any Affiliate of Disney during such periods.
Consequently, in the event City adopts by way or ordinance, regulation, resolution,
initiative, or other means an Entertainment Tax, then City shall rebate to Disney an
amount equal to the Entertainment Tax paid by Disney or any Affiliate of Disney in
accordance with, and subject to the terms and conditions set forth in, this Section. III.
Notwithstanding that the amount of the Entertainment Tax Rebate payable
hereunder by City will be calculated based on the amount of Entertainment Taxes paid by
both Disney and Affiliates of Disney, City's Entertainment Tax Rebate obligation
hereunder is intended solely for the benefit of and is payable solely to Disney.
B. Entertainment Tax Rebate During First Extended Entertainment Tax
Rebate Period. If Disney satisfies all of the conditions and performs all of its covenants
set forth in Section II.A of this Agreement, City shall rebate to Disney an amount equal to
all of the Entertainment Taxes paid by Disney or any Affiliate of Disney during or with
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respect to each Fiscal Year during the entire First Extended Entertainment Tax Rebate
Period. Disney shall periodically, no more frequently than quarterly, invoice City with
respect to any Entertainment Tax Rebate to which Disney is entitled hereunder. Each such
invoice shall certify that Disney is in compliance with the provisions of Section ILA of
this Agreement and shall provide satisfactory evidence (in the form of cancelled checks or
otherwise) of Disney's (or its Affiliates') payment of the Entertainment Taxes subject to
rebate. Provided Disney is entitled to an Entertainment Tax Rebate, City shall pay
invoices within thirty (30) days after receipt. This Section II1.13 is not intended to limit or
restrict Disney's right to an advance of Entertainment Tax Rebates as set forth in Section
III.C.
C. Advance of Entertainment Tax Rebate During First Extended
Entertainment Tax Rebate Period; Return of Entertainment Taxes. Prior to Disney's
Completion of the Qualified Capital Improvements relied upon by Disney to qualify for
Entertainment Tax Rebates during the First Extended Entertainment Tax Rebate Period
and provided Disney is not in Default hereunder, City shall advance payments of the
Entertainment Tax Rebate to Disney in accordance with the same timelines and
procedures set forth in Section III.B. If, however, Disney does not satisfy the conditions
set forth in Section II.A.1 on or before December 31, 2017, or if Disney does not proceed
to Completion of the relevant Qualified Capital Improvements by the Initial Investment
Threshold Date, or if Disney fails to perform the covenants and satisfy the conditions set
forth in Section II.A.3 and II.A.4, then in any of those events the advanced Entertainment
Tax Rebate provided for herein shall be cancelled and rescinded, no additional
Entertainment Tax Rebate shall be provided, and Disney shall, within thirty (30) days after
receipt of written demand from City, return and pay to City any Entertainment Tax Rebate
amounts so advanced by City, plus interest on said sums at the rate of five percent (5%)
per annum from the date City rebated such sums to Disney and the date Disney returns
such Entertainment Taxes and accrued interest thereon to City.
D. Entertainment Tax Rebate During Second Extended Entertainment Tax
Rebate Period. If Disney satisfies all of the conditions and performs all of its covenants
set forth in Section II.B of this Agreement, City shall rebate to Disney an amount equal to
all of the Entertainment Taxes paid by Disney or any Affiliate of Disney during or with
respect to each Fiscal Year during the entire Second Extended Entertainment Tax Rebate
Period. Disney shall periodically, no more frequently than quarterly, invoice City with
respect to any Entertainment Tax Rebate to which Disney is entitled hereunder. Each such
invoice shall certify that Disney is in compliance with the provisions of Section II.B of
this Agreement and shall provide satisfactory evidence (in the form of cancelled checks or
otherwise) of Disney's (or its Affiliates') payment of the Entertainment Taxes subject to
rebate. Provided Disney is entitled to an Entertainment Tax Rebate, City shall pay
invoices within thirty (30) days after receipt.
E. Deferral of Entertainment Tax Rebate During Period That
Validity/Enforceability of Agreement Is Being Contested or Referendum Is Being
Processed; Payment On Successful Final Conclusion. In the event that (1) either (a) a
"Claim" (as that term is defined in Section V. L of this Agreement) is filed against City
seeking to attack, set aside, void, or annul the approval of this Agreement or City's
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provision of the Entertainment Tax Rebate provided for herein or (b) a referendum
petition challenging the City Council's action approving this Agreement is circulated,
signed by a minimum of ten percent (10%) of the registered voters in the City, and
presented to the City Clerk, and the City Council decides to call an election in accordance
with the California Elections Code and the City Charter and Municipal Code at which the
referendum will be presented to the City's voters to either approve or disapprove the City
Council's initial action approving this Agreement, and (2) prior to the time that the
validity and enforceability of this Agreement and City's provision of the Entertainment
Tax Rebate provided for herein has been finally determined, City adopts an Entertainment
Tax, then in such event, and during the period that the third party litigation challenge or
referendum process continues, rather than paying the Entertainment Tax Rebate to Disney,
City shall deposit an amount equal to the Entertainment Tax Rebate that would otherwise
be owed to Disney hereunder into a separate interest-bearing trust account in accordance
with City's standard procedures for the investment of short-term surplus invested funds.
Upon the successful final resolution of the Claim or referendum in favor of the validity
and enforceability of this Agreement (as more particularly addressed in Sections V.L and
V.M of this Agreement), City shall pay to Disney the amounts so deposited into said
separate account (including accrued interest) at the time that the next payment to Disney
otherwise would be due hereunder. If the Claim or referendum results in the termination
or invalidation of this Agreement or City's payment obligations hereunder, then City shall
be entitled to terminate the separate account and retain and use the funds therein
(including accrued interest) for any lawful City purpose.
F. No Pledge. City may make the payments required under this Agreement
with any source of funds available to City. Notwithstanding any other provision set forth
in this Agreement to the contrary, this Agreement does not create or constitute a pledge of
all or any portion of City's Entertainment Taxes or grant to Disney a security interest
therein (if in fact City hereafter adopts an Entertainment Tax).
IV. DEFAULTS AND REMEDIES
A. Defaults. Subject to Section V.H of this Agreement, the occurrence of
either of the following shall constitute a default hereunder (a "Default"): (1) the failure by
either Party to perform any obligation of such Party for the payment of money under this
Agreement if such failure is not cured within fifteen (15) business days after the
nonperforming Party's receipt of written notice from the other Party that such obligation
was not performed when due; or (2) the failure by either Party to perform any of its
obligations (other than obligations described in clause (1) of this Section IV.A) set forth in
this Agreement if such failure is not cured within thirty (30) business days after the
nonperforming Party's receipt of written notice from the other Party that such obligation
was not performed when due or, if such failure is of a nature that cannot reasonably be
cured within thirty (30) days, the failure by such Party to commence such cure within
thirty (30) days and thereafter diligently prosecute such cure to completion. A written
notice delivered pursuant to the preceding sentence is referred to herein as a "Default
Notice.". During the period of time a Party is timely and continuously curing a failure to
perform an obligation hereunder after receiving a Default Notice it shall not be deemed to
be in Default. In addition, if the Party to whom a Default Notice is delivered pursuant to
22
this Section IV.A disputes that it has failed to perform the obligation(s) referred to in the
other Party's Default Notice, the Party to whom the Default Notice was delivered shall
have the right to deliver a written notice to the Party delivering the Default Notice so
stating (herein, a "Default Dispute Notice"), provided that the Default Dispute Notice is
delivered in writing within fifteen (15) days after the other Party's delivery of the Default
Notice. Thereafter, the Parties shall meet and confer and attempt to resolve the dispute. If
the Parties are unable to mutually resolve the dispute within thirty (30) days after delivery
of the Default Dispute Notice, either Party shall have the right to initiate an action in
accordance with Section IVY of this Agreement seeking a declaration of the Parties'
respective rights and obligations with respect to the subject matter of the Default Dispute
Notice, provided that such action shall be filed and served within sixty (60) days after
delivery of the Default Dispute Notice and diligently prosecuted to final judgment (or
settlement). During the period that a dispute is being resolved in accordance with this
Section IV.A, including during the period of time that a declaratory relief action is
pending, and as long as the Party to whom the original Default Notice was delivered
contests the issue of its Default in good faith and continues to perforin all of its other
obligations set forth in this Agreement thgt are not in dispute, this Agreement shall not be
subject to termination based on that Party's failure or alleged failure to perform.
B. City's Remedies Upon Default b, Disney. Upon the occurrence of any
Default by Disney, City may, at its option, suspend the Entertainment Tax Rebate
otherwise due and payable to Disney hereunder for the period that Disney remains in
Default, in which event Disney shall return to City within thirty (30) days after the
effective date of such suspension of the Entertainment Tax Rebate an amount equivalent
to the amounts previously rebated by City to Disney for the period Disney remains in
Default (plus interest on said sums at the rate of five percent (5%) per annum from the
date that City previously rebated such sums to Disney and the date Disney returns such
sums and accrued interest thereon to City), If City has so suspended its Entertainment Tax
Rebate then upon Disney's cure of such Default, City shall resume its rebate obligations,
but shall have no obligation to rebate an amount equivalent to the Entertainment Taxes (or
any amount) paid or due for the period of time during which City's obligation to make
payments was so suspended. In addition, if Disney's Default continues for a period of one
(1) year after the expiration of the time for Disney to cure a Default as provided in Section
IV.A above, City may in its sole and absolute discretion terminate this Agreement by
delivery of written notice of termination to Disney, in which case Disney shall return to
City within thirty (30) days after the effective date of such termination an amount
equivalent to the amounts previously rebated by City to Disney for the period of time
during which Disney was in Default (plus interest on said sums at the rate of five percent
(5%) per annum from the date that City previously rebated such sums to Disney and the
date Disney returns such sums and accrued interest thereon to City) and City's obligation
to continue with the Entertainment Tax Rebate for any period of time after the occurrence
of the Default shall be finally terminated and discharged. In no event, however, shall City
have rights to any other remedy at law or in equity (except as provided in this Section B
and in Section F below), including the right to specifically enforce Disney's covenants set
forth in Section II of this Agreement or to recover from Disney any actual or alleged
damages attributable to loss of anticipated tax revenues resulting -from Disney's Default
hereunder.
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C. Disney's Remedies Upon Default by City-, Limitation on Remedies. Upon
the occurrence of a Default by City in failing to timely pay any amount owed to Disney as
provided in Article III of this Agreement (including after City's receipt of a Default
Notice and expiration of the time for City to cure said failure to perform,. as provided in
Section IV.A), Disney shall have the right to enforce its right to pursue all legal and
equitable remedies available to Disney under applicable law to obtain payment of only the
amounts that are so owed. In no event, however, shall Disney have any rights to any other
remedy at law or in equity (except as provided in this Section C and in Section F below),
including the right to specifically enforce City's covenants set forth in Article III of this
Agreement or to recover from. City any other damages, including without limitation
special, incidental, or consequential damages. In addition, and not by way of limitation of
the foregoing: (1) City neither undertakes nor assumes any responsibility pursuant to this
Agreement to review, inspect, supervise, approve, or inform Disney of any matter in
connection with the design, engineering, permitting, construction, operation, maintenance,
repair, or replacement of any of the Qualified Capital Improvements and Disney shall rely
entirely on its own judgment with respect to such matters; provided, that nothing herein is
intended to release City from whatever obligations it may have pursuant to applicable laws
independent of this Agreement; (2) by virtue of this Agreement, City shall not be directly
or indirectly liable or responsible for any loss or injury of any kind to any person or
property resulting from any construction on, or occupancy or use of, the Disney Properties
in general or the portions of the Disney Properties on which any Qualified Capital
Improvements, the Costs of which are allocated to satisfy either the Initial Investment
Threshold or the Incremental Investment Threshold, are situated, whether arising from: (a)
any defect in any building, grading, landscaping, or other onsite or offsite improvement
constructed by or on behalf of Disney or an Affiliate of Disney, (b) any act or omission of
Disney, any Affiliate of Disney, or any of their respective agents, employees, independent
contractors, licensees, lessees, or invitees, or (c) any accident on the Disney Properties or
any fire or other casualty or hazard thereon; and (3) by accepting or approving anything
required to be performed or given to City under this Agreement, including any certificate,
City shall not be deemed to have warranted or represented the sufficiency or legal effect of
the same, and no such acceptance or approval shall constitute a warranty or representation
by City to anyone.
D. Cumulative Remedies,• No Waiver. Except as expressly provided herein,
the non -defaulting Party's rights and remedies hereunder are cumulative and in addition to
all rights and remedies provided by law from time to time and the exercise by the non -
defaulting Party of any right or remedy shall not prejudice such Party in the exercise of
any other right or remedy. None of the provisions of this Agreement shall be considered
waived by either Party except when such waiver is delivered in writing. No waiver of any
Default shall be implied from any omission by City or Disney to take action on account of
such Default if such Default persists or is repeated. No waiver of any Default shall affect
any Default other than the Default expressly waived, and any such waiver shall be
operative only for the time and to the extent stated. No waiver of any provision of this
Agreement shall be construed as a waiver of any subsequent breach of the same provision.
A Party's consent to or approval of any act by the other Party requiring further consent or
approval shall not be deemed to waive or render unnecessary the consenting Party's
consent to or approval of any subsequent act. A Party's acceptance of the late
24
performance of any obligation shall not constitute a waiver by such Party of the right to
require prompt performance of all further obligations. A Party's acceptance of any
performance following the sending or filing of any notice of Default shall not constitute a
waiver of that Party's right to proceed with the exercise of its remedies set forth in this
Agreement for any unfulfilled obligations. A Party's acceptance of any partial
performance shall not constitute a waiver by that Party of any rights relating to the
unfulfilled portion of the applicable obligation.
E. No Partnershin or Joint Venture. Each Party acknowledges and agrees that
this Agreement shall not be deemed or construed as creating a partnership, joint venture,
or similar association between City and Disney and that the relationship between City and
Disney pursuant to this Agreement is and shall remain solely that of independent
contracting parties.
F. Legal_Actions-, Jurisdiction and Venue. Subject to the limitations on rights
and remedies expressly set forth herein, either Party may institute legal action to cure,
correct, or remedy any Default, enforce any covenant or agreement herein, enjoin any
threatened or attempted violation, enforce by specific performance the obligations and
rights of the Parties hereto or seek declaratory relief with respect to its rights, obligations
or interpretations of this Agreement or pursue other remedies under applicable law.
Notwithstanding any other provision or limitations on rights and remedies set forth in this
Agreement, either Party may institute legal action to resolve any dispute regarding
interpretation of the terms of this Agreement. Any action at law or in equity arising under
this Agreement or brought by either Party hereto for the purpose of enforcing, construing,
or detennining the validity of any provision of this Agreement shall be filed and tried in
the Superior Court of the County of Orange, State of California, and to the maximum
extent permitted by law the Parties hereto waive all provisions of law providing for the
filing, removal, or change of venue to any other court.
G. No Personal Liability of Officials, Directors, Officers, Employees, or
Agents. This Agreement is between City and Disney and no official, director, officer,
employee, or agent of either Party shall have any personal liability hereunder for a Default
by its principal of any term or condition set forth herein.
H. Litigation Expenses. Except as expressly set forth in Section V.L of this
Agreement, in the event of any litigation or arbitration proceeding arising out of or related
to this Agreement, the prevailing Party shall be entitled to recover all of its reasonable
litigation expenses in addition to whatever other relief to which it may be entitled,
including without limitation attorney's fees, expert witness fees, costs of investigation and
discovery, and other costs, whether or not the same would be recoverable under California
Code of Civil Procedure Section 1033.5 in the absence of this Agreement.
V. MISCELLANEOUS
A. Notices. All notices required or provided for under this Agreement shall be
in writing and shall be delivered in one or more of the following manners: (i) in person;
(ii) by United States Postal Service certified mail, postage prepaid; or (iii) by reputable
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overnight delivery service (such as Federal Express) that provides a receipt verifying the
fact and time of delivery, and with a copy of said notice also delivered by first class
United States mail, postage prepaid. Notices required to be given to City shall be
addressed as follows:
To City:
City Manager, City of Anaheim
City of Anaheim
200 South Anaheim Boulevard, #733
Anaheim, CA 92805
with copies to:
City Attorney, City of Anaheim
City of Anaheim
200 South Anaheim Boulevard, #356
Anaheim, CA 92805
and
City Clerk, City of Anaheim
City of Anaheim
200 South Anaheim Boulevard, #217
Anaheim. CA 92805
Notices required to be given to Disney shall be addressed as follows:
Walt Disney Parks and Resorts U.S., d/b/a. Disneyland Resort
1020 West Ball Road
Anaheim, CA 92803
Attn: President
With copies to:
Walt Disney Parks and Resorts U.S., d/b/a Disneyland Resort
1020 West Bali Road
Anaheim, CA 92803
Attn: Deputy Chief Counsel—Head of Legal
and
The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521
Attn: Asst. General Counsel—Corporate
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The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521
Attn: Asst. General Counsel—Real Estate
A Party may change its address(es) for the delivery of notices by giving notice in
writing to the other Party and thereafter notices shall be addressed and transmitted to the
new address(es).
B. Entire Agreement. Except as expressly set forth hereinbelow, this
Agreement sets forth and contains the entire understanding and agreement of the Parties
with respect to the subject matter addressed herein, and there are no oral or written
representations, understandings, ancillary covenants, undertakings, or agreements relating
to the subject matter addressed in this Agreement which are not contained or expressly
referred to herein. Notwithstanding the foregoing, nothing in this Agreement is intended
or shall be interpreted to modify, amend, or supersede the Finance Agreement, including
without limitation Section 4.18 thereof (which applies to Entertainment Taxes imposed on
or before June 30, 2016).
C. Amendments. This Agreement may only be amended by a writing
executed by both Parties. Only the City Council of City shall have the authority to
approve an amendment on behalf of City and any such approval shall occur only at a
properly agendized public meeting.
D. No Third Party Beneficiaries. This Agreement is made and entered into for
the sole protection and benefit of the Parties and their respective successors and assigns.
No other person or entity shall have any right of action based upon any provision of this
Agreement.
E. Interpretation and Governing Law. This Agreement and any dispute
arising hereunder shall be governed and interpreted in accordance with the internal laws of
the State of California, without regard to conflict of laws principles. This Agreement shall
be construed as a whole according to its fair language and common meaning to achieve
the objectives and purposes of the Parties hereto, and the rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be employed in
interpreting this Agreement, both Parties having been represented by counsel in the
negotiation and preparation hereof. All section headings and subheadings are inserted for
convenience only and shall not affect any construction or interpretation of this Agreement.
As used herein, the singular of any word includes the plural and the use of masculine,
feminine, or gender -neutral words or phrases is intended to include all three, as applicable.
F. Further Actions and Instruments. Each of the Parties shall cooperate with
and provide reasonable assistance to the other Party to the extent contemplated hereunder
in the performance of all obligations under this Agreement and the satisfaction of the
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conditions of this Agreement (at no cost to the Party whose cooperation is requested,
except to the extent expressly required herein). Upon the request of either Patty at any
time, the other Party shall promptly execute, with acknowledgment or affidavit if
reasonably required, and file or record such required instruments and writings and take
any actions as may be reasonably necessary under the terms of this Agreement to carry out
the intent and to fulfill the provisions of this Agreement or to evidence or consummate the
transactions contemplated by this Agreement.
Notwithstanding the foregoing and any other provision set forth in this Agreement
to the contrary, however, except as expressly set forth in this Agreement City reserves its
full discretion with respect to future legislative decisions and future land use and
development decisions to the extent that City would retain such discretion in the absence
of this Agreement and nothing in this Agreement is intended or shall be interpreted to
constitute a pre judgment or pre -commitment by City with respect to any such future
decisions or actions, including without limitation any future City action with regard to the
adoption (or amendment) of an Entertainment Tax and any future City action with regard
to land use or building entitlements or permits, and provided that nothing in this
Agreement is intended to limit or restrict any vested rights that Disney or any Affiliate of
Disney may have with respect to any such matter in the absence of this Agreement
pursuant to the Development Agreement or otherwise.
G. Estoppel Certificates. Either Party may at any time deliver written notice
to the other Party requesting that the other Party execute and return an estoppel certificate
(the "Estoppel Certificate") certifying that: (1) this Agreement is in full force and effect
and is a binding obligation ofthe Parties or, if the Party delivering the Estoppel Certificate
asserts that this Agreement is not in full force and effect or is not a binding obligation of
the Parties, a brief explanation of the basis therefor; (2) this Agreement has not been
amended or modified or, if so amended, an identification of the amendments or
modifications; and (3) no Default in the performance of the requesting Party's obligations
under the Agreement exists or, if the Party delivering the Estoppel Certificate asserts that
the requesting Party is in Default, a brief explanation of the nature of the alleged Default.
The Party responding to the request for an Estoppel Certificate shall be entitled to be paid
or reimbursed its reasonable costs and expenses to investigate the matters addressed in the
Estoppel Certificate as a condition to the delivery of same. Otherwise, the Party receiving
a request for an Estoppel Certificate shall provide a signed certificate to the requesting
Party within thirty (34) days after receipt of the request. The City Manager or his/her
designee shall have the authority on behalf of City, and in consultation with the City
Attorney, to sign Estoppel Certificates on behalf of City. An Estoppel Certificate may be
relied on by assignees and mortgagees.
H. Time of Essence. Time is of the essence in the performance of the
provisions of this Agreement as to which time is an element.
1. Force Majeure. Neither Party shall be deemed to be in Default where
failure or delay in performance of any of its obligations under this Agreement is caused by
floods, earthquake, supernatural causes, fires, wars, riots or similar hostilities, strikes and
other labor difficulties beyond the Party's control (including the Party's employment
force), government regulations, court actions (such as restraining orders or injunctions), or
other causes beyond the Party's control (collectively, an "Event of Force Majeure"). Not
by way of limitation of the foregoing, the Parties agree that if any third party litigation (as
referred to in Section V.L) is filed that seeps to attack, set aside, void, or annul the
approval of this Agreement, City's performance of any of its obligations hereunder, or
City's enforcement of any of its rights hereunder, or if a referendum petition challenging
the City Council's action approving this Agreement is circulated, signed by a minimum of
ten percent (10%) of the registered voters in the City, and presented to the City Clerk, as
referred to in Section V.M, either such event shall be deemed to constitute an Event of
Force Majeure. The duration of the Event of Force Majeure for any third party litigation
shall be deemed to commence upon the commencement of such third party litigation and
shall be deemed to terminate on the date that such litigation is finally resolved in favor of
the validity and legality of all such matters challenged therein, whether such finality is
achieved by a final non -appealable judgment, voluntary or involuntary dismissal (and the
passage of time required to appeal an involuntary dismissal), or binding written settlement
agreement. The duration of the Event of Force Majeure for any referendum challenge shall
be deemed to commence upon the date that the referendum petition is presented to the
City Clerk and shall be deemed to terminate on the earlier of the following dates: (1) the
date the referendum election results are certified and the referendum election fails (i.e.,
City's action(s) challenged through the referendum is (are) upheld and affirmed by City's
voters) or (2) the date on which a final non -appealable judgment is entered in a court of
competent jurisdiction determining that the challenged City actions are valid and not
subject to being overturned by the referendum. If an Event of Force Majeure shall occur,
the time for performance by either Party of any of its obligations hereunder so prevented
or delayed by said Event of Force Majeure shall be extended for the period of time that
such event continues to prevent or delay such performance, provided that the Party whose
performance is prevented or delayed shall take all steps reasonably necessary and within
its power to cause the Event of Force Majeure to cease or terminate at the earliest possible
time. Either Party learning of an Event of Force Majeure shall, as soon as reasonably
practicable, notify the other Party in writing of the occurrence of the event, which notice
shall include a statement as to the date on which the Event of Force Majeure commenced.
Upon the cessation of the Event of Force Majeure or its effects which prevented
performance hereunder, either Party with knowledge of the cessation of the event shall
notify the other Party in writing of such cessation, which notice shall include a statement
as to the date on which the Event of Force Majeure ceased. In no event shall commercial
impracticability, adverse market conditions, or the unavailability of financing on terms
believed to be commercially reasonable by a Party be deemed to constitute an Event of
Force Majeure. To the extent an Event of Force Majeure is caused by third party, litigation
or referendum pursuant to this Section and Section V.L and V.M of this Agreement, such
Event(s) of Force Majeure shall extend the First Extended Entertainment Tax Rebate
Period or the Second Extended Entertainment Tax Rebate Period, as applicable, for the
period of time that such event continues to prevent or delay such performance. No other
Event of Force Majeure shall extend the First Extended Entertainment Tax Rebate Period
or the Second Extended Entertainment Tax Rebate Period.
1. Severability. If any term, provision, covenant, or condition set forth in this
Agreement shall be determined by a final non -appealable judgment of a court of
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competent jurisdiction to be invalid, void, or unenforceable, the remainder of this
Agreement shall not be affected thereby to the extent such remaining provisions are not.
rendered impractical to perforin taking into consideration the purposes of this Agreement
and so long as neither Party is thereby deprived of the material benefits of this Agreement
to such Party.
J. Authoritv to Execute and Administer. The City Manager shall have the
authority to execute and administer this Agreement on behalf of City. Each person
executing this Agreement on behalf of Disney warrants and represents that he/she has the
authority to execute this Agreement on behalf of Disney and warrants and represents that
he/she (together with any other signatories, as applicable) has/have the authority to bind
Disney to the performance of its obligations hereunder.
K Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which when taken together, shall constitute
one and the same instrument.
L. Third Party Litigation. Disney shall indemnify, defend, and hold harmless
City and City's officials, officers, employees, and agents , including without limitation
City's attorneys, contractors, subcontractors, and consultants, (collectively, the "Cit 's
Affiliated Parties"), from and against any claim, action, or proceeding (hereinafter,
collectively, a "Claim") against City or City's Affiliated Parties seeking to attack, set
aside, void, or annul the approval of this Agreement, City's performance of any of its
obligations hereunder, City's enforcement of any of its rights hereunder, or any acts or
omissions of Disney or any Affiliate of Disney relating hereto (including without
limitation with respect to the construction, operation, and maintenance of the Qualified
Capital Improvements). Said indemnity obligation shall include payment of attorney's
fees, expert witness fees, and court costs. City shall promptly notify Disney of any such
Claim and City shall cooperate with Disney in the defense of such Claim. If City fails to
promptly notify Disney of such Claim, Disney shall not be responsible to indemnify,
defend, and hold City harmless from such Claim until Disney is so notified and if City
fails to cooperate in the defense of a Claim Disney shall not be responsible to defend,
indemnify, and hold harmless City during the period that City so fails to cooperate or for
any losses attributable thereto. City (through the City Attorney or designee) shall have the
right to approve the legal counsel selected by Disney to represent City and City's
Affiliated Parties with respect to any such Claim, with City's approval not to be
unreasonably withheld, conditioned, or delayed. In addition, Disney shall contractually
require its counsel who is selected to represent City and City's Affiliated Parties to consult
with the City Attorney of City (or designee) with respect to all factual matters involving
actual or alleged City acts or omissions and with respect to all legal claims asserted
against City in order to provide City with an adequate opportunity, in both circumstances
to confirm that City's interest and position with respect to such matters are accurately and
properly represented. Disney shall pay any attorneys' fees, expert witness fees, costs,
interest, and other amounts that may be awarded against City or Disney, or both, resulting
from the Claim. Each Party shall keep the other Party informed of the status of any
pending or threatened Claim upon the other Party's request and promptly after there is any
change in the status of the Claim. In the event Disney performs its indemnity obligations
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as set forth herein and either City or Disney recovers any attorney's fees, expert witness
fees, costs, interest, or other amounts from the party or parties asserting the Claim, Disney
shall be entitled to retain the same.
In addition to the foregoing, City shall have the right, in its sole and absolute
discretion and at its own cost and expense, to retain separate legal counsel to represent
City and City's Affiliated Parties with respect to any Claim.
To the maximum extent permitted by law, the provisions set forth in this Section
V.L are intended to be independent of any other provision set forth in this Agreement and
shall survive the voluntary or involuntary termination of this Agreement.
M. Referendum Referendum Costs, and Referendum Liti ation. Neither Party
believes that this Agreement is subject to referendum. If, however, within the period
provided for by law a referendum petition challenging the City Council's action approving
this Agreement is circulated, signed by a minimum of ten percent (10%) of the registered
voters in the City, and presented to the City Clerk, the City Council reserves the right to
(1) rescind its action approving this Agreement, in which case this Agreement shall be
deemed to have never been approved and shall not come into effect, or (2) call an election
in accordance with the California Elections Code and the City Charter and Municipal
Code at which the referendum shall be presented to the City's voters to either approve or
disapprove the City Council's initial action approving this Agreement. In the event the
City Council takes the action referred to in clause (2) of the preceding sentence, Disney
shall have the option to either (1) terminate this Agreement by delivery of written notice to
City no later than fifteen (15) days prior to the applicable deadline in the California
Elections Code for cancellation of the call for the referendum election, in which event this
Agreement shall be deemed to have never been in effect; or (2) pay all of City's actual and
reasonable out-of-pocket costs incurred to conduct the referendum election, including
without limitation costs paid to the Orange County Registrar of Voters' office with respect
thereto. In addition, any lawsuit filed by any person concerning the referendum or matters
related thereto ("Referendum Litigation") shall be deemed a Claim within the meaning of
Section V.L of this Agreement and Disney and City shall have the same rights and
obligations with respect to the Referendum Claim as set forth in said Section with respect
to other types of third party Claims.
N. Prevailing Wage Laws. City makes no representation or warranty to
Disney as to whether this Agreement in general or City's agreement to provide
Entertainment Tax Rebates to Disney in particular will trigger a legal requirement for
Disney to comply with Chapter 1 (commencing with Section l 720) of Part 7 of Division 2
of the California Labor Code and the regulations promulgated by the Director of the
California Department of Industrial Relations thereunder (California Code of Regulations,
Title 8, Section 16000 et seq.), as the same may be amended from time to time
(collectively, the "Prevailing Wage Laws'), whether prior or subsequent to the time City
actually adopts an Entertainment Tax and the Entertainment Tax Rebate provisions set
forth in this Agreement become operative. Disney represents and warrants that it has
consulted with its own legal counsel with respect to such matters, that Disney is familiar
with the Prevailing Wage Laws, and that Disney is not relying upon any advice or
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opinions of City with respect thereto. If the Prevailing Wage Laws do apply in whole or
in part to work perforined by Disney or an Affiliate of Disney as a result of this
Agreement, then Disney covenants to comply with all such applicable Prevailing Wage
Laws and Disney acknowledges that its indemnity obligations set forth in Section V.L of
this Agreement shall apply to any Claims relating thereto. In addition, nothing in this
Agreement is intended or shall be construed to require City to rely upon its charter city
exemption from the Prevailing Wage Laws and nothing in this Agreement shall prohibit or
prevent City from taking such actions that City reasonably determines it must take to
avoid being disqualified from receiving state funding or financial assistance under
California Labor Code Section 1782, as the same may be amended from time to time.
[Signatures on next page]
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Exhibit A
May Depictinp- Disney Properties
Exhibit A
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Disneyland Resort Specific Pian No. 92-1 Boundary
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Hotel Circle Specific Plan No. 93-1 Boundary
34