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Dispute Suspends Construction Of New Disney Hotel In Anaheim

ANAHEIM (CBSLA) – Construction on a new Disney-owned hotel in downtown Anaheim has been halted due to a dispute between Disney and city officials.

Disney hotel Anaheim
A rendering of a new Disney-owned hotel scheduled to be built in downtown Anaheim, Calif. October 2017. (Disney)

Construction was suspended after the two sides were unable to agree on the terms of the development, the Orange County Register reported Thursday.

The four diamond, 700-room hotel is being built on the west end of the Downtown Disney District -- an outdoor shopping mall adjacent to Disneyland -- in the area formerly occupied by the now shuttered Rainforest Cafe and ESPN Zone sports bar.

It was scheduled to open in 2021 and become the fourth Disney-owned hotel in Anaheim.

The move to halt construction was in response to a letter earlier this month from the Anaheim city attorney's office which stated that the site plan would make the hotel ineligible for tax incentive rebates.

Disney hotel Anaheim
A rendering of a new Disney-owned hotel scheduled to be built in downtown Anaheim, Calif. October 2017. (Disney)

"Given the city's position that our project does not comply with the requirements of the Agreement, you have given us no other choice other than to put construction of the hotel on indefinite hold," wrote David Ontko, chief counsel for Disneyland Resort and International Parks & Resorts.

The hotel was originally proposed to be built on the north end of the resort. However, it was later changed to Downtown Disney. The ordinance approved by the Anaheim City Council in July 2016 gave the proposed hotel a 70 percent break on the city' transient occupancy tax, but specified that the subsidy go to a luxury hotel built near the north end of the resort -- not for a luxury hotel in the shopping district.

Anaheim Mayor Tom Tait, who has opposed the subsidy for the hotel project, said Disney has the option to build the project without a subsidy from the city.

Todd Ament, president of the Anaheim Chamber of Commerce, said in a statement that "Disneyland's decision to halt development of their fourth hotel is a devastating blow to Anaheim and a direct result of the city's increasingly hostile actions towards our local economy."

The Disney Resort is Anaheim's largest employer with about 30,000 workers.

Disney and the city of Anaheim have often been at odds over tax issues. A report last year by The Los Angeles Times found that Disney had received at least $1 billion in subsidies, rebates and incentives over the past twenty years.

Disney has also been accused of grossly underpaying its theme park workers. In July, Disney and the union representing theme park workers reached a tentative contract agreement following months of protests by park employees who claimed that many of them were earning poverty level wages.

This all came after a report released in February by researchers at Occidental College and the Economic Roundtable found that Disneyland Resort employees are paid so little, one in 10 experiences homelessness and two-thirds don't have enough food to eat.

(© Copyright 2018 CBS Broadcasting Inc. All Rights Reserved. City News Service contributed to this report.)

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