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The original item was published from 6/13/2023 10:51:00 AM to 6/13/2023 10:55:21 AM.

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City News - Current

Posted on: June 13, 2023

[ARCHIVED] UPDATE: Anaheim shares hotel impact study; to consider initiative items

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ANAHEIM, Calif. (June 13, 2023) — Anaheim has shared a hotel-revenue impact report as the City Council on Tuesday is set to consider next steps for a proposed hotel and event worker initiative, including fiscal impact reports and a separate hotel worker safety ordinance.


You can find links and summaries to all items by subheads below.
  

If approved, the proposed initiative petition would require the city of Anaheim, city venue operators and private employers to pay hotel and event workers a minimum starting wage of $25 per hour, among other provisions.

 

The Council on Tuesday is expected to decide how to proceed with the proposed initiative.

 

Members have the option of adopting the initiative as proposed or putting it before voters.

 

By a 5-2 vote, the Council initially rejected adopting the initiative at its May 16 meeting.

 

Should the Council vote to place the initiative before voters, it could: 

 

  • Call for a standalone special election for Anaheim voters within 88 to 103 days at a cost of $1.5 million to $1.6 million.
     
  • Place the initiative on the Nov. 5, 2024, general election ballot at a cost of $198,891 to $233,265.


The Orange County Registrar of Voters also has provided an option of consolidating the initiative with California’s March 2024 primary at a cost of $403,688 to $485,052.

 

That may not be seen as workable, though, since placing the initiative on the primary ballot would still be considered a special election and would fall beyond the 103 days required under the California Election Code.

 

Initiative

 

The initiative was circulated for signatures of registered Anaheim voters earlier this year and was certified by the Orange County Registrar of Voters on April 26.

 

Proponents of the initiative submitted 27,215 signatures with 16,842 verified signatures of registered Anaheim voters needed for certification.

 

The initiative, supported by the Unite Here Local 11 hotel worker union, would cover hotels, the city-owned Anaheim Convention Center, Honda Center and Angel Stadium of Anaheim and other public and private event centers of 20,000 square feet or more.

 

Along with wages, the initiative would limit hotel housekeepers to cleaning no more than 4,000 square feet of space in hotels with fewer than 60 rooms and no more than 3,500 square feet in hotels with 60 rooms or more, unless they are paid double their daily pay. 

 

Also included are provisions requiring security devices and overtime pay. You can read the full initiative here.

 

Fiscal analysis

 

In considering any certified initiative, the Council has the option of commissioning an economic and fiscal impact analysis and did so on May 16.

 

On Tuesday, the Council is expected to review two reports.

 

One focuses on impacts to the Anaheim Convention Center, other city-owned facilities and what types of private venues would be impacted.

 

A second report looks at the initiative’s impact to the city’s hotel-stay tax revenue from higher costs at hotels. 

 

Convention center

 

The event center report, by Cincinnati-based Baker Tilly US LLP, finds the city-owned Anaheim Convention Center could see increased yearly wage costs and other impacts of up to $8.6 million a year.

 

The Anaheim Convention Center operates as a city enterprise that charges fees to cover operating expenses.

 

The convention center typically breaks even on operating costs and revenue from event leases, food and beverage service and parking.

 

Secondarily, the convention center is responsible for about $30 million in yearly hotel-stay tax revenue for the city as visitors come to Anaheim for conventions and events.

 

About $14 million of that goes back to the convention center to pay down expansion debt and some maintenance costs in the area around the center.

 

With higher costs and limited ability to raise prices, a potential convention center operating deficit would mean Anaheim’s general fund keeps less of the hotel-stay tax revenue generated from center events.

 

That reduced figure is estimated at $7.3 million to $8.6 million, according to the report.

 

Anaheim’s general fund, currently at $510 million, is the city’s primary source of funding for public safety, community services and other day-to-day operations.

 

Higher costs would also bring challenges keeping and attracting events in competition with other convention centers across the state, region and country, the report said.

 

City-owned Angel Stadium, Honda Center and City National Grove of Anaheim are estimated to see a 19 increase in operating costs should the initiative be approved, according to the report.

 

You can read the report here.

 

Hotel revenue 

 

A second report, by Los Angeles-based Beacon Economics LLC, focuses on the impact to the city’s hotel-stay tax revenue.

 

Anaheim collects a 15 percent tax on hotel bills. The tax makes up the city’s largest source of revenue for public safety, community services and city debt obligations. 

 

The report forecasts a short-term rise in city revenue as hotels raise prices to offset higher costs, if the initiative were to be adopted.

 

That is followed by a forecast of a long-term decline in revenue growth as some hotels could go out of business and the building of new hotels could slow, according to the report.


Anaheim’s hotel-stay revenue could grow by 0.5 percent to 2.5 percent in the first couple of years following adoption, the report said.

 

Based on a forecast of $236 million in hotel-stay revenue for the 12 months through June 2024, the increase could range from $1.2 million to $5.9 million annually.


After that, revenue is still seen growing, but that growth is seen slowing by 30 percent to 70 percent at five years and beyond from adoption.


The report cites limited long-term ability of hotels to raise rates and less to no growth in the number of hotel rooms in the city as investors opt for other markets to finance new hotels.


You can see the report here.


Worker safety ordinance

 

A proposed worker safety ordinance is set to be considered by the Council and draws on many of the proposed initiative’s worker safety proposals. 

 

It would not mandate wages or workload requirements as the proposed initiative would.

 

The proposed worker safety ordinance would require hotels to provide security alarms to those working in hotel rooms and restrooms as well as alarm monitoring and response.

 

The proposed ordinance would also require reporting of incidents to hotel management for tracking and remedying, notifying guests of security policies at check-in with a warning that violations will result in removal at their own cost, and allow paid time for training and to report an incident to Anaheim Police.

 

You can read about it here.

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