The Council selected Sept. 12 for a special election, based on timing under the California Election Code, which requires a vote be held no earlier than 88 days from today and no later than 103 days. The calling of a special election is set to be finalized by the Council at its next meeting on June 27. A special election is estimated to cost $1.5 million to $1.6 million and will be paid for by the City using funds available in its upcoming budget for the 12 months through June 2024.
The Council had the option of placing the initiative on the Nov. 5, 2024, general election ballot at a cost of $198,891 to $233,265. A majority of Council members declined the November 2024 option, citing a need to address the initiative’s workplace implications and economic concerns sooner than that. The Council heard from more than 45 speakers on both sides of the issue in more than two hours of public comment.
If approved by voters, the proposed initiative petition would require hotels and event centers to pay a minimum starting wage of $25 per hour, among other provisions.
It would apply to the City of Anaheim as owner and operator of the Anaheim Convention Center and owner of Angel Stadium of Anaheim and Honda Center, private event center operators of 20,000 square feet or larger and all hotels and motels in the City.
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.
The initiative, supported by the Unite Here Local 11 hotel worker union, 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.
Worker safety ordinance
The City Council on Tuesday also adopted a worker safety ordinance that requires hotels to provide electronic security alarms to those working in hotel rooms and restrooms as well as alarm monitoring and response. The approved ordinance would also require reporting of incidents to hotel management for tracking and remedying, notifying guests of security policies at check-in with 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.
The ordinance includes worker safety provisions from the proposed initiative and goes further with notifications and warnings to guests. But, unlike the initiative, it does not cover a minimum wage or working conditions. You can read about the ordinance here.
The ordinance requires a second vote, which is expected on June 27. If approved a second time, the worker safety rules would take effect Jan. 1, giving hotels time to implement changes.
The City Council’s vote to hold a special election came after hearing about two fiscal impact reports that the Council commissioned on May 16. One report focused on impacts to the Anaheim Convention Center, other City-owned facilities and what types of private venues would be impacted. A second report looked at the initiative’s impact to the City’s hotel-stay tax revenue from higher costs at hotels.
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 with 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 and independently operated Angel Stadium, Honda Center and City National Grove of Anaheim are estimated to see a 19 percent increase in operating costs should the initiative be approved, according to the report. You can read the report here.
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 labor costs, if the initiative were to be adopted.
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.
By fiscal year 2027-28, Anaheim could see $264 million in hotel-stay tax revenue, or $4 million less than if there were no initiative, according to the report. The report cites limited long-term ability of hotels to raise rates, reduced demand and hotel occupancy 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.