Disney Gives Outline of Backlot Project, Says It May Be Scaled Down

Planners for the Walt Disney Co. said a proposed $611-million retail, entertainment and office complex in downtown Burbank may have to be scaled down before the company is convinced that the development would be a sound investment.

Despite those reservations, Burbank Mayor Michael R. Hastings and Vice Mayor Al F. Dossin said they were encouraged at an initial outline by the planners. They said they feel that Disney will be able to work out the difficulties in the project, called “The Disney-MGM Studio Backlot.�

The Backlot has yet to receive formal approval from Burbank City Council.

First Details

The outline gave city officials the first details of the project since the City Council last May awarded Disney an exclusive right to negotiate for the development of a 40-acre site that was to have been the location of the failed Towncenter shopping mall. The city gave Disney Co. an option to purchase the property for $1 million.

The project is slated to be a 2.2-million-square-foot development with a high-rise, 400-room “Hollywood Fantasy Hotel,� a man-made lake, a shopping center, a multiscreen movie theater, restaurants and live theater. New headquarters for the studio’s animation department, the Disney Channel and other production facilities would also be housed there.

The planners said the project’s revenue and expense projections “did not meet corporate thresholds for an investment of this magnitude and anticipated business risks.

“Additional effort will be required to improve the project return on investment to an acceptable level, through reduction of investment cost, reduction of direct or indirect expenses, achievement of higher sales levels, and/or identification of alternative sources of revenues,� the report said.

Also, Disney planners said they may have difficulty attracting major retailers to the center. They said its entertainment orientation and the failure of the site’s previous developer, the Hahn Co., to attract enough stores to anchor a shopping mall may hamper Disney’s efforts.

Disney said it has not had “definitive conversations� with retailers and plans none until the project concept is developed more fully.

‘Back Room Deal’

Access to the project from freeways and surface streets also must be improved, the report said.

Despite continued opposition by a community group that mailed flyers to residents Thursday claiming the council had made an “outrageous back-room deal� with the Disney Co., Hastings and Dossin said they were excited about the project.

“It’s encouraging to see this move forward,� Hastings said. “Disney is saying it will be a challenge, but there is a light at the end of the tunnel.�

Dossin said the details raised “a lot of questions in my mind. It doesn’t look like it will pencil out, but I’m still positive about it and would still like to see them build it.�

The other three council members said they will not comment on the plan until they receive a staff analysis next week.

The Disney proposal is being opposed by rival entertainment giant MCA, which has filed two lawsuits against the city, contending that it illegally conducted closed-door negotiations with Disney.

Preliminary market research indicates that the entertainment part of the project would attract 12.2 million people a year. The project is expected to generate about $7.2 million in annual property taxes for the city, and $3.7 million more annually in taxes.