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City wagers on entertainment may backfire

COVID-19 and the severe recession it spawned abruptly ended what had been one of California’s longest-running and most powerful economic booms.

California’s unemployment rate more than quadrupled as millions of jobs vanished in the partial economic shutdown ordered by Gov. Gavin Newsom. Seven months later, the economy has rebounded a bit as restrictions have eased, but economists see full recovery taking years.

The recession has eaten into family finances, permanently shuttered many small businesses, and hammered the state’s budget and those of hundreds of cities and other local governments.

Among the many casualties has been one of California’s bedrock economic sectors, dubbed “travel and leisure” — encompassing hotels, restaurants, resorts, theme parks, sports arenas and other facilities.

The sudden and steep decline in their patronage not only threatens countless billions of dollars in private investment but billions more that local governments have wagered on becoming venues for tourism and entertainment.

The syndrome is illustrated by what’s happening in two of the state’s larger cities, Anaheim and Sacramento.

Anaheim is, of course, the home of Disneyland. For decades visitors to the archetypal theme park have poured untold billions of dollars into the local economy through hotels, restaurants and other services. Seeking to capitalize even further, 23 years ago Anaheim issued $518 million in bonds to expand its convention center and construct other projects tied to construction of an adjacent theme park, Disney’s California Adventure.

Repayment of the bonds, which would total at least $1 billion including interest over 40 years, hinged on continued high tourist traffic. But the Disney facilities have been shut down for months as part of the state’s response to the COVID-19 pandemic.

Disney officials, including CEO Bob Iger, have been sparring with the governor over reopening and Iger even resigned from Newsom’s coronavirus response commission.

“We don’t anticipate in the immediate term any of these larger

Article source: https://www.dailynews.com/2020/10/19/city-wagers-on-entertainment-may-backfire/

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