After an eight-hour meeting that started Tuesday night, the City Council unanimously approved the project, 7-0. However, a second council vote for final approval of Disney's plan is scheduled for May.
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With the proposed DisneylandForward Project, the company wants to spend $1.9 billion to develop the property over the next 10 years. That includes $40 million to buy streets from the city of Anaheim including Hotel Way, part of Clementine Street and Magic Way.
Also included in the proposal is a $30 million commitment from Disney for affordable housing across Anaheim. This includes funding for parks, plus street and transportation improvements. Disney is also estimating 9,000 construction jobs.
The plan wouldn't expand Disney's footprint in tourism-dependent Anaheim but would help it add rides and entertainment by letting the company relocate parking to a new multi-story structure and redevelop the massive lot, as well as make other changes to how it uses its properties.
Disneyland, Disney California Adventure and the Downtown Disney shopping area are surrounded by freeways and residential areas in the city, so the company sees the plan as vital to being able to continue to create sizable new attractions.
Despite the green light from city leaders, reactions from the public were during the public comment portion of the meeting.
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Many focused on Disney's plans to buy a public street near the theme park and turn it into a pedestrian walkway as well as its intention to add a crosswalk on another neighboring street.
"We're a Disney family and I'm excited for the new rides that this expansion could bring. However, I feel betrayed that Magic Way is up for sale," one woman said.
"You're going to close a street to privatize it," another speaker said. "We already have our streets overtaken by tourists that don't want to pay the parking fee at Disney - and what do we get out of it?"
Ken Potrock, president of the Disneyland Resort, said at the meeting: "We are ready to bring the next level of immersive entertainment here to Anaheim." Over the last two decades, Disney investments have included Cars Land, Pixar Pier, Star Wars Galaxy's Edge and Avengers Campus.
Disney has not committed to which stories it plans to feature given that the new development will take years.
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It's the first time Disney has sought a major change to its California theme parks since the 1990s, when the company obtained approvals to turn Disneyland, its original theme park dubbed "the happiest place on Earth" and built in 1955, into a resort hub. It later built the Disney California Adventure theme park and the Downtown Disney shopping and entertainment area.
If the plan is given final approval, it would into effect June 7.
The Walt Disney Co. is the parent company of this ABC station.
The Associated Press contributed to this report.