The new hotel planned to begin construction at Anaheim’s Downtown Disney last month has been put on hold indefinitely after Disney and the city could not agree over the terms of the development, officials on both sides acknowledged Wednesday, Aug. 15.

The new upscale hotel had been slated to have 700 rooms spread over the west end of the outdoor mall, including the site of the former Rainforest Cafe, ESPN Zone sports bar and restaurant, the AMC Theatres and the popular Earl of Sandwich eatery.

Those businesses and others were closed in June to make way for the new construction, which had been expected to start July 1. It was scheduled to be considered by the Anaheim Planning Commission on Monday, Aug. 20. The new hotel was scheduled to open in 2021, making it the fourth Disney-owned hotel at the Disneyland Resort.

However, Disney executives pulled the project Wednesday, saying they could not reach an agreement with the city over terms under which the hotel was to be constructed.

The move was in response to an Aug. 6 letter in which Anaheim City Attorney Robert Fabela wrote to Disney saying that a change in the site plan would make the hotel ineligible for expected tax incentive rebates.

“Given the city’s position that our project does not comply with the requirements of the Agreement, you have given us no other choice other than to put construction of the hotel on indefinite hold,” David Ontko, chief counsel for Disneyland Resort and International Parks & Resorts wrote to the city attorney Wednesday, Aug. 15.

City spokesman Mike Lyster said late Wednesday that officials “are disappointed the hotel isn’t moving forward.”

“This is one of the most coveted locations for a hotel in the Anaheim Resort, and it would join nearly a dozen other hotels under construction or set to start soon in the area,” Lyster said. “All the necessary planning is in place, and we would love to see it happen. Nothing has changed on that front.”

Disney has been working for years toward construction of the posh new hotel on the west side of Downtown Disney, reaching to the border of the existing Disneyland Hotel. The City Council approved the hotel in concept back in 2016, including a development agreement that would have given Disney a rebate of 70 percent of hotel taxes collected on the site for 20 years.

That was part of a 2015 city program designed to encourage development of more AAA 4-star hotels in Anaheim. Several hotel companies applied for the rebates, according to city records, and Disney’s hotel was approved to also receive the incentive.

However, since then, the project was redesigned to move the hotel from the existing parking lot of Downtown Disney to an adjacent location. This became an issue because of the change in sentiment among current City Council members, who are less favorably disposed to giving tax rebates to hotel developers.

It was unclear late Thursday whether the city would revisit the issue, now that the hotel has been removed from the planning agenda.