Disney’s Special District Says Florida Can’t Eliminate It Without Paying Off Billion-Plus in Debts
Disney’s self-governing special district is arguing that Florida’s move to eliminate its authority over its sprawling theme park area isn’t legal unless its bond debt is paid off.
In a statement to investors, the Reedy Creek Improvement District claimed that dissolving the special tax district would violate a pledge by Florida to bondholders. Under the law that created the district, the state vowed not to “modify in any way the exemption from taxation provided in the Reedy Creek Act, until all such bonds together with interest thereon, and all costs and expenses in connection with any act or proceeding by or on behalf of such holders, are fully met and discharged.”
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Pointing to the agreement, Reedy Creek said it “expects to explore its options while continuing its present operations.” Disney has stayed silent on whether it will file a lawsuit challenging the Florida bill signed into law last Friday that will dissolve its special district in June 2023.
The statement issued to municipal securities regulators last Thursday is the first hint at Disney’s position regarding retaliation from Florida lawmakers against the company for its opposition to the so-called “Don’t Say Gay” law. Gov. Ron DeSantis called on state lawmakers in April to vote on stripping Disney of its special privileges of self-governance in an amended special session. The shot across the bow of Disney, critics say, was also meant to distract from the redrawing of congressional maps that eliminated two majority-Black voting districts.
Independent special districts that were created prior to 1968 and haven’t been renewed since will be eliminated. The law has a provision allowing for reestablishment after the districts are dissolved.
Reedy Creek operates much like a local government, including borrowing money for infrastructure projects by issuing bonds. The question of what happens to the district’s estimated billion-plus in bond debt has been up in the air. States are obligated to uphold the taxing power that enables the payment of bonds once a local government issues them.
Under the 1967 law that created the district, Reedy Creek argues that Florida cannot interfere with its taxing authority until it pays off its outstanding bond debt.
The bill was passed with virtually no analysis on the ripple effects to taxpayers and the counties that would take up oversight of Reedy Creek. Currently, Disney and residents of the land it owns in Orlando bear the cost of maintaining the area, including paying for emergency and waste management services.
While Disney’s special tax district exempts it from a host of regulations and certain taxes and fees related to emergency services and road maintenance, it still has to pay property taxes. Disney, Central Florida’s largest taxpayer, pays nearly $300 million annually to the surrounding Orange and Osceola counties on top of roughly $250 million in other state taxes.
“If we had to take over the first response, the public safety components for Reedy Creek, with no new revenue, that would be catastrophic for our budget here,” Orange County Mayor Jerry Demings said on April 21 at a regional economic summit. “It would put an undue burden on the rest of the taxpayers in Orange County to fill that gap.”
Osceola County said in a statement that it’s “uncertain of what fiscal responsibilities will be encumbered after June 2023” and is “evaluating any shifts in cost.” It added, “Disney has been a strong community partner and we expect that relationship to continue as we work together for a transition plan.”
