Recently, Florida Governor Ron DeSantis signed a bill that eliminates special districts in the state of Florida, including the Reedy Creek Improvement District. This district effectively serves as Disney World’s own government, managing services like road maintenance, supply of utilities like water and electricity, and construction project approval.
DeSantis proposed the district’s dissolution in retaliation to Disney’s public disapproval of the Parental Rights in Education Act, called the “Don’t Say Gay” law by some. The move to get rid of the Reedy Creek Improvement Act has been criticized by some analysts who consider the action hasty and potentially illegal. Now, another factor has come to light, which could prevent or at least complicate the removal of the Reedy Creek Improvement District.
According to Bloomberg Tax, the move to dissolve the Reedy Creek Improvement District has been questioned for a variety of reasons, including claims that it was “retaliation prohibited by the First Amendment,” “not passed with sufficient formality,” etc. But now many analysts are discussing another problem with the change: the state of Florida promised Reedy Creek bondholders that it wouldn’t dissolve the district until all the bonds were paid off.
Specifically, here’s what the Florida Legislature said when the Reedy Creek Improvement Act was passed in 1967: “The State of Florida pledges to the holders of any bonds issued under this Act that it will not limit or alter the rights of the District to own, acquire, construct, reconstruct, improve, maintain, operate or furnish the projects or to levy and collect the taxes, assessments, rentals, rates, fees, tolls, fares and other charges provided for herein … until all such bonds together with interest thereon, and all costs and expenses in connection with any action or proceeding by or on behalf of such holders, are fully met and discharged.”
The restriction is supported by a US Supreme Court ruling, which states that a taxing power (like Reedy Creek Improvement District) cannot be dissolved when there are outstanding bonds issued by that power.
The bonds have not been paid off. In fact, the debt from these bonds amounts to about $1 billion — a debt that would be assumed by Orange and Osceola counties if the district is dissolved. Wesh 2 reported that Orange County Mayor Jerry Demings said, “My main concern as the mayor of Orange County is unintended consequences and costs.” Demings also said that, by paying taxes and maintaining the huge property that is Disney World, the Reedy Creek District “takes an enormous burden off the backs of taxpayers.”
An Orange County tax collector has estimated that “the average increase in taxes would be $200-$250 per year for the median household until the bonds are paid off” (Miami Herald). The same source said that those who supported the dissolution of the Reedy Creek Improvement District “had some misconception that Disney’s getting some special property tax break for Reedy Creek. It’s not.”
DeSantis said that he doesn’t expect tax increases as a result of the new law. His office has promised “additional legislation” to solve the problem.
The state of Florida has violated its promise by passing the new law, and if the special districts are going to be dissolved, the Legislature would need a major solution quickly. The law calls for the district to be dissolved by June 1st, 2023, giving Disney and politicians just over a year to find a solution. Bloomberg noted that Florida could write “a giant check to prepay or ‘redeem’ the bonds,” but that action is prevented by “at least one of the outstanding bonds—2018’s utility revenue bond prohibits redemption until October of 2029.”
In the meantime, Disney has reassured investors that the Reedy Creek Improvement District will “explore its options while continuing its present
operations.” Mayor Demings has asked that residents of Orange and Osceola counties “don’t panic at this time.” He said, “You know, let’s wait on all of the details, and we’ll just have to see how this all shakes itself out” (Wesh 2).
Keep following AllEars for more updates on this developing situation.