The dissolution of Walt Disney World’s Reedy Creek Improvement District could put local taxpayers in an estimated $1 billion in debt and leave local governments scrambling to support vital services at Florida’s top tourist attraction.
State lawmakers on Thursday passed a bill that dissolves the district The Walt Disney Co. uses to self-govern its Florida theme park properties on June 1, 2023. Governor Ron DeSantis, who stood beaten with the entertainment giant, signed it into law on Friday.
What will happen next is unclear, but the Orange County tax collector and other opponents of the bill say ending Reedy Creek could lead to higher taxes for Orange residents and Osceola.
The legislature did not conduct an economic study of the ramifications of disbanding the district. Lawmakers spent just two days considering the bill, which was unveiled on Tuesday, offering little opportunity for public input.
Even the bill’s sponsors — Sen. Jennifer Bradley, R-Fleming Island and Rep. Randy Fine, R-Palm Bay — couldn’t provide the intricate details of Reedy Creek’s dissolution, saying the matter would be settled within the next year.
Democrats warn property owners could be hit with higher tax bills if Republicans go ahead with their plan. Sen. Gary Farmer, D-Lighthouse Point, estimated it would cost the average family in Orange and Osceola Counties $2,200 to settle the district’s outstanding debt and obligations. No detailed nonpartisan figures were produced on the potential tax liability of disbanding the district.
“It’s shoot first and ask questions later. … And maybe if Disney performs in the next election cycle, we’ll cancel it,” Farmer said.
Orange County Mayor Jerry Demings said Thursday that taking over Reedy Creek’s “first response and public safety components” without new revenue would be “catastrophic” to the county’s budget.
“It would place an undue burden on the rest of Orange County ratepayers to fill that void,” he said.
Founded in 1967, Reedy Creek allows Disney to use its own building codes and inspectors, avoid bureaucratic red tape, and issue tax-free bonds for its Florida theme parks and resort properties. Disney essentially imposes itself across the district to pay for roads, water treatment, and other important services for Walt Disney World.
Reedy Creek owns and operates sewage collection and treatment systems, electrical, solid waste collection and recycling services, and its own fire department. The Orange County Sheriff’s Office provides law enforcement protection.
Disney’s private government has been compared to Florida’s 68th county or a “mouse-eared Vatican”. The unique government structure involves Reedy Creek and two Disney-controlled towns – Bay Lake and Lake Buena Vista.
These towns have a combined population of about 53 people, according to census data. Residents are trusted Disney employees, making both towns Disney-controlled company towns, said Richard Foglesong, author of “Married to the Mouse,” a book about the creation of Disney World.
If Reedy Creek is dissolved, the main elements will be how its 40 square miles of land straddling Orange and Osceola counties would be governed, how its assets would be distributed and its debt paid, said Lee Constantine, a former state representative and senator and the incoming president of the Florida Counties Association.
“You’re going to have to root out where the assets are going,” said Constantine, a Seminole County commissioner. “Who is going to pay them? Will they be given to the counties? Will the counties pay them? Whatever they are, whatever the debt service, it must be paid. I can assure you that these bondholders…will want some entity to guarantee those bonds.
“At this point, there are more questions than answers,” Constantine added.
Four local governments are said to be involved in those discussions — Orange and Osceola counties and the Disney-controlled towns of Bay Lake and Lake Buena Vista.
An Osceola County spokesperson said its staff will begin assessing the situation if and when final action is taken. Reedy Creek and Disney did not respond to requests for comment.
Senate Speaker Wilton Simpson said he expects the matter to be discussed further when the Legislative Assembly meets next year with input from Disney’s legal team. A plan could be developed that creates “efficiencies” that save taxpayers money, he said, adding that other theme parks in the state operate without independent districts.
“I think it’s just a matter of getting the teams together and sorting it out,” Simpson said. “I think it’s as simple as that.”
Fine, the House sponsor, said he believes another type of tax district could be formed that could raise money to maintain the roads and other assets in Reedy Creek without burdening taxpayers or giving Disney powers. unique.
Before signing the bill on Friday, DeSantis said he thinks Disney will pay more taxes, insisting “we’ll take care of all of that.” He gave no details.
Leaders are expected to determine what happens to the district’s nearly 400 employees, including about 200 people who work for the Reedy Creek Fire Department.
Firefighters and other district employees are watching closely and hope to participate in conversations about the bill’s implementation, said Jon Shirey, president of the Reedy Creek Professional Firefighters Association.
“Our primary concerns are the livelihoods and well-being of our members, retirees and their families,” he said.
Settling with bondholders could be another messy business, and investors have been mystified by what’s happening in Florida, said Eric Kazatsky, senior strategist for Bloomberg Intelligence who specializes in municipal bonds.
Florida’s bond documents include a covenant — an undertaking to investors — that the state will not “limit or alter” Reedy Creek’s rights to collect income, including the collection of taxes. Kazatsky said he’s spoken with investors and other bond market participants who are intrigued by what’s happening in Florida.
“That’s a lot of puzzles, and are they even allowed to do that?” he said. “It looks like they have a legal obstacle here. They are committed to doing something.
Fitch placed Reedy Creek’s credit ratings on “negative watch” on Friday, meaning the district could be downgraded due to a “lack of clarity” about how the breakup will work.
Scott Randolph, the Orange County tax collector, estimated that absorbing Reedy Creek’s debts could cost property owners an additional $200 to $250 a year in property taxes. This is a rough estimate, however, based on the financial statements of the Reedy Creek Improvement District and the assumption that Orange County absorbs Reedy Creek’s debts.
Reedy Creek collects approximately $164 million in property taxes to maintain roads, utilities, and other services, which is almost entirely paid for by Disney.
If Reedy Creek were dissolved, no other government entity would have the authority to collect that money, Randolph said.
“There’s no windfall for the county,” Randolph said. “There could be a ton of expenses without additional income to cover them.”
Disney would continue to pay property taxes to Orange and Osceola counties, school districts and other entities as in the past. Reedy Creek allows Disney to avoid certain other taxes, such as impact fees and sales tax on building materials.
Governing Disney World and maintaining its surrounding property is a colossal undertaking. Reedy Creek maintains 134 miles of roads and 67 miles of waterways, according to district statistics. It processes 60,000 tons of waste and recycles 30 tons of aluminum, paper, steel cans, cardboard and plastic containers every year.
The neighborhood hosts 250,000 daily guests, more than the 196,000 people who live in Tallahassee, the state capital. With 77,000 pre-pandemic employees, Disney World is one of the largest single-site employers in the United States.
Sen. Jeff Brandes, R-St. Petersburg, wondered if the legislature’s effort would inadvertently help Disney financially.
“Assets include roads, which we are unlikely to close,” he said. “A dump. A power plant, which we would be unlikely to turn off. A fire station, which we are unlikely to close. So those assets, we would now take over operations, maintenance, and support, and Disney would be able to get out of that…debt.
Republicans said Disney gets special treatment under the law that no other theme park in the state gets.
“Universal fails to create the Jurassic Park improvement district to govern themselves,” said home sponsor Fine. “They must abide by the laws of the cities and counties where they exist.”
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DeSantis called on lawmakers to disband Reedy Creek and five other special districts created before 1968. He attacked Disney for standing up to critics of the legislation who called the bill “don’t say gay.” In return, Disney, a powerful player in state politics, suspended its contributions to Florida politicians.
Democrats countered that the bill was more about political retaliation and retribution than corporate accountability. Farmer called it a “punitive and petulant political payment to a company that dared to say the Emperor had no clothes.”
Citing a Florida law dealing with special districts, state Rep. Carlos Smith, D-Orlando and others said dissolving Reedy Creek would require an electoral referendum. The bill’s Republican sponsors said the new law trumps that law and a referendum was not needed.
Disney’s autonomy is part of why it’s been able to make Disney World a unique attraction, and defeating Reedy Creek could generate a lengthy legal battle, said Nova Southeastern University law professor Bob Jarvis.
“It will lead to a trial, so the taxpayers will fund the defense,” Jarvis said.
Editors Katie Rice and Steven Lemongello contributed to this report.