Gov. Ron DeSantis and the Florida Legislature’s actions to start the clock on dissolving a special self-governance district created for The Walt Disney Co. in 1967 could have dramatic impacts for two Orlando-area counties and their taxpayers.
The 38.5-square-mile Reedy Creek Improvement District gave Disney significant control of its property surrounding its Walt Disney World complex in Orange and Osceola counties. Reedy Creek, for example, oversees public safety for Disney, as well as upkeep of roads and other infrastructure like water treatment and building inspections. Dissolving Reedy Creek is equivalent to dissolving a city.
What could this mean for taxpayers?
It could mean big tax increases for residents of Orange and Osceola counties, as taxpayers would suddenly have to pick up the costs of everything from fire protection to road maintenance within Disney property.
Orange County Tax Collector Scott Randolph tweeted that if Reedy Creek is gone, so is the $105 million Disney collects from itself annually to operate those services.
Orange County Mayor Jerry Demings says the financial impact on his county could be “catastrophic.”
Randolph predicted in a WFTV-TV interview that it could mean a 20% to 25% increase in property taxes for Orange county residents.
Neighboring Osceola County said it is “uncertain” about its future financial responsibilities, and is studying the issue.
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The counties also likely would have to assume the debt obligations now held by Reedy Creek. Randolph said Reedy Creek has $53 million a year in debt obligations.
“Obviously, it’s going to affect a key part of the I-4 corridor, but it affects the whole state,” said Susan MacManus, a political science professor emeritus at the University of South Florida, “But in terms of exactly what the fallout will be, I don’t think we know yet. We don’t have enough details to make an accurate assessment. But it sure has created shock waves across the country.”
How would counties pick up costs of public safety now paid by Disney?
Demings said that’s a big concern, if the county had to take over public safety costs now covered by Disney with no new revenue.
“We have a very unique situation with Reedy Creek and the Walt Disney conglomerate,” said Demings, the former Orange County sheriff and former Orlando police chief. “Reedy Creek paid 100% of the cost of the law enforcement services that are provided by the Orange County Sheriff’s Office. They provide 100% of the calls of their own fire rescue and emergency response department. Their own 911 call center. They provide 100% of the cost.”
If Orange County had to assume all of those costs, with no new revenue, “that would be catastrophic for our budget here within Orange County,” Demings said. “It will put an undue burden on the rest of the taxpayers in Orange County to fill that gap. I don’t know that that would happen, but there certainly is a potential that it could happen.”
“That’s a net-sum loss for the rest of the taxpayers of Orange County, when we already have significant pressure on our county budget to provide for public safety and all of the other public health and social services that we have in the county that we pay for from ad-valorem (property) tax dollars,” Demings said.
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What kind of money are we talking about?
The Reedy Creek Improvement District collects about $105 million a year to operate services inside Reedy Creek, according to Randolph. So Disney, in effect, taxes itself for such things as operating its own power plant, maintaining roads and providing fire protection.
“This is on top of other taxing authorities it sets in,” Randolph said as part of a series of tweets he posted on this issue. “So Disney pays the same Orange County, local and state school taxes, etc., as all other properties inside Orange County. If Reedy Creek goes away, the $105 million it collects to operate services goes away. That doesn’t just transfer to Orange County, because it’s an independent taxing district. However, Orange County then inherits all debt and obligations with no extra funds.”
Are officials in Osceola County worried, too?
Osceola County issued a statement, indicating that officials there are analyzing the matter.
“Now that the Legislature has passed a bill to dissolve the Reedy Creek Improvement District, Osceola County government will begin an analysis to understand the impacts in preparation for this going into effect, including evaluating any shifts in cost to Osceola as a result,” the statement said. “As Disney and Reedy Creek have been self-contained, we are uncertain of what fiscal responsibilities will be encumbered after June 2023.”
June 2023 is when this is set to take effect.
The statement added that “over the many years, Disney has been a strong community partner, and we expect that relationship to continue as we work together for a transition plan.”
So, what triggered the move to disband the Reedy Creek district in the first place?
DeSantis and members of the Republican-controlled Florida Legislature targeted Disney for the company’s opposition to the “Parental Rights in Education Act” that legislators approved and DeSantis signed into law.
Among other provisions, the law limits instruction about gender identity and sexual orientation in grades K-3. But critics of the measure — who term it the “Don’t Say Gay” bill — contend it also will negatively affect members of the LGBTQ+ community.
The two-page bill affecting Reedy Creek doesn’t specifically mention Disney or Reedy Creek. But it calls for dissolving independent special districts established before Nov. 5, 1968, and “not reestablished, re-ratified or otherwise reconstituted by a special act or general law” after then.
Reedy Creek — as well as development authorities in Bradford and Hamilton counties, water districts in Broward and Franklin counties, and a Marion County law library — would be affected, according to a bill analysis by the staff of the Senate Committee on Community Affairs. That analysis said Florida’s 1,222 other independent special districts would not be affected.
It’s clear that the bill was aimed at Disney.
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In a Facebook post announcing the introduction of the bill, Florida Rep. Randy Fine, R-Palm Bay, said: “Disney is a guest in the state of Florida. Today, we remind them of that fact. Governor DeSantis and I just announced that we are expanding the Special Session to hold Disney accountable.”
Fine described his bill as one to “eliminate the Reedy Creek Improvement District, a 50-year-old special statute that allows Disney to govern itself, exempt from the laws faced by regular Floridians and its competitors.”
In another post, Fine said he has no problem taking on “woke corporations that wish to sexualize our children. I am not afraid to fight for what is right for my children — and yours.”
Disney had vowed to work to repeal the Parental Rights in Education Act, and announced it was stopping all political contributions in Florida.
Florida Rep. Anna Eskamani, D-Orlando, called the law to repeal Disney’s special district “petty, punitive politics at its worst. They’re trying to cancel Disney and bully them into submission. It’s undemocratic.”
Because of the bill’s speedy introduction, passage and signing into law, “it was also done in a way where the public didn’t get to weigh in or for the ramifications (of the bill) to be thoroughly studied. Special sessions are supposed to be about urgent issues. This isn’t one of them.”
Eskamani called it “a telltale sign of one party rule, drunk on power. This sends an unsettling message to anyone who challenges the governor.”
What is the business community saying?
Don Long, president and chief executive officer of the 450-member Lake Nona Regional Chamber of Commerce in the Orlando area, said it’s difficult to tell what impact the legislation will have.
“There is a certain amount of concern about what happens if Reedy Creek (Improvement District) goes away,” Long said. “Everyone visiting Disney’s theme parks will still need services” the special taxing district currently provides, and Orange County’s budget “has not been established to meet that demand.”
Long said he is “somewhat surprised” that the affected counties and the local communities “weren’t consulted before this action was taken.”
“I would anticipate that local taxpayers, both residents and businesses, would in some way be impacted, but that’s just my own speculation,” Long said. “This all moved so quickly. The problem is, I don’t think we’re going to get any factual information for a while” on what this will mean in terms of taxes on local residents and businesses.
Could Disney decide to scale back its Orlando-area operations in reaction to the action by the Florida Legislature?
University of Central Florida economist Sean Snaith, director of the university’s Institute for Economic Forecasting, doesn’t think that would happen.
Snaith said Disney is too heavily invested in its Orlando-area theme parks to pull out of Florida.
“However this Reedy Creek thing works out, it’s not like we’re talking about a call center where a company could simply pull out,” Snaith said.
Snaith noted that Disney has no room to expand in Anaheim, California, where Disneyland is located, whereas it has plenty of room for further expansion in Florida, both where Disney World is located, as well as the nearly 60 acres it bought last year in Lake Nona for its planned Parks, Entertainment & Products Division.
“The future growth for the company in this country is Disney World,” Snaith said.
Disney did not respond to a request for comment.
What about Disney’s plans to expand operations in the Lake Nona area of Orlando?
Disney is clearing land in Lake Nona for its planned Parks, Entertainment and Products Division campus. The planned Disney campus is being built along Lake Nona Boulevard, across from the new University of Central Florida Lake Nona Hospital.
“My understanding is that it’s a $600 million investment,” Long said.
Disney “imagineers” recently staged a protest against the Parental Rights in Education Act bill, demanding that the company scrap its plans to build the new corporate campus in Lake Nona.
But Snaith doubts Disney would scrap its Lake Nona plans.
Snaith also said he believes Disney’s statement that it plans to create 2,000 jobs at its planned Lake Nona campus is a low estimate, and that the eventual number will be much higher, given the enormous size of the future campus.
“You don’t need that much land for just 2,000 workers,” he said. “I believe it could ultimately be more.”
How big a deal is Disney to Central Florida?
Very big. It has four theme parks, two water parks, and various hotels, restaurants and shops in the Orlando area.
In addition, the two largest Disney Cruise Line ships sail out of Port Canaveral in Brevard County, which borders Orange and Osceola counties. Another Disney cruise ship also currently sails from Miami.
Disney employs more than 75,000 and is the largest employer at a single location in Florida.
“What I can tell you is, for the 50-plus years that Disney has been a part of this community, they have been great community partners,” Orange County’s Demings said. “There are a myriad of jobs that have been created at Disney. I dare say that, with the expansion of the other theme parks, the expansion of business, Disney has been part of that impetus to expand and grow our community in the manner that we see today.”
Demings said he believes Disney has been “an instrumental part” of spurring growth, “not only for our community, but for the entire state of Florida. When you think about visiting Florida, you can’t help but think about visiting Disney and other theme parks as well.”
What about Reedy Creek’s bond obligations?
On Friday, the Fitch Ratings agency placed Reedy Creek Improvement District debt obligations on a “watch” list for possible downgrade of its ratings. Affected were about $766 million in outstanding ad-valorem tax bonds and $79 million in outstanding utilities bonds.
Fitch said placing Reedy Creek on its watch list after the Florida Legislature’s action “reflects the lack of clarity regarding the allocation of the RCID’s assets and liabilities, including the administration of revenues pledged to approximately $1 billion in outstanding debt, following the dissolution of RCID or its re-ratification on or after June 1, 2023. Fitch expects the title of all property owned by RCID, including its indebtedness, to be transferred to Orange County (and to a lesser extent, Osceola County) or to a successor agency, as prescribed under Florida law. Fitch believes the mechanics of implementation will be complicated, increasing the probability of negative rating action.”
In a statement, Reedy Creek said it “expects to explore its options while continuing its present operations.”
It also pledged its bondholders that it will “fulfill the terms of any agreement made with the holders of any bonds or other obligations of the district.”
Are there political ramifications to what’s happening with Disney?
MacManus said “there’s both an economic and political side to this, and when the two collide, usually the political side wins. Right now, both Democrats and Republicans are finding political value in attacking corporations. Democrats want more regulations, and accuse corporations of making too much profit. On the Republican side, you’ve got the anti-woke fight. A lot of people are scratching their heads and wondering: Why now? Of course, it’s happening now because it’s an election year.”
Latest-available voter registration figures show that there are roughly an equal number of Republican and Democratic registered voters in Florida.
But Orange and Osceola counties both lean Democratic. In Orange, 42.3% of voters are registered Democrats and 25.0% are Republicans, with the remainder no party affiliation voters or members of minor political parties. Similarly, in Osceola, 40.2% of voters are Democrats and 23.2% are Republicans.
What would happen next?
Demings said his county likely would “have to enter into the negotiations” with Disney.
“There are some complex issues here that are not yet defined, based upon the proposed language that I’ve seen,” Demings said. “The devil is in the details, and we, quite simply, today do not have the details.”
Demings said his staff is evaluating the language of the bill — in conjunction with the county’s tax collector, property appraiser, comptroller and sheriff — “to make certain that we understand the impact.”
“And so, until we have all of the specifics, it’s hard to say what the specific answers or impacts would be,” Demings said. “Just like everybody else, we’re trying to understand what the Legislature truly is trying to do in this case. But I believe they have not adequately contemplated the ramifications of what they have proposed at this point.”
In the meantime, MacManus noted that “the best news for all parties” is that there is more than a year before the dissolution takes effect.
“It’ll give all sides a chance to cool down,” MacManus said.
What’s Disney likely to do?
James Clark, a political analyst and senior lecturer with the University of Central Florida’s history department, said he doesn’t think “Disney will capitulate, but they may use their army of 38 lobbyists in Florida to quietly work out a compromise, which is probably already underway. But they may also go to court to fight this. In the long run, I think they may work with Orange and Osceola counties, as well as the state, to try to soothe the waters.”
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