Dissolving Disney’s Special District ‘Catastrophic’ for Local Taxpayers
By John Haughey April 25, 2022 Updated: April 25, 2022
The Reedy Creek Improvement District’s (RCID) Board of Supervisors meets on April 27 for its regularly scheduled monthly meeting at the district’s offices on Hotel Plaza Boulevard in Lake Buena Vista.
On the agenda is an appointment, an amended work order, and a proposed solar power purchase agreement—typical stuff for a special district accorded most of the authority, and responsibilities, of a municipality under Florida law.
Not on the agenda, but likely to come up, is the bill passed by Florida lawmakers last week and signed by Gov. Ron DeSantis on April 22 that gives the five-member board 14 months to manage the dissolution of their 38-square-mile district by June 1, 2023.
RCID is a special independent taxing district created in 1967 by Florida lawmakers to serve as the governing jurisdiction for more than 25,000 acres owned by Walt Disney World Resort’s six theme parks spanning Orange and Osceola counties.
It includes the incorporated cities of Bay Lake and Lake Buena Vista, combined population of 53 people in 2020, and provides government services such as fire protection, emergency services, water, utilities, sewage, and infrastructure for an average of 250,000 daily Disney World visitors and its 80,000 employees.
Response to Criticism
With last week’s special session adoption and swift signing of Senate Bill 4-C, Reedy Creek is among six special districts being dissolved across the state because they were not re-certified after Florida’s new Constitution was ratified in November 1968.
Of course, this is not just statutory housekeeping—lawmakers and DeSantis are responding to Disney’s criticism of House Bill 1557, the state’s Parental Rights in Education Act, dubbed the “Don’t Say Gay” bill by opponents.
When DeSantis signed HB 1557 on March 28, Disney issued a statement saying it “should never have passed and should never have been signed into law.”
“Our goal as a company,” the statement continued, “is for this law to be repealed by the legislature or struck down in the courts, and we remain committed to supporting the national and state organizations working to achieve that.
“We are dedicated to standing up for the rights and safety of LGBTQ+ members of the Disney family, as well as the LGBTQ+ community in Florida and across the country.”
On April 22, DeSantis referred to Disney’s pledge when he signed SB 4C in Hialeah.
“Incredibly, they say, ‘We are going to work to repeal parents’ rights in Florida,’” the governor said. “And I’m just thinking to myself, you’re a corporation based in Burbank, California, and you’re going to marshal your economic might to attack the parents of my state. We view that as a provocation, and we’re going to fight back against that.”
SB 4C was adopted quickly during a four-day special session to great conservative media fanfare but, ultimately, it may be more show than tell.
The bill allows the six independent special districts “to be re-established on or after June 1, 2023,” should it be deemed the best outcome after assessing the impacts of dissolution.
In addition, it may not be legal. Under state law, “for the legislature to dissolve an active independent special district … the special act dissolving the independent special district must be approved by a majority of the resident electors of the district …”
$105 Million in Taxes
RCID has one “resident elector”—Disney World.
Disbanding the 55-year-old RCID could have significant impacts on Orange and Osceola county taxpayers, who would assume responsibility for water, sewer, electric power, and public safety services for millions of visitors, and workers now provided by the district’s 370 employees, including 200 first-responders in four fire stations.
According to Orange County tax collector Scott Randolph, Reedy Creek collects about $105 million a year to provide services inside Disney World, essentially taxing itself. Once the special taxing district is dissolved, that special taxing power is defunct.
“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,” he said in a series of Twitter statements since last week.
In addition, Randolph said, the counties would also absorb between $1 billion and $1.7 billion in RCID bond debt.
Under Florida statute, those liabilities are transferred to local governments. In this case, that’s the cities of Bay Lake and Lake Buena Vista, and Orange and Osceola counties.
On April 22, Fitch Ratings placed RCID debt obligations on its “watch” list for possible downgrades for $766 million in outstanding ad Valorem tax bonds and $79 million in outstanding utilities bonds.
The move “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,” the rating agency said.
Big Jump For Property Taxes
If transferred as now configured, Randolph said, Orange County taxpayers could inherit up to $58 million annually in bond debt payments.
“So Orange County would take on $163 million per year,” Randolph said. “If Reedy Creek is dissolved, my guess would be Orange County would have to raise property taxes 15 to 20 percent.”
The county could create a municipal servIces benefit unit (MSBU) to recapture Disney revenues and a new special tax district of its own to address the bond debt, he said, but tax rates would be capped below that of RCID’s, meaning local taxpayers could be saddled with bond debt and less revenue to pay it off.
Disney World was silent through mid-day on April 25 and the RCID board reserved, issuing a statement on April 22 that said it “expects to explore its options while continuing its present operations” and pledged to ”fulfil the terms of any agreement made with the holders of any bonds or other obligations of the district.”
“If we had to take over the first response and public safety components for Reedy Creek with no new revenue, that would be catastrophic for our budget in Orange County. It would put an undue burden on the rest of the taxpayers in Orange County to fill that gap,” Mayor Jerry Demings told reporters last week.
Osceola County is essentially saying nothing.
“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,” it said in a statement.
“As Disney and Reedy Creek have been self-contained, we are uncertain of what fiscal responsibilities will be encumbered after June 2023.”
Demings said the bill was adopted too quickly to ferret through the fallout.
Questions on ‘Rushed Process’
“I believe [lawmakers] have not adequately contemplated the ramifications of what they have proposed at this point,” Demings said. “It’s obvious this is political retribution that is at play here.”
Orange and Osceola counties, once red, now lean Democratic in registered voters. According to elections supervisor offices, 42.3 percent of Orange County voters are registered as Democrats and 25 percent as Republicans. In Osceola, 40.2 percent of voters are registered as Democrats and 23.2 percent as Republicans.
SB 4C’s fiscal impact statement reflects legislative analysts’ uncertainty of RCID’s dissolution.
“The bill will have an indeterminate fiscal impact on residents and businesses currently served by a special district dissolved by the bill. Such residents and businesses may experience a change in services previously provided by the special district and related assessments and taxes imposed,” it states.
In its government sector impact, the analysis maintains, “The bill will have an indeterminate fiscal impact on those local general-purpose governments that will assume the assets and indebtedness of an independent special district dissolved by the bill.”
The Florida Association of Special Districts (FASD) also questioned “the rushed process” in which the bill was passed.
“There is little understanding of the full impact these districts could face, as well as the state of Florida,” FASD executive director David Ramba said in a statement. “We do, however, appreciate the 14-month period before the impact of [the bill] takes effect so we can fully investigate what this would mean to the six districts.
“We will work diligently with the legislature and executive branch on the essential roles these districts play in their separate communities.”
Rep. Randy Fine, (R—Palm Bay), who sponsored the House version of SB 4C, told reporters last week that claims, such as local taxpayers paying an extra $1,000 a year because of the bill, are knee-jerk reactions to changing a system that needed to be overhauled.
Over the next 14 months, he said, the state, local governments, and Reedy Creek will figure out a way to pay for services without penalizing local taxpayers, and tap into the resort’s property taxes to pay down bond debt; Disney is Florida’s largest property taxpayer, paying $280 million in ad Valorem taxes between 2015-20.
According to the Florida Department of Economic Opportunity (DEO), there are 1,844 special districts in the state. There were 132 special districts adopted before state ratified its new Constitution in 1968, Fine said.
All were required to be re-certified. RCID was among the six that failed to do so and thus warranted the scrutiny, he said.
The reassessment could prove beneficial for taxpayers, Fine said.
“Taxpayers could end up saving money because you’ve got duplicative services that are being provided by this special district that are already being provided by the counties,” he said on Fox News Saturday.
The fallout from the bill isn’t restricted to speculating about its financial impact.
From March 28, the day Disney issued its statement against HB 1557, through April 22, Disney’s share price of $136.90 had fallen to $118.27 by April 22, a devaluation of about $33.9 billion with a market capitalization of $215.3 billion.