Disney: Florida Can't Scrap Special District Without Paying Debts Walt Disney World entrance. (Szilkov/Dreamstime.com)
By Solange Reyner | Wednesday, 27 April 2022 05:39 PM
Florida lawmakers rewrote promises made in Disney's Reedy Creek Improvement District's bond offerings when dissolving the special tax district, which created hairy contractual issues for the state, reports Bloomberg Tax.
Dissolving the special tax district "limited and altered" its ability to improve and maintain its project and collect charges and taxes, meaning Florida violated its pledge to bondholders, Reedy Creek told investors in a note dated April 21.
The bill doesn't say what should happen to its debts, but Bloomberg noted that another state law requires that by default, the county assumes a district's debt along with all of its assets when it is dissolved, meaning upward of $1 billion in bond debt could be unloaded to neighboring Florida counties
Florida Republican Gov. Ron DeSantis signed a bill into law last week to terminate the 1967 Reedy Creek Improvement Act, which has allowed the Walt Disney Co. to self-govern the land that houses its Orlando-area theme parks, hotels and resorts.
Republicans voted to do so in response to Disney officials' opposition to the state's new education law, which many say discriminates against the LGBTQ community.
"In light of the State of Florida's pledge to the District's bondholders, Reedy Creek expects to explore its options while continuing its present operations, including levying and collecting its ad valorem taxes and collecting its utility revenues, paying debt service on its ad valorem tax bonds and utility revenue bonds, complying with its bond covenants and operating and maintaining its properties," the note from Reedy Creek to investors said.
Jake Schumer, a municipal attorney in the Maitland law firm of Shepard, Smith, Kohlmyer & Hand, who wrote the Bloomberg piece, says difficult questions follow the Legislature's decision, specifically that the bill dissolving Reedy Creek "would have problems under contract clauses of the Florida and U.S. constitutions."
"Stating that the county assumes the debt is simple enough — actually figuring out what that means is a different story," writes Schumer.
"Reedy Creek spans both Orange and Osceola counties, so how will the debt be divided? Would it be by taxable value of property or by the properties themselves? And how would that apply to the utility revenue bonds when there is no easy way to divide which county the utilities rest in?"
Schumer told the Miami Herald/Tampa Bay Times Tuesday that the Florida Legislature has more work to do if it wants to dismantle the district.
"It simply can't go forward under the contract clause," he said. "They would have to pass something to address this."
DeSantis' office released a statement Friday indicating that more details were forthcoming.
"In the near future, we will propose additional legislation to authorize additional special districts in a manner that ensures transparency and an even playing field under the law," the statement read.