Gov. Ron DeSantis on Friday signed a bill aimed at dissolving a special taxing district that has granted Walt Disney World unique self-governing powers for more than five decades, even as a leading bond-rating agency cautioned investors about the proposed changes.
The bill (SB 4-C) targets the Reedy Creek Improvement District, which encompasses about 25,000 acres in Orange and Osceola counties on property in and around the “most magical place on earth.” The district has authority over issues such as land use and provides traditional functions of government, including fire protection and wastewater services.
DeSantis, who is seeking re-election and is widely mentioned as a potential 2024 Republican presidential candidate, came out swinging against Disney — one of the state’s largest employers and a major tourism draw — after the company vowed to fight a controversial law restricting education on sexual orientation and gender identity in schools.
The governor added two Disney-related measures to a special session this week on congressional redistricting. The Republican-controlled Legislature quickly took up the bills and passed them.
During a bill-signing ceremony Friday in Hialeah Gardens, DeSantis acknowledged that the measures were aimed at punishing Disney for defying him on the education bill, which was formally titled the “Parental Rights in Education Act” but was dubbed by opponents as the “don’t say gay” bill.
“We signed the bill, and then incredibly they (Disney officials) say we are going to work to repeal parents’ rights in Florida, and I’m just thinking to myself, you’re a corporation based in Burbank, Calif., 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,” the governor said at the campaign-style event.
The measure affects the Reedy Creek district and five smaller special districts: the Bradford County Development Authority, the Sunshine Water Control District in Broward County, the Eastpoint Water and Sewer District in Franklin County, the Hamilton County Development Authority and the Marion County Law Library.
The law would dissolve the districts on June 1, 2023, though it would allow the Legislature to re-establish the districts before then.
If it is dissolved, the Reedy Creek district’s debt obligations, revenues and responsibilities would be transferred to Osceola and Orange counties and the small cities of Lake Buena Vista and Bay Lake.
The legislative action prompted credit-rating agency Fitch Ratings on Friday to place a “rating watch negative” on about $1 billion in outstanding district debt.
The district has about $79 million in outstanding utilities revenue and refunding bonds and approximately $766 million in outstanding ad valorem tax bonds, according to an alert issued by Fitch. The district’s various debt ratings range from A to AA-, Fitch said.
“The negative watch indicates the ratings could stay at their present levels or potentially be downgraded,” Fitch said.
The negative watch “reflects the lack of clarity regarding the allocation” of the district’s assets and liabilities, “including the administration of revenues pledged to approximately $1 billion in outstanding debt,” following the dissolution of the district, Fitch said.
Fitch said the debt is expected to be transferred to Orange County and, to a lesser extent, Osceola County.
“Fitch believes the mechanics of implementation will be complicated, increasing the probability of negative rating action,” the agency said.
The Fitch alert, issued before DeSantis signed the bill later in the day, did not lower the district’s bond ratings but cautioned investors about future actions.
The message also touched on what is known as ESG, or environmental, social, and governance principles, which the agency ranks on a scale of one to five. Scores of one or two indicate “no impact on the credit score rating;” a score of three reflects minimal risk; and scores of four and five “indicate that the ESG risk is either an emerging risk or a contributing factor to the credit decision,” according to Fitch’s website.
Fitch revised the Reedy Creek district’s “general government” score on “rule of law, institutional & regulatory quality, control of corruption” from three to five “to reflect state actions to dissolve the district, which points to a substantially reduced degree of independence from political pressure,” the agency said.
“These actions potentially diminish government effectiveness and could prove harmful to bondholders, which has a negative impact on the credit profile and is highly relevant to the Negative Watch action,” Fitch said.
Meanwhile, S&P Global Ratings Agency on Friday did not issue a warning about the Reedy Creek district but acknowledged the district’s pending dissolution.
The legislation did not lay out a plan for exactly how the district’s debt obligations would be transferred.
During debate on the measure this week, Democrats warned that taxpayers in Central Florida could be on the hook to pick up the tab for the outstanding debt as well as utilities and other services.
Rep. Andrew Learned, D-Brandon, told The News Service of Florida that Fitch’s warning translates into “real world consequences” for DeSantis and Republican lawmakers’ culture wars. He noted that the credit-agency warning came even before the district is dissolved.
“That’s the main takeaway. We are all going to pay more now, just because of the threat. Nothing even has to change. Just the threat of it changing is going to raise prices and affect bond ratings. And that’s what’s happening,” Learned said.
But DeSantis brushed off such concerns Friday.
“We’re going to take care of all that. Don’t worry. We have everything thought out. Don’t let anyone tell you that somehow Disney is going to get a tax cut out of this. They’re going to pay more taxes as a result of that,” he said.
DeSantis on Friday also signed a separate bill targeting Disney that will remove an exemption for theme parks that was placed in a 2021 law seeking to punish social-media platforms that strip users from platforms or flag users’ posts.
A federal judge last year issued a preliminary injunction blocking the law from being enforced, saying it was “riddled with imprecision and ambiguity.”
An Atlanta-based appeals court is scheduled to hear arguments Thursday in the state’s appeal of U.S. District Judge Robert Hinkle’s decision.
–Dara Kam, News Service of Florida
Well done Governor AH.
Where does the average citizen of Florida enter in your calculation.
Several years ago my wife and were in a line to meet you in St. Augustine.
You walked away before the last person in the line.
At that time I know you are a looser.
Stay strong, Disney!
I guess neither Yale or Harvard can teach common sense to turnip. This is what happens when the Governor and our Republican legislator get together and scheme up a plan to punish Disney for practicing thier right to free speech. Not only did DeSantis, in all his wisdom, punish his constituents with a huge tax bill, he may have handed Disney a golden egg as punishment for defying him by disagreeing. Now, taxpayers can pay for fire, police, water and electric infrastructure and take possession of the 1 billion in outstanding municipal bonds.
And along with the Municipal Debt a lower Credit Rating overall so it will cost more to borrow, require higher rates to sell the future issues in the Market, and the principal values are down 10% on outstanding Bonds in the open Market. So go ahead and keep shooting your mouth off I will make the popcorn and watch you piss off more Constituents. Bless your heart LOL
Sam Adams says
Who wants to bet this never gets implemented? It’s a brilliant move by a presidential wannabe. Shows that fierce brawler image he adores. But once Disney starts donating to Gov Ron and his other culture warriors again this will go away as quickly as it was adopted.
Wouldn’t it be nice if these guys focused on issues that are truly impacting most Floridians e.g. flawed unemployment, healthcare, property insurance, environmental, educational policies, etc
Somehow I find it hard to believe that our governor would sign this bill if it would be a burden to the state or those districts.
Chicken Little yelling that the sky is falling is a bit premature. Disney will be paying their fair share. Their stock is falling like a lead balloon and I bet dollars to donuts that Disney’s CEO will be fired soon. Being woke does not represent Disney’s share holders.
I don’t think “woke” means what you think it means. I think we should add a tax every time a Republican throws that word around in the face of literally any social issue they disagree with.
Frank W says
You do know that the cities of Lake Buena Vista and Bay Lake are entirely within the Walt Disney World property and has a combined total of less than 60, all Disney employees. Disney pays for the all the services now and will continue to pay for all the services which includes debt servicing.
No, Disney does not pay for the services you mention. the Reedy Creek Improvement District (RCID) pays for those services. RCID is funded through a ‘surcharge’ on their tax bill paid to Osceola and Orange Counties. This is in addition to the normal property taxes which Disney pays to the cities, counties, schools and other taxing agencies, similar to the way HOA fees are collected in your tax billings. Without researching every property Disney owns, the best guess is that of the $160,000,000 Disney pays to the counties, about 60% is for the normal tax stuff with the balance being the RCID ‘surcharge’. And those 60 employees who live in Bay Lake or Lake Buena Vista you mention, they are renters and not subject to property tax.
When the RCID dies, so do the additional funds paid by Disney to RCID through their tax bill. But don’t worry, they will continue to pay their regular property taxes.
As a footnote, RCID is not a cash cow, every year they spend more on maintenance and infrastructure than they receive through the tax surcharge. This deficit is paid directly to RCID. How’s that going to work when RCID is no more.
The guy never spoke to his neighbors when he lived in Palm Coast.
The Republicans in the neighborhood were turned off with this guy.
Vote no for Soviet DeSantis.
He only lived here due to gerrymandering, but he did thwart the erection of a memorial to the crew of the USS Liberty while here.
The dude says
So our esteemed governor and dedicated culture warrior has instructed his politburo to engage in a game of chicken with the State’s largest private employer for exercising their right to free speech…and his toadies hastily comply.
Companies have no businees engaging in social issues. They should just stick to their business.
A concerned observer says
There are two axioms in play here. First; you can please some of the people all of the time, you can please all of the people some of the time but you cannot please all of the people all of the time. Secondly, every action has results, nothing happens in a vacuum.
Yes, tax burden previously levied on Disney will now fall to the residents of the area. However, Disney will now pick up the tax burden for the area they will now fall on them. This is as it should be. I do not see anything which indicates the dollar amount of tax will fall on the local residents and what will fall upon Disney. It may be a wash or favor one or the other. However, will now be equitable and not a political plum for Disney. The rates at the Disney attractions may increase or decrease according to their operating costs relative to the new taxing structure. With their investment in their business, there is virtually no chance that they will pull up stakes and relocate out of the area. A tax advantage such as the one they had will only attract a new company to the area and not keep a huge business (with the incredible investment already in place) to remain.
The tag line “DeSantis Signs Disney-Punishing Bill, Would Shift Nearly $1 Billion in Debt to Taxpayers” is a slant by the author predicated by his or her desire to have their story read by as many people as possible and inflame the taxpayers who fail to see the whole picture.
Sad to see you try to defend the indefensible. You can try but it’s jus laughable.
No, you are missing a key point here, Disney does already pay their fair share of taxes to Orange and Osceola Counties. Last year they paid $11,900,000 for the Hollywood Studios Property and $12,500,000 on the Epcot property. They have so many individual properties I have not tried to review them all. However, I have read in other sources the total is well over $150,000,000 per year paid to the respective counties. This has also been stated by the Orange County tax officials. Granted this number includes the 13.57 mil rate for Reedy Creek Improvement District (RCID) which is collected by the county as required by the state. That amount is returned to Reedy Creek much the same way that HOA fees for many communities are returned to the HOA. The money is used by RCID for road maintenance, fire / EMS services, electrical power generation, sewer, water, trash, roadside cleanup and what-have-you. So in essence, Disney is paying itself to provide the services that would normally be provided by the city/county from the taxes received in addition to what would be called a ‘normal’ tax billing. The amount paid to RCID by Disney is in addition to the tax paid to the City of Bay Lake, Lake Buena Vista, Orange County, Osceola County, the public schools and a couple of water management districts. Additionally, RCID operates at a loss every year with the deficit funds being replaced directly by Disney.
What will happen when RCID ceases to exist is that the counties can no longer bill Disney for an entity which the state has shut down. Now, who will pick up the additional funds necessary to cover the expenses that Reedy Creek paid? The cites of Bay Lake, Lake Buena Vista or Orange/Osceola Counties? Your ‘equity’ argument does not exist.
As for the billion dollar debt shift, it is real. RCID has like every tax district, floated bonds to accomplish certain tasks such a building roads, sewer line and what not. That current debt is serviced by an approximate $62,000,000 payment each year. When RCID closes its doors, those obligations will fall to the remaining taxing districts. So here again, the local tax payers will foot the bill.
The total debt to be absorbed by the remaining tax authorities will be about $200,000,000 per year.
Derrick Redder says
The left wants everyone to pay their fair share.
Especially the Wealthiest . And since none of the others amusement parks get the breaks that Disney (who is partially owned by the CCP). Don’t worry every county effected is taxed & controlled by Demonrats so I’m sure they can shake some $$$ out of another tree.
The dude says
I mean… really. If I pay 10% of my income to the government, why wouldn’t I expect the same of “the wealthiest”?
Common sense has never been the hallmark of conservative thinking.
They all make it up as they go along to fit their Agenda or lack of at any time typical
Way to go deathsantis cost the people of florida more money to get back a disney, do you care of course not. He just wants to get back at them at everyone elses expense. And he thinks he deserves to be a political figure when he does nothing to help the people, only himself.
First he tries to legislate the books we read; and now what we say. The price tag to Floridians will be billions. Major companies who might consider moving operations here will think twice and consider alternate sights. The expansion Disney is considering will now probably not be in Florida. The Governor of Colorado has already offered space for expansion. The Republican Legislators who supported this insanity now face the wrath of the LGBTQ+ Voters who are in large number of Disney Wmplotees. Add this to the Parkland Students who now can vote and the result might be catastrophic for them.
DeSantis is trying to run Florida utilizing the same strongman tactics as used in China, Cuba, Russia, etc.
What Else Is New says
Donald R. Slash-and-Burn DeSantis gets the attention he wants. Good or bad. Instead of signing the medicaid expansion, solving the pervasive algae scum, helping with the property insurance calamity, attention to critical climate change, honoring public schools and more, this Trump wannabe slashes voting rights, pushes Aryan culture, hires vigilantes to scare voters, even though the four voter frauds from 2020 were Repubs from The Villages. On top of all that, he attacks Mickey and Minnie.
Retaliation for a company speaking out for their employees and guests. Should be an interesting court fight with the 1st Amendment on the line. Best guess though is when he wakes u, from his bullying fantasy, and realizes this just doesn’t affect two counties but the entire State he’ll make it go away and make it look like he won. Just a Poser he is.
Whether someone agrees or disagrees with Desantis “punishing” Disney, Desantis is becoming more and more like Trump!!! We have seen and is now being totally revealed through investigations, what Trump really is. Vote for Desantis as governor and you will get another Trump, only perhaps worse, for Florida. He is very dangerous and, even if re elected, will continue to follow Trumps “advice and behavior” because trump runs the RNC and will have election influence over Desantis until the presidential election.
More of the implosion of the GOP from the inside out. Rick Scott was just as deplorable as they come, but at least he knew how to keep his big mouth shut at the right time so as to get to the next level of his career. This pudgy loud mouthed clown DeSantis will be unemployed by the end of the year wondering where it all went sideways. Hell, he barely beat out a gay crackhead four years ago! Nikki Fried is going to be the next governor of Florida, you can bank on that, while she now banks the Disney contributions coming her way to make sure it happens.
Gov Desantis warned us about progressive liberals coming from other states and trying to influence our FREE state of Florida with failed progressive policies they are themselves running from!
Since this story was published, the Reedy Creek Improvement District board met and went over some of the bond debt details.
The document which established the District, as now reported by other sources, states that on page 73, in Section 56, it says: “…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…” “…and that it will not modify in any way the exemption from taxation provided in the Act, 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.”
Just a reminder, Article I, Section 10, Clause 1 of the US Constitution says: “No State shall…” “…pass any…” “Law impairing the Obligation of Contracts,…”
I believe that this means that either the State of Florida pays off the Reedy Bond Debt or it cannot dissolve the District until 2038. Thanks to DeSantis and his legislative lackies, if Reedy Creek is dissolved next year, Florida taxpayers will be on the hook for nearly a billion dollars. How is that fiscally responsible?