Why Disney has special status in Florida – and why the state wants to take it away
1. What sparked this fight?
In March, Florida lawmakers passed a DeSantis-backed law that bans discussion of gender identity and sexual orientation in public schools from kindergarten through third grade. The measure, which opponents have called the “Don’t Say Gay” bill, has been criticized by a number of businesses. After it was passed, Disney released a statement saying the legislation “should never have been passed and should never have been enacted.” The company said it would work for the law to be repealed or struck down by a court. That angered DeSantis, who said Florida was “governed by the interests of the people of the state” and not California’s corporate executives.
2. How did the Disney legislation come about?
On April 19, DeSantis asked the state legislature to consider ending the special privileges Disney enjoys through the existence of the Reedy Creek Improvement District, a special district in central Florida. Within hours, bills were introduced in the Florida House and Senate to end all special districts enacted in Florida before 1968 without further legislative action, which includes five more districts and Reedy Creek. The bill was quickly passed by both houses and was officially approved on Thursday.
3. What is the Reedy Creek Improvement District?
In the mid-1960s, company founder Walt Disney first discovered the more than 25,000 acres of swamp land he would use to build the company’s second theme park. With the nearest power and water lines ten miles or more away, Disney asked the Florida Legislature to create the Reedy Creek Improvement District. The special tax district was intended to help pay for the cost of services such as electricity, water, roads and fire protection that the company would need to build iconic structures such as Cinderella’s Castle and the contemporary complex. Under its legislative charter, the district operates much like a local government, providing services such as building and maintaining roads, operating fire and emergency medical services, garbage collection and recycling and management of utility systems such as water and electricity.
4. Is this an unusual arrangement?
There are tens of thousands of special districts across the United States, and in Florida alone there are more than 1,800 active special districts, according to the Florida Department of Economic Opportunity. What’s different about Reedy Creek is the breadth of its coverage, said Aubrey Jewett, a professor at the University of Central Florida who studies US politics with a focus on Florida. About two-thirds of the land in Reedy Creek is owned by Disney affiliates, including Walt Disney World Resort, Magic Kingdom park, Epcot, Animal Kingdom, and the dozens of hotels and amenities that an estimated 250,000 people pass through or pass through . visit every day. And Reedy Creek, which was set up specifically for Disney use, is the foundation that makes it all work.
5. What are its advantages for Disney?
For one, the existence of the Special District allows Disney to operate without much of the bureaucracy that typically accompanies dealings with local governments. Reedy Creek has its own building codes, called the EPCOT Building Code, which set design standards and criteria for amusement rides and attractions, for example. There’s also a financial upside: the District of Reedy Creek’s ability to issue $4 trillion in municipal bond market debt for infrastructure and utility projects. Municipal bonds are generally exempt from federal income tax and therefore often offer a lower cost of borrowing than a traditional corporate bond. Reedy Creek has about $1 billion in municipal bonds outstanding, according to data compiled by Bloomberg.
There are many things that are unclear. The bill, which is expected to be signed by DeSantis, calls for Reedy Creek to be dissolved in 2023 in the absence of any further legislation. Republican lawmakers suggested throughout the debate that they had a year to come back and fix any issues that arose. It’s also possible that the district will be re-authorized in some way during the next legislative season. Disney declined to comment on the Florida House and Senate vote to end the Reedy Creek District. But the district released a regulatory filing saying its outstanding bonds will continue to be paid. There are state statutes that stipulate that the obligations would be transferred to other local governments.
7. What ideas are discussed?
Florida lawmakers have suggested that debt and liabilities could be transferred to the small towns of Bay Lake and Lake Buena Vista, in addition to the county governments of Orange and Osceola. Bay Lake has a population of just 29, according to the 2020 census, while Lake Buena Vista is home to 24. Florida House of Representatives Speaker Chris Sprows, a Republican, said in an interview with Bloomberg Radio on Wednesday that there are “a million different ways” local governments could choose to deal with outstanding bonds. Jerry Demings, the Democratic mayor of Orange County, said Thursday that Florida lawmakers “didn’t have enough considered the ramifications.” And an Osceola County spokesperson said the government is beginning an analysis to understand the impacts of the legislation. “We don’t know what tax liabilities will be burdened after June 2023,” they said. in a press release.
8. How big is Disney in Florida?
The company is now among the largest employers in the state, with more than 70,000 local workers. Its operations include four theme parks and more than 29,000 hotel rooms. Its flagship park, the Magic Kingdom, welcomed nearly 21 million visitors in 2019 and Disney paid $780.3 million in state and local taxes in 2021. Orlando, meanwhile, has become the park capital of the world in theme, with rivals like Universal Studios. , SeaWorld Entertainment Inc. and Legoland are all nearby resorts. Disney continued to invest in its Florida attractions, with the opening of the Star Wars-themed Galactic Starcruiser hotel in March and the Guardians of the Galaxy roller coaster in May. And as part of a deal with Florida economic development officials, the company plans to move an additional 2,000 workers from California to a new corporate campus in the Orlando area.
More stories like this are available at bloomberg.com