What Happens if Disney's Special District is Dissolved?
On Thursday, April 21, 2022, Florida Governor DeSantis signed a bill passed by Florida's legislature to dissolve the Reedy Creek Improvement District, a special municipality designed by Disney, effective July 2023. In this blog, we explore what could happen if the district is dissolved.
Reedy Creek Improvement District is a special district that allows Disney to have full control over the land they own for Walt Disney World in exchange for providing their own public services within the district. For a refresher, check out our previous article that explains how the Reedy Creek Improvement District (RCID) came about and what it allows.
Which Special Districts are Impacted?
While the arrangement of a special district seems an incredibly unique arrangement by a huge corporation, the RCID is not the only special district currently operating in the state of Florida, and the bill signed by DeSantis Thursday would impact five other 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. Because of careful wording of the law indicating that special districts created prior to 1968 would be dissolved, a notable sixth special district is excluded: The Villages.
This is notable in that The Villages, a special retirement district in Florida which is exempt from Florida sales tax, was established in 1992. The Villages votes largely Republican. In fact, the press release when DeSantis signed the bill to dissolve other special districts was made in The Villages.
The RCID was established in 1967. The cutoff year in the bill of 1968 is clearly meant to target Disney. Add to that DeSantis's statement, making clear the motivation behind the bill: "Disney is a guest in Florida. Today we remind them."
The bill coincides with an ongoing battle between DeSantis and Disney that started with the "Don't Say Gay" bill which bans public schools from conducting education on gender identity and sexual orientation. After receiving pressure from Disney Cast Members, Disney's CEO Bob Chapek, who originally did not publicly oppose the bill, finally made a statement that Disney's goal as a company is to encourage the Florida legislature or the courts to repeal the Don't Say Gay law.
Roy P. Disney, the great nephew of Walt Disney, also released a statemen opposing the bill and revealing his stepchild Charlee Corra as transgender. This statement was praised by Abigail Disney, Roy's sister.
Because of this cause and effect relationship to "Don't Say Gay" and Disney's response, the dissolution of the RCID seems to be in retribution. This has not been disputed by DeSantis.
What Would It Mean if the Law Goes Into Effect?
If the law dissolving the RCID goes into effect, which is a big "if", it means that responsibility for the public services for the 40 square miles Walt Disney World now sits on would fall to Osceola and Orange counties in Florida. Basically, the counties Walt Disney World is in would now be responsible for public services. This means those counties would assume authority over how those 40 square miles are used, including zoning, building permits, resources, and more. But it also means those two counties must now pay for the public services Disney has been providing itself, such as providing first responders and maintaining roads.
This alone is estimated to raise property taxes for residents of Orange and Osceola county by 15-25%, according to a Forbes analysis. In other words, the expenses Disney took on itself and paid as a corporation become the burden of residents of these counties now. The analysis in Forbes goes on to explain that these counties would have to assume the debts of the RCID which right now total about $1 billion. While the RCID sees about $105 million per year in tax revenue, that will not get transferred to the counties should the district be dissolved. In fact, Disney, as a company would experience about a $163 million per year tax break for not having to pay for those public services or the debt. While Disney would lose authority over how the land is used, financially, they could come out ahead while Osceola and Orange counties pay the price.
While this might seem like a huge oversight for Florida's governor, we think DeSantis knows what he's doing here too. Osceola and Orange counties voted democrat in the 2020 elections. Through this bill, DeSantis can threaten Disney's authority over itself while also threatening democrats financially.
Of course, Osceola and Orange counties could be unable to pay the debt and shoulder the additional tax burden of assuming the RCID. Should that worst case scenario happen, we could see the pristine roads of Walt Disney World fall into repair, or more disruptive (or disrupted) emergency services. In sort, Walt Disney World might not be the pristine place guests expect, driving guests away. Disney, at this point, would have to consider leaving Florida.
What Would Happen if Disney Left Florida?
It's important to remember that the ability to create the RCID is what drew Disney to build Walt Disney World in Florida in the first place. Disney World's location in Florida is an asset to the state both in terms of jobs and tourism.
Walt Disney World is among Florida's largest employers, if not the largest, creating over 70,000 local jobs. In fact, Disney had recently begun moving jobs from California to Florida because of the perception that Florida was more business friendly, so it should be interesting to see how the removal of the RCID impacts that.
Walt Disney Worlds 29,000 hotel rooms and theme parks attract over 50 million visitors per year, resulting in more than $5 billion in local and state tax revenue.
So, if this "argument" between Disney and DeSantis escalates to the point that Disney decides to abandon Walt Disney World (unlikely, but possible), Florida would lose 70,000 jobs and $5 billion per year in tourism.
Our Take: What We Think Will Happen Next
So, here's what we think. We think this bill is crafty in that it allows more than a year for these provisions to take effect. Should the bill be allowed to go into effect, without challenge, it wouldn't happen until July of 2023. Why so long? DeSantis could say it is to allow the counties and Disney to prepare financially for assuming/losing responsibilities, which is a fair and sound argument. But this length of time also allows ample time for the bill to be challenged. And we think DeSantis wants it to be challenged.
Again, Florida has an advantage of being seen as business friendly. It benefits greatly from Walt Disney World being in that state. There are any number of other states that would be happy to have Walt Disney World. Allowing this bill to actually go into effect would send a message that Florida is less business friendly than it had been, would burden two major counties financially, and would potentially result in loss of jobs and revenue for the state. And DeSantis knows, because DeSantis has said so, that this bill is a revenge bill for Disney's statement against the "Don't Say Gay" law, which puts this bill in a lot of jeopardy of being seen as the restriction of free speech.
And even if that's not apparent to the judicial branch that has the power to strike down this bill, Disney has enough money and resources to lobby to make it apparent. Disney has the bargaining chips of jobs and tourism revenue, as well as the fact that they don't really stand to lose much and residents of Florida stand to lose quite a bit. Should Disney choose to fight this bill, we think the bill doesn't stand a chance of actually going into effect.
And we're giving DeSantis credit for knowing this, and having crafted the bill this way. Maybe we give him too much credit, but we think that appearing to fight Disney makes DeSantis's political followers think he's doing something. And if it fails, he can say he tried and "the libs" or "the big mean corporation" or whatever, prevented his best efforts to do what was right. He looks good politically to the people who want these things from him, no matter the outcome. We might be giving him too much credit for being crafty, but it's Machiavellian.
We debated writing about this today. We don't like to bring politics into our blog, but in the end, we don't think this is an expression of politics, or a request that you as a reader have any particular politics. This is an analysis of what is happening in the news, which is political in that it involves bills and state governments. And again, just saying "Disney" these days seems to be politically charged, which it should not be.
Let us know over on our Facebook page what you think. All civil discussion will be allowed. Untrue statements will be fact-checked, not out of spite, but out of the preservation of reality. Name-calling, personal arguments, threats, and basically uncivil behavior will be blocked.
Until next time...
Comments