In the latest Florida saga related to Disney’s self-governing special district, the Reedy Creek Improvement District, bondholders released a statement hitting back at the Republican legislation aimed at dissolving the district. It turns out there is no legal standing for Governor Republican Ron DeSantis’s attempts – at least not without a whole lot of cash. Here’s what you need to know.
Last week, DeSantis signed a bill dissolving Disney’s special district as retribution for the company’s decision to speak out against the “Don’t Say Gay” bill. The bill is set to go into effect in June 2023 and it will abolish Disney’s special district, meaning the company would not be able to run its park-like its own city.
The special-purpose district was created by state law in May 1967, and the law gives the company control over their land as a typical government would, allowing the company to skip some legal red-tape processes. This special district also means the company is responsible for paying for things typically covered by the local government like firefighting services, water, roads, and electricity – which isn’t cheap. According to the credit rating agency Fitch Ratings, Reedy Creek has about $1 billion in outstanding debt, CNN reports.
And it’s that massive debt that’s throwing a wrench in DeSantis’s plan to dissolve the special privileges. According to the 1967 law written when the special district was created, a written pledge from Florida was also included. The law states that Florida “will not in any way impair the rights or remedies of the holders … until all such bonds together with interest thereon, and all costs and expenses in connection with any act or proceeding by or on behalf of such holders, are fully met and discharged.”
Essentially, what that means, is Florida can’t dissolve Disney’s special self-governing district unless they want to pay off its $1 billion debt. This means the state would have to increase the property taxes of the residents – something the governor said wouldn’t happen. So, unless or until the state takes on the massive debt, it’s business as usual for Disney.
“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,” Reedy Creek said in a statement posted to the Municipal Securities Rulemaking Board.
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