Disney’s special tax district has been a thorn in the state of Florida for years. The bill that passed was pushed by Gov. Ron DeSantis, who said it would bring $3 billion to the state and make it less appealing for businesses looking to move out of Orlando.
The “Reedy Creek Improvement District” is a special tax district in Florida. It was created by Walt Disney World, and it has been the subject of controversy for many years. The Florida Senate recently passed a bill to eliminate this district.
The Republican-led Florida Senate passed a bill Wednesday that would abolish a special tax district that allows Walt Disney Co. DIS -5.56 percent to govern the land where its theme parks are located, as lawmakers seek to punish the company for opposing legislation restricting gender and sexuality education in schools.
The proposal will most certainly be approved by the GOP-controlled House on Thursday. In a special session called by Republican Gov. Ron DeSantis this week, he requested that legislators examine such a measure, and he has said that he would sign it.
Disney’s Florida businesses might suffer a huge setback if the almost 40-square-mile region near Orlando is lost.
The Reedy Creek Improvement District, established in 1967, exempts Disney from a slew of rules as well as some taxes and fees. For more than 50 years, it has enabled the entertainment giant to administer its theme parks and resorts in the state with little red tape.
According to a source familiar with Disney’s finances who investigated the matter over a decade ago, it saves the corporation tens of millions of dollars each year.
Disney refused to comment on the bill on Wednesday. Reedy Creek’s spokesperson did not respond to queries seeking comment.
Mr. DeSantis and Republican legislators have fought with Disney over the latter’s opposition to the newly adopted Parental Rights in Education Act, dubbed the “Don’t Say Gay” bill by opponents. The bill bans school education on sexual orientation and gender identity until third grade, and restricts it to “age-appropriate” content for later kids.
Subscribe to our newsletter
The tenth point.
Every day, a customized, guided tour of The Wall Street Journal’s finest scoops and articles.
Disney first refused to comment on the law, but workers pressured the company to do so. Following its passage, the corporation committed to work for its repeal as well as to oppose similar legislation in other states.
Any special district created before to the passage of the Florida Constitution in 1968 and not renewed since then would be dissolved on June 1, 2023, according to a measure approved by the Senate 23-16 on Wednesday. Following its dissolution, Disney may attempt to re-establish a special area.
Reedy Creek, which has a permanent population of around 50 people and its own board of supervisors and fire department, enables Disney to develop new facilities and expand its parks without having to follow state or county building, sewerage, and drainage rules. There are four theme parks, two water parks, a sports complex, hotels, shops, and restaurants on the property.
“When driving up to Walt Disney World, you’ll note that there are no potholes. Disney doesn’t have to wait for the county to repair them, according to David Ramba, executive director of the Florida Association of Special Districts.
“Because it isn’t a normal bureaucracy, Reedy Creek is perhaps the most efficient municipal government in Florida.” He described it as “managed like a business.”
Mr. Ramba believes that if the bill is passed into law, Orange County and, to a lesser degree, Osceola County would be responsible for Reedy Creek’s administration.
“The special session in Tallahassee is being closely monitored by Orange County Government, especially when it comes to unfunded expense transfers to local governments,” Mayor Jerry Demings stated in a statement. A spokesman for Osceola County said the county is keeping an eye on the law, but refused to further.
Disney presently pays both counties property and other taxes. Furthermore, as the dominant landowner at Reedy Creek, the firm contributed the majority of the district’s $153 million in tax and fee income in fiscal 2021. This money supports all of the district’s administrative costs, including paying the wages of around 400 workers and repaying $977 million in long-term bond debt issued by Reedy Creek throughout the years.
Mr. Ramba noted that if the district is dissolved, the debt would fall on Orange and Osceola County taxpayers, but the counties will likely create a new special taxing district to tie bond payments to tax income generated by Disney’s holdings in Reedy Creek. Additionally, some of the taxes and fees presently paid by Disney to Reedy would be diverted to local governments.
In the mid-1960s, Walt Disney, the company’s late creator, secretly visited Florida to survey sites for a new theme park. He persuaded his brother Roy, who handled most of the firm’s finances, to press the state for a special district when the corporation located the tract that would later become Walt Disney World.
According to James Clark, a historian at the University of Central Florida who has studied Reedy Creek, Walt Disney was unhappy with how the land surrounding the company’s original Disneyland park in Anaheim, Calif., had been developed, and in Florida, he wanted more control over the businesses that opened around the resort.
“Why are we purchasing 27,000 acres?” Roy would ask, and Walt would respond, “Don’t you wish we had purchased 27,000 acres in Anaheim?” Mr. Clark expressed his thoughts.
According to Mr. Clark, there would also be a tumultuous dispute about how to pay off Reedy Creek’s municipal debt.
“If taxpayers are forced to pay for the bonds, the counties will be the biggest losers from this plan, and Disney would lose a lot of power by losing Reedy Creek,” Mr. Clark said. “If this law passes, Ron DeSantis will be the sole unambiguous winner.”
There are two more key perks that Disney enjoys from the state that haven’t been targeted by legislators in the present spat. One is a $570 million tax cut granted by Florida to the corporation in exchange for relocating 2,000 workers to the state. The other is an Orange Area ordinance that designates a portion of hotel room fees to encourage tourism in the county.
Nearly 80,000 people work for Disney in the state, largely at its theme parks and resorts. According to Visit Orlando, when the region is fully operational, tourism generates $5.8 billion in local and state tax income.
Robbie Whelan and Arian Campo-Flores can be reached at rob[email protected] and [email protected], respectively.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
