The Walt Disney Co. Is among Florida’s biggest employers and Walt Disney World has been a central part of the state’s public image for decades. Now, in a matter of days, the Florida legislature has passed a bill that could strip Disney of special privileges that for the last half-century have granted the company a measure of quasi-governmental authority over a giant tract of land that includes Disney World and other Disney properties. On April 21, the legislature sent the bill to Governor Ron DeSantis, who is likely to sign it. Critics say the move is punishment against the entertainment giant’s criticism of a recently passed Republican-backed law that limits instruction of gender identity and sexual orientation in Florida schools.
1. What started this fight?
In March, Florida lawmakers passed a law supported by DeSantis that bans discussion of gender identity and sexual orientation in public schools for kindergarten through third grade classes. The measure, which opponents have called the “Don’t Say Gay” bill, was criticized by a number of companies. After its adoption, Disney issued a statement saying that the legislation “should never have been passed and should never have been signed into law.” The company said it would work to get the law repealed or struck down in court. That angered DeSantis, who said Florida is “governed by the interests of the people of the state” and not by California corporate executives.
2. How did the Disney legislation come about?
On April 19, DeSantis asked the state legislature to consider terminating the special privileges Disney enjoys through the existence of the Reedy Creek Improvement District, a special district in Central Florida. Within hours, bills were filed in the Florida House and Senate to terminate all special districts enacted in Florida prior to 1968 without additional legislative action, which includes five other districts and Reedy Creek. The legislation moved quickly through both chambers, and was formally approved on Thursday.
3. What is the Reedy Creek Improvement District?
In the mid-1960s, company founder Walt Disney first scouted out 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 got the Florida legislature to create the Reedy Creek Improvement District. The special taxing district was meant to help pay the cost of services such as power, water, roads and fire protection that the company would need to build iconic structures such as Cinderella Castle and the Contemporary Resort. Under its legislative charter, the district operates much like a local government, providing services like building and maintaining roads, operating fire and emergency medical services, picking up waste and recycling and managing utility systems like water and power.
4. Is this an unusual arrangement?
There are tens of thousands of special districts across the U.S. 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 scope of its coverage, said Aubrey Jewett, a professor at the the University of Central Florida, who studies U.S. Politics with an emphasis on Florida. About two-thirds of the land within Reedy Creek is owned by the affiliates of the Disney, including the Walt Disney World Resort, Magic Kingdom Park, Epcot, Animal Kingdom and the dozens of hotels and amenities that roughly 250,0000 people travel through or visit everyday. And Reedy Creek, which was set up specifically for Disney’s use, is the foundation that makes it all work.
5. What are its benefits for Disney?
For one thing, the existence of the special district allows Disney to operate without much of the red tape that usually comes with dealing with local governments. Reedy Creek has its own building codes, called the EPCOT building code, which sets forth design standards and criteria for rides and amusement attractions, for example. There’s also a financial benefit: the ability of the Reedy Creek district to issue debt in the $4 trillion municipal bond market for infrastructure and utility projects. Municipal bonds are typically exempt from federal income taxes, and so often offer a lower cost of borrowing than a traditional corporate bond. Reedy Creek has about $1 billion of municipal bonds outstanding, according to data compiled by Bloomberg.
6. What comes next?
There’s a lot that’s not clear. 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 legislative action. Republican lawmakers suggested throughout the debate that they had a year to come back and fix any issues that came up. It’s also possible the district could be re-authorized in some manner during the next legislative season. Disney declined to comment on the Florida house and senate’s vote to terminate the Reedy Creek district. But the district posted a regulatory filing that said its outstanding bonds will continue to be paid. There are state statutes that say that the obligations would be transferred to other local governments.
7. What ideas are being discussed?
Florida lawmakers have suggested the debt and responsibilities could be transfered to the small cities of Bay Lake and Lake Buena Vista, in addition to the governments of Orange and Osceola counties. Bay Lake has a population of just 29, according to the 2020 census, while Lake Buena Vista is home to 24. Speaker of the Florida House of Representatives Chris Sprowls, a Republican, said in an interview with Bloomberg Radio on Wednesday that there are “a million different ways” the local governments could chose to deal with the outstanding bonds. Jerry Demings, the Democratic mayor of Orange County, said Thursday that Florida legislators “have not adequately contemplated the ramifications.” And a spokesperson for Osceola County said that the government is beginning an analysis to understand the impacts of the legislation. “We are uncertain of what fiscal responsibilities will be encumbered after June 2023,” they said in a statement.
8. How big a deal is Disney in Florida?
The company is now among the state’s largest employers, with more than 70,000 local workers. Its businesses there include four theme parks and more than 29,000 hotel rooms. Its flagship park, the Magic Kingdom, welcomed nearly 21 million guests in 2019 and Disney paid a combined $780.3 million in state and local taxes in 2021. Orlando, meanwhile, has become the theme-park capital of the world, with rivals including Universal Studios, SeaWorld Entertainment Inc. And Legoland all operating resorts nearby. Disney has continued to invest in its Florida attractions, with the Star Wars-themed Galactic Starcruiser hotel opening in March and a Guardians of the Galaxy roller coaster coming in May. And under a deal arranged with Florida economic development officials, the company plans to relocate 2,000 more workers from California to a new corporate campus in the Orlando area.
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