The Walt Disney Company's special governing district in Florida has responded to a new law seeking to dissolve it, saying the state would be on the hook for the district's outstanding debt obligations of about $1 billion.
The law, which Gov. Ron DeSantis signed in a special legislative session last week, would end any independent special district the Legislature established before Nov. 5, 1968.
The Reedy Creek Improvement District was established in 1967 by Disney and the state as a way for the entertainment giant to raise its own revenues to pay for municipal infrastructure expenses like roads, waste services, fire safety and water at Disney World. Reedy Creek issues bonds and levies taxes on properties within its boundaries, which border the Orlando area, effectively on behalf of 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," the statement says.
The dissolution act was passed in response to Disney’s stance on the so-called Don’t Say Gay law, which restricts teaching children about gender and sexual orientation.
Reedy Creek's new statement reflects some experts’ comments that Florida taxpayers could end up paying for the district's outstanding obligations if Disney were to lose control of it.
“Disney pays its way when it comes to government services,” Florida lawyer Tom Wilkes, who has worked on matters involving Reedy Creek, said this month. “It pays [two] counties and two county school boards — and gets very little services in return. It doesn’t get any exemptions there.”
In response to the law's passage, the ratings agency Fitch placed the Reedy Creek Improvement District's financial obligations on negative watch. A Fitch executive said in a statement that it remained unclear how the debt would be treated if Reedy Creek were dissolved but that it would affect Disney.
"Dissolution of the district would eliminate access to tax-exempt issuance," said Michael Rinaldi, Fitch’s head of U.S. local government ratings, adding that "it could cost Disney and other landowners within the district more to finance various projects.”