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Magic no more? DeSantis questions Disney's special operating city in Florida

The Reedy Creek Improvement District, a special administrative zone that is the site of Walt Disney World, has decades of history in Florida.

MIAMI — Imagine if Disney had to go through its local planning and zoning board to build a new castle. Or if it suddenly had to rely on Orange County, Florida, and other local jurisdictions to pick up its trash.

Or if it could no longer sell its own bonds to build roads in its parks.

That's what could happen if some Florida legislators get their way.

On March 30, Spencer Roach, a member of Florida's House of Representatives who represents State House District 79, tweeted that he and other legislators were continuing to discuss repealing a special legislative act that created the Reedy Creek Improvement District. It's the unique zone — believed to be among the only example of its kind in the U.S. — in which Disney's largest theme park and resort operates in the Sunshine State.

The discussions came in response to Disney’s new opposition to Florida House Bill 1557, dubbed the “Don’t Say Gay” bill by critics, which restricts the teaching of sexual orientation or gender identity.

Image:  Advocates march at a rally at the Walt Disney Company in Orlando, Fla., spearheaded by advocates from AIDS Healthcare Foundation on March 3, 2022.
Advocates march at a rally March 3 at the Walt Disney Co. in Orlando, Fla., spearheaded by advocates from the AIDS Healthcare Foundation.Phelan M. Ebenhack / AP Images for AIDS Healthcare Foundation

When asked about the unique arrangement during a public appearance on Thursday, Florida Gov. Ron DeSantis indicated Disney had long received special treatment that it may no longer merit.

“Someone said Disney has all these special perks," DeSantis said. "Should you retaliate against them for them coming out and demagoguing this bill? I don’t believe you 'retaliate,' but I think what I would say is, as a matter of first principle, I don’t support special privileges in law just because a company is powerful, and they’ve been able to wield a lot of power."

Florida's legislature is not currently in session, so any measures taken would require a special convening, something Florida's House and Senate leaders have not yet indicated is coming.

In an interview Friday afternoon, state Rep. Roach called Reedy Creek "the largest tax evasion scam in Florida history, if not U.S. history — and we’ve had our share of scams in Florida."

"They have an advantage," Roach continued, " and it's anti-economic liberty. That is my bent here. Really, the fundamental question should be: Why did we do this in the first place? As Floridians, do we believe in free markets or not? If we do, then this is wrong."

Disney did not immediately respond to an emailed request for comment.

So what exactly is the Reedy Creek Improvement District, and what does it allow Disney to do?

Building castles

As founder Walter E. Disney was looking to set up his second theme park and resort in the mid-1960s, he began lobbying the state of Florida to grant his company an entire jurisdiction that would function as the equivalent of a county government but retain its own special rules.

In 1967, the Florida legislature created the Reedy Creek Improvement District. This governmental district, controlling approximately 25,000 acres, would be responsible for paying the cost of municipal services, including power, fire protection, water, waste management and roads.

Day-to-day operations are conducted separately from Disney, but the company, as Reedy Creek's largest landowner, effectively controls the district's Board of Supervisors.

The establishment of Reedy Creek frees Disney from asking a local planning commission for approval to build new structures or pay governmental impact fees when it builds new structures.

"You can sympathize with that desire," said Richard Fogelsong, a retired political science professor at Rollins College in Winter Park, Florida, and the author of "Married to the Mouse: Walt Disney World and Orlando," a book about the creation of Walt Disney World. "They wanted to build things like a 500-foot fiberglass palace castle — and there's no clause in the local code for something like that."

But most important is Reedy Creek's ability to collect taxes and issue bonds. For the current fiscal year, the district has a budget of more than $169 million — more than 90 percent of which comes from the collection of property taxes on Disney's real estate.

That means it can avoid the headaches of local government that often come with asking residents to pay taxes to fund infrastructure.

"It's allowed them to create the typical municipal-type services at a level Disney wanted for its properties," said Tom Wilkes, an Orlando-based attorney with GrayRobinson who has worked on matters involving Reedy Creek. "For instance, the roads are generally a notch or two higher than outside the district."

As a result, Reedy Creek currently maintains an AA bond rating from Fitch, one of the biggest credit-rating agencies in the U.S., which notes Disney holds large reserves and is able to maintain broad revenue-raising powers, ensuring high financial flexibility.

It is not clear what the ultimate impact on Disney's bottom line would be if Reedy Creek were to be dissolved, Wilkes said. If anything, it could end up costing area taxpayers more if local governments had to begin servicing Disney parks, he said, noting that Disney pays property taxes to Orange and Osceola counties.

"Disney pays its way when it comes to government services," Wilkes said. "It pays the two counties, and two county school boards — and gets very little services in return. It doesn't get any exemptions there."

'Shot across the bow'

This is not the first time Florida officials have challenged Reedy Creek's status; in the past, Disney has agreed to pay as much as $13 million in exchange for maintaining the district.

As one Orange County lawmaker put it in the 1980s: “Without question, Disney is the largest taxpayer in Orange County. Without question, Disney is the largest employer in Orange County. And without question, Disney causes some of the greatest impact in Orange County.”

Roach, the lawmaker who represents the state's 79th House District, said barring a special legislative session, a bill could not be introduced to challenge Disney's hold on Reedy Creek until 2023.

"Right now it's just an idea, though it's not a new one, that I’m thinking about and have socialized with some colleagues," Roach said. He continued: "Disney is politically vulnerable, and they’re in a position now where, if it's politically possible to correct this aberration of the free market ... although it may on the surface look retaliatory, in politics, timing is important."

"And if this is something we want to address, the time to do that is not when they're untouchable, but when they're politically vulnerable."