Disney’s Reedy Creek Says Florida Can’t Disband It Without Paying Its Debts

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Reedy Creek Improvement District website homepages – Courtesy of Shutterstock – Tada Images

Disney’s self-governing special district, the Reedy Creek Improvement District, says the Sunshine State’s choice to dissolve the district in 2023 is not legal unless Florida pays off Reedy Creek’s large debt.

Reedy Creek is a special use district created by state law in May 1967 to give the Walt Disney Company broad governmental authority over property surrounding its central Florida theme parks. Reedy Creek currently has about $1 billion in outstanding bond debt as a result of that power, according to ratings agency Fitch Ratings.

The 1967 law also includes a pledge from Florida to its bondholders, according to Reedy Creek.

The statute states that Florida “shall not in any way prejudice the rights or remedies of holders…until all such obligations and interest therein, and all costs and expenses of any act or proceeding by or on behalf of such holders, are fully satisfied and discharged.

Reedy Creek expects to continue operating as usual following the engagement.

“In light of the State of Florida’s commitment to bondholders in the District, Reedy Creek plans to explore its options while continuing its current operations, including collecting and collecting its ad valorem taxes and collecting of its utility revenues, by paying debt service on its ad valorem tax obligations. and utility revenue bonds, complying with its covenants and operating and maintaining its properties,” Reedy Creek said in a statement to the Municipal Securities Regulatory Board.

The declaration is the first from the Disney-operated district since Republicans in Florida passed legislation on June 1, 2023, which will disband the special purpose district. On Friday, Governor Ron DeSantis signed the bill into law.

As a sort of revenge for Disney’s criticism of a law banning discussion of LGBTQ issues in schools, state officials seized on the company’s self-governing status.

The new law dissolving Reedy Creek elicited no direct public response from Disney. The law is just two pages long and avoids any discussion of how to unravel half a century of infrastructure deals, as well as the next steps in a complicated process. Lawmakers in neighboring Osceola and Orange counties have expressed concern that they could be forced to pay Reedy Creek’s financial obligations and citizens would face steep property tax increases.

“If we were to take over the first response – the public safety components of Reedy Creek – without new revenue, it would be disastrous to our budget here in Orange County,” said Orange County Mayor Jerry L. Demings, to reporters April 21. before the official vote of the legislature that day. “It would place an undue burden on the rest of Orange County ratepayers to fill that void.”

DeSantis said Floridians won’t see any additional tax increases because of the law and reiterated that Disney will pay its “fair share” of taxes. He said disbanding Reedy Creek would be “the first step in what is going to be a process to make sure Disney doesn’t run its own government.”

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