Florida Passes Bills to Dissolve Disney World’s Reedy Creek Improvement District

Florida’s state legislature passed a bill to dissolve the Reedy Creek Improvement District, which gives Walt Disney World its own government within Osceola and Orange County. This post takes a look at what’s happened, what’s next, and what this means for the parks & resorts.

The Walt Disney Company has been embroiled in a bitter standoff with Florida state leadership since the company took a public stance on Florida HB 1557. The actions and statements by each side in that high profile controversy are well documented; the Reedy Creek Creek bills are essentially the legislature’s retaliation for that after Disney “chose to kick the hornet’s nest,” according to State Rep. Randy Fine, who filed the bill in the Florida House.

The latest chapter in the ongoing saga started this Tuesday, when Governor Ron DeSantis announced that Florida’s special legislative session would take up the dissolution of six special districts enacted before 1968, including Walt Disney World’s own government. The Florida Senate moved forward with SB 4C, and a companion bill, HB 3C, was filed in the Florida House.

The latter bill passed the Florida Senate on Wednesday by a vote of 23-16. The former passed the state’s House of Representatives with a 70-38 vote. The bill now heads to DeSantis to be signed into law.

With that, Reedy Creek Improvement District (RCID) and 5 other special districts will be dissolved on June 1, 2023, but given a chance to be reestablished. Just as certain that DeSantis will sign the bill is that it’ll be challenged in court.

For those who are unfamiliar with it, Reedy Creek Improvement District is a special district that allows the company to act as its own government with regard to Walt Disney World. The Florida legislature created the Reedy Creek Improvement District in 1967 during the planning stages of the company’s Florida Project.

This governmental district, controls approximately 25,000 acres and services 19 landowners, including the Walt Disney Company and its wholly-owned affiliates. The powers executed by the Reedy Creek Improvement District are granted to two cities, Bay Lake and Lake Buena Vista. The two towns have low combined populations, all of whom are loyal Disney employees.

RCID’s day-to-day operations are conducted separately from the Walt Disney Company, but as Reedy Creek’s largest landowner, Disney effectively controls the RCID Board of Supervisors. This means Disney is not subject to asking (outside) local planning commissions for approval to build new structures or pay governmental impact fees for construction.

RCID allows Walt Disney World to build parks, attractions, hotels, and other projects within Reedy Creek with little-to-no (outside) governmental oversight. That means Walt Disney World can avoid the logistical hurdles of local government that often come with requesting residents to pay taxes to fund infrastructure. That’s a double-edged sword, as it also means Florida taxpayers are not footing the bill for infrastructure at Walt Disney World.

Among other things, Reedy Creek Improvement District oversees land use and environmental protections within its boundaries, and provides essential public services (e.g. fire protection, emergency medical services, potable water production, treatment, storage, pumping & distribution, reclaimed water distribution, chilled and hot water systems, wastewater services, drainage and flood control, electric power generation & distribution, and solid waste and recyclables collection & disposal).

The District also regulates construction pursuant to the EPCOT Building Code, and is responsible for all public roadways and bridges. RCID is self-sufficient, funding its operations, services, and capital improvements by assessing taxes and fees to the District’s landowners and lessees.

This last point is significant when it comes to dissolving RCID. Through its ability to collect taxes and issue bonds, Reedy Creek Improvement District has an annual budget of more than $169 million. Over 90% of that comes from the collection of property taxes on Walt Disney World real estate. RCID also has $1 billion to $2 billion in bond debt.

In addition to those payments to RCID, Walt Disney World also collects and remits sales taxes to both Orange and Osceola Counties, Tourist Development Taxes from on-site hotel guests, and pays property taxes on to the respective counties. (There was/is a long-running legal battle between Disney and the Orange County Property Appraiser as the company has successfully sought to reduce its tax burden on multiple occasions.)

According to Orange County Tax Collector Scott Randolph, dissolving the Reedy Creek Improvement District would be a financial burden on local residents with no gain. If RCID is dissolved, “it’s zero revenue, but [Orange County taxpayers] take on the obligations,” Randolph said in an interview with WKMG-TV (Orlando’s CBS affiliate).

“If Reedy Creek is dissolved, my guess would be Orange County would have to raise property taxes 15 to 20%,” Randolph stated. Orange and Osceola residents would take on the burdens of fire fighting, wastewater, power, road maintenance, and more at Walt Disney World, all that without additional revenue. Randolph said that it would “punish” local taxpayers more than Disney.

Dissolving the district would mean Reedy Creek employees, infrastructure, and more would be absorbed by Osceola and Orange Counties. The counties would essentially step into the shoes of RCID as its successor, collecting at least some of the tax revenue Walt Disney World currently pays the Reedy Creek district, while also being saddled with RCID’s current liabilities.

However, it’s unclear whether the counties could collect the entirety of RCID’s annual budget. To the extent that Reedy Creek is inflating charges or duplicating taxes assessed by the counties, they could not. Without a thorough audit of Reedy Creek’s financials, it’s impossible to say how much of what Disney is paying to the district could be collected by the counties.

Additionally, Reedy Creek typically operates at a loss of around $5 million to $10 million per year, according to the district’s financial reports. That doesn’t matter to Disney, as that’s peanuts and that lose can be subsidized by theme park revenue. For local governments and taxpayers, those shortfalls are more significant.

The bigger issue is the $1 billion to $2 billion in outstanding debt that RCID has taken on, which sounds almost like defensive poison pill provision to prevent a hostile takeover. (Don’t let the bungling of recent controversies fool you–Disney is incredibly adept at playing politics and protecting itself.) If the special district actually is dissolved, that liability doesn’t just disappear, it becomes the responsibility of taxpayers.

Before we delve into commentary, you’ve probably noticed a lack of coverage here about the standoff between Disney and Florida, which has been breathlessly covered elsewhere. That’s simply because it is not relevant to vacation planning. If we devoted attention to all of the company’s lobbying or controversial business practices, that would likely be a stressful full time job, and one upsetting fans of all political persuasions. When it comes to that, choosing which stories to cover is just as political as the substance of said content.

I hadn’t planned on writing about these Reedy Creek developments as of earlier this week, either. With that said, we have already received countless questions about how the dissolution of Reedy Creek will impact Walt Disney World, prices, and myriad other things. Accordingly, I wanted to break this down in a straightforward manner, free of hyperbole and sensationalism. Hopefully this one article will suffice, and we won’t have to address the topic again.

In short, I don’t think this will have any material impact on the guest experience at Walt Disney World. That’s because I don’t think Reedy Creek Improvement District will actually be dissolved when all is said and done.

I’ll offer the caveat that although I have generalized knowledge of Walt Disney World and degrees in law and political science, I have zero expertise in administrative or municipal law. I’d further add that you should be skeptical of anyone who claims to be certain of how this will unfold. This involves novel issues, unsettled law, and political calculuses that defy convention. There’s not exactly a ton of precedent concerning the dissolution of special districts controlled by corporations.

Moreover, the legislation as passed raises more questions than it answers. Those will almost certainly be settled by the courts, which will need to determine, among other things, whether this amounts to viewpoint discrimination that runs afoul of Citizens United and its progeny.

Even before that, there’s the threshold issue of whether the Florida legislature even has the authority to dissolve RCID without the approval by a majority vote of the residents or landowners of the district. (If required, there’s a zero percent chance of that approval being given.) The bill even tacitly acknowledges this, stating that it is “notwithstanding s. 189.072(2).”

Assuming the state finds a way to sidestep all of that, there’s also the question of how unwinding the Reedy Creek Improvement District would occur. Orange and Osceola Counties clearly don’t want to take on the municipal obligations, and even if they did, that would require a period of transition–not a clean break.

Then there’s the issue of RCID’s debts. Florida isn’t just going to give Disney a $1 to $2 billion tax break as “punishment” for its transgressions. Assuming RCID is dissolved, the most likely outcome is thus that it’s immediately replaced by another special district consistent with those established in or after 1968.

With all of that said, let’s assume, arguendo, that RCID is dissolved and nothing replaces it. What happens then? In theory, Walt Disney World has to jump through more hoops on projects, resulting in delays and more costly construction. The case could also be made that urgent work or needs aren’t serviced in as expeditious of a manner, as Disney is at the mercy of Orange and Osceola Counties.

I wouldn’t be so quick to assume that. For one, you’ve seen the TRON Lightcycle Run construction site, right?! Joking aside, RCID actually has pretty onerous standards, and does not simply rubber stamp all of Imagineering’s plans. Look no further than the incredibly wide walkways at Wilderness Lodge or the giant support column under the Cosmic Rewind starship. You can thank Reedy Creek for all of that, and much more.

The company would undoubtedly face added costs, delays, red tape, and unpredictability, but it’s not like Disney is exactly the paragon of corporate efficiency. They’re about as bureaucratic as any government. Conversely, Orange County seems relatively adept at building and maintaining infrastructure (by government standards) even amidst the current population explosion.

All of this analysis is reductionist, superficial, and filled with broad assumptions. The point is that even if RCID is dissolved, it would hardly mean the sky is falling for Walt Disney World. Guests probably wouldn’t notice anything other than different colored signs along the roads.

Ultimately, even though the bills dissolving Reedy Creek Improvement District have passed and will be signed into law, this is really just the beginning of a long saga that will last the next year-plus. While it’s impossible to foresee everything that will happen, my main predictions are that many attorneys will be enriched and much digital ink will be spilled about the ramifications of RCID’s demise.

Personally, I do not think that “demise” will happen, nor should it in this manner. There are legitimate critiques of Reedy Creek and whether a corporation should perform the roles of government, enjoy special treatment, and have such an outsized influence in state and local politics. Legal scholars, politicians, and others have debated all of this for years. This is not the first time RCID has been called into question–Disney has made changes to stay in Florida’s good graces before.

However, it’s hard to argue persuasively that what’s happening now qualifies as a good faith check on Disney’s self-governance. If motivated by the best interests of voters, dissolving Reedy Creek would be a methodical process, with its financial implications studied and recommendations made for the orderly unwinding of the special district to minimize the negative ramifications on the company and taxpayers. None of that has occurred.

One could argue that this is because no legislator on either side of the aisle actually believes Reedy Creek Improvement District is going to be dissolved. Perhaps they’re cynical, thinking that it’s more about theater, a way to score a quick “win” in today’s era of ‘politics as team sports’ and the ongoing culture wars. Maybe it’s a means of grabbing headlines, dominating the news cycle, and fundraising for midterms before moving on to the next outrage du jour that fuels each side’s base long before next summer.

There’s a reason Orange County (the main “beneficiary” of this change) is against RCID being dissolved in this manner; separately, there’s also a reason Disney has gone quiet on issues concerning Florida politics, including this very Reedy Creek legislation. This isn’t to say that a special district with the name Reedy Creek Improvement District will exist on June 1, 2023. It is to say that it would be incredibly surprising if there are any changes to Walt Disney World’s governance between now and then that materially impact guests.

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YOUR THOUGHTS

Any thoughts on the potential dissolution of Reedy Creek Improvement District? Keep the comments civil, as this is not the place for politically-charged arguing, antagonism, personal attacks, or perpetuating pointless culture wars. While this topic is inherently political, we will be heavy-handed in deleting comments that amount to little more than vapid political cheerleading. Respectfully debating the pros & cons and implications of RCID being dissolved (or whether it’ll actually happen) is totally fine, but don’t step outside the bounds of this narrow topic. If you wish to shout your opinions about Ron DeSantis, Bob Chapek, or other politicians/executives into the internet abyss, that’s why Facebook was invented. 😉