News Reedy Creek Improvement District and the Central Florida Tourism Oversight District

[flynnibus]

If I'm a bond holder, all I need is for the entity that issued the bonds to remain solvent and to have access to the revenue that backs the bonds. I don't care if it builds something else or has some regulatory powers. I just need to get my money back. As long as the RCID has the source of revenue contractually promised and is paying back the bonds, then no harm has been created. RCID's ability to zone is not meaningfully connected to its ability to pay back its debts.

But this isn't fixed income revenue - it's income based on valuations, etc. So like other value based streams, the credibility of it depends on it's viability and future. So if you hinder that ability to influence and control - you hinder the marketability of those bonds as well.

Back to my earlier comment.. I think you take the point too broadly and are in effect tearing down a strawman. The bond rating of the district is based on more than just their authority to issue bonds.

 

[Nevermore525]

The case the state lawyers cited as a reason it’s okay for a government to be retaliatory doesn’t seem to have a strong standing in comparison to what is being claimed by Disney.

The referenced case is about an act passed preventing government employees from having money deducted from payroll towards organizations that engage in political activity.

Not saying Disney has a slam dunk 1A case but their claim is not the same as the one made in the cited case from the state lawyers.

 

[JoeCamel]

The case the state lawyers cited as a reason it’s okay for a government to be retaliatory doesn’t seem to have a strong standing in comparison to what is being claimed by Disney.

The referenced case is about an act passed preventing government employees from having money deducted from payroll towards organizations that engage in political activity.

Not saying Disney has a slam dunk 1A case but their claim is not the same as the one made in the cited case from the state lawyers.

You mean the CFTOD lawyers don't seem very competent?

Yeah, me too

 

[Nevermore525]

You mean the CFTOD lawyers don't seem very competent?

Yeah, me too

Most of the CFTOD board members are lawyers, think that says plenty about their competence.

 

[mkt]

Most of the CFTOD board members are lawyers, think that says plenty about their competence.

Growing up in a family of mostly attorneys, and surrounded by their attorney colleagues my entire life, I can safely say that it doesn't take a genius to pass law school or the bar exam.

I'm a non-attorney, yet you should see the arguments I win during our family get togethers.

 

[WoundedDreamer]

But this isn't fixed income revenue - it's income based on valuations, etc. So like other value based streams, the credibility of it depends on it's viability and future. So if you hinder that ability to influence and control - you hinder the marketability of those bonds as well.

Back to my earlier comment.. I think you take the point too broadly and are in effect tearing down a strawman. The bond rating of the district is based on more than just their authority to issue bonds.

Fair point on the straw man. You (flynnibus) never made the argument that the RCID is completely untouchable. You've made a narrower and IMO more defensible point that some of the powers might actually be pertinent to financial makeup of the bonds. I still disagree, but I think your critique has better logic than the other argument.
Cheers!

 

[flynnibus]

Fair point on the straw man. You (flynnibus) never made the argument that the RCID is completely untouchable. You've made a narrower and IMO more defensible point that some of the powers might actually be pertinent to financial makeup of the bonds. I still disagree, but I think your critique has better logic than the other argument.
Cheers!

I think you are applying information out of context. I believe this is the article you are referring to:

The Contractual Impossibility of Unwinding Disney’s Reedy Creek

There’s been a lot of talk about whether Florida lawmakers can legally dissolve Disney’s Reedy Creek Improvement District, but there’s one basic reason why Florida can’t dissolve it—it promised bond purchasers that it wouldn’t, says Jacob Schumer of Shepard, Smith, Kohlmyer & Hand.

news.bloombergtax.com

The problem is you this article was written in the timeframe where the state had only passed the first round of bills which aimed to just dissolve RCID - which this article points out the contracts problems of the Bonds. It's not a question of which powers - but more that the state is flat out renegging on its own contract in the context of completely dissolving RCID outright. You shouldn't take these comments verbatim when talking about what the replacement legislation actually became, which was a modified RCID.

The article was created in a frame of reference that does not match the current situation. So trying to tear that argument down with the CFTOD legislation or what you think a modified RCID should be doesn't really make sense.

 

[WoundedDreamer]

I think you are applying information out of context. I believe this is the article you are referring to:

The Contractual Impossibility of Unwinding Disney’s Reedy Creek

There’s been a lot of talk about whether Florida lawmakers can legally dissolve Disney’s Reedy Creek Improvement District, but there’s one basic reason why Florida can’t dissolve it—it promised bond purchasers that it wouldn’t, says Jacob Schumer of Shepard, Smith, Kohlmyer & Hand.

news.bloombergtax.com

The problem is you this article was written in the timeframe where the state had only passed the first round of bills which aimed to just dissolve RCID - which this article points out the contracts problems of the Bonds. It's not a question of which powers - but more that the state is flat out renegging on its own contract in the context of completely dissolving RCID outright. You shouldn't take these comments verbatim when talking about what the replacement legislation actually became, which was a modified RCID.

The article was created in a frame of reference that does not match the current situation. So trying to tear that argument down with the CFTOD legislation or what you think a modified RCID should be doesn't really make sense.

The very article! Over the course of the conversation I suspect some of the context has been obscured. Originally, I was suggesting ways in which the RCID might have been reformed in a productive way. A reform in which relevant stakeholders (including Disney itself) looked at the RCID and collaborated on how the reform might go down.

Some posters immediately objected, arguing that the RCID was untouchable and any changes were illegal. I believe those arguments are originally sourced from that article. A significant amount of news coverage emerged with the relevant portion of text that Schumer highlighted being the basis of the argument.

Basically, some individuals were arguing that any change was impossible. I found this to be unconvincing. Hence my deep dive into the original legislation and rebuttal of the argument. You entered into the conversation with a narrower and more reasonable objection. I admit I accidentally held you accountable for arguments you never made.

The imperative to refute that article's substance was necessary since it still seemed to be having an undue sway on the thinking on this thread. By dissecting it, even though you are correct it is not relevant to this immediate court fight, I was trying to open the possibility for the collaborative middle path. A reform program that was not the impulsive Florida legislation passed last year that eliminated the RCID without a proper replacement. Something that would have served all stakeholders better.

One could argue back and say something along the lines of:
So what if a collaborative and non-hostile reform was possible? Ultimately what got passed was retaliation and therefore these discussions on what was possible are all nonsense and a waste of time. Disney has no incentive to engage with a hostile government.

Which is true to an extent. I'm just not convinced the RCID was the perfect agreement for the community. I don't think every complaint raised by those who wanted to eliminate the RCID was unreasonable or stupid. To the contrary, some of the critiques of the district are completely sound. Just because bad-faith actors hijacked the reform movement for political gain, doesn't mean there was no substance to begin with. I guess this was my thinking behind arguing against the article.

 

[flynnibus]

The imperative to refute that article's substance was necessary since it still seemed to be having an undue sway on the thinking on this thread

I have been here from the start and never heard of this guy or this article. I don’t know if it was referenced or not but i think you are mistaken on the source of such concerns over the total dissolution of the district.

Which is true to an extent. I'm just not convinced the RCID was the perfect agreement for the community. I don't think every complaint raised by those who wanted to eliminate the RCID was unreasonable or stupid. To the contrary, some of the critiques of the district are completely sound. Just because bad-faith actors hijacked the reform movement for political gain, doesn't mean there was no substance to begin with. I guess this was my thinking behind arguing against the article.

Certainly room for people’s opinions on if they think the arrangement was for the greater good or not. But you can expect that if someone leads with false claims or inaccurate information it will likely be challenged or corrected.

Much of the debate boils down to what can probably be best described as mutual benefit- rather than purity

 

[lazyboy97o]

Some posters immediately objected, arguing that the RCID was untouchable and any changes were illegal. I believe those arguments are originally sourced from that article. A significant amount of news coverage emerged with the relevant portion of text that Schumer highlighted being the basis of the argument.

Basically, some individuals were arguing that any change was impossible. I found this to be unconvincing. Hence my deep dive into the original legislation and rebuttal of the argument. You entered into the conversation with a narrower and more reasonable objection. I admit I accidentally held you accountable for arguments you never made.

Your specific suggestions are illegal. Changes would not have to just comply with the original legislation, but also other legislation as well as the Florida and US constitutions.

Bonds and the challenges of modifying/dissolving the issuing entities were being discussed here before the article was published.

 

[WoundedDreamer]

I have been here from the start and never heard of this guy or this article. I don’t know if it was referenced or not but i think you are mistaken on the source of such concerns over the total dissolution of the district.



Certainly room for people’s opinions on if they think the arrangement was for the greater good or not. But you can expect that if someone leads with false claims or inaccurate information it will likely be challenged or corrected.

Much of the debate boils down to what can probably be best described as mutual benefit- rather than purity

I do remain rather convinced that if the district were to be stripped of all functions except for the revenue-creating functions directly tied to the bonds, there would be no breach in contract. I will say I like your novel argument that a bondholder's expectation of property taxes repaying the bond is dependent on the RCID doing other functions to maintain the property value and therefore it is a breach of the bond's terms. I think the simplest explanation is that the bonds were sold with the expectation of continuing to be able to levy property tax. And if that property tax can be levied, then it wouldn't constitute a problem. But I'll admit that I like your counterargument, and I think you could argue that in court.

Your specific suggestions are illegal. Changes would not have to just comply with the original legislation, but also other legislation as well as the Florida and US constitutions.

Bonds and the challenges of modifying/dissolving the issuing entities were being discussed here before the article was published.

The specific quote from the RCID legislation that someone quoted for me was literally an excerpt exactly from the article. Including the part where a certain chunk of the text was left out. My "specific suggestions are illegal" in your opinion.

 

[mikejs78]

some individuals were arguing that any change was impossible

That's a mischaracterization of my argument. I am not arguing that any change is impossible. The idea, for example, of a mixed board with representatives from the counties along with those elected would be a possible (although in my opinion unnecessary) reform.

What I was arguing against was your specific suggestions - first of having the counties fund the bonds based on hotel tax, second removing *all* powers except taxation. Not that any reforms are impossible, just these specific reforms.

I do remain rather convinced that if the district were to be stripped of all functions except for the revenue-creating functions directly tied to the bonds, there would be no breach in contract.

Bond contracts are always about more than just the repayment and the taxes - there are stipulations about the powers and those powers have an effect not just on the repayment, but on the market value of the bond. In United States Trust Company v. New Jersey, the Supreme Court ruled that a change the state made to the Port Authority was an impairment of contract. In it, the state did not remove the funding source, or change the payment method. They simply changed the powers given to the Port Authority. In legislation passed in 1962, the NY/NJ State legislatures passed legislation that contained a bond covenant that precluded the Port Authority from acquiring any mass transit facilities other than two specific ones. In 1973, the legislatures repealed that covenant in order to expand the PATH system.

The payment source did not change. The legislatures were committed to the repayment of bonds. The bond ratings did not change. Yet the legislation's passage resulted in the market value of the bonds dropping. The Supreme Court ruled that this was an impairment of contract, and that *any* changes to bond covenants that aren't superfluous are impairments.

your novel argument that a bondholder's expectation of property taxes repaying the bond is dependent on the RCID doing other functions to maintain the property value and therefore it is a breach of the bond's terms.

It's not novel - it's how bonds work.

 

[lentesta]

In United States Trust Company v. New Jersey, the Supreme Court ruled that a change the state made to the Port Authority was an impairment of contract.

The lawyers I've spoken to said that it's unclear if there's a majority on the SCOTUS who'd use a 50-year old case as precedent. Which was kinda mind-boggling to me.

 

[mmascari]

The imperative to refute that article's substance was necessary since it still seemed to be having an undue sway on the thinking on this thread. By dissecting it, even though you are correct it is not relevant to this immediate court fight, I was trying to open the possibility for the collaborative middle path.

Any relationship between that article and this thread is only because they talk about the same subject. At least, the same subject as it existed at the time the article was written. This thread, as it is an active conversation, has progressed to talk about what actually exists as of today. Or, more accurately, each post is talking about conditions as they exist at the time the post is written, accounting for and adjusting to current events that have transpired. By focusing on and dissecting an article written on 4/26/2022 today on 12/13/2023 more than a year later when conditions have substantially changed, you are indeed creating a strawman argument to dismantle as if the events between then and now had not happened. That type of analysis is kind of pointless. It's like arguing with my kids about why they didn't clean their room 18 months ago, as if it is relevant to state of their room today.

I'm just not convinced the RCID was the perfect agreement for the community. I don't think every complaint raised by those who wanted to eliminate the RCID was unreasonable or stupid. To the contrary, some of the critiques of the district are completely sound. Just because bad-faith actors hijacked the reform movement for political gain, doesn't mean there was no substance to begin with.

Can you point out some specific things about RCID you think should be reformed?

Actual specific things that exist and are actually true about how RCID is structured and works. Those bad-faith actors have proclaimed all kinds of things that RCID did or created that were/are bad and should be changed, most of which are simply not true at all to begin with. Likewise, they'll claim that CFTOD cleared those up, while at the same time CFTOD still has the same substantial structure. Certainly, none of the funding surrounding the district changed at all.

For example, the super easiest example to use is the implication that RCID allowed Disney to avoid paying taxes. Followed by saying that the change to CFTOD removed that problem and now Disney is forced to pay it's fair share. An example that is clearly completely false and made up with no relationship to reality beyond the fact that RCID/CFTOD collects taxes.

 

[lentesta]

Where is the guy eating popcorn meme….

Florida school board may seek ouster of Moms for Liberty co-founder over Republican sex scandal

Bridget Ziegler has long been active in conservative politics and was a champion of Florida’s “Don’t Say Gay” law.

www.nbcnews.com

I can’t say anything political…I can’t say anything political….I can’t say anything political.

What I enjoyed second most, after the just deserts, was that the lady’s name on the school board who wants her gone is actually named Karen.

Vote was 4-1 in favor of removal. Ziegler voted for herself to stay.

 

[Nevermore525]

Vote was 4-1 in favor of removal. Ziegler voted for herself to stay.

How noble of her. And she can stay regardless of the vote.

Also like that she said nobody brought up her removal during the CFTOD meeting. Guess we need a few more Debbie’s for the next public comment section.

 

[lazyboy97o]

I do remain rather convinced that if the district were to be stripped of all functions except for the revenue-creating functions directly tied to the bonds, there would be no breach in contract. I will say I like your novel argument that a bondholder's expectation of property taxes repaying the bond is dependent on the RCID doing other functions to maintain the property value and therefore it is a breach of the bond's terms. I think the simplest explanation is that the bonds were sold with the expectation of continuing to be able to levy property tax. And if that property tax can be levied, then it wouldn't constitute a problem. But I'll admit that I like your counterargument, and I think you could argue that in court.

The specific quote from the RCID legislation that someone quoted for me was literally an excerpt exactly from the article. Including the part where a certain chunk of the text was left out. My "specific suggestions are illegal" in your opinion.

Bonds have their own terms beyond the legislation. The whole point of the contracts clauses is to generally prevent the sort of shenanigans you’re trying to play. They don’t say you can unilaterally change a contract if you don’t think it’s too much of a big deal. Modifications created by the government have to serve a strong public purpose, handing assets over to entities that don’t have the resources to operate them is not a very strong public purpose. Wanting to enforce a less restrictive building code isn’t really a strong public purpose. Wanting to hand over zoning control, which would not go to the counties for much of the developed area, to entities already involved isn’t much of a strong public purpose.

You also don’t address the required approval of any tax increases of this hypothetical debt servicing district which could prevent a serious impairment to repayment. There’s a reason the state, in calling a mulligan on dissolution, didn’t just turn the district in a debt servicing rump.

You also haven’t addressed the utility revenue bonds which require utility revenue.

The flaws in your argument aren’t just related to the bonds. They cover a wide variety of issues including ones that are rather clearly spelled out.

 

[lazyboy97o]

The lawyers I've spoken to said that it's unclear if there's a majority on the SCOTUS who'd use a 50-year old case as precedent. Which was kinda mind-boggling to me.

Because it’s too recent?

 

[pdude81]

Because it’s too recent?

The records between 50 and 225 years old were unfortunately stored in the room below the swimming pool. Nobody thought it would ever leak.

 

[WoundedDreamer]

Bond contracts are always about more than just the repayment and the taxes - there are stipulations about the powers and those powers have an effect not just on the repayment, but on the market value of the bond. In United States Trust Company v. New Jersey, the Supreme Court ruled that a change the state made to the Port Authority was an impairment of contract. In it, the state did not remove the funding source, or change the payment method. They simply changed the powers given to the Port Authority. In legislation passed in 1962, the NY/NJ State legislatures passed legislation that contained a bond covenant that precluded the Port Authority from acquiring any mass transit facilities other than two specific ones. In 1973, the legislatures repealed that covenant in order to expand the PATH system.

The payment source did not change. The legislatures were committed to the repayment of bonds. The bond ratings did not change. Yet the legislation's passage resulted in the market value of the bonds dropping. The Supreme Court ruled that this was an impairment of contract, and that *any* changes to bond covenants that aren't superfluous are impairments.

Basis of security for the bonds as listed in the contract :
Payment of principal and interest and premium, if any, on the District’s Ad Valorem Tax Bonds is secured by an irrevocable prior lien on the first proceeds, collected by the District, from Ad Valorem Taxes levied at a rate not exceeding 30 mills on the dollar, per annum, on the assessed value of all taxable property in the District. The Ad Valorem Tax Bonds are issued on a parity. The District’s outstanding Ad Valorem Tax Bonds have equal lien on the Ad Valorem Taxes collected by the District, and with any subsequent series of Additional Bonds as authorized under the Bond Resolution.
For the Fiscal Year ended September 30, 2020, the District levied Ad Valorem Taxes at the rate of 12.2908 mills, of which 4.9677 mills was for payment of debt service on outstanding bonds and 7.3231 mills was for payment of the general operations of the District. For the Fiscal Year ending September 30, 2021, the District has set an Ad Valorem Tax rate of 11.1429 mills, of which 4.2962 mills is for payment of debt service on outstanding bonds and 6.8467 mills is for payment of the general operations of the District.
The District covenants to levy each year such millage, not exceeding 30 mills on each dollar of assessed valuation of the property within the District, as will produce a sum equal to the amounts required to be deposited in the Sinking Fund in such Fiscal Year. If, in any Fiscal Year, the Ad Valorem Taxes actually collected shall be less than the amount required, then the amount of the deficit shall be added to the amount of Ad Valorem Taxes required to be levied in the next succeeding year or years; such tax, however, shall not exceed 30 mills in any Fiscal Year.


The ability to zone and other powers are not listed in the bond covenant, nor would I argue does it have a meaningful or really any impact on the ability for the bonds to be repaid. The case you referenced is meaningfully different, because it potentially undercut the ability for the entity to repay the bonds. Nothing I have suggested would at all risk the ability for the RCID to repay the bonds. Therefore, where is the harm? At the very least the issue is not cut and dry. Y

Any relationship between that article and this thread is only because they talk about the same subject. At least, the same subject as it existed at the time the article was written. This thread, as it is an active conversation, has progressed to talk about what actually exists as of today. Or, more accurately, each post is talking about conditions as they exist at the time the post is written, accounting for and adjusting to current events that have transpired. By focusing on and dissecting an article written on 4/26/2022 today on 12/13/2023 more than a year later when conditions have substantially changed, you are indeed creating a strawman argument to dismantle as if the events between then and now had not happened. That type of analysis is kind of pointless. It's like arguing with my kids about why they didn't clean their room 18 months ago, as if it is relevant to state of their room today.

You have already accused me of being a liar. You clearly have a strong moralistic bent when it comes to this issue. All well and good, but I'm not going to take you too seriously.