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

[mikejs78]

And there you go. I have just presented a completely reasonable method of financing the current expenditures of the RCID through taxes that would not be burdensome on normal taxpayers in Orlando. The idea that the RCID is the only way to manage the territory is based on a lack of creativity

Sounds good in theory, but it's not practical and couldn't happen for a number of reasons:

• You operate under the assumption that Orange and Osecola county *want* the headache of managing Disney's infrastructure needs. History indicates they don't, as it's quite a complex undertaking.
• The cross-county nature of the district would make management and coordination of any infrastructure projects rather difficult.
• The economy that supports 15% out in California may not exist in FL. The sheer volume of people who visit central Florida from elsewhere dwarfs what Aneheim supports. Disneyland, as we know, is primarily a locals park. It's not clear that you could charge the same rate in central Florida without impacting the hotel business.
• Reedy Creek's costs and the costs if the counties assumed the same duties are not 1:1. What's been shown is that special districts tend to be able to do things more efficiently and cheaply, because they are smaller, single-purpose entities. They generally spend less on general and administrative overhead. So the cost to the counties is likely higher than Reedy Creek's budget.
• You speak of changing the tax law as if it's an easy thing with no side effects.
  • If they change the code, it would not only affect Orange and Osecola counties, and they may not want that expansion of the tax code elsewhere in Florida.
  • Any changes to the tax code in FL require a supermajority of each house of the legislature. Possible, but very difficult to pull off.

Finally, and this is the most important one: the bonds. The existing bonds are revenue bonds secured based on the ability of the district to collect ad valorem taxes. This can't simply be substituted with another tax type, unless all the bondholders would agree to such a change. Sure, you can secure a bond with a sales or occupancy tax, but that represents a different risk category than bonds backed by ad valorem taxes, which means everything from the terms to the rate would be affected.

The reason an occupancy tax represents a higher risk is it is subject to wide fluctiations in the tourism market, which represents a different risk to the bondholders. You say Orange County collected $300M in hotel taxes, and would collect $450M if they raised the tax by 50%. Well, what if a recession happens and occupancy goes down 20%? That leads to a shortfall of $90M. Not small. Even a 10% shortfall would result in a $45M deficit.

Property taxes, on the other hand, are somewhat more stable. Assessments generally only go up, even in a downturn, and short of a complete housing market crash, aren't subject to wild fluctuations. Additionally, the special district has the power to raise taxes on the landowners within the district beyond the constitutional limit of 10%.

The existing bonds are predicated on four things: that the district has the power to levy ad valorem taxes, that it can raise more ad valorem taxes if necessary, that it continues to have the authority to build and manage infrastructure, and that it has the power to secure additional bonds. Untangling any of these things could put the bonds at risk of default. This is exactly the reason why the initial propsal to just dissolve the district wouldn't work, and why the legislation establishing the CFTOD made it a point to say repeatedly that the district remained as is, with all the core powers that previously existed, for the purposes of bonds.

So while the sales tax proposal may have worked initially, before the establishment of a special district, there's just too much working against it to make it a viable option today. The special district itself has to exist at least until 2039, and there are arguments that it needs to exist further into the future because the district is supposed to continue developing and can't just stand still, so it will likely need more bonds at some point between now and then.

 

[lazyboy97o]

Exactly. This is something that is meaningfully different from the RCID. Universal has been through normal development processes and approvals for its Epic Universe project. So, bringing this up as something as being similar to RCID is not a serious argument.

And you should look into the genesis of this project. It is designed to support a rail station that will benefit the entire community. Any benefits that accrue to Universal are only secondary to the actual purpose of the district (paying to develop a new rail station for local commuters to use). Hence the "transit" in the name. Me being in favor of allowing a multinational firm to pay for a rail station that will benefit the community is not somehow inconsistent.

They did not. Just the general notion of a theme park resort complex was reviewed. There was no review of a more specific plan or any individual components. There will be no development review of additions and expansion.

I’m well aware of the new district. You are being inconsistent because RCID did much the same, providing a whole host of municipal services at Disney’s expense. You are also once again misrepresenting events. The situation started because Universal wanted Brightline to be forced by the local governments to choose the old Florida High Speed Rail alignment that passed by their property. Brightline pushed back because they estimated that following that alignment would cost at least double (about $1 billion) than their preferred route to the south along FL-417. Universal then worked to develop the Sunshine Corridor where the local and state governments would spend the billions of dollars they wanted Brightline to spend for their benefit. The new District will help with some of that funding, but not anywhere close to the extra billion that Universal wanted to force Brightline to spend. And while the initial information showed SunRail service being extended across the entire Sunshine Corridor the recent public meetings only show SunRail connecting to the airport. So the current plan being presented is not a rail station for local commuters.

The name of a special district does not define its powers. For one, there is already a Shingle Creek Community Development District. The Shingle Creek Transit and Utility Community Development District was not created with specific, limited powers. It was created along a template and the district has all of those powers, even if they don’t currently intent to utilize them they exist and Universal is free to exercise them.

 

[lazyboy97o]

So while the sales tax proposal may have worked initially, before the establishment of a special district, there's just too much working against it to make it a viable option today. The special district itself has to exist at least until 2039, and there are arguments that it needs to exist further into the future because the district is supposed to continue developing and can't just stand still, so it will likely need more bonds at some point between now and then.

I think how the area actually developed challenges the idea that such taxation could have been effective. We sort of tend to forget how much development once focused along US 192. A significantly higher occupancy tax in Orange County likely would have encouraged even more development in Osceola County. This would mean that the revenue is now being generated in the wrong jurisdiction.

 

[mkt]

The people living in the company-owned town specifically designed to perpetuate the company's control are completely free to exercise their civic rights?

Yeah, they actually do. They have actual ballots issued by the Orange County Elections Department which are specific to the relevant elections to their addresses, which include Lake Buena Vista/Bay Lake/Reedy Creek issues and candidates.

They even vote in Precinct 126.

Their housing situation is irrelevant for their right to representation at a local level being taken away.

 

[flynnibus]

It was not a “do it cheaper” benefit because the district has and had higher tax rates to cover the costs associated with the services and infrastructure

That's conflating the 'alternate choice' with the statement itself. The truth is the district didn't use impact fees where as if the district didn't exist, or if the district had acted like it's neighbors, Disney would have been exposed to the fees. Full stop. So it's accurate to say they avoided those fees. The significance of the fees is not a factor in claiming it's a lie or not. And the fact the district used DIFFERENT funding strategies instead of impact fees is a discussion related to the conclusions and what you draw from these facts - it doesn't change the facts. So the claims are not lies, they are just misleading... which is conflated by the fact the CFTOD is also munging their own requirements into the development of the district which the prior RCID did not have. Which is why I've said it's this narrative the CFTOD is trying to spin.

You could make the argument that funding via property taxes vs targeted impact fees is a bad strategy - but it's a different beast entirely... and it's not really the argument CFTOD has made. It's just them grasping at tidbits they find along the way.

Impact fees became popular and nearly ubiquitous in the 80s because it let jurisdictions raise some revenue without raising taxes. RCID didn’t have that issue because Disney just paid the taxes to provide consistent funding. Impact fees don’t go into some regional pot, they stay with the local jurisdiction. The revenues generated from the District assessing impact fees would have stayed with the district.

I don't think anything the CFTOD has said is in conflict of that - they are muddying the waters by suggesting the district SHOULD have been providing those kinds of services within the district and have failed to do so -- which in themselves are controversial claims (in both scope, and in claiming failure).

The whole point is they are using facts - but spinning misleading narratives using those truths. Yes, they didn't pay impact fees, but as you said, that alone isn't damning because they are just a vehicle to do something... not the only way to do something. They cite facts they haven't done things like add schools or libraries - but the claim they should have is the misleading portion.

They are using facts - but creating misleading or false narratives from them.

 

[lazyboy97o]

The truth is the district didn't use impact fees where as if the district didn't exist, or if the district had acted like it's neighbors, Disney would have been exposed to the fees. Full stop. So it's accurate to say they avoided those fees.

Without the District then it would be up to the municipalities to decide if they wanted to impose impact fees.

I don't think anything the CFTOD has said is in conflict of that - they are muddying the waters by suggesting the district SHOULD have been providing those kinds of services within the district and have failed to do so -- which in themselves are controversial claims (in both scope, and in claiming failure).

The District does provide the services.

 

[flynnibus]

The District does provide the services.

Their comments were about them highlighting lacking libraries, schools, housing, and 'failures' to provide adequate transportation needs thus burdening the neighbors.

 

[lazyboy97o]

Their comments were about them highlighting lacking libraries, schools, housing, and 'failures' to provide adequate transportation needs thus burdening the neighbors.

The Parks & Recreation and Education impact fees are not assessed on commercial development.

The District provides roads and just renewed contracts for Lynx service.

Disney though has developed housing. They’ve developed the college and international program housing. They’ve developed Golden Oak. They’ve developed Celebration. Those areas were all de-annexed from the District which placed them under the authority of the counties. Disney is still developing Celebration. The newest section, The Island Village, includes a new elementary school, the third school in Celebration on land provided by Disney. All of that new housing being built there is subject to the county’s impact fees. The new commercial space that has also been built over the years is also subject to impact fees.

 

[flynnibus]

The Parks & Recreation and Education impact fees are not assessed on commercial development.

The District provides roads and just renewed contracts for Lynx service.

Disney though has developed housing. They’ve developed the college and international program housing. They’ve developed Golden Oak. They’ve developed Celebration. Those areas were all de-annexed from the District which placed them under the authority of the counties. Disney is still developing Celebration. The newest section, The Island Village, includes a new elementary school, the third school in Celebration on land provided by Disney. All of that new housing being built there is subject to the county’s impact fees. The new commercial space that has also been built over the years is also subject to impact fees.

So like I said... "They are using facts - but creating misleading or false narratives from them"

Tho I wouldn't call Celebration or Golden Oak cites for the district's planning considering they were all Disney efforts that ultimately are excluded from the district.

 

[lazyboy97o]

So like I said... "They are using facts - but creating misleading or false narratives from them"

Tho I wouldn't call Celebration or Golden Oak cites for the district's planning considering they were all Disney efforts that ultimately are excluded from the district.

Claiming they dodged fees that never would have been assessed is not fact. Claiming the services covered by the fees are not provided is not a fact when they are provided.

It is not a fact that the District was supposed to be a socialized development done by the District. Actual development was always to be done by the landowner. Portions of the land was and still is being developed in ways that subject the land to county impact fees. They’re complaining Disney didn’t work with the other jurisdictions but they did. You’re saying their claim that they didn’t do something is true because you have to ignore when they did it.

 

[flynnibus]

Claiming they dodged fees that never would have been assessed is not fact. Claiming the services covered by the fees are not provided is not a fact when they are provided.

They didn't charge impact fees while it's common place for the region - fact

They nagged them on not providing those services - independent of the topic of impact fees.

It is not a fact that the District was supposed to be a socialized development done by the District.

I agree. Again... "They are using facts - but creating misleading or false narratives from them"

They’re complaining Disney didn’t work with the other jurisdictions but they did.

I agree. Again... "They are using facts - but creating misleading or false narratives from them"

You’re saying their claim that they didn’t do something is true because you have to ignore when they did it.

I'm saying they are using facts in isolation and creating misleading or false narratives from them.

It's a common tactic in misinformation and propaganda. Cite some indisputable or easily verifiable facts and then leap into or connect to into some other claim not necessarily supported or consistent with the originate cite. By combining the issues it muddies the conversation making it harder to discredit and makes the conclusion more credible to the passer by or ill informed .

Here they cite the lack of impact fees being paid (True) - but then use that fact to suggest by doing so the district hasn't been doing these other things they should have (not true).

 

[lazyboy97o]

They didn't charge impact fees while it's common place for the region - fact

They nagged them on not providing those services - independent of the topic of impact fees.

Once again, those services are provided. These are Orange County’s impact fees:
Fire - Provided by the District
Law Enforcement - Provided by the cities
Parks & Recreation - Not Applicable
Schools - Not Applicable
Transportation- Provided by the District

 

[Lisa Schultz]

In an apparent stand off with The Walt Disney Company, some Florida legislators are meeting to discuss the possibility of removing the Reedy Creek Improvement District and stripping Disney of its semi self government status. This is as Disney says they are working to have a new law struck down passed by the Governor this week.

The 1967 act allowed Disney to create the Reedy Creek Improvement District, the self-described purpose being “to support and administer certain aspects of the economic development and tourism within District boundaries.” The creation of the district means Walt Disney World and other landowners pay for local essential services like water, electricity, fire protection, and emergency medical services instead of local taxpayers.

I think Disney should pack up and move to another state that wants them and there are plenty of them. It should really wallop De Santis who would have possibly impacted 80,000+ Disney employees going on the unemployment rolls, it would undoubtedly impact all the people whose businesses sell/rent to Disney guests thereby lowering the state income from taxable revenue. Who knows, maybe the DeSantis feud would even result in Florida becoming a taxable state in which case half of the Florida population would move to another state.

 

[mkt]

I think Disney should pack up and move to another state that wants them and there are plenty of them.

Yes please. There's 48 other states as well as US colonies, all who'd love a piece of that action. But they won't.

It should really wallop De Santis

His approval rating is already pretty bad, so

possibly impacted 80,000+ Disney employees going on the unemployment rolls,

More than that, Easily over half a million if you include indirect jobs created by Disney's presence. However that'd be a 3 month hit on unemployment given how bad Florida's unemployment benefits are.

it would undoubtedly impact all the people whose businesses sell/rent to Disney guests thereby lowering the state income from taxable revenue.

Oh yeah. On the flipside, for those who manage to still have jobs, hello cheaper housing opportunities, from vacation rentals suddenly becoming residential properties.

Who knows, maybe the DeSantis feud would even result in Florida becoming a taxable state

That would require a constitutional amendment. You won't get people to vote for this.

half of the Florida population would move to another state.

Please and thank you. We're already crowded here.

 

[Lilofan]

Please and thank you. We're already crowded here.

Be careful what you wish for. Less population less taxes collected to fund schools, social services , infrastructure , fire , police, programs , etc. There are no winners in this game. When Scott was governor , on the Welcome to FL sign on I-95 entering FL from GA there was the logo - Open for Business. When DeSantis took office , the Open for Business logo was removed from the Welcome sign.

 

[Batman'sParents]

I think Disney should pack up and move to another state that wants them and there are plenty of them. It should really wallop De Santis who would have possibly impacted 80,000+ Disney employees going on the unemployment rolls, it would undoubtedly impact all the people whose businesses sell/rent to Disney guests thereby lowering the state income from taxable revenue. Who knows, maybe the DeSantis feud would even result in Florida becoming a taxable state in which case half of the Florida population would move to another state.

If it got that bad, at a certain point Disney would just allow WDW to be operated under license by a third party like Tokyo and would just cash the checks.

 

[WoundedDreamer]

Now having read much of the report, I am still of the mindset that there is no evidence of meaningful corruption. However, I am concerned there is evidence of incompetence. The RCID didn't have proper internal contract controls and did not have internal legal council. ARE YOU KIDDING ME? Disney has known since the 1980s that the RCID was a point of vulnerability for the company in Florida. And they didn't take basic precautions to protect both themselves and the district? Failure and incompetence on the most basic level. What on Earth were RCID and TDO thinking? Whoever is their legal council that allowed this to occur should be fired. Their government affairs people should be fired too. They need to figure out why they ever allowed this to happen. Maybe they could hire whoever works with Universal, who seems to be able to manage government affairs better. This is a travesty.

It will be easy for Disney to put its head in the sand and say, "this is government retaliation and none of it is true." While much of it is overhyped, the Disney-RCID relationship does sound like it was far from perfect. Disney's legal council should have foreseen these potential red flags and protected shareholder's interests by ensuring the highest quality of governance in the district. This should have included clear delineation between company property and RCID property, clear delineation between company employees and district employees, and clear delineation between company activities and district activities.

While reading the report I was shocked by the incompetence. But then I remembered the shambolic state of Walt Disney World. I always thought that the peeling paint, poor staffing, and bad show were indicative of poor priorities at TDO. Basically, that they cared more about money than show or product. The thought never occurred to me that the people in the building were fundamentally incompetent. But this report challenges my traditional interpretation. It now seems likely that Walt Disney World is being run by people who are not capable of managing the complexity.

It's not uncommon in business, engineering, and government for individuals to make highly-complex systems. I would say Walt Disney World and RCID as developed by Joe Fowler would fit the bill. That guy was incredible. But it's also not uncommon for the systems made by businesses, engineering teams, and governments to eventually face a competence crisis. If creative or organizational geniuses build a complex system, those who come after might not be able to understand the brilliance or how intricate pieces come together.

We can see a prime example of this with the Magic Kingdom or EPCOT Center. The original designers viewed each project holistically. Every tree, every sign, every building, every ride, every bench all contributed to the overall story and the feelings that the environments evoked. That's why details like EPCOT's typography and iconography were carefully designed (and why they remain beloved by fans to this day). As time has gone on, there are nuances in these park's designs that the Imagineers of today cannot appreciate or understand. One of the reasons you can instantly tell and feel the difference between classic attractions and new ones. Even the best attractions can feel off or weird when placed within classic Disney spaces.

I am now concerned that TDO is unable to manage the complexities of something so massive with so many variables. Bad decisions that I used to ascribe to a lack of care, might well be the result of a lack of skill. Commentators on this site for years have railed against Walt Disney World's operations. @WDW1974 was fond of arguing that the parks were being run like they were going out of business. I think it's hard to argue that the cash extraction is one reason that Walt Disney World is in such a poor state. But I am now open to the possibility that more than just greed is at play.

Walt Disney World's health is essential. Disney Parks should consider bringing in a 3rd party to evaluate TDO's management. I'm worried there are systemic problems manifesting in a multitude of ways.

I think Disney should pack up and move to another state that wants them and there are plenty of them. It should really wallop De Santis who would have possibly impacted 80,000+ Disney employees going on the unemployment rolls, it would undoubtedly impact all the people whose businesses sell/rent to Disney guests thereby lowering the state income from taxable revenue. Who knows, maybe the DeSantis feud would even result in Florida becoming a taxable state in which case half of the Florida population would move to another state.

"Packing up" buildings is not an option. The only option Disney has is to learn how to work with the community like other successful theme-park operators and venues have.

Yeah, they actually do. They have actual ballots issued by the Orange County Elections Department which are specific to the relevant elections to their addresses, which include Lake Buena Vista/Bay Lake/Reedy Creek issues and candidates.

They even vote in Precinct 126.

Their housing situation is irrelevant for their right to representation at a local level being taken away.

I looked at the City of Lake Buena Vista's website. This was the picture that popped up on their homepage:

This beautiful picture was exactly what Walt Disney had in mind. Someone should make a T-Shirt "We were promised the city of tomorrow and all we got were three parking garages!"

After appreciating the beauty of those monuments to civic virtue, I then looked at the City of Lake Buena Vista's budget. I wanted to see how much the city spends on parks, pools, community programs, and other things things that enhance the lives of its citizens. What I found was puzzling. Instead of spending being focused on the community, I found budgetary priorities better suited for a theme park resort complex. Disney should feel glad that their the city's voting constituent's interests are so aligned with the interests of the company.

Sounds good in theory, but it's not practical and couldn't happen for a number of reasons:

• You operate under the assumption that Orange and Osecola county *want* the headache of managing Disney's infrastructure needs. History indicates they don't, as it's quite a complex undertaking.
• The cross-county nature of the district would make management and coordination of any infrastructure projects rather difficult.
• The economy that supports 15% out in California may not exist in FL. The sheer volume of people who visit central Florida from elsewhere dwarfs what Aneheim supports. Disneyland, as we know, is primarily a locals park. It's not clear that you could charge the same rate in central Florida without impacting the hotel business.
• Reedy Creek's costs and the costs if the counties assumed the same duties are not 1:1. What's been shown is that special districts tend to be able to do things more efficiently and cheaply, because they are smaller, single-purpose entities. They generally spend less on general and administrative overhead. So the cost to the counties is likely higher than Reedy Creek's budget.
• You speak of changing the tax law as if it's an easy thing with no side effects.
  • If they change the code, it would not only affect Orange and Osecola counties, and they may not want that expansion of the tax code elsewhere in Florida.
  • Any changes to the tax code in FL require a supermajority of each house of the legislature. Possible, but very difficult to pull off.

Finally, and this is the most important one: the bonds. The existing bonds are revenue bonds secured based on the ability of the district to collect ad valorem taxes. This can't simply be substituted with another tax type, unless all the bondholders would agree to such a change. Sure, you can secure a bond with a sales or occupancy tax, but that represents a different risk category than bonds backed by ad valorem taxes, which means everything from the terms to the rate would be affected.

The reason an occupancy tax represents a higher risk is it is subject to wide fluctiations in the tourism market, which represents a different risk to the bondholders. You say Orange County collected $300M in hotel taxes, and would collect $450M if they raised the tax by 50%. Well, what if a recession happens and occupancy goes down 20%? That leads to a shortfall of $90M. Not small. Even a 10% shortfall would result in a $45M deficit.

Property taxes, on the other hand, are somewhat more stable. Assessments generally only go up, even in a downturn, and short of a complete housing market crash, aren't subject to wild fluctuations. Additionally, the special district has the power to raise taxes on the landowners within the district beyond the constitutional limit of 10%.

The existing bonds are predicated on four things: that the district has the power to levy ad valorem taxes, that it can raise more ad valorem taxes if necessary, that it continues to have the authority to build and manage infrastructure, and that it has the power to secure additional bonds. Untangling any of these things could put the bonds at risk of default. This is exactly the reason why the initial propsal to just dissolve the district wouldn't work, and why the legislation establishing the CFTOD made it a point to say repeatedly that the district remained as is, with all the core powers that previously existed, for the purposes of bonds.

So while the sales tax proposal may have worked initially, before the establishment of a special district, there's just too much working against it to make it a viable option today. The special district itself has to exist at least until 2039, and there are arguments that it needs to exist further into the future because the district is supposed to continue developing and can't just stand still, so it will likely need more bonds at some point between now and then.

Now this is an interesting roadblock! Just like every other objection, I’m fairly certain this can be addressed too. To begin…

You fairly point out that the original RCID bonds were issued with the expectation that they would be funded using the stable property tax method. Investors can reasonably argue that a change would constitute a breach in contract. This is not only dishonest it’s illegal. I agree with everything you have asserted so far. But what is to be done?

The answer is simply to strip the RCID of all its powers except for the ability to levy a property tax. All the other powers could be devolved to the two counties. Next, the legislature can set an end to the RCID only after the last of the legacy bonds are payable. Guarantee that the RCID cannot issue new bonds unless they are simply replacing bonds that already exist. This would prevent potential shortfall or default. Then, once the bonds are paid, the RCID ceases to function. And like that the RCID has ceased to exist and the powers are devolved.

Or, there is always another option. Orange County could take on responsibility for the bonds. This might strike everyone as unfair at first. Why should Orange County have to take responsibility for the bonds? Here's my thinking...

When the RCID is dissolved, the Disney Springs parking garages would fall to the next governing authority. In this case, Orange County. Disney Springs relies on those parking garages to ensure the viability of Disney Springs. What if Orange County were to start charging for entry into the parking garages? What would that do to Disney Springs' business?

And Orange County has other types of leverage over Disney. Suppose Orange County were to place a toll on World Drive. Or maybe they could contract with advertisers to put billboards along World Drive. Epic Universe billboards would look awfully nice along World Drive... Another form of leverage Orange County could engage in. This leverage can all be used for a specific reason- to get Disney to buy the parking garages and World Drive off of Orange County.

Once Disney folds, which they would if they have any sense, the proceeds of the sale (valued at the total amount of RCID's bonds) could be placed into a special county account. The property taxes in Orange County could pay for the bonds, and any shortfalls in county finances that result could be withdrawn from the special account as time passes.

That billboard idea does speak to me though. How much do you think Universal and other entities would pay for billboards along World Drive? Disney would probably rush to buy the billboard space themselves. Talk about leverage!

Other Points...
- I wouldn’t be shocked if merging the RCID fire department and other services into the two big counties would result in savings. The RCID needs its own administration staff and facilities that the counties already pay for. By merging them into two existing organizations, cost and labor savings should accrue. And I'm no longer certain the RCID is some super well-run entity. Some of those issues listed in the report were embarrassing. When the district's own employees find the way Disney and the RCID operate "complicated" that's a red flag.

-The Anaheim Resort District has thousands of rooms and 90 hotels. While it’s true Disneyland Resort is relatively more reliant on local Californians, it would be unfair to characterize it as anything other than a resort with regional and international pull. Lots of people come and stay in Anaheim. But I agree aggressive increases of hotel tax rates to 15% would not beneficial or needed. That's why I suggested 9%. Though... Anaheim manages to fund 63% of their General Fund on the proceeds of the various taxes they levy against the Anaheim Resort District. It's not inconceivable that the two counties might start wanting a bigger piece of the theme park pie. The theme park industry has been given extreme latitude to operate with minimal taxation. And many of the taxes that are levied tend to be put right back into the tourism industry.

- Your most potent objection might be the supermajority and gridlock in the Florida Legislature. At this point this whole issue has become a political clown show. Unfortunately, the opportunity for a smooth phase out or reform of the RCID is probably passed. What could have been a bipartisan reform is now very politicized. Republicans have no incentive other than to castigate Disney because they've trained their voters want it. And Democrats clearly see an opportunity to become the primary beneficiary of Disney's vast political spending in the state. Neither side has much incentive to work firmly but collaboratively with Disney. One side has every incentive to be a demagogue, and the other side has every incentive to laud Disney to get those campaign funds. It's all sickening.

They did not. Just the general notion of a theme park resort complex was reviewed. There was no review of a more specific plan or any individual components. There will be no development review of additions and expansion.

Universal took their proposal to the regional planning authorities and got approval. A regional planning authority that is accountable to voters in the county. That’s something Disney hasn’t had to do since the Lyndon Johnson administration. Imagine if Walt Disney World had to get development approval for changes to its plan like Disneyland did or Universal did? It’s a nice thought.

I’m well aware of the new district. You are being inconsistent because RCID did much the same, providing a whole host of municipal services at Disney’s expense. You are also once again misrepresenting events. The situation started because Universal wanted Brightline to be forced by the local governments to choose the old Florida High Speed Rail alignment that passed by their property. Brightline pushed back because they estimated that following that alignment would cost at least double (about $1 billion) than their preferred route to the south along FL-417. Universal then worked to develop the Sunshine Corridor where the local and state governments would spend the billions of dollars they wanted Brightline to spend for their benefit. The new District will help with some of that funding, but not anywhere close to the extra billion that Universal wanted to force Brightline to spend. And while the initial information showed SunRail service being extended across the entire Sunshine Corridor the recent public meetings only show SunRail connecting to the airport. So the current plan being presented is not a rail station for local commuters.

The plan was developed and endorsed with cooperation from Sea World, the local chamber of commerce, the Mayor of Orlando, hotels in the area, and of course final approval fell to Orange County. You’re right it was self-serving for Universal Orlando to agitate for the change. But by partnering with these community partners they turned it into a win for all those stakeholders. Even Brightline eventually joined in the project and threw its support behind the new route. This district was created with a specific mission. Build and maintain a train station. A train station that will help Universal, but that also will add value to all those stakeholders.

It’s curious about Sunrail. It would be a shame if they didn’t use the infrastructure they’re building. I’ll watch for further developments. It would be a very expensive and empty station if they don’t make use of it.

I contrast all of the above with Disney’s infrastructure projects within Walt Disney World that help only Disney. Governments are created to help the communities they reside in. Picking up the bill for Disney’s CapEx is not a government function.

The name of a special district does not define its powers. For one, there is already a Shingle Creek Community Development District. The Shingle Creek Transit and Utility Community Development District was not created with specific, limited powers. It was created along a template and the district has all of those powers, even if they don’t currently intent to utilize them they exist and Universal is free to exercise them.

In summary the “Universal District:”

1. Does not have planning powers
2. Does not have zoning powers
3. Does not have the right to establish government services
4. Does not have the right to establish building codes
5. Was created by locally elected members of the community
6. It has benefits for multiple stakeholders
7. It has a specific and measurable goal behind its creation (building and maintaining a train station)

So, how is this like the RCID? I will say it makes for good headlines which is why Disney’s legal and PR teams blasted out articles like, “Florida Gives Universal Special District While Denying Disney the Same Right.” The nuance of the issue was completely lost and it wasn’t even the legislature that created the district. To be fair, if I were fighting a battle of public opinion against the State of Florida I would do the same thing.

 

[JoeCamel]

Now having read much of the report, I am still of the mindset that there is no evidence of meaningful corruption. However, I am concerned there is evidence of incompetence. The RCID didn't have proper internal contract controls and did not have internal legal council. ARE YOU KIDDING ME? Disney has known since the 1980s that the RCID was a point of vulnerability for the company in Florida. And they didn't take basic precautions to protect both themselves and the district? Failure and incompetence on the most basic level. What on Earth were RCID and TDO thinking? Whoever is their legal council that allowed this to occur should be fired. Their government affairs people should be fired too. They need to figure out why they ever allowed this to happen. Maybe they could hire whoever works with Universal, who seems to be able to manage government affairs better. This is a travesty.

It will be easy for Disney to put its head in the sand and say, "this is government retaliation and none of it is true." While much of it is overhyped, the Disney-RCID relationship does sound like it was far from perfect. Disney's legal council should have foreseen these potential red flags and protected shareholder's interests by ensuring the highest quality of governance in the district. This should have included clear delineation between company property and RCID property, clear delineation between company employees and district employees, and clear delineation between company activities and district activities.

While reading the report I was shocked by the incompetence. But then I remembered the shambolic state of Walt Disney World. I always thought that the peeling paint, poor staffing, and bad show were indicative of poor priorities at TDO. Basically, that they cared more about money than show or product. The thought never occurred to me that the people in the building were fundamentally incompetent. But this report challenges my traditional interpretation. It now seems likely that Walt Disney World is being run by people who are not capable of managing the complexity.

It's not uncommon in business, engineering, and government for individuals to make highly-complex systems. I would say Walt Disney World and RCID as developed by Joe Fowler would fit the bill. That guy was incredible. But it's also not uncommon for the systems made by businesses, engineering teams, and governments to eventually face a competence crisis. If creative or organizational geniuses build a complex system, those who come after might not be able to understand the brilliance or how intricate pieces come together.

We can see a prime example of this with the Magic Kingdom or EPCOT Center. The original designers viewed each project holistically. Every tree, every sign, every building, every ride, every bench all contributed to the overall story and the feelings that the environments evoked. That's why details like EPCOT's typography and iconography were carefully designed (and why they remain beloved by fans to this day). As time has gone on, there are nuances in these park's designs that the Imagineers of today cannot appreciate or understand. One of the reasons you can instantly tell and feel the difference between classic attractions and new ones. Even the best attractions can feel off or weird when placed within classic Disney spaces.

I am now concerned that TDO is unable to manage the complexities of something so massive with so many variables. Bad decisions that I used to ascribe to a lack of care, might well be the result of a lack of skill. Commentators on this site for years have railed against Walt Disney World's operations. @WDW1974 was fond of arguing that the parks were being run like they were going out of business. I think it's hard to argue that the cash extraction is one reason that Walt Disney World is in such a poor state. But I am now open to the possibility that more than just greed is at play.

Walt Disney World's health is essential. Disney Parks should consider bringing in a 3rd party to evaluate TDO's management. I'm worried there are systemic problems manifesting in a multitude of ways.


"Packing up" buildings is not an option. The only option Disney has is to learn how to work with the community like other successful theme-park operators and venues have.



I looked at the City of Lake Buena Vista's website. This was the picture that popped up on their homepage:
View attachment 758288

This beautiful picture was exactly what Walt Disney had in mind. Someone should make a T-Shirt "We were promised the city of tomorrow and all we got were three parking garages!"

After appreciating the beauty of those monuments to civic virtue, I then looked at the City of Lake Buena Vista's budget. I wanted to see how much the city spends on parks, pools, community programs, and other things things that enhance the lives of its citizens. What I found was puzzling. Instead of spending being focused on the community, I found budgetary priorities better suited for a theme park resort complex. Disney should feel glad that their the city's voting constituent's interests are so aligned with the interests of the company.


Now this is an interesting roadblock! Just like every other objection, I’m fairly certain this can be addressed too. To begin…

You fairly point out that the original RCID bonds were issued with the expectation that they would be funded using the stable property tax method. Investors can reasonably argue that a change would constitute a breach in contract. This is not only dishonest it’s illegal. I agree with everything you have asserted so far. But what is to be done?

The answer is simply to strip the RCID of all its powers except for the ability to levy a property tax. All the other powers could be devolved to the two counties. Next, the legislature can set an end to the RCID only after the last of the legacy bonds are payable. Guarantee that the RCID cannot issue new bonds unless they are simply replacing bonds that already exist. This would prevent potential shortfall or default. Then, once the bonds are paid, the RCID ceases to function. And like that the RCID has ceased to exist and the powers are devolved.

Or, there is always another option. Orange County could take on responsibility for the bonds. This might strike everyone as unfair at first. Why should Orange County have to take responsibility for the bonds? Here's my thinking...

When the RCID is dissolved, the Disney Springs parking garages would fall to the next governing authority. In this case, Orange County. Disney Springs relies on those parking garages to ensure the viability of Disney Springs. What if Orange County were to start charging for entry into the parking garages? What would that do to Disney Springs' business?

And Orange County has other types of leverage over Disney. Suppose Orange County were to place a toll on World Drive. Or maybe they could contract with advertisers to put billboards along World Drive. Epic Universe billboards would look awfully nice along World Drive... Another form of leverage Orange County could engage in. This leverage can all be used for a specific reason- to get Disney to buy the parking garages and World Drive off of Orange County.

Once Disney folds, which they would if they have any sense, the proceeds of the sale (valued at the total amount of RCID's bonds) could be placed into a special county account. The property taxes in Orange County could pay for the bonds, and any shortfalls in county finances that result could be withdrawn from the special account as time passes.

That billboard idea does speak to me though. How much do you think Universal and other entities would pay for billboards along World Drive? Disney would probably rush to buy the billboard space themselves. Talk about leverage!

Other Points...
- I wouldn’t be shocked if merging the RCID fire department and other services into the two big counties would result in savings. The RCID needs its own administration staff and facilities that the counties already pay for. By merging them into two existing organizations, cost and labor savings should accrue. And I'm no longer certain the RCID is some super well-run entity. Some of those issues listed in the report were embarrassing. When the district's own employees find the way Disney and the RCID operate "complicated" that's a red flag.

-The Anaheim Resort District has thousands of rooms and 90 hotels. While it’s true Disneyland Resort is relatively more reliant on local Californians, it would be unfair to characterize it as anything other than a resort with regional and international pull. Lots of people come and stay in Anaheim. But I agree aggressive increases of hotel tax rates to 15% would not beneficial or needed. That's why I suggested 9%. Though... Anaheim manages to fund 63% of their General Fund on the proceeds of the various taxes they levy against the Anaheim Resort District. It's not inconceivable that the two counties might start wanting a bigger piece of the theme park pie. The theme park industry has been given extreme latitude to operate with minimal taxation. And many of the taxes that are levied tend to be put right back into the tourism industry.

- Your most potent objection might be the supermajority and gridlock in the Florida Legislature. At this point this whole issue has become a political clown show. Unfortunately, the opportunity for a smooth phase out or reform of the RCID is probably passed. What could have been a bipartisan reform is now very politicized. Republicans have no incentive other than to castigate Disney because they've trained their voters want it. And Democrats clearly see an opportunity to become the primary beneficiary of Disney's vast political spending in the state. Neither side has much incentive to work firmly but collaboratively with Disney. One side has every incentive to be a demagogue, and the other side has every incentive to laud Disney to get those campaign funds. It's all sickening.


Universal took their proposal to the regional planning authorities and got approval. A regional planning authority that is accountable to voters in the county. That’s something Disney hasn’t had to do since the Lyndon Johnson administration. Imagine if Walt Disney World had to get development approval for changes to its plan like Disneyland did or Universal did? It’s a nice thought.


The plan was developed and endorsed with cooperation from Sea World, the local chamber of commerce, the Mayor of Orlando, hotels in the area, and of course final approval fell to Orange County. You’re right it was self-serving for Universal Orlando to agitate for the change. But by partnering with these community partners they turned it into a win for all those stakeholders. Even Brightline eventually joined in the project and threw its support behind the new route. This district was created with a specific mission. Build and maintain a train station. A train station that will help Universal, but that also will add value to all those stakeholders.

It’s curious about Sunrail. It would be a shame if they didn’t use the infrastructure they’re building. I’ll watch for further developments. It would be a very expensive and empty station if they don’t make use of it.

I contrast all of the above with Disney’s infrastructure projects within Walt Disney World that help only Disney. Governments are created to help the communities they reside in. Picking up the bill for Disney’s CapEx is not a government function.


In summary the “Universal District:”

1. Does not have planning powers
2. Does not have zoning powers
3. Does not have the right to establish government services
4. Does not have the right to establish building codes
5. Was created by locally elected members of the community
6. It has benefits for multiple stakeholders
7. It has a specific and measurable goal behind its creation (building and maintaining a train station)

So, how is this like the RCID? I will say it makes for good headlines which is why Disney’s legal and PR teams blasted out articles like, “Florida Gives Universal Special District While Denying Disney the Same Right.” The nuance of the issue was completely lost and it wasn’t even the legislature that created the district. To be fair, if I were fighting a battle of public opinion against the State of Florida I would do the same thing.

TLDR

 

[lazyboy97o]

The answer is simply to strip the RCID of all its powers except for the ability to levy a property tax. All the other powers could be devolved to the two counties. Next, the legislature can set an end to the RCID only after the last of the legacy bonds are payable. Guarantee that the RCID cannot issue new bonds unless they are simply replacing bonds that already exist. This would prevent potential shortfall or default. Then, once the bonds are paid, the RCID ceases to function. And like that the RCID has ceased to exist and the powers are devolved.

This idea is illegal.

Or, there is always another option. Orange County could take on responsibility for the bonds. This might strike everyone as unfair at first. Why should Orange County have to take responsibility for the bonds? Here's my thinking...

Also illegal.

When the RCID is dissolved, the Disney Springs parking garages would fall to the next governing authority. In this case, Orange County. Disney Springs relies on those parking garages to ensure the viability of Disney Springs. What if Orange County were to start charging for entry into the parking garages? What would that do to Disney Springs' business?

You are incorrectly assuming that the rushed dissolution process is required and using language that would not have that result.

And Orange County has other types of leverage over Disney. Suppose Orange County were to place a toll on World Drive. Or maybe they could contract with advertisers to put billboards along World Drive. Epic Universe billboards would look awfully nice along World Drive... Another form of leverage Orange County could engage in. This leverage can all be used for a specific reason- to get Disney to buy the parking garages and World Drive off of Orange County.

More illegal ideas.

Universal took their proposal to the regional planning authorities and got approval. A regional planning authority that is accountable to voters in the county. That’s something Disney hasn’t had to do since the Lyndon Johnson administration. Imagine if Walt Disney World had to get development approval for changes to its plan like Disneyland did or Universal did? It’s a nice thought.

Why don't you share the meeting minutes where Universal presented the specifics of their plans?

The plan was developed and endorsed with cooperation from Sea World, the local chamber of commerce, the Mayor of Orlando, hotels in the area, and of course final approval fell to Orange County. You’re right it was self-serving for Universal Orlando to agitate for the change. But by partnering with these community partners they turned it into a win for all those stakeholders. Even Brightline eventually joined in the project and threw its support behind the new route. This district was created with a specific mission. Build and maintain a train station. A train station that will help Universal, but that also will add value to all those stakeholders.

It’s curious about Sunrail. It would be a shame if they didn’t use the infrastructure they’re building. I’ll watch for further developments. It would be a very expensive and empty station if they don’t make use of it.

I contrast all of the above with Disney’s infrastructure projects within Walt Disney World that help only Disney. Governments are created to help the communities they reside in. Picking up the bill for Disney’s CapEx is not a government function.

You are again conflating and misrepresenting different events and organizations. The Sunshine Corridor project is not the same as the Shingle Creek Transportation and Utility District.

In summary the “Universal District:”

1. Does not have planning powers
2. Does not have zoning powers
3. Does not have the right to establish government services
4. Does not have the right to establish building codes
5. Was created by locally elected members of the community
6. It has benefits for multiple stakeholders
7. It has a specific and measurable goal behind its creation (building and maintaining a train station)

So, how is this like the RCID? I will say it makes for good headlines which is why Disney’s legal and PR teams blasted out articles like, “Florida Gives Universal Special District While Denying Disney the Same Right.” The nuance of the issue was completely lost and it wasn’t even the legislature that created the district. To be fair, if I were fighting a battle of public opinion against the State of Florida I would do the same thing.

In summary, you still haven't bothered to actually read the relevant legislation.

 

[mikejs78]

The answer is simply to strip the RCID of all its powers except for the ability to levy a property tax.

Nope. I think you missed the point that one of the stipulations in the bond contracts is that the district will continue to have the ability to build infrastructure, and continue to have the ability to float bonds. Take that away and the bond contracts are in default.

In fact, the FL legislature, back in 1967, guaranteed this to all bondholders.

The State of Florida pledges to the holders of any bonds issued under this Act that it will not limit or alter the rights of the District to own, acquire, construct, reconstruct, improve, maintain, operate or furnish the projects or to levy and collect the taxes, assessments, rentals, rates, fees, tolls, fares and other charges provided for herein … until all such bonds together with interest thereon, and all costs and expenses in connection with any action or proceeding by or on behalf of such holders, are fully met and discharged.