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

[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 In 1973, the legislatures repealed that covenant in order to expand the PATH system.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.

 

[mmascari]

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.

I guess if you have to mislead to point out a fault with RCID, it's not really a fault then. My bent is to people not just making stuff up to then argue against. If that's all you have, then you are correct about one thing, it's not worth the conversation.

One would think if RCID was full of all these faults that need to be addressed, it would be easy to point them out. I guess not. They must all be secret faults that we just know exist but cannot articulate.

 

[lazyboy97o]

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?

How land can be used is a major factor in its value. The rates of taxation can even change depending on use.

The business case for maintaining the existing land use is even in the OPPAGA report as a reason not to bother messing with the Reedy Creek Improvement District.

 

[WoundedDreamer]

How land can be used is a major factor in its value. The rates of taxation can even change depending on use.

Hmm, maybe the bondholders should have insisted that power be included when they bought the bonds as originally issued. But they didn't. The text is the text.

 

[WoundedDreamer]

I guess if you have to mislead to point out a fault with RCID, it's not really a fault then. My bent is to people not just making stuff up to then argue against. If that's all you have, then you are correct about one thing, it's not worth the conversation.

One would think if RCID was full of all these faults that need to be addressed, it would be easy to point them out. I guess not. They must all be secret faults that we just know exist but cannot articulate.

Examples of why it should be reformed:

1) The RCID does not allow the hundreds of thousands of individuals that live near it to participate in its management
2) The RCID and Disney became intertwined and it impacted good governance
3) Disney shifted CapEx from its balance sheet to the local government apparatus, thus obscuring true CapEx

No lies necessary.

 

[lazyboy97o]

Hmm, maybe the bondholders should have insisted that power be included when they bought the bonds as originally issued. But they didn't. The text is the text.

The pledge from the state is part of the deal.

 

[lazyboy97o]

Examples of why it should be reformed:

1) The RCID does not allow the hundreds of thousands of individuals that live near it to participate in its management
2) The RCID and Disney became intertwined and it impacted good governance
3) Disney shifted CapEx from its balance sheet to the local government apparatus, thus obscuring true CapEx

No lies necessary.

1) Orlando does not allow the hundreds of thousands of individuals that live near it to participate in its management.
2) Of course they’re intertwined. That’s part of the purpose of such special districts. That’s why the state specifically allows land holding special districts to be run by people affiliated with the land owner.
3) This seems to be the argument that failed in State v Reedy Creek Improvement District

 

[WoundedDreamer]

1) Orlando does not allow the hundreds of thousands of individuals that live near it to participate in its management.
2) Of course they’re intertwined. That’s part of the purpose of such special districts. That’s why the state specifically allows land holding special districts to be run by people affiliated with the land owner.
3) This seems to be the argument that failed in State v Reedy Creek Improvement District

1) Communities > soulless corporation
2) This was impacting sound governance
3) Even it was legal, it doesn't make it desirable for the community

 

[lazyboy97o]

1) Communities > soulless corporation
2) This was impacting sound governance
3) Even it was legal, it doesn't make it desirable for the community

There was no community desire to take over the district or its functions. The community doesn’t heavily regulate large amusement developments. It was the counties who were most concerns about having to absorb the assets and liabilities of the District. They almost certainly would have just zoned all of Walt Disney World as a Planned Dvelooment and let Disney continue to do as they desire with even less public input.

 

[WoundedDreamer]

The pledge from the state is part of the deal.

The state pledged to not alter any power necessary for the RCID to complete the terms of their bond. I have shown you the text of the bond where the specific powers needed to execute the bond were listed. The zoning was not listed.

 

[mmascari]

1) The RCID does not allow the hundreds of thousands of individuals that live near it to participate in its management

Do I get say in how your local government works? Why not? What's the definition of "near" that allows those outside the boundary to get input even while being outside? Do the residents of Miami get a say? Do the residents of Lake Nona get a say? Should the residents of Kingsland GA get a say in either the FL state government or in RCID? They certainly deal with traffic passing through headed to FL tourism destinations. If we're going to ignore governance boundaries, what's the new measure? Should we dissolve all local government and only have state or federal governance?

How is adding outside control of RCID governance any different than those scenarios? I'm trying to understand if this is a problem with how governance boundaries work (which seems to be the complaint) and should apply to every special district in FL, or if it is just a rationalization of why not to like RCID.

2) The RCID and Disney became intertwined and it impacted good governance

Do you have an example of a poor governance decision that was taken? Obviously RCID was influenced by Disney. This isn't a bad thing, but the contrary to be expected. Disney is the primary constituent of RCID, almost the only one. Governance organizations should be influenced by those they govern. How about an example of where RCID made a governance decision that favored Disney at the expense of some other constituent within the district?

3) Disney shifted CapEx from its balance sheet to the local government apparatus, thus obscuring true CapEx

The parking garages, that satisfy a local business development and infrastructure could be thought of similar to roads. A decision that is made by governments all over the country. Sometimes governments build them, sometimes they incentivize private groups to, sometimes they just let parking be bad.

Is there some other, beyond the parking garages, example of Disney shifting CapEx to RCID? Maybe a theme park parking lot? Perhaps a road inside a restricted access area instead of a public road? A roller coaster? Did RCID fund a theme park ride, I think everyone here would agree that would be a significant problem.

 

[WoundedDreamer]

There was no community desire to take over the district or its functions. The community doesn’t heavily regulate large amusement developments. It was the counties who were most concerns about having to absorb the assets and liabilities of the District. They almost certainly would have just zoned all of Walt Disney World as a Planned Dvelooment and let Disney continue to do as they desire with even less public input.

Of course they were concerned. The way the process was handled was not sound or methodical. They had a long list of questions with very few answers. I always have argued that reforms needed to be done in a methodical way. The community shouldn't have had the issue sprung on them.

 

[castlecake2.0]

Wow almost $400k billed to “the taxpayers” for last weeks report

 

[lazyboy97o]

Of course they were concerned. The way the process was handled was not sound or methodical. They had a long list of questions with very few answers. I always have argued that reforms needed to be done in a methodical way. The community shouldn't have had the issue sprung on them.

They knew plenty of answers, namely that they lacked mechanisms to increase revenue in order to provide expanded services.

 

[mmascari]

1) Communities > soulless corporation
2) This was impacting sound governance
3) Even it was legal, it doesn't make it desirable for the community

What community? There is virtually no community at all within the RCID boundary. The community within the RCID boundary is the Walt Disney World Resort. Along with some land sold that includes conditions where the Walt Disney World Resort retains significant control over how it is used and developed.

There's no community of families that are within the district competing with a mega corporation to have different priorities by the district governance. That's not a thing that exists.

 

[lazyboy97o]

What community? There is virtually no community at all within the RCID boundary. The community within the RCID boundary is the Walt Disney World Resort. Along with some land sold that includes conditions where the Walt Disney World Resort retains significant control over how it is used and developed.

There's no community of families that are within the district competing with a mega corporation to have different priorities by the district governance. That's not a thing that exists.

It’s the community outside. The one that, even after some shenanigans, happily gave Universal effective zoning control, funding for new roads, and their own special district with the full powers of Chapter 190.

 

[WoundedDreamer]

Do I get say in how your local government works? Why not? What's the definition of "near" that allows those outside the boundary to get input even while being outside? Do the residents of Miami get a say? Do the residents of Lake Nona get a say? Should the residents of Kingsland GA get a say in either the FL state government or in RCID? They certainly deal with traffic passing through headed to FL tourism destinations. If we're going to ignore governance boundaries, what's the new measure? Should we dissolve all local government and only have state or federal governance?

How is adding outside control of RCID governance any different than those scenarios? I'm trying to understand if this is a problem with how governance boundaries work (which seems to be the complaint) and should apply to every special district in FL, or if it is just a rationalization of why not to like RCID.


Do you have an example of a poor governance decision that was taken? Obviously RCID was influenced by Disney. This isn't a bad thing, but the contrary to be expected. Disney is the primary constituent of RCID, almost the only one. Governance organizations should be influenced by those they govern. How about an example of where RCID made a governance decision that favored Disney at the expense of some other constituent within the district?


The parking garages, that satisfy a local business development and infrastructure could be thought of similar to roads. A decision that is made by governments all over the country. Sometimes governments build them, sometimes they incentivize private groups to, sometimes they just let parking be bad.

Is there some other, beyond the parking garages, example of Disney shifting CapEx to RCID? Maybe a theme park parking lot? Perhaps a road inside a restricted access area instead of a public road? A roller coaster? Did RCID fund a theme park ride, I think everyone here would agree that would be a significant problem.

We hold corporations to a different standard than fellow citizens. You telling a community you're not a part of how to run that community is meaningfully different from a community holding a gigantic firm accountable. It would be one thing if the RCID was filled with fellow citizens, but it's dominated by a single entertainment complex.

The parking garages serve The Walt Disney Company. There's a term for infrastructure that is built for a company with an aim of enhancing its property. Capital expenditures.

And the poor governance examples include the Bonnet Creek incident. There's also a question of whether RCID can be an effective regulator of itself.

It’s the community outside. The one that, even after some shenanigans, happily gave Universal effective zoning control, funding for new roads, and their own special district with the full powers of Chapter 190.

Correct, after the community reviewed Universal's proposal, it zoned a property to a specific purpose. Now Universal can act with impunity in the area because it was zoned appropriately. Hmm, doesn't sound so bad.

 

[lazyboy97o]

Correct, after the community reviewed Universal's proposal, it zoned a property to a specific purpose. Now Universal can act with impunity in the area because it was zoned appropriately. Hmm, doesn't sound so bad.

Once again, no it was not. No specific plan was reviewed nor was the property given a specific zoning designation.

The zoning of Walt Disney World is much more specific and subject to state review. Which areas are not appropriately zoned?

 

[tissandtully]

Once again, no it was not. No specific plan was reviewed nor was the property given a specific zoning designation.

The zoning of Walt Disney World is much more specific and subject to state review. Which areas are not appropriately zoned?

I'm beginning to think this poster is one of the CFTOD board members.

 

[WoundedDreamer]

Once again, no it was not. No specific plan was reviewed nor was the property given a specific zoning designation.

The zoning of Walt Disney World is much more specific and subject to state review. Which areas are not appropriately zoned?

I never said that Walt Disney World wasn't zoned appropriately. That seems to have been your own extrapolation.

I'm beginning to think this poster is one of the CFTOD board members.

Groan.