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

[Sirwalterraleigh]

I think it's a very sound argument and - based on the Bloomberg article that was posted here yesterday by another user - is indisputable based on FL and federal law. The government can't break a contract just because they feel like it. So it seems like the options just from that are:

1. Leave RCID as it is.
2. Leave RCID in place until the last bond is paid off.
3. Try to end RCID before the bonds are paid off, but that can't happen until 2029 at the earliest because there's a bond maturing that year that has a clause preventing early payoff. This option would also end up angering people across the country who own RCID bonds since paying off the other bonds early takes away a source of tax-free earnings for the bondholders. It would also dump a huge lump sum burden on the counties as they would have to pay off the remaining balances on all outstanding bonds in 2029 upon dissolution of RCID.

And even if options 2 & 3 are possible under the law as it applies to the bonds, that still ignores the other legal arguments for preventing the dissolution such as the requirement that the RCID voters approve the dissolution and the obvious 1st Amendment argument.

It’s gonna be #1…

Because it’s what everyone ultimately wants.

 

[Disney Glimpses]

I'm not sure why everyone is assuming FL isn't willing to re-establish RCID under updated terms (as the bill allows for). Even that loser Randy Fine admitted to such recently. They really don't have much of a choice but to re-establish it.

 

[lazyboy97o]

I'm not sure why everyone is assuming FL isn't willing to re-establish RCID under updated terms (as the bill allows for). Even that loser Randy Fine admitted to such recently. They really don't have much of a choice but to re-establish it.

Because the stated goals aren’t actual policy objectives related to the powers of the District. There is nothing gained by paying extorted penance that rewards such behavior.

 

[flynnibus]

When I pulled back on blogging and writing a few years ago, I stopped even commenting on boards. I did lurk, however, but I've been allowing myself to not obsess over every detail. Life simply got busy!

I'm amazed at how much people dedicate of their life to this stuff for sure!

I haven't ruled out a return to blogging at some point, and words you type are forever, so I'm going to continue to not weigh in on this particular topic. I'd make some crack about wanting to instead debate costs of marathons and festival drinks, but the reality is that while I still visit the parks, I don't buy the food or drinks. I'm priced out.

Hey, don't be a stranger! Certainly helps having people with the experience and data points and not just 'I like Enchanted more than HEA' Publishing is a rat race... enjoy the discussion instead Cya around!

 

[ctrlaltdel]

It’s possible that you still run into issues of harming the existing bond holders since you need a mechanism to ensure financing of the Districts projects, which includes maintaining the assets the bonds financed. There’s a reason the Bloomberg author declared dissolution legally impossible. Bonds are incredibly powerful and any simple solution is almost certainly insufficient.

This is why I have a hard time actually visualizing a dissolution (that wasn't prompted by the "residents" of a district with a well thought out and lengthy plan for integration into another legal entity). Municipal bonds are a very different thing than even major corporate financing. Interest rates and financing are a different beast for municipalities (they typically get an insanely great rate, due to having taxing power that is pretty much the safest money a financial institution can hope for when repaying bond debt).

 

[ctrlaltdel]

I'm not sure why everyone is assuming FL isn't willing to re-establish RCID under updated terms (as the bill allows for). Even that loser Randy Fine admitted to such recently. They really don't have much of a choice but to re-establish it.

I guess what would the updated terms be? It certainly seems that the leadership that pushed the bill is walking back some of their initial inflammatory statements after it was clear they probably overstepped both politically and legally, but I can't really envision what those different terms would be? Disney (and to a lesser extent the other hotel, restaurant, and entertainment companies that benefit from the infrastructure on property) essentially pay an extra tax to maintain and build out infrastructure in a way that lets them deal with less red tape. Again, as sinister as it sounds on the surface (Disney has it's own government!) it's all the non-controversial, mundane, standard local government stuff. There is nothing even that political about the functions of RCID.

 

[Disney Glimpses]

Because the stated goals aren’t actual policy objectives related to the powers of the District. There is nothing gained by paying extorted penance that rewards such behavior.

Frankly, just giving them a district with the terms that new districts get today (which aren't very different) would be a political win. They would claim Disney is now finally like everyone else and paying their fair share despite nothing actually changing. It's all smoke and mirrors, in my opinion.

 

[Sirwalterraleigh]

Because the stated goals aren’t actual policy objectives related to the powers of the District. There is nothing gained by paying extorted penance that rewards such behavior.

That is why I’m predicting that nothing happens.

This is just for theater/temporary Pop…

They don’t need to do anything to achieve that. It’s already done. And the public attention span is that of a kitten.

 

[GoofGoof]

Couldn't RCID continue taking out new debt to legally continue existing? I am certain that even without the dissolution law, they would always have significant bond debt because that is just how governments (really any large organization) operate.

The legislature could in theory pass a bill that prevents all existing special districts the power to issue municipal debt. I’m not sure they can legally single out just one district so it would be a nuclear option that would have long lasting implications on all parts of the state (as an example,, The Villages has a special district and would be adversely impacted). It’s theoretically possible but would really be a huge political disaster.

As far as RCID itself, they cannot dissolve the district without having a landing spot for the billion in existing debt. The Governor’s vague statements that the debt won’t go to the counties and the taxpayers but that’s the only real option. They could try to force RCID to redeem all of the bonds early and try to make Disney as their main taxpayer pay a one time tax assessment to cover that but I am not sure that’s even legal or possible to do. The other issue is the utility bonds that don’t mature until 2029 have a clause in them which prohibits early redemption. That’s covered under Federal Securities law so there’s no getting out of that.

The fact of the matter is Disney really doesn’t need to do anything here. The state has put itself in a no win situation and will essentially need to ask Disney to negotiate an agreement. They could just say no and then the dent and the service cost goes to the county, but it’s in Disney’s best interest to negotiate. Of course they won’t say yes unless it’s financially beneficial. I could see them negotiating a “new“ special district but then making sure there are clauses the ensure that the state cannot weaponize it against them in the future. Like a poison pill type payout if the state attempts to dissolve the district without Disney’s consent.

 

[flynnibus]

they typically get an insanely great rate, due to having taxing power that is pretty much the safest money a financial institution can hope for when repaying bond debt

'...but in this world nothing can be said to be certain, except death and taxes'

 

[lazyboy97o]

Frankly, just giving them a district with the terms that new districts get today (which aren't very different) would be a political win. They would claim Disney is now finally like everyone else and paying their fair share despite nothing actually changing. It's all smoke and mirrors, in my opinion.

Community Development Districts don’t control land use to the same extent. The District does have greater powers in terms of building, zoning and land use. Disney would be giving up some of its big technical benefits, some would not be given up in practice, at extra cost. Why do that if you don’t have to?

 

[mikejs78]

Couldn't RCID continue taking out new debt to legally continue existing? I am certain that even without the dissolution law, they would always have significant bond debt because that is just how governments (really any large organization) operate.

The Florida state constitution includes a clause that allows the legislature to remove a special district’s powers to issue new bonds. Like the bill to eliminate RCID, this requires a simple majority vote.

This would really mess up RCID’s ability to support capital projects at WDW, as they would no longer be able to issue bonds.

My opinion is that if RCID tried to fight this in state court, they would lose because the Florida constitution should trump the Reedy Creek Act.

The state could remove their guaruntee for *new* bonds. The issue is the existing bonds. Since the state legislature made a commitment to bondholders that they would not change Reedy Creek, they can't change Reedy creek until the existing bonds are paid off, because that commitment is part of the bond contract. The FL supreme court has ruled that the state constitution prohibits the state from altering contracts, so that's where this comes from. (And there's also federal issues with altering contracts).

The law to eliminate RCID included a clause that eliminated landowners’ requirement to vote on this.

This is another area that RCID could possibly fight the state in court.

However, legislatures frequently change earlier statutes with later statutes, so RCID would have to find a reason why this is different than other laws.

There's a question on whether or not that's legal. Since Reedy Creek was in existence at the time of the law, there's a question if the legislature can just remove that requirement for existing districts. They certainly can for new districts going forward.

I'm not sure why everyone is assuming FL isn't willing to re-establish RCID under updated terms (as the bill allows for). Even that loser Randy Fine admitted to such recently. They really don't have much of a choice but to re-establish it.

They may not be able to re-establish RCID under updated terms due to the bond contract issue. They may have to keep the district intact.

 

[GoofGoof]

Frankly, just giving them a district with the terms that new districts get today (which aren't very different) would be a political win. They would claim Disney is now finally like everyone else and paying their fair share despite nothing actually changing. It's all smoke and mirrors, in my opinion.

This is exactly what I think happens. The state cannot necessarily dictate the terms but the politicians need to save face so they “dissolve“ the existing district, take their victory lap on slapping down woke Disney and then a new district is established that gives Disney largely the same benefits. In order to get Disney to play along they will have to offer some assurance that this won’t happen again the next time Disney speaks out. Since the relationship is too broken to just rely on a handshake agreement I would expect some sort of financial windfall should the state go after the district again.

 

[Nubs70]

I think it's a very sound argument and - based on the Bloomberg article that was posted here yesterday by another user - is indisputable based on FL and federal law. The government can't break a contract just because they feel like it. So it seems like the options just from that are:

1. Leave RCID as it is.
2. Leave RCID in place until the last bond is paid off.
3. Try to end RCID before the bonds are paid off, but that can't happen until 2029 at the earliest because there's a bond maturing that year that has a clause preventing early payoff. This option would also end up angering people across the country who own RCID bonds since paying off the other bonds early takes away a source of tax-free earnings for the bondholders. It would also dump a huge lump sum burden on the counties as they would have to pay off the remaining balances on all outstanding bonds in 2029 upon dissolution of RCID.

And even if options 2 & 3 are possible under the law as it applies to the bonds, that still ignores the other legal arguments for preventing the dissolution such as the requirement that the RCID voters approve the dissolution and the obvious 1st Amendment argument.

State of Florida does have an issue with existing bonds but future bonds could be curtailed.

Could not RCID be dissolved with exisiting bonds being transferred to a new entity, RCID Holdco, whose purpose is to administrate what was RCID until bond maturity without authority to issue new bonds?
1. Existing bonds are.not interfered with.
2. Bond accountability is not dumped on the counties.
3. WDW still retains ability to issue bonds for infrastructure improvement .

 

[lazyboy97o]

This is exactly what I think happens. The state cannot necessarily dictate the terms but the politicians need to save face so they “dissolve“ the existing district, take their victory lap on slapping down woke Disney and then a new district is established that gives Disney largely the same benefits. In order to get Disney to play along they will have to offer some assurance that this won’t happen again the next time Disney speaks out. Since the relationship is too broken to just rely on a handshake agreement I would expect some sort of financial windfall should the state go after the district again.

What you’re describing is extortion design to suppress speech.

 

[Chip Chipperson]

Couldn't RCID continue taking out new debt to legally continue existing? I am certain that even without the dissolution law, they would always have significant bond debt because that is just how governments (really any large organization) operate.

Potentially, but that depends on whether there's an appetite for their debt in the market after this mess. It would also raise questions about whether there is still a legally binding pledge from the State to not interfere with their ability to levy taxes to pay for the bonds. Given the risk involved for buyers, it might not be so easy.

 

[UNCgolf]

State of Florida does have an issue with existing bonds but future bonds could be curtailed.

Could not RCID be dissolved with exisiting bonds being transferred to a new entity, RCID Holdco, whose purpose is to administrate what was RCID until bond maturity without authority to issue new bonds?
1. Existing bonds are.not interfered with.
2. Bond accountability is not dumped on the counties.
3. WDW still retains ability to issue bonds for infrastructure improvement .

I think there would still be contractual issues with that, and I'm also not sure that's even possible to do when it comes to municipal entities. You're suggesting creating a corporation to administer the assets of what was once a municipality.

 

[ctrlaltdel]

This is exactly what I think happens. The state cannot necessarily dictate the terms but the politicians need to save face so they “dissolve“ the existing district, take their victory lap on slapping down woke Disney and then a new district is established that gives Disney largely the same benefits. In order to get Disney to play along they will have to offer some assurance that this won’t happen again the next time Disney speaks out. Since the relationship is too broken to just rely on a handshake agreement I would expect some sort of financial windfall should the state go after the district again.

Not knowing Florida law, what is the difference between RCID and new districts? Doesn't seem like much and it won't functionally change what RCID does, but interested.

 

[Chip Chipperson]

The law to eliminate RCID included a clause that eliminated landowners’ requirement to vote on this.

This is another area that RCID could possibly fight the state in court.

However, legislatures frequently change earlier statutes with later statutes, so RCID would have to find a reason why this is different than other laws.

It would be an interesting argument. The State granted the landowners the right to vote on any attempt to dissolve. That could be viewed as a legally binding contract. Without any clear justification, can the State unilaterally revoke that right - particularly when there are multiple public statements admitting that this act was revenge against Disney for voicing it's opinion? Revocation of the right to vote on the matter is an obvious harm to the landowners (which doesn't just include Disney, either).

 

[ctrlaltdel]

It would be an interesting argument. The State granted the landowners the right to vote on any attempt to dissolve. That could be viewed as a legally binding contract. Without any clear justification, can the State unilaterally revoke that right - particularly when there are multiple public statements admitting that this act was revenge against Disney for voicing it's opinion? Revocation of the right to vote on the matter is an obvious harm to the landowners (which doesn't just include Disney, either).

Not a laywer but seems like a fairly easy due process claim here.