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

[lazyboy97o]

wonder if any of their current bonds have covenants about maintaining a certain rating level?

Wouldn’t a lower rating itself be a harm? The holder is going to have trouble reselling the bond if the issuing entity has a lower rating.

 

[lazyboy97o]

Except that there isn't much Disney can do. The issue is a government entity issue, nothing more, nothing less. Reedy Creek simply moves part of the county governance to the district. The one's really being messed with are the non-Reedy Creek taxpayers in Orange/Osceola counties. Reedy Creek provides a boundary for who gets taxed for the infrastructure bonds. Take away the boundary and it flows to the next boundaries, which are the county lines. Disney will operate the parks just fine with or without RCID.

But as I said, RCID isn't going anywhere and Disney knows it. The whole thing is theater.

The pledge to bond holders is that the State “will not limit or alter the rights of the District to own, acquire, construct, reconstruct, improve, maintain, operate or furnish the projects”. That’s a specific statement of who will own and control the assets financed by the bonds. It’s not just that they will exist and that whomever owns them will make the payments, it’s that the District will own them.

 

[Sirwalterraleigh]

It is the internet, where all things are simplified down to 280 characters...

If RCID is in fact dissolved without another special district put into place, the impact will be simple and brutal. For Orange county residents, who will bear the brunt of it, the property owners will see a 20-25% increase in ad-valorem taxes. This will probably drive most of the 50% take home people out of the area, and a lot of small business owners as well.

For the rest of the state, all of us who live in a CDD with outstanding bonds will want those pushed to the counties. Let the poor pay for those gated communities!

Ok…so we are on the same page.

You want to know how to lose elections for about 30 years?!?

You just read the template

 

[Sirwalterraleigh]

Wouldn’t a lower rating itself be a harm? The holder is going to have trouble reselling the bond if the issuing entity has a lower rating.

Bonds are an investment…the higher the risk/instability…the lower the yield/stability

 

[Dranth]

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.

But what assurance can they offer? They have already proven they are willing to go in and by adding a word or two overwrite/nullify existing deals if they see fit. I wouldn't trust any of them and instead fight to keep what I have.

 

[bpiper]

Wouldn’t a lower rating itself be a harm? The holder is going to have trouble reselling the bond if the issuing entity has a lower rating.

I was thinking that it might cause an interest rate increase to compensate for higher risk.

 

[Sirwalterraleigh]

I was thinking that it might cause an interest rate increase to compensate for higher risk.

An interest rate increase???

Bonds aren’t like Flyer private penny stocks. They are backed by public domain…so the riskier they are - the less they pay. It would take longer to recoup in that scenario.

…or at least…lower rate in the immediate. More money over longer time.

 

[lazyboy97o]

Sure, let's look at one of the cases referenced by Jacob Schumer in the Bloomberg article.

In Von Hoffman v. City of Quincy, the City of Quincy, Illinois essentially refused to pay bonds ("coupons on interest notes") that it had issued. Even after receiving a judgement against them, Quincy continued to refuse to pay these bonds. It dragged out further, but the short of it is that Quincy tried to avoid paying the full amount owed to the bond holder by using a law as its defense. ("The principal question in this court was whether the act of February 14th, impaired the obligation of a contract, and was therefore void within the tenth section of the first article of the Constitution, which prohibits any State from passing such an act.")

The case references the U.S. Constitution (Art. I, § 10):

no State shall pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.​

If Florida statutes require that RCID's obligations be assumed by the county (s. 189.072(4)):

Financial allocations of the assets and indebtedness of a dissolved independent special district shall be pursuant to s. 189.076.​

And (s. 189.076(1)):

The government formed by merger of existing special districts shall assume all indebtedness of, and receive title to all property owned by, the preexisting special districts.​

Then how is the obligation being impaired?

I realize there are counterarguments and am not trying to get into a debate. I'm only noting that one of the cases cited by Mr. Schumer raises questions.

The specific source of revenue to service the bonds is now gone. The counties don’t assume the taxing authority. Even then, in this case, the state promised that it would be the District itself that would be a position of ownership and control.

 

[Disstevefan1]

Sure, let's look at one of the cases referenced by Jacob Schumer in the Bloomberg article.

In Von Hoffman v. City of Quincy, the City of Quincy, Illinois essentially refused to pay bonds ("coupons on interest notes") that it had issued. Even after receiving a judgement against them, Quincy continued to refuse to pay these bonds. It dragged out further, but the short of it is that Quincy tried to avoid paying the full amount owed to the bond holder by using a law as its defense. ("The principal question in this court was whether the act of February 14th, impaired the obligation of a contract, and was therefore void within the tenth section of the first article of the Constitution, which prohibits any State from passing such an act.")

The case references the U.S. Constitution (Art. I, § 10):

no State shall pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.​

If Florida statutes require that RCID's obligations be assumed by the county (s. 189.072(4)):

Financial allocations of the assets and indebtedness of a dissolved independent special district shall be pursuant to s. 189.076.​

And (s. 189.076(1)):

The government formed by merger of existing special districts shall assume all indebtedness of, and receive title to all property owned by, the preexisting special districts.​

Then how is the obligation being impaired?

I realize there are counterarguments and am not trying to get into a debate. I'm only noting that one of the cases cited by Mr. Schumer raises questions.

I may be reading this wrong, but does, “ shall assume all indebtedness of, and receive title to all property owned by, the preexisting special districts.”

Receive title, does that mean the area formerly known as RCID would be owned by, the county? The state? An entity other than TWDC?

Just asking.

 

[Nubs70]

Sure, let's look at one of the cases referenced by Jacob Schumer in the Bloomberg article.

In Von Hoffman v. City of Quincy, the City of Quincy, Illinois essentially refused to pay bonds ("coupons on interest notes") that it had issued. Even after receiving a judgement against them, Quincy continued to refuse to pay these bonds. It dragged out further, but the short of it is that Quincy tried to avoid paying the full amount owed to the bond holder by using a law as its defense. ("The principal question in this court was whether the act of February 14th, impaired the obligation of a contract, and was therefore void within the tenth section of the first article of the Constitution, which prohibits any State from passing such an act.")

The case references the U.S. Constitution (Art. I, § 10):

no State shall pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.​

If Florida statutes require that RCID's obligations be assumed by the county (s. 189.072(4)):

Financial allocations of the assets and indebtedness of a dissolved independent special district shall be pursuant to s. 189.076.​

And (s. 189.076(1)):

The government formed by merger of existing special districts shall assume all indebtedness of, and receive title to all property owned by, the preexisting special districts.​

Then how is the obligation being impaired?

I realize there are counterarguments and am not trying to get into a debate. I'm only noting that one of the cases cited by Mr. Schumer raises questions.

Looks like RCID would do well to get a 100 year bond offering executed.

 

[GoofGoof]

But what assurance can they offer? They have already proven they are willing to go in and by adding a word or two overwrite/nullify existing deals if they see fit. I wouldn't trust any of them and instead fight to keep what I have.

They would need to put a specific clause into the creation of the new district that provides for a financial backstop for Disney should the state decide to dissolve the district again later. Disney never thought they would need that and hadn’t for over 50 years. Now they do. There are many different ways to do it through various independent contracts. Remember that this isn’t the Kingdom of Florida with a monarch who calls the shots. The state government may be able to reverse something that they previously passed but they still have to follow the basic laws of contracts. That’s why the bond provision is ultimately the easiest way for RCID to fight this.

 

[GoofGoof]

My interpretation of that statute is that, for example, Orange County would assume ownership of the fire trucks and fire stations owned by RCID.

And the parking garages and roads and power generation facilities. The garages are I assume leased to Disney under long term contracts and the power facilities have contracts to sell power to Disney so the counties may get assets but they would have limited control over them.

 

[GoofGoof]

Sure, let's look at one of the cases referenced by Jacob Schumer in the Bloomberg article.

In Von Hoffman v. City of Quincy, the City of Quincy, Illinois essentially refused to pay bonds ("coupons on interest notes") that it had issued. Even after receiving a judgement against them, Quincy continued to refuse to pay these bonds. It dragged out further, but the short of it is that Quincy tried to avoid paying the full amount owed to the bond holder by using a law as its defense. ("The principal question in this court was whether the act of February 14th, impaired the obligation of a contract, and was therefore void within the tenth section of the first article of the Constitution, which prohibits any State from passing such an act.")

The case references the U.S. Constitution (Art. I, § 10):

no State shall pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.​

If Florida statutes require that RCID's obligations be assumed by the county (s. 189.072(4)):

Financial allocations of the assets and indebtedness of a dissolved independent special district shall be pursuant to s. 189.076.​

And (s. 189.076(1)):

The government formed by merger of existing special districts shall assume all indebtedness of, and receive title to all property owned by, the preexisting special districts.​

Then how is the obligation being impaired?

I realize there are counterarguments and am not trying to get into a debate. I'm only noting that one of the cases cited by Mr. Schumer raises questions.

Isn’t this the issue though? From the article:
In authorizing Reedy Creek to issue bonds, the Florida legislature included a remarkable statement—included in Reedy Creek’s bond offerings—regarding its own promise to 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.”

So when the bond holders purchased those bonds it was right in the bond offering that the State pledged not to limit or alter the rights of the district to generate enough income to pay back the debt. If the state then breaks that pledge by passing new legislation it’s securities fraud. Municipal bonds are not subject to SEC regulatory compliance like corporate debt and equities, but they are still subject to Federal Securities fraud laws. Since the state legislature made the pledge and not Orange County I don’t know how that would play out in court, but the burden could potentially fall to the state itself and not Orange County. In that case the state would be obligated to pay any damages not the counties.

 

[lazyboy97o]

Right, which is why Orange County Tax Collector Scott Randolph is saying he is going to have to raise taxes on everyone who lives in the county.

The state pledged to protect the District’s taxing authority. Not the District and/or it’s successors. Just the District. Orange and Osceola County are not the District. Raising existing taxes is a different tax levied on different assets.

 

[lazyboy97o]

And the parking garages and roads and power generation facilities. The garages are I assume leased to Disney under long term contracts and the power facilities have contracts to sell power to Disney so the counties may get assets but they would have limited control over them.

The garages at Disney Springs are not leased to Disney. They are owned and operated by Reedy Creek. If you look at the employee name tags and uniforms they say RCID.

 

[Nubs70]

Right.

I think what everyone can agree on is that the law dissolving RCID created a big mess.

But if:

RCID could be restricted from issuing new bonds. The net effect would be RCID would sunset at the latest maturity date in affect. This would allow obligations not to be impaired and sufficient time to development.and execution of assimilation with the respective counties.

 

[peter11435]

But if:

RCID could be restricted from issuing new bonds. The net effect would be RCID would sunset at the latest maturity date in affect. This would allow obligations not to be impaired and sufficient time to development.and execution of assimilation with the respective counties.

Ok but again…. Why? What’s the benefit? Who benefits? Be specific

 

[lazyboy97o]

But if:

RCID could be restricted from issuing new bonds. The net effect would be RCID would sunset at the latest maturity date in affect. This would allow obligations not to be impaired and sufficient time to development.and execution of assimilation with the respective counties.

The inability to issue new bonds could impair the ability to maintain and improve.

 

[DisneyDebRob]

John Classe, head of RCID operations said last night: "I learned this week that our planned expansion... of our solar power program, just one of the 75-megawatt facilities that we have in the pipeline, could be delayed because of the developer experiencing financing challenges relating to the uncertainty surrounding the legislation,”

I thought that said John Cleese…that’s exactly what we need here is a Monty Python man to show what a joke this is turning out to be.

 

[UNCgolf]

Sure, let's look at one of the cases referenced by Jacob Schumer in the Bloomberg article.

In Von Hoffman v. City of Quincy, the City of Quincy, Illinois essentially refused to pay bonds ("coupons on interest notes") that it had issued. Even after receiving a judgement against them, Quincy continued to refuse to pay these bonds. It dragged out further, but the short of it is that Quincy tried to avoid paying the full amount owed to the bond holder by using a law as its defense. ("The principal question in this court was whether the act of February 14th, impaired the obligation of a contract, and was therefore void within the tenth section of the first article of the Constitution, which prohibits any State from passing such an act.")

The case references the U.S. Constitution (Art. I, § 10):

no State shall pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.​

If Florida statutes require that RCID's obligations be assumed by the county (s. 189.072(4)):

Financial allocations of the assets and indebtedness of a dissolved independent special district shall be pursuant to s. 189.076.​

And (s. 189.076(1)):

The government formed by merger of existing special districts shall assume all indebtedness of, and receive title to all property owned by, the preexisting special districts.​

Then how is the obligation being impaired?

I realize there are counterarguments and am not trying to get into a debate. I'm only noting that one of the cases cited by Mr. Schumer raises questions.

The applicable statute would be 189.076 (2) since there's no merger of districts:

Unless otherwise provided by law or ordinance, the dissolution of a special district government shall transfer the title to all property owned by the preexisting special district government to the local general-purpose government, which shall also assume all indebtedness of the preexisting special district.

The plain text reading suggests all RCID property would be transferred to Orange and Osceola counties. However, that's tied in with the law that requires a vote by the existing district to dissolve, which the legislature attempted to bypass, so...