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

[lentesta]

If the bond is paid off then their is not problem do you not understand that? These bonds do not extend out to infinity. A bond has a call right in it where they can be called back at anytime by the bond holder... transfer the obligation to Florida and Florida pays it.. no problem. And when Florida hits Disney with a special tax to cover that for the full amount in one fell swoop the only person that will be screaming bloody murder will be Disney. The bondholder will be made whole and happy, Florida will have no obligations so they will be happy.

My man, you're getting hammered in this discussion and you keep posting the same stuff over and over again. If you think you're right, then just assume we're all idiots and you'll never get through to us. Either way, please stop posting.

 

[Gringrinngghost]

So you think the State could/should pay off $1 billion in one lump sum within the next 13 months and then create sum magical tax that charges an extra $1 billion in taxes to Disney?!?!?! I cant believe that you actually think that's possible from a legal or financial standpoint and that you don't find such a gross abuse of power to be anything short of authoritarian.

They'll just raise our taxes again to pay for it... just like the Online Sales Tax going to pickup the slack in cutting business taxes.

 

[UNCgolf]

They would need to do that and somehow also drag in 2 Democrats in the house and 3 in the Senate.

Right, that's what I said -- they were 2 short in the House and 3 in the Senate of having a party-based supermajority.

 

[mmascari]

No it is more like saying ESPN is Disney. The RCID was setup in such as way that it operates for all intents and purposes as an operating company of Disney. The board of RC is made of solely of Disney executives that buy a small tract of land which they then sell back to Disney as soon as their term on the board expires... I can't imagine how it could be under more control of Disney if they wanted more control

That's the mechanism used to create the control and influence. That doesn't make Disney and RCID one thing.

The new law didn't try to take something away from Disney through asset seizure. If Disney and RCID were one thing, then the government dissolving RCID would be taking something from Disney. Because that's what we want to, government seizing assets when they don't like what you say.

Disney has a majority direct ownership stake in ESPN. The minority owners couldn't just take the rest of ESPN from then.

All these details matter. Disney has spent the last 50 years making sure that RCID and Disney were separate and distinct yet maintaining control through how RCID is structured.

If you're going to ignore all the details and just make stuff up and pretend it's real, better to visit WDW than discuss impacts of real actions. At least as a visitor, they'll cater to a fantasy world.

 

[peter11435]

When states create entities such as RCID. Do said entities exist for eternity?

Literally section 1 of the Reedy Creek Act.. “The Reedy Creek Drainage District shall henceforth be known by the name of Reedy Creek Improvement District, and shall continue to be a public corporation of this State and have perpetual existence.”

 

[GoofGoof]

So you think the State could/should pay off $1 billion in one lump sum within the next 13 months and then create sum magical tax that charges an extra $1 billion in taxes to Disney?!?!?! I cant believe that you actually think that's possible from a legal or financial standpoint and that you don't find such a gross abuse of power to be anything short of authoritarian.

That’s my biggest question. What mechanism exists to charge Disney $1B in extra state taxes but not impact anyone else? FYI at the current state corporate tax rate of 5.5% you’d need $18 trillion in income to owe $1B in taxes.

 

[mmascari]

Worst case scenario the state would just go out on the open market and buy up those bonds at a premium

Assuming they're all for sale on the open market.

If they could do it quietly, they could probably get them all at a discount right now.

But, once word is out, especially the ones that limit early pay off, they're going to go for a huge premium.

If the only way for this to work is for the state of FL to buy on the open market the RCID bonds that don't allow early pay off so they can waive that condition (somehow), you can bet there's a sociopath who is buying one right now and going to raise the price to some extreme level since FL would have no other choice.

Reminds me of land rush in the swamps of FL sometime in the past......

 

[GoofGoof]

FL at one point had the 5th or 6th lowest corporate tax rate and had pretty decent programs to provide additional tax credits for companies bringing jobs to the state. It was considered a very pro-business state. That seems to be changing. it’s too soon to say there will be lasting damage to the state economy but it’s definitely alarming to see and other companies are watching closely how this plays out.

 

[mikejs78]

Florida hits Disney with a special tax

Not possible. In Florida, any new tax requires is super majority of 2/3. Even if every Republican voted for the new tax, they'd be a few votes shy in each house.

One way to do this is to create a new district that issues new bonds to pay off bonds that were previously issued by RCID.

That really doesn't work. One district can't pay off the bonds have another distinction. Plus some one of the bonds cannot be repaid until 2029.

Also, Florida has stricter contractual protections in their constitution and case law than the federal government does.

When states create entities such as RCID. Do said entities exist for eternity?

Well the charter seem to envision that. But yes, until the residents of Reedy Creek decided that the district is no longer useful and voted to terminate it.

 

[mmascari]

That’s my biggest question. What mechanism exists to charge Disney $1B in extra state taxes but not impact anyone else? FYI at the current state corporate tax rate of 5.5% you’d need $18 trillion in income to owe $1B in taxes.

30% luxury sales tax on theme park tickets that cost over $115.

Disney can just raise prices by 30%. They'll probably catch someone else up too, but eh, that's the game.

I cannot imagine that will have a detriment to the FL economy.

Parks would probably still be crowded with our luck. Isn't that what they say, that WDW visitors will pay any price?

 

[GoofGoof]

30% luxury sales tax on theme park tickets that cost over $115.

Disney can just raise prices by 30%. They'll probably catch someone else up too, but eh, that's the game.

I cannot imagine that will have a detriment to the FL economy.

Parks would probably still be crowded with our luck. Isn't that what they say, that WDW visitors will pay any price?

Disney lowers the price to $114 a ticket and then charges you extra for breathing air while in the park
Or maybe they charge $114 for a base discount ticket and $1 for a magic band but that band price goes up every year and if you don’t want the magic band then you need to buy a regular undiscounted ticket for $200.

It would be a fun game of cat and mouse to see play out.

 

[GoofGoof]

It’s a slippery slope for a company making a long term investment. Disney is one of the states largest employers and is a major piece of the economy and look how they are treated. If I invest in the state will I be forced to bend to the will of the government? Plenty of companies have fled CA over government overreach. FL is not immune to that.

 

[Lilofan]

30% luxury sales tax on theme park tickets that cost over $115.

Disney can just raise prices by 30%. They'll probably catch someone else up too, but eh, that's the game.

I cannot imagine that will have a detriment to the FL economy.

Parks would probably still be crowded with our luck. Isn't that what they say, that WDW visitors will pay any price?

If WDI really wanted authentic theming the public bathrooms at Epcot UK and France would be pay to use like some in those cities.

 

[mikejs78]

If WDI really wanted authentic theming the public bathrooms at Epcot UK and France would be pay to use like some in those cities.

Don't give Bob any ideas....

 

[Disstevefan1]

If WDI really wanted authentic theming the public bathrooms at Epcot UK and France would be pay to use like some in those cities.

WDW would never charge to use the restrooms....... toilet paper on the other hand.............

 

[lazyboy97o]

The bondholder have no interest in the form of governance in the area. Their only interest is in receiving payment under the terms of the bond and that the payments retain their tax free status. That's it. You could transfer the liability of payments to anyone that was willing to accept them and it doesn't matter to the bondholder as long as they get what they are entitled to and they aren't entitle to a particular form of government only the payments and those payments' tax status.

If this were true then Fitch wouldn’t have released negative statements.

No it is more like saying ESPN is Disney. The RCID was setup in such as way that it operates for all intents and purposes as an operating company of Disney. The board of RC is made of solely of Disney executives that buy a small tract of land which they then sell back to Disney as soon as their term on the board expires... I can't imagine how it could be under more control of Disney if they wanted more control

Except that if Disney sells the land they lose control. The power isn’t tied directly to Disney. The regulatory demands Reedy Creek are also not really in line with those of an employee.

 

[lentesta]

Let's consider what it means to impair a contract:

This term applies to any law that will lessen the value or decrease the enforceability of a contract or an agreement.​

Contract impairment is addressed by Art. I, § 10 of the U.S. Constitution:

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

As noted in Von Hoffman v. City of Quincy, the U.S. Supreme Court found:

It is competent for the States to change the form of the remedy, or to modify it otherwise, as they may see fit, provided no substantial right secured by the contract is thereby impaired.​

Thus, from a Constitutional perspective, it can be argued that the State of Florida or a local county has a right to alter (or payoff) bonds issued by RCID, as long as "no substantial right secured by the contract is thereby impaired."

We also have to consider what the state of Florida promised when it passed the Reedy Creek Act:

Section 56. Pledge by the State of Florida to the Bond Holders of the District and to the Federal Government.-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 and to fulfill the terms of any agreement made with the holders of such bonds or other obligations, that it will not in any way impair the rights or remedies of the holders, and that it will not modify in any way the exemption from taxation provided in the Act, 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.​

One way to do this is to create a new district that issues new bonds to pay off bonds that were previously issued by RCID.

Ultimately, this is a matter of legal interpretation. Does this "substantially" impair the contract?

Fair enough. Let's say for the sake of argument that the state can pay off the bonds.

The state has also already said it can't dissolve the RCID while the RCID is party to a contract.

Let's assume the state tries.

In some cases, like where the counterparties are Orange or Osceola Counties and Disney's paying for things like fire and police service, wouldn't the counties argue impairment via lost jobs? I've heard RCID employs 2,000 police, firefighters, first responders, and the like.

Even if the state agrees to keep them employed (and Disney agrees to contract with the state), Disney's paying more than the state, with better benefits and retirement packages. The employees are impaired.

It seems like untangling this is like my dad's walk to school: uphill both ways and in miserable conditions.

 

[Gringrinngghost]

30% luxury sales tax on theme park tickets that cost over $115.

Legoland, SWO, NASA, UOR would like to have a word with you.

 

[kalel8145]

This thread has grown by like 15 pages today. Impressive, most Impressive.

 

[thomas998]

So your grand plan is that Florida makes the bondholders whole by paying off the ~$1billion with money it doesn’t have… and then levying a $1 billion tax on Disney to get it right back?

That is certainly one possible method to eliminate the debt. I suspect that the reason DIsney is so concerned with what is happening is that they can see that as a possible method the state will use and if they do it would certainly hurt Disney to have to cough up a billion.