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

[lazyboy97o]

There was nothing in the original law that actually said if the district was dissolved Disney would get anything. Nobody thought this would ever happen so wasn’t necessary. Lessons learned. It would be easy to write that into a new act creating a new special district.

And then they just repeal that part of the law when it comes time to threaten a dissolution. Or they again do the merging or replacement or whatever and the existing District isn't technically dissolved. Or they do something completely different that does not relate to the District. They pass a law saying you can't sell alcohol in a municipality with a population of less than 100. They tax streaming services from theme park operators. They require streamers to produce local content. They could do all sorts of ridiculous stuff. The State is acting in bad faith and you suggest giving them what they want which gives them no motivation to start acting in good faith.

 

[GoofGoof]

And then they just repeal that part of the law when it comes time to threaten a dissolution. Or they again do the merging or replacement or whatever and the existing District isn't technically dissolved. Or they do something completely different that does not relate to the District. They pass a law saying you can't sell alcohol in a municipality with a population of less than 100. They tax streaming services from theme park operators. They require streamers to produce local content. They could do all sorts of ridiculous stuff. The State is acting in bad faith and you suggest giving them what they want which gives them no motivation to start acting in good faith.

So suing them in Federal court will make them less likely to take any of these actions? I don’t think escalating the conflict makes it somehow less likely for the state to do any of that. Like it or not TWDC needs to and wants to do business in FL so its in their best interest to negotiate quietly and that seems to be exactly what is happening. You cannot move WDW. Other companies in other industries could just pull operations out of the state but it’s not possible for Disney. If they wanted an all out war with DeSantis they would have already cancelled the Nona Lake project. Instead they are still moving forward with moving thousands of jobs to FL.

But what if they then passed a new law that said "notwithstanding" the part that gave them something if the district was dissolved ?

As I said before the “notwithstanding“ clause isn’t a blank check. That may work in certain instances where the legislature has jurisdiction but it cannot void other contracts legally written. Disney can have the state sign a contract with a clause that has some sort of favorable terms for them (tax breaks, lower utility rates, etc, etc) that is only triggered should the RCID be dissolved. So for example, TWDC signs a contract to purchase electricity from RCID that includes a clause that says should the district be dissolved, replaced or merged with another district the rate goes from $0.12 a kWh to $0.06 a kWh. This type of contract cannot just be voided by the legislature. Disney gets a 50% cut on the rate it pays for electricity if they dissolve the district.

 

[lazyboy97o]

So suing them in Federal court will make them less likely to take any of these actions? I don’t think escalating the conflict makes it somehow less likely for the state to do any of that. Like it or not TWDC needs to and wants to do business in FL so its in their best interest to negotiate quietly and that seems to be exactly what is happening. You cannot move WDW. Other companies in other industries could just pull operations out of the state but it’s not possible for Disney. If they wanted an all out war with DeSantis they would have already cancelled the Nona Lake project. Instead they are still moving forward with moving thousands of jobs to FL.

If I walk up and try to punch you, you blocking my punch is not an escalation. Engaging in defensive action is not escalation. We need to completely discard this ridiculous notion that trying to stop aggression is escalatory. It is not.

The courts are system in place to stop legislative and executive overreach. If the system has broken down so much that they do not matter then we have far bigger problems and all of these hypothetical “compromises” are even more useless because there is no enforcement mechanism. It makes “notwithstanding” a blank check.

As I said before the “notwithstanding“ clause isn’t a blank check. That may work in certain instances where the legislature has jurisdiction but it cannot void other contracts legally written. Disney can have the state sign a contract with a clause that has some sort of favorable terms for them (tax breaks, lower utility rates, etc, etc) that is only triggered should the RCID be dissolved. So for example, TWDC signs a contract to purchase electricity from RCID that includes a clause that says should the district be dissolved, replaced or merged with another district the rate goes from $0.12 a kWh to $0.06 a kWh. This type of contract cannot just be voided by the legislature. Disney gets a 50% cut on the rate it pays for electricity if they dissolve the district.

That’s a terrible hypothetical. Neither the District nor the State provide electrical service. But even if it was some sort of contract, you claim going to court to enforce the contract is escalatory and irresponsible. Why is “escalating” now bad but “escalating” later acceptable and more reasonable? And again, this all assumes threatening the District is the only way to abuse power.

 

[GoofGoof]

That’s a terrible hypothetical. Neither the District nor the State provide electrical service. But even if it was some sort of contract, you claim going to court to enforce the contract is escalatory and irresponsible. Why is “escalating” now bad but “escalating” later acceptable and more reasonable? And again, this all assumes threatening the District is the only way to abuse power.

RCID provides the electricity to WDW and maintains the local grid. They source a portion of the power from the generation they own and the rest is purchased from other utilities. They sell the power to WDW at a rate set by the board similar to any other municipality that buys power for its residents.

I never said going to court for any reason was irresponsible. A highly public first amendment Lawsuit is not the logical first step. It may come to that, but the logical first step is to work back channels and see if you can get essentially what you want without the public spectacle. If what the state offers isn’t acceptable then there are several additional avenues they are likely to pursue around RCID itself before resorting to TWDC suing over 1st amendment violations. As far as other threats, they need to be addressed as they come up. There is no reason to act differently now in anticipation of a possible additional threat.

 

[lazyboy97o]

RCID provides the electricity to WDW and maintains the local grid. They source a portion of the power from the generation they own and the rest is purchased from other utilities. They sell the power to WDW at a rate set by the board similar to any other municipality that buys power for its residents.

I never said going to court for any reason was irresponsible. A highly public first amendment Lawsuit is not the logical first step. It may come to that, but the logical first step is to work back channels and see if you can get essentially what you want without the public spectacle. If what the state offers isn’t acceptable then there are several additional avenues they are likely to pursue around RCID itself before resorting to TWDC suing over 1st amendment violations. As far as other threats, they need to be addressed as they come up. There is no reason to act differently now in anticipation of a possible additional threat.

The District does not operate their own utility services. That is all contracted out to Reedy Creek Energy Services, a wholly owned subsidiary of The Walt Disney Company. Orange County does not operate their own electrical utility with service instead largely provided by private companies such as Duke Energy (the District’s solar partner) and FPL.

You described going to court as an escalation, which very much suggests it would be the irresponsible move. The First Amendment is not the only grounds for a suit, it would be multiple issues. Working back channels suggests an actual desire for “compromise” and a need for a solution. There is not because the problem is made up. It also still shows that same wrong message, that a problem can be fabricated and that companies will come quietly groveling to the state for a deal.

And again, what does Disney do the next time an issue is concocted and something else is used as leverage? A contract to not dissolve the District wouldn’t stop so other angle of attack.

 

[GoofGoof]

I don’t want to keep belaboring these points. At the end of the day if the issue is government overreach there is an election in November. It is up to the people of FL to decide if they approve of these actions. Disney certainly has a right to sue if they believe their first amendment rights were violated. It really may come to that and if it does it’s probably a pretty solid case.

 

[mikejs78]

The District does not operate their own utility services. That is all contracted out to Reedy Creek Energy Services, a wholly owned subsidiary of The Walt Disney Company. Orange County does not operate their own electrical utility with service instead largely provided by private companies such as Duke Energy (the District’s solar partner) and FPL.

You described going to court as an escalation, which very much suggests it would be the irresponsible move. The First Amendment is not the only grounds for a suit, it would be multiple issues. Working back channels suggests an actual desire for “compromise” and a need for a solution. There is not because the problem is made up. It also still shows that same wrong message, that a problem can be fabricated and that companies will come quietly groveling to the state for a deal.

And again, what does Disney do the next time an issue is concocted and something else is used as leverage? A contract to not dissolve the District wouldn’t stop so other angle of attack.

I think Disney probably thinks there is some risk to going to court. They may feel that as a first step they want to try to mitigate that risk by negotiations, as long as they don't compromise too much. I agree with you about the hazard of negotiations, but courts are unpredictable. My guess is that they will first try negotiation, then try a suit in state court, and resort to a federal first amendment suit as a last resort.

 

[Brian]

According to the Orlando Business Journal, a Winter Park (Orange County) resident has filed to join the newly refiled lawsuit in favor of dissolution of RCID.

https://www.bizjournals.com/orlando/news/2022/06/08/florida-desantis-reedy-creek-lawsuit-intervene.html

Another Orange County resident has joined the lawsuit that's targeting Florida Gov. Ron DeSantis over the potential tax implications from the eventual termination of Walt Disney World's (NYSE: DIS) Reedy Creek Improvement District — but this time it's in support of the dissolution.

Winter Park resident James Pickett on May 24 filed a motion to intervene in the case involving Osceola County residents Michael, Leslie and Eduardo Foronda, and Orange County resident Vivian Gonzalez, who filed a lawsuit on May 16 with the Eleventh Judicial Circuit Court in Miami-Dade County alleging taxpayer rights violations being caused by DeSantis' law targeting the dissolution of special districts made prior to 1968. A motion to intervene is meant to allow for a third party — with a possible stake in the outcome — to enter an existing case where they were not an original named party.

The lawsuit also names Florida Department of Revenue Executive Director Jim Zingale and former Florida Secretary of State Laurel M. Lee as defendants.

DeSantis signed into law in April that will dissolve Disney's Reedy Creek district by June 2023, which has led to experts speculating potential tax burdens that could fall on residents of both Orange and Osceola counties.
In the documents, Pickett disputes several claims by the plaintiffs in the lawsuit — including the alleged taxpayer rights violations — and also claims the dissolution, and eventual inheriting, of Reedy Creek Improvement District by both Orange and Osceola counties could be a potential boon. The documents list no indication of Pickett's political affiliations nor of any association with DeSantis.

The Reedy Creek Improvement District is the governing jurisdiction for Walt Disney World Resort's land. Its cities include Bay Lake and Lake Buena Vista.

"The cited opinions clearly have, as a motive, fearmongering, and scaremongering the residents of Orange and Osceola counties into believing that they are going to be subjected to increased property taxation and loss of jobs in the community — if recent legislation dissolving (inactivating) Reedy Creek Improvement District is allowed to become effective. Plaintiffs’ cited opinions are in contradistinction to existing Florida Constitution, laws, and rules," said the motion. "Plaintiffs rely upon a false supposition that RCID was to be a fiefdom of the Magic Kingdom, rather than a Florida Special District to promote tourism and community development."

The motion filed by Pickett alleges that Reedy Creek's assets exceed the estimated $1 billion-plus debts and costs of the district, and could provide an unexpected advantage for the counties. The document cites a 2020 Reedy Creek audit that shows the total assets of the district exceed $1.56 billion with liabilities of $1.14 billion, as well as a $469.9 million positive net position, which helps show the financial strength of the entity. Disney's nearly $900 million in outstanding bonds have become a focal point for many investors and ratings agencies — especially if/when the district is dissolved.



"RCID owns approximately 7,200 acres of land in the district [...] which, rather than at original cost, conservatively have a current average value of $100,000 per acre, meaning that — without considering other current assets — there will be at least $7,200,000,000 to pay RCID's bond indebtedness of $1 billion or even $2 billion without placing a burden on the citizens of [Orange and Osceola counties]," said the motion. "It is probable that there would be a bidding war if another entity wished to place competing properties in RCID. Hence, supervening authorities [such as the counties] stand to net $5 billion or more, as an operation of law, by dissolving RCID. Thus, SB 4-C will provide a financial windfall to [the counties], rather than a financial burden."

In addition, the motion filed by Pickett disputes the lawsuit's claims of the signed bill's (SB 4-C) actual effect on property assessments, as well as the impact on non-residents/creditors/landowners of Reedy Creek.

Pickett, DeSantis and Zingale's offices and Attorney William J. Sanchez of Miami-based William J. Sanchez & Associates PA, who is representing the plaintiffs and running for U.S. Senate, declined to comment.

However, Sanchez previously told Orlando Business Journal he sees the lawsuit on good footing after another version filed in federal court was dismissed. "We truly believe we are on firm footing before the state court. The federal court judge viewed the case more through the prism of the First Amendment argument which is Disney's to make. Although there is case law which also gives third parties rights to raise another party’s First Amendment rights, we chose to not appeal the federal judge’s decision. We believe our Florida taxpayer rights are going to receive greater protection in state court."

Vivian Gonzalez could not be reached for comment, and contact information for the other plaintiffs and former Secretary of State Laurel Lee was not found. Representatives from Disney, Reedy Creek and Osceola Countywere not available for comment. An Orange County spokeswoman said the county had “nothing new to report” on Reedy Creek.

Reedy Creek Improvement District is the 39-square-mile governing jurisdiction and special taxing district created in 1968 for Walt Disney World Resort's land that acts with the same authority and responsibility as a county government. The district includes two cities — Bay Lake and Lake Buena Vista — and has its own fire department and staff, and contracts law enforcement from local counties.

Walt Disney Co.'s Walt Disney World — the nation's largest single-site employer, with nearly 70,000 Orlando workers — has four local theme parks: Magic Kingdom, Epcot, Animal Kingdom and Hollywood Studios. Walt Disney World alone is the top generator for visitation to Orlando, with more than 50 million people going through its turnstiles in previous years — many of those repeat visitors.
Disney also owns two area water parks, Blizzard Beach and Typhoon Lagoon, as well as several themed hotels, golf courses, a camping resort, timeshare properties, ESPN Wide World of Sports and the Disney Springs dining/shopping/entertainment district.

 

[UNCgolf]

Those numbers seem like they were made up out of thin air.

First of all, does RCID actually own 7200 acres? I thought Disney owned the vast majority of land in the district. If that number is accurate, it means RCID itself would own over a quarter of the land.

Regardless, even if that number is accurate, the value estimation seems wildly off. My guess is most of the RCID owned land is roads, infrastructure, ponds, and other undevelopable land. That means it would have very little value -- certainly not 100k an acre.

Plus, as far as I know, there's nothing stopping Disney from purchasing that land before the district is dissolved (if it actually is).

 

[Disney Glimpses]

I think Disney probably thinks there is some risk to going to court. They may feel that as a first step they want to try to mitigate that risk by negotiations, as long as they don't compromise too much. I agree with you about the hazard of negotiations, but courts are unpredictable. My guess is that they will first try negotiation, then try a suit in state court, and resort to a federal first amendment suit as a last resort.

I don't think either side wants this in court. As many have said here, I truly believe they will find a way that changes virtually nothing in reality but offers DeSantis a political "win."

 

[lazyboy97o]

Those numbers seem like they were made up out of thin air.

First of all, does RCID actually own 7200 acres? I thought Disney owned the vast majority of land in the district. If that number is accurate, it means RCID itself would own over a quarter of the land.

Regardless, even if that number is accurate, the value estimation seems wildly off. My guess is most of the RCID owned land is roads, infrastructure, ponds, and other undevelopable land. That means it would have very little value -- certainly not 100k an acre.

Plus, as far as I know, there's nothing stopping Disney from purchasing that land before the district is dissolved (if it actually is).

I believe one of the big chunks of land owned by the District is the green belt around Celebration. It’s an acreage but it’s conservation land that isn’t going to be great for building. I also think there are spindly bits along I-4 and US 192, so not exactly desirable for development.

 

[lazyboy97o]

Something I’ve been wondering but have not had a chance to research: if no new legislation materialized, what if Disney and the District just did nothing? They take the position that the law doesn’t apply and the District and everyone else just continues doing business as usual?

 

[Brian]

Something I’ve been wondering but have not had a chance to research: if no new legislation materialized, what if Disney and the District just did nothing? They take the position that the law doesn’t apply and the District and everyone else just continues doing business as usual?

In that case, a state entity or DeSantis ally would likely file for an injunction seeking to cease RCID operations.

 

[lazyboy97o]

In that case, a state entity or DeSantis ally would likely file for an injunction seeking to cease RCID operations.

Right, but that puts the onus of action on the State who would likely also have to go after the counties since they also didn’t take the District’s assets. They have to put in writing in a filing that the law applies to Reedy Creek Improvement District because it was specifically intended to target them.

 

[lazyboy97o]

I’m guessing that on June 1, 2023, RCID loses its taxing authority.

Maybe a bigger Issue is what happens to RCID’s bond rating since they technically no longer exist.

If your taxpayers keep paying then you still have authority.

The State can’t just let the bonds go poof.

 

[Brian]

They have to put in writing in a filing that the law applies to Reedy Creek Improvement District because it was specifically intended to target them.

That's assuming that the none of the other affected districts don't also take a similar approach (ignoring the law and maintaining status quo).

 

[Brian]

I’m guessing that on June 1, 2023, RCID loses its taxing authority.

Another factor would be if the Orange/Osceola County Tax Collectors continue to collect the assessments on behalf of the district. My guess is they would not, since they would recognize the district as having legally been dissolved (barring a course correct before then).

At that point, it becomes a matter of liquidity for the district, and operations would likely end in due course.

 

[UNCgolf]

I believe one of the big chunks of land owned by the District is the green belt around Celebration. It’s an acreage but it’s conservation land that isn’t going to be great for building. I also think there are spindly bits along I-4 and US 192, so not exactly desirable for development.

That's what I was thinking -- mainly conservation land etc. that would not have a high value.

 

[castlecake2.0]

I believe one of the big chunks of land owned by the District is the green belt around Celebration. It’s an acreage but it’s conservation land that isn’t going to be great for building. I also think there are spindly bits along I-4 and US 192, so not exactly desirable for development.

The area surrounding Celebration is owned by “different companies” that are all owned by Disney, like Compass Rose and The Celebration Company, all managed by the District. A lot of it is nature preserves and canal systems to manage Disney and Celebration’s water systems. As you said, not suitable at all for development.

 

[Chip Chipperson]

In that case, a state entity or DeSantis ally would likely file for an injunction seeking to cease RCID operations.

I'm not sure the other taxpayers in RCID would go along with it, either. I also think that if Disney and RCID want this to be settled by the courts then they're better off bringing their case there themselves rather than being forced to defend themselves for ignoring a law that they never fought in court.