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

[tissandtully]

On what grounds?

"trust me bro" grounds

 

[mkt]

But why is the plate decal on the back window?

That is an HOV decal for electric cars. My car has one of those as well. Some of them have a bad habit of fading to white.

 

[Disstevefan1]

But why is the plate decal on the back window?

There looks to be a decal on the plate, what’s in the window looks to be what should be affixed to the handicap placard although I have never seen it displayed like this.

 

[mkt]

There looks to be a decal on the plate, what’s in the window looks to be what should be affixed to the handicap placard although I have never seen it displayed like this.

It’s a faded HOV decal for electric vehicles. I have the same one on my car and I’m having the same fading issue.

Apparently the state of Florida’s ink vendor uses the worst red ink on the planet.

 

[DCBaker]

The CFTOD Board of Supervisors meeting on Wednesday, December 13 has been cancelled.

 

[Teleostei35]

It is - you're just fixated on the wrong constituents. Even if the residents are purely proxies - their representation is that of a private entity... who is now being governed without representation.

“Taxation without representation”. That’s not right.

 

[pdude81]

Looking at the BOS Agenda for the 13th I saw “special magistrate for code enforcement.” Is this the RCID had or completely new?

It sounds much more regal than "Shakedown Specialist"

 

[JoeCamel]

The CFTOD Board of Supervisors meeting for Wednesday, December 13 has been cancelled.

View attachment 758545

Enjoy your Christmas break freeloaders....

 

[MagicRat]

 

[Sirwalterraleigh]

Lol…further proof this was obviously stupid from the start

The problem with the stance there are “two sides” to everything…is forgetting that 50% - minimum - of all humans are stupid

 

[Rhinocerous]

So if they became anti-poetry, they'd no longer be allowed to develop?

They would have to weigh the prose and cons.

 

[lewisc]

The problem with the stance there are “two sides” to everything…

Occassionally the 2 sides are simply right and wrong.

 

[Sirwalterraleigh]

Occassionally the 2 sides are simply right and wrong.

Then there’s only one side worthwhile, isn’t there?

This issue was never really in doubt

 

[WoundedDreamer]

Nope. I think you missed the point that one of the stipulations in the bond contracts is that the district will continue to have the ability to build infrastructure, and continue to have the ability to float bonds. Take that away and the bond contracts are in default.

In fact, the FL legislature, back in 1967, guaranteed this to all bondholders.

I have to admit that I found this argument interesting. So interesting in fact, that I decided to do a deep dive into this issue.

Jacob Schumer appears to be the originator of the argument that the RCID is impossible to eliminate. Early last year the then 32 year-old lawyer was a nobody. But then his career fortunes took a significant upswing when he put out an article that was picked up by Bloomberg Tax (sounds like fun reading ). In the year since he has seen his career explode as he became a favorite "wonk" for various publications. He actually has recently switched jobs, moving to a new law firm likely propelled by his media coverage.

Every subsequent article I have seen appears to be sourced from that original piece. It's largely shaped the discourse. Good for him and his career. But is it true?

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.


I have bolded the relevant sections. Why would the district's ability to "own, acquire, construct, reconstruct, improve, maintain, operate projects" be relevant? Now here's where I will deviate from Mr. Schumer...

Some types of bonds are funded through tax revenues. That type of bond is stipulated in contract. However, there are also other types of bonds that are funded via revenue generated from the project. For example, a government might build a road with the expectation that revenue generated from that project will be the source of revenue that will actually pay off the bond. In this case, the actual efficacy of the bond hinges on the ability for the government to continue to earn revenue from the bond. Suppose the RCID were to have built a parking garage that required earning revenue from those who used it to pay off the bond. If the Florida Legislature were to take the garages, it would mean that those bondholders were never getting their money back.

Thus, the Florida Legislature put this provision in place to protect those projects and the rights of bondholders. The text is plain that the specific powers given to the RCID cannot be taken away if they are currently part of an agreement that is repaying a bond. That would constitute a violation of the bond agreement. The same is true of a tax, which also might be part of a bond repayment agreement.

But it says absolutely nothing about taking away powers that are not being used to repay the bonds. In other words, if a specific power is tied to bond repayment it is protected. If it is not, then it's fair game.

I know I'm not popular around this thread, and I also know that @tissandtully does not like "trust me bro grounds." You all will probably favor Mr. Schumer over anonymous WDWMagic poster. However, I have proof that all my points are correct. That might sound like a bold claim, but I have bolder proof. I will now quote again a portion of the same passage Schumer used as the basis for his piece:

"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"

If Mr. Schumer is to be believed, any change to the RCID's ability to do any of the things mentioned above would constitute a breach of contract and be a violation of law. You will note I have bolded several words above. Why? Well, when the State of Florida renamed and reformed the RCID to the CFTOD, it made numerous changes. One of which was:

"Removing the District’s ability to charge tolls"

According to Mr. Schumer's legal opinion, this would constitute a violation of law. However, no one from the Walt Disney Company's legal team or from the those holding legacy RCID bonds has raised any objection. In fact, recently the several asset rating firms have upgraded the bond's rating because they feel the independent oversight will improve accountability. Where is the default? There's more. Other powers removed from the RCID include:

"Own and operate certain types of recreational facilities, but retaining the authority to
own and operate parks, playgrounds, campsites, and fishing facilities"

"Own and operate 'novel and experimental' transportation facilities"

"Own and operate a nuclear fission power plant or other 'novel and experimental' public
utilities"

"Own and operate airport facilities"

Each one of those removals were "limits" on the RCID's powers or altering them in some way, but there has been no legal objection raised to this point. Instead, Disney's case hinges on a long shot First Amendment argument.

 

[mkt]

Instead, Disney's case hinges on a long shot First Amendment argument.

And what is effectively a breach of contract case in state court where they're the defendant, because the CFTOD wants to get out of the development agreement.

 

[Batman'sParents]

I have to admit that I found this argument interesting. So interesting in fact, that I decided to do a deep dive into this issue.

Jacob Schumer appears to be the originator of the argument that the RCID is impossible to eliminate. Early last year the then 32 year-old lawyer was a nobody. But then his career fortunes took a significant upswing when he put out an article that was picked up by Bloomberg Tax (sounds like fun reading ). In the year since he has seen his career explode as he became a favorite "wonk" for various publications. He actually has recently switched jobs, moving to a new law firm likely propelled by his media coverage.

Every subsequent article I have seen appears to be sourced from that original piece. It's largely shaped the discourse. Good for him and his career. But is it true?

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.


I have bolded the relevant sections. Why would the district's ability to "own, acquire, construct, reconstruct, improve, maintain, operate projects" be relevant? Now here's where I will deviate from Mr. Schumer...

Some types of bonds are funded through tax revenues. That type of bond is stipulated in contract. However, there are also other types of bonds that are funded via revenue generated from the project. For example, a government might build a road with the expectation that revenue generated from that project will be the source of revenue that will actually pay off the bond. In this case, the actual efficacy of the bond hinges on the ability for the government to continue to earn revenue from the bond. Suppose the RCID were to have built a parking garage that required earning revenue from those who used it to pay off the bond. If the Florida Legislature were to take the garages, it would mean that those bondholders were never getting their money back.

Thus, the Florida Legislature put this provision in place to protect those projects and the rights of bondholders. The text is plain that the specific powers given to the RCID cannot be taken away if they are currently part of an agreement that is repaying a bond. That would constitute a violation of the bond agreement. The same is true of a tax, which also might be part of a bond repayment agreement.

But it says absolutely nothing about taking away powers that are not being used to repay the bonds. In other words, if a specific power is tied to bond repayment it is protected. If it is not, then it's fair game.

I know I'm not popular around this thread, and I also know that @tissandtully does not like "trust me bro grounds." You all will probably favor Mr. Schumer over anonymous WDWMagic poster. However, I have proof that all my points are correct. That might sound like a bold claim, but I have bolder proof. I will now quote again a portion of the same passage Schumer used as the basis for his piece:

"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"

If Mr. Schumer is to be believed, any change to the RCID's ability to do any of the things mentioned above would constitute a breach of contract and be a violation of law. You will note I have bolded several words above. Why? Well, when the State of Florida renamed and reformed the RCID to the CFTOD, it made numerous changes. One of which was:

"Removing the District’s ability to charge tolls"

According to Mr. Schumer's legal opinion, this would constitute a violation of law. However, no one from the Walt Disney Company's legal team or from the those holding legacy RCID bonds has raised any objection. In fact, recently the several asset rating firms have upgraded the bond's rating because they feel the independent oversight will improve accountability. Where is the default? There's more. Other powers removed from the RCID include:

"Own and operate certain types of recreational facilities, but retaining the authority to
own and operate parks, playgrounds, campsites, and fishing facilities"

"Own and operate 'novel and experimental' transportation facilities"

"Own and operate a nuclear fission power plant or other 'novel and experimental' public
utilities"

"Own and operate airport facilities"

Each one of those removals were "limits" on the RCID's powers or altering them in some way, but there has been no legal objection raised to this point. Instead, Disney's case hinges on a long shot First Amendment argument.

When it comes to the rating of the bonds from Moodys or S&P, they don’t cite the additional provisions of state law, as the reasons for them changing the rating. They were mainly concerned with the continued ability of the district to be able to raise revenue(taxes) to pay off the existing principal plus interest with the bonds.

Whether that results in a reconstitution of the RCID or the continued existence of CFTOD, as long as the district can levy taxes to pay off the debt, The district response will most likely retain a stable rating.

The reason they were downgraded before, was because of the uncertainty over the continued ability of the district to pay debt by levying taxes.


On a separate note, does the ability to govern the district matter? Yes. But, both boards seem to have made it a priority (per the charter)to continue to ensure that existing debt holders will be paid.


Now, future debt issuance could be another story. That’s where there is potential for uncertainty.

 

[Batman'sParents]

From S&P: https://disclosure.spglobal.com/ratings/pt/regulatory/article/-/view/type/HTML/id/2956080

Reedy Creek Improvement Dist, FL GO Rating Outlook Revised To Stable From Developing Following Recent State Legislation​

WASHINGTON D.C. (S&P Global Ratings) March 3, 2023--S&P Global Ratings revised the outlook to stable from developing on Reedy Creek Improvement District (RCID), Fla.'s general obligation (GO) bonds outstanding. At the same time, we affirmed our 'AA-' long-term rating on the district's GO bonds outstanding.
"The outlook revision reflects recent state legislation that provides for the district's continued ability to levy ad valorem taxes consistent with the security pledges at the respective bond issuances, while limiting operational changes that could affect timely debt service payment," said S&P Global Ratings credit analyst Christian Richards.
Revenue from ad valorem taxes, at a rate not to exceed 30 mills on all taxable assessed value (AV) within the district, secures the bonds, consistent with its historical revenue raising capability. The 30-mill cap applies to the district's debt service and general operating budgets. We do not make a rating distinction from the district's general creditworthiness for the limited ad valorem pledge, given its history of strong operating performance and its flexibility under the cap. In fiscal year ended Sept. 30, 2022, RCID levied 13.57 mills (8.66 for operations and 4.91 for debt service).
The 'AA-' rating reflects our view of the strong tax base, supported by a stable primary taxpayer and very strong collection rates, and consistent financial performance of RCID. The outlook revision results from the governor signing legislation on Feb. 27, 2023, that amended the Reedy Creek Improvement Act. The new law removes the risk of RCID dissolution on or after June 1, 2023 contained in previous legislation. The February 2023 legislation changes the board selection process, makes technical changes on the district's zoning powers among other technical operational changes, and changes RCID's name to the Central Florida Tourism Oversight District (CFTOD), although CFTOD may continue to operate under the RCID name for two years. As of the date of enactment, the Florida governor will now select, and the Florida Senate will confirm, five board members to serve staggered four-year terms. Previously, the landowners of RCID voted to select board members. Notably, the law does not make changes in the ability of CFTOD to levy ad valorem taxes for operations or debt service. We also note that CFTOD's assets, liabilities (including bonds outstanding), and operational responsibilities will not be transferred to other local government units as had been contemplated under the April 2022 legislation that required the reorganization or dissolution of RCID. We expect CFTOD will continue make timely debt service payments during the board transition, given the ability of the district to continue levying property taxes and pay bonded debt service.
CFTOD spans about 25,000 acres and provides fire protection, road and bridge maintenance, and emergency medical services, in addition to combined utility services. CFTOD encompasses the Walt Disney World Resort, the primary recipient of its services, accounting for about 88% of the property tax base. As of fiscal year-end 2022, RCID had approximately $686 million in tax-secured debt, and an additional $185 million in utility debt.
"Year-to-year performance is mixed on an audited basis due to planned capital expenditures funded with reserves, but the district generally outperforms its budget, leading to maintenance of very strong reserve. We expect this to continue through the near term given the district's predictable revenue and expenditure profiles," added Mr. Richards.
We evaluated the district's credit risks associated with environmental, social, and governance (ESG) relative to its economy, financial metrics, management, and debt and long-term liability profile. We view hurricane winds and inland flooding as representing the largest environmental risks to CFTOD over the long term as these acute events could lead to property tax revenue disruptions and economic effects depending on the severity, frequency, and duration. We view its social and governance risks as credit neutral within our analysis. In regard to governance, the provisions of the recent legislation clarify the district's governance structure, mitigating uncertainty around continued operations.“

 

[lentesta]

They would have to weigh the prose and cons.

I swear this was an SNL skit.

 

[mkt]

Now, future debt issuance could be another story. That’s where there is potential for uncertainty.

I see them issuing more debt in order to try to stretch their control over the district

 

[GhostHost1000]

I swear this was an SNL skit.

I'm sure the Simpson's at least did an episode on this lol