The Walt Disney Company’s special governing district in Florida has responded to a new law seeking to dissolve it, saying the state would be on the hook for the district’s current outstanding debt obligations of approximately $1 billion.
The law, signed by Florida Gov. Ron DeSantis in a special session of the Florida legislature last week, would end any independent special district established by the Florida legislature prior to November 5, 1968.
The Reedy Creek Improvement District was established in 1967 by Disney and the state as a way for the entertainment giant to raise its own revenues to pay for municipal infrastructure expenses like roads, waste, fire safety and water at Disney World. Reedy Creek issues bonds and levies taxes on properties within its boundaries, which border the Orlando area, effectively on behalf of Disney.
“In light of the State of Florida’s pledge to the District’s bondholders, Reedy Creek expects to explore its options while continuing its present operations, including levying and collecting its ad valorem taxes and collecting its utility revenues, paying debt service on its ad valorem tax bonds and utility revenue bonds, complying with its bond covenants and operating and maintaining its properties,” the statement continues.
The dissolution act was passed in response to Disney’s stance on the so-called “Don’t Say Gay” law, which restricts teaching children about gender and sexual orientation.
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Reedy Creek’s new statement reflects comments made by some experts that Florida taxpayers could end up paying for the district’s outstanding obligations if Disney were to lose control of it.
“Disney pays its way when it comes to government services,” Florida attorney Tom Wilkes, who has worked on matters involving Reedy Creek, told NBC News earlier this month. “It pays [two] counties, and two county school boards — and gets very little services in return. It doesn’t get any exemptions there.”
In response to the law’s passage, ratings agency Fitch placed the Reedy Creek Improvement District’s financial obligations on negative watch. In a statement to NBC News, a Fitch executive said it remained unclear how the debt would be treated if Reedy Creek were dissolved but said that it would impact Disney.
“Dissolution of the district would eliminate access to tax-exempt issuance,” said Michael Rinaldi, head of U.S. Local Government Ratings at Fitch, adding that “it could cost Disney and other landowners within the district more to finance various projects.”
