Why Disney World has own special district in Florida and what happens if it goes away

ORLANDO, Fla. — Dissolving Walt Disney World’s Reedy Creek Improvement District could saddle local Florida taxpayers with about $1 billion in debt and leave local governments scrambling with how to take over vital services for the state’s top tourist attraction.

State legislators passed a bill Thursday that dissolves the district the Walt Disney Co. uses to self-govern its Florida theme park properties on June 1, 2023. Gov. Ron DeSantis signed it into law on Friday. He has been battling with the entertainment giant after it publicly declared its opposition to a new law backed by the governor that critics have dubbed “Don’t Say Gay.”

What happens next is unclear, but the Orange County tax collector and other opponents of the bill say ending Reedy Creek could lead to higher taxes for local residents.

The Legislature did not conduct an economic study on the ramifications of dissolving the district. Legislators spent only two days examining the bill, unveiled on Tuesday, providing little opportunity for public input.

Not even the bill’s sponsors — Sen. Jennifer Bradley, R-Fleming Island, and Rep. Randy Fine, R-Palm Bay — could provide the intricate details of how Reedy Creek would be dissolved, saying the matter will be hammered out in the next year.

Democrats warn property owners could be hit with higher tax bills if Republicans proceed with their plan.

“It’s shoot first and ask questions later. … And maybe if Disney behaves over the next election cycle, we’ll undo it,” Democratic Sen. Gary Farmer said.

Who governs Disney World?

Established in 1967, Reedy Creek allows Disney to use its own building codes and inspectors, avoid bureaucratic red tape and issue tax-free bonds for its theme parks and resort property in Florida. Disney essentially taxes itself through the district to pay for roads, water treatment and other important services for Walt Disney World.

Reedy Creek owns and operates wastewater collection and treatment systems, electrical utilities, solid waste and recycling collection, as well as its own fire department. The Orange County Sheriff’s Office provides law enforcement protection.

Disney’s private government has been likened to Florida’s 68th county or a “Vatican with mouse ears.” The unique government structure involves Reedy Creek and two cities that Disney controls — Bay Lake and Lake Buena Vista.

Those cities have a combined population of about 53 people, according to census data. The residents are trusted Disney employees, making the two cities company towns controlled by Disney, said Richard Foglesong, author of “Married to the Mouse,” a book about the creation of Disney World.

If Reedy Creek is dissolved, top-line items will include determining how its 40 square miles of land straddling both Orange and Osceola Counties would be governed, how its assets would be distributed and its debt paid, said Lee Constantine, a former state representative and senator and the incoming president of the Florida Association of Counties.

“You’re going to have to flush out where the assets go,” said Constantine, a Seminole County commissioner. “Who’s going to pay for them? Are they going to be given to counties? Are the counties going to pay for them? Whatever they are, whatever the debt service is, it’s got to be paid. I can assure you those bondholders … are going to want some entity to guarantee those bonds.”

“At this point, there’s more questions than answers,” Constantine added.

Four local governments would be involved in those discussions — Orange and Osceola counties and the Disney-controlled towns of Bay Lake and Lake Buena Vista.

A spokesperson from Osceola County said its staff would begin evaluating the situation if and when final action was taken. Reedy Creek and Disney did not respond to requests for comment.

Senate President Wilton Simpson said he expects the matter will be discussed further when the Legislature convenes next year with input from Disney’s legal team. A plan could be developed that creates “efficiencies” that save taxpayers money, he said, adding that other theme parks in the state operate without independent districts.

“I think it’s just a matter of getting the teams together and sorting through it,” Simpson said. “I think it’s that simple.”

Leaders would have to determine what happens to the district’s nearly 400 employees, including about 200 people who work for the Reedy Creek Fire Department.

Settling with bondholders could be another complicated matter, and investors have been mystified by what is happening in Florida, said Eric Kazatsky, a senior strategist for Bloomberg Intelligence specializing in municipal bonds.

Florida’s bond documents include a covenant — a commitment to investors — that the state will not “limit or alter” the rights of Reedy Creek to collect revenue, including levying taxes. Kazatsky said he’s spoken with investors and others in the bond market who are puzzled by what is happening in Florida.

“It’s a lot of head-scratching, and are they even allowed to do this?” he said. “It seems like they have a legal hurdle here. They have covenanted to do something.”

Disney would continue to pay property taxes to Orange and Osceola counties, school districts and other entities as it has in the past. Reedy Creek enables Disney to avoid some other taxes, such as impact fees and sales tax on construction materials.

Governing Disney World and maintaining its surrounding property is a massive undertaking. Reedy Creek maintains 134 miles of roads and 67 miles of waterways, according to the district’s statistics. It handles 60,000 tons of waste and recycles 30 tons of aluminum, paper, steel cans, cardboard and plastic containers each year.

The district hosts 250,000 daily guests, which is more than the 196,000 people who live in Tallahassee, the state capital. With 77,000 pre-pandemic employees, Disney World is one of the largest single-site employers in the United States.

A matter of fairness or political revenge?

Republicans said Disney gets special treatment under the law that no other theme park in the state enjoys.

“Universal doesn’t get to create the Jurassic Park Improvement District to govern itself,” said Rep. Randy Fine, the House sponsor. “They have to abide by laws of the cities and counties where they exist.”

DeSantis called for legislators to dissolve Reedy Creek and five other special districts created before 1968. He’s attacked Disney for opposing legislation critics branded the “don’t say gay” bill. In return, Disney, a powerful player in state politics, paused its contributions to Florida politicians.

Democrats countered that the bill is more about political retaliation and retribution than corporate accountability. Farmer called it “punitive, petulant political payback to a corporation who dared to say the emperor has no clothes.”

Disney’s autonomy is part of the reason why it’s been able to make Disney World a unique attraction, and undoing Reedy Creek could generate a protracted legal battle, said Bob Jarvis, a law professor for Nova Southeastern University.

“It will lead to a lawsuit, so the taxpayers will be funding the defense,” Jarvis said.