If Governor Ron DeSantis succeeds in removing its special district status, Florida will owe Disney $1 billion. The new law revoking Disney’s 50-year old agreement with the state hit a snag Wednesday.
The global entertainment empire struck back and pointed to provisions in its agreement with the state.
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Unless the state is okay with paying Disney an estimated $1 billion in outstanding bond debts, Florida might find it hard to remove Disney’s self-governing status.
Despite a law passed last week dissolving the company’s special district, provisions in the binding agreement will make a new law impossible to enact.
The Reedy Creek Improvement District is the self-governing district created especially to administer Disney World.
The company entered an agreement with the state of Florida as a condition to build a huge theme park there. Disney World occupies the land between both Orange and Osceola counties. The RCID allows the company to legally govern its own affairs.
RCID Says State Will Owe Disney $1B if Florida Decides to Dissolve Special District
The RCID sent a letter to bondholders last week citing provisions in its 1967 agreement with the state. It stated that Florida “will not in any way impair the rights or remedies of the holders”.
However, if either DeSantis or the Florida Senate insisted on revoking Disney’s autonomy, Florida will owe Disney the total bond.
This is why Disney remains confident that it will retain its special status even with the newly signed law.
In its letter, Reedy Creek said it will continue operations unless all parties agree to settle outstanding obligations.
“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 letter said.
Last week, DeSantis signed the bill revoking Reedy Creek’s special status into law. However, the law did not specify the actual process or mechanism on how RCID will cease to exist.
Orange and Osceola Counties Not In Favor of Reedy Creek’s Dissolution
Meanwhile, Orange and Osceola county officials warned of hardships if Reedy Creek disappears. Additional burdens will end up in local taxpayers’ hands as they are the ones who will owe Disney.
Locals will have to assume the agreement’s outstanding bond debt and pay it by taxes.
Florida’s decision to revoke Reedy Creek’s special status as a response made by the state government against The Walt Disney Company.
Previously, the entertainment giant publicly opposed a new Florida law banning sexual and gender identity education the law applies to schoolchildren below the fourth grade.
Initially, Disney refused to comment on the law, but its employees stood up against the measure. This forced Disney to give out a more forceful stand against the “Don’t Say Gay” law.
Watch the Wall Street Journal special feature explaining Disney’s special tax district in Florida:
What do you think of the fact that Florida will owe Disney $1 billion in bond payments? Will the threat of payment force Florida to back down? Or, will they be more than glad to pay the bond just to get the best of Disney?
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