Disney and Reedy Creek broke their silence over Florida’s latest state legislation to reassure investors that there is one thing standing in the way of the special Disney World District’s termination: its massive debt.
In a statement to investors, they said:
“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.’’
According to Jake Schumer, a municipal attorney in the Maitland law firm of Shepard, Smith, Kohlmyer & Hand, this essentially breaks a promise to bondholders that took on debt bonds issued by the now-terminating Reedy Creek district government.
“By dissolving Reedy Creek, the legislature essentially rewrote the promises made in the district’s bond offerings,” Schumer explained in a Bloomberg tax article. “Instead of bonds backed by a special district with the power to levy up to 30 mills in taxes, the property tax bonds will be backed jointly by two governments that can only generate a maximum of 10 mills in taxes…Under the U.S. Constitution, a state can only impair an existing contract if the impairment is reasonable and necessary to serve an important government purpose.”
“With this law, the state of Florida has eliminated the government entity that backed the various bonds while violating its own explicit promise not to do so,” he continued. “It is hard to imagine a way that the state could successfully argue that this did not violate its own contractual obligations or unconstitutionally impair the contract between Reedy Creek and the bondholders”
The Reedy Creek Improvement District reported having outstanding debt bonds amounting to just under $1 billion. It should be noted that the expectation of more specific legislation and applications for district re-establishment was established from the moment Gov. DeSantis signed the bill brought forward by members of Florida’s State Congress, suggesting this particular issue has already been taken into consideration.
“They (Reedy Creek) do have services, utilities. We’re going to take care of that. Don’t worry,” the Governor said after signing the legislation. “We have everything all thought out. Don’t let anyone tell you that Disney is going to get a tax cut out of this. They are going to pay more taxes because of this.”
While the story is far from over, progress continues at The Most Magical Place On Earth. TRON: Lightycycle Power Run is inching closer to completion, Guardians of the Galaxy: Cosmis Rewind is set to open in a matter of weeks, and anticipation grows for the return of EPCOT’s Cultural Representatives.
We at Disney Fanatic will continue to keep our readers updated on Walt Disney World news as more developments come to light.