State’s Pledge To Reedy Creek Investors Could Prevent Dissolution

A statement from the Reedy Creek Improvement District to its investors says they’re going about their business as normal, despite recent legislation to dismantle the district in June 2023. Here’s why they seem so calm about it. In what is likely to be considered Disney’s first statement since the bill was passed, Reedy Creek pointed out an obscure provision in the law that established the district—known as the Reedy Creek Act. When the act was signed, the State of Florida essentially pledged to the investors of Reedy Creek that it would not interfere with the district until all of its bonds are “fully met and discharged.” “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,” said the district. This essentially means that the state has a contractual obligation to not interfere with Reedy Creek until the district can pay off its debt. This was pointed out in a Bloomberg Tax article written by Maitland-based attorney Jacob Schumer. “In case it was not obvious, dissolving Reedy Creek ‘limited’ and ‘altered’ its ability to improve and maintain its project and collect its various charges and taxes, and thus Florida would be violating its pledge to bondholders by dissolving Reedy Creek,” wrote Schumer. Then you run into the constitutional problems regarding the bill to dismantle the RCID. One of the main concerns surrounding the dissolution of Reedy Creek is where the district’s debt would go if and when it dissolves. This was discussed by Orange County Tax Collector Scott Randolph during an interview with CNN, where he said the district’s debt and obligations will be passed onto taxpayers. But it’s still not clear how that could work. “That’s what happens when you change a regulatory structure in 72 hours,” said Randolph. A statement released by Governor Ron DeSantis—who changed a special legislative session on redistricting to include Reedy Creek—said the state will have a plan on what to do next, but offered little to no details on what could be done beyond additional legislation. “It is not the understanding or expectation for SB 4-C, abolishing independent special districts, to cause any tax increases for the residents of any area of Florida,” the statement said. “In the near future, we will propose additional legislation to authorize additional special districts in a manner that ensures transparency and an even playing field under the law.” Efforts to dismantle Reedy Creek began after Disney announced its opposition to Florida’s Parental Rights in Education bill—known as “Don’t Say Gay” by opponents. In response to Disney’s stance on the bill, some lawmakers returned campaign contributions made by Disney. The bill drew widespread controversy over its vague language and supposed targeting of LGBTQ+ youth. The law bans instruction about gender identity and sexual orientation in schools in grades K-3. The full text of the bill can be found here.