On Wednesday, the Florida Senate voted 23 to 16 to eliminate the Reedy Creek Improvement District, dealing a major blow to Disney and by extension, taxpayers in Central Florida.
The district has about a billion dollars in outstanding bonds that need to be dealt with. That burden, as state lawmakers admitted, will fall on local taxpayers.
“The procedures that we have will transfer that indebtedness to the general-purpose local governments,” said Sen. Jennifer Bradley (R–Clay County), the bill’s sponsor in the Florida Senate.
The billion dollars in bonds that Reedy Creek holds will mature as late as 2036. About 20% are revenue bonds, which will be backed by payments for services like utilities. The remaining 80% are general obligation bonds, backed by faith and credit in the district, which is on the verge of dissolution.
“Those are issued to creditors on the promise that the district will continue to exist and will be able to pay those obligations, of course, state law says that those bonds will be assumed by the counties but just because state law says that you really must dig in to see what is in those agreements,” said Joe Bishop-Henchman, vice president of policy at the National Taxpayers Union. “You don’t really know what’s in the fine print of all of these agreements.”
In 2008 when the government bailed out AIG and assumed control, its bonds had to be paid immediately. The bonds that were taken out by Reedy Creek could be the same, and if so, that payment would fall on the county.
In questioning during the bill’s lone committee stop in the Senate in Tallahassee, state lawmakers admitted they do not know who would absorb the debt or how soon.
“A billion dollars spread across the population of the county may not be too much, but it’s money, real money,” Bishop-Henchman said.
While Orange County would acquire Disney’s land and debt, there wouldn’t be that much additional money for the county.
“If Reedy Creek goes away, the $105 million it collects to operate services goes away,” wrote Orange County Tax Collector Scott Randolph. “That doesn’t just transfer to Orange County because it’s an independent taxing district. However, Orange County then inherits all debt and obligations with no extra funds.”
Under state law, Orange County is not allowed to tax Disney extra unless it creates a new special district for Disney. However, to do this, the county would need the property owners inside of Disney (the company) to agree to take back the debt.
If the bond debt falls on Orange County, residents can expect to acquire between $2,200 to $2,800 in extra debt for a family of four.
The Florida House is expected to pass the measure on Thursday. If signed into law it would dissolve Reedy Creek, as well as five other districts in the state on June 1, 2023.