The story
Initial steps
After the success of Disneyland in California, Walt Disney began planning a second park on the East Coast. He disliked the businesses that had sprung up around Disneyland, and wanted control of a much larger area of land for the new project. He flew over the Orlando-area site, and many other potential sites, in November 1963. Seeing the well-developed network of roads, including the planned Interstate 4 and Florida's Turnpike, with McCoy Air Force Base (later Orlando International Airport) to the east, he selected a centrally located site near Bay Lake. He used multiple shell companies to buy up land, at very low prices, that eventually would be included within the district. These company names are listed on the upper story windows of what is now the Main Street USA section of Walt Disney World, including Compass East Corporation; Latin-American Development and Management Corporation; Ayefour Corporation (named for nearby I-4); Tomahawk Properties, Incorporated; Reedy Creek Ranch, Incorporated; and Bay Lake Properties, Incorporated.
On March 11, 1966, these landowners, all fully owned subsidiaries of what is now the Walt Disney Company, petitioned the Circuit Court of the Ninth Judicial Circuit, which served Orange County, Florida, for the creation of the Reedy Creek Drainage District under Chapter 298 of the Florida Statutes. After a period during which some minor landowners within the boundaries opted out, the Drainage District was incorporated on May 13, 1966, as a public corporation. Among the powers of a Drainage District were the power to condemn and acquire property outside its boundaries "for the public use". It used this power at least once to obtain land for Canal C-1 (Bonnet Creek) through land that was developed as the Bonnet Creek Resort, a non-Disney resort which opened in 2020.
Improvement district and cities
Walt Disney knew that his plans for the land would be easier to carry out with more independence. Among his ideas for his Florida project was his proposed EPCOT, the Experimental Prototype Community of Tomorrow, which was to be a futuristic planned city (and which was also known as Progress City). He envisioned a real working city with both commercial and residential areas, but one that also continued to showcase and test new ideas and concepts for urban living. Therefore, the Disney company petitioned the Florida State Legislature for the creation of the Reedy Creek Improvement District, which would have almost total autonomy within its borders. Residents of Orange and Osceola counties did not need to pay any taxes unless they were residents of the district. Services like land use regulation and planning, building codes, surface water control, drainage, waste treatment, utilities, roads, bridges, fire protection, emergency medical services, and environmental services were overseen by the district. The only areas where the district had to submit to the county and state would be property taxes and elevator inspections. The planned EPCOT city was also emphasized in this lobbying effort.
On May 12, 1967, Governor Claude R. Kirk Jr. signed the Reedy Creek Improvement Act, adding the following Florida statutes to implement Disney's plans:
Chapter 67-764 created the Reedy Creek Improvement District;
Chapter 67-1104 established the City of Bay Lake; and
Chapter 67-1965 established the City of Reedy Creek (later renamed as the City of Lake Buena Vista around 1970.)
According to a press conference held in Winter Park, Florida, on February 2, 1967, by Disney vice president Donn Tatum, the Improvement District and cities were created to serve "the needs of those residing there", because the company needed its own government to "clarify the District's authority to [provide services] within the District's limits", and because of the public nature of the planned development. The original city boundaries did not cover the whole Improvement District; they may have been intended as the areas where communities would be built for residential use. To maintain full control of the district, it was important for Disney to limit the voting rights of the inhabitants, rights which were only meant to include landowners owning more than one-half acre. Since Disney owned most of the land, the residents would simply be renting their homes. But after the 1968 Avery v. Midland County case, Disney feared that they would have to eventually give everyone living inside the district voting rights, and so the population was restricted to the two municipalities Bay Lake and Lake Buena Vista.
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Further development
After Walt Disney died in 1966, the Disney company board decided that it did not want to be in the business of running a city, and abandoned many of his ideas for Progress City. The planned residential areas that Walt originally advocated for were never built. Richard Foglesong would later argue in his 2003 book, Married to the Mouse: Walt Disney World and Orlando, that the Disney company abused its powers by remaining in complete control of the District.
In 1968, the Reedy Creek Improvement Act was held by the Supreme Court of Florida not to violate any provision of the state constitution. As the law, in part, declares that the District is exempt from all state land use regulation laws "now or hereafter enacted," the attorney general of Florida issued in 1977 an opinion stating that this includes state requirements for developments of regional impact (DRIs).
In January 1990, the RCID was granted a $57-million allocation of tax-free state bonds over an agency with plans for a low-income housing development and all additional government applicants in a six-county region, as the state distributed the bond proceeds on a first-come order. Disney was criticized for the move, with a Republican gubernatorial candidate filing a lawsuit to stop the RCID from using the funds. Also, one state legislator moved to limit the RCID's ability to apply for the program.
In 1993, the land that eventually became the Disney-controlled town of Celebration, Florida—which was built with many of Walt Disney's original ideas that had since evolved into a form of New Urbanism—was deannexed from Bay Lake and the district. This was done to keep its residents from having power over Disney by providing for separate administration of the areas. Celebration lies on unincorporated land within Osceola County, with a thin strip of still-incorporated land separating it from the rest of the county. This strip of land contains canals and other land used by the district.
Abolition
On March 30, 2022, state representative Spencer Roach tweeted that Florida legislators had met twice within the past week to discuss the possibility of repealing the Reedy Creek Improvement Act and stripping Disney of its "special privileges" in the state. Roach and Florida governor Ron DeSantis later criticized Disney for the "special perks" the company enjoyed through use of the RCID. Roach said there had been previous attempts to eliminate the district. A bill analysis and fiscal impact statement for the bill was created on April 19, 2022, by Senator Jennifer Bradley. However, this analysis was unable to determine the impact the bill would have on either the residents served by the special district, or the local governments that would absorb the district's debts.
On April 20, 2022, the Florida Senate passed Senate Bill 4C (SB 4C) with a 23–16 vote that would abolish the special taxing district. If it became law, the bill would dissolve any independent special district in Florida established prior to November 5, 1968, including the RCID; the dissolution would take effect June 1, 2023.
Representative Randy Fine sponsored a bill in the Florida House of Representatives to dissolve all six independent special districts in Florida established prior to November 5, 1968 (the date of the ratification of the Constitution of Florida), including the Reedy Creek Improvement District (RCID). On April 21, 2022, the bill was passed by the Florida House by a 70–38 vote. DeSantis signed the bill into law the following day. Some members of the Florida Legislature as well as political commentators said the bill was likely retaliation for Disney announcing its opposition to the Parental Rights in Education Act, dubbed by critics as the "Don't Say Gay bill". Representative Dotie Joseph dubbed SB 4C "un-American" adding that it was "[p]unishing a company for daring to speak against a governor's radical-right political agenda".
The bill which abolished the district did not have any provisions for the logistics or debt. Under its enabling act, the state vowed to bondholders that it wouldn't impair the ability of Reedy Creek to service its debt. By dissolving the district, the debt would have been subsumed by Orange and Osceola Counties. On May 16, 2022, Florida governor DeSantis said that he is looking into making the government take control of the special district but promised that local and state tax payers would not be paying for Reedy Creek's outstanding debt.
In 2023, DeSantis announced he would rename the district to Central Florida Tourism Oversight District instead of dissolving it, and replace five-board members which had been selected by Disney, with a new board with five members hand-picked by the governor. This was approved by the Florida state legislature on February 9 and 10, 2023. The bill was signed by Governor DeSantis on February 27.
Potential repercussions
The bill was passed after two days of discussions and without a fiscal impact analysis. This led to debates about the bill's effects on taxes and bond debt. Randy Fine, the Republican House sponsor of the bill, claimed a different type of district could be formed that would not move additional costs to taxpayers.
Disney already pays property taxes to Orange and Osceola counties. The bill would not increase these counties' revenues but would force both counties to increase services within the former jurisdiction of the RCID. A tax collector for Orange County claimed the RCID's abolition would increase costs for taxpayers. Florida Senate Democratic member Gary Farmer also highlighted concerns that the dissolution would transfer over $1 billion in bond liabilities to all Florida taxpayers.
Potential legal challenges
Analysts expected legal challenges to the dissolution. One argument was that because the law targeted Disney in retaliation for a political position, it violated the company's free speech rights under the First Amendment to the United States Constitution.
Another argument is that the dissolution violates the contract the state of Florida made with bondholders not to alter or limit the powers of the district until all bonds were paid off, making the dissolution unconstitutional under the Contract Clause. Under Florida law, when a special district government, like the Reedy Creek Improvement District, is dissolved, the dissolution transfers "title to all property owned by the preexisting special district government to the local general-purpose government, which shall also assume all indebtedness of the preexisting special district." In 1866, the U.S. Supreme Court ruled that "once a local government issues a bond based on an authorized taxing power, the state is contract-bound and cannot eliminate the taxing power supporting the bond".
Local taxpayers did file suit in federal court, but this was dismissed in May 2022 for lack of standing for the First Amendment issue, and lack of demonstrated injury to the taxpayers. It was refiled in state court the same month.
Reorganization
On December 2, 2022, the Financial Times reported that a deal between Representative Randy Fine, the Disney company and other members of the Florida state legislature was underway to keep the main Reedy Creek Improvement District agreement, since the District abolition law had yet to take effect. Such compromise was reportedly being drafted especially because former Disney CEO Bob Chapek, who openly opposed the Parental Rights in Education law, was fired, and the abolition of the District would represent a tax increase in cities and counties across Florida, which could endanger Governor DeSantis' nomination for the Republican Party in the 2024 presidential election.
Concerns over possible debt transfer to counties, and taxpayers in Orange and Osceola Counties having to start paying for some Disney World services such as police, fire protection and road maintenance, led the legislature to mostly revert the changes. On February 9 and 10, 2023, the Florida State House and Senate, respectively, passed bills in a special session allowing the special tax district to remain, as well as leaving the ability for Disney to issue tax-exempt bonds and approve development plans without scrutiny from certain local regulators in place. Disney would no longer be able to appoint the five members of the tax district's board, which would instead be appointed by the governor and confirmed by the Florida State Senate, and some parts of the district's authority would be removed, such as the power to potentially construct a nuclear power plant, airport, and stadium. Governor DeSantis signed the bill on February 27.
From Wikipedia’s article on Central Florida Tourism Oversight District, shared under CC BY-SA 4.0.5