TAMPA, Fla. (WFLA) — Florida’s fight with the House of Mouse may become more expensive and more complicated in Florida thanks to agreements the state made before its constitution was even ratified.
The Disney Company released a statement outlining the clauses of its now 55-year-old agreement with the state of Florida, saying that the new legislation, signed by Gov. Ron DeSantis to strip Disney of its right of self-governance in Florida violates their contract.
The contract was set up through the Reedy Creek Act, which gave the Walt Disney Company full control of the area it built its Magic Kingdom in 1967. Florida’s state constitution was ratified in 1968.
The company said in its statement that by passing and signing the Senate Bill 4C into law, Florida had violated clauses of the state’s agreement to create the Reedy Creek Improvement District.
According to the RCID and Disney, the agreement’s contract clauses stipulate “that it will not limit or alter the rights of the District to own, acquire, construct, reconstruct, improve, maintain, operate or furnish the projects or to levy and collect the taxes, assessments, rentals, rates, fees, tolls, fares and other charges provided for in the Reedy Creek Act, and to fulfill the terms of any agreement made with the holders of any bonds or other obligations of the District.”
In plain language, as long as Disney operates in Florida through the Reedy Creek Improvement District, the state of Florida cannot interfere with its ability to operate as it chooses. Particularly, the ability of RCID to buy, build or renovate any projects in its sphere of influence, as well as its ability to collect taxes and fees to pay for it, under agreements with their bond holders.
The agreement with Florida also says “that it will not in any way impair the rights or remedies of the holders, and that it will not modify in any way the exemption from taxation provided in the Reedy Creek Act, until all such bonds together with interest thereon, and all costs and expenses in connection with any act or proceeding by or on behalf of such holders, are fully met and discharged.”
Written plainly, as long as Disney owes bond debts to Florida, the state legally cannot change how the company operates in the state, specifically Reedy Creek. It puts a billion dollar price on Florida’s effort to dissolve Disney’s bubble of control.
If state lawmakers, or the governor, want to strip away Disney’s powers in Reedy Creek, they’ll either have to negotiate with the company or pass additional legislation to continue their dissolution process. Those protections are enshrined in state law. They’ll also have to find a way to do so without putting all of the debt Disney owes onto taxpayers in Orange and Osceola counties, where the Magic Kingdom sits.
State statutes say the bond debt will be inherited by taxpayers if the district is dissolved.
According to F.S. 189.076, “Unless otherwise provided by law or ordinance, the dissolution of a special district government shall transfer the 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.”
That hasn’t stopped DeSantis from assuring voters that Disney would pay its dues instead of Florida residents. However, previous rulings by the Florida Supreme Court lean in Disney’s favor for how the situation may play out.
A 2017 ruling in Sears, Roebuck & Co. v. Forbes/Cohen Florida Properties and the City of Palm Beach Gardens sets up additional protections for businesses in cases of contract disputes and impairments. In the terms of the Disney debate, Florida’s contract with the Walt Disney Company may mean the state cannot follow-through on its promise to dissolve Reedy Creek, even with the legislation to do so already signed into law.
According to FSC, in 1984, Forbes/Cohen entered a land-lease agreement with Palm Beach Gardens to build a mall. The city approved Forbes’ petition to build and approved construction plans. Later, Sears, using part of the space built, tried to sublet to a Dick’s Sporting Goods. Forbes asked the city to intervene, and Palm Beach Gardens issued a resolution to block Dick’s from subletting the space.
That move prompted litigation, based on violating terms of the contract to use the space and not impair the company’s right to operate as it saw fit according to the agreement already in place.
“We conclude the City’s resolution is unconstitutional both because it impairs Sears’s right to contract—and the contract rights emanating from the lease between Sears and Forbes/Cohen—and deprives Sears of its substantive due process rights,” FSC wrote in its opinion.
This sets the stage for Disney versus the Florida Legislature and Gov. DeSantis. By passing the legislation to dissolve Reedy Creek the state is effectively impairing and modifying, through legislative force and action, how Disney would operate in its contractually approved area beginning June 1, 2023.
If the legislature proceeds, and DeSantis is given the victory over Disney, $1,239,860,000 would be due between 2023 and 2038. Based on Disney’s statements and Florida law, that means taxpayers may be forced to foot the bill.