Florida's government has passed a law repealing the self-governing district Disney has had in the state for 55 years—but since the two-page law fails to address some very complicated issues, the Reedy Creek Improvement District says business will continue as usual for now. Reedy Creek has told investors that it believes the move to dissolve the district is illegal because the 1967 law that created the district included a pledge from the state that the agreement would not be changed before Reedy Creek's debt to bondholders, which currently stands at more than $1 billion, had been fully paid, the Miami Herald reports.
In a statement last week, Reedy Creek quoted the statute as saying Florida pledges "it will not limit or alter the rights of the District" until "all such bonds together with interest thereon ....are fully met and discharged." The district said that in light of the "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," per CNN.
At Bloomberg Tax, attorney Jacob Schumer describes unwinding the district as a "contractual impossibility." Should Florida pass additional legislation to address the bond-debt provision, Schumer notes that under state law, Orange and Osceola counties would inherit Reedy Creek's debt. The district had been paying it off with property taxes higher than those Florida counties are allowed to charge. "If Reedy Creek is ever dissolved, it would be a monumental and complicated enterprise even on a years-long timeline." (County officials say the new law could lead to huge tax hikes.)
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