Reedy Creek Improvement District

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.[9] He flew over the Orlando-area site, and many other potential sites, in November 1963.[10] 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 became 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.[10]

A map showing the Walt Disney Company's land holdings and the boundaries of the District

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 is now being developed as the Bonnet Creek Resort, a non-Disney resort.[11]

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).[12] 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.[11] 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.[11] The only areas where the district had to submit to the county and state would be property taxes and elevator inspections.[9] 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:[13]

• 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.[9][11]

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.[14] 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.[11]

The Reedy Creek Improvement Act was held by the Supreme Court of Florida not to violate any provision of the Constitution of Florida.[15] 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 has issued an opinion stating that this includes state requirements for developments of regional impact (DRIs).[16]

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 were never built.[11] Most notably, Richard Foglesong argues in his book, Married to the Mouse: Walt Disney World and Orlando, that Disney has abused its powers by remaining in complete control of the District.[9]

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.[17]

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.[18] A bill analysis and fiscal impact statement for the bill was created on April 19, 2022 by Senator Jennifer Bradley.[19]

On April 20, 2022, the Florida Senate passed Senate Bill 4C (SB 4C) with a 26–13 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.[20][21] On April 21, 2022, the bill was passed by the Florida House by a 70–38 vote.[22] DeSantis signed the bill into law the following day.[23] 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".[24][4][5]

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.[25] Randy Fine, the Republican House sponsor of the bill, claimed without providing evidence that the tax revenue would instead go to local governments and that taxpayers would save money.[25]

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 Minority Leader Gary Farmer also highlighted concerns that the dissolution would transfer over $1 billion in bond liabilities to all Florida taxpayers.[26]

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.[27]

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.[6][7][8] 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."[28] 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".[6]