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LetMyPeopleVote

(145,374 posts) Tue May 10, 2022, 02:49 PM May 2022

Florida Faces First Amendment, Contract, and Budget Issues in Dissolving Disney District

This lawsuit will be fun to watch

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https://reason.com/2022/04/27/florida-faces-first-amendment-contract-and-budget-issues-in-dissolving-disney-district/

Florida faces all sorts of obstacles in its bid to strip Disney World of its self-governing status. Disney's Florida theme parks have long enjoyed the status of a special purpose district, allowed to operate as its own city. Since 1967, this special purpose district—known as the Reedy Creek Improvement District—meant that The Walt Disney Co. had governmental control over the lands in and around its Florida theme parks, an area now encompassing around 25,000 acres. When the district was created, "the land was little more than uninhabited pasture and swamp," notes CNN. "With the special purpose district, Disney took over responsibility for providing municipal services like power, water, roads and fire protection—but were also freed from dealing with legal red tape or paying taxes for services that benefited the broader public.",,,,,

"If Disney can prove that that's what happened—that there was a retaliation against Disney by the state of Florida, who sought to take away a benefit that the government had previously gave to Disney—that might set for a retaliation claim under the first amendment," First Amendment lawyer Lawrence Walters told WESH 2 Florida......

Florida's dissolution of the district also runs up against contractual concerns. "There's a much more basic reason [than the First Amendment] Florida can't dissolve Reedy Creek—it promised bond purchasers that it wouldn't," notes Florida attorney Jacob Schumer at Bloomberg Tax:

Reedy Creek, like other special districts, can borrow money by issuing bonds, which can then be purchased by investors looking for fixed payments. Just like any other debt, the terms of the bond are based on the specific bond contract at issue. Reedy Creek is authorized to issue a few different kinds of bonds, but the most important ones are those that promise to pay from the property taxes collected by the district and those that pay from utility system revenue.

Reedy Creek's bond offerings very much rely on the district's unique powers. Its property-tax-based bonds discuss that the district can tax up to 30 mills and promise to tax at a rate high enough to pay the bonds. Its utility revenue bonds discuss the district's various powers to generate utility revenue and promises to fix fees and charges sufficient to generate sufficient revenue to pay the bonds.

In authorizing Reedy Creek to issue bonds, the Florida legislature included a remarkable statement—included in Reedy Creek's bond offerings—regarding its own promise to bondholders: "The State of Florida pledges to the holders of any bonds issued under this Act 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 herein … until all such bonds together with interest thereon, and all costs and expenses in connection with any action or proceeding by or on behalf of such holders, are fully met and discharged."

If Florida wants to end Disney's special status, the counties where Reedy Creek is located (Orange and Osceola) could inherit Reedy Creek's over $1 billion in bond debt and it will also violate contractual obligations to bondholders, Schumer writes. Besides, "both the U.S. and Florida constitutions place strict limitations on the government's ability to impair its own contracts."