In a statement quietly posted on April 21, Disney informed investors that despite the recent Florida state law abolishing its special tax district by 2023, the state can’t actually proceed with its plan unless it also covers all outstanding debts to bond holders in the district, including interest payments that may be due. Subsequently, the company told investors it intends to conduct business as usual for the time being.
In the statement, first reported by WESH in Florida, officials for the Reedy Creek Improvement District — the official name of the tax district in which Disney operates its Florida theme parks and also functions as the local government — assured investors that under the terms of the 1967 law that established the district:
“Unless otherwise provided by law, the dissolution of a special district government shall transfer title to all of its property to the local general purpose government, which shall also assume all indebtedness of the preexisting special district.”
Specifically, the statement notes that “In the Reedy Creek Act the State of Florida has pledged to the holders of any bonds issued by the District: (1) that it will not limit or alter the rights of the District … 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.”
As a result, the statement says, Disney intends to continue “present operations” in Reedy Creek. Disney also said it is exploring “its options” in the meantime.
Jacob Schumer of Shepard, Smith, Kohlmyer & Hand told Bloomberg Tax on Tuesday that this effectively makes it an “impossibility” for Florida to go through with the law. Which, of course, it passed largely to punish Disney for (eventually) coming out against the so-called “Don’t Say Gay” bill, which established a bigoted new state law intended to censor LGTBQ teachers and make it easier to fire them.
“With this law, the state of Florida has eliminated the government entity that backed the various bonds while violating its own explicit promise not to do so,” Schumer said. “It is hard to imagine a way that the state could successfully argue that this did not violate its own contractual obligations or unconstitutionally impair the contract between Reedy Creek and the bondholders.”
The statement is at present Disney’s only public comment on the bill revoking the Reedy Creek special tax district; representatives for the company didn’t immediately respond to a request for further comment from TheWrap.
