Disney tells investors state can't dissolve special district without paying debt

[LetMyPeopleVote]

Disney has far better lawyers than DeathSantis. I was wondering why Disney was keeping quiet and then I read this article and the other articles. The State of Florida in effect made some guarantees to the bondholder and the Disney special district cannot be dissolved while there is debt outstanding

DeathSanitis is an idiot who passed this law out of spite. Being an idiot, DeathSantis screwed up and put Disney in the driver seat. Florida has over 1400 special districts and you do not dissolve these entities because these entities have debt

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https://www.miamiherald.com/news/politics-government/state-politics/article260783972.html

As Florida legislators were rushing through passage of a bill to repeal the special district that governs Walt Disney World last week, they failed to notice an obscure provision in state law that says the state could not do what legislators were doing — unless the district’s bond debt was paid off.

Disney, however, noticed and quietly sent a note to its investors to show that it was confident the Legislature’s attempt to dissolve the special taxing district operating the 39-square mile parcel it owned in two counties violated the “pledge” the state made when it enacted the district in 1967, and therefore was not legal. The result, Disney told its investors, is that it would continue to go about business as usual.......

Disney’s statement says, “In light of the State of Florida’s 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, paying debt service on its ad valorem tax bonds and utility revenue bonds, complying with its bond covenants and operating and maintaining its properties.’’ In essence, the state had a contractual obligation not to interfere with the district until the bond debt is paid off, said Jake Schumer, a municipal attorney in the Maitland law firm of Shepard, Smith, Kohlmyer & Hand, in an article for Bloomberg Tax posted on Tuesday and cited in a Law and Crime article......

Randolph calls the measure the “no lawyer left behind act,” and predicts that there will be many lawsuits, including one from bondholders, alleging the state illegally impaired the contract.

[LetMyPeopleVote]

1. Statement from Disney, posted on the website of the Municipal Securities Rulemaking Board

This is the Statement that Disney filed with municipal securities board.
https://emma.msrb.org/P21566885-P21210477-.pdf

STATEMENT RE SPECIAL LEGISLATIVE SESSION

On April 20, 2022 in a special legislative session called by Governor Ron DeSantis, the Florida Senate passed a bill (S 4C), providing for the dissolution, effective June 1, 2023, of any independent special district established by special act of the Florida legislature prior to the effective date of the current Florida Constitution, which was November 5, 1968. The Florida House of Representatives is expected to vote on an identical bill (HB 3C, and collectively with S 4C, the “Bill”) today which, if passed by the House, is expected to be signed into law by the Governor at the end of the special session on April 22, 2022. Reedy Creek Improvement District (“Reedy Creek” or the “District”) was established as a public corporation of the State by Chapter 67-764 Laws of Florida, effective May 12, 1967 (the “Reedy Creek Act”). Pursuant to the Bill Reedy Creek will be scheduled for dissolution on June 1, 2023. The Bill further provides that any special districts dissolved as a result of the Bill (including the District) may be reestablished on or after June 1, 2023 pursuant to the requirements and limitations of Florida’s Uniform Special District Accountability Act, which provides, among other things, that 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.

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 (a) 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 (b) to fulfill the terms of any agreement made with the holders of any bonds or other obligations of the District; and (2) 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.

In light of the State of Florida’s 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, paying debt service on its ad valorem tax bonds and utility revenue bonds, complying with its bond covenants and operating and maintaining its properties.

[FBaggins]

2. Of course they can - but why would it matter?

The authors of these articles keep forgetting that the other side of the argument is the current state government.

So you say that we can't do it without the district's debt being paid off?

Ok... the debt gets paid off - which if funded by issuing new debt - which in turn is funded by the new taxes implemented to replace what RCID was charging.

But it can be even simpler than that:

You say this violates state law "unless otherwise provided by law"?

Yeah... we'll get right on that.

[LetMyPeopleVote]

3. DeSanTax

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In Texas, we are paying the Abbottax in the form of increase charges to recover the costs of last years freeze. My power bills are over $70 per month higher. Deathsantis has to keep up with the DeSantx

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[LetMyPeopleVote]

4. Rating agency warns Disney debt conflict could 'weaken' other Florida government bonds

The rating agencies are worried about DeathSantis' stupid stunt. This is going to cost the state of Florida and local governments a great deal. If the rating agencies down grade Florida's credit, the cost of borrowing goes up

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https://www.miamiherald.com/news/politics-government/state-politics/article260873762.html

One of the nation’s leading bond rating agencies warned Thursday that if the state of Florida doesn’t resolve a conflict over its decision to repeal Walt Disney World’s Reedy Creek Improvement District and its obligation to investors, the move could harm the financial standing of other Florida governments.

Fitch Ratings posted the alert late Thursday on its Fitch Wire web site, nearly a week after Gov. Ron DeSantis signed into law the measure dissolving the special taxing district that governs Disney property by June 1, 2023. Reedy Creek Improvement District holds nearly $1 billion in bond debt and last week Fitch issued a “negative watch” because of the uncertainty around how that debt will be paid and by whom......

A 1967 state law that established the Reedy Creek Improvement District on 39 square miles of Disney property gave the district the power to issue bonds and tax itself to build roads, sewers and utilities, establish its police and fire departments, and regulate its construction. In exchange, the state pledged “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 law dissolving the district does not address how the bonds will be paid, but on Friday when he signed the measure, DeSantis said: “We’re going to take care of all that. Don’t worry. We have everything thought out. Don’t let anyone tell you that somehow Disney is going to get a tax cut out of this. They’re going to pay more taxes as a result of that.”

There is no easy way of fixing this issue without endangering the credit of the state