Following criticism from Disney Corporation over a controversial education bill, Florida Governor Ron DeSantis signed legislation last week that would dissolve the Reedy Creek Improvement District, the location of the Disney World resort of the company. Chris Bonman explains the history of the Special Ward, how it worked, and the uncertainty around what may happen next.
On April 22, Florida Governor Ron DeSantis signed legislation, disbanding the Reedy Creek Improvement District, effective June 1, 2023, reportedly in response to the Disney Corporation’s opposition to the state’s recently enacted Parental Rights in Education Bill, which restricts teaching in class about gender identity and sexual orientation. the policy of this action despite everything, what exactly is going on and who is involved? What is the Reedy Creek Improvement District and why is it important that it be dissolved? Welcome to the dark world of special quarters.
Let’s go back. In the United States, there are five main forms of local government. The first three are cities, counties, and in 27 states cities or townships are general-purpose local governments. They provide many services, tax residents and collect fees, and issue debt to support infrastructure. It is often the local governments that people identify with. The fourth are school districts. Finally, we have special quarters. Typically, these local governments provide a unique service to a specific geographic area. They often have the power to tax (mainly property tax, but sometimes other taxes as well) or levy charges for services (such as transit fares or water charges). Certain special districts have the power to issue debt. The Reedy Creek Improvement District (RCID) in central Florida, and home to the Walt Disney World Resort, is part of this camp; however, in 1967 the state gave RCID significantly more powers, powers usually associated with a city or county. These services benefit landowners, primarily Disney Corporation and its subsidiaries, and are largely paid for through taxes and utility fees.
Credit: Asher Heimermann, CC BY-SA 4.0Going through Wikimedia Commons
RCID is responsible for services such as environmental planning, water control, road maintenance, emergency services, and water, sewer, and electrical utilities. If you think that sounds like many services provided by a city, you’re right. These services are supported by property taxes and utility fees levied on property owners within the RCID. In effect, Disney is taxing or charging itself for providing services it values.
RCID is like another type of special district in Florida, the Community Development District (CDD). CDDs exist primarily to facilitate the issuance of bonds to finance infrastructure development in new residential developments. They allow property developers to build roads, water pipes, sewer lines and other things, pay them off with debt, and pay off the debt by charging new property tax to new owners. Rather than increasing the purchase price of new housing, fixed-term contracts make it possible to spread the cost of the necessary infrastructure over time. CDDs differ from RCID in several important ways. CDDs are more limited in their ability to deliver public services, and most importantly, CDDs have a completely different governance structure. CDD board members are initially distributed based on the amount of land an owner owns in the district. As the main owner, it is the developer. As homes are sold, council seats are converted to popular election until the full board includes members elected by the people. RCID is different in that landowners still control council seats. As such, Disney Corporation and its subsidiaries control decisions made regarding service delivery and infrastructure in the district.
What next for the Reedy Creek Improvement District?
The RCID disbands in 2023. Now what? The answer to this question is not clear. The legislation inserts a single paragraph into Florida’s statutes and says little about how the dissolution will occur or what happens during the process. Undoubtedly, the law will be subject to dispute; however, RCID, like all special districts in Florida, is subject to the Uniform Special Districts Accountability Actwho broad outlines how independent special districts dissolve. This law specifies that the debt and assets of a disbanding special district must be transferred to a general-purpose local government, which assumes responsibility for repaying the debts and/or continuing to provide services. This likely means that Orange County (and possibly Osceola) will have some liability for the debt and transferred assets.
Importantly, the tax levy that supports the RCID is also eliminated upon dissolution. Currently, RCID charges about twice the average property rate in Orange County, Florida. If Orange County assumes the debt, assets, and service delivery requirements of RCID, it must do so with its own (lower) property tax levy. That could mean taxpayers across the county will foot the bill in the form of future tax increases, or not.
Little is known about the process. Many players in the dissolution process have not yet been assigned their roles. The uncertainty of the process is the problem. If an implementation plan accompanied the dissolution, the responsible parties could react and plan what will happen on June 1, 2023. At this time, we are left with many questions and few answers.
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Note: This article gives the point of view of the authors, and not the position of the USAPP – American Politics and Policy, nor of the London School of Economics.
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About the Author
Christopher Goodman – Northern Illinois University
Christopher Goodman is assistant professor of public administration at Northern Illinois University. His research focuses on local public finance, local government management/urban policy and intergovernmental affairs. His recent work appears in Budgeting and public finance, The American Journal of Public Administration, Publius: The Journal of Federalism, State and local government reviewand Growth and change.