DeSantis’ Repeal of Reedy Creek Would be a Disaster for FL

“I will not allow a woke corporation based in California to run our state,” Gov. Ron DeSantis (R-FL) declared in a recent fundraising email, and this week his war on Disney moved from rhetoric to retaliatory regulation, as he pushed for a bill in the current special session that would dissolve Disney’s Reedy Creek Improvement District (RCID).

He seems poised to declare victory as the House and Senate have both passed the bill, but this effort marks a reversal of not only long-held conservative principles of protecting free speech and private property rights but also threatens to unleash colossal economic devastation on Central Florida’s local governments and residents, with impacts rippling statewide.

DeSantis’ ire was sparked by Disney’s opposition to HB 1557, the Parental Rights in Education bill (called the “Don’t Say Gay” Bill by its critics), and his war on Mickey Mouse has been cheered by a wide swath of the conservative commentator class. (National Review’s Charles C.W. Cooke is a notable exception, generally supporting DeSantis’ agenda but calling the effort to repeal RCID “an ugly and ill-conceived mistake.”)

I’m a native of Orlando, and growing up in the shadow of the House the Mouse Built makes you fully aware of the good, the bad, and the ugly that Disney has brought to Central Florida. The region’s astronomical growth would not have been possible without the billions pouring out of tourists’ pockets, but with that comes all the usual traffic, crime, and environmental challenges as swampland and citrus groves were transformed into one of the world’s top vacation destinations.

Disney is the state’s largest employer, with Walt Disney World employing nearly 80,000 people, with a payroll of over $3 billion, plus those employed by the Disney Cruise Line ships departing from Port Canaveral and Miami. Mickey is the multi-billion dollar fuel for the economic engine of the entire state; it’s the magnet that draws in visitors to other area attractions and hotels. We can avoid a state income tax largely because of hotel and sales taxes collected from the more than 100 million people who visit the Sunshine State each year.

To research this article, I consulted public records and spoke with numerous experts around the state including attorneys, law professors, land use and development professionals, Florida tourism industry professionals, former Disney employees, elected officials, and county government employees. Many asked to remain anonymous due to the highly charged political atmosphere surrounding this topic.

My sources ranged all across the political spectrum but universally expressed shock at DeSantis and his GOP compatriots mounting such a blatant assault on free speech. Many raised concerns about the thoughtless speed by which the bill moved forward, and the havoc they expected its unintended consequences to wreak in a state dependent on tourism revenues. “They’re just making shit up,” was the blunt reaction from one Central Florida political insider.

HB 3C (along with an identical companion bill in the Florida Senate that passed on Wednesday) is a deceptively simple one-and-a-half page bill that eliminates independent special districts that were enacted before the 1968 Florida Constitution, unless the legislature moves to reauthorize them. That cutoff point just so happens to include RCID and five other much simpler special districts.

The bill essentially sets up a system of legislative blackmail with a short clause establishing that the included special districts would be “dissolved effective June 1, 2023” — in other words, after the upcoming midterm elections in which DeSantis and the Republican legislators sponsoring the bill are running for re-election and after the regular 2023 legislative session.

The legislature is “putting Disney on a leash,” as one Florida attorney Board Certified in Local Government Law told me, “so they better do what Ron DeSantis says, they better give to the PACs Ron DeSantis says, or else.” In his view, it was more egregious than immediately dissolving RCID, sending Disney the message that “if you do what we say [and stop criticizing HB 1557] then after session, we’ll quietly let you come back.”

The governor and his allies have characterized ending RCID as a justifiable blow against crony capitalism, but it’s a far cry from the multimillion dollar incentives handed out to build sports stadiums, instead comprising a grant of interwoven powers and responsibilities that would be excruciatingly difficult to unwind, assuming such an effort survived the likely legal challenges.

Here’s what RCID actually does. When Walt Disney was scouting Central Florida for his next theme park in the mid-1960s, neither Orange nor Osceola County had the resources or staff to manage the massive development, and the creation of RCID was supported by both local and state government officials.

The 1967 state statute that created RCID granted the Walt Disney Company broad powers to develop and control the land they purchased to build projects that would eventually include some of the world’s top tourist attractions like the Magic Kingdom, Epcot, and Animal Kingdom, plus numerous Disney hotels, restaurants, and retail stores. It encompasses a roughly 25,000 acre (39 square miles) parcel southwest of Orlando, stretching over Orange and Osceola Counties.

Disney collects and remits sales taxes to both counties, as well as collecting Tourist Development Taxes from hotel guests, and RCID pays county property taxes (nearly $300 million from 2015 to 2020) as well as levying taxes on its own properties to cover needed expenditures for local government type functions like building permitting, fire and emergency medical services, a power plant, water and waste treatment, trash and recycling, and construction and maintenance of roadways and waterways. RCID demands a higher standard than the neighboring counties, resulting in immaculately maintained roadways (locals frequently joke about trying to get Disney to seize control of the unending I-4 construction), building codes that are state-of-the-art for hurricane protection, and significant resources devoted to environmental protection.

The satellite map of the region below shows vast green spaces preserved by Disney as natural habitat. That’s some of the most valuable real estate in the country, and the dissolution of RCID could set off detrimental environmental impacts as Disney may consider selling some of these parcels, or local government leaders could be tempted to seize them through eminent domain and distribute to allies (for state Republicans claiming they’re concerned about crony capitalism, the windfall from developing even a small fraction of this green space should be a real concern).

Professor Clay Calvert, who teaches First Amendment and media law at the University of Florida College of Law, concurred that this “implied threat” within the statute to comply or face the revocation of the RCID’s powers could constitute a violation of Disney’s free speech rights.

Describing himself as a “libertarian-leaning” registered Republican, Calvert said it was ironic “how radically this issue has flipped over,” with the GOP-controlled Legislature going from enacting a special carve-out for Disney in a social media anti-censorship law, to now specifically targeting Disney for retaliation.

He wouldn’t be the first to voice a feeling of whiplash after watching conservatives for years cheer the Citizens United case, in which the Supreme Court ruled that corporations, non-profit organizations, and labor unions had free speech rights and the government could not restrict them from making independent expenditures for political campaign purposes.

“Singling out a business in a way that detrimentally affects its free speech rights is always problematic,” said Calvert, and constitutes “textbook viewpoint discrimination,” which is “presumptively unconstitutional.”

It should be noted that the über-Republican retirement community The Villages includes multiple special districts with very similar functions as RCID, but DeSantis isn’t targeting his supervoters.

The clear message with HB 3C, the professor continued, is that “if they had supported DeSantis’ view [on HB 1557], then Disney wouldn’t be facing any repercussions.” He highlighted the legal woes of former New York City Mayor Rudy Giuliani when he sought to defund and evict the Brooklyn Museum of Art from a city-owned building because he objected to an exhibit that he called “sick” and anti-Catholic. A federal court ruled that Giuliani’s retaliatory actions were a violation of the museum’s free speech rights.

Property rights issues offer Disney another path to challenge this bill. One former Disney corporate employee described potentially repealing RCID as the biggest eminent domain taking in Florida’s history. This issue might “score points politically” for DeSantis, he added, but “legally he’ll get his ass kicked.” He also shared his shock that the state’s laissez-faire pro-business conservatives had taken such a sharp turn.

Calvert’s UF Law colleague, property and constitutional law Professor Michael Allan Wolf, expressed similar incredulity on how the state’s Republicans had shifted so quickly away from defending private property rights. He noted that if HB 3C passed, Disney could have a cause of action not just for the diminution of value in their property interest, especially after over 50 years of developing and investing in RCID’s infrastructure, but also on equal protection grounds.

Wolf pointed out the 1999 Supreme Court case of Village of Willowbrook vs. Olech, in which a city demanded a much larger water easement from property owners who had previously sued them than from their neighbors. The Supreme Court ruled that the Equal Protection Clause of the U.S. Constitution supported a cause of action not just where a plaintiff alleged discrimination based on membership in a protected class, but where the plaintiff alleged that “ill will motivated the government” to treat that plaintiff “differently from others similarly situated.”

Disney would have “a pretty powerful argument” under cases like Olech, opined Wolf, “because the governor’s rhetoric sounds like retaliation.” Additional expressions of “ill will” towards Disney can be found in tweets and comments by multiple GOP legislators.

In addition to the free speech, property rights, and equal protection grounds, there is also the simple fact that repealing RCID without the consent of the voting landowners is prohibited by current state law.

The authority to vote for the RCID Board of Supervisors rests solely in a hand-selected group of senior Disney employees who are listed as the official landowners of several undeveloped parcels within the district, and they are not going to vote to dissolve RCID.

Section 189.072(2) of the Florida Statutes restricts how the legislature can dissolve an active independent special district like RCID, requiring the vote of “a majority of the landowners voting in the same manner by which the independent special district’s governing body is elected.” HC 3C begins “Notwithstanding s. 189.072(2),” so the bill drafters are clearly aware of this provision but there’s nothing in the short text of the bill that could overcome the rights of the RCID voting landowners.

That statutory provision was reassuring to Orange County Commissioner Christine Moore, who initially told me she was “stressed” and “horrified” by HB 3C “because we can’t handle it — we aren’t keeping up with Orlando development now.” Worrying about how to possibly take on RCID was “a distraction to the business we need to be doing,” she added, pointing out Central Florida’s ongoing challenges with transportation and affordable housing.

After speaking with a county attorney, however, she relaxed somewhat, calling me back to say that the attorney was “pretty confident” that Disney could prevail in court based on that statute.

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Still, court cases take time, and the short time period — just over one year — after which HB 3C would abolish RCID left very little time to prepare. Disney had “completely different standards” than Orange County, said Moore, and if the county was going to take over RCID’s functions, enter into a new RCID-like arrangement with Disney, or some hybrid of the two, “we’d have to do a study, and that doesn’t happen overnight.”

HB 3C’s House sponsor, State Rep. Randy Fine (R), admitted on Wednesday he had not met with anyone from Disney, RCID, or Orange or Osceola County government to discuss the impact that repealing RCID might have before putting the bill forward.

I found out about this bill to abolish #ReedyCreek this morning when I was IN THE SHOWER. 🚿

It’s so knee-jerk. Have you met with @Disney workers, @OrangeCoFL or @OsceolaCountyFl? Or is this something you don’t believe requires their input?

FINE: I’ve NOT met with any of them. pic.twitter.com/Mdrj8yZtwg

— Rep. Carlos G Smith (@CarlosGSmith) April 20, 2022

State Rep. Carlos Smith (D), the Democrat questioning Fine in that embedded tweet, is an outspoken critic of HB 1557 and the state’s GOP leadership, but it’s not just liberal Democrats concerned about bill’s rushed timeframe. Moore’s county commission seat is technically non-partisan but she’s a Republican, and my local government attorney source is Republican too. He dug into “very complex, costly, time-consuming” endeavor it would be for the two separate counties to absorb RCID or create a new special district arrangement for them. He declined to even attempt to estimate the legal bill for such a project but said his firm’s rate for partners doing this type of specialized work was $400-600 per hour.

Legal fees would only be one aspect, and he expected that multiple county agencies would have to significantly increase their staff to handle the workload — one of the very same challenges that motivated the state government to create RCID in the first place. As one example, repealing RCID would require a “massive rewrite” of the county comprehensive land use plans and regulations, creating a pile of work for both lawyers and urban planners.

Another local government attorney, Nick Shannin, has represented Orange County constitutional officers and offered additional perspective on how repealing RCID would “immediately put a strain” on already busy county legal departments.

It would be “an expensive logistical nightmare” for both Disney and the counties, who “can’t create employees out of thin air with specialized skill sets like this,” said Shannin. “We’ve had no opportunity to plan to make this a smoother logistical operation…it’s not immediately doable.”

June 1, 2023 was “not even close to enough time,” Shannin emphasized, saying four years “would be a challenge but we could figure it out, but one year? No way.” The first attorney also slammed that deadline as unreasonable and said he expected it would take at least 5 years to properly study the issue and prepare for transitions.

Orange County Tax Collector Scott Randolph (D) launched a messaging crusade Wednesday denouncing the bill, pointing out that repealing RCID would result in the counties assuming all of its assets and liabilities. That means that Orange and Osceola would be on the hook for Disney’s $2 billion bond debt, which figures out to an additional tax bill for each county taxpayer estimated to be between $2,200 and $2,800 per family of four.

IF Reedy Creek goes away, the $105 million it collects to operate services goes away. That doesn’t just transfer to Orange County because it’s an independent taxing district. However, Orange County then inherits all debt and obligations with no extra funds.

— Scott Randolph (@ElectRandolph) April 20, 2022

To add insult to injury, the House staff analysis released for HB 3C included the misleading statement that the bill “does not appear to require counties or municipalities to spend funds.” Shannin burst into laughter when I read that section to him, taking several seconds to compose himself before calling it “an amazingly incomplete statement,” with the lawyer fees alone “only a small piece of the puzzle” of the burden the counties would bear.

The first attorney was even more direct, blasting the House analysis as “demonstrative bullshit.”

Another major problem, that attorney said, was that RCID has a higher pay scale and benefits for its workers as compared to their government employee counterparts. The counties would have to “frantically try and rehire all those people” in this tough job market. Many would understandably be reluctant to return to their old jobs for reduced pay and benefits.

That would leave the counties choosing between an array of terrible choices: refuse to raise pay for former RCID workers and be majorly understaffed, raise the pay for all county workers to RCID levels and annihilate their budget, or attempt to pay RCID workers what they were getting and face strong opposition and almost certainly lawsuits from the fire union and other public employee unions over the pay gap.

RCID also contracts with the Orange and Osceola County Sheriff’s Offices and the Florida Highway Patrol for law enforcement; if you get arrested on Disney property, it’s one of these cops slapping the cuffs on you. The multimillion dollar contracts include both direct arrangements with the agencies to provide police services and to hire a large number of off-duty deputies for additional security. Disney pays those off-duty cops a higher hourly rate than the minimum required under their union contract, and they will not want to give up that lucrative side gig.

Essentially, the repeal of RCID would be a war on tens of thousands of first responders and blue collar workers, resulting in many losing their jobs and even more having their pay and benefits reduced.

An Osceola County employee told Mediaite that their county suffered one of the highest unemployment rates in the country when Disney shut down during the pandemic, and their tax revenues had still not recovered to pre-pandemic levels. Anything that hurts the hospitality industry hurts everyone in the state, he said, and that’s especially true for Osceola, which, unlike Orlando and Orange County is mostly rural outside of the Disney corridor and even more heavily dependent on tourist dollars.

In the end, even if DeSantis somehow prevails in court, repealing RCID will punish the counties much more than it would Disney. Supporters of HB 3C are correct to point out that Disney is unlikely to withdraw Walt Disney World completely from Florida — Space Mountain isn’t easy to pack — but that’s only one of six Disney parks around the globe. The overall parks division brings in less than 25% of Disney’s annual gross revenue; the vast majority comes from their movies, television shows, and other entertainment products.

Disney recently began the process of transferring about 2,000 employees from California to a new facility being constructed in the Lake Nona area of Orlando, because they had viewed the business climate to be friendlier in the Sunshine State. The events of this week seem likely to inspire Disney to pause and reconsider this move, if not other future investments in Florida. Gov. Jared Polis (D-CO) has been publicly lobbying this week for Disney to move to his state (“We’re ready for Mountain Disneyland”), attacking the effort to repeal RCID and promising a more supportive situation in Colorado.

Florida has been spending big bucks to promote the state as a haven for business investment, touting DeSantis’ insistence on keeping things open as much as possible throughout the pandemic. But it’s impossible to square that messaging with how HB 3C telegraphs to the world how very precarious a Florida business owner’s rights are if the wrong thing is said about the Republicans controlling state government.

Now, DeSantis is in a unique position in that unlike most Florida Republicans, he can eschew campaign contributions from Big Business. He caused a buzz at a Florida Chamber of Commerce event a few months ago when he basically told them they were now irrelevant. DeSantis can tell corporate donors to go pound sand, having successfully nationalized his election by weaponizing culture war issues to build a nationwide fundraising machine drawing in small-dollar donations from all 50 states.

However, that will be impossible for the vast majority of Republicans who lack DeSantis’ name recognition and frequent Fox News appearances. They’re vulnerable if Disney decides to drop a few million bucks into the 2022 and 2024 elections with the goal of shrinking, if not eliminating, the GOP majority control. Florida might be trending red, but it’s a narrow margin of victory that elected Republicans from many state House and Senate districts, and a well-funded PAC has a solid chance of knocking some out, especially if bolstered by local news reports about out-of-work fire fighters, increased taxes, and county budgets ripped apart.

Here’s the nasty little secret DeSantis wouldn’t want his legislative lackeys to realize: he may have to win re-election as governor in order to launch his presumptive 2024 presidential campaign, but he doesn’t really need any of the Republican legislators to get re-elected with him. If they do win, fine, he’ll spend the next two years governing much like he has, but if Democrats take control of one or both chambers, then he’s got an easy enemy to blame for not getting anything else done, a convenient target to demonize in his MAGA 2.0 campaign speeches. (Some might go so far as to say it’s better for DeSantis’ 2024 ambitions if the GOP loses the state legislature.)

But for now, Florida Republicans seem content to speed along on DeSantis’ anti-Mickey bandwagon, even if they run their own political careers off a cliff in the process. On Tuesday, DeSantis announced the special session would include repealing RCID, on Wednesday the Florida Senate voted to approve HB 3C, and it passed the House early Thursday afternoon.

Moving the bill forward “so fast that no one has the chance to reflect is not good governance,” said Shannin, and he’s right regardless of the topic but especially regarding something so intricately complex and potentially devastating to the state’s economy.

Disney, like all big corporations, is far from infallible and not immune from criticism. If Florida’s Republicans want to criticize the company and call for boycotts, that’s absolutely within their rights — they’ve got free speech rights too — but they can’t honestly claim to be conservatives and continue pushing for a punitive repeal of RCID when it isn’t likely to stand up in court, will waste countless millions of dollars on unnecessary litigation and bureaucracy, and will wreak untold havoc on local government budgets and the state tourism industry.

This is an opinion piece. The views expressed in this article are those of just the author.

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