Disney tells investors Florida’s attempt to strip special tax status is likely illegal based on contract

Reedy Creek Improvement District, the governing body that holds its own special tax status in Florida, posted a statement this week telling shareholders that the state government’s attempt to strip Disney of its special status would very likely be unsuccessful due to a provision in the contract granting the special privileges to Disney.

The statement explains the contract bars the state from stripping Reedy Creek of its self-governing status within the state unless the state assumes the debt of the district as well.

The statement cites 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.”

The statute also reads, “State of Florida pledges…it will not limit or alter the rights of the District…until all such bonds together with interest thereon…are fully met and discharged.” 

After Governor Ron DeSantis signed the Reedy Creek repeal into law on Friday, the governor’s office released a statement indicating that more details are forthcoming.

“In the near future, we will propose additional legislation to authorize additional special districts in a manner that ensures transparency and an even playing field under the law,” the statement read.

However, municipal attorney Jacob Schumer wrote in a Bloomberg article this week that the legislation signed by DeSantis last week “either violates the contract clause of the Florida Constitution, or is incomplete,” and that if the state government wants to move forward with the measure, it would need to rewrite the contract.

“It simply can’t go forward under the contract clause,” he said. “They would have to pass something to address this,” Schumer said.