The State of Florida Repeals Walt Disney World’s Government Authority–What Does It Mean?
In recent days and weeks the Florida state legislature led by Governor Ron DeSantis has sought to end the Reedy Creek Improvement District, an independent governing body that provides regulatory control and support to The Walt Disney World Resort. Currently, the elephant does not seem afraid of the mouse, and it’s looking to stomp on it if possible. There are many people chiming in and various reports being filed as to what might happen should it be implemented next June. We bring to the table some questions we think should be asked and what the ramifications might be. We make simple what this is all about, talk about whether it’s really going to happen, and more importantly, how it might affect your next visit to Florida. Join us in this podcast as we talk about Walt Disney World’s Reedy Creek Improvement District: Questions, Facts & Uncertainty.
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As a caveat, I will do my very best to be non-political. But understand that this has nothing to do but politics. This is political theater. In my observation, both sides do the kinds of things I’ll be speaking about. That is why Disney and other corporations often render to both sides of the aisle. Publix–a terrific grocery store chain headquartered in Florida– was called out for doing something similar in placating politicians.
And as I have done in several previous podcasts, this isn’t an anti-Chapek dismissal as well. Bob Iger is at fault for some of this. But the difference between Bob Iger and Bob Chapek is that the former held much more trust among his employees. I believe this is Chapek’s weakest link, and it’s creating a domino effect in this very issue.
What’s This Issue All About?
In the 1960s around when it was discovered that Walt Disney had amassed a large amount of property, he and Roy proposed a special district. It would become known as the Reedy Creek Improvement District and canvasses part of of Orange and Osceola counties. It allows Disney to operate like its own county government and is responsible for municipal services such as power, water, fire prevention and road maintenance. It also means Disney doesn’t need approval from local planning commissions if it wants to build new structures. This was critical to Walt Disney World being built in that neither county could offer Disney much support in undertaking such a large project as was established at that time.
Reedy Creek Improvement District provides this overview:
One of the busiest places in America, the District’s boundaries include: 4 theme parks, 2 water parks, 1 sports complex, 175 lane miles of roadway, 67 miles of waterway, the cities of Bay Lake and Lake Buena Vista, an environmental science laboratory where the continuity of water quality is monitored, an electric power-generating & distribution facility, a natural gas distribution system, water and wastewater collection & treatment facilities, a solid waste and recyclables collection & transfer system, plus over 40,000 hotel rooms and 100’s of restaurants and retail stores.
A five-member Board of Supervisors, elected by landowners, governs the District. The goal of the Board, together with the District’s staff, is to ensure the economic viability of all venues and businesses within the District, while never sacrificing Central Florida’s remarkable wildlife and ecological environment. Through the creation and effective operation of the District, Walt Disney was able to turn 38.5 square miles of remote and largely uninhabited pasture and swamp land into a world-class tourist destination that welcomes millions of visitors every year.
That’s what the Reedy Creek Improvement District is largely about. I should also mention that in many ways it’s actually a world-class benchmark for showcasing the partnership of government and private enterprise. I should also mention that Disney reaps many benefits from being able to essentially have its own government regulate them. For instance, part of what allowed The Disney-MGM Studios to open prior to Universal Orlando opening its gates was the fact that they could hustle through zoning, permits and construction reviews in a fraction of the time that it took Universal working with Orange County and the city of Orlando. ABC news called Disney out on it (before Disney bought ABC) and Universal called them out on it. But Florida state government didn’t give Disney or RCID any trouble for it at the time.
Yet now after 50 plus years the state of Florida seeks to revoke the ability of Disney to have its own government district.
Why Does the Governor & Republican Backed Legislature Doing This?
The governor didn’t initially seek after Disney. The governor was seeking out hot topic issues that could rally his conservative base as he creates greater support not only in Florida in a re-election year but in an eventual potential bid for the White House, particularly if Trump or none of his family choose to run again. The governor has sought to do this on several fronts such as putting down efforts to teach or discuss critical race theory or identifying math text books in the school curriculum that seemed too woke. In one instance, he sought to focus on not only repress but prosecute any discussion of LGBTQ+ issues in the classroom that was happening in lower grade levels.
This particular legislation has upset a number of Disney Cast Members in Florida who feel strongly about LGBTQ+ issues and felt that Disney as a corporation should speak up on it. Initially Bob Chapek felt to not deal with it, or perhaps deal with it behind the scenes. Either way, Disney Cast Members felt that was the wrong approach and became vocal about that. In the wake of this commotion, Bob Chapek agreed to address the issue with DeSantis and go publicly against the legislation. DeSantis saw this as an opportunity to address all that is wrong with “Woke” Disney World as he has put it.
All of this has put not Disney, but particularly the Ron DeSantis in the headlines. As such he has seen that this allows him the national stage to make a name for himself among the Make America Great Again community. Since then he has sought to make sure Disney is known at “Woke Disney”. He has emphasized that Chapek, and thus the corporation, only cared when it was going up for a vote, and made no effort to address it prior. He also has pointed to Disney essentially doing business in China when minorities like the Uyghurs are oppressed.
In truth, Governor Ron DeSantis has gotten a lot of press–good or bad. And he’s now a bigger household name for the Republican Party outside of the Trump family.
Can Florida state government really do this?
Yes, they can. And they did. But that doesn’t necessarily mean it will hold up in court. Nor doesn’t mean that it’s ethical. It doesn’t even mean that it’s a smart political move. Consider for instance that there are many Districts (1,844 to be exact) all with different purposes. Florida House leaders said the new law would impact five special districts: Reedy Creek Improvement District, Bradford County Development Authority, Sunshine Water Control District in Broward County, Eastpoint Water and Sewer District in Franklin County, and the Hamilton County Development Authority. Why these are being emphasized as well is unclear. But what is clear, is that the Republican-led lawmakers don’t like Disney’s interference with the Florida politics, and they have chosen to especially single them out.
In truth, government agencies do make enemies out of corporations. For instance, this isn’t much different than Democrats taking on big oil or tobacco companies.
By the way, key Republicans have come forward and denounced DeSantis for what he said. Former Trump attorney Jenna Ellis has even offered to defend Disney against the state. “Hi @Disney. Open offer to help defend your right to constitutionally protected speech against Florida’s illegal retaliation.” She also went on to say, “Do we really want the government to have a precedent that it can relate against a corporation because it doesn’t like a statement that corporation makes?…We know that Florida is retaliating against Disney…because they have admitted it.”
Speaking of lawyers…how could this play out in court? Who knows. But I’m fairly certain that there will be significant activity taking place in front of a judge.
Note that at this point the Reedy Creek Improvement District would not be phased out until June 1, 2023. That still buys time to take action both before and after the upcoming elections. As I believe Scott Maxwell noted on a radio interview, there is an off ramp for both parties that give them plenty of time to exit this deal.
Why hasn’t Disney said anything so far?
As of the time this podcast was recorded, Disney has not made any official comments regarding the legislation as it was considered, as it was passed, and as it was signed by the Governor. But Disney has said too much already. Through Reedy Creek Improvement District it has addressed its commitment to bondholders, but has not made any statement regarding their view of the legislature/governor’s actions or how they would appeal.
But if I know Disney, there is an army of attorneys paying attention to this. And there are lots of ways to fight the issue. Moreover, it may have made the future of other districts in Florida caught in the cross fires of this, and they just may have to take legal counsel as well.
Could this impact the citizens of Orange & Osceola counties?
The Washington Post reported last week that Disney has an estimated $1 billion in debt obligations and spends more than $160 million a year on public services; other government bodies could be forced to assume those responsibilities. Other sources says that removing the District would cost Disney between 1-2 billion a year. In truth, state and county officials haven’t really determined what that would entail.
Curiously, what hasn’t been mentioned in this is that Florida has a tourism development tax. Just last February it was announced that Orange County alone earned $28,362,000 for February alone of this year, the biggest in history, despite its effort to fully rebound from the pandemic. It’s a big issue locally that many of these funds never do enough to build larger roads and other services citizens in this area need. But certainly, these funds would go a long way to offset some of these Disney debts. They’re not designed to at this time. But then again, Disney wasn’t designed to lose its district.
Does this really impact the average guest visiting Walt Disney World?
No, not really. Will prices go up? Yes. But they always do. This is just a reason for doing so. Without it prices will go up. Few guests can perceive a noticeable impact being in Walt Disney World as opposed to being at Disneyland, which doesn’t enjoy the same self-governance benefits.
Humorously, you may have seen some images of picketing happening in front of the sign at Walt Disney World. There are actually five big welcoming signs as you enter Walt Disney World. Four of them are squarely on Disney property where parties cannot demonstrate. But one sign is on state road 535, where you can stand on public sidewalk in front. In fact, one MAGA group “closed the road” with their cars just recently “preventing” people from visiting Disney. This is of course a joke, since there are multiple access roads into Disney, and this entrance is a minor one comparatively. Know however, Disney has partnered with the highway department to put a new ramp off of I-4 that goes directly into even that entrance and in the near future no one will be able to stand in front of any Disney sign.
Would this be happening if Bob Iger was running the company instead of Bob Chapek?
I think that Bob Chapek has been dealt a terrible hand since day one in terms of having to deal with a company that has gone from one crisis to another. To begin your stint having to close every theme park world-wide along with collapsing all theatrical releases, this has been a painful run. But leaders don’t usually get to choose what hand they are dealt. And despite the hand, a great CEO must be a skilled enough to play those cards no matter what the hand.
Chapek’s run-in with DeSantis is couched in his having to deal with Governor Newsom of California. And yet that really wasn’t his role. Even though he was asked to be on a committee to re-open California during the pandemic, Bob Iger didn’t do well trying to figure out Governor Newsom of California, Newsom ended up playing politics with lead Republican and conservative leaders Orange County, where Disneyland resides. That left Disney at best caught in the middle, and eventually failing to win any favors from Newsom. While Walt Disney World successfully reopened in July of 2020, it wasn’t until the following April that Disneyland was permitted to re-open.
From the outset Chapek had really wanted to stay out of the political fray on this issue. He also stated in so many words that he wanted to work “behind the scenes” to address it rather than out in front. Whichever way he really was directing the organization, Cast Members took issue with it. And they particularly put up anger and frustration when it was revealed that Disney had supported the campaigns of many of these government officials up in Tallahassee. In truth, as I mentioned previously, that’s been going on and with both sides of the aisle for years–long before Chapek took over. Bob Iger was a part of it as was Eisner before him, and so on. But if these Cast Members don’t trust Chapek to make the right moves, and instead choose to be open and public about what Disney should do, then it really becomes lose/lose proposition for Chapek. Again, he finds himself between a rock and a hard place.
In a two part series I have chronicled both the slow fall and the hastening fall of Bob Chapek. He has made decisions that have cost him as a CEO. And those decisions stop at his desk. But part of me feels that so much of this was set up against his favor. And I feel that many of the employees of The Walt Disney Company have not given him the break he deserves. It is about trust. But trust begins with assuming positive intent of the other.
So in truth, I believe at the core of this is the company’s ability to trust Bob Chapek to make the right move and to act in the best interest of the company. Without that, Disney looks splintered and in disarray. Still, make no mistake. Walt Disney World will be here long after DeSantis has moved off stage. Though I’m not sure that Bob Chapek will be.
Would there be any advantage to Disney if they didn’t keep their governing body?
Perhaps the strangest question of all that I’ve poised here. If Disney’s government entity has a large debt burden, would there be a possibility that going with such a move could be ultimately in their best interest. Perhaps this would allow Disney to dump some of its overhead. After all, Disney has a lot of folks on their payroll. Many areas of operation have even contracted out over the years. Wouldn’t this essentially do the same?
To me this seems at first penny wise and pound foolish. While I could see some short term gain, I can’t imagine DIsney seeing this as an advantage in the long run. For instance, a significant benefit of special districts is making tax-exempt purchases for the services they provide and issuing municipal bonds for major infrastructure projects at a much lower interest rate. It would seem unlikely that Disney will lay down and just let this happen. But I’ve seen Disney do crazy things, and I wouldn’t put it pass them.
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