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.

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.”