STATEMENT RE SPECIAL LEGISLATIVE SESSION

On April 20, 2022 in a special legislative session called by Governor Ron DeSantis, the Florida Senate passed a bill (S 4C), providing for the dissolution, effective June 1, 2023, of any independent special district established by special act of the Florida legislature prior to the effective date of the current Florida Constitution, which was November 5, 1968. The Florida House of Representatives is expected to vote on an identical bill (HB 3C, and collectively with S 4C, the “Bill”) today which, if passed by the House, is expected to be signed into law by the Governor at the end of the special session on April 22, 2022. Reedy Creek Improvement District (“Reedy Creek” or the “District”) was established as a public corporation of the State by Chapter 67-764 Laws of Florida, effective May 12, 1967 (the “Reedy Creek Act”). Pursuant to the Bill Reedy Creek will be scheduled for dissolution on June 1, 2023. The Bill further provides that any special districts dissolved as a result of the Bill (including the District) may be reestablished on or after June 1, 2023 pursuant to 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.

In the Reedy Creek Act the State of Florida has pledged to the holders of any bonds issued by the District:

(1) that it will not limit or alter the rights of the District (a) to own, acquire, construct, reconstruct, improve, maintain, operate or furnish the projects or to levy and collect the taxes, assessments, rentals, rates, fees, tolls, fares and other charges provided for in the Reedy Creek Act, and (b) to fulfill the terms of any agreement made with the holders of any bonds or other obligations of the District; and (2) that it will not in any way impair the rights or remedies of the holders, and that it will not modify in any way the exemption from taxation provided in the Reedy Creek Act, until all such bonds together with interest thereon, and all costs and expenses in connection with any act or proceeding by or on behalf of such holders, are fully met and discharged.

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.

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.”