The head of Florida’s bond finance is predicting that the Florida legislature will re-establish the Reedy Creek Improvement District. This comes after Florida passed a law that would dissolve the district.
The prediction was made by Ben Watkins, director of Florida’s division of bond finance. He suggested that legislatures will most likely create a successor district. Watkins thinks that the new district would have many of the powers of the current Reedy Creek Improvement District. This is what allows Disney to run many municipal functions throughout Walt Disney World Resort. The new district would likely again includes emergency services, garbage collection, infrastructure funding, and more. It would most likely drop some of the powers that previously the district had that were never used, like the operation of a nuclear power plant.
“I’m confident that Reedy Creek will get addressed in a more meaningful way,” he said Thursday. Lawmakers will likely restore a limited version of the special district in the next legislative session, Watkins said. Watkins also shared that Governor Ron DeSantis’s office has been “supportive” of a successor district approach. At the end of the day, lawmakers will ultimately have the final say in how the legislation will be drafted.
In April, Florida passed a law that would dissolve the Reedy Creek Improvement District in 2023. The law was seen by many as retribution over Disney’s opposition to its “Don’t Say Gay” bill. One challenge with this law is that there is $1 billion of municipal bonds outstanding for the district that would have to go somewhere. A new successor district could potentially take on the bonds.
“The debt will be transferred and assumed by — with the same terms and conditions — the successor entity,” Watkins said. He elaborated that the new district will have identical powers to collect revenue and levy taxes, so the bonds wouldn’t be impacted.
Along with not wanting to transfer the debt to Florida residents, Florida also does not want the potential dissolution of the Reedy Creek Improvement District to impact the district’s credit ratings. The current situation has led to Moody’s Investors Service and S&P Global Ratings to give the rare outlook of “developing” to property tax bonds being sold by Reedy Creek.
“We understand what non-impairment is, we are not going to do anything that adversely affects the credit,” he said. As things were playing out this spring, Watkins reached out to bondholders and investment firms. He shared that the legislature had left an “information void” in the way that it passed the law so quickly.
“Our reputation in the credit market is extremely important to us,” he said. “We don’t want to jeopardize that.”
DAPS MAGIC will continue to follow this story and provide updates as they become available. What do you think will happen with the Reedy Creek Improvement District? What do you think should happen? Share your thoughts and opinions in the comments below!